Economist.com Cities Guide: Chicago Briefing - July 2006

News this month

To market, to market

The Chicago Stock Exchange’s effort to revive sagging sales got a boost in June when four leading Wall Street firms bought minority stakes in the exchange’s parent company, CHX. On June 21st CHX announced that Bank of America, Bear Stearns, E*Trade Financial Corporation and Goldman Sachs would invest $20m in the company in return for full voting rights and seats on the governing board (full details of the agreement have yet to be released). The deal is an important vote of confidence in the exchange's long transformation: last year it abandoned its member-owned structure to become a for-profit enterprise, and now it is loosening rules to allow brokers to trade a wide array of equities, and plans to introduce a new electronic trading system this autumn.

The Chicago Stock Exchange had floundered for years in the shadow of the New York Stock Exchange (NYSE) and NASDAQ, but recently things have been looking up. As the larger exchanges become even larger—the NYSE is making a bid for Euronext and NASDAQ has built a 25% stake in the London Stock Exchange—investors are looking to smaller regional exchanges for more flexibility and lower trading costs. Chicago’s exchange also stands to benefit from new federal regulation that will create a national investment market by October 2007. Then investors will not automatically head for the exchange with the most liquidity (usually the NYSE); instead orders will be routed to a national pool and go to the market with the best price. Analysts are betting that the increased competition will boost regional exchanges like Chicago’s.

The case rests

A corruption trial that has tainted the mayoralty of Richard Daley is drawing to a close. Four former high-ranking officials in Mr Daley’s administration have been in court since May 10th: two are charged with favouring Mr Daley's supporters in the city’s hiring and promotion process, the third with helping to arrange the scheme, and the fourth with lying about it all to federal agents. Chicago operates under a federal court order that means officials cannot hire someone based on his politics.

The prosecution presented its case over six weeks and questioned a bevy of witnesses; the defence rested its case on June 21st after just two days, calling only two witnesses and none of the four defendants to the stand. Defence lawyers, insisting that their clients were innocent middlemen who never knowingly broke the law, said that prosecutors had failed to make a compelling case. The defence received a boost on June 20th, when a judge dismissed one count of fraud against all four men. Closing arguments began on June 26th, and are expected to last two days.

Nabbed

A federal sting led to the arrest of 47 alleged gang members in Chicago in late June, proving that the city of Al Capone still has some gangland cachet, even as its crime rate has fallen. The so-called Operation Snakebite—which also saw arrests in Detroit, Philadelphia, and Camden, New Jersey—centred on the Mickey Cobras gang, based out of the Dearborn Homes, a public-housing project on Chicago’s South Side. Investigators believe the Cobras are responsible for some 70 drug-related deaths in recent months, attributable to taking heroin mixed with fentanyl, an exceptionally potent painkiller. The sting yielded a variety of drugs, including fentanyl and 200 pounds of heroin. Among those arrested was a Chicago police officer charged with helping a Cobra leader hide his drug paraphernalia and giving him access to a police database.

In the future, such arrests within city limits may become rare: a recent study shows that gentrification and the demolition of massive housing projects such as the Dearborn Homes have forced gangs to set up shop in the suburbs. It also found gangs pooling resources rather than fighting each other and, like good suburbanites, moving from the dope trade into white-collar crime.

Put a sock in it

Ozzie Guillen, manager of the White Sox, Chicago’s South Side baseball team, has earned a reputation for being “a colourful interview”, meaning he lacks a censor between brain and mouth. But he may have gone too far in a recent tirade. A continuing feud with Jay Mariotti, a flame-throwing columnist for Chicago’s Sun-Times newspaper, turned ugly on June 20th when Mr Guillen cursed at him and called him a “fag” in front of a coterie of reporters. Mr Guillen’s attempts to clarify his remarks took a turn for the ridiculous when he said that in his native Venezuela, the word “fag” is “not a reference to a person’s sexuality, but to his courage”, and insisted that he has gay friends, watches women’s basketball and has even attended a Madonna concert.

Mr Guillen has since given a tepid, non-apologetic apology, saying he’s sorry to anyone whose feelings may have been hurt. Major League Baseball, the group that operates America’s two leagues, has no set policy for punishing players or managers for making offensive remarks, but in 2000 a pitcher for the Atlanta Braves was suspended for 14 games for racist slurs, and the former owner of the Cincinnati Reds was suspended for an entire season in 1993 due to a history of praising Hitler and insulting racial minorities on her team. Mr Guillen, who last year brought the White Sox their first World Series title since 1918, may be suspended or fined.

Last bow

Daniel Barenboim ended his tumultuous 15-year tenure as music director of the Chicago Symphony Orchestra (CSO) on June 17th. After leading the orchestra in a rousing performance of Beethoven’s Ninth Symphony and Choral Fantasy, he returned twice to the podium, visibly moved and embracing musicians along the way. He made his debut with the CSO at the tender age of 15 as a promising pianist.

Mr Barenboim had a rocky relationship with the orchestra’s governing board—the CSO’s shrinking revenues were blamed in part on his penchant for performing difficult contemporary music rather than traditional crowd-pleasers. But despite his disagreements with management, Mr Barenboim enjoyed tremendous popularity with the orchestra’s musicians, who voted to name him “honorary conductor for life”. He remains conductor-for-life at the Deutsche Staatsoper in Berlin, and works with the East-West Divan Orchestra, comprised of Israeli and Palestinian youths, which he co-founded with Edward Said, a late Palestinian-American scholar and music critic. Next year he will travel to Milan to become the principal guest conductor for the famous La Scala opera house. The CSO has not yet named Mr Barenboim’s successor. In the meantime the orchestra will be led by Bernard Haitink, a Dutch conductor, and Pierre Boulez, a French composer and conductor.

Catch if you can

July 2006

Ravinia holiday weekend

June 30th-July 4th

What better way to celebrate Independence Day than by enjoying music and a beautiful summer night under the stars? Ravinia, the Chicago Symphony Orchestra's summer home, offers a range of performances on the holiday weekend to suit all tastes. The main event is on Saturday night, when James Conlon, the orchestra’s musical director, presents an evening of festive fare, from Verdi and Shostakovich to Leonard Bernstein and George Gershwin. The following night sees Los Lonely Boys play their blend of Latin-influenced country blues. On July 3rd and 4th Ravinia revives the 70s with an Abba tribute band.

200 Ravinia Park Rd, Highland Park. Tel: +1 (847) 266-5100. Ticket prices: Lawn $10, pavilion $20-$45. For concert times and a full schedule, visit Ravinia’s website.

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