Posts Tagged ‘pension plans’

Foreclosures Continue To Dramatically Increase In 2010

Foreclosures Continue To Dramatically Increase In 2010

Courtesy of Michael Snyder at The Economic Collapse 

In a very alarming sign for the U.S. economy, foreclosures have continued to dramatically increase in 2010.  But there has been a shift.  Back in 2007 and 2008, experts tell us that most foreclosures were due to toxic mortgages.  People were being suckered into mortgages that they couldn’t afford with "teaser rates" or with payments that would dramatically escalate after a few years, and when those mortgages reset, the people who had agreed to them no longer could make the payments.  But now RealtyTrac says that unemployment has become the major reason for foreclosures.  Millions of Americans have become chronically unemployed during the economic downturn and many of them are losing their homes as a result.  But whatever the cause, one thing is certain – foreclosures have continued to skyrocket at a staggering rate.

According to a new report from RealtyTrac, foreclosure filings climbed in 75% of the nation’s metro areas during the first half of 2010.  At a time when the Obama administration believes that we are "turning the corner", things just seem to get even worse. 

Some areas of the country continue to be complete and total disaster areas when it comes to real estate.  For example, you have got to feel really sorry for anyone trying to sell a house down in Florida right now.  According to RealtyTrac, Florida led the way with nine of the top 20 metro foreclosure rates in the country during the first half of 2010.

Ouch.

But the worst city for foreclosures continues to be Las Vegas.…
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Seattle’s “Actuarial Valuation” of City Pension Plan Sinks to 62% Funded; I say it’s Far Wors

Seattle’s "Actuarial Valuation" of City Pension Plan Sinks to 62% Funded; I say it’s Far Worse

Courtesy of Mish 

A new Seattle report says the city will have to increase pension contributions to keep its plan solvent. Please consider Seattle’s retirement investments plunge deeply.

The City of Seattle will have to substantially increase the amount of money it pays into its employees’ retirement system to cover future obligations because its related investments took big hits during the economic meltdown, according to a report presented to the City Council Friday.

This situation will put further pressure on a city budget that is already fracturing.

As of Jan. 1, 2008, the city’s retirement "actuarial valuation" funding ratio was 92.4 percent, the report said. That’s the ratio of the assets the city had compared to what it owes for benefits earned by employees. As of Jan. 1 of this year, the funding ratio had dropped to 62 percent – mainly because the city’s stock market holdings tied to retirement accounts dropped 20 percent and other factors.

The study prepared for Seattle by Milliman says the city will have to increase its retirement contribution rates make sure its retirement plans are fully funded. Workers and the city contribute to the plan, but rate hikes for employees are limited to 2 percent, said the report.

City Councilman Mike O’Brien said it’s unrealistic to wait and hope that a Wall Street surge solves the city’s retirement funding problem.

O’Brien said City Councilmembers, who will consider the matter in earnest during fall budget talks, will have to determine whether 1 percent bumps are enough to right the retirement ship.

City of Seattle Pension Results

Inquiring minds are digging into the City of Seattle Pension Plan Funding Report.

An increase in contribution rates is needed to maintain actuarial balance.

  • Employees and employer share rate increases, but rate increase for employees is limited to 2.00% (10.03% total).
  • As of January 1, 2011, employer rate increase needed is 6.97% of payroll.
  • Total employer portion would increase from 8.03% to 15.00% of payroll.

Worse Than It Looks

Note the huge increase in payroll funding. Also note that the study was done on January 1, 2010. The stock market is now down on the year. Thus, it is highly likely that 62% is actuarially overstated .

Is the city going to raise


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NY State Shell Game – Municipalities Borrow from Pension Fund to make Required Pension Fund Contributions

NY State Shell Game – Municipalities Borrow from Pension Fund to make Required Pension Fund Contributions

Seashell Game

Courtesy of Mish

When it comes to pension funding schemes, NY governor David Paterson and the NY legislature have taken can-kicking to ever increasing levels of absurdity. Please consider State Plan Makes Fund Both Borrower and Lender.

Gov. David A. Paterson and legislative leaders have tentatively agreed to allow the state and municipalities to borrow nearly $6 billion to help them make their required annual payments to the state pension fund.

And, in classic budgetary sleight-of-hand, they will borrow the money to make the payments to the pension fund — from the same pension fund.

As word of the plan spread, some denounced it as a shell game and a blatant effort by state leaders to avoid making difficult decisions, like cutting government spending or reducing pension benefits.

“It’s a classic Albany example of kicking the can down the road,” said Harry Wilson, the Republican candidate for comptroller, who holds an M.B.A. from Harvard.

Under the plan, the state and municipalities would borrow the money to reduce their pension contributions for the next three years, in exchange for higher payments over the following decade. They would begin repaying what they borrowed, with interest, in 2013.

But Mr. Paterson and other state officials hope the stock market will have rebounded to such a degree by that time that the state’s overall pension contribution burden will have been reduced.

Another oddity of the plan is that the pension fund, which assumes its assets will earn 8 percent a year, would accept interest payments from the state that would probably be 4.5 percent to 5.5 percent.

This week, Mr. Paterson called borrowing “a last resort,” but added, “I have never said I wouldn’t borrow.”

Oddities Galore

The idea is so absurd that I struggle to believe anyone would propose it, let alone actually vote for it. Yet it passed, and the governor signed it.

Paterson and other state officials hope the stock market will bail them out. I have the odds of that at something like 15%.

Plan assumptions of 8% annualized are highly unlikely to happen. Amazingly, even IF 8% returns came home, Seven State Pension Plans will be Out of Money by 2020.

Mike "Mish" Shedlock

******

Lower picture courtesy of Jr. Deputy Accountant 


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Padded Pensions and What to do About Them

Padded Pensions and What to do About Them

Courtesy of Mish

The New York Times article Padded Pensions Add to New York Fiscal Woes has been making the rounds. At least 20 people sent me the link. Let’s take a look at few snips, then a look at a followup Times article on addressing the problems.

In Yonkers, more than 100 retired police officers and firefighters are collecting pensions greater than their pay when they were working. One of the youngest, Hugo Tassone, retired at 44 with a base pay of about $74,000 a year. His pension is now $101,333 a year.

It’s what the system promised, said Mr. Tassone, now 47, adding that he did nothing wrong by adding lots of overtime to his base pay shortly before retiring. “I don’t understand how the working guy that held up their end of the bargain became the problem,” he said.

According to pension data collected by The New York Times from the city and state, about 3,700 retired public workers in New York are now getting pensions of more than $100,000 a year, exempt from state and local taxes. The data belie official reports that the average state pension is a modest $18,000, or $38,000 for retired police officers and firefighters. (The average is low, in part, because it includes people who worked in government only part time, or just a few years, as well as surviving spouses getting partial benefits.)

Some will receive the big pensions for decades. Thirteen New York City police officers recently retired at age 40 with pensions above $100,000 a year; nine did so in their 30s.

The Times article is 4 pages long so please give it a closer look.

Legal Theft

Undoubtedly Mr. Tassone is not as stupid as he sounds. He knows full well he gamed the system, but it was legal.

Tassone argues he held up his end of the bargain. Excuse me for asking what end is that? Public unions are legalized mobs. They coerce votes from corrupt politicians willing to buy there patronage.

There is no "public end" because there is no one working on the public’s behalf. Indeed the public in general has been crucified with never ending tax hikes to support union thugs who pack every school board in the country, and promise Armageddon if police or firefighters get laid off.

The public is


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There Are Now More Government Employees than Goods-Producing Workers in the US

There Are Now More Government Employees than Goods-Producing Workers in the US

Courtesy of Jesse’s Café Américain

For the first time there are decidedly more government employees than goods-producing (manufacturing) employees in the US according to the Department of Labor.

This chart is from The Mess That Greenspan Made here.

It is interesting to think about this in terms of health care, pension plans, job security, employee loyalty, and so forth.

The reason for this is not the growth of government jobs but rather the drastic shrinkage in US based manufacturing employment while government employment remains resilient. As a percent of the population, the number of government employees is now about 9% which is slightly lower than it was in the 1970′s.

The Service sector dominates. There is a nice chart showing goods-producing, government, service, and non-employed percentages from EconomPicData here.

US corporations have been offshoring jobs for many years, in part due to the structural problems of benefits and environmental costs in a developed nation and Asian mercantilism. Some of this transfer of employee is due to natural market forces, but a great deal of it is a result of purposeful national policy and trade practices such as currency pegs, for example.

As Adam Smith observed in Wealth of Nations (1776):

"To found a great empire for the sole purpose of raising … customers may at first sight appear a project fit only for a nation of shopkeepers. It is, however, a project altogether unfit for a nation of shopkeepers; but extremely fit for a nation whose government is influenced by shopkeepers."

In this case if one substitutes "kleptocrats" for "shopkeepers" and "dollar debt slaves" for "customers" then the quotation may fit the current situation in the US and its reserve currency empire quite well. It also helps to explain the steady role of the government bureaucracy in administering this paper empire, as well as the outsized financial sector.

But one underestimates the resilience of a free people at their peril, as did Napoleon dismissing the English, echoing Smith, "L’Angleterre est une nation de boutiquiers," prior, of course, to his Waterloo in June, 1815.


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Government Fraud: Pensions

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Government Fraud: Pensions

Courtesy of Karl Denninger at The Market Ticker

I warned people about this over a year ago….. 

This morning I had seen a third "notice" that there are widespread "critical shortfalls" in Union Pension Funds.

I put up a short video on the topic and am now getting emails telling me that this is more widespread than has been reported – additional funds have been sending these deficiency notices out.

And in that article I called for general strikes organized by the unions of this nation – what’s left of them anyway.

In fact, here’s the original call:

Yes, I am potentially calling for the Longshoremen to strike every port in the United States.

I am potentially calling for the Teamsters to strike.

I am potentially calling for every State Employee covered by CALPERS to strike.

Of course none of them did.

Now we get this from The Wall Street Journal:

Public employee pension plans are plagued by overgenerous benefits, chronic underfunding, and now trillion dollar stock-market losses. Based on their preferred accounting methods — which discount future liabilities based on high but uncertain returns projected for investments — these plans are underfunded nationally by around $310 billion.

The numbers are worse using market valuation methods (the methods private-sector plans must use), which discount benefit liabilities at lower interest rates to reflect the chance that the expected returns won’t be realized. Using that method, University of Chicago economists Robert Novy-Marx and Joshua Rauh calculate that, even prior to the market collapse, public pensions were actually short by nearly $2 trillion.

Oh, so there’s a little book-cooking going on?

Yeah, you’ve got these "public" pension plans that don’t like the rules that private pension plans have to use for their accounting, and this is what they’re telling their "auditors":

Some public pension administrators have a strategy, though: Keep taxpayers unsuspecting. The Montana Public Employees’ Retirement Board and the Montana Teachers’ Retirement System declare in a recent solicitation for actuarial services that "If the Primary Actuary or the Actuarial Firm supports [market valuation] for


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Phil's Favorites

So You Wanna Be a Stock Picker

 

So You Wanna Be a Stock Picker

Courtesy of 

The stock market has been a treacherous place for the last few months. You wouldn’t know it by looking at the indexes.

I wrote this opening salvo earlier in the week when the S&P 500 was hovering near all-time highs. This morning, due to a new variant in South Africa, stocks are selling off sharply. The Dow Jones Industrial Average, the people’s index, is down over 1,000 points, sitting 5% below the all-time highs from earlier this month.

It’s been a while since we’ve seen these names on the leader and laggard board and I was hoping to never...



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Zero Hedge

"The Omicron Variant" - Magic Pills, Or Solving The Africa Problem?

Courtesy of ZeroHedge View original post here.

Authored by Kit Knightly via Off-Guardian.org,

Yesterday the WHO labelled the sars-cov-2 variant B.1.1.529 as a “variant of concern” and officially named it “Omicron”.

This was as entirely predictable as it is completely meaningless. The “variants” are just tools to stretch the story out and keep people on their toes.

...



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Biotech/COVID-19

The hunt for coronavirus variants: how the new one was found and what we know so far

 

The hunt for coronavirus variants: how the new one was found and what we know so far Scientists find variants by sequencing samples from people that have tested positive for the virus. Lightspring/Shutterstock

Courtesy of Prof. Wolfgang Preiser, Stellenbosch University; Cathrine Scheepers, University of the Witwatersrand; Jinal Bhiman, National Institute for Communicable Diseases; ...



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Politics

The first Thanksgiving is a key chapter in America's origin story - but what happened in Virginia four months later mattered much more

 

The first Thanksgiving is a key chapter in America’s origin story – but what happened in Virginia four months later mattered much more

In the 19th century, there was a campaign to link the Thanksgiving holiday to the Pilgrims. Bettman/Getty Images

Courtesy of Peter C. Mancall, USC Dornsife College of Letters, Arts and Sciences

This year marks the 400th anniversary of the first Thanksgiving in New England. Remembered and retold as an allegory for perseverance and cooper...



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Chart School

Gold and Silver still working higher

Courtesy of Read the Ticker

Using Gann Angles from zero we can time the next run up, and it is near.

The last two days gold and silver are down on the back of central bankers talking the US Dollar higher in a attempt to off set inflation. A rising dollar is a form of tightening. Also the talk of a faster 'taper' has sent interest rates higher. But Luke Gromen knows this cant not last.

@LukeGromen Externally-financed twin deficit nations with insufficient external financing (ie the US, not Japan) cannot abide rising real rates for long.


RTT Comments: What this means a higher US Dollar makes it harder for those outside the US to buy the vast quantity of US Treasuries. 


U...

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Digital Currencies

Stablecoins: these cryptocurrencies threaten the financial system, but no one is getting to grips with them

 

Stablecoins: these cryptocurrencies threaten the financial system, but no one is getting to grips with them

Safe as houses? iQoncept

Courtesy of Jean-Philippe Serbera, Sheffield Hallam University

Cryptocurrencies have had an exceptional year, reaching a combined value of more than US$3 trillion (£2.2 trillion) for the first time in November. The market seems to have benefited from the public having tim...



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Promotions

Phil's Interview on Options Trading with TD Bank

TD Bank's host Bryan Rogers interviewed Phil on June 10 as part of TD's Options Education Month. If you missed the program, be sure to watch the video below. It should be required viewing for anyone trading or thinking about trading using options. 

Watch here:

TD's webinar with Phil (link) or right here at PSW

Screenshots of TD's slides illustrating Phil's examples:

 

 

&n...



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Kimble Charting Solutions

Crude Oil Cleared For Blast Off On This Dual Breakout?

Courtesy of Chris Kimble

Is Crude Oil about to blast off and hit much higher prices? It might be worth being aware of what could be taking place this month in this important commodity!

Crude Oil has created lower highs over the past 13-years, since peaking back in 2008, along line (1).

It created a “Double Top at (2), then it proceeded to decline more than 60% in four months.

The countertrend rally in Crude Oil has it attempting to break above its 13-year falling resistance as well as its double top at (3).

A successful breakout at (3) would suggest Crude Oil is about to mo...



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ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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