If you consider taxpayers to be the employers of the public sector that’s fine, but during any *pension holiday* we paid our legally owed taxes. That money was then mismanaged and the unions were fine to turn a blind eye to it as long as they got to “bargain” for a sweeter deal down the road.
As far as the Taibbi article it attempts to paint a picture of big bad Wall St taking over these pensions. Nothing could be further from the truth. The article does highlight decades of underfunding and overpromising by states and local governments and unions. Any money given to Wall St is a conscious decision by governments. I wish the unions would shift their “bargaining” focus to the underfunding and the management of the money instead of continuing to look for ways to enhance their pensions – pensions which increasingly won’t be there for them.
The best part? Hedge funds and PE funds aren’t the magic bullet of performance everyone thinks they are. For every hedge fund that returns 30% there are dozens, if not hundreds more, that are mediocre or underperform. Many of these pensions find themselves having to play catch up thanks to the underfunding. Instead of being responsible and lowering benefits they are chasing yield. And Wall St is more than happy to woo them as clients. Guess how that ends.
Cause we all know that Wall St forced people to buy overpriced homes with exotic loans they couldn’t afford, right?
