What We Learned Last Week

Last week we learned that Moody's is downgrading Chicago's bond rating based on an opinion. An opinion that flows from the same discernment and acute financial savvy and antennae that allowed them to miss or contribute to a wide range of financial scandals. We also learned that Moody's is acting on math that they certainly won't show us, because it is proprietary but it is also possible that Moody's can't/don't dare show us this math.

The one time the US Treasury took the time to test said math they turned up a $2 trillion dollar mistake. This is not a rounding error. This is like discovering that the puppy your brought home is actually a rabid wolverine and it is now being introduced to your toddler.

We also discovered that Moody's and major financial players have a great deal to gain by creating "volatility"/movement in the interest rates of our formerly boring municipal bond market. When the spread careens back and forth or just down somebody somewhere makes a mint... like $2.2 billion dollars. We concluded by explaining that said volatility is extremely bad for the city's fiscal welfare and to purposely create it would be both reckless and possibly criminal behavior... which has become the hallmark... neigh the gold standard for ethical behavior among the financial class.

Keep that in mind when we tell you today WHO is getting our money and WHY they are getting our money. It is possible that after you read this you are going to stop thinking about how to best cut pensions and start contemplating how many baseball bats we are going to need to make certain everyone working at CBOT, the CME and for Mayor Emanuel gets a proper beating. I know what you're thinking. Don, everyone gets one bat and aluminum won't break.

Well first of all this is the big leagues so we use wooden bats. Second, I'm talking fact-bats... but IF someone is moved to more direct action wooden bats are both classier and match a good suit.

Why Are We Going to Be Out Up to $2.2 Billion Dollars?

For close to four years the Crack Chicago Stenography Corps has been clutching their pearls about this payout while demanding we gut our pensions, privatize everything we can and play the Chicago version of the Hunger Games with what remains of our public services. Now ask yourself HOW is it possible that in ALL four of the years they have been howling like this you have no idea WHO is walking off with a brown paper bag full of cash that will not be paying for the schools the lost generation needs or HOW or WHY they will be getting that bag of money?

I don't blame you for not knowing, you've been reading Dan, Melissa, Hal and Fran for years. It's a miracle that you aren't out burning public school teachers and workers at the stake and demanding that we sacrifice their pensions to an Aztec fertility god. When credit default swaps, direct bank loans, letters of credit, standby bond purchase agreements and lines of credit are created a “ratings trigger” is embedded in the financial instrument. It is just like it sounds. When the borrower's credit rating changes it “triggers” a set of actions that the parties either can or in some cases must take.

Now you, I and virtually everyone else in the city do not have the time, staff or financial power to push events in any particular direction to activate a trigger. We don't, for example, even know what these triggers are or what sorts of triggers are embedded in each agreement but guess who knows all of that intimately? That's right the same financial industry that has behaved like a pack of hungry raccoon for the past twenty years. The questions you should be asking and our media should have told us a long time ago are pretty straightforward and scary.

One, what are these triggers and how does Moody's or anyone else arrive at a decision to take an action that will activate them? Two, are the entities setting these triggers off, the downgrades, free from any conflict of interest? Because in the past said conflicts have led to the straight up looting of the public trust. Three, is there any chance at all that any of the entities involved are engaged in any unethical or illegal action because we are talking about $2.2 billion dollars and Moody's.

Given Moody's history of fraud ignoring, the Department of Justice's sudden awareness of their recent criminal inclinations and its own admission that it is NOT "independent and unbiased in it's opinions" I'd say one should START with those questions and see where they lead you. If I were... say a major print newspaper I bet one could learn a lot more than say a collection of activist, researchers and investigator who only have a few hours a week to give such an inquiry... I'm looking at you Sun-Times and Tribune. Make an effort. Hell, we'll even help.

Pulling the Triggers and Killing the Hostages

In every good bank heist film there are a bunch of people in the bank that are caught between the desperadoes and the law or the scruffy action hero trapped inside with the hostages. In this case those "people" would be schools, pensions, libraries, road repair, emergency response services the fire department, mental and medical health services... little things like that.

Our desperadoes, are junk-bond raiders or as they like to be called "high-yield bond investors" and they have already tapped Chicago so hard that city is not going to walk straight for the next ten years. Here's the scary thing. Now that one of the agencies has downgraded Chicago's credit rating into junk bond territory they have placed us in a pork chop suit and thrown us into a lion enclosure.

Basically the worst kind of financial predators come a calling when a place like Chicago hits the table. The authorities, in our case, are the Emanuel Administration; who is funded by many of the banks and wealthy individuals who stand to profit from the $2.2 billion dollars at stake.

And their allies the Rauner Administration that wants to make it possible for Chicago to go bankrupt, right now it cant by state law, so that the full scale Michigan brand of financialization and disinvestment can get underway. When you can't tell he difference between the desperadoes and the authorities you usually get an Assault on Precinct 13 scenario where hostages get hurt bad and at least one of the desperadoes gets away.

So prepare yourselves because it turns out that we are scruffy action hero trapped in the bank with the people... yippie kay-yeh Mother#*&r. These ratings triggers give the holders of credit default swaps, direct bank loans, letters of credit, standby bond purchase agreements and lines of credit an option to raid the treasury that they can choose to exercise or not.

They could set new terms. Mayor Emanuel could dig in his heels and move city deposits around or lock them out of city business to show he means business about them trying to raid our assets and cut a better deal for all of us.

Remember how Mayor Rahm Emanuel was supposed to have the power to get on the phone with his fellow plutocrats to work out deals around just this sort of thing? Well he is pitching a fit over Moody's actions and delaying other credit deals but he does not appear to be doing anything to not give $2.2 billion dollars to some of his campaign investors.

Wait, what... did I say the money is going to entities and people that financed his campaign? Why didn't this come up during the campaign? It feels like news... Is it possible that the people over at the Sun-times and Tribune couldn't figure this out and start asking questions or demanding accountability. The sad thing is that you already know the answer to this question. Sure they could of but why throw shade on their endorsed candidate. A man they endorsed because he is supposed to stop these very kinds of things from happening. I feel like I'm in a time loop and this is where everything goes bad... again.

Who is Getting Up to $2.2 Billion Dollars - Everything Goes Bad... Again.

It turns out that the $2.2 billion goes to a small collection of financial institutions and some extremely rich people who hold the proper positions in our credit default swaps, direct bank loans, letters of credit, standby bond purchase agreements and lines of credit or to put it more bluntly the rich are about to be getting a whole lot richer off the common public good.

The headliner banks that stand to make a Scrooge McDuck level of cash from our distress are JPMorgan Chase & Co. Barclays PLC. and Wells Fargo & Co. All three of these banks have behaved, and we have no reason to believe that they have stopped behaving, as criminal entities.

One could argue that given all the fiscal damage they have done and are still doing right here in Chicago that what we may owe them is a bill and what they owe us is their survival.To get a sense of how no one involved in any of this is interested in doing anything to stop this transfer of $2.2 billion in public funds to private hands Mayor Emanuel's next CFO, Carole Brown works for Barclays.

And yes, I used the present tense "works" for Barclays because how is it possible that she can be a responsible guardian of the city's finances when she has recently been engaged in weakening its finances for private gain? This is not a revolving door between corporate raiders and government guardians of the public trust.

This Wilson Fisk excusing himself from the party to pick up the phone as the Kingpin. What I'm saying is that the door is not revolving, they are just changing the information on the name plates in the middle of the same damn meeting. This is what one should conclude when a recent advocate for the huge payout from our treasury in now put in charge of protecting and stewarding this treasury.

So after four years of not knowing now you know the financial institutions holding the proper positions in our credit default swaps, direct bank loans, letters of credit, standby bond purchase agreements and lines of credit will be the recipients of all that sweet, sweet cash.

You also know that some of the architects/managers of those positions will now be in charge of the treasury they set up for looting. Right about here is where most people start wondering if we are witnessing a robbery. Tomorrow we will explore if that is indeed what is happening. Spoiler alert... when thieves write and enforce the law it's still a robbery... it's just legal and that's why legal and just are two different words.

Don Washington is the Front Man for the Informational/Blog/Conspiracy the Mayoraltutorial.com, can be followed at This e-mail address is being protected from spambots. You need JavaScript enabled to view it is not afraid of ninja, cannot be killed by mortal means and wants you to Get Dangerously Informed