Meep: Prophetess of DOOM
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?
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