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?[/quote]
Wrong. The unions were fighting the pension holidays and warning about the inevitable losses that occur when bubbles burst. They wanted to maintain minimum contribution rates. It was the other special interests who fought the unions so that they could stake a greater claim on the extra money that should have been going toward contributions.
There was no “sweeter deal” that the unions were going to bargain for in the future, either. There was the enhancement in the late 1999/2000 that was passed (wrongly, IMHO) at the peak of the stock/internet bubble. Not sure where you’re getting your (mis)information.
And yes, it was Wall Street’s takeover of the public pension funds, as well as the market distortions caused by Wall Street and the Fed, that caused the “pension crisis.”
