It surprised no one at all that Moody's cut Chicago's credit rating to junk yesterday:
Chicago today became the first victim of the Illinois Supreme Court's ruling on pensions, as Moody's Investors Service reduced the city's credit rating to junk bond status.
In a statement that specifically cited the court's May 8 decision overturning cuts in state pensions, the credit rating agency said the city's options now “have narrowed considerably.”
The downgrade is a blow to Mayor Rahm Emanuel, who during the mayoral campaign stressed his expertise to deal with the city's financial challenges. Emanuel labeled Moody's decision “irresponsible,” but did not deny its impact.
The downgrade also is a major blow to taxpayers because the city's cost of borrowing will rise, perhaps a lot, even if other bond ratings agencies do not follow Moody's lead.
If Fitch Ratings and Standard & Poor's Financial Services follow suit, the city's financial position could spiral downward—potentially forcing the city to come up with as much as $500 million quickly.
I wonder if it's possible that, now that the city's history of corruption and shady dealing is costing us real money, perhaps things will start to improve? I mean, could voters rise up and punish the self-dealing politicians who got us here?
Ah, ha ha. Ha.