Here we go again (Low low down payment)

[CA renter]

[quote=phaster][quote=CA renter]
Except that they have been using up all of their ammunition and there will be precious little left when the SHTF moment happens. They have masked the problem by *growing* the problem. The 2008 crisis was more difficult for them to manage than the 2000/2001 crisis, and the next one will be even worse because the numbers are growing larger and the problems are becoming more systemic with every new manufactured crisis.[/quote]

to give ya an idea how bad I think it is consider that Fannie Mae and Freddie “The two GSEs have outstanding more than US$ 5 trillion in mortgage-backed securities (MBS)”

http://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac

BUT that MBS figure is dwarfed because the unfunded public pensions alone I read is in the 4.1 trillion dollar range, and the real “unfunded” public pension figure basically doubles if one considers health care costs

[quote=CA renter]
There is no smoke, nor any fire, from what I can see. If you have any evidence or reason to believe that there was fraud, please make your case.
[/quote]

been checking back every once in a while to see if anyone had something to add/say

http://piggington.com/how_will_unfunded_pensions_affect_economy?page=4

so wondering have I made my case….

http://www.washingtonpost.com/business/economy/congressional-leaders-hammer-out-deal-to-allow-pension-plans-to-cut-retiree-benefits/2014/12/09/4650d420-7ef6-11e4-9f38-95a187e4c1f7_story.html?tid=pm_business_pop%5B/quote%5D

As usual, phaster, you don’t know what you’re talking about. You like throwing shit at the wall to see what will stick, hoping that the readers of your posts won’t actually know anything about the issues. Unfortunately for you, you’ve come to the wrong place. If you have some data to back up that $4.1 trillion in unfunded pension liabilities, I’d sure like to see it. Out here in the real world…

“You see, the $3.8 trillion figure was an estimate of total liabilities, not unfunded liabilities. Since the pensions have $2.8 trillion in assets, their unfunded liabilities are just $1 trillion. Or, to put this in terms that may be understandable to Post readers, the unfunded liabilities are 0.22 percent of projected GDP over the next 30 years. And, as I noted in my earlier post, most state and local governments are already funding at levels that are consistent with making up this shortfall so there will no required tax increases or spending cuts to meet these future obligations.”

http://www.cepr.net/index.php/blogs/beat-the-press/unfunded-pension-liabilities-are-1-trillion-not-38-trillion-never-take-anything-in-a-washington-post-editorial-at-face-value

Nothing like hyperbole and propaganda to work up the uninformed masses!

And this was written in 2013. The unfunded liabilites are even lower now for many public entities, and many of them have already taken steps to pay them off. Add to this the fact that many local government agencies have already eliminated retiree healthcare…back in the mid-90s.

The most expensive cohort of public sector retirees, especially in California, are those who retired/will retire between ~2000 and ~2025 because they get both retiree healthcare AND the enhanced pension benefits in most cases. After that, the elimination of retiree healthcare for many public employees (largely phased in by the mid-90s) will result in an increase in retirement ages — irrespective of when they are technically “allowed” to retire — as these employees work longer in order to maintain healthcare coverage. This is a factor that has NOT been included in many (any?) of the pension forecasts, at least not yet.

Additionally, many employers have enacted a two-tier retirement system, and those employees will have lower retirement benefit formulas in addition to not getting retiree healthcare (though, in many cases, they cost more when they are working).

BTW, that link at the bottom of your post is for PRIVATE DB pension plans, not public (though I would fight every bit as hard to defend these workers/retirees, as well).

From your WAPO link:

“A measure that would for the first time allow the benefits of current retirees to be severely cut is set to be attached to a massive spending bill, part of an effort to save some of the nation’s most distressed pension plans.

The rule would alter 40 years of federal law and could affect millions of workers, many of them part of a shrinking corps of middle-income employees in businesses such as trucking, construction and supermarkets.

The measure is now before the House Rules Committee and is likely to be moved as an amendment to a massive $1.01 trillion spending bill, perhaps by late Wednesday. It is expected to pass the Senate by Thursday.

If passed, the change would apply to multi-employer pensions, where a group of businesses in the same industry join forces with unions to provide pension coverage for employees. The plans cover some 10 million U.S. workers.”

[FlyerInHi]

[quote=CA renter]

By worse, do you mean that the next crisis will undo all the gains since 2009?

As long as we move forward in GDP growth, it really doesn’t matter if we have a next crisis or many more.[/quote]

Yes, undo all of the “gains” since 2009, and possibly more, as the economy was not allowed to realign and purge itself of the bubble-induced misallocation of resources.[/quote]

I think that you’re serious. Imagine what that would to portfolios and pension funds.

I don’t believe that it will happen in my lifetime.

[CA renter]

[quote=FlyerInHi][quote=CA renter][quote=FlyerInHi]

By worse, do you mean that the next crisis will undo all the gains since 2009?

As long as we move forward in GDP growth, it really doesn’t matter if we have a next crisis or many more.[/quote]

Yes, undo all of the “gains” since 2009, and possibly more, as the economy was not allowed to realign and purge itself of the bubble-induced misallocation of resources.[/quote]

I think that you’re serious. Imagine what that would to portfolios and pension funds.

I don’t believe that it will happen in my lifetime.[/quote]

We can wish all we want, but if you look at the numbers, it doesn’t look good, IMO.

[FlyerInHi]

[quote=CA renter]
We can wish all we want, but if you look at the numbers, it doesn’t look good, IMO.[/quote]

If you’re so sure, what are you doing to prepare?

Talking about speculation in commodities, higher prices of oil did lead to new technologies — more oil production, more alternative energy. We are now reaping the benefits.

GDP is total value of goods and services produced(not asset prices). There’s nothing fake about that. Why would you ever want GDP to go down? If something is not produced for lack of liquidity, that thing/service is lost forever (unless you’re talking about a finite resource such as oil). But human labor/productivity is infinite.

[CA renter]

[quote=FlyerInHi][quote=CA renter]
We can wish all we want, but if you look at the numbers, it doesn’t look good, IMO.[/quote]

If you’re so sure, what are you doing to prepare?

Talking about speculation in commodities, higher prices of oil did lead to new technologies — more oil production, more alternative energy. We are now reaping the benefits.

GDP is total value of goods and services produced(not asset prices). There’s nothing fake about that. Why would you ever want GDP to go down? If something is not produced for lack of liquidity, that thing/service is lost forever (unless you’re talking about a finite resource such as oil). But human labor/productivity is infinite.[/quote]

Asset prices can affect GDP numbers, too. The prices of raw commodities is priced into things that we buy.

Additionally, when asset/commodity prices are artificially inflated, it causes a misallocation of resources. You’ve noted energy, so let’s use that as an example. If prices are being driven up by speculation, it will cause people in the energy industry to commit more resources to drilling for oil, or building massive solar or wind farms, etc. That’s good IF the prices are based on real supply and demand (not speculators of any sort). If the prices increases were caused by speculation or other market manipulations, then the boom will eventually go bust, and all of those direct and indirect jobs will be lost, the equipment will be sidelined (possibly only working a fraction of its intended lifespan), the environment will be damaged (and the companies responsible for the damage might go BK, leaving the mess for taxpayers to clean up) and the economy will be decimated, especially in the regions where all of this work was happening.

This is just one example. Market manipulations have a ripple effect on the economy, and if booms are allowed to grow to bubble proportions, they can take down whole sectors of the economy for a prolonged period of time.

And I doubt that a “lack of liquidity” will exist for very long. If the economy is that dicey, it will usually collapse, then the money from elsewhere comes rushing in during the vulture stage. Of course, I favor a public bank, so in my theoretically ideal world, there would almost always be liquidity in the system, especially if the boom-bust cycle was damped as speculators are prevented from controlling or greatly affecting the market.

[FlyerInHi]

The economy has some momentum.
Lest hope the rest of the world doesn’t drag us down. But if China gets it right 2015-2016 should be smooth sailing. If Europe gets out of the doldrums then things should be pretty nice.

[spdrun]

Nice for whom? Considering what you claim to be doing, wouldn’t you prefer a tepid economy where you can keep buying property and renting it out, rather than having all of your opportunities going *poof*?

[spdrun]

.

[FlyerInHi]

Pretty nice in general. A feeling of overall economic prosperity.

Maybe I can charge more for my vacation rentals if people travel more.

But the window of opportuny to buy will close. I’m not that self absorbed. I want everyone to do well.

[spdrun]

I’d prefer to have me and mine do well. Then I can worry about everyone else. Self-absorbed? Maybe.

[Coronita]

I don’t know things have been going pretty well….

1. My W2 total comp is at peak. My company might be teetering back and forth, but I’m use to it now (sort of)…
2. My rental income is providing good backup source of income….
3. My fixed rate debt obligations are rock bottom and my outstanding good debt (is any debt really good? 🙂 is going down…
4. Stocks are near high, and though I might not be having the best returns right now, it’s still beating that 1% CD for the past few years…
5. Job market hasn’t been terrible for nerds and geeks.

I wish the local markets had better rental properties that could cash flow…I know if I tried a lot harder and look elsewhere, there probably can be more rental properties outside of SD. But I don’t think I’m ready to be a full time landlord all over the place (if ever)…I don’t think the rental market is topped out, and folks seriously want to do this full time probably can do it even today if they are more flexible in where they buy rentals (not in SD for example)…. I’m not ready for that yet….My own fault and limitation.

The only thing that isn’t getting better is my driving. My car is setup just fine, and everyone that drives it is surprised how well it’s setup…But every month my driving gets worse….

And no, we didn’t see that average 30-35%+ plunge in home prices in Carmel Valley or Del Mar that people were expecting to see..And no, we didn’t see all that pent up shadow inventory in this area that supposedly existed too.

[CA renter]

[quote=flu]I don’t know things have been going pretty well….

1. My W2 total comp is at peak. My company might be teetering back and forth, but I’m use to it now (sort of)…
2. My rental income is providing good backup source of income….
3. My fixed rate debt obligations are rock bottom and my outstanding good debt (is any debt really good? 🙂 is going down…
4. Stocks are near high, and though I might not be having the best returns right now, it’s still beating that 1% CD for the past few years…
5. Job market hasn’t been terrible for nerds and geeks.

I wish the local markets had better rental properties that could cash flow…I know if I tried a lot harder and look elsewhere, there probably can be more rental properties outside of SD. But I don’t think I’m ready to be a full time landlord all over the place (if ever)…I don’t think the rental market is topped out, and folks seriously want to do this full time probably can do it even today if they are more flexible in where they buy rentals (not in SD for example)…. I’m not ready for that yet….My own fault and limitation.

The only thing that isn’t getting better is my driving. My car is setup just fine, and everyone that drives it is surprised how well it’s setup…But every month my driving gets worse….

And no, we didn’t see that average 30-35%+ plunge in home prices in Carmel Valley or Del Mar that people were expecting to see..And no, we didn’t see all that pent up shadow inventory in this area that supposedly existed too.[/quote]

You’re part of a relatively small group of people (techies) who are doing quite well in this upswing. Most other people are not earning peak wages, even nominally, and if you look at real wages, it gets even uglier.

That being said, I’m very happy for you and others in your situation, and hope that your luck continues for many more years. It’s good to know that at least some people who work for a living are doing well.

[phaster]

[quote=FlyerInHi][quote=phaster]

to give ya an idea how bad I think it is consider that Fannie Mae and Freddie “The two GSEs have outstanding more than US$ 5 trillion in mortgage-backed securities (MBS)”

http://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac
[/quote]

That’s not bad. MBS means the assets of Fannie and Freddie are backed by the equity in the homes of Americans. I believe the homes in America are worth that much and more.[/quote]

you are missing the multi TRILLION dollar point, I used MBS as a datum to illustrate the magnitude of the economic problem w.r.t. unfunded pensions!

http://piggington.com/how_will_unfunded_pensions_affect_economy?page=4

with MBS there is indeed RE assets backing things up; HOWEVER with unfunded public pensions the magnitude of the problem is in the TRILLIONS and those “promises” were made by individuals with oversized political egos (who have no understanding of math or markets) and didn’t set aside enuf monies so there are insufficient assets to backup ALL the public pension IOUs!!

just like hollywood or communist propaganda which exists in a fantasy world (with little or no basis in truth) past and present oversized political egos want to save face

therefore bureaucrats would like tax payers make up the difference of what is in the till and what was promised to various public employees over the years.

figure since you have “flyer” as part of your web moniker, you might be familiar with the old top gun movie line:

“Your Ego Is Writing Cheques Your Body Can’t Cash”

from 2007 to the present we have seen that when RE is mismanaged and accounting standards relaxed, we get an economic bubble and a long sucky economic era (which 99% of people live in)

what too few have pondered is what is going to happen to future generations, by ignoring the multi TRILLION dollar economic problem of unfunded pensions

said another way big egos wrote checks that can’t be cashed!!!

http://news.yahoo.com/video/san-diego-leaders-star-funny-220600127.html

basically by ignoring the unfunded pension problem, its akin to stress building up more and more on a tectonic plate

the economic environment is OK for most part now, and at the current moment san diego seems to appeal to “millennials” so rents and RE prices reflect that “reality”

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/12/10/millennials-can-afford-to-become-homeowners-just-not-where-most-of-them-live/

BUT its important to have a road map for times ahead, to try and be aware of problems

if you have a chance read an article about what happened in japan because “millennials” I seem to think are following what happened over there….

“When Japan’s real-estate bubble burst, young people had no point of reference other than boom times. So when the job market dried up, many of them welcomed the chance for self-exploration.

But we should spare a thought for our friends across the Pacific—not just for their sake but for ours as well. No one knows why Japan’s economy never fully recovered, but some economists are starting to trace the problem to young people like Iwabuchi who cannot find good jobs, don’t learn new skills, and neither earn nor spend enough to help get the economy moving.”

http://www.theatlantic.com/magazine/archive/2013/05/the-slacker-trap/309285/

[phaster]

[quote=CA renter]
As usual, phaster, you don’t know what you’re talking about. You like throwing shit at the wall to see what will stick, hoping that the readers of your posts won’t actually know anything about the issues. Unfortunately for you, you’ve come to the wrong place. If you have some data to back up that $4.1 trillion in unfunded pension liabilities, I’d sure like to see it. Out here in the real world…
[/quote]

Since I only pop in and post from time to time, I think I don’t throw as much shit around and sees what sticks as you (looking at the frequency of posts)

To answer your question (about the real world) I calculated the figure, awhile ago after reviewing a Harvard University’s John F. Kennedy School of Government working paper titled:

Underfunded Public Pensions
in the United States:
The Size of the Problem, the Obstacles to Reform and the Path Forward

within which there is a graph (fig 4) showing a range of present value calculations

the 4.1 trillion PV figure (I selected) was my own back of the napkin so to speak “secret sause” PV calculation which is within range of other studies and could be thought of as another “trial” w/in an experimental calculation

the high end bias (I selected) is due to the fact that the CA Controller just released a report of exponential growth in the debt associated with public pensions within the state…

“Chiang added public pension systems to his already large fiscal database. One chart reveals that their “unfunded liabilities” – the gap between assets and liabilities for current and future pensions – exploded from $6.3 billion in 2003 to $198.2 billion in 2013.”

http://www.sacbee.com/news/politics-government/dan-walters/article3507521.html

if as you claim the total unfunded public pension debt is just over a trillion dollars, then subtracting about 200 billion from a trillion means that rest of the 49 states – there is about 800 billion unfunded pension debt for ALL the rest of the states like new york, Illinois, etc. (and that does not take into account municipal governments – i.e cities and counties)

http://www.thinkadvisor.com/2013/09/09/20-best-worst-states-for-pension-funding?page_all=1

I’m guessing from the other thread (specifically about unfunded public pensions and portfolio management)

http://piggington.com/how_will_unfunded_pensions_affect_economy?page=4

[quote=EconProf]
CAR, the (apparent) fact that your husband is a firefighter explains your strong defense of government sector unions. We all get that. I don’t know why you won’t admit it. Piggs are smart enough and fair-minded enough to look beyond that fact and weigh the arguments and evidence based on their merits.
[/quote]

[quote=joec]
Because CAR likes to believe she is a good person and isn’t out to get what’s best for herself and her loved ones.

I don’t blame CAR, but this is true for pretty much everyone in society including all the wall street, big business types, etc…Everyone just wants their piece of meat and screw the hells with everyone else.

That’s life…honestly. It doesn’t hurt to look in the mirror and admit it (I know I do and can care less for plenty of things/people/etc…).

Best course of action for everyone is just find ways to avoid getting taxed I think and be able and flexible to move…If you can find ways to like get solar, your own water, police/fire protection, etc…do it…or find tax advantaged ways to generate very to 0 income, and live off capital gains, tax exempt bonds, etc…

Since her husband is a fire fighter, that makes her whole argument biased already since any change will greatly affect her own life so take anything mentioned with buckets of salt.
[/quote]

etc…

your response will be its all a right wing “republican” conspiracy!

BUT I’m going point out before hand that Chiang (the CA controller) who reported an unfunded liabilities debt of about 200 billion (as of 2013) is a “democratic”

so for now all I can add is, what is going to be interesting (and the only way to know which POV is actually right) is watching how economic headwinds due to unfunded public pension actually affect society and immigration patterns in years to come

http://www.cepr.net/index.php/blogs/beat-the-press/are-public-pensions-taking-excessive-risks

[CA renter]

phaster, EconProf has a habit of spreading lies and propaganda, just like you do (one might wonder who’s paying you, since this is all you’re focused on, too). Every single time he’s been asked for any data or proof, he disappears. He’s not a credible poster, and neither are you.

You might try including my responses to those posts, BTW, to be sure you get the context of those discussions. Neither of EconProf nor Joe know me, nor do they know anything about me that I haven’t shared on this site. I have NEVER done anything just because it’s in my best interest, and have often advocated for things that go directly against my own interests. How about you?

That trillion dollar figure DOES include municipal pensions, BTW. Even if you’re talking about the large state funds, most municipal governments contract with these funds for their employees’ retirement benefits. Having said that, I believe these numbers include both the state and municipal funds.

And Controller Chiang’s “bombshell” isn’t a bombshell; the numbers have been known for years in the pension community. This is why the pension funds have been addressing the issues and enacting plans to pay off these liabilities.

While you’re fighting for what’s right (in your mind), you might want to focus on the far greater unfunded liabilities in the Social Security or Medicare system. Or the bond measures that idiot voters pass when we have no money to pay for them (I’ve heard people claim that bonds don’t cost taxpayers any money because the bond investors are paying for them!!!). Or the private contractors who are well known to rip off the government at every turn (and who have far more politicians in their pockets than unions ever will).

BTW, who do you think is behind the attacks on public sector workers? There is a reason that this relatively unremarkable debt is being targeted over other types of debt and obligations. Could these people be your employers?

FYI, since you don’t read much here and only vomit the right-wing propaganda regarding the pension issue (useful idiot?) and your totally unsubstantiated claims regarding corruption in the planning department, I’ve long made it clear that I’ve always been opposed to the pension changes enacted during the stock market bubble, and have always opposed “pension holidays” where NO contributions were made to the pension plans — in some cases, it was years of this (funny how we never hear about this tax savings in the MSM, isn’t it?). And I have always been opposed to extreme risk-taking in the pension funds, which goes hand-in-hand with my opposition to the Fed’s manipulations which force pension funds (and others) into ever-riskier investments.

[Author]

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