October 30, 2013 at 10:17 am #9108
If your answer to that question is affirmative, I suggest you take a good hard look at what’s coming out of Detroit these days. Why don’t we just call
[See the full post at: Still Feel Confident About Collecting Your Pension After This?]October 30, 2013 at 5:17 pm #8928
Since many of these pensioners were exempted from social security deductions, they won’t even have SS to fall back on, or will get SS payments at greatly reduced rates. Not that social security will remain solvent for a lot longer. Insult to injury. Coming soon to a community near you.
(see: “Why Social Security Won’t Bail Out Many Detroit Workers”, over at the Fool)
Stick to the plan: Get out of debt and pay as many living expenses forward as possible (home, energy, local food production, hard assets, hopefully enough cash/PMs to pay property taxes. Insurance will be necessarily optional if available at all. Those of us who never expected these promises to be kept got a head start; the rest had better adopt a serious sense of urgency…. and start walking more if you haven’t already.October 30, 2013 at 5:27 pm #8929
BTW – the song “They’re Coming to Take Me Away Hahaaa!” was by Napoleon XIV (Jerry Samuels-1966); available on youtube for your enjoyment.October 30, 2013 at 5:40 pm #8930
Those of us who never expected these promises to be kept got a head start; the rest had better adopt a serious sense of urgency….
Not going to happen, mate, people will stick with what they like to believe, with what looks more promising, what makes them feel better/best, only the outcast village idiots are going to pay attention.October 30, 2013 at 8:50 pm #8931
We’re about to move to WordPress. Things will change, look different etc. Too much for me to oversee, so do please add your constructive criticism once we arrive in the promised land. I hope the Comments, Forum etc. will be nice and easy to use, and if they’re not, that I’ll be able to find where you’re going to tell me how and why ;_). AND of course that you will support The Automatic Earth in all possible waysm not least of all financially. Because we need that. Badly. We’ll make available Nicole’s World of Change lectures the moment we move over, and there’s more in the pipeline. We very much appreciate your presence here.October 30, 2013 at 9:08 pm #8932
At least federal employees’ retirement is safe, secure, and snuggly.
From a paper entitled “Fiscal Exposures Improving Cost Recognition in the Federal Budget, published by the GAO.
Page 34 “All Civil Service Retirement and Disability Fund Investments are in U.S. Treasury and Federal Financing Bank Securities. The government does not set aside assets to pay future benefits or other expenditures associated with designated funds.”
(Apparently, even 16 cents on the dollar is not set aside for retirees – nothing is set aside).
But not to worry…
Page 36 “As of Sept. 30, 2012 the CSRS accrued liability is $1.2 trillion and the FERS accrued liability is $484 billion. The system has a sizeable unfunded liability. The unfunded liability is dealt with by the FERS Act, which provides for annual credits to the CSRDF out of any money in the Treasury general fund not otherwise appropriated to amortize any supplemental liability of the CSRDF for current or former federal employees.
The term unfunded liability refers to gaps between the projected financial commitment to a program and the earmarked revenues available to fund that commitment. However, no federal obligation can be truly considered ‘unfunded’ because of the government’s sovereign power to tax to meet its obligations.”
Don LevitOctober 30, 2013 at 9:34 pm #8933
” … no federal obligation can be truly considered ‘unfunded’ because of the government’s sovereign power to tax to meet its obligations.”
Give with one hand and take with the other.
Cough! cough! For the last 30 years, the right word is “print”, not tax.October 31, 2013 at 4:58 am #8934
“For the last 30 years, the right word is “print”, not tax. “
And print it will be, though printing is just “Stealth Taxation.”
Must have been quite the high for the bureaucrats, spending every dime of income believing the pensionless producer would be forced to pony up in the end.
And now they have eaten the “golden egg” laying goose, and will be coming to take her furniture.
Atlas has Shrugged.October 31, 2013 at 6:13 am #8935
Cue the Fed. If it can keep the Ponzi alive with the purchase of a Trillion dollars of MBS and other like paper per year, it can certainly “afford” a Trillion dollars in Muni Bond “purchases.” (Buy it and Burn it is the reality)
It will be most interesting when all this comes down to bailing out California, and it’s plush high five, and six digit public pensions. That’s where I figure the buck stops.
CA is 13-14% of the nations GDP, and a whole lot of what’s for dinner across the land, and much wine with which to wash it down. Not to mention it’s massive Defense Contracting Industry. Definitely, at least in the minds of Financial Alchemists and Spendthrift Politicians, TOO big to fail?
Maybe California is on a “High Speed Rail” directly onto the Fed’s balance sheet, with some estimates of Unfunded Liabilities of $640 Billion? Might make Detroit seem trivial when the time comes, since it’s shortfall wouldn’t make the interest payments on that.
Meanwhile, in case I haven’t mentioned it here, a fun read from 1849, https://www.classicreader.com/book/2026/1/
And we know how that ended… eventually.October 31, 2013 at 10:06 am #8937
The mess we find ourselves in with these pensions is beyond my comprehension to think of any solution.
I have been trying to figure out how the municipal bond market can be so strong after this plain to see Detroit horror story, and of course the obvious forthcoming California debacle.
It is as if the world has gone completely mad and the obvious is just ignored by everyone who is not immediately affected. How can a sane person by municipal bonds?October 31, 2013 at 3:34 pm #8941
If we substitute the ability to print versus the ability to tax, we abandon our exclusive status of our full faith and credit.
It is the taxes that serve as collateral for loans, for example.
Anyone can print money. Only those worthy of full faith and credit status have a significant percentage of taxes to back their interest, and don’t forget, their loan principal.
Don LevitOctober 31, 2013 at 6:07 pm #8942
An amazing item about the Detroit city pensions is the strange way they were managed:
Currently about 12,000 retirees, drawing an average of $19,200. (so about 228 million) But the trustees were just giving away an additional 100 million per year to the retirees, not based on any law or mathematical reality.
I think I know what the answer would be if I told Fidelity that I was running short and could they please give me an end of year bonus.October 31, 2013 at 11:26 pm #8944
Sorry I don’t have a link, but it is my understanding that the State of Michigan has one of the most public pension friendly constitutional protections in the nation.
If we see the .16 sent solution in Detroit, we’ll see this sort of decimation every where.
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