Illinois Buying On Margin

Illinois just borrowed $3.7 billion at 5.7% in order to make a contribution to its pension fund. How much do they expect to make on investments above that borrowing rate? Didn't they see the Interactive Brokers commercial where one can borrow at 1.25%? This would be funny if not for the fact that it is so sad.


Anonymous said...

nice, laughing even though I shouldn't.
More seriously: they cannot reasonably expect to make more than the 30-year treasury + some extra, so 5.7% is an aggressive play. Too bad most taxpayers do not understand what just happened: their future earnings were pledged to give pensions to a certain voting block.

Anonymous said...