Dig this post where Mish goes through a bunch of stories about state and local pension funds that are imploding. Here's a sample.
The Fort Worth Employees’ Retirement Fund — the pension fund for city employees — has taken an enormous hit from the stock-market collapse.There's a great site, PensionWatch, devoted to tracking the implosion of these funds.
As of Nov. 30, the fund had fallen to approximately $1.29 billion, a drop of nearly 35 percent from its peak of nearly $1.99 billion in October 2007.
City taxpayers should be concerned about potential long-term implications. The pension fund has already required a sizable increase in support from taxpayers to shore it up. The more dollars that are pumped into it, the greater are the chances that the City Council will have to compensate by raising the property tax rate or reduce services.
This crisis is huge and will cause many states, counties and cities to declare bankruptcy. It is not subject to solution through a stimulus package. It cannot be stopped short of printing money like the Weimar Republic. It cuts across party lines.
We were not willing to earn what we received. Electing Obama or John McCain wasn't going to change that.
In the end, this behavior is self-correcting. We'll figure this out that hard way, whether we end up in some socialist train wreck a few years from now as the State tries to cover all the bills or if we embark on an austerity program starting today at 1PM.
You have to pay your bills. You cannot escape it. You have to pay your bills.
1 comment:
I see three problems with pension funds:
(1) We need them so badly In no small part, the deliberate, well thought out dismantling of the extended family in the United States has elevated the urgency to be able to make it "on your own" at the stage of adult life in which one is most vulnerable. My great-grandparents never had to worry about pension plans.
(2) Demographics The deadly combination of the "baby boom" (which was a "boom" only in comparison to the fertility of the Great Depression and war years) and subsequent declining fertility rates directly related to (1) and the rantings of the population Cassandras have set up defined benefit "pay-as-you-go" plans (e.g., Social Security) for bankruptcy.
(3) Public sector unions The unionization of public sector employees is nothing more than a scam to shake down taxpayers. If elected and appointed public servants are heartless Simon Legrees bearing whips and cudgels, as the unions like to paint corporate management, then why not elect different people? As much as I admire and respect police and firefighters, there is no reason they should be retiring at 50 at 90% salary.
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