05 December 2013

Another Domino Prepares to Fall

Back in August I observed that Chicago's financial condition was not much better than Detroit's. Not surprisingly, the day after Bankruptcy Judge Rhodes's finding that Detroit was eligible for Chapter 9 relief and, equally importantly, that Detroit's pensions could be trimmed notwithstanding state constitutional protection, Chicago Mayor Rahm Emmanuel is engaging in a full court press to get his city's union to agree voluntarily to cuts. Read the story in the NYT here.

Emmanuel's push also follows by days the Illinois legislature's action with respect to state employee pensions. According to the well-regarded Pew Charitable Trust's report "The Widening Gap Update," the Illinois state pension system was one of the most underfunded in the United States. You can download an early version of my article describing the reporting on the crisis in U.S. state pensions here.

And last but not least, I've also posted on the "baby bust" affecting much of the world that is one of the factors contributing to the crisis in pensions. Will the young fight back against funding pensions on a pay-as-you-go basis? Or will we geezers manage to keeping hanging on? Stay tuned if you're one or the other.

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