13 October 2010

Who Said You Could Get Up? Bend Over!

If public employees retire at age 50 on a millionaire's income, you'll just have to pay more taxes, and work a few years longer to pay for it. You didn't actually believe that they were working for YOU, did you?
Many of the largest U.S. municipalities are understating the true size of their pension obligations by using inappropriate accounting methods, leading to $574 billion of unfunded pension liabilities, according to a study released Tuesday.

Those unfunded pension benefits are in addition to $3 trillion of unfunded liabilities that the study's authors have said exist among state pension plans. _WSJ

The only real choices you have are to either go expat, or go Galt. Otherwise, you're going to be paying for these people's sea cruises, motor homes, and summer cabins for the rest of your lives.
The result is a growing wave of pension shortfalls that threatens to wash over many local governments in the near future, the report said. The authors calculated that each household in the 50 cities and counties they studied owes an average of $14,165 to current and past government employees for their pensions.

The report says that five major cities -- Boston, Chicago, Cincinnati, Jacksonville and St. Paul -- have pension assets that can pay for promised benefits only through 2020.

Philadelphia, for example, has assets on hand that can only pay pension promises through 2015, the report says. But that assertion is disputed by some Philadelphia pension officials. _WaPo
Municipal bondholders are watching these developments closely (PDF), in the hope that they will not get burned by cities in the same way that Obama burned the auto company bondholders.

The US Democrat Party has been in bed with labour unions since forever. The relationship between the US DP and public sector unions is particularly close, and will only grow stronger as the pension crisis forces the unions to call in their markers. This will result in DP politicians losing more battleground elections, although most of the big city precincts are DP dominated (and bleeding cash).

Keep a close eye on Pension Tsunami for the latest developments.

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4 Comments:

Blogger CarlBrannen said...

It's worse than that. In order to have a nice television, you have to have someone who builds it, designs it, moves it, sells it, etc. The government didn't help with any of that. So the concept that we're going to have a high living standard with a huge government is doubly ridiculous.

Wednesday, 13 October, 2010  
OpenID snakeoilbaron said...

This may not end well but I hope it at least ends.

As for going expat - there is an even better solution being proposed to the Israelis or Israelites or whatever. It involves some of the technologies mentioned on this blog. Going under the sea:
UNDER THE SEA

I would have thought Jews would have been safer in space but anywhere the rest of humanity needs to learn science and technology to get to is probably fairly safe.

Thursday, 14 October, 2010  
Blogger PRCalDude said...

It's like this: the Baby Boomers are either going to retire in the next 5 years or start dropping dead on the job. The mean life expectancy in the US is only 76 years and it may actually be lower for the Boomers given their obesity. The Boomers represent a huge source of tax revenue and if they're not earning money, they aren't a source of taxes.

Secondly, the offspring of the boomers are making much less and are 30-40% unemployed through the first (going on second) productive decades of their careers, if any.

Add in wage deflation and off-shoring and "going galt" or "going expat" might not even be necessary.

The key is to get yourself into a lower tax bracket where you can actually start collecting subsidies from the government if you need to. Just think of it as taking money out of a system that you've already put money into. Why shouldn't you and your own family benefit in some way from the taxes you've already paid?

When my wife got pregnant and quit her job, she didn't want to file a maternity leave form with the state because she didn't want to be "dishonest" or "a leach" or some-such nonsense. I asked her how much she paid in taxes to the state over the past 3 years and how much they took out for SDI. Once she did the math, she went right down and filed and was awarded money.

That fact softened the blow from our latest tax audit.

The moral of the story is: consume less, live on less, and apply for subsidies for which you are qualified.

Thursday, 14 October, 2010  
Blogger gtg723y said...

PRCalDude: The real moral of the story is that the government should only do what the constitution has relegated to it. The defense of our borders, the maintenance of the Navy, note that the only standing military was supposed to be off shore, settle disputes between the states, and maintain post roads, what we now call the interstate. That is all they are supposed to do, if you and the people in your state want to be a bunch of little socialists, that's fine but keep it in your state. Also when your little socialist state goes bankrupt, don't come crying to my state for a bailout.

the next question is what do we do about all the bankrupt states? Because what will happen is that all the little socialists that crashed the state they are currently in will move out in to the non-socialist states and start voting, making those states socialist and then crashing them. So to keep the little socialists contained a bailout is necessary, the punishment should be that any state that accepts money from the many states losses it representation in congress and its electoral votes until that money and its interest is paid back. That would require an amendment however and will not happen until Obama is out.

Tuesday, 19 October, 2010  

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“During times of universal deceit, telling the truth becomes a revolutionary act” _George Orwell

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