NEW YORK (TheStreet) -- A recent report by the Economist Intelligence Unit rated Chicago one of the top 10 cities in the world for its ability to "attract capital, business, talent and tourists."
Although that certainly will focus global attention on "The Second City," Chicago's precarious financial condition could result in it becoming even more well known -- for going broke.
That an urban area with such assets could be teetering on the edge of bankruptcy demonstrates, yet again, why investors should flee municipal bonds for the proven performance of so-called Dividend Aristocrat stocks such as Coca-Cola (KO), Wal-Mart (WMT) and Exxon Mobil (XOM).
At least Detroit had an excuse with the collapse of the automobile industry.
The major reason for Chicago's financial woes is mismanagement. The city's employee costs, especially for pensions, are unsustainable.
Chicagoist recently summed up the crisis as follows:
"As we've written before, the city is facing a $600 million payment to the underfunded police and firefighters' pensions in 2015 mandated by the state. Since city budgets in recent years have been balanced by nickel-and-diming residents with tax, fine and fee hikes -- as well dips into "rainy day funds" established by the money from privatizing civic resources like the Skyway and the parking meters -- Chicago doesn't have $600 million laying around. Which is why Mayor Rahm Emanuel has been lobbying downstate lawmakers to postpone that payment."
The only problem with that is it does not solve the problem, it merely delays the inevitable.