[davelj]

[quote=equalizer]
Calpers cut assumed annual return rate to 7.5% instead of 7.25% recommended by state chief actuary. As long as SB pension is in line with range, Judge can’t rule it legally unconscionable. Of course the rate should probably be 7% because the only people who have worse investment track record than me are pension fund managers who are peddled junk by Wall Street.
[/quote]

A lot of work has been done on assumed forward rates of return given certain asset mixes, and most folks who don’t have an agenda – that is, they’re not consultants being paid by the municipality to justify a higher rate, or politicians who support a higher rate (to reduce the amount of funds necessary to plow back into the pension) – come out at 5%-6% as a reasonable assumption given current interest rates and asset valuations. Personally, I think 6.5% is aggressive but supportable; anything above that and you’re venturing into Fantasyland. I believe that SD City pension fund uses 8% and the County uses 8.25% (I could be off by 25 bps on these).

A Stanford study (which I had a few small issues with) came out late last year suggesting the use of 5.5%. SDCERA issued a response to that study (and justifying their ~8% assumption) that would have earned an F in Finance 101.

The trustees and administrators are well aware that their assumptions are too aggressive but to publicly acknowledge reality is just too painful so they’ll try to bleed the rate down over time and continue to kick the can down the road until someone comes along and says “enough.”

[davelj]

[quote=harvey][quote=davelj]In my opinion the most interesting part of this will be the determination of seniority (or liquidation preference) between the pension funds and the bond holders, as this is uncharted territory.[/quote]

Isn’t there some precedent for this in the Stockton bankruptcy?[/quote]

No, there is not. The Stockton bankruptcy process is ongoing and will be for some time. My understanding is that the unions are working with the various parties to cut benefits as they understand that it’s inevitable. But the actual extent of the cuts is as yet undetermined.

[davelj]

In my opinion the most interesting part of this will be the determination of seniority (or liquidation preference) between the pension funds and the bond holders, as this is uncharted territory.

I suspect that at least some judges will deem the pensions to have been willfully ignorant in assuming that the taxpayers would be willing to pay what the pensioners assumed they would bear. And if that happens – whoa Daddy – things will get very interesting.

San Diego isn’t as bad off as San Bernardino County, but… we’re still pretty damn sickly. I give it even odds that we eventually go through the same process as Stockton – better than even odds if the Stockton BK (or others that follow it) end up with pension liability reductions as that dramatically increases the attractiveness of the BK option.

The fundamental mistake that the unions have made is in assuming that the taxpayers would be willing to meet whatever pension burden the local politicians saddled them with. (This is not unlike a banker ignoring a borrower’s willingness – as opposed to its ability – to pay its debt… and finding out the underlying collateral is insufficient to repay the principal.) In any case, it’s going to be pretty interesting.

[davelj]

[quote=paramount][quote=davelj] I’m not seeing the big deal.[/quote]

Of course you don’t; fascists never do…[/quote]

I’m pretty sure that liking the idea of american citizens carrying around a passport card does not automatically deem one a fascist.

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

Seems like a bit of a jump. Why isn’t it fascist to require drivers to obtain a license? (Or perhaps it is?) Or for people to have to provide state-sanctioned birth certificates for obtaining all manner of things? (Or perhaps it is?) I could go on and on. My point is that “fascism” appears to be pretty subjective.

[davelj]

[quote=UCGal][quote=davelj][quote=UCGal]
Do you carry your passport with you everywhere you go? [/quote]

Yes. My wallet – if that’s what you would call it – consists of just four items: (1) US Passport Card, (2) drivers license, (3) ATM card, and (4) a credit card. It might be the thinnest wallet on record. If folks are required to carry a license to drive – and aren’t particularly put out by so doing – how difficult is it to carry a passport card? Just sayin’…[/quote]
Good for you.

My passport book does not fit in a wallet. But it does allow me to travel international by plane. Passport cards are limited to specific countries and specific modes of travel.

I’m too cheap to have both.

I’m sure you’re aware that US citizens are not required to have passports. Only one in three US citizens has a valid passport.

http://travel.state.gov/passport/ppi/stats/stats_890.html%5B/quote%5D

Too cheap to have both? Please. A passport card costs $55 ($40 if you already have a passport book) and is valid for 10 years. You spend more than that even on those odd occasions that you go out to eat.

Yes, I’m aware that US citizens are not required to have passports. Perhaps they should be required to have them if they are going to benefit from the protections our country provides them. Again, obtaining and carrying a drivers license does not appear to have greatly burdened the affected Citizenry… is a passport card really such a big imposition? I certainly didn’t view it as such.

It’s more expensive and time consuming to get your cable service hooked up. I’m not seeing the big deal.

[davelj]

[quote=UCGal]
Do you carry your passport with you everywhere you go? [/quote]

Yes. My wallet – if that’s what you would call it – consists of just four items: (1) US Passport Card, (2) drivers license, (3) ATM card, and (4) a credit card. It might be the thinnest wallet on record. If folks are required to carry a license to drive – and aren’t particularly put out by so doing – how difficult is it to carry a passport card? Just sayin’…

[davelj]

[quote=harvey][quote=SK in CV][…] When you’re a little bit off on all of the support for your arguments, then the credibility of the entire argument is reduced. Those little facts matter.[/quote]

They sure do!

[quote]Somewhere between 20 and 30% of Fortune 500 companies still offer DB plans to new employees. [/quote]

http://reason.com/blog/2010/08/20/only-17-fortune-100-companies

Only 17 Fortune 100 Companies Still Offer Defined Benefit Retirement Plans

That was 2 years ago, I’m sure it is less today.

Now tell me again, do the little facts matter? (or only when you make them up?)

Yes, there are still some lingering DB plans around. They are long-term plans, they will take time to phase out. But the point (you never actually make a point, except to nit-pick) is that they are going away because shareholders/investors no longer tolerate the risks associated with them.

No company is expanding their DB plans, and just about every company is eliminating them. Because that’s what shareholders want.

sdrealor’s point in his post above is spot on. Your credibility is completely shot.

No go ahead and proceed to say that I “redefined” words or that “words have meaning” or some other cop-out. Anybody (without a very bitter chip on their shoulder) who read my paragraph about how and why DB plans are going away knew exactly what I meant.

Keep on nit-pickin. Cite “facts” that are wrong. It’s all you got, dude![/quote]

This article suggests much higher numbers than yours… I don’t know which is right (nor do I care)… just sayin’ the data isn’t consistent.

http://www.workforce.com/article/20090512/NEWS01/305129997

[davelj]

[quote=Allan from Fallbrook][quote=pri_dk][quote=Nor-LA-SD-GUY2]Maybe a split into a north EU and a south EU ?[/quote]

South EU women are hotter.

Feel free to debate, but bring data.[/quote]

Pri: I won’t disagree that South EU has some definite talent, but I’d suggest you take a spin around Hungary, the Czech Republic and Poland before being so quick on the trigger.[/quote]

Agreed. And let’s not forget Romania. I’ve been to Romania five times over the last decade; I was in Constanta this time last year. Lots of beautiful women with questionable morals – a combination for which I have a demonstrated weakness.

[davelj]

[quote=CA renter]

Many elderly people spent decades living with, and being cared for, by younger relatives all throughout human history. Industrialization has changed all of that. We can either go back in time where most people worked on farms or in family businesses (which I wouldn’t really mind), or we can deal with the consequences of what we have created in this lovely capitalist system of ours. We cannot neglect the elderly simply because they have become an “inconvenience” in this capitalist system we are all supposed to love and embrace. [/quote]

I don’t think this is a capitalism vs. socialism issue, nor an issue of industrialization vs. agrarian. After all, this country was – for better or worse – considerably more “capitalistic” prior to the New Deal. Recall that the “elderly being cared for by younger relatives” was still a characteristic of the Industrial Revolution. I would argue that industrialization has little to do with this discussion. Also arguably… the socialization of elder care (via Social Security and Medicare) has engendered the notion that families don’t need to care for their elderly relatives because… wait for it… the government is doing it for them. Also, a tried and true capitalist would be suggesting that we need to find a way to put the elderly to some reasonable form of part time work, not just pay them social security to remain idle. So, I agree with a lot of what you’re saying here, but you lost me once you brought capitalism into it. Again, arguably, socialism plays a big role here.

[davelj]

[quote=Veritas]
… “a 2004 investigative report by the Sacramento Bee found that among retired members of the California Highway Patrol, 66% of the rank and file officers, and 82% of the chiefs retired with service disabilities. Similarly, a 2006 investigative report by the San Jose Mercury found that two-thirds of San Jose Firefighters retired with service disabilities.”

http://unionwatch.org/tag/the-impact-of-chiefs-disease-on-taxpayers/

No one is saying the work is easy and that the employees in high risk careers should not be fairly compensated, but the City Council and the Board of Supervisors should ensure that the tax payers are not being victimized by the Unions and Associations that represent the employees, lest the voters lose faith in their ability to do the job responsibly and fairly.[/quote]

Yes, this is a little-covered oft-used scam. I have a friend on one of the local pension boards and he said it is standard operating procedure to retire and then immediately file for disability. It’s just part of the game – completely normal and expected. He and the other board members spend a huge amount of time either granting or denying disability status. My friend told me that the rate of disability claims among retired public employees is well over 10x that in the private sector, but I haven’t looked into it myself.

[davelj]

[quote=davelj]This whole notion of “retirement” is a mid- to late-20th century industrial economy phenomenon that will soon be looked back on as an historical anomaly. It cannot and will not last – the math is overwhelming. 90%+ of folks in the US should be prepared to work at least part-time until a few years prior to dying… and living with relatives in their old age. Learn to love it.[/quote]

Yes, I’m repeating myself. Forget about “retirement” and focus on the fact that the vast majority of folks will likely be working well into their 70s. People need to dramatically readjust to reality, which has been obscured by governments/municipalities/corporations kicking the can down the road for several decades now. The jig is up.

Here’s a pretty good synopsis (sections 4 and 5 deal with more current issues):

http://www.thenexthill.com/a-brief-history-of-retirement-in-america-part-1.htm

[davelj]

This whole notion of “retirement” is a mid- to late-20th century industrial economy phenomenon that will soon be looked back on as an historical anomaly. It cannot and will not last – the math is overwhelming. 90%+ of folks in the US should be prepared to work at least part-time until a few years prior to dying… and living with relatives in their old age. Learn to love it.

[davelj]

[quote=Allan from Fallbrook]

There’s “dangerous” and then there’s “Dangerous”; it’s a matter of perspective, profession and venue.[/quote]

I was roommates with a cop about 20 years ago. Whenever someone asked him about the danger involved with the job he’d say, “I’m not worried about dying from injury; I’m worried about dying of boredom.”

[davelj]

[quote=Arraya][quote=flyer]Since “A population of debtors skating at the edge of disaster,” seems to be a very probable reality for our society in future years, all the more reason to make sure one has provided in all possible ways for one’s immediate and extended family.

lf.[/quote]. The debt data is pretty daunting. Another contraction would be catastrophic to a large portion of the population. We have roughly 70 percent of households that don’t have a thousand dollars for an emergency but they are inundated with debt. Student loans are at 27 percent delinquency rate now. Which, generation of, skyrocketed during the recession. That is a lot of people banking on a recovery that may never come[/quote]

While we’re neck-deep in debt, what we’re not neck-deep in is debt SERVICE (thank you, Fed! – I’m being facetious), a huge chunk of it at long-term fixed rates. The government and corporate graphs are not dissimilar.

http://research.stlouisfed.org/fred2/series/TDSP

Japan’s been dealing with high and rising debt – with concomitant low debt service – for 30+ years now.

So, while I agree that we’ve got way too much debt, that Day of Reckoning can be put off for many decades using all manner of mechanisms (re: shenanigans). I’m sure we’ll try them all and invent some new ones as well. In the meantime, folks just continue to live their lives…

[davelj]

[quote=Allan from Fallbrook][quote=davelj]

So, while I enjoyed Graeber’s book, it was kind of a head scratcher in a few ways. Other than showing how our notions of money, debt, and trade have changed over time – and disproving some long-held beliefs – it offered little in the way of enlightenment regarding how we should be dealing with things differently going forward. Of course, perhaps one shouldn’t expect much in this regard from a self-described anarchist. But it is a pretty good book.[/quote]

Dave: Graeber’s writings on anarchy are quite good and do offer certain solutions, or, more correctly, alternatives to the status quo ante.

One has to be careful in handling the term “anarchist”, largely because it can mean many things, but in Graeber’s case, he’s of the kinder, gentler variety (meaning, not a bomb-throwing anarcho-syndicalist.)

He riffs somewhat on Jared Diamond and Kropotkin, in the sense that modern societies are simply too large, too complex and too fast to be managed competently, even by the “best and brightest” and thus he advocates for a simpler and slower organization of people, labor and compensation.

It’s very interesting stuff, especially when you happen to look at our hyperactive, interconnected, globalized world and how well that seems to be functioning.[/quote]

I don’t doubt for a moment that Graeber has some interesting alternatives in his other missives. He’s clearly a very clever guy. Of course, I think Ayn Rand and Marx (among many others on opposing sides of the political spectrum) also make some very interesting – and correct – observations. I suppose I’m just wary of all of the extremes at this point.

[Author]

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