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Chicago Downgraded to Junk

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chicagoNo surprises here that Moody’s downgraded Chicago’s credit rating to junk bond status. There’s no way it can continue on like this without increasing taxes and cutting services. What I’m seeing here in Newport, RI for example isn’t encouraging and will play out nationwide in perpetuity. Our water bill, for example, is up double digits in percentage terms from last year and real estate taxes are astronomical. I’m not crying woe is me. It’s simply criminal that politicians did not make sure these promises were matched. (Check out more bad news for Rhode Island here).

Cities and states cannot operate like this forever. What’s more is the liabilities are much, much higher than you and I are reading because the assumed rate of return is kept artificially high. The market will not bail out the states. The last few years’ returns are with borrowed money from the Federal Reserve. The party will come to a halt. If there were any sensible fiduciaries guiding the states/cities being realistic would have to be the first place to look. Like that will ever happen.

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E.J. Smith - Your Survival Guy

Preparing your investments and family for when disaster strikes.
E.J. Smith is the Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH, where he completed course-work in Practical and Defensive Handgun, Conceal Carry Pistol, Shotguns, Precision Scope Rifle and Kidnapping Prevention. E.J. plays a Yamaha Recording Custom drum set with Zilldjian cymbals. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com. Sign up here to receive all the best content from Richardcyoung.com each week.