When existing credit is destroyed, you get credit deflation. Chicago alone has billions denominated in asset-less backed credit, and it is moving into a crisis phase, from Mish:
So when this fails, there will be a net re-assessment of values, and the billions that cannot be paid will not be paid... BUT since the billions are denominated in credit, when it disappears (no pension check for you!) the economic impact will be credit deflation.
Whole lotta deflation goin' on....
Feel free to forward this by email to three of your friends.
Bad news on Chicago is deep and broad:
- The Chicago Public School System has a $1.1 Billion Budget Hole in $5.9 Billion Budget
- A $228 to $263 million derivative time bomb just triggered on the Chicago Board of Education
- Chicago Public Schools may be out of cash in 30 days
- Corruption investigations plague the school board
- Chicago booted Moody's as a bond rater
- Roadblocks impair pension reforms by the Illinois legislature
- Rauner issued a statement he will not bail out Chicago on the backs of Illinois taxpayers
- Chicago teachers threaten strikes demanding more money that isn't there
So when this fails, there will be a net re-assessment of values, and the billions that cannot be paid will not be paid... BUT since the billions are denominated in credit, when it disappears (no pension check for you!) the economic impact will be credit deflation.
Whole lotta deflation goin' on....
Feel free to forward this by email to three of your friends.
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