The biggest problem facing Illinois is the public pension fund
problem. I don’t care what the “official” number is for the degree to
which it is underfunded. I can guarantee that even without
marking-to-real-market the illiquid investments like private equity
funds, derivatives, commercial real estate trusts and other assets that
do not have truly visible markets, collectively the public pension
system in Illinois is at least 60-70% underfunded. Then apply a
realistic assumed actuarial rate of return on assets, which would be
lower than the current assumption (likely 7.5% ad infinitum) and the
underfunding goes to 80%. The problem is unsolvable without a complete
and drastic restructuring.
I was in a Lyft ride today and the driver happened to be from the
northwest suburban area of Chicago. There’s a lot bad things happening
in that State that are not reported in the mainstream media. All road
public road work has been halted except toll roads. The gun violence
has worked its way from the South Side up through downtown into the Gold
Coast neighborhood and is winding its way north.
He said that his old house at peak prices in northwest burbs was
worth over $500k. The current resident has it offered for $250k.
Housing and real estate prices are plunging. He has a good friend who
consults with Sears and the expectation is that SHLD could file
bankruptcy any day (
Short Seller Journal subscribers were shown this idea on April 2, 2017 at $11.49 – it’s been as low as $6.20 since then).
It’s not just Illinois. The entire system is crumbling beneath the
surface. As long as the mainstream media isn’t reporting the truth, the
“truth” can’t be that bad, can it? The truth is worse than any of us
can possibly know.
There’s a 1%/99% in this country that’s different than the assumed
meaning for that term. For 99% of the population, economic reality and
systemic truth has been covered up and kicked down the road for so long
that this segment of the populace is willing to believe there may well
be a such thing as a “free lunch.” To 99%’ers, it’s inconceivable that
the grim-reaper could or ever would show up to collect. Of the 1%, a
small percentage not part of the insider elite can see most of the truth
and can imagine that the whole truth is far worse than what can be
perceived from publicly available information. The balance of the 1%
are the insiders.
I stated in 2003, after watching the tech bubble collapse and the
housing bubble inflate, that the inside elitists were going to keep the
system propped up with printed money and easy credit until they had
swept every last crumb of middle class wealth off the table and into
their own pockets. I also said that nation’s retirement assets would be
last crumbs remaining. Enabling pension underfunding is another form
of debt used to confiscate wealth. That’s why the catastrophic
underfunding of pensions was allowed to persist.
For purposes of my analysis, anyone who does not have enough money in
the form of cash in hand to buy a Federal politician or buy the direct
phone number to the Oval Office is “middle class.” There’s plenty of
douche-bags running around with assets worth 8-figures but they don’t
have enough spare change to buy their way in to the elitists’ card game.
We are at the point where the last crumbs are being swept off the
table. It looks like Illinois will be the first to fall but there will
be several others that follow. Part of the motivation by the
Fed/Government to hold up the stock market like it has been doing is to
keep the big State pension funds propped up for proper looting – like a
prize-fighter being held up under the shoulders after passing out in
order to deliver more punches to the face.
I suspect the time at which the system will be allowed to collapse is
not too far off. The only question for me is whether or not the “Mad
Max” scenario engulfs the country
before the outbreak of World War 3…
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Dave Kranzler spent many years working in various Wall Street jobs. After business school, he traded junk bonds for a large bank. He has an MBA from the University of Chicago, with a concentration in accounting and finance, and graduated Oberlin College with majors in Economics and English. Dave has nearly thirty years of experience in studying, researching, analyzing and investing in the financial markets. Currently he co-manages a precious metals and mining stock investment fund in Denver and publishes the Mining Stock and Short Seller Journals. Contact Dave at dkranzler62@gmail.com.
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The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
