Wednesday, November 12, 2008

State & Local Governments Have Bailout Fever

I wonder if this activity described in this article from Real Clear Markets applies to what's going on in Illinois and the budget pressures in Chicago.

Officials from state and local governments apparently feel left out of the $750 billion bailout package passed by Congress and signed by the president last month. Now they're angling for a share, complaining that the markets for government debt used to fund states, counties and municipalities are drying up.Maybe they should regard the situation as a message from above. State and local governments are already drowning in debt, much of it in liabilities for public employee pensions that were underfunded to begin with, and are now even more so after losing tens of billions in market value during the recent economic slump.

To issue more debt when they know they don't have the money to pay future pension liabilities is foolish.
If you read the rest of this article, one could conclude that governmental entities should attempt to live within their means. Also pensions for civil servants figures in this piece I could draw a connection to that other article about teacher's pensions that I posted here on Sunday.

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