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Junk-Rated Chicago Has A Billion Dollar Pension Problem
Last week, Chicago got some bad news from Moody’s. On the heels of an Illinois Supreme Court decision that struck down a pension reform law, the ratings agency cut the city to junk status, triggering some $2.2 billion in accelerated payment rights for the city’s creditors and complicating Mayor Rahm Emanuel’s efforts to refinance nearly a billion in floating rate notes and borrow another $200 million to pay off the accompanying swaps.
The Moody’s downgrade in many ways punctuates what has been a rapid deterioration in state and local government finances across the country, a situation that’s forcing lawmakers to slash budgets and cut funding for a variety of state-funded programs.
As a refresher, here’s some context on Chicago’s underfunded pension problem:
In downgrading the city, Moody’s said it expected “Chicago's credit challenges will continue, both in the near term and in the long term [as] unfunded liabilities of the Municipal, Laborer, Police, and Fire pension plans grow and exert increasing pressure on the city's operating budget.” That looks to have been an accurate assessment, because as Bloomberg reports, Chicago’s budget gap is set to triple by 2017.
Chicago's budget gap is expected to triple with statutory contributions to pension funds, after the city improved its fund deficit for four straight years to less than $300 million in fiscal year 2015.
"Notwithstanding the gains achieved by the city in recent years in addressing its structural budget deficit, the budget gap in coming years is likely to widen from the 2015 level due largely to growing salaries and wages and funding requirements from city pension plans," Chicago bond documents, released yesterday, said. A budget gap of $430.2 million was projected for 2016 and $587.7 million for 2017. However, "statutory obligations to the [police pension fund] and [firemen's pension fund] will, in the absence of legislation modifying the city's contributions to these funds, increase the projected budget gaps for 2016 and 2017 by more than $500 million," the documents said.
So Chicago taxpayers, get ready to take one for the team, because as one muni bond analyst told the Chicago Tribune earlier this month, “raising taxes is going to have to be a part of the solution.”
* * *
Incidentally, this is just one more example of the unintended (we hope) consequences of monetary policy gone ZIRP, because when reality forces you to lower the rate of return you can expect on your investment, your unfunded liabilities balloon, and as you can see from the following table, the assumed rates of return for Chicago’s pension funds are nowhere near the risk-free rate meaning, in short, this could get very, very ugly.
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It's all good.
Chicago = Greece.
Chicago will undergo austerity measures and get a bailout from the Fed.
Seriously, just this week the Fed stated that some municipal bonds could be eligible collateral for purchase (QE4).
It's all lining up nicely.
Obozo's right-hand man runs the city and follows his hero's economic principles...
What could possibly go wrong?
And I don't even mention all the many murders every day...
The next Detroit!
All Tiny Dancer Rahm has to do is levy a fee for cash withdrawls on EBT cards like Brownback in Kansas.
Chicago's fiscal crisis will be solved in a month ;-)
Just imagine what that funding gap would look like if there was a significant bond/stock market reversal. Of course...that would never happen, but, just saying, if it did, it would double destroy these pension funds.
only a haircut.. only a haircut. Ask the Cypriots.
8% CAGR assumption. Fucking hysterical. Please, Fed, PLEASE print. We need inflation so bad it's painful (literally).
Fucking 8%. Unbelievable. They should buy an annuity or something. They'll model an 8% return rate for you. Never get there (even in 1992), but they'll model it for you.
50% of 8% is more like 4%!
http://www.cityofchicago.org/city/en/depts/mayor/iframe/just_the_facts.html
"
How Does the Funding Break Down?Annual total amounts taken from the taxpayer-supported general revenues to support current retirement benefit levels (2012 estimates):
City Sponsored Funds: $477 million
Chicago Parks: $11 million
Chicago Teachers: $204 million
Total: $692 million
Based on funding assumptions, this number is expected to grow to $2.4 billion in 2017.
*All current numbers for headcount and average pensions are based on the most recent available CAFRs and actuarial valuation reports from each respective pension Fund. Current funding levels are 2012 estimates from independent actuaries.
What Are Acceptable Funding Levels?When a Fund’s assets are at a level that when invested they are sufficient to pay all the projected future benefits, the Fund is said to be “100%” or “Fully Funded.” A fully funded pension plan means each generation pays the full cost of the services its public employees provide.
Below 80% funding, a pension plan is vulnerable to swings in investment earnings and can rapidly burn through its assets in order to fund benefit payments.
What is the City’s Current Unfunded Pension Liability?An unfunded pension liability is the difference between the value of the promises made to retirees and employees for services already rendered and the funds available to pay for those promises.
Currently, the City’s six pension funds only have 50% of the funding needed to support the current pension system.
City’s Unfunded Pension Liabilities (projected to end of FY2012):
Total Current Unfunded Liability: $26.8 billion
How Much Do City Employees and their Employers Contribute to their Pension Benefits?
What are the two different types of pension funding?This is all specified in the Illinois Pension Code. It is important to mention, public employees pay a significant amount towards their defined benefit pensions, an amount that is higher than Social Security contributions of private sector employees.
Funds can have their contributions set based on payroll. Five of the six City funds (not CTPF) currently use this approach.
Funds can have their contributions set based on "actuarial funding," which bases contribution rates on the financial condition of the Fund. This is how CTPF funding is now set.
"
This isn't a Billion Dollar Problem.
Those numbers are from 2012!
It's a 30+ Billion Dollar disaster..
...& the $2.2B Bond Downgrade Capital Call has to be paid FIRST -RIGHT NOW!!!
Look at where the current funding is comming from,
The current employees are having their money taken from each paycheck - significant % - and dumped into the fund. that employee contribution just goes out the door on the other side to pay past benefits. the city has failed to make the adequate matching contributions. End result is that the current employees are really getting the screw job by continuing to contribute to the bankrupt program.
you are talking about social security....right?
They are about to go bankrupt because of something they didn't do a long time ago.
Correction, they are bankrupt, have been for many years now.
Politically propped up.
The clear solution would be to eliminate the payees, but there might be some hesitation from the politicos.
If they can still pass out and cash checks they are not considered bankrupt. Corrupt, desperate, yes, but not bankrupt.
Nah, they'll do it, just look at Detroit. What are those old retirees who worked for 30-40 years going to do when their pension is cut in half - wave their canes in anger?
The Pension Fund ITSELF needs to file bankruptcy. And sued for the fraudulent over-optomistic assumption that it can earn 8%. This is a box inside of a box...
"The Pension Fund ITSELF needs to file bankruptcy. And sued for the fraudulent over-optomistic assumption that it can earn 8%. This is a box inside of a box... "
...& these funds are chasing yieled and stuffing Taxpayer/Pensioner money into the 'markets' every few weeks like clockwork: buying high priced paper at outrageous earnings multiples and risky debt at low rates of return.
A correction from this precipice and/or interest rates dislocations and/or triggering of derivates exposure ( such as those caused by debt dowgrades! ) at this point will erode/destroy principal, leech capital and cause further impairment.
These are the reflation/'recovery' numbers.
It can get much worse very quickly -as the Taxpayers of Chicago and the Public Sector Pensioneers are about to learn...
"Look at where the current funding is comming from,
The current employees are having their money taken from each paycheck - significant % - and dumped into the fund. that employee contribution just goes out the door on the other side to pay past benefits. the city has failed to make the adequate matching contributions. End result is that the current employees are really getting the screw job by continuing to contribute to the bankrupt program. "
Look harder. THINK.
The employees are paid by taxing the Citizens of Chicago.
It is the Taxpayers that are being cleaned out.
The currenct municpal employees are just a proxy for a vast expropriation from millions of people -the vehicle by which the politicians and the financiers wash the funds to receive their cut, and without which there would be no skim to be had...
The $2.2 Billion Dollar accelerated Derivatives payment that has been triggerd exemplifies this.
What is important to the politicians is power which is bought in campaigns funded by financiers.
What is important to the financiers is that the game continue -that the Taxpayer extracted funds be shovelled into their 'markets' to support 'finance' via fee structures, arbitrage and leverage opportunites, and the selling of securities and bonds and other debt vehicles packaged by the financiers.
Great info above Throxx, thanks. There's a limit to the amount of money that you can tax somebody. And there oughta be a limit on the amount of money Chicago can borrow when they can't get any more tax money. Washington sets a bad example everytime they extend the debt ceiling, and avoid taking the bitter medicine.
not to mention the fees for this debt. skiming the scam til, well greece is chi town...
promises, hmmm 41400 would be moar than enuf for my gravey train ride.
another political problem created by the politicians that are here to correct the problem they created, ha, lol...
your vote counts s/
Good comment.
I like it how many public employees resort to saying they are paying for many of their benefits, through payroll deductions. They just cannot get it around their head, that they would have no pay at all if it was not for the taxpayers being "forced" to pay the taxes. If the taxpayers had a choice between which government services they could use, then those public employees could say they are paying for their benefits since there would be competition in the equation. Right now, the only so called competition in the equation is for the taxpayers to pick up and move. In Detroit, they did, and very soon in Chicago they will also and hence pension reduction on the horizon. Of course all those public employees will be screaming bloody murder saying they are owed because "they" paid into the system. No, you and your public union, along with your political cronies broke the system, so you all can pay to fix it. Do not come to us taxpayers via the Federal gubmint to bail you out!
Signed,
Fed up taxpayer!
"public union, along with your political cronies broke the system, "
The blame/shame/guilt trip is always laid on 'stingy Taxpayers': never on corrupt Ploiticians or corrupt Unions or corrupt Financiers.
There have been several high profile cases of Derivatives written on GO Bonds, Municipal Debt and the like being triggered and costing the Taxpayers Millions or even Billions of Dollars.
WHO in the government is signing on the dotted line for this shit?
Do they have any fucking clue about what they were doing? Why are they not being held responsible for abuse of office or fraud or criminal conversion, etc?
Where the fuck are the balancing hedges aginst such derivatives?
Are the taxing authorites that they cannot invoke in the first place against the Taxpayers alone supposed to be the hedge?!
Who the hell bets on black at a casino table with their neighbor's and their neighbor's children as a chit for the spin of the wheel? What kind of twisted criminal syndicate allows such a margin chit to be laid on their roulette table in the first fucking place?
AFAIK, not a single ONE of these high profile/big money derivatives deals has resulted in a sudden hundreds of millions or billions of dollars being paid to a municipality or a pension.
Don't you think that if every single time derivatives are employed by bureaucrats and politicians -even if the purported goal is avoiding imposition of public sector jobs cuts and/or higher taxes or fiscal discipline or debt reduction- and invariably the result is exactly the opposite of the stated goal; that it might not be an accident??
The taxes are already too high, the pensioneers promised too much, the inappropriately managed funds are too drastically underfunded, the returns on the funds are too low and too heavily skimmed, the demographics are too heavily skewed, the taxpayers eventually leave when they are asked for too much in return for too little, and the fleeing overburdened Taxpayers leave behind depressed RE markets and depressed industries and depressed retail...
It is not sustainable. The system has already been gutted by the corrupt Politicians and Financiers, the first-in-line over-paid Statist/Unionist bureaucrats,e etc...
It cannot be fixed. It cannot be sustained.
The Pensions cannot be funded and the promised benefits cannot be paid.
It's just a matter of time before capitulation...
"WHO in the government is signing on the dotted line for this shit?"
People who know they'll be long gone before it goes tits up. Which is why my solution is to find them, execute a no knock raid in the wee hours of the night and drag them in front of the cameras in time for the morning show so they can explain to everyone (while the city burns) why they thought 8% CAGR was realistic or even sane. Then perp walk them and take 'em home.
If the above isn't cruel or unusual for innocent people, it sure as shit isn't cruel or unusual for guilty ones.
8% is easy. They'll take 7.4% of it from the taxpayers each year and borrow the rest. Voila! Wanna go for 16?
Anti that is y the fed can never increase rates. Everything in this country is teetering on the edge of a market correction that would bang 401k's and lead to increasing layoffs and possible social unrest. 8%+ assumed return?
LOL
the presidence was already set when First National Bank of Chicago set fees for walk up tellers in 1988.
And where is FNBC now...... I actually started my career with FNBC.......
I used to cover First Chicago Bank and it was led at the end by our old friend Jamie D. When he sold out to JP Chase he gathered the employees and told them what a hardship this would be on his family. Chutzpah
Well thats a bit of an extrapolation, EBT cards are a function of coercive taxation, which the bearer of derives "benefit" from without having ever deposited in the bank or made any agreement on the terms of withdrawl.
But the point is valid as what a bank would love more than anything is to have zero overhead (employees/tellers) and have pure profit.
Electronic "currencies" are just one step closer, I can't wait for a Cypriot-type confiscation of "benefits" as opposed to real cash deposits by the bearer.
"Maybe I'm a dreamer but I'm not the only one." - John Lennon ;-)
Would not want to be in Chi Town when you tell the cops and firemen they won't be retiring in style; having some heavily insured properties in Chicago around that time is another matter.
+1 nmewn
'You think you are all clever, classless and free,
but you are still fucking peasants as far as I can see.'
J. Lennon
and to think all the smart folks say there is no such thing as perpetual moton !!! Bullish !!!
perpetual motion....you must be thinking of the NSA, IRS, SEC, FDA, (to name a few) sitting around watching porn and jacking off 24/7.
aaaah, the greecy underbelly of shitcago, I say get china to manufacture the world's biggest butt plug and shove it up shitcago
That's the trouble with the Future... It Keeps Showing up.
and it looks just like the past.
Deja Vu all over again !!!
memorial day forcast, 98% change of deja vu again with a 2% chance of same old same old
Rather than buy Chicago bonds, I should have instead walked up to a Chicago Policeman and given him a fist full of dollars.
Looks like in the not-to-distant future retiring Chicago cops are going to get a different style of fisting.
at least he would give you a pencil in return... well, back when that could be afforded anyway...
The easiest way to eliminate State independence is to let the unions bankrupt as many as possible. The centralized Fed comes in to save the day - the price is your independence. Illinois is a subset of the entire Federal Government fiscal hairball. Illinois and its obligations will survive because the entire mess will be aggregated into the Federal fiscal situation and hoisted on all country-wide taxpayers. The goal is total centralization and the States' independence is in the way.
Write it off.
Clearly, all of Chicago's problems can be traced to the artificial coloring used to create the neon green pickle relish used on a 'Chicago Hot Dog'. Years of exposure have affected their brains.
It's Ironic you say that....never ate the shit. To me a hot Dog is Mustard and Onion...with no Leprechaun-Jizz colored pickles.
Maybe Giardiniera if Im feeling sassy....
I'm sorry, but surely you mean mustard and sauerkraut.
There is a certain degraded mentality that eats salad with hot dogs.
Yellow mustard only on Sabretts.
There is a certain degraded mentality that eats hot dogs.
I live in the burbs of Chitown....
We're considering a wall.....
What? the freeways aren't enough.. (guess you'll be moving west of I355)
Right now with the Expressway-wideening project it's like driving through a demilitarized zone.
and already West of it....;-)
I-355 was the best thing to happen in Chicago in quite some time (sad.......). Initially, you could get around the city in a flash. Then everyone discovered it.
Until you say, NO MAS, to the very creative and numerous means to which they are going to tax you to solve the problem. You're a slow learner, VERY SLOW.
Seems more like the pensioners are the ones with a billion dollar problem.
Three words: payment in kind.
Probably going to take a while before Chicago declares bankruptcy. Unlike Detroit they don't have a one-dimensional economy.
Then again Detroit should have declared bankruptcy 15-20 years ago.
Chicago?
Pull it!
and the Taxpayers said, "I'm done taking one for the team. moving out of shitcago is going to have to be part of the solution."
shitcago is taking a big tax enema and all the taxpayers are blown out the backdoor, don't forget to flush on your way out.
the modern day interpretation of government cheese, the .gov pension.
The funniest word in the English language: "Retirement." Followed closely by "pension."
I laugh every time I hear them used in a positive or affirmative manner.
Liberty is a demand. Tyranny is submission.
Retirement and pension theme song: https://www.youtube.com/watch?v=yahBtp_1jWE
The local politicos cannot solve this. They are owned by the unions. They will keep doing what they are paid to do.
The Feds must come in and apply the same actuarial discipline that the private sector chafes under. No exceptions. To become solvent, the feds should in turn lend money as needed to keep the pension funds solvent. Where will the money come from to pay back these loans? From those who benefit—the beneficiaries. Since the feds have unlimited ability to tax income in any way they want, they should establish an excise tax on benefits derived from these bailed out pension systems to fund the bailout. Problem solved, a self-funded bailout.
ES....lending of money into this system is not a solution! It is only the same can kicking going on across the globe and eventually will result in confiscated funds for all. We all are the Fed government and eventually have to pay the damn bills the politicians have run up!
And if you do not want to pay...get ready for your permanent retirement to Camp FEMA. I hear it is much nicer than The Villages in Florida and they will have multiple locations all over the United States so you can be close to home.
Cabal's Plans to Create a Plantation System for the US and Europe:
http://winteractionables.com/?p=21178
In Los Angeles they* scrapped a half paid for 3 billion dollar electrical generating plant because it used ocean water for cooling, and ocean water cooling is out of style now.
Rahm Emmanuel gets an offshore bonus based on the new debt he creates.
Seriously.
This is intolerable. Zero and his cohorts in The District will not stand for having their home town's gleaming image tarnished by this propaganda. Everything is organized and awseome. Lean forward...
Harsh reality is that a city full of millions of poor and lower middle class people who can't remotely afford to fund their own pensions can't possibly be taxed enough to fund lavish pensions for every worthless parasite working for city government.
The lower 80% of the public have been impoverished or are on the road to being impoverished. But the well connected top 20% still want all their lifetime benefits. Historically this leads to one thing.
A 1/10th of a percent tax on America's $55T in wealth would cover quite a bit of this. Heck, you could even make it kick in only after the first $10M and it would still be enough.
That's only $55B...a drop in the bucket.
"You get a billion. You get a billion. YOU get a billion!"
Look under your seat. ;)
You are more than mad. You're GMad.
I'm gonna assume those two down votes are Oprah and the Pritzkers.
More porperty taxes coming Chicago's way if Rahm has his way. Just another Detroit, the people still have not gotten it yet.
Compared to the suburbs property taxes are lower. But that may change real soon.
moar property taxes... because the combination of current property taxes, sales taxes, and income taxes simply isn't enough for Chicago or IL in general...
I keep trying to tell my parents they need to GTFO of IL now before it's too late... they're on fixed income and about to be taxed into oblivion...
I'm 52. Born in, and live in Maryland.
As a yoot, I would go to a park, near Baltimore's harbor, and look out over a vast industrial complex. Shipyards, that bustled around the clock. Paint factories for the ships. A GM car plant. Soap. Insulators. The Port. Bethlehem Steel, the largest furnace operation in the world. As many as 30,000 a day worked there. Piston rings. Chrome plating. Koppers. Chemicals. Grace. DuPont. Drywall. Warehousing. A working town. Raincoat factory. Air fresheners. Model trains. Office furniture. Lumber and steel truss manufacturing. American Can Company. Crown Cork and Seal.
And I worked for none of them, and still know of them. We all used to joke and chide how the blue collar workers, in the unions, bled these companies. Get into arguments. You were a union guy or not. Fights would start. Joke about the exorbitant pay and bennies.
And in my short lifetime, it's gone. Almost 100% of the above industry is fucking gone.
Replaced by, I have very little idea of what value is produced in Baltimore. Financialization and tech. Yeah, whatever. Something needs to be " produced" to create value.
Oh, there is Under Armor here. Not bad.
But go down the road to Ft. Meade. That is where NSA has its spook city. 30,000 !!!!!! A day go to " work" there every day. Beth Steel- gone, replaced by a .gov spy agency, looking at us! And being Government, they are the ONLY working class special citizens to get a pension from the company. Unions and government destroyed the private sector. But the still want their candy.
Crash and burn. Sooner the better.
I'll give the Cabal this, they have kept the plates spinning way past the time I thought math, common sense and reality would crash this turd.
We can't fix this. Impossible. It needs to burn to the lug nuts, and we need to start over.
Greece. It's still drawing breathe. What the fuck does it take?
Ditto Newark, NJ
Its all planned, a few people are getting rich moving everything off-shore.
Loans cover the gap for now.
You'll notice the music also sucks.
More specifically:
People who head large global corporations, global investment banks and politicians in between got rich as well as some investors. I believe
What does it take? Stock Market "correction" will be the catalyst. That's y rates can never rise, until it explodes.
Agreed, but where was your short made? How about your shoes and pants? How about your car?
I do know a place in Kentucky where I can buy American made underwear, which I do. I know about it because I searched for it online and found it. My shoes...I buy American made. Same situation...I searched for American manufacturers.
Quit being lazy. Make the effort.
I used to feel the same way but this place hopeless. Grew up with bumper stickers that read "Buy a foreign car, put another American out of work". Now US corporations r all about minimizing tax bill. Cynical, unfortunately yes.
The production was off shored so the corporations could generate more profit to put in their pockets in the form of bonuses, Unions had little to do with the off shoring and in fact most were dead set against it. Union wages or not, no person in the u.s.a could survive on $2.50 per day. Had this off shoring never happened we would not be discussing this topic today. Without unions the middle income group would have never happened.
Government is the blame for it all. Allowing the on shoring of previously u.s made products without tariffs,,, a result of trade treaties and DC's lust for world power in the form of globalization. The new TPP treaty they will ratify, ( it like the others is unconstitutional but hell, who cares about that anymore?), will make past trade treaties look like a walk in the park. The trillions paid in made up wars, mostly going to the MIC industrialists and central banks printing their monopoly money devaluing the currency.
Fascism (corporatism) creates Nazism which creates police states and wars. Look around, one can see Nazis everywhere. A fascist/Nazi government takes over everything and destroys it. Schools, medicine, police, you name it are a complete disaster. Wars, wars and more wars are the result of a power hungry fascist government. This morning on the Drudge report the headline "Senate Republicans gives President new powers" They are unlawfully and unethically delegating powers they don't have. A definite sign of a lost nation.
Fascist Nazi governments are paranoid to the extreme, which explains Ft Meade and hundreds of others like it.
Always remember who the enemy is.
Disclaimer: I am not union member.
Obama and his folks have turned DC and the rest of the country into Chicago.
Chicago has the strongest public unions in the US.
Michael Madigan is the pro public union kingpin. How can taxpayers afford $100K/yr plus public pensions?
As goes Chicago into bankruptcy so does the rest of the country.
For a while my property tax went up equal to my job pay raises then the increases started doubling. I moved SE.
That was 5 years ago. Good luck slaves. Free at last free at last Thank God Almighty I am free at last....
You can look at Chicago then look at the USA as just a larger version of the same thing. Funny thing, aren't Hillary and Prezbo from there? How ironic.
Michael Madigan, John Cullerton and the public union lobbyist will just tax people and businesses out of the state of Illinois.
In the meantime even IL public union pensioners flee the state when they retire due to the taxes and cost of living.
Lets see what all that expensive real estate does when the garbage piles up.
What's my bid?
Lets see what all that expensive real estate does when the garbage piles up.
What's my bid?
Where is Meredith Whitney, the chunky sorority girl, when you need her?
You laugh, but the Fed Reserve accepting munis as collateral proves that chunk sorority girl right in spades.
The obvious answer is a city income tax. Chicago funds itslef with regressive sales and real estate txas while letting the 0.01% - ers off easy. Plus the state just opened the door by lowering the state income tax back to 3%. Yeah, Rahm go for it. You know you want it.
You mean, Chicago is on the precipice of Progressive Utopia.
Look, you want to pay teachers for top-flight public education, this is what you get. You want to pay for a city with the lowest handgun murder rate, this is what you get.
Oh wait.
You want cops that are willing to work in a DMZ? You want firefighters to keep your businesses milking the inner city from burning to the ground?
Illinois, and Chicago in particular, knew they had a problem with pensions as far back as 1945. So what did they do? Not "nothing." They did worse than nothing. They continued to make empty promises and use the false promises of pensions to keep pay rates artificially low. They screwed the workers to placate voters, kniowing that the voters were the ones who would be left holding the bill, and workers would eventually end up getting nothing. They also joined in with corporate pension managers to get the legal contribution minimums lowered time and time again, and to allow the most ludicrous rosy projections of pension fund investment growth. In short, they legalized fraud against their employees, while doing nothing about the obligation they were putting on taxpayers, in the name of keeping taxes artificially low.
My wife is contributing to what she thinks will be a small pension, as a Special Ed teacher. Her job is very hard; really takes it out of her. She has to have a higher level of education compared to level of pay of anyone I know. She makes enough of a contribution to her pension that she should get something. I make several times more money than she does, and we pay enough in state and property tax that she should get something out of her pension. We live in Minneapolis, MN., which actually has better state and city finances than most. But I know damn well that the pension promise is just an imaginary carrot dangled out in front of her to keep her wages low. She would be far better off getting all of her compensation right now. Not that IRAs or 401ks are any better; professional stockbrokers don't make their living from their investments unless they can rig the markets; they make their money from fees and commissions. Amateurs playing the market will lose their shirts, and any hope of "retirement." But at least if my wife got all the compensation promised to her, she could put it in a pickle jar or we could buy a rental property or something that would actually provide income.
You don't lend money to people you know aren't going to pay you back. That's what these pensions are; loans from workers to politicians, guaranteed by the taxpayers. Huh, what could possibly go wrong there?
Thanks for reminding some of the gung-ho here that pensions are something you pay into, not just collect.
Let's see, the real economy goes to shit. The government, who relies on people working for tax money, refuses to downsize or make cutbacks and rolls along business as usual. What could wrong? Not only that, the people that work at the gov't are the ones that can decide they need even more revenue to keep what they have save, regardless of everyone else. And that's precisely what one of the ideas Chicago has...........a plan to raise personal real estate taxes by 50%. Which sadly, from what i've read, only covers operating expenses and doesn't fully address the pension issue. So perhaps a 150% hike is in order. Ludicrous? Don't wan't to pay? You'll have no choice because the people that send out the bills are also the ones that will sell your house on the courthouse steps if you don't pay.
So, your house gets sold for pennies on the dollar, a chinese investment firm buys it, they then rent it out and turn your previous home into a profitable business. Not only that, they have rents in the stratosphere right now. Soon I expect them to look past regulations keeping ten families from living in one home, gota keep those pensions rolling in ya know. Furthermore, owning a home in the US isn't always the greatest thing. One little hiccup with your finances and it's the first thing mentioned in the courtroom every damn time.
Obuma fix.
outsourcing another 10 million jobs thru trade agreements should fix everything
You can see the dialectic developing. Local police forces will be "saved" and subsumed by a federal police force in order to "overcome" the funding issues.
The pension problem is endemic throughout the US.
How can you say no?
thelastman
The result of decades upon decades of 'head in the sand' politics and economic policy - with every rational voice of reason having been shouted down for the entire period.
Why are there old data there in the tables?
When the next recession hits, and the state and local governments are threatened with bankruptcy, QE-Next will be buying state and local debt. Count on it.
Surely Chicago's pension investment advisors are similiar to Atlanta's. THIEVES!
Most of the comments concern unions. Government Unions are just a smokescreen for government employees to take more tax dollars or create rules that exempt gov employees from laws. Police Unions are a great example. They get many police off the hook due to various 'contractual agreements'.
The whole problem lies with the off shoring of production and the middle income jobs that went with it. Without those jobs the tax base shrinks to the point where there are insufficient funds to make the now insolvent programs solvent.
This off shoring was and still is supported by government. Had they not allowed the off shoring t begin with we would not be discussing these problems today.
Always remember who the enemy is. Stop the infighting!
Promises Made, Promises Broken 2014: Unfunded Liabilities Hit $4.7 Trillion
How Bad Is It?
http://www.statebudgetsolutions.org/publications/detail/promises-made-promises-broken-2014-unfunded-liabilities-hit-47-trillion
This is a link to a spreadsheet showing every state in the country.
https://docs.google.com/spreadsheets/d/1uaNVzfeKQ3XD_M696zuuzIWafHnaslkJ...
Why can't they seasonally adjust the data? A stroke of the pen and poof, the deficit becomes a surplus.
Look on the bright side. Thanks to Daley and Emmanuel, Morgan Stanley is making a fucking killing on their 75 yr Chicago parking meter lease.
http://www.bloomberg.com/news/articles/2010-08-09/morgan-stanley-group-s...
http://theexpiredmeter.com/tag/chicago-parking-meter-lease-deal/
http://www.chicagoreader.com/chicago/mayor-emanuel-locks-in-parking-mete...