The Socialists Are Here

Chicago is a mess.  We have a mayoral election coming up.  Rahm stepped down due to his total lack of transparency with regard to the death of an African-American kid.  After he stepped out, the Machine put their candidates in.  Here are the Democratic Machine Candidates:

1.  Bill Daley
2.  Toni Preckwinkle
3.  Susan Mendoza
4.  Gerry Chico

You cannot vote for any one of them if you want an end to the corruption in Chicago that has existed for the better part of 70 or more years. The first Mayor Daley instituted it.  The crony capitalism that is directly tied to the Democrats and businesses in the city can be traced back to the Daley’s.

Every politician tries to whet their beak a bit in different ways.  Some make it look up and up.  Property tax appeals, insurance, service orientated businesses like roofers and fence and facade people.  All somehow give a kickback to the politicians.

Chicago really was ground zero for the fanatical socialists at the early part of the 20th Century.

Here is the thing, not one candidate running for mayor has called for extreme budget cuts, or pension reform.  Chicago is billions underwater in pension debt.  So is the state and so is the county of Cook along with just about every county in Illinois.

Their policy is

• more spending.
• Annexing close in suburbs
• City income tax
• Transaction tax
• Higher user fees
• Commuter tax
• Real estate transfer tax
• Slight increase in property, corporate income, and personal income taxes for the state
• Increased taxes on Private Equity and Venture Capital and Hedge Fund returns

I have written about the danger of a transaction tax in the past.  I actually hope they pass it this time.  The city and nation have danced around this tax for as long as I can remember.  Let’s put it into the tax code.

Chicago has very few things going for it when you think about “alpha”.  It’s become a consultant, lawyer, accountant town.  They make good money, but not blow out money.  The people that are taking a lot of risk and looking to make fundamentally life and generational changing money are the people in the PE, VC, and trading world.  Some make it, some don’t.

If they pass a transaction tax, the next day every single trading firm will leave the city of Chicago.  So will every exchange.  Every one.  I am on the board of Open Finance and I would certainly vote to move the ATS to another jurisdiction because that would be in the best interest of the shareholders of the firm.  I highly doubt the folks are other nascent crypto exchanges (Eris, SeedCX, Bitnomial) would feel differently.  I know the folks on the board of the public exchanges would move.  CME sold all its real estate and data centers.  With the flip of a switch, all trade traffic would be rerouted.  They’d close what’s left of the floor and say Sayonara.

We are already seeing plunging real estate values in Illinois.  Follow Dennis Rodkin on Twitter.  He tweets it out every so often.  These are not an isolated cases.

This townhouse sold for less than…its past 3 prices, going back to 2006. It’s in Highland Park, built in 2006.

Sold in 2006: $899,000
Sold in 2015: $626,000
Sold in 2016: $626,000 again
Sold in February 2019: $605,000
(-33% since 2006) pic.twitter.com/9JSgNw56wT

— Dennis Rodkin (@Dennis_Rodkin) February 7, 2019

It’s like high end real estate in Chicago has a Groupon on it. Everything half off. That is government getting into your assets and pocketbook.

So, who can you back?  Very tough call for someone that is a fiscal conservative.  There are only two candidates that have enough gravitas to run the city and fight the fight.  They know where the bodies are buried.  They have experience with the scumminess of the city.  I don’t think they can be bought, and I think they will try and put an end to crony capitalism in Chicago.

Paul Vallas and Lori Lightfoot.

Each have their own problems.  Lightfoot is super progressive and a socialist.  Vallas is hated by the Chicago Public School system because he wanted to reform it.

So, city council; pass the transaction tax.  It would be a fitting ending to Rahm’s mayoral career given that he occupied space on the CME board after leaving the Clinton Administration.  I sat next to him when he showed up.