Joe Nation at Stanford’s Institute for Economic Policy Research says that California’s public employee pension funds may be underfunded by $200 billion. The Orange County Register says the taxpayer is ultimately on the hook for whatever the pension fund shortfall turns out to be. The estimates vary. “An analysis by the Foundation for Education Choice estimated California public retirement systems’ unfunded liabilities at $326 billion, more than three times the state’s own estimate.”
One estimate goes as high as half a trillion dollars. “Nation’s findings, issued by SIEPR on Thursday, follow a previous study conducted by four Stanford students who estimated that the three state employee pension plans – CalPERS, CalSTRS and the University of California Retirement System – could be underfunded to the tune of $500 billion.” The LA Times argues that things won’t be so bad if pension managers can get good returns. “Nation based that figure on a “risk-free discount rate” that projected that the funds would earn an extremely conservative average return of 4% a year. California pension administrators consider a 4% return as too low and base their forecasts on average annual returns of between 7% and 8%.”
State public pensions are clearly underfunded. With the taxpayers in revolt, there are limited ways to meet the crisis. One way the state can meet its obligations is simply to cut current employment to pay retirees. “The growing obligation could force local governments to devote half of their payroll over the next 18 years to pay for such so-called unfunded liabilities.” But that would be ridiculous. The other alternative is for the pension funds to make more money on investments. The Union-Tribune says that fund administrators are “scrambling as hard as they can to ramp up investment returns”. Calpers claimed it got a 13.3% return on investment last year. According to the Wall Street Journal
Chief Investment Officer Joe Dear said Tuesday the latest report showed a gain of more than $40 billion from the lowest point of the recession in March 2009. “We also beat our benchmark of 12.95% and eclipsed return targets for every asset class except real estate,” he said.
The results exceeded Calpers’s long-term annualized earnings target of 7.75% and raised its 20-year return average through June 30 to 7.65%.
Calpers said it saved almost $300 million in fee reductions with external managers, has eliminated low-performing funds from its portfolios and is developing new risk-management tools.
As part of that effort, the pension fund will put $500 million into “Green” investments, a move which the Los Angeles Times reports will “go into firms that work to reduce greenhouse gas emissions, produce renewable energy, create clean water and waste options or support carbon trading efforts.”
The strategy is a shift for the nation’s largest public pension fund in that it will be managed internally and it will support “top performers that have improved share value and also done good for the environment,” said Calpers board President Rob Feckner. Previously, it had invested on externally managed funds that excluded the worst environmental offenders.
To be considered by Calpers, companies must draw a material portion of their revenue from low-carbon energy, water, waste and pollution control, and other environmentally friendly activities. The strategy will be modeled after HSBC Holdings PLC’s (HBC) Global Climate Change Benchmark Index.
Investopedia explains that “Green investments are traditional investment vehicles (such as stocks, exchange-traded funds and mutual funds) in which the underlying business(es) are somehow involved in operations aimed at improving the environment. This can range from companies that are developing alternative energy technology to companies that have the best environmental practices.” By making these investments, Calpers is tying its future to the “Green” industry. Green investments are not risk-free however. MSN Money warned in 2007 of a “Green Bubble”, which so far has not yet materialized. The Green industry has plugged along since then. The Financial Times said that returns on investment varied by shade of color. Some “dark green” funds were so restrictive they passed up otherwise lucrative prospects. But “light green funds” allowed investors to make money and “make a difference”.
But if environmentalism was no longer seen as making a difference nor required by government, the bottom could fall out of the industry. Green investments are linked to two factors. First, the intensity of environmental regulations and second, the perceived benefit of “green” activities. Reuters described the effect of a failure to pass environmental legislation in Congress as a setback for “Green” investment.
With the death of climate legislation in the U.S. Congress, Frank Alix’s job has become a lot tougher. Alix is co-founder and CEO of Powerspan, a New Hampshire-based company that says it has developed a technology for snaring carbon dioxide from power plants. Earlier this year, Alix had been optimistic that Congress would pass a climate bill, offering incentives for carbon capture and storage (CCS) and putting a price tag on emitting carbon. That would have caused a dozen utilities to install Powerspan’s equipment, he figured.
“We as a company and as a group of investors bet that the U.S. might provide leadership,” he says.
That didn’t happen under a Congress controlled by Democrats, and now that the Republican Party has taken control of the House of Representatives, it appears to be a virtual impossibility. There’s widespread agreement in Washington that climate legislation is completely off the table until at least the 2012 election, if then. And Alix’s projected market in the U.S. has evaporated. “Without a price on carbon, these projects will cost hundreds of millions of dollars and no one will do them,” he says.
“Without a price on carbon, these projects will cost hundreds of millions of dollars and no one will do them”. That would spell bad news for Calpers. Politics and investment have historically been linked together, especially in the Golden State. The nightmare scenario for California is that environmentalsm may eventually be seen, in whole or in part, as a scam — and optional too. In that situation, Green investments would neither be a regulatory requirement nor a perceived benefit. And in that case, Calper’s Green will go into Red.
embedded by Embedded VideoYouTube Direkt
Tip Jar or Subscribe for $5
So no consideration given on cutting back on the payments themselves?
I have an idea: cut the retirement payments by half, but give every retiree a free case of cigarettes per month, and an ounce (or six) of state-grown or seized marijuana. That way they’ll stay home and pacified and die earlier, saving payouts, so everybody wins.
Heard on Rush the other day that the Chicago carbon trading market had closed a few weeks ago, the price of a ton of CO2 having fallen from $7.00 to $0.10 since Captain Trade had been defeated by the Continental Congress, or whatever it was. Goldman Sachs and Algore being the primary losers in the closure.
Cutting pension payments? Of course not! Understand, the public unions keep pensioners on the voting rolls, by now, they outnumber the currently “working” union members. So yes, the unions will sacrifice current employment to protect pensioners.
Wretchard said:
“The nightmare scenario for California is that environmentalsm may eventually be seen, in whole or in part, as a scam — and optional too. In that situation, Green investments would neither be a regulatory requirement nor a perceived benefit. And in that case, Calper’s Green will go into Red.”
Our newly elected governor Jerry Brown has convinced himself and his following that Green Technology will be the economic engine that pulls California out of the hole that it currently is in. The opposite is almost certainly true, i.e. that Green Technology is probably an economic scam along the lines of the Dot Com and Subprime mortgage fiasco. The liberals who run California politics are ignoring the first rule about getting out holes, i.e. stop digging. Of course, if one is a moonbat then not being “stuck on stupid” is hard to do…
The Foldin’ State will always have the TSA to touch its junk (bonds) when no one else will.
The USA got lucky on this. Well Maybe. We get to watch what happens in Europe, which is ahead of the USA going down this slippery slope (ceramic tube?). It may not be luck. President Reagan had a lot to do with America getting a late start on the road to ‘ell. So long as the MSM keeps coverage of the euro-riots, American citizens will have what might be called a ‘shot across the bow’. A warning at least. But first that will mean allowing one of the bankrupt states to go down the tubes. California thinks the rest of America will bail them out. Until they are proven wrong, they will not change their evil ways. Witness the election of the guy who basically started it all, many years ago. California didn’t just wake up one morning a mess. They spent decades working their way there.
I’ll say this in defense of Gov-elect Moonbeam: I’m sure he doesn’t actually *believe* in any of that green technology hoohah. But then, I’m afraid that what Moonbeam believes and what comes out of his mouth, are rather poorly correlated these days, much worse in that regard now than thirty years ago.
California is the second world’s largest hate-based organization after the US government. It is racism that motivates them to destroy the lives of the majority of the population. Hate also fuels the necessary brutality and use of deadly force in order to subjugate their pecuniary wards of state. It allows them to demand lucre at whatever price they care to demand. Though the money will be taken from what are effectively state owned laborers, the cost is bundled with environmental issues to water down the appearance of the extortion that it really is. Americans are no good in their eyes and must not be allowed to prosper. Their numbers can be reduced through selective breeding and by draining them of resources to raise their children. That is why California gives billions of tax payer dollars a year to illegal aliens. It is a war of attrition.
“As part of that effort, the pension fund will put $500 million into “Green” investments, a move which the Los Angeles Times reports will “go into firms that work to reduce greenhouse gas emissions, produce renewable energy, create clean water and waste options or support carbon trading efforts.”
Translation. Lefty, hooked up hacks start company, get lefty legislator friends to mandate their service, citizens are forced to pay, or else lefty government enviro cops pull guns, bring you before lefty judge as criminal.
It’s a win win for the pension, the lefty ‘investors’, the legislature gets saved the direct pension costs and the armed enviro security cops get more jobs.
To follow the money, follow the green.
Yeah, but we CA retiree’s are “lusty” and “brawny”, at least according to Warner Bros. Come on up to the foothills and try to sneak up on us, sometime.
Moonbeam the moonbat. I like that, Eggplant. Talk about being about five years behind the curve on the “green market” scam, the incoming governor in one fell swoop demonstrated he is even more simpleminded than the Austrian weight lifter. Sure gonna be fun until the “big one” hits, eh?
I’m afraid that what Moonbeam believes and what comes out of his mouth, are rather poorly correlated these days
But his clothing is beautifully coordinated, thanks to his wife, “a former lawyer for Gap Inc., whose recent clothing counsel included urging her husband to buy new suits for the gubernatorial campaign.
Maurice Himy, co-owner of the now-defunct Spaccio, recalls selling Brown ‘fine Italian goods.’ But these days, ‘I think he and his wife shop at Saks Fifth Avenue.’ (Brown’s campaign declined to make the governor-elect or his wife available, citing their busy schedule.)”
http://articles.latimes.com/2010/nov/14/image/la-ig-jerrybrown-20101114
There’s gold in them thar suits in Sacramento, even if nowhere else in CA. New koan for the former student of Zen: What is the sound of one jaw flapping?
8. Annoy Mouse ranted
Please be so kind as to clarify who “them” am. You obviously feel strongly about somebody, but who it is you refer to is unclear. Thanks.
Josh/2; don’t let your guard down –the trade didn’t disappear –in fact it’s worse now, it’s in Green Hell, on the EEX in Leipzig, Chermany. They’re not gonna let AlGore trade tho, unless he dresses up like Heidi and serves traders those gallon steins of beer.
“GORE!”
“Yes, mein herr?”
“How vas der MASSAGE?”
“VERY funny, sir, may I serve you a refill?”
***
PACat –LOL –”foldin’ state” –Governor Spoondream of the Foldin’ state –haw haw
and Senator Barbaric Boxhead
and Congressmadam Maximum Squatters
The idea that mankind needs to sequester carbon via artificial means is a prime indicator of anti-logic.
The vast bulk of the life on this green / blue planet is doing that just to maintain existence.
Higher levels of carbon dioxide accelerate sea shell growth AND plant growth across all environments.
If the environment was a true concern, some attempt would be made to address the massive flotsam drifting across the wide oceans. Something like changing our plastics over to a more biodegradeable polymer or at least making them denser than sea water.
49rD – 12
The government. The ones who have an endless list of hyphenated Americans that they ‘love’. It has occured to me, that the government doesn’t really ‘love’ everyone except for euro-Americans but basically has raced based policies and quotas that disenfranchise only those who are disadvantaged by being white males.
I guess I find all of the fill in your race here forms to be offensive when openings in education and and employment use quotas. I also find it offensive that a bankrupt state gives billions to foreigners because they ‘like’ them. It sounds like race based preferences to me.
When you play 3 card Monty but you lose no matter what, the money and benefits always seem to go to someone else’s sacred cow, you realize that the decks are stacked against you and it isn’t chance. The government will rule against you every time. The only thing that changes is the excuse. They don’t love Hugo Chavez as much as THEY hate you.
Maybe I am wrong but it explains everything.
The Union-Tribune says that fund administrators are “scrambling as hard as they can to ramp up investment returns”.
This is staggeringly stupid. Remember Orange County and their can’t-lose pension fund investments? Oh-so-smart fund managers lead Californians into oh-so-brokitude – just like Bernie Madoff.
AM – 15 I concur as far as the feds are concerned. When it comes to the CA state government types I believe they are not smart enough to mimic the feds. Instead, each administrator is simple-mindedly stuck on “looking out for his/her own” at the expense of society n general and political sanity. It’s not racist, it’s arrogant hubris.
17 IS.
Actually it’s not really the same thing. CalPers fund managers have an excellent long-term record on investments. For years they’ve diversified all over the place. Oh, sure. A few of their investments were based on stupid “politically correct” ideas, but by-and-large they’ve been brilliant. The Orange County thing was because of lack of diversification, all eggs in one basket stuff, from what I’ve read.
49rD –
“Instead, each administrator is simple-mindedly stuck on “looking out for his/her own” at the expense of society n general and political sanity.”
If you mean that bureaucrats are just looking out for their own race, I’d agree. But what are race and gender questions doing on innumerable state forms? I am unemployed for the first time in 35 years; I filled out that form and had to answer to my race and gender. It didn’t ask if I was gay or transgendered but that is next. It ought to be unconstitutional to screen applicants for college and employment based on race, ethnicity or gender preferences. Keeping those stats takes time and money and one must wonder what the obsession is. It can only be because the information is being used to ensure ‘social justice’.
My take is that it is racist and it is wrong. Maybe it is not as bad as a majority against a minority but there is no ‘good’ racism, even to right past injustices. You are either for equality or you are against it I am pretty sure that the bureaucrats in Sacramento are against it.
That said, I think the feds are worse too.
Gold is where you find it and God is where you find Him…but they aren’t often in the same place.
We may be looking for answers to all the wrong questions…because we have leaders who can’t lead, representatives who don’t represent, democrats who don’t believe in democracy, governors who don’t govern, and legislators who don’t even read legislation.
In other words, we don’t have a prayer. Literally.
I’d get out of CA whilst there’s still gas available.
The Golden State persists in schemes
That lead to chasing gold moonbeams
That lead to oversold boom dreams
Producing milk and honey
Where leprechauns spin straw to gold
And nights are warm and never cold
And lefty knights forever bold
With other peoples’ money
They never think that they be wrong
That time is short and pain is long
They laugh and sing a merry song
And everyone keeps dancing
But soon the piper must be paid
Someone will call a spade a spade
And lefty dreams will be unmade
The boil is ripe for lancing
This is horrible.
I was married for to a woman in CA who was a public employee, and she was always really pleased with herself about the big fat pension she was laying up for herself.
When she told me she’d decided she didn’t want to be married any more I thought I was well shot of her.
Now this news is telling me I’ll be paying for her stinking pension from across the continent, because the turd-for-brains California legislators have given away the future, and the turd-for-brains Jurists smugly tell us we all have to pay the bill.
What is it about being a public employee that makes you more worthy than ANYONE WORKING IN THE PRIVATE SECTOR????
Truly massive investment pools CANNOT escape the general economy.
Hence TIAA/CREF stays with a zero market timing investment philosophy — indexing the American economy via the S&P….
CALPERS followed TIAA/CREF — mostly.
However, some players have been able to dip into the honey pot — getting it to invest in off beat schemes.
The REAL threat to all pensioners everywhere is ZIRP from Benny and the Press.
His antics MUST necessarily gut investment returns for all passive investments everywhere.
The math is daunting. On present trends, Benny and the Press are going to blow up every pension fund, annuity and insurance firm. After all, they are the primary target of his liquidity tax.
It takes Capital and Surplus to sustain Underwriting. In the normal order of business, investment returns are entirely responsible for keeping the industry afloat. At scale, the industry must have entirely passive income: rents, interest, dividends…
Benny has no intention of permitting passive investors from earning decent returns even in a world of serious currency de-basement/ commodity price inflation.
Which means that a vast sector of our growth engine has been put down.
Further, effective taxation has EXPLODED upward courtesy of the Fedsury — completely swamping the Bush era tax cuts.
And, yet, still the economy is being raped by the same crew. Fantastic bust-out ‘bonuses’ are still being used to drain the Money Trust/ MERS scam…
Everyone is Karzai, now.
“What is it about being a public employee that makes you more worthy than ANYONE WORKING IN THE PRIVATE SECTOR????”
Well, the cops, prosecutors and judges and prison guards are all on your crew.
Think of them as Normans…
Think of yourself as Saxon…
——
And then think of the last time the MSM ever pointed to the State as being the source of systemic trouble-making.
‘Crickets…’ you say?
BTW, it looks like Silver is being re-monetized.
The US Mint can’t hardly keep up with demand.
Silver mining — as strictly silver mines — are but a trivial factor in production.
Meaning that it will take much higher prices to bring additional silver to the market.
BTW, humanity has always been on a Silver Standard with the rare exception of the back half of the Nineteenth Century — and in the Anglo Commercial Orbit.
There is simply not enough gold to go around. This makes it impractical for trade for daily consumption. Silver simply must return back to more traditional value ratios based upon cost of extraction and need for specie.
walt #23
Where leprechauns spin straw to gold
And nights are warm and never cold
Reminds me of the song from Finian’s Rainbow:
On the day I was born,
Said me father, said he.
I’ve an an elegant legacy
Waitin’ for ye,
‘Tis a rhyme for your lips
And a song for your heart,
To sing it whenever
The world falls apart.
Look, look
Look to the rainbow.
Follow it over the hill
And the stream.
Look, look
Look to the rainbow.
Follow the fellow
Who follows a dream.
‘Twas a sumptuous gift
To bequeath to a child.
For the lure of that song
Keeps me head runnin’ wild.
For you never grow old
And you never stand still,
With whippoorwills singin’
Beyond the next hill.
Look, look
Look to the rainbow.
Follow it over the hill
And the stream.
Look, look
Look to the rainbow.
Follow the fellow
Who follows a dream.
Well, the world is falling apart and Jerry Brown is still chasing after a dream, head runnin’ wild and all.
Sung version here: http://www.youtube.com/watch?v=OiNxeRUG6_Y
(sung Jerry Brown style, at a 2007 concert in Palm Desert, CA).
The problem is SO much bigger than pension funds. The bus has gone over the cliff and there’s not a damn thing we can do about it. Obama used classic Marxist economics to take over industry and destroy those he didn’t.
Debt with no end is the pony ride we’re taking to the Little Big Horn. Not just the U.S., but the world. Our FED is attempting something that HAS NEVER WORKED IN THE HISTORY OF THE WORLD….printing more money to get out of debt. It’s truly insane.
And soon, the bailers will be in trouble too. According to The Wall Street Journal , a combination of 15 major national governments will have to borrow a total of more than $10 trillion next year, to finance deficits and repay maturing bonds. That’s 27% of their total economic output. It also is equal to about twice the entire world’s annual savings.
As I have stated before, this time the hole is too deep to climb out of without a realignment via a world war. Societies are at the precipice of total collaspe right NOW.
In a metaphor for the ages, today it has been reported that Joan Baez was injured falling out of her “tree house” – a wall-less structure she erected on her property in Woodside California so she could “be with her birds”. Apparently she likes to sleep in the thing — and it turns out that its lack of walls, (supposedly a feature, not a bug), nearly caused her to break her neck. Talk about a freak accident! (LOL) and a perfect metaphor for how the California Hippy Greenie Fascist moonbattery knows no limits in this insane state I live in. Woodside is one of the wealthiest little cities in America you’ve never heard of – it’s a very secluded, snooty California Hippy redoubt where people like Ken Keysey and Wavy Gravy and Joan Baez live in luxurious splendor* and isolation from the dirty human masses they want so much to control by guilt-tripping them into “living right”. Never mind that you or I couldn’t get within spitting distance of the multimillion dollar estates where these counter-culture mandarins live without getting the fuzz on our butts.
Last month I listed my Hollywood Hills home – I can’t wait to get the F out of this insane asylum!!!
(*of course Ken Keysey and Wavy Gravy are long dead, but their spirits live on in Woodside, taking the form of a spectral pot cloud which lingers among the redwoods…)
…Uh, Morton. Wavy Gravy isn’t room temperature YET.
…As a retired California State employee, I’d like to thank you folks for your support. No, really. What did you expect from a fantasy based Democrat legislature and governor ? The Dems have dominated the politics here and what you see on the national economy since 2006 has been working here for at least 40 years.
..If you don’t want their policies……….don’t elect them.
…Larry D., No. 3 ; No, I retired 8 years ago and no, I can’t vote in the union elections since then, though I still pay dues at a reduced rate. I could opt out of the dues, but won’t. The union has no legal duty to represent me.
#31.Dave D.
The central tension that is tearing the West apart is the fact that there is no accountability for the people we elect. That is the flaw that is breaking everything apart. “..If you don’t want their policies……….don’t elect them.” sounds nice, but the plain fact is that there is a huge disconnect between what the average politician says he’s going to do and what he actually does once he gets into office. Having to wait X number of years before you can throw the lying bastard out is not a good option, especially when there is a good likelihood that the one you replace him with will be yet another lying bastard and it will be X number of years before you can throw him out.
I do not know the solution but I can identify the problem.
Actually, there are a lot of ex-CA residents who left because of sewer-slime like the one-time majority of the state legislature who grew rich brokering bribes and favors, and when required to retire from the legislature, stepped nimbly into a freshly-purchased mayoralty of S.F.
The California state legislature is chock full of windigos so busy competing with each other for bribes and payoffs they barely have time to deliver all the sweetheart bills and appointments to various powerful state and regional commissions they’ve promised. Those commissioners in their own turn are then able to suck their own share of lifeblood out of the hapless taxpayers. An awful lot of people are not even aware of the regional commissions that make decisions about water rates, development of Indian Casinos, routing of highways, locations of new campus facilities, letting of construction contracts. Sure, lots of such things are decided at the municipal and county level, but billions of dollars’ worth of activity is under the jurisdiction of almost anonymous regional commissions which control, say, the entire watershed of the American River, or firefighting personnel in 3 or 4 adjacent counties.
People outside the state are mostly unaware of the profound disgust of voters at hearing in-state news reports about the brazen behavior of Governor Schwartzenegger’s predecessor, who granted audience to lobbyists and petitioners ONLY upon receipt of their cash contributions to his “campaign chest.” His involvement in the deliberately engineered power “blackouts” was to push through absurdly inflated long-term payment contracts to the conspiring power companies, guaranteeing them far greater revenues than market rates then current around the country. Those are the factors that precipitated the recall election that put Arnold in the office.
dave d,
Unfortunately, at this point, any realistic solution has to include cutting back on the pension payments. More unfortunately, the politicians almost certainly won’t do that. Until, at some point, they absolutely have to. And that will be worse for the pensioners than if a realistic approach is taken now.
California’s public employee pension funds may be underfunded by $200 billion. The Orange County Register says the taxpayer is ultimately on the hook for whatever the pension fund shortfall turns out to be.
There won’t be enough taxpayers in California to pay that off. How and when do they plan on ‘federalizing’ it?
…EXHELODRVR, odd you should mention that, but the union I belong to has signed a contract, at their suggestion, with the State to do just that. Still, the retirements already in effect are contracts that the Public Employee retirement system is required to fulfill. I suspect Bernanke is cheapening those bongo bucks even as I type, but PERS has got to follow the law.
…Break those contracts if you can, but remember this ; we all commit to contracts as either payer or payee. We depend on the law to enforce them. If you destroy that responsibility, how are you going to do business or have any faith in being paid or getting the work done you paid for. I was a cop from 1971 until 2002. When you or yours called, I came. We had a deal, I worked, your rules (the law ), your conditions of employment, you lived up to the contract. Now, you want to renege. Not much I can do about that now but sue you ( collectively ) and see if our contract will be enforced.
…I don’t know how this will turn out. But, I know this. Every time the rule of law is ignored, folks lose confidence and get more cynical. Any system can be broken by folks refusing to live up to the promises they made. Our system has been pretty good for a lotta folks, but it’s not promised to work if it’s not followed. This has a ripple effect greater than just pensions.
There is an easy and obvious way out of this pension problem, so obvious that I am absolutely certain that some form of it will, in the end, be the way the problem is resolved. (Although no one dare speak about it openly until it’s the only option left)
And the solution is this: rather than pay pensions with US dollars, California will make some portion of each payment with a California IOU which can be sold on the secondary markets. Perhaps the bearer can use them to meet state tax obligations, which would give them some tradeable value. But, if the IOU’s only end up bringing 10 cents on the dollar, well them’s the breaks.
Watch for it – within 5 years, this will be reality.
bl @ 13: EEX in Leipzig, Chermany
Oh, well, *German* carbon, that I can see a market for, some of that rare white Aryan carbon, yes, …
Tc/32; yes, you can chase away the home invader, but what he did to your family is permanent, and another of of the sonzabitches got in the back door while you were chasing the first one out the front.
well, that’s too cynical. Good pols are now rising to the surface everywhere –even in Greece –everywhere (but Cal-i-for-nee-yay) local elections are turning away the dirty-fingernail gold chain zoot suits and missed her mouth with the lipstick harlots.
Josh, nein, nicht market for der carbon, market for der absence of der carbon. That’s what the Mo Strong, Al Gore, Goldman Sacks, IPCC, Soros, Obama, Genovese, Gambino, Kremlin basement, Hu Manchu, combine had in mind. See, the cost of goods sold, when you’re selling ‘protection’ is ‘nothing’, so yer margins tend to be as high as the sky –the ‘see how clean it is? WE did that!’ sky.
Well, Dave D. — about your #36,
Isn’t that breach exactly what O’Bumble’s administration did in the general extortion of all the participants in the GM & Chrysler bankruptcies????
Normally when a person or a corporation files for bankruptcy protection, the CREDITORS are ahead of Union organizations in the liquidation of assets and distribution of funds. In these cases, the Coercer-in-Chief threatened (we don’t know exactly what he threatened) the lenders, creditors, and shareholders, and made guarantees to the UAW to give them OWNERSHIP of the new corporations, ignoring and violating the long-established legal rights of other parties to the bankruptcy proceedings.
Pity Arizona in all this. Illegals invading from the south and all those Californians voting with their feet heading east. Meanwhile the Obomination is withdrawing the National Guard. It is almost time to deputize the Entire state and start passing out ammo.
In the 18th and 19th centuries state legislatures in America and municipal offices were often filled by annual elections. The Federal Congress had biennial elections, maybe because travel was slow. Even Governors were elected every 2 years. United States Senators were elected by the annually elected state bodies, so they were sensitive to the need to avoid getting their supporters fired, although the 6 year term insulated them from passing passions. Senators, like the Presidential Electors who the States also selected, were meant to be senior respectable leaders already retired from commercial interests. The long term unaccountable professional officeholders came in with the **cough** Progressive **cough** Era.
#36
Tradition speaks about the danger of making deals with the Devil. Somehow the contract, without being broken, always seems to go to the Devil’s advantage.
The obvious, but currently politically impossible solution, is for California to levy a tax on income that comes from the treasury of the state of California. Why not? The federal government makes distinctions in taxation upon the source of the income (capital gains vs. wages earned for example) so why can’t California? Start taxing those pension checks at 70%. Its not a reduction of your pension, its a tax. You still have to declare the entire amount on your Federal income tax return. Its not a reduction in your pension, its merely an increase in your taxes.
Doesn’t the change of terminology make it feel so much better?
BftP/42; –my great Governor, Rick Perry, has a new book out, Fed Up! –which contains an extensive cover of what damage the 17th Amendment has done to every state –which, unless i’m far wrong, in the aggregate compose the “United States”.
***
Tc/43; make the terminology even better –it’s not a tax, it’s an “investment” in the “future”, which is “what THe AMerican PEople ™ (or THe PEople of CAlifornia ™ ) sent me here to do!”
From Schwarzenegger to Moonbeam: yep, Kollyfornia is definitely going Tango Uniform.
Oh, by the way: I’d like to appeal to everyone to stop calling carbon dioxide “carbon,” like the Leftists do (masters of distortion, misnomers, and lies). Carbon sounds like awful, sooty stuff that anyone in their Right Mind would want to control. CO2? not so much.
I think, too, that most people don’t grasp math proportions: that 1 billion = 1,000 million. So if a pension is” underfunded by 326,000 million, and the agency saves 300 million of that by reductions in fees”: see where I’m going with this? Most people don’t get that it’s just 300 out of 326,000, which leaves 325,700 to go!
California and the US could take a large chunk out their deficits by just evicting the illegals and lopping a third of the salary off federal/state workers who make more than 150k and 1/4 of the salary of state workers who make 100-150k. and 15% of the salary of workers who make less than 100k.
That would cut back expenses.
To increase revenues you’d just and allow for offshore drilling and increase use of shale.
Then convert short haul trucks and buses to natural gas to chop down the trade deficit.
Then chop back the healthcare regulation and epa regulations.
The numbers would go right again in a few short years.
Likely none of this will happen in the next two years.
Except Obamacare will likely be defenestrated. I don’t know if the house can but similar brakes on the EPA.
20. Annoy Mouse
I meant they were looking out for whomever their “constituents” were. It could be members of a race, gender, occupation, industry, etc., but the ones that support the pol get their attention.
The race/gender question on your app. would throw me, too. If there were an “opt out” check box that would be what I’d use. I suppose a case can be made for blind data gathering, but right now – during this patently unconstitutional “czar period” – one can’t be too careful.
Cheers
36 Dave D
Yeah, it’s going to be interesting to see the resolution when we reach the point where CA has legally binding obligations, but no money to pay for them. Something will have to give.
@36, thank you Sir for your service. I am certain it was often neither fun nor safe, and I don’t think this thread or any other BC thread is directed against individual public servants, particularly brave and selfless first responders. I lived in CA off and on in the 70′s, 80′s and 90′s, and saw San Diego specifically go from being a friendly, clean, fun place to live to a Third World extension of Tijuana. I would ask for one clarification on your post which was maybe an oversight: I believe that with regards to the law, you enforced OUR rules (you and I as citizens). With regards to your work rules, you complied with THEIR rules (ie whatever the pols and the union suits agreed on). The issue at hand is not how to stiff dedicated public servants out of their retirments, but rather who is going to bail out the huge CalPers shortfall which at some point can no longer afford to pay them. Will it be the Feds (ie taxpayers from all 57 states) in the form of newly printed inflation causing dollars, the Califoria pols who made an unsustainable contract with your union in return for votes and campaign contributions, or some other t*rd sandwich? Bottom line, I appreciate and honor your service, I gladly paid for it when I lived in CA, but I don’t live there now and I no longer want to pay for it now when I (thankfully) live far away.
The California budget could be balanced quickly by the simple expedient of diligently chasing out the illegals, and cutting welfare (in all its forms) down to the point where the recipients either get jobs or move to another state with more generous benefits.
It won’t happen.
The train wreck is inevitable now, and the only choice the rest of us have is to compartmentalize it as much as possible so California doesn’t drag the rest of the country down with it.
My 84 year old mother in law from Ventura, whose cancer is in remission, who recently had her cataracts removed, and who recently had arthroscopic surgery on her knee, goes into the hospital next week to have the first of her hips replaced. She worked for the county for decades and has county supplied supplemental insurance, on top of her inflation adjusted county pension, that picks up all the costs not covered by Medicare.
She is a very sweet person and we love her dearly, but come on! Dysfunction and fantasy permeates everywhere you look, but the majority of Californians have done well by the current system. Moonbeam is clearly what the majority of Californians wanted, and when the wake up call finally comes the state is going to face one hell of a hang over.
49rD – “If there were an “opt out” check box that would be what I’d use.”
The only problem with this is only a majority disadvantaged whites would check this. I’m just disgusted by the state. It used to be that you would make modest income working for the state but make up for it in job security and a modest pension. Now it is hitting the big time and I’d like to see the demographic distribution in that.
I feel sorry for David D because he was promised and owed a pension by the state but that same state promised too much to too many including supplementing millions of illegal aliens in a “bribes for votes” scheme. Clearly Sacramento is using ‘illegals’ as a wedge issue to overpower the generally conservative Southern California voter. This unconstitutional scheme is wreaking havoc on state finances and will certainly deplete the financial reserves necessary to meet commitments to David D.
It is clear to me that the only reasonable end to this is a state level bankruptcy and a complete restructuring of debt. California is trying to become a tourist park but it cannot sustain its responsibilities without agriculture and industry.
51CH – “Moonbeam is clearly what the majority of Californians wanted”
Millions of illegal’s voted in the world’s largest election fraud ever. Disenfranchising a majority of the taxpayers isn’t a loving devotion to the needy, it is an evil and cynical act based on the Lefts universal disregard and seething hatred for mainstream Americans. They call us Nazi’s as a straw man. Once you have demonized a majority of a populace, the ‘enemy, it is not only OK to hate them, it is a sworn duty. These are not mere ideological differences driving the state of politics in California, it is an existential war and Brown and Boxer were the symbols of that struggle.
…#40. Yeah, that is what Obungle did to GM equity holders when GM went bankrupt. One might note that he took the value from the company owners and gave it to the employees and pensioners who have just resold it to a new set of…..suckers.
..It might be noted that States cannot declare bankrupcy, but of course they can acually be bankrupt, and that’s what counts.
…#48. BINGO. That’s the crux. I suspect that when California starts sending IOU’s, otherwise known as unsecured promissory notes, to CalPers as payment of the states obligation, then CalPers will go to Federal court for a writ of mandamus requiring the state to fulfill the contract and obey the state Constitution. Legislators and the Governor will refuse and will the Judge have them arrested, or sieze state property, or send Federal Marshalls to raid the treasury ?
..I don’t think that will happen, but I don’t know.
..#43 Tcobb. I’ve read that tax proposal before, here I think, and made by you. Maybe it’s legal, maybe not. I suspect the equal treatment clause in the 14th amendment would be involved, but I’m not a lawyer. Since California can’t tax retirees living out of state ( they used to, but lost that ) I suspect a mad dash for the borders would ensue. I live 7 miles south of Oregon. A slow amble/shuffle north would suffice. I’ll start packing now.
For that matter the fed could promote 5-10 percent inflation for 10 years while the federal government froze all colas and government pay increases. That would also get federal pay scales in line. That would be an ugly way to do it. And might hurt the rest of the economy as much as it helped federal balance sheets. But that also looks nearer to the mark as to what the feds have in mind. I believe in fact that SS cola increases were suspended this year but that may have been because the feds declared there was no inflation.(against the evidence)
Bernake’s take is much like the the take of the fed of the late 70′s. The way to combat high oil prices was to reduce to promote inflation and thereby reduce the value of the dollar. At that time there were also sovereign debt defaults but these were south american and african countries. those defaults took down a lot of US banks thanks to robert mcnamera who like most democrats failed his way to the top.
This time with a much weaker dollar the danger is closer to home.
Last week I posted a comment on my website (www.grainoftruth.com) about Calstrs decision to invest only $150 million in commodities rather than its original plan of $2 billion. Mr. Dear’s optimistic comments in the WSJ interview about this year’s 13% returns seem beside the point when you look at the tepid returns Calstrs, Calpers, and UDRS funds have earned in the past eleven years. In my post, I link to a recently released Miliken Institute study analyzing those returns. Calstrs has returned about 3.3% over the past eleven years. I believe Calstrs cannot afford to take the risk of committing large amounts to commodities. The Miliken study is worth reading for its conclusions and recommendations.
Wr et al,
The big news, in my op, has been muni bonds. Muni bonds as a precursor of future CA and national derailment. Last week at least one CA muni bond funds, went due south. This was about the same time that $10 billion in new munis were ignored by investors. Shortly thereafter, rumors began the all powerful FedReserve would step in and start buying munis, esp. in the carcass of CA.
Rather than address the root of too much debt, the entire world continues to beg the banksters to produce more money OutOfThinAir. When the end of this game comes, it is going to be extremely brutal.
Charles@55,
I agree that we could/should do those intelligent changes to repair the meltdown underway.
I pray that we USAians and foreign nations too, address the luming financial firestorm. However, I predict that mankind is wholey begotten to lusts of supposed easy money, credit money without end. We must do what we can, but the illusion and power of corruption will win.
For those who care, may consider, that the seventh day is His Shabbat rest. IIPeter3:8… remember the Lords day is as a thousand years…; the time of Adam can/is be easily calculated at about 6,000 years past. Six days of work and the seventh day is millennial rest.
..#56, Mr. Parman. Thankyou for leading me to the Miliken study and the very surprising ( to me ) information that the big states are using ” Build America ” bonds to pay their employee retirement contributions. All this anticipation of a Federal bailout of unfunded state retirement obligations and now I find out it’s already happening by way of the Treasury paying 35% of those bonds’ interest.
52. Annoy Mouse
It used to be that you would make modest income working for the state but make up for it in job security and a modest pension. Now it is hitting the big time and I’d like to see the demographic distribution in that.
Affirmative action needs to be abolished. When it’s practiced by government (at any level) it serves to give racial minorities wholly unearned and undeserved power over the white majority.
This is completely different from a white employee working for a black employer in the private sector. When a citizen interacts with a government functionary, he usually does so as a supplicant. I know, it wasn’t intended to be that way–they’re supposed to be public servants–but it is the reality nowadays. That, after all, is the main objection to government-run health care.
36. DaveD -
“Every time the rule of law is ignored, folks lose confidence and get more cynical. Any system can be broken by folks refusing to live up to the promises they made. Our system has been pretty good for a lotta folks, but it’s not promised to work if it’s not followed. This has a ripple effect greater than just pensions.”
As I have rarely commented in the “new” Belmont Club, I am loathe to weigh in again. Not because of timidity, but I haven’t been part of the discussion… It seems that I want to speak again…
No matter what the situation, DaveD has brought up the 800 pound gorilla. What do you do when it’s you that wants to be the revolutionary? What do you do if you want to break beyond the constraints of stare decisis and make new law? Does that make you the revolutionary or the “destructor”?
Wretchard seems to me to be the lone voice in my limited sight that has walked down that path to see the outcome… His nudging has always been welcome and the finesse he shows in walking us down that path is legendary in my discussion groups. I vote we see what Wretchard has to say…
What we could be seeing here is collusion between government and (unionised) public employees to fix the unfunded pension liabilities in a way that does not look like a tax aimed at appeasing public employees.
Eg, CARB and its CO2 taxes …
Collusion like this:
From here: GM selling at a loss should tell you something
…Some of you guys insist on equating the Governments takeover of GM and the screwing of the real owners ( stockholders )as a means of rewarding the UAW, with public pension responsibilities determined by collective bargaining. They are exact opposites.
…California overwhelmingly re-elected the Dims this year. The legislature is 2/3 Dim and has been. At some point you have to say the people of California have made their choice. Jerry Brown was the governor who introduced collective bargaining into State employee politics. He just got re-elected by a large majority. State employees don’t want him to violate the law, they want him to follow it. That’s a big difference from the UAW, the support of which caused Obama to steal the assets of equity holders. The law didn’t require that, it prohibited that, or so I thought before the court endorsed it.
..I never trusted Mr. Brown nor have I voted for him. I don’t trust his green agenda, but the Californians I live with endorsed it by majority vote. The majority gets to decide in a Republic. When and if they change their minds, they’ll vote the Commie bastards out. The unsustainable will fail.
blert is right that the pension funds are prisoners of the general economy. If they think they can count on 8% returns, lookout. They’re smoking crack. And they will hurt you even more.
With $1000 to invest, you might easily get 8% or way higher in any economic environment given you have enough moxy, foresight, understanding, and appetite for risk. With $1,000,000,000 or more to invest in this ZIRP environment, those kinds of returns are only possible given a large risk appetite.
Pension funds might as well walk into Vegas and bet on red if they think they can maintain 8% return indefinitely. Such an investment strategy will have the benefit of blowing up sooner rather than later.
Sooner rather than later is a big concept to factor. Bury the bad blood vs. the boomers that’s been a feature of this kind of talk. Realize that at least right now a lion’s share of the boomers are still quite productive. Very soon in the scheme of things they will not be. Would you like to take a haircut when you are 63 or 73?
Worse, to continue a metaphor from a previous thread, would you like to start counter-flooding the battleship when the boomers are cargo to be pushed port and starboard, or while they are still largely part of the crew?
I have a great idea. What we need is a seat tax. like carbon sweat is plentiful, harmless, and not especially useful unless you are the one thing on the planet that makes like possible I.e. A green plant that lives by photosynthesis.
Once we have created this sweat tax the government coffers will be filed by every human on earth who does not buy a device to capture and save sweat and we can all get rich by investing in sweat capture machines and nobody will have to work past thirty and all mid terms will be canceled forever and a butterfly will flap its wings in the Brazilian Rainforest and Obama’s teleprompters will have a gay marriage or maybe a Gay marriage depending on their orientation du jour and peace will reign over the land. Fruit of the Loom and BVD have already bought into this idea by the way and will by funding lots of “scientific” research to prove
that people who deny sweat are themselves old stinky pants and probably do not believe int he holocaust
either.
The only possible downside to this plan is that making the sweat capture machines creates yuck more sweat so we will have the Chinese and the Indians make the sweat capture machines and we will just live of the green investment and then when we have collected all the sweat in the world and cornered the market on stinky sweat and have the biggest sweat reserves in the world instead of belong like those stinky old
capitalists of yore, the ones who were not socially responsible we will share our wealth with the rest of the world and let them tax there own sweat or something like that.
Whatever cannot be sustained will not be sustained and Calpers cannot be made solvent. All they can do is collapse sooner by running after higher returns in riskier investments. They will be buying Greek bonds next. The only real question is will the feds eventually bail them out and will that touch off the unraveling of the union as it is or will that happen before California defaults.
BTW if I were told to put all my money into either Greek sovereign debt or California debt I would go with the Greeks. At least they know the have a unsustainable situation.
CALPERS brags about 13% returns in a year when the S&P total return was double that? whoop-dee-doo.
Cutting benefits ain’t necessarily easy, at least as regards current retirees, vested employees, and current employees. Each state is different, but most have some sort of constitutional or statutory protection of benefits–and depending on the exact wording and status (i.e., constitutional vs. statutory) it may be very hard and very uncertain.
DaveD @ 64—what you write is generally true, but the crux is what you allude to at the end. “Unsustainable” is exactly what one would expect from the government elected in California… and my home state of Illinois, as well. Yes, the people voted and the results are in, but if the people voted that henceforth 2+2=5, which I think they did, it won’t work. The majority carries the day in a democratic election, but elections don’t change the laws of math or physics.
The idea of segmenting out a share for “green” investments implies they earn a lower return than the market as a whole, because if they were as good or better than the market, there would be no need to break that portion out. That is SOOOO California, just deny plain facts in the interest of an ideological position.
“Break those contracts if you can, but remember this ; we all commit to contracts as either payer or payee”
Dave D
Dave tell that to the secured GM creditors. contracts are broken all the time and they can legally broken if their enforcement would destroy the state and in any event the state has sovereign immunity which boils down to get any judgement you want you still won’t be paid especially if paying you means we have to close the schools hospitals and fire stations.
you should have spent some time on the bunko squad. had you done that you might have been little more critical of what the union reps were telling you. bad break dude. like the cop told me when my house was broken into, “should have gotten a bigger TV dude. One that wouldn’t fit out the window”
i have some GM bonds –dunno what if anything they’re worth, don’t check ‘em anymore. Lucky for me i bought ‘em long time ago, and did get some coupon out of ‘em over the years. but, this sho ain’t what i was thinking 20 years ago was gonna happen with that chunk of hard-scrabble oil patch income.
Is pension overload of the system the new Cloward-Piven?
it ain’t new –it IS a setup imho –look at the unions –all together now, one, two, three –so it ain’t ‘new’ cloward-piven, it’s ‘patient’ cloward-piven –