Why is Illinois Using Credit Default Swaps?

You remember credit default swaps, right, the financial "instrument"
that pricked the housing and economic bubbles?
Illinois is "enjoying" the same kind of debt bubble that led the nation
into its current financial mess. I call it a debt bubble because if all
the borrowing that the state does to keep it afloat ever becomes no
longer possible, if Illinois defaults on the bonds it has sold to
millions of investors, Illinois is finished. Kaput.
It might surprise you that under girding Illinois' massive debt are
credit default swaps (CDS), the same financial instrument that had
turned a prosperous national economy into hash. In short, the state's
borrowing of hundreds of millions of dollars is getting a lot more
expensive, and the chances of an Illinois debt bubble bursting
increasing.
CDS are the same kind of insurance that AIG sold to guarantee that the
mortgage backed investments wouldn't fail. The only thing it guaranteed
was utter chaos when homeowners and buyers (investors) lost confidence
in the value of housing.
Continue reading at Chicago Daily Observer

Leave a comment

  • ChicagoNow is full of win

    Welcome to ChicagoNow.

    Meet our bloggers,
    post comments, or
    pitch your blog idea.

  • Advertisement:
  • Visit my new website

    I'm a freelance writer, editor and author. I can help you with a wide variety of projects. Check out my new website at www.dennisbyrne.net

  • Meet The Blogger

    Dennis Byrne

    Chicago Tribune contributing op-ed columnist and author of forthcoming historical novel, "Madness: The War of 1812." Reporter, editor and columnist for Chicago Sun-Times and Chicago Daily News. Freelance writer and editor.

  • Subscribe to The Barbershop

    Enter your email address:

    Delivered by FeedBurner

  • Dennis Byrne’s Facebook Fan Page

  • Categories

  • Like me on Facebook

  • Our National Debt

  • Twitter

  • Tags

  • Recent Comments

    • The blog is having good impression from their readers. The long way of information and gathering more supportive information from ...
      Read the story | Reply to this comment
    • This is very informative post for students. Now student update along with awriter.org/college-paper-org-review for online essay writing reviews.
      Read the story | Reply to this comment
    • Excuse me, but Trump is crazy. I'm not surprized about things a have found here. Gonna share the post on ...
      Read the story | Reply to this comment
    • In reply to ejhickey:
      Those of you in the privileged class have a real advantage: you don't have to associate with us mere plebeians.
      Read the story | Reply to this comment
    • Seeing those long lines at both our airports made me decide that I am going to start flying by private ...
      Read the story | Reply to this comment
  • /Users/dennisby/Desktop/trailer.mp4
  • Latest on ChicagoNow

  • Advertisement: