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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Phil's Favorites

Utilities are starting to invest in big batteries instead of building new power plants

 

Utilities are starting to invest in big batteries instead of building new power plants

This is what a 5-megawatt, lithium-ion energy storage system looks like. Pacific Northwest National Laboratory

Coutesy of Jeremiah Johnson, North Carolina State University and Joseph F. DeCarolis, North Carolina State University

Due to their decreasing costs, ...



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Zero Hedge

Elon Musk Takes Out $50 Million in New Loans, Mortgaging Five Homes

Courtesy of Zero Hedge

We were one of the very first to speculate that Elon Musk had mortgaged 5 of his homes in late January, when we highlighted research by an internet sleuth on Musk's personal financial situation. According to public records cited by Tesla skeptic EVent Horizon and laid out in a timeline on Sutori in late January, Elon Musk looked as though he had leveraged some of his personal real estate.

A follow up report from Bloomberg ha...



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ValueWalk

KHC To Be Bought Out By Berkshire: Here Is Why Its A Possibility

By Jacob Wolinsky. Originally published at ValueWalk.

Whitney Tilson’s email to investors discussing buyer beware of consumer staples sellers; Stamps.com Inc. (NASDAQ:STMP) and The Kraft Heinz Company (NASDAQ:KHC) blowups; Will Buffett buy KHC?; Is the #3G model flawed?; Asia Wealth Summit; Theranos.

I’m sending out today’s email early because there’s so much juicy/timely stuff…

Q4 hedge fund letters, conference, scoops etc...



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Kimble Charting Solutions

Giant Topping Pattern Could Be Forming, Says Joe Friday

Courtesy of Chris Kimble.

The first fact of the day; The long-term trend for tech remains up and the decline into the lows on Christmas Eve DID NOT break this trend!

This chart looks at NDX 100 ETF (QQQ) on a weekly basis over the past 14-years. For the past decade, since the lows in late 2009, QQQ has remained inside of rising channel (1). As you can see the decline into the end of the year lows, did nothing more than test support, which held and a strong rally has followed!

Over the past few months, QQQ could be forming a “Head & Shoulders&...



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Insider Scoop

Salesforce.com's Q4 Report Should Trigger Higher Valuation, Says Bullish Oppenheimer

Courtesy of Benzinga.

Related CRM Oppenheimer Praises HubSpot's Execution, Downgrades On Valuation Benzinga's Top Upgrade...

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Chart School

RTT browsing latest..

Courtesy of Read the Ticker.

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Thursday, 02 August 2018, 07:48:20 PM

Click for popup. Clear your browser cache if image is not showing.


Comment: $600 BN interest payments for US gov, print baby print



Date Found: Sunday, 05 August 2018, 09:22:26 PM

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Comment: Hire FED interest rates always brings double trouble



Date Found: Monday, 06 August ...

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Digital Currencies

Cryptos Are Surging: Bitcoin, Ethereum Hit One-Month Highs As Institutions Dip Toes

Courtesy of Zero Hedge

Cryptocurrencies are surging while the US equity markets take the day off. Ethereum is up over 18% from Friday's 'close' and the rest of the crypto space is a sea of green. While no immediate catalyst (headline or technical level) is clear, increasing chatter over institutional investors dipping their toes in the space have prompted an extension of the positive trend.

A sea of green...

Source: Coin360

Ethereum is leading the charge follow...



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Biotech

Cancer: new DNA sequencing technique analyses tumours cell by cell to fight disease

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

 

Cancer: new DNA sequencing technique analyses tumours cell by cell to fight disease

Illustration of acute lymphoblastic leukaemia, showing lymphoblasts in blood. Kateryna Kon/Shutterstock

Courtesy of Alba Rodriguez-Meira, University of Oxford and Adam Mead, University of Oxford

...

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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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OpTrader

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. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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