Category Archives: Pensions

Why Los Angeles Is In Trouble – Average Pay For 20,000 Highly Compensated City Employees Nears $150,000, by Adam Andrzejewski

Any government that pays tree trimmers 200 grand deserves to go bankrupt, and the voters who voted for the clowns signing the checks deserve their misery. From Adam Andrzejewski at forbes.com:

The Los Angeles area comprises the Hollywood movie studios, Beverly Hills, Muscle Beach, and a previously booming economy that trailed only New York City and Tokyo.

The city is also home to powerful politicians such as U.S. Rep. Adam Schiff, Chairman of House Judiciary Committee; U.S. Rep. Maxine Waters, Chief Deputy Whip; and Mayor Eric Garcetti, the National Co-Chairman of Biden for President.

However, LA itself is in trouble. Whenever we open the books, the city consistently ranks among the worst tax and spend offenders.

Last year, there were 20,000 highly compensated city employees whose average pay exceeded $147,000 and cost taxpayers $3 billion. All of them made more than $100,000 and nearly 2,000 out-earned California Governor Gavin Newsom ($202,000).

Our auditors at OpenTheBooks.com found painters making $113,943; “tree surgeons” trimming $207,058; police officers with an arresting $325,942; legislative analysts earning $399,631; firefighters hosing down $486,674; and “harbor boat pilots” swimming in $515,000.

Mayor’s Office – Mayor Garcetti cost taxpayers $269,375 in salary – $67,000 more than Gov. Newsom. Seven “deputy mayors” earned $1.44 million with individual salaries each exceeding $200,000. Chief of staff, Ann Guerrero, made $232,205– compensation out earning the mayor of Chicago ($216,000).

Garcetti has an executive staff larger than 48 of the 50 state governors. The mayor employed 261 people last year for $20+ million in salary cost.

While permanent staff enjoy handsome salaries, Garcetti also relies on unpaid labor. Although intern positions are available in dozens of departments working on issues such as homelessness, sustainability, and immigration, those internships are not compensated.

Continue reading→

The Disappearing Retirement Fund, by Jeff Thomas

You just never know when a cash-strapped government might dip into your retirement fund. From Jeff Thomas at internationalman.com:

retirement fund

As a general principle, I’ve always tended to avoid entrusting others with my money. I’ve avoided funds, as they are often based upon investments that are peaking or close to peaking. I’ve avoided pension funds, as they’re often structured in a similar manner.

And whenever by law I’ve been required to be invested in such funds, they’ve rarely been successful over the long term. In the end, I would invariably have made more money by pursuing those investments that had great promise but at the time were unpopular (and therefore underpriced).

As dubious as I tend to be of conventional investment schemes (and those who broker them), I am doubly dubious of any government-run scheme. Governments, historically, have proved to be poor money managers, and politicians tend to place more value on big promises that garner votes than on delivering on those promises.

And so, I’m predictably biased as to the likelihood of any form of fund that any government may be involved in. Even if it’s structured well, which it may well not be, governments, if they have the power to do so, will tap into the fund, draining it of the intended recipient’s contributions, leaving the fund exposed, should a crisis occur.

Continue reading→

The Social Security Shell Game, by Dennis Miller

Social Security is flush with its one asset—the federal government’s debt! From Dennis Miller at theburningplatform.com:

Shell game with three cups - The Social Security Shell GameA friend sent me the recent announcement about the Social Security Cost-of-Living Adjustment (COLA) for 2021.

“Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase 1.3 percent in 2021.

The 1.3 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2021.”

Brian Anderson tells us, “The average Social Security benefit was $1,503 per month in January 2020.”

The average recipient is going to get a $19.54/month COLA increase. I sarcastically responded with “whoopee!”

They make a great fanfare out of telling recipients about their increases.

COLA Social Security Chart

Since January 2010, COLA increases have averaged 1.375%.

As a 15-year Social Security recipient, I know in December they send out the notification about how much you will receive the following month. Most, if not all, of the increase is taken back with increases in Medicare Premiums.

Brian Anderson continues:

“Social Security benefits have lost 33% of buying power since 2000. TSCL’s (The Senior Citizens League) analysis found that, over a 10-year period, average Social Security benefits of $1,075 per month in 2009 lost a total of $15,258 in financial growth from 2010 to 2019 when compared to the previous decade when COLAs averaged 3%.”

Why don’t benefits keep up?

Continue reading→

Will Georgia Halt the Radicals’ Revolution? by Patrick J. Buchanan

Perhaps overlooked in the controversy over the presidential election is the importance of Georgia’s two run-off races for the Senate. From Patrick J. Buchanan at buchanan.org:

“In victory, magnanimity… in defeat, defiance.”

That counsel about human conflict comes from Winston Churchill.

And President Donald Trump, given all he has endured for five years from those piously pleading now for a “time of healing,” cannot be faulted for his defiant resolve to unearth any and all high crimes or misdemeanors committed in the counting of ballots in the election of Tuesday last.

Trump owes his people this, and he owes the establishment nothing.

Yet, in making this his priority, Trump should be mindful of several realities. From what we have seen so far, the prospect that the decision in the battleground states of Wisconsin, Michigan, Pennsylvania, Nevada, Arizona or Georgia will be overturned does not appear high.

Indeed, it seems a certainty that not enough electoral votes could be flipped from Biden to Trump to overturn Joe Biden’s electoral vote victory.

And Trump should realize that in alleging fraud, he is creating an imperative upon himself and his team to provide the evidence to prove it.

In politics as in poker, there comes a time when you have to show your cards or fold your hand. Are the cards there?

Continue reading→

This Is How A State Goes Bankrupt, Illinois Edition, by John Rubino

Politicians have been buying votes with pension promises to government employees for decades. Now, in Illinois and other states, the bill is coming due. From John Rubino at dollarcollapse.com:

Somewhere back in the depths of the 20th century, a bunch of governors, mayors, and public sector union leaders got together and cooked up one of history’s greatest financial scams. They would offer teachers, cops, and firefighters extremely generous pensions but would avoid raising taxes to fund the resulting future obligations. Grateful workers would vote to re-elect their benefactors, while taxpayers would appreciate the combination of excellent public services and low taxes.

The beauty of the scheme flowed from its demographics: Most of the original public sector workers were young and therefore decades away from retirement, so the crime wouldn’t be discovered until long after the architects retired rich and revered.

Now, however, those baby boomer workers are retiring and the scam is revealed for all to see. Even in the absence of a pandemic lockdown, mass defaults on state and city obligations would be inevitable in the coming decade. But with the lockdown, they’re coming next year.

So what do the worst offenders do? What they’ve always done, of course, which is to look for ways to paper over the mess for one more election cycle. Illinois is the poster child for state financial mismanagement, with unfunded liabilities that have grown from virtually nothing to $137 billion in just the past two decades.

Continue reading→

 

California’s Real Wildfire, by MN Gordon

California’s public pension are burning forest fire-size holes in California’s budgets. From MN Gordon at economicprism.com:

Hot dry winds have returned to the land of fruits and nuts.  After baking away all summer long in the blistering sun, the dense sage and chaparral covering the coastal hillsides and canyons and the inland mountain forests are dry and toasty.  Vegetated areas are a giant tinderbox.

What happens next is as predictable as night follows day.  Just one spark – from a downed powerline or a backfiring semi-truck – and the whole thing conflagrates into a blistering windblown wildfire.  The Golden State goes up in smoke.  The sky turns to an orange haze; the sunsets are magnificent.  And ash sprinkles down and coats the pavement with residue.

Of course, this happens every year.  And every year is the worst year ever.  The fires rage until the mild winter weather arrives.  Then everyone seemingly forgets the fires ever happened…until the mudslides.

Indeed, California is a whacky and wild place.  The Governor’s an absolute loon who fancies himself a leading presidential candidate for the 2024 election.  State and local governments are largely socialist.  The general populace generally wants first rate infrastructure, at a second rate price.  And nearly half of all U.S.’s homeless people live here.

Yet the real story with California.  The story only geeks and dweebs will tell.  Is a story of its state and local governments.  It’s a story that’s also being written in a state or city near you.  The story has nothing to do with wildfires, per se.  But it does have to do with conflagration.

This is the story of an army of public servants.  And the promise of retirements that are unaffordable.  More so than the wildfires ravaging the state are the wildfires ravaging the big pension fund.  This is the story of grand promises that must be broken.  And the painful level setting that comes with it.

Where to begin?

Continue reading→

New Jersey Is Becoming The Most Hated State As Households Flee In Record Numbers, by Tyler Durden

New Jersey politicians keep raising taxes as New Jersey residents keeping leaving the state and the politicians profess to see no connection between the two. From Tyler Durden at zerohedge.com:

A new tax on millionaires, a 22.5% gas tax hike  (bringing the total increase to 250% in 4 years), and now a tax on high frequency trades: it is becoming obvious to most – except perhaps the state’s democratic leadership – that New Jersey is now actively trying to drive out its tax-paying population and top businesses with a series of draconian measures to balance its deeply underwater budget, instead of slashing spending. The state-imposed limitations on commerce, mobility and socialization due to the covid pandemic have also not helped. And in case it is still unclear, the trend of New Jersey’s ultra wealthy residents fleeing for more hospitable tax domiciles which started with David Tepper years ago, is now spreading to members of the middle class.

According to the latest data from United Van Lines and compiled by Bloomberg, people have been flooding into Vermont, Idaho, Oregon and South Carolina, eager to flee such financially-challenged, high-tax, protest-swept, Democrat-controlled states as Connecticut, Illinois and New York. But no other state has seen a greater exodus than New Jersey, where out of every 10 moves, 7 have been households leaving the state, or nearly three times as many moved out than moved in.

On the opposite end were bucolic, pastoral states such as Vermont and Idaho, which have seen between 70% and 75% of all inbound moves.

Continue reading→

 

Central Banks Bailed Out Markets To Avoid Trillions In Pension Losses, by Tyler Durden

The last thing that the world’s many underfunded pensions need is bear markets in either stocks or bonds. Can central banks save their bacon? From Tyler Durden at zerohedge.com:

The Organization for Economic Co-operation and Development (OECD) recently published a report showing how pension funds in OECD countries recorded a massive loss of approximately $2.5 trillion during the stock market meltdown in February through late March. Shortly, after that, central banks intervened with monetary cannons to rescue stock markets and other financial assets to avoid pension returns from going negative.

The spread of COVID-19 worldwide and its knock-on effects on financial markets during the first quarter of 2020 are likely to have reversed some of these gains. Early estimates suggest that pension fund assets at the end of Q1 2020 could have dropped to USD 29.8 trillion, down 8% compared to end-2019 [or about a $2.5 trillion loss].

The drop in pension fund assets is forecast to stem from the decline in equity markets in the first quarter of 2020. Returns, inclusive of dividends and price appreciation, were negative on the MSCI World Index in the first quarter of 2020 (-20%), and between -11% and -24% on the MSCI Index for Australia, Canada, Japan, the Netherlands, Switzerland, the United Kingdom, the United States.

An increase in the price of government bonds that pension funds own could partly offset some of the losses that pension funds experienced on equity markets in Q1 2020. Some Central Banks, such as the Federal Reserve in the United States, cut interest rates in 2020 to support the economy. The fall in interest rates may lead to an increase in the price of government bonds in the portfolios of pension funds as the yields of newly issued bonds decline. – OECD

Bloomberg’s Lisa Abramowicz pointed out in a tweet, “this report [referring to the OECD report] shows the massiveness of pension assets & points to why central banks are tethered to bailing out markets: social infrastructures depend on their not going down too much.”

Continue reading→

Why Is No One Mentioning Unions? by Paul Rosenberg

Public sector unions have a lot of municipal governments by the balls. That may change as their pensions go bust. From Paul Rosenberg at theburningplatform.com:

I try to avoid all things political, but the recent mayhem required me to give it some attention. And I couldn’t help noticing that almost no one is addressing a fundamental factor in most of it: The unions.

Whether we like or dislike unions (I have mixed experiences, as I suppose most people do), they are a major factor in our recent events, and bear some attention. And so I’ll get the ball rolling.

The Police Unions

A few people have mentioned police unions following the sadistic murder of George Floyd, but let’s be clear on this: All the cops who kill people then get their jobs back are so privileged because of their unions. (And this, by the way, is actual privilege.)

Welcome To The Third World, Part 31: California Makes Its Case For A Bailout, by John Rubino

California lawmakers are trying to make it look like they’re cutting expenses so they can run to Washington for a bailout. However, they’re not touching the biggest expense—state pensions—which tells you all you need to know about the sincerity of their effort. From John Rubino at dollarcollapse.com:

Just a few months ago, California was running surpluses and spreading the wealth around — at least to its affluent voters and public sector employees — as if the good times were here to stay.

Fast forward to the present and it’s all over. Tech stock IPOs – a huge source of capital gains tax revenue for the home of Silicon Valley – have evaporated. Those “unicorn” companies – not yet public but worth over a billion dollars each – are doing “down rounds” that value them as the risky start-ups most of them are. The formerly booming housing market has ground to a halt. And thousands of service industry businesses like restaurants and nightclubs have closed permanently.

But the state government still has to pretend to balance its books, so now comes the tragicomedy of negotiations between the governor and state legislators over where to find the needed $50+ billion. Here’s how the Associated Press covers it in an article bafflingly titled California lawmakers agree to close $54.3 billion budget gap:

Continue reading