[CA renter]

[quote=harvey]Right, organized labor has no political power, they are helpless victims of “wall street.”

Of course compensation is important for retention. That explains why police officers in one nearby community get more than five times the people that they serve:

The average pay and benefits package for a police officer here had been worth $177,203 per year, in a city where the median household income was $31,356 in 2011, according to the Census Bureau. All of this had gone largely unnoticed until becoming the center of debate during the recent municipal election.

Defined benefit pensions make it way too easy for politicians and unions to hide the true cost of services and to defer those costs until long after the politicians are gone. This is why we are seeing a wave of municipal bankruptcies. Politicians and public-sector unions gave themselves a sweet deal years ago, using the arcane pension system to hide the cost, until eventually the day of reckoning comes.

Defined benefit pensions for public employees are a completely unnecessary risk.

Of course there is the alternate explanation: That big, bad wall street “forced” these modest public servants to take their $177K compensation.

Wall street made them do it![/quote]

That’s Desert Hot Springs. They seem incapable of managing their finances, and not just because of pensions.

From your link:

This is not Desert Hot Springs’ first experience with fiscal problems. In 2001, it went bankrupt after losing a $10 million lawsuit brought by a developer who complained that the city was thwarting his efforts to build affordable housing. The city had to borrow to pay the judgment and is still paying off that debt — a struggle for a working-class town.

…

Also from your link:

The city, Desert Hot Springs, population 27,000, is slowly edging toward bankruptcy, largely because of police salaries and skyrocketing pension costs, but also because of years of spending and unrealistic revenue estimates. It is mostly the police, though, who have found themselves in the cross hairs recently.

In other words, the other spending that caused the crisis is already spent, so the easy targets are the public employees whose pay is deferred and still under the control of the public entities.

…

And the city council was unwilling to consider options that would fix the problem (the claim that it would only “delay the reckoning” is subjective, and not fact-based).

Mr. Phillips, the police union lawyer, said the current crisis had been driven by the new majority on the City Council — including Mayor Sanchez and Mr. Betts — that was philosophically opposed to tax increases. The union’s own proposal to address the budget shortfall — by cutting the size of the force and filling in with overtime work for which the officers would defer payment for 17 months, as well as raising the local sales tax — was rejected by city officials, who said it would only delay the reckoning.

==========================

Now, there IS a real problem with the changes made to pension benefit formulas under Gray Davis, as mentioned here:

Mr. Adams said that California’s rich police pensions were first offered to prison guards by former Gov. Gray Davis more than a decade ago. The move set off a chain reaction, with the California Highway Patrol soon clamoring for the deal, and then city police officers all over the state.

I have ALWAYS been opposed to these pension changes, long before you were ever aware of how public pensions worked, and long before the “pension crisis” that was 100% caused by Wall Street (and they were also responsible for those pension changes during the internet/stock market bubble in the late 90s…I was there, and I was warning about it back then).

Additionally, while the pension system might be “arcane” to you, it’s perfectly transparent and easy to understand to those who know what they are looking at. All of the numbers are available on the CalPERS website.

I also want to point out that while contribution amounts were raised after the Wall Street crisis, these public employers were paying very little, and usually NOTHING AT ALL during the years of the stock market bubble. That’s what enabled them to enhance the pension formulas…because the pension funds were OVER-funded.

[CA renter]

[quote=FlyerInHi]Why not pay them compensations up front?

If they’re not good at managing their money for retirement, then they’re are not the cream of the crop, are they?[/quote]

Not that they are necessarily bad with money (some are, some aren’t; but public employees do tend to have better credit than most*), but the skills that make a good money manager don’t necessarily translate into making a good cop, firefighter, teacher, etc.

*Most public employers do run a credit check during the hiring process, and candidates with low credit scores are unlikely to get a job with the government.

http://money.msn.com/credit-rating/3-jobs-where-good-credit-counts

[CA renter]

[quote=livinincali]

But your argument was that we need defined benefit pension plans to keep people yet you say people stay and leave for other reasons. Just like how they do in the private sector. If that’s you argument than don’t you have to give up the argument that you NEED to offer guaranteed benefit contribution plans in order to make people stay.[/quote]

Of course, there will always be somemovement. The goal is to keep the churning to a minimum and to keep the most valuable employees in place once you’ve spent all that time and money on hiring and training them.

[CA renter]

[quote=desmond][quote=The-Shoveler]When I was younger, surfing meant a lot to me,
Now walking on the beach at least once a week means a lot to me.

I don’t know what you would do in Dallas besides work.

I would not move but that is just me.

That is another great thing about SD,

The temperature is almost always just perfect for taking long walks on the beach,[/quote]

Don’t worry guys, there are plenty of things to do in Texas.

Nice job, desmond! Looks like you guys are really enjoying Texas. It’s beautiful country out there. 🙂

[CA renter]

And in case you’ve missed this:

———

McConnell opened his remarks at the California resort with a tip of the hat to the wealthy conservative activists hosting the summit — whose network raised over $400 million for the Republican cause in 2012 alone — saying “I want to start by thanking you, Charles and David (Koch), for the important work you’re doing. I don’t know where we’d be without you…”

The senator devoted most of his speech to his desire to free up unlimited political spending, or what he calls “free speech.” He described the campaign finance reform movement beginning during the Watergate scandal as an effort by “the political left” to control the political process, though neglecting to mention his support for strict contribution limits and public financing of elections during the 1970s, when he called the corrupting influence of money in politics a “cancer” on democracy.

Referring to the Supreme Court’s 2010 Citizens United decision that freed up unlimited political spending by corporations and Super PACs, McConnell said the decision “leveled the playing field” for corporations, ushering in “the most free and open system we’ve had in modern times.” McConnell added, “I pray for the health of the five” justices who ruled his way in the case.

While most of McConnell’s comments on campaign finance mirrored his public statements, he did add this eye-opening quote on the passage of the 2002 McCain-Feingold bill that regulated electioneering communications.

“The worst day of my political life was when President George W. Bush signed McCain-Feingold into law in the early part of his first Administration,” said McConnell.

Commentators have noted that McConnell’s tenure in the Senate has included two government shutdowns, multiple wars, the 9/11 attacks, and the financial collapse of 2008. Regarding the latter, McConnell said at the time that the passage of the $700 billion Wall Street bailout for firms directly implicated in the crash was “the Senate at its finest.”

In other words, legislation limiting political spending by the wealthy was his worst day in the Senate, and legislation giving a $700 billion handout to the wealthy was his finest day in the Senate.

Regarding the newly proposed amendment to the Constitution to overrule Citizens United, McConnell fielded a question from David Koch and told the crowd that this is radical legislation seeking to silence the wealthy.

http://insiderlouisville.com/metro/leaked-audio-mcconnells-speech-koch-summit-reveals/

————-

Yet, some people still claim that we don’t need unions, or that we don’t need politically active unions. And these very same people will say there is a “level playing field” in politics… The level of ignorance out there is off the charts.

[CA renter]

[quote=FlyerInHi][quote=EconProf]CAR: You report how business donations far outweigh labor donations. But don’t a lot of businesses support liberal causes? Solyndra comes to mind. With crony capitalism under Obama, big business is “persuaded” to help out the existing administration, whether Democrat or Republican. Let’s remember that true conservatives do not automatically support big business.
[/quote]

I think true conservatives would not focus on solyndra, which is small fish. They would focus of the homeland security and military industrial complex that has built up in the DC area and across the country.

They would also focus on how our military has screwed things up that we have to keep on using the military on unscrew things. That situation seems like the perfect climate for the security/armament/defense business.[/quote]

I don’t get distracted by non-economic issues where politics are concerned. That’s not to say that these issues are unimportant, but that they pale in comparison to economics. I’m far more concerned about what the donors are doing WRT the position of labor (union and non-union workers), and how their actions and activities affect workers’ compensation and general quality of life vs that of “capital” (those who do not work for their living, but invest/speculate for a living, instead). When looked at from that perspective, there is no question that capital has been outspending labor by many multiples. See my link, above, for the info.

[CA renter]

[quote=livinincali][quote=CA renter]
Yes, public employees would be less effective without these benefits, and turnover rates would be much higher. These jobs value experience, because that’s the ONLY way you’re going to know how to do your job in many of these positions. The costs to recruit, train, and equip many of these employees are extremely high, so turnover is a huge cost to public employers.

Defined benefit plans encourage the most experienced and valuable employees to stay, and this reduces costs for the public employers, while also ensuring that they have the highest-qualified workforce.
[/quote]

It also encourages the worst and most disgruntled to stay as well. Once you get 10-12 years into city employment the benefit to stay on even though you hate doing what you’re doing is too high. Why do we want to lock down the best and the brightest shouldn’t they have freedom to pursue other opportunities like the rest of us. If you have someone that is truly great and want to keep them throw out the silly bucket pay scales and pay them what they are worth on the free market. Seriously where is the 10-15 year teacher making $60K in pay, $15K in medical benefits and probably another $10K in pension benefit going to go in the private sector and make a comparable amount.[/quote]

The worst employees tend to leave before benefits vest to any large extent. That doesn’t mean that some dead wood isn’t hanging around after too many years — and I absolutely support making it easier to fire truly bad employees. It’s more important to keep the good ones than to worry about the average or slightly less-than-average ones. Also, there’s no guarantee that if you got rid of the bottom 10%, that you’d get a new group that is better. Churning costs money, and it doesn’t necessarily mean that you’re getting better quality employees. And many of the best employees might not want to stick around, either, if they think that management is indiscriminately or wrongly terminating their coworkers.

As for the argument that there is any kind of a “free market” in labor…you clearly aren’t looking at the same things that I am. Employers are always conspiring to drive down wages and benefits, and they do so on many levels, including political, which is why we desperately need politically active unions…”united we negotiate, divided we beg,” and all that.

And that teacher going into another profession where s/he can make the same or better compensation? Lots of them do exactly that. Again, look at the attrition rate for teachers. Many teachers also come from the private sector where they were making more money, but they change for lifestyle or other factors (often to get hours that match their children’s hours). But since you’ve asked the question, how many professional athletes can leave the profession and make more money in another field? How many CEOs can leave that position and make anywhere near the same amount in another position? How about investment bankers? And how about the techies? Think they can leave tech and make more money elsewhere? Obviously, people tend to gravitate toward positions that give them the best of what they’re looking for with respect to job satisfaction, freedom, lifestyle, compensation, etc. That goes for everybody, not just teachers and other public servants.

[CA renter]

Let’s look at where the real money is coming from, and whether it’s supporting labor or capital, shall we?

[formatting issues, but click on the link]

Grand Total Democrats Republicans Dem % Repub %
Business $698,136,635 $295,238,284 $398,886,016 43% 57%

Labor $284,017 $272,187 $8,855 97% 3%

————

The broadest classification of political donors separates them into business, labor, or ideological interests. Whatever slice you look at, business interests dominate, with an overall advantage over organized labor of about 15-to-1.

Even among PACs – the favored means of delivering funds by labor unions – business has a more than 3-to-1 fundraising advantage. In soft money, the ratio is nearly 17-to-1.

An important caveat must be added to these figures: “business” contributions from individuals are based on the donor’s occupation/employer. Since nearly everyone works for someone, and since union affiliation is not listed on FEC reports, totals for business are somewhat overstated, while labor is understated. Still, the base of large individual donors is predominantly made up of business executives and professionals. Contributions under $200 are not included in these numbers, as they are not itemized.

https://www.opensecrets.org/overview/blio.php

[CA renter]

[quote=harvey]

The public pension system has evolved into a complex and arcane bureaucracy over the decades as it was influenced by public sector employee unions, which are some of the best-funded political lobbying organizations in the nation:

https://www.opensecrets.org/orgs/list.php

[/quote]

And this goofy claim of yours needs to be clarified, as well. From your link:

——-

Heavy Hitters: Top All-Time Donors, 1989-2014

This list includes the organizations that have historically qualified as “heavy hitters” — groups that lobby and spend big, with large sums sent to candidates, parties and leadership PACs. Individuals and organizations have been able to make extremely large donations to outside spending groups in the last few years. While contributions to outside groups like super PACs do not factor into an organization’s designation as a “heavy hitter” (a listing of about 150 groups), those numbers are included for the roster below.

For example, this list does not include casino magnate Sheldon Adelson. He and his wife Miriam donated nearly $93 million in 2012 alone to conservative super PACs — enough to put him at No. 2 on this list. Similarly, the list excludes former New York City mayor Michael Bloomberg, who has donated more than $19 million in the past two years, largely to groups that support gun control. Neither Adelson nor Bloomberg — or the organizations they report as their employers — qualifies as a “heavy hitter” under our current definition. It’s also important to note that we aren’t including donations to politically active dark money groups, like Americans for Prosperity, a group linked to the Koch brothers, or the liberal group Patriot Majority — because these groups hide their donors; see a list of top donors that we’ve been able to identify to such groups. We are working to revise this list to take into account the new realities of campaign finance created by the Citizens United decision, but as it currently stands, there are significant omissions.

It is also worth noting that certain organizations, such as ActBlue and Club for Growth, are included although they function for the most part as pass-through entities: individual donors give to them with the contributions earmarked for specific candidates.

[CA renter]

Yes, Wall Street has corrupted the pension plans. That’s exactly what I had said in my previous post.

Yes, public employees would be less effective without these benefits, and turnover rates would be much higher. These jobs value experience, because that’s the ONLY way you’re going to know how to do your job in many of these positions. The costs to recruit, train, and equip many of these employees are extremely high, so turnover is a huge cost to public employers.

Defined benefit plans encourage the most experienced and valuable employees to stay, and this reduces costs for the public employers, while also ensuring that they have the highest-qualified workforce.

And the “state of California” isn’t in the investment business. The pension funds most certainly are, as they should be.

Once again, private sector workers have Social Security AND defined contribution plans. In many cases, this costs almost as much as a DB plan (most public employees who’ve worked long enough to get the full defined benefit do not get Social Security).

And not “everyone else in the workforce” has a DC pension plan. Many have defined benefits, and DB plans were the norm a few decades ago…you know, when the middle class and the economy were at their strongest. Corporate greed has caused the demise of the middle class; not unions, and not DB pension plans.

It’s amazing how the right-wing propagandists have managed to fool so many people into working against their own interests.

[CA renter]

[quote=harvey]”Wall Street” is an abstraction.

“Wall Street” does not manage any investments.

Pension funds in California are managed by public employees. Real agencies. Real people.

The public pension system has evolved into a complex and arcane bureaucracy over the decades as it was influenced by public sector employee unions, which are some of the best-funded political lobbying organizations in the nation:

https://www.opensecrets.org/orgs/list.php

Government exists to provide services to the public.

Government agencies hire employees to provide the service.

Pensions are simply a component of compensation for these employees.

Like any government activity, policy should seek to provide the service at the least cost.

Much of the complexity of the public sector pension systems simply does not need to exist. The bureaucracy is complex, by design, to allow the true cost of pension benefits to be hidden from the public and to allow politicians to defer costs.

The pension system is a useful tool for budget shenanigans.

And it is all totally unnecessary.

It is entirely possible to provide all government services without the overhead of the complex public pension system.

The solution is simple: End defined-benefit pension programs for government employees. Compensate public employees fairly and provide them with defined-contribution retirement benefits, just like the majority of the population and workforce.[/quote]

Once again, you’re proving how totally ignorant and uninformed you are. Nothing new here. Wall Street firms (and other outside money management firms) are absolutely managing public pension money, and they’ve been doing so for quite awhile.

Just a couple of examples of what happens when Wall Street corrupts public pension funds:

Former CalPERS CEO Pleads Guilty to Bribery, Fraud, Including Taking Cash in Paper Bags

http://www.businessweek.com/magazine/content/09_46/b4155036786606.htm

What once was the boring business of in-house investment managers buying very safe Treasuries and highly-rated municipal bonds, with a smattering of very highly-rated corporate bonds, has become an insidiously corrupt casino where “pay to play” is an expected part of the investment dance. It is unacceptable.

[CA renter]

[quote=phaster][quote=CA renter]
The Fed’s insistence on keeping rates at ~0% are exacerbating the problems.

As for how it will affect the bond market, I believe that most people who work in these markets understand the risks…at least, I sure hope so.
[/quote]

The fed is keeping interest rates near “0” because historically that is how economic activity was kickstarted.

The mechanism by which the fed directed interest rates, was by printing money and lending it out to credit worth institutions, who in turn lent it out to credit worth people… (see the problem?)

Few institutions have their books in order, same goes for people (fewer people have the capacity to take on more debt), yet since 2008 the fed has created something like 4 TRILLION dollars in an attempt to try and get the economy going (but most of the printed credit “money” is just sitting on ledger sheets at the fed and big banks)

As I see it we’re in twilight zone of global “mild stagflation” waiting for something to give…

I say that is because if ya think the US FED printing 4 TRILLION or so is a big number, consider the mind-blowing 15+ TRILLION the bank of china has printed since 2008.

I’d bet that most people who work in the “bond” market don’t ponder such things, and only see a limited picture of stuff around them and not the BIG “crazy” picture.

It is this narrow world view, that caused 99% of “financial experts” to miss seeing the bubble in housing, systemic problems caused by CDOs, etc. last time around.

Perhaps, I might be fooling my self looking at all the data trying to grasp the big picture, but feel the next implosion is going to be government debt at the city and state level.

Unlike the federal level which can print money and have deficit spending, there is no similar pressure relief valve “mechanism” at the city and state level AND the unfunded “pension” debt is a huge value – in the billions or tens of billions for large cities, and “collectively” hundreds of billions at the state level.

Muni bonds are based on the faith, that the city and states will pay back bondholders, so when I read that new account rule about public pension debts being required to be placed on the balance sheet (I kinda think that a “debt” tidal wave seemingly appearing out of nowhere is something to be concerned about, because somehow its going to affect bond ratings, investors perceptions and in time the outlook of joe six pack walking down main street)

Its going to be interesting in years ahead, cause somehow something BIG has to give with all the mismanagement…[/quote]

The Fed cannot kick-start an economic recovery as much as it can unleash a speculative wave of misallocated money…rushing around the globe in search of yield. I, for one, have long been staunchly opposed to the Fed’s responses to recessions and the corrections of these monetary misallocations.

As to the rest, the government debt implosion has already happened. It’s been on the radar for many years, now. If someone isn’t aware of it, they certainly have no business in the financial markets.

But to think that these debt problems are solely due to public pensions is to ignore all of the other deficit spending done during the monetary free-for-all. Pensions are only one piece of the puzzle, and they’re not even the major piece in many cases. ALL stakeholders need to come to the table in order to fix this mess — taxpayers (many of whom have been getting tax subsidies, like Prop 13, that we have no business giving away, especially for real estate that isn’t a primary residence), bondholders, public employees, government contractors, (illegal) immigration advocates, and VOTERS who’ve voted in every election to spend money that we do not have.

[CA renter]

All I can say is that if we were renting a condo where the owner was recording *anything,* there would be problems.

Why are so many so willing to give up their privacy!?!?

[CA renter]

Yes, the pension funds were once well-managed by staid, boring pension managers, most of whom were in-house.

Over the years, Wall Street has corrupted the public pension funds, and more and more of the pension money is being placed at greater and greater risk in more “financially innovative” investments. We have Wall Street and the Federal Reserve to blame for this. The Fed’s insistence on keeping rates at ~0% are exacerbating the problems.

As for how it will affect the bond market, I believe that most people who work in these markets understand the risks…at least, I sure hope so.

It’s important to note, though, that public employees have been the ones to take the biggest hits, so far. They’ve been moving more employees, especially the newer ones, into hybrid retirement plans, and most employees with most municipal agencies haven’t been getting retiree healthcare for decades — they’ve been phasing it out since the early/mid 90s. Also, PEPRA has made quite a few changes regarding pensionable compensation, benefit caps, and increased pension contributions from employees.

The above information is related mostly to changes in California, though I know that other states and municipalities are moving in the same direction.

[CA renter]

Just checked our local areas and didn’t see anything too crazy. In around 2005-2006, rents shot through the sky around here, but have been pretty steady (at very high rates) since then.

Looked at Temecula and saw this one. Looks pretty reasonable to me, at least for a Southern California property — unreasonable anywhere else, IMO. Is this very different from what it was a few years ago?

https://sandiego.craigslist.org/nsd/apa/4634655531.html

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