Canary In The Coal Mine: Unfunded Liabilities Have Turned Illinois Into A "Banana Republic"

Authored by Daniel Lang via,

Illinois is the perfect example of what happens when your state is run by fiscally irresponsible dunces for decades.

The state is buried debt, and hasn’t passed a budget in over 700 days. 100% of their monthly revenue is being consumed by court ordered payments, and the Illinois Department of Transportation has revealed that they may not be able to pay contractors (who are working on over 700 infrastructure projects) after July 1st if the state doesn’t pass a budget. To top it all off, the state’s credit rating is one step away from junk status, the lowest of any state. Because of these factors, Illinois may become the first state to declare bankruptcy since the Great Depression.

Governor Bruce Rauner has gone so far as to call his state a “banana republic.”

The state’s comptroller has admitted that “We are in massive crisis mode.”

And a reporter for the Chicago Tribune thinks Illinois has gone so far past the point of no return, that the state should be broken up. He recently wrote what basically sounds like a suicide note for Illinois.

Dissolve Illinois. Decommission the state, tear up the charter, whatever the legal mumbo-jumbo, just end the whole dang thing.


We just disappear. With no pain. That’s right. You heard me.


The best thing to do is to break Illinois into pieces right now. Just wipe us off the map. Cut us out of America’s heartland and let neighboring states carve us up and take the best chunks for themselves.


The group that will scream the loudest is the state’s political class, who did this to us, and the big bond creditors, who are whispering talk of bankruptcy and asset forfeiture to save their own skins.


But our beloved Illinois has proved that it just doesn’t deserve to survive.

So how did it get to this point?

The root of the problem is Illinois’ unfunded pension liabilities, which amount to $130 billion. The state’s leaders simply promised what could not be delivered. Most of their employees can retire in their 50’s, and many of them will receive 1-2 million dollars over the course of their retirements. As the debts associated with those pensions reached astronomical levels, the government increased taxes so much that many of the wealthiest and most productive citizens and businesses have moved away, leaving an even smaller tax base to draw from.

In short, Illinois is in a death spiral, but it’s not alone. Illinois is merely the canary in the coal mine.

We’re only hearing about Illinois right now because the percentage of their pensions that have been funded is the lowest in the nation. However, there are plenty of states that aren’t too far behind Illinois. There are plenty of states with a higher debt to GDP ratio, and more debt per person. And it’s not just public pensions. The pension funds for every company in the the S&P 500 are underfunded by $375 billion. Before the last financial crisis, they were fully funded. And globally, the problem is far worse. 20 countries in the OECD, whose members include every western and developed nation, have a combined $78 trillion in unfunded liabilities, from both private and public pensions.

During the economic crash of 2008, we all saw how contagious an economic calamity could be. A crash in one market can put many others over the edge, and cause them to crash as well. What started with a subprime mortgage crisis in the United States, quickly turned into a global economic crash that we still haven’t truly recovered from.

So when Illinois does crash and burn as a result of their pension funds (and it is a matter of when, not if), then it’s time to buckle up. It could be just the beginning of a global financial unraveling that will affect us all.


ClassicalLib17 Stuck on Zero Fri, 06/23/2017 - 19:46 Permalink

Illinois' main problem with pension funding stems from the annual 3% compounding increase. This applies to municipal police and fire as well. I know of a retired 84 year old Drivers Training/Wrestling Coach in my community who is now collecting $110,000 a year. He is but one of the many govt pensioners with this deal draining my state dry. Ah, the miracle of compounding interest!

In reply to by Stuck on Zero

True Blue Juggernaut x2 Fri, 06/23/2017 - 22:56 Permalink

My mom taught grade school in Joliet for 20 yearsTo the same class? Were any of them ever paroled?Sorry, I couldn't pass that one up.That which cannot be sustained; won't. The whole economic system is one giant fraud, starting with the fiat FRN and the 'Federal' Reserve Banks on down. There are no black swans -because the whole system is fraudulent and criminal; setup to fail from the beginning. When the very foundation is composed of lies and semantic diversions (like calling the loss of value 'inflation') then, the 'black swan' events become inevitable because eventually the truth will prevail, reality will manifest itself and the consequences will be paid. To quote Keats, "Beauty is truth, truth beauty" because no matter how ugly or painful the truth; you cannot build something worthwhile on a foundation of lies.Consider if Congress passed a law (I don't know, maybe on Dec. 23, 1913 or something) declaring that pi is exactly 3. Eventually the hard facts of reality will overcome the delusions and deceit -and they'd wave their hands in horror and mouth pious platitudes about how 'unforeseeable' it was, while every structure built on those lies collapses; taking down everything and everyone with it.We now have 104 years of 'engineering' built on the belief that legislative fiat can indeed make pi = 3.000.Sleep well. 

In reply to by Juggernaut x2

GUS100CORRINA Dead Canary Fri, 06/23/2017 - 19:17 Permalink

Canary In The Coal Mine: Unfunded Liabilities Have Turned Illinois Into A "Banana Republic"My response; In the LAND OF OBAMA, OBAMA and his merry band of DESPOTS have struck again. HOW IN THE HELL DID THIS GUY EVER BECOME POTUS? Opps ... I forgot ... it was all orchestrated by the Illuminati who took orders from the Rothschild family.See how simple. The Rothschilds want Illinois to completely collapse so they can buy up Illinois assets for pennies on the dollar. They just needed PROGRESSIVE LIBERAL IDIOTS to carry out their plan.Old ABE was wise to their plan and they assassinated him!!

In reply to by Dead Canary

Herd Redirecti… GUS100CORRINA Fri, 06/23/2017 - 19:38 Permalink

I'd have to check my history books, but I do believe the Rothschilds moved in to America via Chicago, through the dry goods business.  Not long after they were using fronts to gobble up the railroads, and the oil wells, and then in 1913, the creation of the Federal Reserve, income tax, and the IRS!  What a year!   Not sure whether they were involved with the CBOT or the CME (probably the latter).

In reply to by GUS100CORRINA

LetThemEatRand JustPrintMoreDuh Fri, 06/23/2017 - 18:48 Permalink

"At least the problem is contained to Illinois"Good one.  I would add that lost in the MSM and even alt-media analysis of what is happening in Illinois is that Illinois used to have a manufacturing base.  That manufacturing base provided tax revenue for public works/employees and their pensions.  Yes, the pensions are overbloated, but it would not be a crisis if the state did not lose the tax base that supported it.  The public workers are just the last to hear the train coming.  The private employers/employees got run over a long time ago.

In reply to by JustPrintMoreDuh

DocBerg LetThemEatRand Fri, 06/23/2017 - 19:30 Permalink

From the Quad Cities to Peoria, Illinois used to have a superb heavy industrial base.  Chicago was the Silicon Valley of the country up until the early 1970s.  But the morons running this state and Wall Street have destroyed most of this.  So now, there are no easy fixes left, and our Solons in Chicago, and the ventriloquist's dummy in Springfield are paralyzed.  I really wish I could get the hell out of this doomed state, but I sadly have family who cannot be moved.  I hope I can get out before the EBT cards stop working! 

In reply to by LetThemEatRand

booboo LetThemEatRand Fri, 06/23/2017 - 19:42 Permalink

Yes they just "lost it" it's somewhere, I know they left it over here when they walked in the door, I'm sure they put it over there, goddamn it I hate when they lose shit. Oh well, just everyone take a deep breath, relax and think, we'll find it just think. I know!! The fucking sock drawer, no that's not it!
Maybe they got smart and left on their own. Like my old man used to say when I worked at a union meat packing plant " they can lock you out son but they can't lock you in"
Edit: the Quad Cities were and are still run by a mini democrat machine, I know for a fact that in order to do anything there it took writing a check and swearing allegiance to vote democrat. The fucking carpenters union blew up a motel being built by a non union contractor in the 80's. Yea, they "lost" their manufacturing base.

In reply to by LetThemEatRand

GUS100CORRINA JustPrintMoreDuh Fri, 06/23/2017 - 18:56 Permalink

JustPrintMoreDuh wrote the following on Jun 23, 2017 6:09 PM"At least the problem is contained to Illinois."My response: YOU ARE KIDDING, CORRECT? Ever heard of LTCM? LTCM was a liitle firm who almost took down the entire financial system over a volatility short position. LTCM compared to Illinois is like a day at the beach with a HURRICANE coming on the horizon.The Illinois debt bomb will be like ROLLING THUNDER ACROSS THE LAND. Nothing will stop the default cascade once it gets started. Mark my words: We are about to see major central bank intervention into the Illinois situation.

In reply to by JustPrintMoreDuh

fattail GUS100CORRINA Sat, 06/24/2017 - 09:30 Permalink

Much of the negative effects of the great depression can be attributed to the vanishing of people's savings as their uninsured deposits were wiped out in bank closures.  With everyone worried about their money vanishing they lost trust and confidence in banks and pulled what's left of their money out and put it under neath their mattresses.  Of course, all kinds of collateral was being sold and dumped on the market causing asset prices to crash.  With everyone watching asset prices crashing many assets went no bid exacerbating the problem.  The deflationary death spiral reigned.  There has not been that massive drain on liquidity since then mainly because the FDIC allows regular people to have confidence that their insured money won't disappear if their bank fails.  I can for see some of the same deflationary effects taking place once a few of these pensions go broke.  The oblivious will wake up one day to a letter in the mail explaining why the ACH credit they will receive the next day is so much smaller.  Standards of living will fall, and every last nickel will have to be spent wisely.  The PBGC is broke and will be of no help.The fix for these pensions is fairly straight forward.  Everyone gets a haircut.  New pensioners pay more in.  No guaranteed rate of return.  I know for a fact some states have already taken these steps to punt the can way further down the road.  The problem with these underfunded pensions is once a few more of these get written down there will be a run on every pension after people start carefully calculating their expected haircut, and decide to cashout their lumpsum and be the first to hit the exit.  So the question is does the federal government let the pensions fail and watch the deflationary effects roll across the country like rolling thunder or does the federal government steps in and write a check to the PBGC?   I think we know the answer.  Inflation is so much easier for a government to deal with than a deflationary depression.  

In reply to by GUS100CORRINA

Twee Surgeon lasvegaspersona Fri, 06/23/2017 - 18:41 Permalink

You are not actually required to engage with that Pyramid scheme if you are self employed and I suspect you are.You could take that Dosh and do something nice with it. Buying Silver might be a better option.Your drivers license is also a voluntary contract where you give up your right to free travel in exchange for the protection of the State.A Drivers License is a Statutory Instrument. A Statutory Instrument is a contract between two or more parties. A lot of local Courts are shying away from Prosecuting 'no drivers license cases, they will hammer your Ass for no Insurance. There are actually examples of some things working properly in the Federal Government and a few metaphoric heads have rolled at great cost to State or Local Gestapo agencies on the Endless Tit of the Productive class. Some States tread lightly and some Cop's , if you know your Constitutional Rights, clearly given to Man by God himself. Take it or leave it.

In reply to by lasvegaspersona

Hillarys Server silverer Fri, 06/23/2017 - 19:26 Permalink

Exit tax on current wealth and on expected future earnings. That's what they do to Americans who try to give up their US citizenship.

How could anyone with a brain and a tank full of gas not dash right now for the state border?

It's like the Deep Impact movie and everyone is just standing there on the beach hugging their daughter and waiting for the big wave to swallow them.

Don't they have a survival instinct?

In reply to by silverer