Chicago bonds… junk.

Illinois bonds… the nation’s worst.

And bonds for Chicago Public Schools (CPS), the state’s largest school district and America’s fourth largest… well, cue up the cries of “Won’t somebody please think of the children?!?”

It’s not mid-‘1970s bankrupt New York City, and we don’t have the sexy cultural zeitgeist of early hip-hop, disco, and punk as a backdrop against our fiscal struggle. But it’ll be interesting to one day look back at our city and state – whenever things get better – as ground zero for American municipal insolvency. And if nothing else – even if we’ll never be a footnote to a hip period piece like an impoverished, Ford Administration-era Big Apple is to HBO’s Vinyl – perhaps we will provide a future cautionary tale for cities and states in the early throes of political dysfunction.

In particular, amidst the various muni debt issues garnering coverage in the business news cycle (issues that also stretch to Chicago’s parks, the largest system in the nation, which eventually will house the Obama Presidential Library), is the particular dilemma of CPS, which is also now making fresh news for staff layoffs and the ongoing threat of a teachers strike. On the surface, sexy, speculative finance strategies aren’t immediately linked to public K-12 school district bonds, which you might believe have all the risk and danger of a Treasury offering. It’s an association that is, at the least, incongruous; at most, some might contend it doesn’t make for the most flattering mental picture – that of well-heeled investors raking a super-premium return on troubled inner-city school debt.

Even if it’s perfectly permitted in the economic system under which we live, and even if some middle-class retirement funds hold small positions in such investments, it’s a public image that perhaps is as much of a good look to many as that of those who profited betting against subprime mortgages during the housing bubble. And yet, it’s simply the function of market forces as dictated by supply and demand. Not to mention that CPS would be unable to provide its students – many of them from poor, inner-city neighborhoods – with many of the basic educational resources needed if unwilling to borrow a few more cents (or quarters, to be more like it) on the dollar than usual.

Chicago isn’t alone; school districts in Denver and in Pennsylvania since the late ‘00s have also experienced their share of financial distress, and the worries are that Chicago’s problems will become just as bad as those systems. But as it is both accompanied and compounded by other municipal debt hardships throughout the state that have turned up in the in the bond market, CPS’s issues are getting heightened national attention and making the rounds on outlets like Bloomberg and Reuters.

The most recent CPS bond offering, as reported several weeks back in the Tribune, was roughly a quarter of a billion dollars for 28 years at over 8 percent. Perhaps it might seem like a bit too risky of an investment if you’re a lower or middle-class city employee, but certainly not if you’re a money manager with ample discretionary savings to spare. But provided 28 years is enough time for the city and state to turn its finances around (the recovery of California’s economy offers hope), is it actually such a bad investment after all, no matter your tax bracket? Considering you just might likely buy the same value of lottery tickets over a 28-year span as you would a CPS bond, but are actually more likely to profit from CPS bonds than the Lotto, would it be worth the risk?

Ultimately, both the lottery (supposedly) and the bonds serve the same purpose in subsidizing the state’s K-12 education, so would buying some of those bonds be all that bad? You’d likely still have some discretionary money left over to buy that lottery ticket now and again… after all, Powerball seems to have a miraculous way of loosening a dollar out of one’s wallet when their personal budget has been maxed out ‘til payday.

Can you “think about the children?!?” while simultaneously profiting from Chicago’s school mess? There seem to be far more balancing acts that are harder to navigate. And right now, it seems to be an easier balancing act than trying to get our city and state debt issues in order.