Save the Cities

[punked]

And when you default the creditors will get pennies on the dollar. As I said, they only have themselves to blame because they thought they could ride the tax payer gravy train forever.

What tax payer gravy train? They negotiated a Contract where they were promised "If you pay a dollar into this fund we will pay a dollar" only to have not only that dollar never paid but the dollar they paid stolen. I know you love theft and all but I like the law and would think people should follow it.

[bush_cheney2004]

And when you default the creditors will get pennies on the dollar. As I said, they only have themselves to blame because they thought they could ride the tax payer gravy train forever.

Yes, the small city of Prichard was forced to fund unsustainable pension obligations by state law. They did not want to do it.

[punked]

THat's what GM workers thought too...they were wrong..just like you. Bankruptcy court favors secured creditors over pensioners.

Yah private companies and public states are a bit different. A state will have to raise taxes before it defaults sorry much different situation.

[TimG]

They negotiated a Contract where they were promised "If you pay a dollar into this fund we will pay a dollar" only to have not only that dollar never paid but the dollar they paid stolen. I know you love theft and all but I like the law and would think people should follow it.

It is not theft if the city can't pay. The pensioners are just going to have to take a haircut on what they are owed.

[bush_cheney2004]

What tax payer gravy train? They negotiated a Contract where they were promised "If you pay a dollar into this fund we will pay a dollar" only to have not only that dollar never paid but the dollar they paid stolen. I know you love theft and all but I like the law and would think people should follow it.

You are conflating defined contribution plans and pensions....completely different animals.

[punked]

It is not theft if the city can't pay. The pensioners are just going to have to take a haircut on what they are owed.

It is if the city dipped into the pension fund to take all the money people paid into it out of it.

[TimG]

Yah private companies and public states are a bit different. A state will have to raise taxes before it defaults sorry much different situation.

In a public pension cases the ONLY thing that matters is the politics. If there is no political will to pay the bill the bills do not get paid. Edited April 15, 2011 by TimG

[punked]

In a public pension cases the ONLY think that matters is the politics. If there is no political will to pay the bill the bills do not get paid.

No if a state defaults it costs them a hell a lot of money because then they must pay huge amounts of interest to raise capital they need. It costs much less in the long run to pay up then to not pay up.

[RNG]

Has anyone watched the OP video?

[TimG]

It costs much less in the long run to pay up then to not pay up.

Have you ever heard of a sovereign default? That is when the state tells the creditors to go pound salt. Then the result is a debt restructuring where the creditors loose a lot of money.

In this case, the money is owed by a city with limited ability to raise taxes or take on debt.

[bush_cheney2004]

Has anyone watched the OP video?

No...your link is busted!

[Guest American Woman]

You are conflating defined contribution plans and pensions....completely different animals.

They did pay into their pension plans, though: Workers paid 5.5 percent of their salaries into the pension fund, and the city paid 10.5 percent. link

[punked]

Have you ever heard of a sovereign default? That is when the state tells the creditors to go pound salt. Then the result is a debt restructuring where the creditors loose a lot of money.

In this case, the money is owed by a city with limited ability to raise taxes or take on debt.

Yes sovereign default is just what I am talking about. You go into default you can expect to pay huge interest rates to raise any sort of capital for a long long long time not only that you also expect very large amounts of inflation of goods (or deflation of your money) to occur costing people huge amounts of money. This is be avoided by any government that isn't full of idiots.

[RNG]

No...your link is busted!

Fixed, sorry.

[bush_cheney2004]

They did pay into their pension plans, though: Workers paid 5.5 percent of their salaries into the pension fund, and the city paid 10.5 percent. link

Right, and their defined pension plans were mismanaged and subject to default. A defined contribution plan is not subject to the same underfunding risks.

[TimG]

You go into default you can expect to pay huge interest rates to raise any sort of capital for a long long long time not only that you also expect very large amounts of inflation of goods.

Well the inflation factor does not apply to a small city. The raising capital may not be a big issue either. The point that your are missing is the only factor that really matters in domestic pension disputes is if there is the political will to pay. If there is no political will then the governments can change whatever laws they want.

BTW - I am willing to bet you cheered Obama on when he screwed the secured creditors out of what they were legally entitled to. So you can hardly claim to be a champion of contract rights.

[punked]

Well the inflation factor does not apply to a small city. The raising capital may not be a big issue either. The point that your are missing is the only factor that really matters in domestic pension disputes is if there is the political will to pay. If there is no political will then the governments can change whatever laws they want.

BTW - I am willing to bet you cheered Obama on when he screwed the secured creditors out of what they were legally entitled to. So you can hardly claim to be a champion of contract rights.

I am pointing out that in a city, state, or Country default is the last options because at that point you can not longer borrow money. I mean you could but it would be at such a high interest rate it would be pointless to do so. It is and should be the last option long long after raising taxes. No matter if you blame the pensioners or the stupid government who never paid for their promises it is the last option.

[TimG]

No matter if you blame the pensioners or the stupid government who never paid for their promises it is the last option.

Sure it is but it appears that some cities are at that point.

[punked]

Sure it is but it appears that some cities are at that point.

I agree because they didn't pay for their debts as they went along by raising taxes or making tough choices. If they wanted to close down schools so the people could have lower taxes they should have had that conversation at that time. Instead of telling the teachers now "Sorry no Pension for you".

[Bonam]

Perfect illustration of why government pensions are an idiotic idea in the first place. Let people keep the portion of their taxes/contributions that is forced to pay for supposed pension programs, and encourage them to invest/save for their own retirements. Wtf is so damn hard about that? Why do people feel that the government needs to hold their hand on everything?

Edited April 15, 2011 by Bonam

[Smallc]

Not all people will do that. That's the idea of social safety nets. They catch stupid or unlucky people. We're going to have to pay for them some way anyway. Personally (despite having to pay more than most people out of my own pocket), I'm happy to have the CPP.

[Bonam]

Not all people will do that. That's the idea of social safety nets. They catch stupid or unlucky people.

Doesn't sound like the people in this case got much safety out of their net. People can be stupid, but so can governments. Paying taxes all your life for something you may very well not benefit from because the program goes bankrupt is the opposite of a safety net. Considering that expenses on things like health care, education, and entitlements are spiraling out of control in Western countries far faster than economic growth, it is logical to assume that the programs we are supposedly paying taxes for now will not exist in the same state decades down the road when we will supposedly benefit from them. People would be far better served to rely on themselves than assume that the government will hold their hand through everything.

Edited April 15, 2011 by Bonam

[punked]

Doesn't sound like the people in this case got much safety out of their net. People can be stupid, but so can governments. Paying taxes all your life for something you may very well not benefit from because the program goes bankrupt is the opposite of a safety net. People would be better served to rely on themselves than assume that the government will hold their hand through everything.

They would be better served to elect governments who pay for what the promise to pay for instead of shifting money here their and everywhere in order to pretend like they have more money then they do so they can cut taxes.

[Smallc]

Considering that expenses on things like health care, education, and entitlements are spiraling out of control in Western countries far faster than economic growth,

People would be far better served to rely on themselves than assume that the government will hold their hand through everything.

These two statements make your post impossible to understand. If it's too expensive for government because the costs are growing faster than the economy, it's also too expensive for individuals. Reform is needed, not some libertarian wet dream.

[Smallc]

They would be better served to elect governments who pay for what the promise to pay for instead of shifting money here their and everywhere in order to pretend like they have more money then they do so they can cut taxes.

That's right. It's time that people in North America had a frank discussion about tax rates and the need for sustainable government revenue.