PowerSwitch

In another thread, Ken highlighted the financial problems facing at least 3 States. The article he quoted can be found here and this is a good follow up.

The events of the past few days have crystallised things.
Firstly, Bloomberg tries to put everything into perspective:
American State Pension Funding Time bomb

Somewhat surprisingly, it was Maine who got on the act first:
Maine Governor won't sign budget proposal and allows a shutdown

Then there's Connecticut: Social Services agencies prepare for deep cuts with no budget

Then there is Illinois: Judgement ruling goes against Illinois - must pay $ billions in Medicaid

Expect outbreaks of Disaster Capitalism being liberally applied in these States.

The latest from James Kunstler puts it into a more personal level:

James Kunstler wrote: An awful lot of Americans must be maxed out, though, people who actually used to work at things and get paid for it. Each one of them is a walking Illinois now, facing each dawning day with a bigger load of problems, more things they can’t pay for, and moving closer to the dreadful day when everything is gone, every chattel, every knickknack, the very roof over their head, and most particularly the belief that they live in a fair and decent society.

So, I wonder what we’re going to do with a Tweety-Bird-in-Chief in the White House when this deal goes down. Stresses and tensions are out there a’buildin’ and the time for being a nation of feckless idiots is drawing to a close. The sad thing is: it wasn’t even fun while it lasted

James Kunstler: An Awful lot of Americans are Walking Illinois

Americans have been living beyond their means for decades now and the chicken's are coming home to roost.

it's tough but inevitable.

As Greer warns the average American will need to get used to being poor in the future.

Isn't Illinois a bigger basket case than Greece?

It's all cracking up... state debt, social security and the pension system, not just in America but in the rest of the world as well.

The limits to growth jaws are clamping down ever harder on our business as usual system.

http://www.caseyresearch.com/articles/t ... -should-do

It was the letter Jerry Deaton had been fearing.

Deaton, a 69-year-old retired truck driver, was waiting for his pension check from Teamsters’ Central States Pension Fund. It has 400,000 participants in 37 states.

The news was devastating. Deaton stared at the letter stating his pension would be cut in half.

Said Deaton, “It doesn’t leave you with much options. I’ll be 70 in December. Who’s going to hire a 70-year-old truck driver?�

Deaton’s story is a microcosm of America’s impending pension crisis.

While the mainstream media focuses on the looming insolvency of Social Security and Medicare, the pension system is quietly on the verge of collapse.

According to Moody’s, federal, state, and local employee pension plans have a combined $7 trillion in unfunded liabilities.

That’s 40% of U.S. gross domestic product (GDP).

Our world is dying.

State employee pensions are more of a kicking the can down the road thing rather than a limits to growth thing.

Lord Beria3 wrote:It's all cracking up... state debt, social security and the pension system, not just in America but in the rest of the world as well.

The limits to growth jaws are clamping down ever harder on our business as usual system.

http://www.caseyresearch.com/articles/t ... -should-do

It was the letter Jerry Deaton had been fearing.

Deaton, a 69-year-old retired truck driver, was waiting for his pension check from Teamsters’ Central States Pension Fund. It has 400,000 participants in 37 states.

The news was devastating. Deaton stared at the letter stating his pension would be cut in half.

Said Deaton, “It doesn’t leave you with much options. I’ll be 70 in December. Who’s going to hire a 70-year-old truck driver?�

Deaton’s story is a microcosm of America’s impending pension crisis.

While the mainstream media focuses on the looming insolvency of Social Security and Medicare, the pension system is quietly on the verge of collapse.

According to Moody’s, federal, state, and local employee pension plans have a combined $7 trillion in unfunded liabilities.

That’s 40% of U.S. gross domestic product (GDP).

Our world is dying.

Consider that GDP is a per year calculation and future obligations of a pension fund are paid out over the lifetime of the recipients which on average is ten years after age sixty five or initial retirement. It still is a big figure which should never have been allowed to accumulate but it doesn't have to be settled in just one year.

johnhemming2 wrote:State employee pensions are more of a kicking the can down the road thing rather than a limits to growth thing.

Not really John. One of the main reasons that state employee pensions are bankrupt is that the old growth rates have died away... lower growth means lower returns and a bigger deficit.

The big picture is, as always, limits to growth.

Lord Beria3 wrote:

johnhemming2 wrote:State employee pensions are more of a kicking the can down the road thing rather than a limits to growth thing.

Not really John. One of the main reasons that state employee pensions are bankrupt is that the old growth rates have died away... lower growth means lower returns and a bigger deficit.

The big picture is, as always, limits to growth.

Governments have not stopped growing yet so that is not the cause.
The ones I am familiar with are under funded because they have payment formulas that are unrealistically generous. One lets policemen retire after twenty years while only investing contributions at a rate that would require thirty years of service. Another pays out based on the highest salaries earned or the three highest years which lets an employee get a promotion to a job where they set their own overtime schedule as a supervisor and max it out for three years and retire on that over worked supers salary while for twenty seven years they worked for much less and avoided overtime like the plague. Another lets cops work traffic details on overtime to build up their last three years so you have Captains watching construction workers dig holes. Another lets employees accumulate up to a thousand hours of leave pay (Six months worth)which is paid out on retirement and counted in his highest year.
All these things are not the idea of the rank and file but were negotiated by union reps during contract negotiations. The government fools on that side of the table accept them time and time again because they make little impact on this years budget balance and only begin to bite after their own retirement date.
Once in place as law or rules the employees can' be faulted for playing by them.

You are allowing your prejudices to cloud your judgement V. The entire system is overstretched on the back of the assumption of perpetual growth. The unions and their demands were but one facet of this.

It's systemic.

Lord Beria3 wrote:

johnhemming2 wrote:State employee pensions are more of a kicking the can down the road thing rather than a limits to growth thing.

Not really John. One of the main reasons that state employee pensions are bankrupt is that the old growth rates have died away... lower growth means lower returns and a bigger deficit.

The big picture is, as always, limits to growth.

Actually no. The state employee pensions were often given in a much more generous manner to private pensions because it did not impact today's budget. Hence it kicked this particular can down the road.

Obviously massive growth may have dealt with it, but the pensions were often not funded anyway.

johnhemming2 wrote:...The state employee pensions were often given in a much more generous manner to private pensions because it did not impact today's budget. Hence it kicked this particular can down the road.

Obviously massive growth may have dealt with it, but the pensions were often not funded anyway.

Since you you appear to suffer from similar prejudices to V, I shall repeat the point:

You are allowing your prejudices to cloud your judgement. The entire system is overstretched on the back of the assumption of perpetual growth. The unions and their demands were but one facet of this.

It's systemic.

The pensions issue, however, would/will be a problem even if we manage the current growth levels over time.

johnhemming2 wrote:The pensions issue, however, would/will be a problem even if we manage the current growth levels over time.

We can agree on that John.

No wonder the USA government are trying to get rid of their healthcare system.

Lower life expectancy would improve their finances

More on Illinois and Chicago:

Mish Shedlock: The Way How Chicago "Works"

The Coli family has been active in politics for years and is well-known for spreading around union cash to various candidates. Coli and his relatives have also been accused in civil lawsuits in both state and federal court of running the union like a racket — accusations they have vehemently denied.

In a 2011 deposition stemming from one suit, Coli was asked under oath why so many of his relatives were allowed to control the union’s lucrative pension funds. “For the record, go f— yourself,� Coli answered, according to a transcript in court records.

“So I take it you’re refusing to answer that question?� the plaintiff’s attorney asked. “I think the answer speaks for itself,� the transcript quoted Coli as saying.

Sounds like the fox had the keys to the henhouse there, then...