Home › Forums › Financial Markets/Economics › Excellent Economist Mag. article on CA’s Gov. retiree Pension problems
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November 14, 2011 at 1:29 PM #732909November 14, 2011 at 1:40 PM #732914
gandalf
Participant[quote=pri_dk]The question moving forward really isn’t “Public sector employee or Wall Street?”
The question is “Public sector employee or Taxpayer or Public services?”
Some combination of the latter three are going to have to bear the cost of the generous promises that have been made.[/quote]
That’s a false premise. You are presenting false choices. Nobody is saying EITHER Wall Street OR public employees. That’s also false.
How many false things can you say in one post?
I SAID: People who are outraged about public pensions should FIRST direct their outrage at the financial industry. FOLLOW THE MONEY.
The average public employee is a minor part of the problem. Enough of the right-wing talking point bullshit.
November 14, 2011 at 1:47 PM #732915Anonymous
GuestShortfalls are at least $240 billion. Perhaps as much as $500 billion.
So let’s say we take all the assets of a dozen or so “Wall Street” CEOs (we’ll ignore the fact that it is doubtful that they actually broke any laws and skip any due process.)
So we get about $50 billion back.
Now what?
November 14, 2011 at 2:19 PM #732916Shadowfax
ParticipantIt’s a start. Better from them than from the rest of us, you included, right?
Didn’t break any laws? You are kidding, right? These guys (I am not aware of any women CEOs, but there may be some) are the Chief Executive Officers–they are ultimately responsible for the actions of the banks they are in charge of. It’s Enron all over again–“I didn’t know my traders were actively and knowingly fleecing grannies of their savings!”
Since when was fraud not a crime? If we had an enforcement arm that had any cojones, most of these assholes would be in trial for the basic crime of stealing.
Part of the problem with the banks that are too big to fail is that they are also too big to be accountable. You can’t throw a corporation in jail, so you have to look to the people who made decisions or overlooked the crimes being committed in the name of profits. Look at Solyndra: it’s being investigated for taking government money. Did the CEO line his pockets with some of that money? Maybe. But at least there is/was an investigation into where it all went.
Where is the investigation of the banks that sold these retirement plans (usually conservative customers for investment products) toxic securities? Well, the enforcement arms have been gutted by budget cuts and the commissioners’ seats are filled with insider cronies who can’t bring charges against their Harvard MBA classmates. Who you gonna call? So the CEOs and others at the helm of Wall Street either participated or were willingly or woefully ignorant. They should recompense the people they fleeced. End of story.
November 14, 2011 at 2:19 PM #732919GuestI agreed to your “start,” so can you answer my question:
Then what?
How do we solve the other 80%+ of the problem?
November 14, 2011 at 2:39 PM #732922ParticipantIf not for federal policy, TARP, etc. — there would be no Bank of America, Citi, Chase, Wachovia, etc. “Too Big to Fail” institutions should have been broken up and restructured. Deposits and transactions could have been guaranteed for less than existing outlays. Bankruptcy proceedings would have resulted in trillions of dollars in restitution to counter-parties — money that would be paid before shareholder losses. $500 billion is a drop in the bucket.
Instead, we got a taxpayer financed, currency-floated bailout. We saved the 1%, preserved giant Wall Street banks, guaranteeing Goldman and the like, made good on Chinese investments, European counter-parties, Saudi royalty, hedge funds — almost everybody is getting paid except for ordinary American people, and now that includes average people paying into their pensions.
Criminal conduct? Are you joking? Laws were broken. Madoff was a token. Frauds were committed. CitiBank is the most recent example of fraud to settle for a slap on the wrist and no admission of wrong-doing. The proof there was airtight and would have resulted in jail time if prosecutors had chosen to pursue. Enforcement and prosecution has been non-existent. Obama sucks, but Republicans are way worse.
In one of the most obscene cases of criminal activity, the FBI was on the verge of annoncing a major case against Wachovia in 2010 for laundering $378 BILLION DOLLARS in Mexican drug cartel money over the past decade. Intervention from above, the case was dropped and settled with a slap-on-the-wrist fine, no admission of criminal wrong-doing, propping up the system and its criminals once again.
There is way more than $500 billion out there. Trillions of dollars have been fleeced from the American economy and financial system over the past 10-15 years. It is now in the accounts of the 1%. That is why ordinary people are fucking angry. If not for the financial industry of the past decade, there would be no great financial crisis of 2008, pensions would be solvent.
November 14, 2011 at 2:43 PM #732929Allan from Fallbrook
Participant[quote=gandalf]
There is way more than $240 billion out there, fleeced from the financial system over the past 10-15 years. It is now in the accounts of the 1%. That is why ordinary people are fucking angry. If not for the financial industry of the past decade, there would be no great financial crisis of 2008, pensions would be solvent.[/quote]Gandalf: I would agree with your entire post, save that last sentence. You’re overlooking the fact that pensions would probably still not be solvent, and not due to Wall Street, but to overly rosy assumptions that were completely unattainable (pensions were in trouble before the Crash of 2008). This problem has been coming long before the bottom fell out of the US economy, though that factor did indeed contribute mightily.
To your other point, I would also add the massive amount (in trillions) that has “found” its way overseas into cash havens like the Caymans through tax loopholes and favorable “relationships” with bought-and-paid for US politicians. You can pillory the GOP more than the Dems for this, but both parties are complicit in this and the dollar figures are staggering. Repatriation of said funds for taxation would return billions to the US.
November 14, 2011 at 2:49 PM #732931GuestSo the Mexican drug cartels have all the pension funds.
How do we get it back from them?
November 14, 2011 at 2:57 PM #732934Participant[quote=Shadowfax]It’s a start. Better from them than from the rest of us, you included, right?
Didn’t break any laws? You are kidding, right? These guys (I am not aware of any women CEOs, but there may be some) are the Chief Executive Officers–they are ultimately responsible for the actions of the banks they are in charge of. It’s Enron all over again–“I didn’t know my traders were actively and knowingly fleecing grannies of their savings!”
Since when was fraud not a crime? If we had an enforcement arm that had any cojones, most of these assholes would be in trial for the basic crime of stealing.
Part of the problem with the banks that are too big to fail is that they are also too big to be accountable. You can’t throw a corporation in jail, so you have to look to the people who made decisions or overlooked the crimes being committed in the name of profits. Look at Solyndra: it’s being investigated for taking government money. Did the CEO line his pockets with some of that money? Maybe. But at least there is/was an investigation into where it all went.
Where is the investigation of the banks that sold these retirement plans (usually conservative customers for investment products) toxic securities? Well, the enforcement arms have been gutted by budget cuts and the commissioners’ seats are filled with insider cronies who can’t bring charges against their Harvard MBA classmates. Who you gonna call? So the CEOs and others at the helm of Wall Street either participated or were willingly or woefully ignorant. They should recompense the people they fleeced. End of story.[/quote]
Shadowfax: As I read the Rolling Stone piece, I couldn’t help but think how much an independent, investigative media would help expose shit like this.
Its not just enforcement agencies that have been gutted. Pick nearly any major metro paper of your choosing and look at how lean their staffing is. When’s the last time you read a really good piece of muckracking journalism (outside of Taibbi and the Rolling Stone)? Chances are its been a while. We know to the minute what Lindsay Lohan and Kim Kardashian are up to, but don’t have a fucking clue when it comes to meaningful reporting. Its sad and a major part of the reason that we, as a country, are where we are.
November 14, 2011 at 3:05 PM #732936GH
Participant[quote=gandalf]The financial industry caused pension insolvency by a wide margin.[/quote]
I have an idea. While the pension fund managers sue Wall Street they reduce pensions in accordance with the shortfall.
I for one had absolutely nothing to do with this mess and do not as a tax payer want to be left on the hook along with every other bailout imaginable
November 14, 2011 at 3:08 PM #732935briansd1
GuestThe fraud on Wall Street made us all think we were wealthier that we really are.
Peak to trough $16 trillion of US wealth was lost. Poof, gone just like that.
We regained about 1/2 of that.
Want pensions to get back to health? Assets value increases is the best way to do that.
I’m waiting for CA renter to say that, no, we don’t want inflation because that only hurts the middle-class who needs to buy houses.
But asset value inflation is exactly what the pensions funds were counting on. The pension funds were thinking that asset value rises made contributions unnecessary at times.
November 14, 2011 at 7:16 PM #732976patientrenter
Participant[quote=gandalf]….The parties on Wall Street made the majority of the profits off what they knew to be a swindle. That is why my ire is directed at ‘Wall Street’…..[/quote]
Hang ’em high!
I am all for true accountability, and that would send people like Greenspan, Bernanke, Paulson, Summers, Rubin, Dodd, Frank, and Geithner to prison for life. They were entrusted with the public interest and used it to enrich their friends. And with them would go people on Wall Street like Dimon, Blankfein, and half the senior people at the investment banks, hedge funds, private equity funds, rating agencies, mortgage brokers, etc. who made millions from what was essentially fraud.
But who actually made the most money from our giant asset bubbles? Wall Streeters walked away with hundreds of billions. But there were gains of many trillions cashed in during the bubble years. Who got most of that money?
Well, the people who got the most were the net sellers of assets during the bubble. They have in their bank accounts most of the money that is the mirror image of the losses everyone is now gnashing their teeth about. That’s a lot of homeowners who congratulate themselves on good timing.
It’s a lot of baby boomers who got fat defined benefit pensions based on unsupportable bubble returns on the pension assets. The most egregious examples are public employees who voted themselves pensions that were unbelievably generous in amount and age of eligibility.
It’s not something we like to think about. “We have met the enemy, and he is us.”
Edit: Oh, and inflation is just another way to send the bill for all this to….. someone else, namely the savers of our society.
November 14, 2011 at 8:19 PM #732984ParticipantReally good comments, pr.
November 14, 2011 at 9:32 PM #732988Participant[quote=pri_dk]So the Mexican drug cartels have all the pension funds.[/quote]
Setting aside the sarcasm, we have this thing called a ‘Drug War’ and law enforcement routinely seizes assets from drug busts. The FBI runs an investigation a couple of years ago and learns there’s nearly $400 billion dollars worth of cartel drug money getting laundered through Wachovia Bank in the United States. As it turns out, the drug money is the only thing keeping Wachovia solvent. Holy fuck, huh? So the Obama Administration’s DOJ buries the case and settles out of court with a minor fine and no admission of wrongdoing.
In other words, keeping Wachovia afloat is more important than shutting down an insolvent bank — a criminal enterprise no less, jailing its management, confiscating drug cartel assets and using the bank’s ill-gotten funds to safeguard the deposits of average Americans and offset losses to ordinary investments and pensions. There was an immense amount of fraud, incidentally, associated with Wachovia’s mortgage lending operations.
By my calculation, that’s $30B right off the top from the drug cartels. Probably another $70B could have been squeezed out of the bank and sent back to depositors and ordinary American investors through bankruptcy and restructuring — “Sorry, China. Sorry, Goldman-Sachs. Sorry, Sheik Ali Dick Wad (funding Islamic terrorism). Get in line. Oregon Municipal Employees are getting paid first.” The rest of the bank’s operations and assets would work their way through bankruptcy proceedings. On top of all this, Wachovia executives would likely be rotting in jail.
Average local public employees union is the least of our problems.
November 14, 2011 at 9:37 PM #732989Participant[quote=pri_dk]So the Mexican drug cartels have all the pension funds.
How do we get it back from them?[/quote]
I dunno. Any ideas of your own?
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