Posts Tagged ‘public pensions’

Schwarzenegger on Public Pensions and the Cost of the “Protected Class”

Schwarzenegger on Public Pensions and the Cost of the "Protected Class"

Courtesy of Mish

44014, LOS ANGELES, CALIFORNIA - Thursday August 26, 2010. Arnold Schwarzenegger, the 38th Governor of California, is spotted walking back to his convertible after having breakfast at Le Pain Quotidien in Brentwood. Arnold, who could be seen snacking on a treat, wore a white button up, blue trousers, a silver wallet chain and a large wrist watch. Photograph: Pedro Andrade/Kevin Perkins,  PacificCoastNews.com   + 1

Now that Schwarzenegger is a certifiable lame duck (dead duck may be a more appropriate term) Schwarzenegger sees fit to take on public unions in a major way. It’s too late now (for him) even as he speaks the truth.

Please consider Public Pensions and Our Fiscal Future by Arnold Schwarzenegger.

Recently some critics have accused me of bullying state employees. Headlines in California papers this month have been screaming "Gov assails state workers" and "Schwarzenegger threatens state workers."

I’m doing no such thing. State employees are hard-working and valuable contributors to our society. But here’s the plain truth: California simply cannot solve its budgetary problems without addressing government-employee compensation and benefits.

Thanks to huge unfunded pension and retirement health-care promises granted by past governments, and also to deceptive pension-fund accounting that understated liabilities and overstated future investment returns, California is now saddled with $550 billion of retirement debt.

The cost of servicing that debt has grown at a rate of more than 15% annually over the last decade. This year, retirement benefits—more than $6 billion—will exceed what the state is spending on higher education. Next year, retirement costs will rise another 15%. In fact, they are destined to grow so much faster than state revenues that they threaten to suck up the money for every other program in the state budget.

At the same time that government-employee costs have been climbing, the private-sector workers whose taxes pay for them have been hurting. Since 2007, one million private jobs have been lost in California. Median incomes of workers in the state’s private sector have stagnated for more than a decade. To make matters worse, the retirement accounts of those workers in California have declined. The average 401(k) is down nationally nearly 20% since 2007. Meanwhile, the defined benefit retirement plans of government employees—for which private-sector workers are on the hook—have risen in value.

Few Californians in the private sector have $1 million in savings, but that’s effectively the retirement account they guarantee to public employees who opt to retire at age 55 and are entitled to a monthly, inflation-protected check of $3,000 for the rest of their lives.

In 2003, just before I became governor, the state assembly even passed a law permitting government employees to purchase additional taxpayer-guaranteed, high-yielding


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Huge Battle Looms Over Public Pensions – Who Will (Who Should) Foot the Bill?

Huge Battle Looms Over Public Pensions – Who Will (Who Should) Foot the Bill?

Courtesy of Mish

Public pension plans are $1 to $3 trillion underfunded. I think the number is closer to $3 trillion and destined to get worse. However, even $1 trillion is a massive problem.

With so much at stake, a Battle Looms Over Huge Costs of Public Pensions

There’s a class war coming to the world of government pensions. The haves are retirees who were once state or municipal workers. Their seemingly guaranteed and ever-escalating monthly pension benefits are breaking budgets nationwide.

The have-nots are taxpayers who don’t have generous pensions. Their 401(k)s or individual retirement accounts have taken a real beating in recent years and are not guaranteed. And soon, many of those people will be paying higher taxes or getting fewer state services as their states put more money aside to cover those pension checks.

At stake is at least $1 trillion. That’s trillion, with a “t,” as in titanic and terrifying.

Given how wrong past pension projections were, who should pay to fill the 13-figure financing gap?

Consider what’s going on in Colorado — and what is likely to unfold in other states and municipalities around the country. Earlier this year, in an act of rare political courage, a bipartisan coalition of state legislators passed a pension overhaul bill. Among other things, the bill reduced the raise that people who are already retired get in their pension checks each year.

This sort of thing just isn’t done. States have asked current workers to contribute more, tweaked the formula for future hires or banned them from the pension plan altogether. But this was apparently the first time that state legislators had forced current retirees to share the pain.

The state’s case turns, in part, on whether it is an “actuarial necessity” for the Legislature to make a change. To Meredith Williams, executive director of the Public Employees’ Retirement Association, the state’s pension fund, the answer is pretty simple. “If something didn’t change, we would have run out of money in the foreseeable future,” he said. “So no one would have been paid anything.”

Meanwhile, Gary R. Justus, a former teacher who is one of the lead plaintiffs in the case against the state, asks taxpayers in Colorado and elsewhere to consider an ethical question: Why is the state so quick


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Put on Your Party Hats – It’s Time to Party for Another Decade!

Mish is a picture of optimism compared to Robert Prechter (of Elliott Wave Fame).  Robert Prechter is wrong, instead of dropping to 1,000, the Dow may only drop to 5,000, and even that may be too pessimistic in Mish’s eyes. - Ilene 

Put on Your Party Hats – It’s Time to Party for Another Decade!

Courtesy of Mish 

I don’t know about you but I am psyched. The prospects of an ongoing party for another decade are extremely good as the following chart shows.

Dow Jones Industrial Average – 1999 to Present 

click on chart for sharper image

Market participants put on their party hats and started cheering in 1999 when the DOW crossed 10,000 for the first time. They have been cheering pretty much nonstop ever since.

Admittedly there was a bit of a party lag between early 2005 and late 2008 but the party hats have been working overtime since mid-2008 as shown below.

Dow Jones Industrial Average – October 2010 to Present 

click on chart for sharper image

Lost Decades Comparison

Please bear in mind that some pessimists liken the above behavior to a period of stunning underperformance of the Japanese Nikkei Index over the last two decades.

Japan’s Two Lost Decades

click on chart for sharper image

The Perpetually Optimistic Mish

Being the ever-optimist that I am, I want to quickly point out that while Japan essentially went straight down over two decades, the US by comparison has put in stunning outperformance by going nowhere.

Top hat and champagne glass held aloft for New Year's

Indeed, the Dow Jones Index is remarkably sitting exactly where it was in April of 1999, over 10 years ago while the Nikkei over the same timeframe fell by about 50%.

Optimists such as myself have only one thing to say: Hallelujah!

Meanwhile doom and gloomers like Robert Prechter think the Dow will fall to 1,000.

To that I say "Poppycock" (pretty harsh language indeed for those who know me well).

By my optimistic comparison, I think the Dow’s downside is 5,000. That is a stunning 400% more optimistic appraisal of the current state of affairs than Prechter.

Furthermore, I freely admit that the DOW, instead of dropping, just may meander around 10,000 for another decade.

Wow. Except for public pension plan assumptions, imagine the parties we can have over that!

Mike "Mish" Shedlock


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North Korea's growing criminal cyberthreat

 

North Korea's growing criminal cyberthreat

Money is a crucial target for North Korea’s hacking efforts. rega rega/Shutterstock.com

Courtesy of Dorothy Denning, Naval Postgraduate School

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Zero Hedge

Top South Korean Crypto Regulator Found Dead "From Unknown Cause"

Courtesy of ZeroHedge. View original post here.

The struggle between the South Korean Ministry of Finance and Ministry of Justice over the future of cryptocurrency regulation - a debate that mostly played out during December and January - terrified crypto traders who feared the South Korean government was on the verge of - wittingly or unwittingly - devastating the market.

Headlines about a pending ban in South Korea helped drive the bitcoin price more than 60% lower in January - its largest monthly drop in years - but now that the debate has been settled, the price has been steadily climbing again,...



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Stifel Sees Reboot Opportunity For Chipotle, Upgrades From Sell To Hold

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As Bitcoin Nears $11,000, Here's A History Of Its Biggest Ups And Downs

Courtesy of ZeroHedge. View original post here.

The cryptocurrency rebound off Feb 5th's bloodbath lows (below $6,000 for Bitcoin) has been impressive, as a 'mysterious' massive buyer 'bought the dip' and momentum took care of the rest.

With Bitcoin now nearing $11,000 (almost a double off the lows), ...



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What is 'right to try,' and could it help?

In this March 18, 2011 photo, Cassidy Hempel waved at hospital staff as she was being treated for a rare disorder. Her mother Chris, left, fought to gain permission for an experimental drug. AP Photo/Marcio Jose Sanchez

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Mapping The Market

The tricks propagandists use to beat science

Via Jean-Luc

How propagandist beat science – they did it for the tobacco industry and now it's in favor of the energy companies:

The tricks propagandists use to beat science

The original tobacco strategy involved several lines of attack. One of these was to fund research that supported the industry and then publish only the results that fit the required narrative. “For instance, in 1954 the TIRC distributed a pamphlet entitled ‘A Scientific Perspective on the Cigarette Controversy’ to nearly 200,000 doctors, journalists, and policy-makers, in which they emphasized favorable research and questioned results supporting the contrary view,” say Weatherall and co, who call this approach biased production.

A second approach promoted independent research that happened to support ...



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An Interview with David Brin

Our guest David Brin is an astrophysicist, technology consultant, and best-selling author who speaks, writes, and advises on a range of topics including national defense, creativity, and space exploration. He is also a well-known and influential futurist (one of four “World's Best Futurists,” according to The Urban Developer), and it is his ideas on the future, specifically the future of civilization, that I hope to learn about here.   

Ilene: David, you base many of your predictions of the future on a theory of historica...



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Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

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Mid-Day Update

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