Entries by Mike Shedlock
Illinois Financial Apocalypse – $163 Billion Accumulated Liabilities
Editor’s Note: If you think what’s happening in Illinois can’t happen here, think again. For starters, read these two studies by the California Policy Center, (1) “Calculating California’s Total State and Local Government Debt,” and (2) “Comprehensive Review of California School Bonds.” While experts disagree over what is a reasonable rate-of-return projection for pension fund […]
Aggregate U.S. Pension Data Shows Grim Outlook
Editor’s Note: This analysis by economics blogger Mike Shedlock clearly shows why government employee pensions are taking an awful risk by continuing to forecast annual investment returns of 7.0% or more per year. In his first chart Shedlock points out how between 2008 and 2014 the aggregate value of state and local government worker pension […]
What Happens When Public Unions Control Everything for Decades?
Editor’s Note: California and Illinois have a lot in common. Both have diverse, resilient economies, both are large states with most of the population concentrated in urban areas, and both have been controlled for decades by public sector unions. The crucial difference, of course, is that at least in Illinois, there is a reform minded […]
Volcker Sounds Alarm Over States' Budget Gimmicks and Pension Assumptions
The Volcker Alliance, founded by former Fed chairman Paul Volcker has sounded an alarm over budget gimmicks. The alliance seeks Truth and Integrity in State Budgeting. In the report, the Volcker Alliance examines in detail the budgeting practices of California, New Jersey and Virginia, assessing the effectiveness of each state’s practices. The report highlights the […]
CalPERS and Unions Win Again – Taxpayers and Bondholders Lose
In bankruptcy, the federal courts have ruled that cities can reduce pension obligations. They can, but they don’t have to. In Detroit, bondholders were sacrificed to maintain police and fire pensions with minimal haircuts. On Monday, U.S. Bankruptcy Judge Meredith Jury ruled against bondholders in favor of Calpers in the San Bernardino bankruptcy. She acknowledged […]
Michigan Court: Reduce Pensions or Reduce Retirement Health Benefits
Editor’s Note: Notwithstanding recent court challenges that could go either way, one way to negotiate meaningful steps towards financially sustainable defined benefit pensions, i.e., reductions or suspensions of COLAs, prospective reductions in the multiplier, increased employee contributions towards the unfunded liability and not just towards the normal contribution, etc., is to offer to reduce OPEB […]
How Unions and Bankers Hide Chicago's Poor Financial Health
Editor’s Note: Nearly everything described in this lengthy expose on the perilous financial condition of the City of Chicago, and the ways it has been obscured for so long, also neatly applies in many if not most of California’s large cities. Also directly applicable to California’s cities are the author’s descriptions of how the unions representing […]
New Hampshire Police Union Members Resent Pension Reforms
Editor’s Note: This article quotes a New Hampshire police officer, disgruntled about his pension benefit reductions. He claims – and his Facebook quote appears below – that if he’d put 12% of his pay into a 401K he would “be better off.” Here’s what he expected: To work till age 47, with 22 years of […]
Illinois Pension Plans 39% Funded – Taxpayers On the Hook
Editor’s Note: When it happened in Detroit, they said it couldn’t happen in Chicago. Most Californians will agree that our economy is bigger, and more diverse and resilient than that of Illinois or Michigan. But pension fund solvency relies on perpetual bull market rates of return – and the moment the market hiccoughs again, California’s […]
Union Group Mobilizes "Against" Pay Hike
In what may be a first (otherwise an extreme rarity), a substantial force within a union has mobilized against a pay hike to $9.00 per hour from essentially nothing. “Nothing” you say? Yes, it happens in small non-profit theaters that pay aspiring actors $7 to $15 per performance. Rehearsal time does not count. Curiously, but rightfully […]
Wayne County Michigan – Following Detroit into Bankruptcy
Just as Detroit is coming out of bankruptcy, the entire county is about to go under. This will be especially aggravating because Detroit pensioners are already extremely upset with the pension haircuts they received. In the “too late to complain now” category, Wayne County now seeks to overturn the Detroit bankruptcy settlement. Lawyers will have […]
California's Cities Aren't Alone – Unions Trample Finances in Scranton, Pennsylvania
The city of Scranton hiked property taxes 57% and garbage collection fees 69% to shore up a police and fire pension funds that will run out of money anyway, in 5 years and 2.5 years respectively. Amusingly (to outsiders) but certainly not to Scranton taxpayers, Scranton Pensions Increased as Much as 80 Percent as a result of […]
Federal Judge Smacks CalPERS on Sanctity of Pensions
Exceptionally good news from California today: A federal judge ruled Calpers claim of “Sanctity of Pensions” is invalid. Today’s ruling went even further than the bankrupt city of Stockton originally sought in court. For details, please consider the New York Times article In Ruling on California Town’s Bankruptcy, Judge Challenges Sanctity of Pensions. A federal bankruptcy […]
Meet "McCashier" Your $15.00 Per Hour McDonald's Worker Replacement
Editor’s Note: Successful union activism in support of a $15/hour minimum wage will not only reduce the supply of entry level jobs – it will have a disproportionate negative impact on small businesses. Large corporations will invest directly in – or offer their franchisees access to – specialized automation equipment. Small businesses will not have […]
Los Angeles Careens Towards Bankruptcy – Retirement Benefits Are Biggest Driver
The Los Angeles 2020 Commission studied among other things the sorry state of LA’s pension mess. In a case of can-kicking extraordinaire, its recommendation was to appoint another commission to further study the problem. Please consider Report Finds Los Angeles at Risk of Decline A scathing verdict on Los Angeles’s civic health that was delivered in a one-two […]
Union Goon-Squad "THUGs" Thwart Reform in Pennsylvania
A “goon-squad” group named The Helpful Union Guys (THUG), members of Ironworkers Local 401 set fires, started riots, and took crowbars to the competition in an effort to protect union jobs. THUGs stalked women, took baseball bats to a Toys R Us site, and even torched a Quaker meetinghouse that dared to use non-union labor. Philly.Com reports 10 […]
Vallejo Headed for Another Bankruptcy?
On May 6, 2008, the Vallejo City Council voted 7-0 to file for Chapter 9 bankruptcy. At the time it was the largest city in California to do so. In March of 2009 I noted Judge Rules Vallejo Can Void Union Contracts. Vallejo foolishly refused to do so, and I predicted it would soon be back […]
The Partisan War on "Income Inequality"; Law of Bad Ideas
Debate rages over “income inequality”. CEOs makes hundreds or thousands of times more than workers. That is one aspect of income inequality. And it’s easily explained: The Fed’s inflation policies, bank bailouts, Fractional Reserve Lending, and crony capitalism are to blame. That blame is nonpartisan. Rather than attack the problem, “progressive” partisans howl over minimum wages. […]
Drone Transport Ships, Automation, and the Bubble Economy
Editor’s Note: This article by Mike Shedlock leads off with a report on “drone transport ships,” but moves on to explore a provocative and very pertinent question: Are policies that create the “bubble economy,” i.e., artificially inflated asset values, partly motivated by a desire to counter the deflationary pressures caused by automation? We have explored […]
Mistrust Leads to Shocking Union Defeat in Tennessee
Efforts by the United Auto Workers to unionize a Tennessee Volkswagen plant failed today in spite of the fact that Volkswagen chose to cooperate closely with the UAW. Volkswagen allowed UAW organizers to campaign inside the factory—a step rarely seen in this or other industries. Mistrust Sinks Deal By a vote of 712 to 626 […]
Economic Policy Impacts: Comparing Illinois to Texas and Indiana
In the all important “Jobs Bowl”, far more important than the “Super Bowl” Illinois is losing out to Texas and Indiana. Via email from the Illinois Policy Institute: “The common refrain made against Texas by those who defend the status quo in Illinois is that the jobs being created in the Lone Star State are lower-paying […]
Controversy in Detroit: What's a Fair Settlement of Bondholder and Pension Obligation Claims?
A huge battle between pensioners and bondholders is on. Last week, a Bond rating agency blasted Governor Rick Snyder’s $350-million Detroit pension rescue plan as being too favorable to creditors at the expense of bondholders. Today, the New York Times reports Detroit Turns Bankruptcy Into Challenge of Banks. Amy Laskey,a managing director at Fitch Ratings, said in a recent report […]
Harris v. Quinn: A Mother Petitions the Supreme Court in Fight Against Unions
I have tried to steer clear of inflaming names like “parasite” when speaking about public unions. In this case, no other word comes close to describing the setup. Making Millions Off the Disabled One brave mother, Pam Harris, has resisted forced unionization of herself (as a sole home-caretaker, in her own home, for her disabled […]
Data Shows Correlation Between Government Union Power and State Government Solvency
Editor’s note: Mike Shedlock has done it again by pointing us at an important new study that examines and ranks the financial condition of the 50 U.S. state governments, as well as at a terrific map generated by the data. But missing from the study was a consolidation of state and local government financials – […]
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