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Detroit Pensioners Face Miserable 16 Cent On The Dollar Recovery

Tyler Durden's picture


If there is ever a case study about people who built up their reputation and then squandered it for first being right for all the wrong reasons, and then being wrong for the right ones, then Meredith Whitney certainly heads the list of eligible candidates. After "predicting" the great financial crisis back in 2007 by looking at some deteriorating credit trends at Citigroup, a process that many had engaged beforehand and had come to a far more dire -and just as correct - conclusion, Whitney rose to stardom for merely regurgitating a well-known meme, however since her trumpeted call was the one closest to the Lehman-Day event when it all came crashing down, it afforded her a 5 year very lucrative stint as an advisor. Said stint has now been shuttered.

The main reason for the shuttering, of course, is that in 2010 she also called an imminent "muni" cataclysm, staking her reputation once again not only on what is fundamentally obvious, but locking in a time frame: 2011. Alas, this time her "timing" luck ran out and her call was dead wrong, leading people to question her abilities, and ultimately to give up on her "advisory" services altogether. Which in some ways is a shame because Whitney was and is quite correct about the municipal default tidal wave, as Detroit and ever more municipalities have shown, and the only question is the timing.

However, as Citi's Matt King recent showed, when it comes to stepwise, quantum leap repricings of widely held credits, the revelation is usually a very painful, sudden and very dramatic one. This can be seen nowhere better than in the default of Lehman brothers, where while the firm's equity was slow to admit defeat it was nothing in comparison to the abject case study in denial that the Lehman bonds put in. However, as can be seen in the chart below, when it finally came, and when bondholders realized they are screwed the morning of Monday, Septembr 15 when the Lehman bankruptcy filing was fact, the move from 80 cents on the dollar to under 10 cents took place in a heartbeat.

It is the same kind of violent and anguished repricing that all unsecrued creditors in the coming wave of heretofore "denialed" municipal bankruptcy filings will have to undergo. Starting with Detroit, where as Reuters reports, the recovery to pensioners, retirees and all other unsecured creditors will be.... 16 cents on the dollar!...  or less than what Greek bondholders got in the country's latest (and certainly not final) bankruptcy.

From Reuters:

On Friday, city financial consultant Kenneth Buckfire said he did not have to recommend to Orr that pensions for the city's retirees be cut as a way to help Detroit navigate through debts and liabilities that total $18.5 billion.


Buckfire said it was clear that the city did not have the funds to pay the unsecured pension payouts without cutting them.


"It was a function of the mathematics," said Buckfire, who said he did not think it was necessary for him or anyone else to recommend pension cuts to Orr.


"Are you saying it was so self-evident that no one had to say it?" asked Claude Montgomery, attorney for a committee of retirees that was created by Rhodes.


"Yes," Buckfire answered. 


Buckfire, a Detroit native and investment banker with restructuring experience, later told the court the city plans to pay unsecured creditors, including the city's pensioners, 16 cents on the dollar. There are about 23,500 city retirees.

One wonders by how many cents on the dollar the recovery to pensioners would increase if the New York-based Miller Buckfire were to cut their advisory fee, but that is not the point of this post (it will be of a subsequent).

What is the point, is that creditors across all products, aided and abetted by the greatest credit bubble of all time blown by Benny and the Inkjets, will find the kind of violent repricings that Lehman showed take place whenever hope dies, increasingly more prevalent. And since retirees and pensioners are ultimately creditors, this is perhaps the fastest, if certainly most brutal way, to make sure that the United Welfare States of America is finally on a path of sustainability.

The only question is how will those same retirees who have just undergone an 84 cent haircut, take it. One hopes: peacefully. Because among those whose incentive to work effectively has just been cut to zero, is also the local police force. In which case if hope once again fails, it is perhaps better not to contemplate the consequences. For both Meredith Whitney, who will eventually be proven right, and for everyone else.


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Sun, 10/27/2013 - 11:19 | 4095067 LetThemEatRand
LetThemEatRand's picture

This is the plan, for both public and private pensions.  Detroit is just the beginning.  It's how every Ponzi scheme ends.  At some point the operator of the Ponzi -- who enjoyed spending the money as it came in -- reaches the point where he/it just can't get enough new money in to pay the old investors, and then there's the "oh shit" moment where you hope to get 16 cents on the dollar back.  

Sun, 10/27/2013 - 11:22 | 4095074 fonzannoon
fonzannoon's picture

I speak to several NYC pensioner's. They have no reaction to this. It can't happen here. I find it so interesting. I told one of them that the rest of the pensioner's should be crashing the white house front door about this. The whole "first they came for" quote means nothing to these people. I would have thought the Unions would have come together bigtime. Fk em. Too fat and happy by me. 

Sun, 10/27/2013 - 11:27 | 4095079 kaiserhoff
kaiserhoff's picture

Federal employees should get less, much less.

Sun, 10/27/2013 - 11:34 | 4095098 philosophers bone
philosophers bone's picture

Plans and intentions don't matter.  This is cold, hard reality. 

Sun, 10/27/2013 - 12:13 | 4095184 CPL
CPL's picture

Lucky it's not zero, but 16% of the asset value and an inflation rate eating that ass up.

It's going to be pretty awful for people.  If anyone has family relying on those pensions, make some room, Mum and Dad are moving home.

Sun, 10/27/2013 - 12:37 | 4095218 Antifaschistische
Antifaschistische's picture

but, but, if you include the cost of living (including housing) in Detroit, where you can buy a home for 10k...perhaps 16% isn't too bad.   You can't buy a home in 77024 for 10k.

You can probably pick up the lot next to you for 5k....make a garden, and be completely self supporting.   boom.  problem fixed.

Sun, 10/27/2013 - 12:40 | 4095228 fourchan
fourchan's picture

lol the banks were done months ago and got a 75 cents on the dollar those jews.

Sun, 10/27/2013 - 13:06 | 4095282 negative rates
negative rates's picture

And just a week short of the full moon too, go figure.

Sun, 10/27/2013 - 13:35 | 4095359 Paveway IV
Paveway IV's picture

I would be worried about Devil's Night this year, too. Except they buldozed most of empty crack houses. The large swaths of barren inner-city land provide an adequate firebreak. Millions of Detroit 'benefit refugees' have emigrated to more lucrative states.

Who needs drones and a state Stazi? Public financing weapons of mass destruction take a little longer than carpet bombing, but are even better at laying waste to an entire city. 

Mission: Accomplished

Sun, 10/27/2013 - 14:29 | 4095505 TheRedScourge
TheRedScourge's picture

The sad thing is that this will undoubtedly be spun as a consequence of capitalism, because it was people in finance who told them they'd only get 16 cents on the dollar back, and they'll try even more socialism, and get even worse results. Tens of millions of Chinese starved to death or were killed as a result of communism, do we really think we're so much smarter or faster learners than the Chinese? No, we've acquired boatloads of "can't happen here" mentality over the last 200 years of prosperity that people living 300 years ago were so kind to hand to us, along with the flawed idea that if they just chain down the government and then give every voter a key it will somehow stay in those chains.

Sun, 10/27/2013 - 14:40 | 4095532 James_Cole
James_Cole's picture

The only question is how will those same retirees who have just undergone an 84 cent haircut, take it. One hopes: peacefully.

Hopefully Detroit will eventually go the Richmond route and get people representing them who actually look out for the people, not the banks bribing them. 

The game is pretty clear all over the country, steal from retirement accounts and then have elected officials talk about 'hard choices.' It's also been the same game with social security since the 80s, I hear there's 'hard choices' needed for that too, go figure. 

Sun, 10/27/2013 - 15:39 | 4095649 gatorengineer
gatorengineer's picture

no one is taking an 84 percent hair cut.  Pension benefit guarantee corp.  Haircut will be on the order of 30%, and now guaranteed until the uSSA goes under.

Sun, 10/27/2013 - 15:52 | 4095674 0b1knob
0b1knob's picture

Doesn't the Pension benefit guarantee corp. cap pension payouts at something like $25000 per year?    The haircut will be proportional to the pension.   The people getting the biggest pensions get scalped.

Sun, 10/27/2013 - 18:05 | 4095948 gatorengineer
gatorengineer's picture

caps at roughly 170k a year....14k per month....  just google it



Thats an extreme case.  But do you really think the unions would put up with such a haircut.... Come on guys


Sun, 10/27/2013 - 18:14 | 4095970 SWRichmond
SWRichmond's picture

retirement and pensions are features of the middle class.  the working middle class is dead.  so does some part of this surprise us?

Sun, 10/27/2013 - 19:40 | 4096168 The Alarmist
The Alarmist's picture

Don't kid yourselves ... Detroit pensioners will take no haircut at all.  Nobody will lose in the new normal until the society as a whole collapses, at which point all bets are off.

Mon, 10/28/2013 - 01:32 | 4096793 patb
patb's picture

Detroit wasn't paying PBGC premiums.

Their guarantor is assumed to be the state of michigan, they will get very little help there.


i'd give more to the pensioners who agree to live full time in the city.


Sun, 10/27/2013 - 18:48 | 4096048 kaiserhoff
kaiserhoff's picture

Some of their benefits forced them to opt out of that long ago.

Big mistake in hind site.


Mon, 10/28/2013 - 00:17 | 4096743 TruthInSunshine
TruthInSunshine's picture

This is necessary because of a fractional reserve paper fiat economic system, where fiat debt is conjured from thin air at zero cost basis, and bankers not only control the ebb & flow of bubbles & busts of all things, including municipal pensions & the size of municipal debt, but intentionally induce said bubbles and busts, so that the fiat banker/lender class is able to Harvest the real wealth of any fiat indebted population or entity for itself.

There are 23,000,000 government employees at the federal, state & local levels (that we know of; this doesn't include "contractors," either), many of whom have worked one or more government jobs previously, and are "double stacked" (collecting pension from prior government job while drawing salary from current government job, which is more common than many "private citizen plebes" would believe).


Average salaries for state & local government employees runs closer to $60,000, though the range is very wide.

Nearly all government employees are unionized and receive generous pre and post-retirement fringe benefits.

Does anyone know how many of these 23,000,000 workers, drawing a collective taxpayer derived salary of 2 trillion+ USD annually, are "essential?"

How about minimally "productive," or "useful?"

They're sucking the republic and all private sector productive members dry - like a massive parasite on a host, threatening to kill the host (literally).

Think about it: In USSA-Amerika (USSA), 1 out of every 5.6 Americans with a job is employed by a federal, state or local unit of government (not including enlisted military personnel or government contractors).

The republic is being bled to death by the fiat bankers/lenders & by the bureaucracy.

American taxpayers should firmly insist that government "rightsize" itself very quickly, which would mean 30% to 45% of government employees (mostly unionized) be let go, the remaining ones become as efficient/productive as private sector workers, and not only would government services ACTUALLY IMPROVE, but the American Taxpayers would save a minimum of 1 trillion USD annually.

Sun, 10/27/2013 - 20:33 | 4096292 mms
mms's picture

PBGC only covers private pensions, not government and not church pensions.  Look it up.  You have to pay annual premiums to be covered by PBGC as well. 

If true, this will be sad indeed.  I have studied the actuarial reports of the Detroit pension funds, and they have a lot more money in their trust funds than $0.16 on the dollar.  But if the pension funds are collapsed into general assets of the city, then indeed they have a big problem.

Sun, 10/27/2013 - 18:57 | 4096062 CrashisOptimistic
CrashisOptimistic's picture

What?  Doesn't the PBGC kick in on this?

If the PBGC kicks in, this isn't 84 cents of haircut.  The US taxpayer is going to pay a good part of these pensions.

Sun, 10/27/2013 - 13:07 | 4095288 Oldwood
Oldwood's picture

What makes anyone think that Obama will not try to federally backstop "union" employees. Wasn't the precedent set with GM? He must suport his base, besides their first goal HAS to be to conceal the damage their policies create.

Sun, 10/27/2013 - 13:41 | 4095377 JLee2027
JLee2027's picture

Sure. But the odds of that passing Congress are pretty low. 

Sun, 10/27/2013 - 13:47 | 4095392 Oldwood
Oldwood's picture

Sorry but I had fell under the illusion that congress no longer has control of the purse given the new expanded powers of the executive office. Do you think Obama cannot direct some signing order or even a fed intervention to supply extended credit of some type? I don't claim to be knowledgeable about such things other that to have witnessed many a thing I thought were illegal and unconstitutional.

Sun, 10/27/2013 - 17:16 | 4095820 Deo vindice
Deo vindice's picture


If you can manipulate the voting machines at election time, who cares about maintaining their base?

Sun, 10/27/2013 - 13:29 | 4095342 CPL
CPL's picture

Naw it's Jews screwing Jews also.  So instead of Jew, why not just state Dirtbags.  Everyone is getting screwed and allows for the exclusion of any particular race, creed, culture, religion.  But it still leaves lots of room for calling them by their proper name;

Math Illiterate Useless Skinflint Smegma filled Dirtbag Pieces of Shit...and that's sugar coating it.

Sun, 10/27/2013 - 15:45 | 4095659 fourchan
fourchan's picture

well i love matzo ball soup and live in the city of detroit, but all i see is a fire sale driven by jewish bankers,

paid for by blacks, old people, and cops/firemen who risked their lives in this shit hole city for decades.

and there is plenty of stuff left here to burn like the 50,000 homes the city owns that are vacant.

Sun, 10/27/2013 - 16:00 | 4095686 CPL
CPL's picture

They might sing their 13th birthday, but they honor nothing of the culture, the history, the myths, the traditions.  They aren't anymore Jewish than Haggis.  They aren't Jews.  Just a name in namesake from a questionable part of history that involved some pretty shady crap.

I bet a revistation on their family tree and examination would illustrate!!...questionable.  <jazz hands>

History has had many pretenders.  When they are found, their treatment is a fate done by Judges and dark holes.

Sun, 10/27/2013 - 18:00 | 4095937 fourchan
fourchan's picture

there are two systems of money in america.

one was developed by freemen and patriots, the other jews. 

guess which one we suffer under now as debt slaves, the the one corrupting the federal government, and

the one which pays obscene bonuses to its developers. they even call it the "system" because it is systematic.

Sun, 10/27/2013 - 16:44 | 4095763 tenpanhandle
tenpanhandle's picture

Sorry CPL but any description with "smegma" in it has not been sugar coated.

Sun, 10/27/2013 - 16:54 | 4095777 El Vaquero
El Vaquero's picture

IMO, dip-donk googley eyed pig-fucking multi-colored cunt scab eating strumpet strangling cocksnorts is worse.  He did sugar coat it. 

Sun, 10/27/2013 - 22:29 | 4096582 MisterMousePotato
MisterMousePotato's picture

Shit. And I just told my 13-year-old daughter to read a couple articles here at ZeroHedge every day so she'd get a good education.

Actually, she probably wouldn't learn to swear like that anywhere else.

Sun, 10/27/2013 - 13:04 | 4095279 Oquities
Oquities's picture

no!  did you see the comment about the police getting screwed on their pensions too?  the Detroit response times for police NOW average 1 hour to infinity for nasty-ass crimes even, and the solved crimes rate is lower than the literacy rate in the city.  you may buy the lot next door for a garden, but you need Mad Max to cover you while picking your veggies.  the end scene is total chaos in inner-cities or municipal bailouts that make Lehman look like chump change.  re-set either way.  happening now.

Sun, 10/27/2013 - 13:54 | 4095420 Cloud9.5
Cloud9.5's picture

We are in the age of contraction.  Neither the current state nor the current currency will survive.  Debt cannot be repaid.  Detroit is the model for the future.  The smart ones got out of the inner city.  The stupid ones and the trapped ones stayed.  As the dominos fall all of us are going to come to realize there is no place to run.


The next twenty or thirty years are going to be dominated by the salvage cult.  Save what you can. Preserve what you can and bring the ones that matter to you close to you.

Sun, 10/27/2013 - 15:47 | 4095663 fourchan
fourchan's picture

well said.

Sun, 10/27/2013 - 19:46 | 4096179 czardas
czardas's picture

No, the reality is that Detroit is not the rest of the country despite all the comparisons.   It is a failed municipality that was run by thugs, criminals and unions (redundant?) for decades.  They didn't educate, sanitize, police, innovate, build or plan.  They lost 2/3 of their population and those remaining lived a day to day existence enabled by federal welfare.

The real problem is not going to be city failure but state failure.   Frugal states (all those worthless flyover areas) will not consent to bailing out their wayward brothers and the fight will move to DC where we'll be told how damn heartless and racist we are for not forking over the money we've stashed to zombies.


Sun, 10/27/2013 - 17:53 | 4095909 Gohn Galt
Gohn Galt's picture

Real Detroiter's don't need Mad Max to cover them while they pick their veggies.  Inspectors and other revenue agents poking their nose in your garden do.  A lot of neighborhoods will ultimately be better off with no government services/intervention once they can take care of themselves.  The whole thing is horrible and is going to bad for everyone and surprising for those who drank the kool-aid, it never was sustainable.  I apologize if I offend anyone on this subject, as I feel will eventually bring some sort of pain to everyone, even those who prepared and knew.

Sun, 10/27/2013 - 18:19 | 4095978 Oldwood
Oldwood's picture

The police probably only respond to calls where someone is shot in self defense.

Sun, 10/27/2013 - 18:48 | 4096049 RafterManFMJ
RafterManFMJ's picture

Police response times? Who cares? Only an imbecile calls the police; and only an imbecile thinks da cops interested and capable of saving them.

Sun, 10/27/2013 - 21:30 | 4096418 Jani
Jani's picture

Good one rafter -

Ran a bar for almost 20 years here on Long Island, not once did I call the cops -- always settled things on our own.

Sun, 10/27/2013 - 13:23 | 4095327 CPL
CPL's picture

If you are young that's an awesome option.  We are talking pensions.  Not young couples.

Home ownership is a pain in the ass btw, it's the primary reason older folks go rent and if they do buy a home it's a small bungalow. 

Lawns, roofs, gutters, driveways, plumbing, electrical...all of it costs time, health and money.  Know what happens when a guy with a hip replacement goes up a ladder?  50/50 he's going to need a new hip.  I catch my Dad doing it all the time when he's feeling chipper.  He can get up the ladder.  But he gets stuck on the coming down part now.  Twice now this summer, can't blame him, he gets an idea in his head...

...There are limits on what can be expected.  So if this is the case, I'd make room and let the kids know Grandma and Grandpa are coming back for a stay to help out.

Sun, 10/27/2013 - 13:31 | 4095350 RSloane
RSloane's picture

There are more and more people in their 20's and 30's moving back in with Grandma and Grandpa rather than the reverse.

Sun, 10/27/2013 - 13:49 | 4095402 Paveway IV
Paveway IV's picture

The grandparents are going to be pissed when DHS commandos stun-grenade their wrinkly butts at 3 A.M. to arrest their grandchildren (student loan deafults, etc.). Who is going to fix the busted in front door or clean up the riot gas residue? 

Cops: "Cry me a damn river grandma, and keep your arthritic hands where I can see 'em.  Your grandkids didn't obey the law and pay their loans on time. They are Default Terrorists. They should have thought about the terms of that loan before blowing taxpayer money on fancy-scmancy post-high-school education. Now they can learn all about responsibility (and waterboarding) in our financial re-education camps. By the way, you're not illegally hiding any gold around here, are you? Mind if we check?"

Sun, 10/27/2013 - 14:43 | 4095506 CPL
CPL's picture

Who's skull fucking their parents?  Seriously.  If they are beating the crap out of someone's Mum, it's a matter of time before someone gets their Mother on a list.

So do you really think it'll ever get that bad?  Doubt it.  It's going to happen once then DHS will be at war with itself.  People don't drop murdering their parents that fast.  Especially when all those names are on a list in a computer and all the DHS employee names and contractor names are already known.  Just takes a little information management to put a name on a list and suddenly a director's mother has been processed under signed by another director.

It is a situation that leaves no doubt in my mind for abuse internally.  In fact I bet right now executives are putting each other's family member names on lists to camps out of their individual overview.  I'd put money on it in fact.

Put yourself in the mind's eye of someone willing to murder and attempting to justify their exsistance.  People outside your organisation aren't your problem to success, they are only a metric.  A number to reach.

It's the people working with you that are the direct threat to your position.  Path of least resistance is to elminate all those around you that question your method in the office.  Everyone lateral to your job posting is your real enemy.

So you pick them off quickly.

I would wipe the floor with every other director and use their families like pawns.  The biggest problem would be people building empires in the office I would want to take over.  So remove the problem to my professional success as a DHS director.  There could only be one rule in that department.  Eventually co-opting the department, then consume the order giver and that person's family.

It's what I would do if I were a director in that position. I would leave no other option but one option. 

Why?  Because I know eventually that someone else would do the same thing, so better me than them.  <--- this is why things are shitty all over now.  It's a rot.

Sun, 10/27/2013 - 17:09 | 4095806 El Vaquero
El Vaquero's picture

Not to mention that you'd get more freaky shit like this:



Carlos Correa, a tire technician at a shop near Broadway and Iron, said he saw a man washing his black Corvette around 11:30 a.m. The man was
approached by the suspect carrying a gun, which is described in varying accounts as an AK-47 and a semiautomatic rifle, and told him something to the effect of, “I’m not going to hurt you, but call APD and tell them I’m waiting at the bus stop.”


Witnesses north of the scene said they saw an officer arrive, step out of his car and begin firing at the suspect before running backward.

Then, they saw the shooter calmly get into the police officer’s empty car and drive away.

“He done it like real calm,” said witness Ernie Olguin. “I thought he was a cop.”


Dude had a tattoo on his back that said "cop killer."

Sun, 10/27/2013 - 17:23 | 4095844 Deo vindice
Deo vindice's picture

If I have to give some site personal info and answer quizzes to read the story, the story will remain unread. I'll just take your word for it that it's true.

Sun, 10/27/2013 - 17:26 | 4095852 El Vaquero
El Vaquero's picture

You just have to take the quiz, no personal info.  If you want to see the press confrence that the police gave on this, you can go here:


Sun, 10/27/2013 - 19:43 | 4096172 zhandax
zhandax's picture

No quizzes for me.  NoScript 2.2.4

Sun, 10/27/2013 - 20:49 | 4096333 401K of Dooom
401K of Dooom's picture

Hooray, someone else who uses NoScript just like meeee!!!

Sun, 10/27/2013 - 18:28 | 4095999 Oldwood
Oldwood's picture

Check out police actions regarding this womoen who failed topay her traffic ticket.

Arrested at her home with handcuffs, taken to jail and strip seached and imprisoned overnight. While I don't condone people not paying their tickets it seems a little over the top. There is little doubt they are doing this to get people's attention, like do as I command or else. I feel like we are living in a police state more every day.

Just last week the cops shot a man standing in the middle of the street with his hands at his side and they claimed he lunged at them with a knife. Unfortunately for the police there was a camera running. They feel like they can do what they want, just like everyone else in government.

Sun, 10/27/2013 - 20:14 | 4096238 Dr. Everett V. Scott
Dr. Everett V. Scott's picture

Check out what happens to a cop when the cop picks on a guy a little too much...

Sun, 10/27/2013 - 13:55 | 4095423 CPL
CPL's picture

What was old is new again. 

Multigenerational households, which run exactly contrary to the control mechanisms dirtbags developed for this whole mess.  Hard to control single individuals like puppets when they are in their strongest and most beneficial community to them as individuals are surrounding them.  Harder taking money from 10 people than 1.  It's also a lot harder pulling the wool over anyone's eyes.


Sun, 10/27/2013 - 16:46 | 4095767 post turtle saver
post turtle saver's picture

grandma and papa got nothing to lose, either... they'll be the ones at the door with the shotguns, Biden style

Sun, 10/27/2013 - 18:33 | 4096008 WillyGroper
WillyGroper's picture

Wasn't it Alexander Solzhenitsyn that said "take everything from a man and you no longer own him"?

Sun, 10/27/2013 - 14:16 | 4095477 Mike in GA
Mike in GA's picture

They're going for less than sales of thousands of properties 3-4 years ago garnered NO bids.  The city will take anything at this point to restore abandoned properties to the tax rolls. 

Sun, 10/27/2013 - 16:23 | 4095727 Flagit
Flagit's picture

fuck, did you SEE the houses for sale?

in the cheap-cheap stack, they were burned out, every last one.

i was using google earth to look at some buildings, warehouse, ect.

with street view, i could see the mold removal company van, with employees in suits, and the makeshift tarp tunnels over the doorway.

i dont know exactly how the google street cam works, but they were cold, busted removing that mold.

"mold? no, there has never been mold here. just sign here!"

naaa, no thanks.

Sun, 10/27/2013 - 18:34 | 4096012 WillyGroper
WillyGroper's picture

In my state the attorneys have a hammer lock on just that. No soup for the prudent.

Sun, 10/27/2013 - 18:42 | 4096024 RafterManFMJ
RafterManFMJ's picture

but, but, if you include the cost of living (including housing) in Detroit, where you can buy a home for 10k...perhaps 16% isn't too bad. You can't buy a home in 77024 for 10k.

You can probably pick up the lot next to you for 5k....make a garden, and be completely self supporting. boom. problem fixed.
AR/AK, Ammo, rifle plates/carrier, razor wire, big angry dog, trip flares, window bars, night vision gear, concrete bunker/safe room...

...I'd say another 15K for the above and you could make a go of it.

Sun, 10/27/2013 - 19:25 | 4096128 MilleniumJane
MilleniumJane's picture

Did anyone see the Kid Rock interview on CNBS last week?

Well worth watching.

Mon, 10/28/2013 - 00:02 | 4096735 Notarocketscientist
Notarocketscientist's picture

Detroit should market itself as a retirement destination.    People could sell their homes in bubble locations and pockets mega bucsk... then pick up a fixer up for 20k

Coming soon to a neighborhood near you!

Sun, 10/27/2013 - 12:56 | 4095254 TeamDepends
TeamDepends's picture

16 out of 100 ain't bad in Keynesland.

Sun, 10/27/2013 - 13:21 | 4095325 Max Cynical
Max Cynical's picture

Add that to the billions that have already been paid out to pensioners (including the annual 13th check) and I think you'll find many that probably got more than they ever deserved.

Sun, 10/27/2013 - 13:58 | 4095433 CPL
CPL's picture

That fact that the ponzi paid out is amazing enough.  Most everyone thought it would have blown up in 2005, but the resolve to keep making financial bubbles proved otherwise.

Sun, 10/27/2013 - 15:05 | 4095576 BeanusCountus
BeanusCountus's picture

The article is misleading. The 16% settlement is on the UNFUNDED liability to the plan. The plan is currently around 70% funded, so after the settlement the plan will be have the assets to pay 75% of benefits. And, that's using a 5.5 to 6.0% growth rate. Take the rate of growth to 7.5 or 8% of plan assets (not saying its realistic, but other plans use these rates) and the plan would be fully funded. Only point here is that pensioners will probably only see a 25% cut in benefits going forward. Substantial for sure, but not an 84% cut as suggested in the article.

Sun, 10/27/2013 - 15:18 | 4095595 quasimodo
quasimodo's picture

Same here, felt a little bit like a KWN article

Sun, 10/27/2013 - 16:26 | 4095732 Flagit
Flagit's picture

drop the fucking sensationalism, and give us fucking FACTS.

THAT is why we come here, not for flashy doom-laiden headlines.


edit: and ty beanus


Mon, 10/28/2013 - 00:01 | 4096733 Notarocketscientist
Notarocketscientist's picture

How much longer do you think they will stay funded when the stock market crashes?

Sun, 10/27/2013 - 20:14 | 4096237 Serfs_Up
Serfs_Up's picture

i bet they can still buy homes for $ tax would be nil

shit..16% might be a pretty good deal after all

Sun, 10/27/2013 - 11:35 | 4095099 LetThemEatRand
LetThemEatRand's picture

I understand the sentiment, but the people who should get less first and foremost are the ones who took the money that was earmarked for pensions.   It's not like the money is gone as in the classic Ponzi scheme.  The money went to TBTF banks, and the corporate entities and their executives still have at least most of it.  Take it back as the first course of action.

Sun, 10/27/2013 - 13:08 | 4095256 HappyCamper
HappyCamper's picture

If any of you think that these people will get anything less than 100% or their pensions, you obviously haven't been paying attention these last few years.

It's on like Donkey Kong.

Sun, 10/27/2013 - 13:16 | 4095311 Bob
Bob's picture

You make a very good point: We'll soon see the Rule that rules. 

I'm thinking pensioners are gonna eat massive Wall Street generated shit on this. 

We'll soon know. 

Sun, 10/27/2013 - 18:43 | 4096039 WillyGroper
WillyGroper's picture

The corp that I retired from ( b4 they stole my pension) sent a letter out to active employees just last week on how much their pension is going to be whacked due to zirp. And that's figuring it with a 15 yr smoothing mechanism as if this hellish economy is all of a sudden going to resurrect an industrial base.

"They're coming for your pension that disappears as soon as you go to collect it. They're coming for your social security too. And they'll get it for their cronies on Wall Street. THEY OWN YOU".

Carlin - RIP

Sun, 10/27/2013 - 13:06 | 4095273 ebworthen
ebworthen's picture


Who thumbs this down?

Someone spends 30-40 years of their life working for a City teaching or trying to keep the streets safe or driving a bus or cleaning toilets and floors under the promise of a pension then is robbed of it? 

Robbed of a 40 year day-in-day-out working promise, and it's o.k.?

Are the cliche's so ingrained that we can't be furious at the injustice of bankers, financiers, accountants, and corrupt politicians stealing someone's life?

J.P. Morgan Chase, Jamie Dimon, and the other banks and banksters have the money; I say get it and get them.

Sun, 10/27/2013 - 13:07 | 4095289 negative rates
negative rates's picture

It was either that, or live on the streets of Detriot.

Sun, 10/27/2013 - 13:12 | 4095303 Oldwood
Oldwood's picture

While i doubt these public employees will ultimately suffer these losses, we have all been robbed of our contributions to SS and we know it is gone. All the screaming and handwringing in the world will not get it back. Its just the government first and foremost must protect it's own regardless of the costto everyone else. Lots of promises have been made and more are piled on daily to keep this shitstorm rolling, but reconcilliation will happen and we know the longer it takes the worse it will be for all of us.

Sun, 10/27/2013 - 13:28 | 4095331 Bob
Bob's picture

Actually, the SS contributions are not "gone."  They are not, of course, held as cash, but the Funds hold nearly $5T of the federal debt that so many are swearing we should take seriously because it must be paid.

I'll agree, though, that those are the same people who want us all to pretend it doesn't exist.  No lockbox, IOU's, ponzies, "already spent," and so on are absurd. 

SSTF investments are formally recognized as part on the on-the-books Federal Debt:

Anything else is a con victim or a con man. 

Sun, 10/27/2013 - 13:54 | 4095422 Oldwood
Oldwood's picture

So our SS is secure because its assets are held as debt? Owed by whom? I'm not aware that our government has any assets it can easily liquidate. Did we just not have a government shutdown and threatened default because we are broke? It would seem to me that all treasuries issued represent a debt that only we, the taxpayers can repay. Have I got it wrong?

Sun, 10/27/2013 - 19:42 | 4096173 FeralSerf
FeralSerf's picture

"I'm not aware that our government has any assets it can easily liquidate."

Like a bank robber, but many orders of magnitude greater, the government has its "capital equipment", its guns and ammunition. The bank robber uses his to rob a bank. The government uses its huge collection of lethal weapons to steal from its citizens and, if possible, the the citizens of other states as well.

The U.S. government is the most successful armed robber in history. It has stolen more assets and killed more people than any other organization ever has. Great Britain is in second place in the ranks of criminal enterprises.

Sun, 10/27/2013 - 20:08 | 4096228 James-Morrison
James-Morrison's picture

The Trust Fund holds its assets in "Inter-agency, non-negotiable debt" aka IOU's from you to yourself.

In other words, the Fed will monetize your checks.

I expect to be paid in Zimbabwe-equivalent, Benny Bucks.

Sun, 10/27/2013 - 13:55 | 4095424 Paveway IV
Paveway IV's picture

Which part of "It will be mathematically impossbile for the U.S. to pay it's debt in a few years" don't you get? 

Sun, 10/27/2013 - 14:26 | 4095501 Bob
Bob's picture

That's not hard to get.  I'm sorry I left it off my list of alleged issues. 

Revenue-raising is only a question of how and who.


Sun, 10/27/2013 - 14:37 | 4095525 Mike in GA
Mike in GA's picture


Sooo...give me all your cash, I spend it and give you a piece of paper promising repayment by my grandson 40 years hence.  It's all accounted for properly and it's now termed DEBT.  DEBT. not CASH.


And you're saying it's not gone?!  You've been conned or you work for the gov or you're an idiot. 

Debt pays interest. Debt is an obligation to be repaid.  SS cash was supposed to be EQUITY.  Equity EARNS a return.  Debt cannot be both an asset and a liability to the same entity at the same time.  Politicians spent our CASH and obligate us to repay DEBT with INTEREST and you're okay with that??!! 

Fucking people like you are why this country is in trouble.  This shit makes me sick.  SS has been robbed from Eisenhower on and if politicians had left prior surpluses to be invested rather than borrowed there would be a surplus still.

Sun, 10/27/2013 - 15:20 | 4095558 Bob
Bob's picture

I understand your point of view.  On the other hand, though, it remains debt on the books.  At the point of an actual BK, I'm sure SS will take a truly massive hit. 

Until a BK, it remains a simple choice of fiscal policy. 

And legal policy, of course.  Money would have to be confiscated from many powerful criminals. 

We often talk about the need for guillotines and lampposts.  But until SS is grabbed, the probability of any use of them is very low, imo. 

Investments of the various trust funds are as real as any other US Govt debts.  It can be disparaged in many different ways, but it ultimately depends upon the will and ability of the issuer to make good. 

I sure as hell don't know how this is gonna turn out.  But I know that as of now, people who cry about paying the debt should have the various earned benefit/entitlement trust funds in mind. 

Otherwise, they've already taken it up the ass (in their own minds) and are now bearing witness like prophets that they've had it up the ass and want us to understand the full glory of it so that we too may embrace their Promised Land!

Sun, 10/27/2013 - 18:30 | 4096002 Oldwood
Oldwood's picture

So you're saying there is a chance...that we will get our money all back. Wow, I was really worried for a year or two there!

Mon, 10/28/2013 - 15:52 | 4098723 Thisson
Thisson's picture

It's not so simple as saying it's just "up to policy."  In order to make good on those special securities, treasury must redeem them with cash.  It doesn't have the cash, so it must either print or sell treasuries to obtain that cash.  Printing debases the currency, in a very regressive way, and is effectively a tax on the lower classes.  Selling treasuries relies on the bond market's demand for them.  That demand is not unlimited.  Therefore it's more than a matter of policy choice. 

Sun, 10/27/2013 - 16:00 | 4095690 BeanusCountus
BeanusCountus's picture

Sorry, but I have to explain how this works. First, please understand that when excess social security receipts for any given year come in, they are immediately spent and reduce that year's reported annual deficit. The IOUs to the social security fund are not counted as expenditures or added to our national debt (LBJ started this gimmick I think, with the approval of Congress). So, imagine if you can the time when annual social security disbursements exceed receipts (happened one year so far, but will begin on a regular basis within the next three or four years). The amount of the "trust fund" that has to be paid back to make up the difference will then be ADDED to the annual deficit and our national debt. By 2020 (for that year alone), this will be around 200 billion, and will rise to 1 TRILLION EACH YEAR by 2030. So how does that make our annual deficit look, not even counting the usual overspending on all of the other programs? Politicians know this. Which brings me back to the "trust fund". It doesn't exist, has been used to pay for purchases already made, and will have to be repaid absent entitlement reform. Otherwise this country has no hope of ever achieving any annual budget that doesn't make the last few years 1T deficits look like a walk in the park.

Sun, 10/27/2013 - 16:37 | 4095714 Bob
Bob's picture

Almost everybody in the financial community believe this:

First, please understand that when excess social security receipts for any given year come in, they are immediately spent and reduce that year's reported annual deficit. The IOUs to the social security fund are not counted as expenditures or added to our national debt (LBJ started this gimmick I think, with the approval of Congress).

I can only think it's a right of passage of some sort to a fraternity where the oath is to blame the victims of a crime that you yourself are helping to commit in convincing everybody that "the money is gone." 

Look, it gets counted:


Sun, 10/27/2013 - 19:32 | 4096149 BeanusCountus
BeanusCountus's picture

Hi Bob. Been waiting for this one for a long time. First, i am not a member of a "fraternity". Nothing against them, just always considered myself a free thinker. Done a bit of actuarial work and, I'm told, pretty good with understanding numbers.

CBO currently says our debt to GDP is around 70 or 80 percent. 100 percent or more considered "game over". Reason is because "debt to gdp" is a bullshit number. Debt to income is really what should be considered. Obviously, CBO is only measuring "debt held by the public" in their ratio. So, they don't consider "inter governmental debt" as real liabilities. And neither are anyone else, or we are already like Greece. But no one recognizes it. Choosing instead to only focus on the debt we are currently paying interest to outsiders on. Point is, and has always been, the intergovernmental debt will be bearing interest soon. To outsiders. So, Bob, when you are paying 5% of GDP in interest, and you only take in 18% of GDP in revenue, how do you look to someone giving you a loan? Well, you are spending 28% of your revenue on interest alone. Ready? YOU...ARE...FUCKED! Do the math, project any growth you wish, but.... it's over. And, I happen to be an optimist.

Sun, 10/27/2013 - 14:44 | 4095533 Marco
Marco's picture

Social security was never a savings based pension scheme ... it has always been a pay as you go wellfare scheme.

If the entire trust fund evaporated overnight and you paid the difference out of general revenue it would add less than 50 billion to the deficit ... woopdefuckingdoo.

Sun, 10/27/2013 - 15:16 | 4095592 Mike in GA
Mike in GA's picture




Sun, 10/27/2013 - 15:29 | 4095624 Oldwood
Oldwood's picture

My understanding was that the prior fixes applied to SS were to create a surplus that was to offset the coming shortfalls that aging boomers would impose. I understand it was all a big lie because they spent it on other stuff and put an IOU in it's place, but if we are going to assume it is simply paid from through tax revenues, SS or general, and we are going to be means tested to get it in the future, then we should call it what it is...fucking welfare! I'm sick of this pussyfooting around with language and we all acting like it doesn't matter. SS and medicare taxes should be elliminated as a line item tax and become part of general revenue taxing and called the "dole". The worse part of all of this game playing is the obvious inference that we are all fools and don't know what they are doing. Everything has to come to us as a lie, every pill wrapped in government cheese. What the fuck good is a democracy if the public is assumed too stupid to care for itself and must be lied to?

Sun, 10/27/2013 - 15:49 | 4095667 QQQBall
QQQBall's picture

It has always been pay as you go. That is utter bullshit. The Trust Fund has been raided by the federal Gov't. 

Sun, 10/27/2013 - 16:05 | 4095697 Bob
Bob's picture

You're both right from a broader perspective, I think.  The public forceably contributes trillions in wage earnings that the government then spends as proceeds of debt sold to finance its operations . . . too bad the money was then used to compensate for slashing taxes on the 1% and their corporate facades. 

But it could be clawed back.  Even from offshore tax havens. 

In theory, at least. 

The debt could be paid.  Still. 

Sun, 10/27/2013 - 13:38 | 4095364 Abaco
Abaco's picture

They should have bargained for better salaries instead of sky high pensions the cost of which could be hiddedn from the tax payers for years.  They gambled and lost.  Do you think the voters of Detroit would ever approved of paying their teachers, police, firemen 300K a year?   At today's interest rates you need several million in the bank to pay for a $50K pension. Call it 5 mill. Accumulated over the 20 years to retirement = $250K/year. Yeah, you can quibble wth the math a bit but the poinbt should be clear.

Sun, 10/27/2013 - 14:39 | 4095531 TheMeatTrapper
TheMeatTrapper's picture

Exactly. I have no sympathy for government employees not getting their pension when I work harder, longer and more productively than any government worker I've ever met - and I have no hope of a pension. Why should I pay them for something I will never have?


Sun, 10/27/2013 - 14:50 | 4095538 LetThemEatRand
LetThemEatRand's picture

Race you to the bottom!  Stupid sheep getting too much feed.   Certainly not the fault of the people who control this country gutting the middle class and sending productive private jobs overseas for their own profit.   It's all the fault of the people who took good paying government jobs that were available.  String 'em up!

Sun, 10/27/2013 - 15:36 | 4095646 Henry Hub
Henry Hub's picture

Race you to the bottom indeed! Instead of saying public sector workers shouldn't get decent pay and pensions, people should be saying we all should be getting them. And we should in a just and fare country. The oldest trick in the book played out by the oligarchs is divide and conquer. Private sector workers against public sector workers, the young against the old pensioners, the middle class against the poor, the Whites against the Blacks. These tactics have worked ever time for them. It's time we all stood together against the scumbag oligarchs.

Sun, 10/27/2013 - 16:32 | 4095742 Bob
Bob's picture

I smell the scent of entitlement in you!  How dare you feel entitled to anything that you can't play this game to get for yourself?

We love criminals.  Oligarchs are the really Big Boys. 

I'm so glad they own my world. 

Sun, 10/27/2013 - 18:36 | 4096016 Oldwood
Oldwood's picture

There is no doubt we are victims of devisive politics, but if we can't pay the public sector unions benefits, how do you suggest we give everyone else the same thing and still pay for it. If you vote for me I will do all in my power to put a Bently in every garage.

Sun, 10/27/2013 - 14:42 | 4095535 FreeNewEnergy
FreeNewEnergy's picture

While I am usually in agreement with you, eb, I downvoted your post, but, as a stand-up kind of guy myself, I'll admit it and tell you why.

Basically, teachers, cops, paper shufflers and the rest of the public employees (who also have unions protecting their "rights") have been living in dreamland for decades and have been overpaid - let me put more emphasis on that - MASSIVELY OVERPAID for years and years, at the expense of the overtaxes citizenry.

The fact that they will not get back what they paid in (and augmented by the government, i.e. taxpayers) should come as no surprise to anyone with an eye for reality and even a cursory understanding of actuarial tables. Well, I suppose that's a lot to ask for, but maybe these people should have saved some of the massively huge salaries they were getting - outside the system.

Sure, Jamie and the boys did a number on them, but that's their job. Blame the stupid for being stupid and for getting what they deserve, which, in my humble opinion, is a lot less than what they think they're owed.

Best part is if the government screws its own, then they'll suddenly be on the right side. Tide's turning, the remaining small government enclaves will be outnumbered hundreds to one.

I never bought into SS or pensions, so I don't expect any. I'm clean, and the sooner more people come to my way of thinking - that big government assisting big banks and big corporations - is bad for you and me, the sooner we can gut the system of the leeches and start rebuilding.

I say, slash the pensions and deal with the collateral damage. Stand up, sit down, fight, fight, fight!


Sun, 10/27/2013 - 20:23 | 4095716 MisterMousePotato
MisterMousePotato's picture

Couple quibbles:

"The fact that they will not get back what they paid in ... ." Yes, they will. And then quite a bit some. Even at 16 cents on the dollar.

They may not get what they were promised. In which case, I would suggest that they pay a personal visit to the persons or person who made that promise. (They might be surprised to see how those persons are getting along.)

But, since *they* never paid in anything at all, at 16 cents on the dollar, they're getting a screaming return on their investment.

Too, your take on this seems to be that the problems have been caused by stupidity. Yes, these are stupid people. And, yes, they acted stupidly. But, the problems really arise on account of corruption and thuggery: dotgov employees bribing politicians to steal money from taxpayers and give it to them. And now, they are surprised to find that these same politicians lied to them?

Give me a break. Election cycle after election cycle, they watched their bought and paid for politicians lie to the voting public, and now they're surprised to find out they're liars? And I'm supposed to feel sorry for them?

Trying. Really am.

Sun, 10/27/2013 - 13:48 | 4095400 philosophers bone
philosophers bone's picture

Hi Rand.  I don't think you're quite right.  The "money" didn't go to the TPTF banks.  Some did, but the vast majority of it really never existed.  The "money" was projected to be created from anticipated market returns based on actuarial assumptions which were based on fantasy.  Blame all around.  Every day that these defined benefit plans with no hope of ever meeting their obligations exist is a fraud on someone.

Sun, 10/27/2013 - 14:45 | 4095541 LetThemEatRand
LetThemEatRand's picture

Certainly true that we could take it all back and the pensions would still be underfunded.  But that is not a reason to let the bankers keep what they stole, is it?

Sun, 10/27/2013 - 18:39 | 4096025 Oldwood
Oldwood's picture

Come on man! Everyone knows the banks are TBTF! Quit talking this craziness.

Sun, 10/27/2013 - 22:01 | 4096282 MisterMousePotato
MisterMousePotato's picture

I weary of this attempt to divide us. Truth is, I am equally pissed at the following, and have no interest in trying to rate their respective culpability by any of the various metrics that suggest themselves:

1. Bankers;

2. Politicians;

3. dotgov employees;

4. Democrats (all of them);

5. Republicans (nearly all of them);

6. Welfare recipients (many of them);

7. Their enablers and hanger onners.

Well, that's about three-quarters of the country, so I guess it really doesn't matter very much what I think, does it?

The aforementioned are all, as far as I am concerned, equally responsible for our problems, and are unwelcome in my house.

Mon, 10/28/2013 - 11:43 | 4097689 Mike in GA
Mike in GA's picture

Let's have dinner.  Your place or mine.  My campaign slogan, were I ever to run for anything would be "Elect me.  I'll kill somebody". 

Sun, 10/27/2013 - 11:37 | 4095103 Hulk
Hulk's picture

Legions of Federal workers getting gold plated pensions and they didn't even show up for work

Sun, 10/27/2013 - 11:46 | 4095121 RSloane
RSloane's picture

I completely understand the frustration/anger with those types of arrangements. However, any contracts must be considered to have been drawn in good faith and be honored. Otherwise we should just drop the charade of working contracts.

Sun, 10/27/2013 - 11:49 | 4095127 LetThemEatRand
LetThemEatRand's picture

The Rand types only believe in the sanctity of contracts that benefit the oligarchs.   When a worker enters into a contract that the Rand type thinks is overly generous to the worker, they are the first to say "pitch it, it wasn't fair to begin with."  It is one of the things that is most distasteful about the entire cult.

Sun, 10/27/2013 - 12:39 | 4095224 spine001
spine001's picture

They say that if you want to understand why something happens you need to follow the money. So where has all the money robbed from the middle class and the pensioneers gone? The answer is very simple if you look at international cash flows, most of it went to China and a little bit to India.

Then you ask yourself, when did the wealth transfer start, and you can easily see the inflection point during the first Clinton Administration.

Then if you have my memory, you immediately remember a big scandal on campaign funding that exploded during the Clinton presidency that involved high level Chinese government funding of his presidential campaign through hidden entities, the FBI was heavily involved, and you also remember that it ended up being completely covered up.

Then, you trace the sources of the crisis and you find that they occurred because of changes in the law that were implemented during the great depression so that what happened then did not happen again and that the Clinton Administration through action or omission was responsible that these changes occurred and then your conclussion is inescapable about who is really guilty of all of this.

The sad part of all of this is that our grandfathers gave a lot of their blood to protect us and we allowed the dismissal of those protections without a fuss.


Sun, 10/27/2013 - 13:04 | 4095278 Trampy
Trampy's picture

They say that if you want to understand why something happens you need to follow the money.

J.K. Galbraith said in Chapter VI, "The Marxian Pall," of his most excellent The Affluent Society (1958), the modern popularity of Cui Bono can be attributed to Karl Marx:

Though it was not original with Marx--as he made clear--he made it famous. ... When [Marx] sees someone agitating for change, either at home or abroad, [Marx] enquires automatically: 'What is there in it for him?"

Sun, 10/27/2013 - 15:23 | 4095600 daemon
daemon's picture


Sun, 10/27/2013 - 15:22 | 4095605 daemon
daemon's picture


Sun, 10/27/2013 - 20:11 | 4096232 WillyGroper
WillyGroper's picture

Oh, I didn't know Kissa$$inger was under Cliton. I thought it was RayGun.

Think again, who opened the door to the Dragon?

Sun, 10/27/2013 - 12:45 | 4095237 RSloane
RSloane's picture

To be perfectly honest I don't get the whole "Rand cult" notion, but I agree with you on everything else and I'm fairly conservative. People view unions, who have ever decreasing power and numbers, to somehow be behind this fiscal disaster. My question is who would work for less than being offered on the basis of 'its the right thing to do'? I can't see anyone here saying to their bosses, "oh no you pay me too much, please take some back' yet it is expected of union workers. If anyone struck bargains in bad faith it was the politicians and their handlers, not the unions. Hell, even in the most liberal staunchly democratic strongholds unions are being fucked left, right, and center. No one wants to address that, though. Come election time, unions as fragmented and beaten as they are, will be held up as shining examples while their members get shafted daily. And that is the real circus in this 'bread and circuses' madness.

Sun, 10/27/2013 - 12:59 | 4095270 LetThemEatRand
LetThemEatRand's picture

The foxes -- fat on last night's sheep meal -- are truly laughing their asses off as the sheep tear each other to bits arguing about which sheep had too much feed last night.  This is why we're fucked.  The bankers have convinced a LOT of people that the solution to their theft is for the lot of us to make do with less.    Divide and conquer.

Sun, 10/27/2013 - 13:29 | 4095341 Shad_ow
Shad_ow's picture

Don't let the politicians off so easily.  Without their collusion bankers couldn't have pulled this off.

Sun, 10/27/2013 - 13:34 | 4095355 LetThemEatRand
LetThemEatRand's picture

I would not let the politicians off at all.  If they colluded with bankers and fucked the workers, they should go to jail.  My point is and was that this whole "lazy union employees get what they deserve" meme completely misses (deliberately?) the fact that the money was stolen and lined the pockets of bankers.  The workers are fucked either way.  The bankers (and the politicians who colluded with them) should be fucked too.  Why anyone has an issue with that is beyond me.

Sun, 10/27/2013 - 14:04 | 4095446 DelusionalGrandeur
DelusionalGrandeur's picture

...ok, thank you! exactly sums it up...and why anyone would junk you us beyond my comprehension too, but this is fight club. 

makes perfect sense to me.


Sun, 10/27/2013 - 16:26 | 4095731 MisterMousePotato
MisterMousePotato's picture

The 'workers' bribed the politicians. In these circumstances, it really is difficult to apportion blame. My thinking is that both are 100% responsible.

Sun, 10/27/2013 - 17:11 | 4095810 Imminent Crucible
Imminent Crucible's picture

"The politicians"....let's see, that would be the legislative branch that makes the laws, and the executive branch that enforces the laws.  So you're thinking that Congress will pass a law saying "All politicans have behaved badly and thus shall go to jail" and Eric Holder will say "The executive branch concurs; bring out our handcuffs and orange jumpsuits forthwith: we shall all do Twenty To Life so that America can be a just nation again."

Yeah, I can see where that will work.

Sun, 10/27/2013 - 20:35 | 4096293 WillyGroper
WillyGroper's picture

"executive branch that enforces the laws."


Sun, 10/27/2013 - 13:45 | 4095390 RSloane
RSloane's picture

Its much worse than 'make do with less'. When the Scranton mayor announced that all public union workers would now be on minimum wage he was shafting mortgage holders, renters, people with families to support, people with outstanding bills like car payments, insurance payments, tax payers, etc. The consequence is that the only people left in Scranton are people too poor to move, welfare recipients, and drug dealers. Their tax base is almost completely gone now. Who wants to live in a city where cops are quitting because they don't want to make minimum wage or teachers refuse to teach in a school system plagued with violence, guns and drugs for minimum wage? People keep waiting for the great reset. They don't have to wait anymore.

Sun, 10/27/2013 - 13:47 | 4095395 Anusocracy
Anusocracy's picture

I've been fucked out of money every second of my working life because you and your ilk believe that government has to exist on the almost zero chance that some government somewhere might accidentally do one thing right in the next 10-20 million years.

Sun, 10/27/2013 - 14:15 | 4095474 LetThemEatRand
LetThemEatRand's picture

Your solution of no government is simplistic and all of history proves that it won't work because the same people who corrupt it now will still exist.  There is no perfect system.  You need to learn more complex thought and stop thinking that there is a magic unicorn (no government) solution in which you will be wealthy and happy.  

Sun, 10/27/2013 - 15:01 | 4095569 RSloane
RSloane's picture

I haven't said anything about gov't other than the politicians involved should be held accountable, like in tar and feather accountable not a slap on a wrist. I am not, repeat am not, in favor of bigger governance. I am in favor of governance and its politicians be held strictly accountable for the mess they have landed all of us in. We have people in congress who think if we put too many people on Guam it will tip over, or people who think there are still two Viet Nams and they like the communist one better. There is plenty of stupid to go around. Until we start calling out politicians on their shit, nothing, but nothing, is going to change.

Sun, 10/27/2013 - 13:22 | 4095326 Oldwood
Oldwood's picture

Could it be that unions in thusprivate sector have been shrinking becasue the industries they have typically dominated have either been wiped out by foreign competition or government regulation (think mining), and public sector unions have seen significant growth because there has been no competitve restraint to their wages and benefits. American people have refused to pay union wages and those industries have been replaced by foreign competitors or right to work state environments. Public sector employment has not seen this because government debt and unfullfillable promises have insulated the "consumer" from the "supplier" or led said consumer to believe someone else would pay for it.

Sun, 10/27/2013 - 15:04 | 4095575 odatruf
odatruf's picture

RSlone, Oldwood, et al - I think we do need to differentiate between private and public unions in most cases. Public sector works and workers do face any market forces keeping them in check.  All they need to do is win the vote, which is not the same thing as winning the argument or battle of ideas.

Private sector unions are often unfairly flogged. Organizations should be free to enter into contracts or abstain from them, and union / work contract terms ought to be enforced by the legal system that same as any other contract. And that goes both ways - for the employer and the union.

I will say though, in the spirit of the season, that when a host is drained too quickly, even if the host agrees, the parasite has no one to blame but itself.

Sun, 10/27/2013 - 15:44 | 4095657 Oldwood
Oldwood's picture

I agree with your contention that we should all be allowed to enter into legal contracts enforced by law as that is the core of a free capitalist market place, but there are two problems with your assumptions. First of all is that  the management of a corporation can morally enter into an agreement that they know is not sustainable by the marketplace while also having their personal golden parachute lined up for a painless escape. Secondly, there is nothing fair or legal about a union being able to force and employer to capitulate to their demands by striking and forcibly shutting down said employer with blockades and boycotts. In a free market place both sides should have equal standing but in America, businesses are prevented by law from maintaining a monopoly in the market place (even though our government openly endows many to monopolies) while unions are exempted from such laws. How can you have a free market when there are millions of workers willing to work for a given wage yet a union can hold the employer and the marketplace hostage for not being willing to do the same? As a free market employer I should be able to hire and fire at will within the limits of their contract, the same as an employee should be able to work or quit at will. Employers have been progressively pushed into a weakened position in dealing with employment and laws. On one hand we have government pressing upon us that people are but sheep that need protection and employers are the wolves that must be restrained, while continuously expanding their powers far in excess of any that a typical employer would have. Government has far more control and impact upon our lives than any employer ever dreamed.

Sun, 10/27/2013 - 18:47 | 4095879 Things that go bump
Things that go bump's picture

Less than 100 years ago, men, women and children worked 12-16 hours a day, 6 days a week in mills, mines, sweatshops and farms and competed for the privilege of making only enough to possibly keep the roof of a rat-infested dump over their heads and maybe feed themselves most days (best develop a taste for pease porridge 9 days old), and that was with every hand employed and leaving young children untended. If they got sick or hurt on the job there was another cog who would happily take their place. If they were killed on the job, a more compassionate employer might go to the trouble of having the body dumped on their doorstep, but it was the family's loss after that. It was only through unionization and collective bargaining that we escaped that. If you think a wage that paid more than mere subsistance was given willingly, you don't know your history. If in your geneology there was anyone who immigrated to this country around the beginning of the 20th century and arrived riding stearage without a penny to their name (and three of my four sets of great grandparents are in this group) you spring from this stock and it is to their sacrifice and risk that you owe your comfortable existance and the opportunities you may have had. If your lineage is Irish or Italian or Scandinavian or Jewish or German or Polish or any other of those European hellholes chances are that you have a great grandfather or grandfather who put his very life in danger to stand in a picket line and shut the factories and mills and mines down. It was the only way to force change. They faced the Pinkertons and other strike breakers and watched their families go hungry for the chance of something better. If you think your comfortable existance is safe now you are deluded. Why do you think all these new immigrants are being accepted and encouraged? This game has been played before. You've just forgotten it. Once again there aren't enough jobs to go around. What there are consist of low paid service jobs. There is certainly deflation present in this country, and it is in the price you can charge for your labor. In four generations we are heading right back where we came from. Make sure you teach your children and grandchildren to know their place and the proper respect owed their betters. I'm probably older than you. My grandparents were Victorians and told stories at the dinner table. 

Sun, 10/27/2013 - 18:51 | 4096055 Oldwood
Oldwood's picture

Your examples of people using force to obtain leverage is exactly what I'm arguing against. We know all the horror stories of the past just like we know the ones about the unions and their murderous deeds. We didn't need unions nearly as much as we simply need honest government to enforce a few basic laws, like today. The point should be to minimize excessive leverage to where no one, employer or employee holds an unfair advantage. Politics and the power of government seem much more intent on retribution of past wrongs than actual justice or fairness today. Everything is couched in terms of affirmative action. Unions can do no wrong because some business people were evil and abusive in their past. No black president can do wrong for the same reasons. Not justice and equality for all but retribution for past sins. We are all in the criminal justice system now paying for the sins of our fathers, or our neighbor's father or someone we likely never heard of.

Sun, 10/27/2013 - 19:08 | 4096087 Things that go bump
Things that go bump's picture

So sorry, honest government is an oxymoron.  

Sun, 10/27/2013 - 15:09 | 4095580 RSloane
RSloane's picture

No one has leveraged low wages abroad more than the American consumer. Public sector employment is now facing their own Armageddon in that people are just too fucking broke to support them and are voting by moving out of municipalities that heavily rely on tax revenue streams. That's almost gone, we're about done with that era within the next ten years. 

Sun, 10/27/2013 - 19:07 | 4096084 TheMeatTrapper
TheMeatTrapper's picture

My question is who would work for less than being offered on the basis of 'its the right thing to do'? I can't see anyone here saying to their bosses, "oh no you pay me too much, please take some back' yet it is expected of union workers.


The unions extort money from politicians willing to give other peoples money to buy votes.

The "right" thing to do is not to join a union, eschew collectivism and get paid individually based on individual productivity and value produced - but that concept is alien to an entitlement minded statist like yourself. 

I told my boss that I wasn't interested in another raise or promotion. "So you give me an extra 20 grand." "The government will take half and flush it down the toilet, the wife will flush the other half down the toilet and I'll be stuck 'owing' you for something that I derived no benefit from - and you'll expect me to work even longer hours than I already do." 

He had no idea how to respond to that. 

Every man has the freedom to just say no. 

Sun, 10/27/2013 - 19:46 | 4096183 Crawdaddy
Crawdaddy's picture

Ha! Sounds like the same type of conversation I had with my boss (and my wife.) I told both of them if they appreciated what I do and want it to continue, the best reward they could give me is to leave me the hell alone.


Sun, 10/27/2013 - 13:12 | 4095304 Anusocracy
Anusocracy's picture

In a panarchic world, all of these problems would be the responsibility of only those who voluntarily chose to support whichever government is going bankrupt.

As one who does not want any government, any government workers, or any government contracts, it would someone else's problem.

The lovers of government.

Sun, 10/27/2013 - 13:40 | 4095373 Abaco
Abaco's picture

Government pensions are fraudulent to begin with.  Politician promises big pensions to unions.  Unions vote for politician. They both point to the taxpayer, who wasn't a party, and say he is on the hook. 

Sun, 10/27/2013 - 14:46 | 4095544 TheMeatTrapper
TheMeatTrapper's picture

The Rand types only believe in the sanctity of contracts that benefit the oligarchs.   When a worker enters into a contract that the Rand type thinks is overly generous to the worker, they are the first to say "pitch it, it wasn't fair to begin with."  It is one of the things that is most distasteful about the entire cult.

Oh bullshit. 

The problem with your strawman argument is that the contract was between "workers" and a government. The cost of that contract is then passed on to people who had no say in the negotiations. 

How would you like it if I employed several people and promised them a million dollars a year - then turned around and put a gun to your head and informed you that you must pay their salaries? You might protest that you had no say in the matter. I would then point out the fact that everyone here on Zerohedge voted on the issue and although unfortunate, you lost and the vote was entirely lawful. 

Pay up sucka and quit bitchin.

Sun, 10/27/2013 - 16:31 | 4095739 MisterMousePotato
MisterMousePotato's picture

Next time, give us the opportunity to reward you with up arrows.

Sun, 10/27/2013 - 11:53 | 4095132 fonzannoon
fonzannoon's picture

Hey RSloane i can only speak to what is local to me, but those contracts were not drawn up in good faith. They were the byproduct of crony politicians at their worst.

They are funded by my tax dollars, so unfortunately for me to vote my viewpoint, I am going to have to leave. I'm fine with that. But it's a nice trap I am in. My home is worth less than what I paid, so I am stuck. My taxes keep going up to pay for these ridiculous pensions etc. So I am the frog and the water is warmer by the minute.

Sun, 10/27/2013 - 11:59 | 4095138 LetThemEatRand
LetThemEatRand's picture

I think that misses the point.  The money that was paid in to fund the pensions was stolen by TBTF.  The workers -- whether you think they deserve it or not -- entered into contracts to receive a pension.  Back in the old days, working for the government meant making a lot less up front, but the big incentive was the pension.   Now that globalists have destroyed the middle class, working for the government for many is more lucrative on both the front and back end so it is easy to think the public is being robbed.  But to me the anger should be directed at those who gutted the middle class and made working for the government more lucrative in the first place.  The answer is not to have everyone make do with less (except the bankers).

Sun, 10/27/2013 - 11:58 | 4095146 fonzannoon
fonzannoon's picture

I somewhat agree lter. The unions took advantage. But u are right about wall street. The problem is approaching it from the idea that it can be fixed. It can't. It's going to be bad. I can only hope those who deserve it get what should be coming to them.


Sun, 10/27/2013 - 12:03 | 4095155 LetThemEatRand
LetThemEatRand's picture

That's why I prefer to focus on the people who stole the money, rather than on the people who contracted to receive it.  It is certainly easy for anyone who has never worked for the government (I spent one summer in DC 20+ years ago working for a Congressman (R), and that's the extent of my government work) to get mad at workers who now seem wealthy in comparison to the guy who tried to make a go in the private sector, and I totally agree with you that there is plenty of blame to go around.  The government workers will be fucked no matter what.  The key to me is that the guys who stole it should not be allowed to keep it.

Sun, 10/27/2013 - 12:05 | 4095163 fonzannoon
fonzannoon's picture

I hear u. I would not go crazy arguing otherwise. I would point out that many pensions over the years were happy to not fund those pensions and rely on market gains to fund them instead. In many ways those pensions were just as much complicit in this wall street scam as they are victims of it.

Sun, 10/27/2013 - 12:23 | 4095195 RSloane
RSloane's picture

In the last two years, one of the hardest hit union pensions was the Ohio Teacher's Retirement Plan which heavily invested in American Airlines! They lost shitons of money, right upfront with more disaster on its way. A large percentage of those pensions are poised to roll over in the next ten years. Cincinnati is broke, so is Cleveland. Entire school districts are closing down. Where is the money going to come from to honor those pension agreements, given that Ohio has an unusually large number of older teachers in its system? What about Chicago teachers, even given the heavy school closings that Rahm was able to push through to save money?

My guess is all of them are going to lose very heavily. If they had any market sense at all they need to be saving/investing for their own retirements, because there will be nothing left to honor their contracts.

Sun, 10/27/2013 - 13:24 | 4095329 Oldwood
Oldwood's picture

We have all been robbed by wall street. Are you going to see to it that we are all made "whole"?

Sun, 10/27/2013 - 14:30 | 4095508 LetThemEatRand
LetThemEatRand's picture

It sure isn't going to happen if the entire conversation centers around lazy union workers while ignoring the role of the bankers.

Let's take the money back and start there.  Then we can have a conversation about what to do with the money they stole.  Or shall we just bash the other sheep that got too much feed?

Sun, 10/27/2013 - 15:47 | 4095664 Oldwood
Oldwood's picture

You seem to fail to recognize that it is those sheep with their heads firmly buried in their feed bins that are enabling the politicians and bankers to continue this theft. If those sheep are not set right and brought into the real world with a smart rap up side the head, then none of this can change. Its going to take more than just us "enlightened few".

Sun, 10/27/2013 - 16:33 | 4095745 grid-b-gone
grid-b-gone's picture

Why would anyone work for a promise? Take the money up front. Choose a bird in the hand.

At the very least, contracts should be written to make members secured creditors. 

Make sure you are in line to get paid before the guy selling road salt to the city in this year's budget.

You voted for the contract that made you unsecured, assuming a city could simply issue more bonds if it ever got into real financial trouble. Maybe you assumed the federal government would simply step in and print more to cover bad promises.

In solvent cities, unions should be proposing lump sum buy-outs for members in which bonds are sold to finance the buy-outs.

Trade those unsecured promises for cash now. Let someone else be the unsecured creditor. Most union members would not vote to accept the present value of their future promises. They will continue to cling to hope until they someday take 16 cents on the dollar. 


Sun, 10/27/2013 - 19:27 | 4096137 FeralSerf
FeralSerf's picture

" Ohio Teacher's Retirement Plan which heavily invested in American Airlines! They lost shitons of money . . . Where is the money going to come from to honor those pension agreements . . . ?"

If you took all of your pension savings and bet on a losing horse at the races and lost, where would the money come from for your pension? Tell me how this is different?

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