Spotlight Danville, Illinois, My Home Town: Bankrupt

Danville Illinois is bankrupt. That's not an official announcement yet, but it will be. Pensions are at the heart of it.

I have talked about my relationship with Danvile before, but here is a brief recap.

I grew up in Danville, Illinois, the home of Chuckles (the candy), Hyster (lift forks), Lauhoff (the world's largest grain elevator), Petersen Puritan (one of the world's largest aerosol bottling plants, think deodorant sprays), a GM foundry in adjacent Tilton, and many other industries.

All of those industries but Hyster are gone or sold to other companies. Hyster remains but production of forklifts doesn't. Lauhoff is now the Bunge corporation. Inquiring minds may be interested in the History of Chuckles, no longer made in Danville.

Dick Van Dyke, Jerry Van Dyke, Bobby Short, Gene Hackman, Irving Azoff, Hellen Morgan, are some of the celebrities that were born or raised in Danville.

The population of Danville was 44,000+ when I was in high school. It's now 31,597 despite huge growth in area.

I graduated from Danville Schlarman, a Catholic high school, in 1971 and graduated from the University of Illinois in 1976. My goal was to escape the area, and I did.

Curiously, just today, I was labeled a "traitor" for this. I will return to that in a moment, but let's get to the real story why towns like Danville are bankrupt.

Spotlight Pensions

WirePoints reports Illinois Mayors Have Little Control Over Pension Costs.

Ask Danville, Illinois, Mayor Scott Eisenhauer if he has any control over his police and fire pension mess and you’ll quickly see frustration set in. “Springfield makes all the rules but localities have to pay for them.”

For decades Illinois has prided itself on being a “local control” state. Local control was originally meant to push authority for policy decisions down to the lowest levels of government – as close to the people as possible.

The reality, however, is just the opposite, and nowhere is that more evident than in the state laws mandating pension benefits for police and firemen across Illinois. State lawmakers impose one-size-fits-all government benefits and local governments – meaning local residents – have no choice but to pay them. For some cities, that’s bringing on bankruptcy.

Eisenhauer knows a thing or two about the local pension crises hitting cities across the state. Danville’s pension funding levels have collapsed to levels that make them virtually insolvent. The police pension fund in 2016 had just 30 cents of every dollar it needs to ensure it can meet its future obligations.

The fire fund is even more broke. It was just 17 percent funded then.

It’s why Danville recently implemented a special pension tax – what Wirepoints argues might be economic suicide for the city – to try to stave off the insolvency of their plans. Danville was featured in a Wirepoints report titled, Springfield fiddles while Illinois cities burn.

Eisenhauer is quick to describe one of the reasons why cities like Danville are in such a mess.

Of the five major components that impact a community’s pension costs – the number of active workers, the number of pension beneficiaries, salary levels, benefit levels and the pension fund’s actual rate of return – he argues he has partial control over just one: the number of active workers employed by the city. Even then, “minimum manning” laws – which require a city to keep a certain number of firefighters on duty at all times – prevent the mayor from having full control over headcounts.

More than half of Illinois’ 650 public safety funds are less than 60 percent funded, according to the most recent data from Illinois’ Department of Insurance

Perfect Timing

There is more to the article, but those are the essentials.

Just moments before I read that article I got into an exchange on Twitter where "Armed Snowflake" accused me of being spoon fed by wealthy parents.

The exchange started in response to my post "Free Stuff": Medicare for All Cost Pegged at $32.6 Trillion for 10 Years.​

"Free Stuff Like You Got From Your Wealthy Parents"

Violent Revolution

The conversation went on and the "Armed Snowflake" accused me of of being a "class traitor". He also supports violent revolution.​

Excuse me for pointing that that Venezuela is the result of extreme socialist policies.

An enlightened person chimed in.

Yeah right. Let's just give away free medical care, free preschool, free housing, and free college.

The results are predictable: First Danville, then Venezuela.

Mike "Mish" Shedlock

Comments (28)
No. 1-17
Democritus
Democritus

One possibility is that this "Armed Snowflake" is actually an FBI agent trying to find out if you're supporting an armed revolution in the USA.

caradoc-again
caradoc-again

Heavy Socialism has more momentum that we realise. An entitlement culture breeds kids unaware of the truth of having to earn what you spend and ideally before you spend it. It starts on an individual basis and soon aggregates up to the civil level. It might be some developmental stage as societies grow out of poverty, peak, then decline.

Other parts of the world that have had it harder often still have the "old ways" of thrift, earning before you spend, seeking out the ability to create wealth, self reliance & they also have stronger family ties. They do their best to look after themselves and family as there is no alternative.

We have done this to ourselves. Unfortunately, it looks like only crisis will result in solutions and it may have to be a big crisis at that.

As for the Medicare side, just look at the cost of obesity alone. Can adults blame anyone else for our own weight? Kids, yes, grown-ups need to take responsibility and address it. It isn't addressed and that tells you something about attitudes.

Tengen
Tengen

Danville is very similar to my Ohio rust belt roots. A lot of agreements (ie pension funds) were made back when things were waaaay better in the area. Now the downward spiral has been in motion for at least 3-4 decades and nobody knows what to do. Little flyover towns aren't needed in the QE era.

Whenever I go back, it always saddens me how few people know anything about the Fed or the finance sector in general. I really believe that's why people like "Armed Snowflake" and other agitators are amplified, so that the bankster pillage can continue under the radar. We're always told that we should dislike each other over red/blue politics, race, gender, religion, culture, language, and any other immediately distinguishable trait that could divide us.

To the elites that encourage this nonsense, there isn't necessarily any ideological goal, socialist or otherwise. Rather, they want to make sure we come to blows with each other if and when things go sideways, while the Lloyd Blankfeins and Jamie Dimons of the world make haste to their gated communities, and if necessary continue on to their compound, bunker, or whatever safe haven they've set up for themselves. Maybe they've got a wee island ready where they can sip mojitos in the shade while watching the rest of us hack each other to pieces on closed circuit TV. I wouldn't put it past them.

Stuki
Stuki

The whole "Agreement"/"Promise", blah-blah culture itself is at the core of much of the West's rot. Basically exalted lawmaker, lawyer and executioner classes getting a carte blanche to rob and harass at will, with no escape for the rest.

Which is also why things only work(ed) in The West for as long as there were fairly cheap ways to get out of agreements and the like. Cross the Atlantic, Go West ....

America used to (still sorta does comparatively, but it's fading fast) have fairly efficient and low cost bankruptcy. That does help.

Now even the US, is moving increasingly in the direction of dysfunctional Middle Eastern cultures of "debtors prisons" and the like. Completely sclerotic hellholes where noone dares do anything, and where "you owe" is just another excuse for walking all over someone's basic individual rights and freedoms.

Such cultures do make politicians, apparatchiks, lawyers and the security apparatus' extremely important; and bestow great status on their members. Which is why those groups are fighting so hard to keep them.

But, by being nothing more than yet another way by which the connected get to rob and harass the productive, they are simple economic suicide in the long run.

As far as government "debt" and promises: No promise in any way binds anyone who didn't make it. A rule mandating a politician who voted for a promise cannot turn around and vote to reneg on it a year later, may well be sound. But A voting to extend a promise to some union, in no way binds an unrelated B from voting to simply reneg on it later. B is representing different tax payers than A. Many of whom may not even have been born, much less have voted, when A made his promises. So, B voting to reneg doesn't mean anyone lied. Just that someone different chooses not to assume unsustainable promises made by others a long time ago.

The entire underpinnings of government debt, hence the government debt "crisis," is this simple to see through newspeakian sleight of hand. Get rid of that, and the "crisis" goes away overnight. Along with government's unrestrained ability to turn future generations into de facto slaves at will.

Curious-Cat
Curious-Cat

The problem is that free snowflake and his fellow believers will not disappear and they are not interested in listening to arguments. Like any religion, their believe is absolute and all the rest of us are infidels. If someone made me God tomorrow, and I was able to make any possible change needed to save this country, I still wouldn't know what to do.

Snow_Dog
Snow_Dog

“I graduated from Danville Schlarman, a Catholic high school, in 1971 and graduated from the University of Illinois in 1976. My goal was to escape the area, and I did.“

MLB Hall-of-Famer Robin Yount is a Danville native.

Broke into the big leagues in the summer of 1974, while Mish was playing poker to get himself through U of I.

jivefive99
jivefive99

Its pretty obvious by now that pensions are no longer workable. The early 1960s didnt last and you cant predict the future. I myself have a pension coming, and I'll need it, but it should become one of those quaint things of the past like cracker barrels that disappeared. Now keep in mind, the average worker, time and time again, screws up their self-directed (401k) plans -- the average person just isnt interested in investing. That being said, while they should eliminate all pensions, the wealthy of this country are gonna have to go along with MUCH BIGGER 401k matchings and universal basic income to feed people fleeing the automation storm. Oh, and , uh, I need my 1/3rd of pay pension at least for awhile ... please :)

AWC
AWC

Jack those property taxes up to around 5 bucks per square foot of land per month, and see if the voters adjust their attitudes at the polls, about the glorious bureaucracy they created.

Until then, money now being the product of central planners, it will be distributed by said planners, to those whom they see “fit.” Hedge accordingly.

channelstuffing
channelstuffing

hyster forklift parts are cheap junk chinese import,like craftman,black & decker etc etc ,now its a toss up if they survive the warranty period lol

JonSellers
JonSellers

"The population of Danville was 44,000+ when I was in high school. It's now 31,597 despite huge growth in area."

Death spiral.

ML1
ML1

USA can never pay it's debts. US states can never pay their debts. US cities can never pay their debts. EU countries can never pay their debts. EU country states/cities can never pay their debts. Both in USA and EU personal consumer debts, real estate loans and every other kinds of debts and loans are at records. Both in USA and EU company debts are at records. Pension debts are high everywhere and even in cases where the pension plans and savings are NOT underwater like in USA the assumption is that there must be about 8% return in the funds currently in the pension plans for pensions to be able to be paid. China, Asia, Africa, Latin America are all also drowning in debts of all kinds. . Current economic growth and high stock prices are based on this excessive debt and assumption that this debt created FAKE demand will continue in perpetuity with debts increasing and increasing while there is no longer any capability to pay back the debts and paying even interest is dependent on ZERO interest rate environment with extremely low interest rates for debts. . This is happening when the numbers of kids in Western Countries are dropping and the immigrants being brought to western countries are mostly uneducated and unable to pay for their own life and instead mostly either living on welfare or working a low wage job and getting also welfare so the stress from pensions will be on fewer and fewer productive people. . The only question is WHEN it will ALL come crashing down?

WildBull
WildBull

This in just one more step on the road to economic collapse. One more Socialist promise not kept. On more case where the crocked politicians and crooked union bosses made promises that could not be kept to buy the votes of the public employees ( both sides of the table). The path from here to Venezuela is long. Slow but sure.

All these something for nothing dreamers think it will be different here.

Casual_Observer
Casual_Observer

The Great Recession will be followed the Great Reset as told by John Mauldin. When we look back in a few years there will be longing for better times of the Bush Obama and early Trump years.

Realist
Realist

The problem is not Pensions; the problem is poorly designed and poorly run Pensions. Which appears to be common in the US. There are many well run pensions all over the world. As I often mention, look to your northern neighbor for some good examples. A well run pension will keep management expenses low and provide superior returns to what the average individual could do on their own. One example: HOOPP (Hospitals of Ontario Pension Plan) is 122% funded and just increased benefits to retirees. Well run Pensions are to everyone’s benefit.

2banana
2banana

Public unions are the largest political donors of all time. They give nearly 100% of their money to democrats. Democrats reward public unions for their support. A never ending cycle of other people's money.

MissionAccomplished
MissionAccomplished

Anyone using the term "bourgeois" outside of a punchline is a punchline.

FFS already!