California or bust (San Jose in crisis?)

[equalizer]

I don’t know if this was discussed so I’ll post it here.

Michael Lewis has interview with Terminator and thoughts on Whitney and growing pension crisis in San Jose and elsewhere.

Do you guys think that anyone who can will probably get out of these debt ridden towns?

“Americans knew exactly what they wanted to do, from the top of the society to the bottom. They’d been conditioned to grab as much as they could, without thinking about the long-term consequences. Afterward, the people on Wall Street would privately bemoan the low morals of the American people who walked away from their subprime loans, and the American people would express outrage at the Wall Street people who paid themselves a fortune to design the bad loan”

http://www.vanityfair.com/business/features/2011/11/michael-lewis-201111

[gandalf]

Michael Lewis is great. Liar’s Poker is my favorite. The whole fucking book is pretty much spot-on accurate. Back in the day, I worked with a couple of the guys from Salomon, one of them from the book. They were at DLJ when I was there.

One thing Lewis fails to point out in the VF article is how deeply Wall Street is responsible for the pension shortfalls.

[The-Shoveler]

It’s not popular but it’s an interesting problem,

In absents of some serious inflation.

How to get out of the debt trap? It’s not going to be possible for the Cities to pay what they thought they could when the boon times were rolling, the unions kind of did an Autoworkers union to themselves and everyone else.

[The-Shoveler]

It’s kind of like Greece , they doubled the public employees pay and benefits during the ten years they were in the EU, till they were being paid more than the much more prosperous German public employees. The average rail worker in Greece gets about 100K in US dollars per year in pay.

[briansd1]

[quote=Nor-LA-SD-GUY2]It’s kind of like Greece , they doubled the public employees pay and benefits during the ten years they were in the EU, till they were being paid more than the much more prosperous German public employees. The average rail worker in Greece gets about 100K in US dollars per year in pay.[/quote]

Your analogy to Greece is interesting. Many are now advocationg a fiscal union in Europe and transfer payments from rich countries to the poor ones. Of course, the Germans are not happy about that.

We’ve had fiscal union in America and that’s allowed the poor heartland states to develop thanks to the support of the industrialized coastal states.

I would love to see some more state rights and fiscal disunion in America. 😉
http://robertreich.org/post/9603077350

[ctr70]

That was an awesome article.

We need some SERIOUS pension and health care benefit reform for state Government workers. Why can’t they just all have standard IRA’s and 401k’s that they just contribute out of their own salary just like people in the private sector ? And that’s all the retirement they get, what they contribute, just like the private sector. Why should they get these fat retirement pensions and health care for life on the backs of the tax payers when the majority of the population in the private sector doesn’t get that? People should be marching in the streets of Sacramento for pension reform!

Interesting how Arnold tried but could not get the state legislators to pass Gov. worker pension reform…classic American politics, instead of making the hard decisions to fix things, they do what they have to do to get re-elected. One of the things Arnold tried to do was limit the campaign donations of some state union organization, which he failed to do. Lot’s of crooked activity protecting the status quo of the state employees.

I love that comment from the mayor where San Jose needs to literally go down to ONE city worker managing the whole city just so they can pay the bloated retirement pensions of retired city workers.

Did you see the state prison psychiatrist is making $850,000 a year???

[Anonymous]

San Jose:

This year they would be $245 million: pension and health-care costs of retired workers now are more than half the budget. In three years’ time pension costs alone would come to $400 million, though “if you were to adjust for real life expectancy it is more like $650 million.” Legally obliged to meet these costs, the city can respond only by cutting elsewhere. As a result, San Jose, once run by 7,450 city workers, was now being run by 5,400 city workers. The city was back to staffing levels of 1988, when it had a quarter of a million fewer residents. The remaining workers had taken a 10 percent pay cut; yet even that was not enough to offset the increase in the city’s pension liability. The city had closed its libraries three days a week. It had cut back servicing its parks. It had refrained from opening a brand-new community center, built before the housing bust, because it couldn’t pay to staff the place. For the first time in history it had laid off police officers and firefighters.

Vallejo:

Back in 2008, unable to come to terms with its many creditors, Vallejo declared bankruptcy. Eighty percent of the city’s budget—and the lion’s share of the claims that had thrown it into bankruptcy—were wrapped up in the pay and benefits of public-safety workers. Relations between the police and the firefighters, on the one hand, and the citizens, on the other, were at historic lows. The public-safety workers thought that the city was out to screw them on their contracts; the citizenry thought that the public-safety workers were using fear as a tool to extort money from them. The local joke was that “P.D.” stands for “Pay or Die.” The city-council meetings had become exercises in outrage: at one, a citizen arrived with a severed pig’s head on a barbecue grill. “There’s no good reason why Vallejo is as fucked up as it is,” says longtime resident Marc Garman, who created a Web site to catalogue the civil war. “It’s a boat ride to San Francisco. You throw a stone and you hit Napa.” Since the bankruptcy, the police and fire departments have been cut in half; some number of the citizens who came to Phil Batchelor’s office did so to say they no longer felt safe in their own homes. All other city services had been reduced effectively to zero. “Do you know that some cities actually pave their streets?” says Batchelor. “That’s not here.”

They robbed the people of the city they were charged with protecting. The robbery will continue for decades.

b..b.but the bankers are to blame!

[ctr70]

The problem is the people making the laws also get those bloated pensions so they are going to try to protect the status quo. I guess the idea is that let’s bankrupt all the cities of CA and state itself, just so the retired workers can get their over paid bloated pensions on the backs of the tax payers.

[Author]

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