Public Finance, Unions, and Pensions Roundup 27June2011

GREECE? ISN’T THAT THING OVER YET?

No, it’s not. Various parties are having fits over having to deal with reality, and I’m not just talking about the Greek populace.

A vote is being taken on Wednesday (or at least, that’s the current schedule) in Greece on their latest austerity package….and this is just to get the short-term cash flows promised in various bailout plans previously…. it doesn’t take care of their long-term debt problem.

A Bank of England official warns of bank exposure to PIIGS debt, though my understanding is that French and German banks have it much worse. I like the timing of the stress test results release – I’m thinking it will be coming out right about the time the credit agencies will say Greece is actually in default.

Other eurozone countries aren’t looking too hot, either.

Leo Kolivakis writes about many things, some personal, but you should scroll down to item 4, where he talks about Greece. An excerpt:

Let me share with you the ugly reality on Greece’s woeful tax collection system. Everyone in Greece knows this, but let me give it to you straight. A close buddy of mine, a radiologist, is now vacationing in Greece with his family. His aunt recently had to replace a heart valve and she slipped an enveloppe of 12,000 euros to the cardiovascular surgeon so he would do it. In Greece, this enveloppe is called “fakelaki” and if you don’t have the money, you’re dead. Specialist surgeons working at public hospitals are typically the worst offenders, but there are others notorious for accepting huge sums and they declare nothing. And most of them pay off Greek tax collectors who are equally corrupt and greedy.

The U.S. has a long way before getting that corrupt, but those officials deliberately trying to weasel themselves around the rule of law (see the PUBLIC FINANCE section) had best beware and be aware… what you may think is a show of power may be what ultimately undermines it.

GENERIC PENSION ISSUES

Joshua Ruah, the Northwestern prof who has been slicing and dicing public pension obligations in all sorts of ways, has put out a new paper: the revenue demands of public employee pension promises….and he’s asked for responses. Here’s some of the responses he’s gotten so far. And another response (from governmental pension plan administrators) in the NYT.

Stronger pensions disclosures during muni issues? Sounds like a good idea to me. I wonder why he thinks it helps only bondholders — ask the pensioners of Prichard whether they would’ve been well-served by better disclosures earlier. Good info protects not only bondholders but also public employees and taxpayers.

PUBLIC UNION INFLUENCE: MELTING! MELTING! OH, WHAT A WORLD!

Our first story comes from across the pond: UK looks to rein in their public unions. This should be fun. I think various U.S. states should take notes, including the bit about not paying union leaders who don’t actually work for the state.

Striking Canada Post workers discover that the government has a lot more power than they do. Huh. How did that happen?

(note: Crown Corporations are just government-run and -owned entities. I recently found out that in some provinces, you get regular car insurance through a Crown Corp. Interesting)

What will the unions in Wisconsin do now? I’m thinking whining is a continuing strategy.

Some take the “defeat” in NJ as a harbinger of tough times for public unions across the U.S.…meh. Were they all fired? Their pensions repudiated? No. It was hardly a defeat.

Yet.

Buck up, unions – you’ve got at least one guy on your side.

PUBLIC FINANCE

Laws? Limits? Ceilings? Pfft. Like that could stop a latter-day messiah who has stuff to get done. I’m curious what the legal status of such debt issues would be…. and I bet institutional investors that suck up these issues would like to know this as well.

Though the bondholders are probably a bit more concerned with the CBO cashflow projections.

VDH points out that Thatcher’s inevitabilism is coming due: i.e., other people’s money is running out. Bribing people with their own money has always been a difficult balancing act to keep up, and the problem has been in the West is that they’ve not been producing enough people to keep that going. Oh, tant pis.

Ex-mayor of L.A. warns about the coming bankruptcy of cities, agreeing with Meredith Whitney…with you-know-what playing a major role. Some cities think that they see the light at the end of the tunnel…right before they get hit by a train, I’m thinking.

CALIFORNIA

Public employees in Costa Mesa take on “big” boss to win big pensions…. well, if they can hang onto them. These are chickens I wouldn’t count on hatching if the nest eggs aren’t even there. I guess they’ll learn what “municipal bankruptcy” means soon enough. It doesn’t mean that pensions get paid, if the plan is underfunded.

California school admins living large in retirement. I am not fond of the “100K PENSIONS!!!” stories, because it’s not individual pensions like this that are necessarily breaking the back of plans. You can have a whole bunch of relatively small amounts killing you, if paid to enough people, for long enough. But these things grab headlines, and stir up envy… and it’s always amusing to see the politics of envy redound upon those who love to use it themselves (which is often the way.)

FLORIDA

Having to contribute to your benefits to the tune of 3 percentage points? A crippling tax. Oh baybee. Can we use that when the feds want to increase our taxes to pay for the gravy train they want to continue? If that’s such a hardship, of course, the workers are always free to quit.

HAWAII

Pension reform bill signed requiring higher retirement ages and service levels.

NEW JERSEY

After the NJ pension reform passes, the lawsuits begin. Huzzah! Let us not forget the tough times lawyers have fallen upon with their loss in the Walmart case.

The unions also promise to hit back in votes. Good for y’all! That means you’re going to stop voting for Democrats, right? Or are you just going to admit that you’re stuck? (see article for answer – like with the open borders crowd, reparations extortionists, and gay rights activists, they know they’re stuck with the Dems. So…. )

Christie taking his victory lap.

John Bury pricks everybody’s balloons in this quarrel.

NEW YORK

The legislature continues to debate letting districts borrow money and pretend they’re real contributions to the pension plans.

The NYT whines that it was bullying in NJ but it’s bargaining in NY. I don’t know – sounds like some of the NY unions don’t see Cuomo’s actions in quite so benign a light.

OHIO

Employees run for the exits, trying to get theirs while they can.

RHODE ISLAND

Yet another group to look at the state’s pension mess and give suggestions for a fix. They’ve been given a task that’s well-nigh impossible:

In tackling a subject that ultimately may mean breaking promises, Raimondo has said that any solutions need to ensure fairness among the new employees, veteran workers and retirees. Newer state employees and teachers bear a greater burden now, she says, because most of their contributions to the retirement system pay for their predecessors’ benefits.

Raimondo stresses that solutions must be fair to taxpayers, as well.

What happened to the last set of suggestions? Let’s see… raising the minimum retirement age from 59 to 65 (drastic!), and offering up a DC/DB hybrid akin to what federal employees get… shot down even before it got to a legislative committee.

What I’m saying is I’m adding this group to my list of intentions for St. Jude.

UK

Isn’t this cute – an “industrial action” from public employees over their pensions being changed. Yes, those schoolteachers are working hard in the mines and the clerks are grinding away with their wrenches. Supposedly, the Tories are asking parents to sub for teachers (yes, I suppose if you’ve seen it on a Simpsons episode, it’s a gimmick).

Some angst over making the women’s retirement age the same as men. I always wondered about this — in the developed countries, women have always lived longer. Why were they given younger retirement ages?

Cross-posted to The Commune.

About Meep

Meep is a member of the Irish Catholic mafia, having a suspiciously high number of green-eyed, red-haired friends. While she doesn’t have red hair herself [except when she goes into the sun (rare for any vampire)], she does have green eyes. She’s a raving Papist and is a life actuary on the side [i.e., she counts dead people]. An amateur pain-in-the-ass [willing to go pro!], she likes covering retirement, mortality, math, and education issues.
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6 Responses to Public Finance, Unions, and Pensions Roundup 27June2011

  1. Pingback: Public Finance, Unions, and Pensions Roundup 27June2011

  2. Mr. Bingley says:

    The President of the NJ PBA is “Anthony Wieners”?

    HAHAHAHAHAHAHA!

    “We will use the full extent of our legal resources to expose the illegality of these laws,” said PBA President Anthony Wieners. “These laws were scrutinized by legislators for only ten days prior to passage.”

    Hey, that beats the dog-snot out of Obamacare, which still hasn’t been fully scrutinized months after its passage!

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  3. SkippingDog says:

    In the Costa Mesa case, a municipal bankruptcy would not affect the city’s existing pension obligations. Those are met through the California Public Employee Retirement System (CalPERS), not through some city sponsored pension plan.

    Were Costa Mesa to attempt a municipal bankruptcy under Chapter 9, they would still have to present a court approved work-out plan that complies with California law. The California constitution prohibits the discharge of public pension obligations through the bankruptcy process, so Chapter 9 would not provide any relief for existing obligations.

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  4. Tough Love says:

    Quoting Skippy …”The California constitution prohibits the discharge of public pension obligations through the bankruptcy process, so Chapter 9 would not provide any relief for existing obligations. ”

    Gee, Prichard Alabama’s employees had the SAME protection …. they thought.

    When the money is gone,it’s gone. Laws won’t change that.

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    • SkippingDog says:

      Prichard Alabama is a small city that operates its own pension system and was previously in bankruptcy. I have no idea what the Alabama constitution says about public employee pensions, but I do know what the California constitution says about them.

      Even Prichard is now paying its retired employees, and the state is contemplating action to address the obligation.

      You really need to compare apples to apples once in awhile, TL.

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      • Tough Love says:

        From what I’ve read, they’re getting somewhere between 1/4 and 1/3 of Plan benefits.

        Like I said, when the money isn’t there, Constitutional guarantees and contract law will mean squat.

        And quoting …”the state is contemplating action to address the obligation.” How? The State has (for years) been telling Prichard that they are “obligated” to pay, and Prichard’s answer is always … with what ?

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