The
fact that some municipalities such as Detroit are declaring bankruptcy, and
many states do not have the luxury of printing money like the Federal
Government and are in danger of defaulting on their bonds made this recent communication from the
Oxford Club pertinent.
For
many of us, it's our worst financial nightmare. Yet, it's become an
all-too-common reality. Due to somebody else's foolish choices, countless
Americans are getting blindsided by pension cuts.
Promises are being broken. And retirements are going up in smoke.
Take the news out of Illinois on Tuesday.
The state faces an unfunded pension liability of a whopping $100 billion. With that much money in arrears, Illinois can no longer make good on its promise to teachers, state employees and university workers.
But thanks to a highly controversial law that just spun out of the state's legislature, the liability figure could soon be cut by 20%... slashing the benefits of nearly half a million current and retired public-sector workers.
Although, the measure is technically law, its fate is far from clear. There's no doubt a fierce court battle lies ahead.
We Are One Illinois, a coalition of the state's labor unions, called the law "unfair" and "unconstitutional."
A line from its official statement caught our attention:
Promises are being broken. And retirements are going up in smoke.
Take the news out of Illinois on Tuesday.
The state faces an unfunded pension liability of a whopping $100 billion. With that much money in arrears, Illinois can no longer make good on its promise to teachers, state employees and university workers.
But thanks to a highly controversial law that just spun out of the state's legislature, the liability figure could soon be cut by 20%... slashing the benefits of nearly half a million current and retired public-sector workers.
Although, the measure is technically law, its fate is far from clear. There's no doubt a fierce court battle lies ahead.
We Are One Illinois, a coalition of the state's labor unions, called the law "unfair" and "unconstitutional."
A line from its official statement caught our attention:
Teachers, caregivers, police, and others stand to lose huge
portions of their life savings because politicians chose to threaten their
retirement security, rather than pass a much fairer, legal, negotiated solution
in Senate Bill 2404.
It sounds simple, if not cliché. The unions blame politicians for making poor decisions. The unions claim to be the victim. Nothing new there.
But nobody is a victim here. In fact, they're all guilty. Everybody involved deserves blame... a lot of it.
- The politicians deserve a strike for not adequately funding the pension.
- The unions deserve a strike for not compromising long ago.
- The workers, dare we say it, deserve a strike for not taking control of their own fate.
To leave your financial future in the hands of politicians
is, well... Do we need to even finish the sentence?
In 2012 Stockton Cal a city of 300,000 entered Chapter 9
bankruptcy. This week it announced a plan to exit from that condition. This is
part of the plan” Although Stockton
pledged to keep up all payments to its employee pensions, retirees will lose a
subsidy for their health insurance under a settlement announced earlier this
year. In June, Stockton said it would give retirees $5.1 million in exchange
for canceling that benefit, or about 1 percent of $538 million that retirees
may have been owed.”(Huffington Post)
Perhaps there is a lesson that may be of value to
Plainfield.
Doc -- I think the country, as well as the world, is in for a huge financial correction.
ReplyDeleteNo country, city, county or state can own up to its promises to retirees. If these governments go bankrupt, they can default on their bonds.
Most retirees portfolios (the few that have them) are weighed towards bonds, because they are considered safe.
Nothing is safe right now.
Many are investing in real estate. That is causing our current bubble -- which is now higher than 2008.
The Fed is manipulating the economy, desperately (and successfully so far) keeping the stock market up, bank balance sheets looking good, the Fed buying toxic "assets", trying to keep things LOOKING like the economy is growing.
It's isn't growing. Those of us in the trenches know the reality. Everything basic is going up. Health care costs are about to skyrocket. Taxes are up. Companies will cut back due to Obamacare, or do more outsourcing, or hire more consultants.
The more the government controls, the more it manipulates. But they can't gloss over the fundamentals forever - eventually the piper will have to be paid.
Our politicians do not have the agenda, or I think the background or knowledge, to make the hard decisions that are needed. They want to please everyone -- and you just can't.
It takes a long time for a large system to unravel. I believe since 2008 we have seen the start up it.
We as citizens need to wake up and elect people who will make the hard decisions that will please no one. People are going to lose -- no matter what choices are made.
I personally believe social security, medicare, and welfare programs will be affected with cut backs of benefits. Taxes will raise further, to vainly pay off the debts accrued, which means property values will go down. Eventually the government will have to cut back services, and raise taxes to cover our debt payments.
I don't think we'll see an apocalypse, but a slow gradual decline of freedoms, standard of living and opportunity. The barriers to start a small business, the backbone of the country's economy, are high.
I think more and more we will become a country with have and have not, as the middle class is destroyed.
Both parties are serving any group with big money, and neither party I believe are making the best choices for we, the people. I blame both parties for bad choices and pandering to specialized agendas. Neither party wants to solve the hard problems, and just blame each other.
That all being said, I believe the US is the most stable financially on the planet -- and that's what's scary.
Doc,
ReplyDeleteI hate to say it, but it is our own fault.
Look at Plainfield and who runs the city. Why, because less than 20% of those who can vote do. So the same old people, who want power, and not what is good for Plainfield, stay in power and keep the city the way it is.
It is like the people are saying "OK, Plainfield is a dump - but it is OUR dump, and we will keep it that way".
How many people vote in the state elections - we have the highest property taxes in the nation, and the people who put that in place are still running the show.
How many people vote in the National election? Again, same people who caused this mess are still there, because people throw up their hands and say "What can I do?" Well, keep doing nothing, and this is what you get.
Hate to say it, but it is our own fault.