Chicago bankruptcy is the only option

Chicago schools have to shut down in September unless Chicago comes up with a bailout plan.  The mayor proposes that the city directly buy pension debt from the school system, loan them money.   Chicago city has no money so the mayor is about to raise property taxes, once again.  But firms are already leaving the city and unemployment rising (see graph below).

Zero Hedge reporting:

From the Chicago Tribune

Emanuel this past week quietly proposed a change to city investment rules that would allow the city to buy debt from so-called sister agencies, including CPS, no matter the creditworthiness of that debt. He said he was making the request on behalf of city Treasurer Kurt Summers as part of the Summers' annual investment policy update.

Aides for both Emanuel and Summers said the proposal was not designed to give the city a way to provide temporary funding to CPS as it seeks state help to right its teetering financial ship. "That's not what's happening," city spokeswoman Molly Poppe said. "This is not some contingency plan or bailout for CPS."
Instead, they said, it's meant to give the treasurer the option of investing in bonds, short-term loans or other types of debt from CPS — and other agencies like the Chicago Housing Authority, Park District, CTA and City Colleges — just as the city has the option of buying its own debt.
CPS carries roughly a $6.2 billion debt load, and recently borrowed $725 million through a bond issuance. In March CPS indicated it would have to tap an existing $370 million credit line with Barclays to help pay a June 30 pension obligation in the amount of $676 million. CPS already carries a junk rating by all three major rating agencies.
Nonetheless, the narrative that the bailout is actually an investment is fully in play.

"This change means that our sister agencies would no longer be treated any differently from an investment perspective than the city, as is commonplace throughout the country," said Alexandra Sims, senior adviser to Summers. "The city has always had the ability to invest in municipal and state bonds. This expands and allows us to invest in the city and all sister agencies as part of the treasurer's plan to invest in Chicago."

 Illinois Unemployment rate