The Worst Financial Nightmare In Illinois History Erupts As State Comptroller Declares ‘We Are In Massive Crisis Mode’

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Margaret Thatcher once said that the big problem with socialist governments is that “they always run out of other people’s money”, and unfortunately we are witnessing this play out in a major way in the state of Illinois right now. At this point, the Illinois state government has more than 15 billion dollars of unpaid bills. Yes, you read that correctly. They are already 15 billion dollars behind on their bills, and they are on pace to take in 6 billion dollars less than they are scheduled to spend in 2017. It is the worst financial crisis in the history of Illinois, and State Comptroller Susana Mendoza sounds like she is about ready to tear her hair out in frustration

“I don’t know what part of ‘We are in massive crisis mode’ the General Assembly and the governor don’t understand. This is not a false alarm,” said Mendoza, a Chicago Democrat. “The magic tricks run out after a while, and that’s where we’re at.”

It’s a new low, even for a state that’s seen its financial situation grow increasingly desperate amid a standoff between the Democrat-led Legislature and Republican Gov. Bruce Rauner. Illinois already has $15 billion in overdue bills and the lowest credit rating of any state, and some ratings agencies have warned they will downgrade the rating to “junk” if there’s no budget before the next fiscal year begins July 1.

Would you continue to do work for the Illinois state government if you knew that they were this far behind on their bills and that it is doubtful that you would be paid any time in the foreseeable future?

Of course the answer to that question is quite obvious. As contractual relationships break down, social services are starting to suffer, and there is not much hope that things will take a turn for the better any time soon.

At this point things have gotten so bad that the Illinois Department of Transportation is planning to cease all roadwork starting on July 1st, and even the Powerball lottery is threatening to cut all ties with the state

As reported previously, the state Transportation Department said it would stop roadwork by July 1 if Illinois entered its third consecutive fiscal year without a budget – the longest such stretch of any US state – while the Powerball lottery said it may be forced to dump Illinois over its lack of budget. For now, state workers have continued to receive pay because of court orders, but school districts, colleges and medical and social service providers are under increasing strain.

So what has caused this unprecedented crisis?

At the core, the problem is political. A tense standoff between a Republican governor and a Democratic legislature has resulted in the state going 700 days without a budget

On May 31, Illinois will have gone 700 days without a budget, an unprecedented political failure. Also on May 31, if a budget is not passed, it could mean that the state could go until 2019—an unimaginable idea, except that senators have already imagined it.

How does a state, led by a successful businessman as governor, a brilliant political strategist in the House, and a consummate dealmaker in the Senate, end up in this kind of political disorganization? Bad political errors led to bad political incentives, and as the problem worsened, so did the political risk of solutions—and what politicians had to ask of their constituents.

This is another example of how deeply divided we are as a nation right now. Democrats hate Republicans and Republicans hate Democrats, and it is getting to the point where the two parties cannot work together on even the most basic things.

In the end, the state of Illinois is either going to have to cut spending dramatically, raise taxes substantially or some combination of both. And since the Democrats have very large majorities in both chambers of the state legislature, I wouldn’t count on spending being cut that much.

This is the thing with big government – it always has a tendency to get even bigger. And the bigger government gets, the more of our money and the more of our freedom it takes away.

That is why I am a huge advocate of dramatically shrinking the size of government on the federal, state and local levels. Like Rand Paul has often said, I want a government so small that I can barely see it.

When you let government get out of control, what you end up with is a ravenous beast that has an endless appetite for more of your money. In Illinois, the money is all gone and the beast is desperately hungry for more.

Sadly, what is happening in Illinois is just the tip of the iceberg. If stock prices start declining from these massively inflated levels, state pension funds all over America are going to be in crisis mode very rapidly. And a new recession would greatly accelerate the financial problems of a whole bunch of states that are already dealing with huge budget shortfalls.

Unfortunately, experts all over the country are warning that the next major downturn is coming very quickly. For example, just consider what Bernard Arnault just told CNBC

A financial crisis could be just around the corner, according to the chief executive of LVMH, who has described the global economic outlook as “scary”.

“For the economic climate, the present situation is…mid-term scary,” Bernard Arnault told CNBC Thursday.

“I don’t think we will be able to globally avoid a crisis when I see the interest rates so low, when I see the amounts of money flowing into the world, when I see the stock prices which are much too high, I think a bubble is building and this bubble, one day, will explode.”

There is always a price to pay for going into too much debt.

A financial day of reckoning can be delayed for a while, but eventually bad financial decisions are going to catch up with you. The state of Illinois is learning this lesson in a very harsh manner right now, and the country as a whole is on the exact same path as Illinois.

I am often criticized for endlessly warning about America’s coming day of reckoning, but you can’t pile up the biggest mountain of debt in the history of the world without paying a price.

Just like the state of Illinois, we will pay for decades of exceedingly foolish decisions, and unfortunately this is going to cause severe economic pain throughout our entire society.

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Contributed by Michael Snyder of The Economic Collapse.

Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream , The Truth and Economic Collapse Blog.

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  • TrevorD

    Just ask the government to please ask The Fed to print some more magic money, so easy and it solves everything. Just mention maybe that you are a Rothchild Zionist NWO supporter, should do the trick, normally does.

    • RandyJ/ProudSurvivor

      Ya-and it should only take some 300,000 years to pay down the national debt doing it that way. At peak print production. If we stopped spending now….

      • gato felix

        Not really “money” now a days is all on computers, electronic numbers, you really never have it in your hand for the most part, just press the delete button and presto its gone, the same way they magically make it apear!!!

        • That is currency, as in cryptocurrency.
          Money is made of metal, usually gold and silver.

          • gato felix

            Yes you’re right in that real money is gold and silver!

          • That being the case, if you can’t stockpile gold and silver, it would be wise to take after the elites and hoard as much of the currency as you can, assuming that Bill Bonner knows what he is talking about at ATMcrisis.com

          • gato felix

            Knowing how these elites think they’ll dredge up E.O. 6102 all over again like they did in 1933… not disagreeing with you though

          • Of course, an executive order is no more law now than it was then, and FDR only got about 25% of the gold in private hands anyway, because most of it was owned by the wealthy, who didn’t surrender theirs. If we are going to dredge up an EO again, it should be JFK’s 11110.

        • RandyJ/ProudSurvivor

          Yep! There must be a button at the treasury that is labeled “Presto”.

  • RandyJ/ProudSurvivor

    As if there’s any difference at all between Dems and Repubs…

    • Robindventers


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  • RandyJ/ProudSurvivor

    I’m curious to know if the Illinois comptroller has included unfunded liabilities, such as state employee pensions? Because if she hasn’t, it’s way, WAY bleaker than she has let on….

    • That assumes that they haven’t already spent the pension funds like the feds have spent the Social Security trust funds.

  • The federal government doesn’t seem to lack any takers when they are either $20,000,000,000,000 on-budget or $200,000,000,000,000 off-budget in the red.
    Maybe Illinois just needs to send their accountants to Keynesian school.

  • gato felix

    ” At the core the problem is political” when the fuck isn’t it politicians? It’s about time the people start banning politicians! For starters how about not participating in the “voting” scam!!!

  • NonYo Business

    coming to a state near you.

    • RandyJ/ProudSurvivor

      Exactly! Where I live-Michigan-the capital city has a budget crisis. A local businessman had a weekly op/Ed piece on local radio & reported that Lansing had a looming unfunded liability crisis related to pensions to the sum of thirty million dollars if I recall right. Soon after, the city treasurer rebutted his claim saying there was no crisis and that the actual amount of unfunded pension dollars was more like 2.5 million. Guess who was right…

  • Mike

    ah, good old democrats strike again.

  • landy fincannon

    Nit too worry! The neo-cons and soros have a plan. An Article 5 Convention of the States

    • uncommon sense

      Their goal is an entirely new constitution. Soros and Holder are part of a group promising a new Constitution by 2020.

      http://keywiki.org/Constitution_2020
      https://publiushuldah.wordpress.com/category/article-v-convention/

      And even the CoS scammers admitted that a new constitution is on the table:

      Jordan Sillars, Communications Director for COS, let the cat out of the bag when he said:
      “…I think the majority of Americans are too lazy to elect honest politicians. But I think some men and women could be found who are morally and intellectually capable of re-writing the Constitution…”

  • renee ciccioni

    This is suspicious considering the race to the bottom plans that have been uncovered in the past ,besides when taxes are used what they are intended for there is great outcomes, roads ,garbage removal,the poorest and vulnerable are taken care of so less suffering, and schools when they are are being used for literary purposes rather than religious or political indoctrination.

  • dav1bg

    An audit would probably fix the problem. Half the state employees are double dipping the retirement fund.

  • AstyanaxMexicana

    Rahm and Illinois are finished “absent some catastrophic and catalyzing event – like a new Pearl Harbor.”

  • SP_88

    There is much more spending going on in Illinois than they can afford. But because they are so stubborn, they will never cut spending as long as they can get away with raising taxes to continue with their spending spree.
    They should have been cut off long ago, but because they hide the seriousness of this crisis from their constituents, the people are the last to know.
    This will continue until they are forced to make some tough decisions. Or until the decision is made for them.

  • Frank

    Livin’ large, that is until the Illinois EBT cards get cut off, then we’ll see some of that post-apocalyptic fiction become reality. California is leading the way to state debt implosion and collapse. Liberal Progressives need to be neutralized and rendered incapable of being in charge of spending public funds and ALL major spending by political appointees and public employees should be subjected to citizen oversight and review before any funds are obligated. Accountability to The People is completely absent, and the bell tolls.

  • I_P_Frehley

    Here in Illinois, there really never was a republican (opposition) party, just corrupt, but spineless turds for the most part. The commies running the show, mainly scumbag Madigan, are so corrupt and power mad that no tax is too high, no budget is too insane and spending must never, ever be reduced; and this brings us to “the budget crisis” – Rauner doesn’t want the tax and spend norm to continue. To the detriment of his governance, he won’t approve a budget of more spending, more taxing and more waste. The only solution, for us overtaxed is to leave this state and never return – it is ruined beyond repair, sadly.

  • Pippiagain

    When four of the last five mayors of the Chicago area are in jail, wee might speculate that there is just the tiniest bit of dishonesty going about?