ZeroHedge vs Illinois TRS

Discussion in 'Economics' started by rcj, Sep 20, 2010.

  1. rcj


    Zero Hedge posted an interesting response from the Illinois Teacher’s Retirement System that basically stated their dislike for Tyler Durden’s characterization of a “death spiral” in relation to their need to sell off assets (see Illinois Teachers’ Retirement System Enters The Death Spiral: AIG Wannabe’s Go-For-Broke Strategy Fails As Pension Fund Begins Liquidations). The response had a very cogent and common sense reason for the asset sales, even thought they occurred at a very inopportune time. See TRS Responds to “Death Spiral” Comments.

    We at the BoomBustBlog commented on the Illinois TRS on August 23rd: Is Illinois Worse Off Than Greece…

    In reviewing both our comments and the responses from TRS, it begs the question as to why TRS officials failed to address some of the more salient points in our missive. To wit, let’s excerpt a portion from our note, linked above:

    Illinois Budget Crisis Draining State Services: Bloomberg

    State retirement liabilities are near $130 billion, Illinois holds the country’s largest pension and health care funding gaps
    Pension debt is $90 billion, and programs are unfunded to the tune of $54 billion
    The state’s unpaid bills have risen by $1 billion in the past year
    Chicago Downgrade Raises Borrowing Costs Amid $164 Million Sale: Bloomberg

    Chicago is planning a multibillion dollar education capital plan, which it will debt finance
    Chicago has continued to thin out its cash reserves, and when faced with firing 1,200 public school employees, it instead chose to let the good times roll (party like its 2005)
    Recent credit ratings downgrades may have raised the debt financing cost by 40%