Thursday, May 14, 2015

The junk spreads!

It’s hard to know how seriously we should take the talk that Moody’s Investors Service went ahead and dinked the financial status of the Chicago Public Schools and the park district.

One day after Moody’s downgraded the status of city government’s bonds to junk status – implying that they are a bad financial risk for investors looking to make a buck – they took the same actions with the schools and the parks.

THEY’RE ALL JUNK. It probably is the first in a series of downgrades that will impact all governmental units in the area.

Big business interests will now be eager to treat all government entities in such a negative manner.

Which makes me think they’re engaging in their own partisan politicking – trying to force government into enacting measures of harm to labor interests and ones that likely would never have been considered otherwise.

The real question, in my mind, is if the Standard & Poor’s bond rating agency decides to follow suit. Will they downgrade their own ratings of our local government entities to show some sort of overall negative perception of how weak our financial status is.

OR WILL STANDARD & Poor’s keep its level the same? Indicating it might be a mere hang-up that Moody’s has with regards to Chicago.

Considering that the two entities usually react in similar ways, it would be likely that a Standard & Poor’s downgrade would be forthcoming. Which means it’s more a kneejerk reaction than anything else.

Of course, I have always felt that the bond ratings are not some hard-and-fast ranking that ought to be taken for granted. It’s almost like those baseball fans who think the batting average, a mere percentage carried out to the thousandth of a point, is an absolute indicator of how good a ballplayer truly is.
Nothing has truly changed between last week when the bond ratings were still of some sound standard, and this week when we’re supposedly worthless financially.

EVERYTHING IN CHICAGO remains the same. In fact, it is likely that things won’t get significantly better when our government officials do figure out some mathematical formula that enables the pension funding mechanisms to be resolved and our bond ratings will increase again.

I noticed that Mayor Rahm Emanuel went about saying on Wednesday that it was “irresponsible” for Moody’s to lower the bond ratings. Just as Chicago Teachers Union spokeswoman Stephanie Gadlin issued a statement calling such actions “reckless.”

Could it be that the bond rating fiasco is the common ground that can bring two otherwise-openly hostile sides together? I don’t know if this is the first step toward avoiding a teacher strike later this year.

But that could become the one positive that arises from all this mess.

OF COURSE, WITH the teachers’ union also saying it believes Emanuel and the big banks are in cahoots with each other to misrepresent the financial status of our governments, it’s probably not realistic to expect anything to bring the sides together.

Actually, I’m wondering how long it will be until Illinois government also has its bond ratings dinged down to junk status. Or is there a sense that business interests don’t want to do something to embarrass the political stature of Bruce Rauner – the governor of Republican persuasion who claims he wants to run the state like the investment banker he once was.

That would be blatantly partisan. I’d like to think such a thing would not happen.
But this kind of big-business trash-talk about junk bonds does have a certain stink of partisan politics about it; perhaps concocted by the same kind of partisans who are desperate to spew the nonsense that Chicago is the next Detroit.

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