Forum Replies Created
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[quote]
San Diego officials divided over accelerating pension debt payoff…The city’s projected pension debt has increased from $1.2 billion to nearly $2.8 billion since 2007.
Some say the city could be on a path toward repeating underfunding schemes more than a decade ago that caused huge pension payment increases, drastic budget cuts and eventually earned San Diego the nickname “Enron by the Sea.”
…Kalwaraski, the actuary, recommended the board stick with the 30-year policy for debts caused by assumption changes, contending that San Diego already has the most conservative policies in other areas.
That includes a 6.5 percent long-term projection of investment growth, the lowest in the entire state.
http://www.sandiegouniontribune.com/news/politics/sd-me-pension-debt-20180917-story.html
[/quote]FWIW responded to a comment,… where I essentially agreeded that bankruptcy is inevitable given debt and other trends, and quoted/hyper-linked the same two facts that I pointed out to bearishgurl,… odd thing is my comment removed (but I have a highlighted PDF copy of what was deleted)
http://www.TinyURL.com/AcceleratingPensionDebt
seems I ran afoul of some part of the five posted guidelines of the UT forum
[quote=sandiegouniontribune.com]
…Be relevant, respectful, honest, discreet and responsible.
[/quote]or perhaps this is a case of being too “relevant” and “honest”
[quote=bearishgurl]
Happy reading, Piggs![/quote]
huh,… constantly repeating alternative facts does not change the simple truth, which is,… we’re up the proverbial creek all because the way the public pension portfolio is setup and operated
in other words the problem(s) were avoidable if nothing more than middle school math concepts were used from the onset,… BUT here we are in the middle of a big blame game AND innocent taxpayers who had no part in creating the financial mess are being positioned to pay for the mismanagement by politicians and public unions who are DISHONEST and DUMB w/ money they were entrusted w/
http://www.TinyURL.com/InvestorWarning
BTW it does not take a genius to see the San Diego public pension portfolio just like the Detroit public pension portfolio, has an optional 13th pension payment feature,… so let’s consider what happened there!
[quote]
13 things to know about Detroit’s ’13th checks’ for pensioners…Detroit pension funds paid retired and working employees bonus payments, called “13th paychecks.” The payments cost the city’s pension funds billions of dollars and some say they’re part of the reason the city went broke.
…The bonus payment were given with little oversight. Officials still don’t know how much was paid out in bonuses…
…The bonus payments were made quietly, but required the approval of the City Council. Council members apparently believed the funds had enough money, and would continue to have enough money into the future, to afford the bonuses…
https://www.mlive.com/news/detroit/index.ssf/2013/10/10_things_to_know_about_detroi.html
[/quote]
[quote]
Supplemental “13th Check” benefitThe supplemental “13th Check” benefit is paid from trust fund assets to eligible retirees in years when the qualification formula specified in the Municipal Code is satisfied. When qualified, SDCERS will calculate and pay the 13th Check to all eligible retirees annually in November…
Bottom line,… if you want someone to blame, look in the mirror because it seems these links outline the root cause of the financial mismanagement which is endangering everyone
http://www.TinyURL.com/DifferentDay
[quote=DataAgent][quote=FlyerInHi]Can we not build a big pipeline to bring water from the Mississippi or Canada? Something on a Hoover dam scale, but proportionately bigger in relation to the size of the current economy.
[/quote]The third straw cost almost $1B for a 3 mile pipeline. Las Vegas is about 1500 miles from the Mississippi River. Forget the cost, who would have the authority to build such a pipeline across 4 states?
Thinking big, why not build a pipeline to the CA central coast and grab all the Pacific Ocean water you could get? Just add a couple of desal plants and NV would never have to worry about water again.[/quote]
[quote=Myriad]The state should focus on building a massive water distribution and storage network before wasting money on LA-SF HSR. Whereas the HSR only really benefits city dwellers, water is needed by pretty much everyone, especially inland farmers.
One could make the argument that agriculture that comes from CA (quantity & value), having enough water for farming is of national importance.
https://www.sfchronicle.com/news/article/California-s-two-tunnel-Delta-project-is-back-12823416.php
[/quote]BINGO!… the reason its a dumb idea to build a water way that goes up and over the continental divide is,… financing cost($) and basic physics (i.e. real e$tate cost$ once a route is selected, amount of concrete needed, power requirements to pump water once the structure is built, etc.)
in general the BIGGEST problem w/ basic infrastructure is its boring, in other words people only miss it when its gone,… on the other hand a fancy choo choo train is something that politicians and career bureaucrats can do a ribbon cutting ceremony w/ joe six pack and the family
FYI actually threw in some money into a start up a few years ago that was going to do a water project in the central valley,… unfortunately the preferred stock offering didn’t raise the min required so my money was refunded,…
[quote]
Solar Thermal Desalination Now Underway in Water-hungry California…The controversial Carlsbad desalination project’s latest projected cost is now $1 billion.
It will suck in 100 million gallons of San Diego’s seawater a day and force it through a series of filters to produce 50 million gallons of water a day using high-pressure reverse osmosis.
A modest solar thermal desalination alternative now quietly undergoing permitting inland would produce 5 million gallons of water, about one tenth of that of Carlsbad, but at a much lower cost of just $30 million, using a solar distillation process.
actually thought if the pilot solar desal plant worked in the central valley, the next logical steps would be solar desal in the imperial valley along w/ perhaps a inlet from the sea of cortez going toward the salon sea area (which is a natural “sink”)
[quote]
How water from Mexico can save the Salton Sea…Filling the Salton Sea with imported water from Mexico is not a new idea. The proposal has been around in one form or another since the 1970s. While the idea has a track record of inspiring excitement, support hasn’t translated to funding.
Previous studies – including by the U.S. Bureau of Reclamation and the Salton Sea Authority – deemed it too costly to pull off.
But the tides have changed.
At the beginning of 2018 the Imperial Irrigation District is set to cut off flow of water from Colorado River into the Salton Sea, as required by the 2003 Quantification Settlement Agreement. Once that happens, the lake’s decline is expected to accelerate.
[quote=FlyerInHi][quote=DataAgent]I like Las Vegas too. It has huge growth potential.
However, the water situation in Las Vegas seems quite bleak. Millions of people (and growing) depend on Lake Mead for water. The ‘third straw’ could literally drain Lake Mead like a bathtub. How long till that bathtub empties?[/quote]
The third straw at the bottom of lake mead actually gives Vegas priority over the water ahead of California, Arizona and Mexico. It does not draw more water but it’s insurance iin case water levels continue to drop.
BLM will auction more land in the south 15 almost all the way to Primm. So sprawl continues unabated. A lot of middle to high end housing. No affordable housing so rents continue to rise at the bottom.
Even UNLV will build market rate “luxury” housing on its land.[/quote]
I’ve been following the topic of climate change ever since I was a student at UCSD back in the late 80’s and early 90’s where I learned drought in the region can last longer than a human life time AND that there have been two long term drought events that happened in the past 1200 years,… which in geological time, is akin to a blink of an eye
http://www.TinyURL.com/AncientDroughts
[quote]
The American Southwest: Are We Running Dry?[/quote]
So its not out of the realm of possibility that another century long drought happens AND the key indicator to watch is the water level and “trend” line
http://mead.uslakes.info/Level/
[quote]
Falling Lake Mead Water Levels Prompt Detente in Arizona FeudThe Colorado River, which supplies water to 40 million people from Denver to Los Angeles, has been gripped in the driest 19-year period on record, according to officials from the Bureau of Reclamation, a multistate agency that manages water and power in the West. With low snowpack and warm conditions again, runoff from the river this year is only about 40% of the long-term average, prompting renewed concerns over the water level in Lake Mead.
The risk of the reservoir falling below 1,025 feet by the year 2026—a level once thought unthinkable—has risen to 40%, according to new estimates by the Bureau of Reclamation. Because the lake is funnel shaped, water officials worry it could decline even faster once it gets that low—triggering even bigger cutbacks.
Arizona, Nevada and California in 2007 had agreed to undertake a series of cuts from the river, under Interior Department guidelines for when Lake Mead dipped below 1,075 feet. For example, Arizona, which has the lowest water rights on the system, agreed to curtail roughly one third its annual use, or 320,000 acre feet. (An acre foot is the amount of water used by an average family of five in a year.)
The intensity of heat and drought since then has prompted the states to prepare the new drought plans, to leave more of their water in the reservoir. Arizona, for example, would under the new plan instead reduce its use by 512,000 acre feet.
“It’s hard to understate how big of a haircut that is,” said Drew Beckwith, water policy manager at Western Resource Advocates, an environmental advocacy group in Boulder, Colo. “The challenge for Arizona is who within Arizona is going to be taking the cuts.”
WRT the third straw
[quote]
…People who worry about those issues sometimes focus their scorn on Las Vegas, which appears culpable mainly because, of all the cities that draw water from the river, it lies the closest to its banks. But, in actuality, Nevada was so thinly populated when the river was divided up that its allotment is very small—just two per cent of the total—and it actually takes less than that, primarily because Las Vegas has some of most stringent water-conservation regulations in the country.…Just as proximity makes people think that Las Vegas is the principal cause of the decline of Lake Mead, it also makes them think that any further decline in the lake will be a problem mainly, or even only, for Las Vegas. But that isn’t true, either. When the pumping plant for the third straw is completed, Nevada will be the only lower-basin user with the infrastructure required to draw lake water from below the level known as “dead pool”—roughly nine hundred feet above sea level, the elevation of the lowest openings in the four intake towers on the upstream side of Hoover Dam. Approximately a quarter of the water remaining in Mead is below that dead-pool line and, therefore, untappable by users below the dam. The chance that the lake will drop that far anytime soon is small—it’s more than a hundred and eighty feet below the current surface—but in 1998 few people thought the lake would ever drop to where it is today.
“If Mead falls to nine hundred,” Mulroy continued, “nothing goes downstream from Hoover Dam.” That would mean that the river’s two largest users, Arizona and California, would get nothing, and some of the most productive agricultural land in the country would turn back into desert. “But Southern Nevada will still be taking water out of the lake, because the new intake is at eight-sixty”—eight hundred and sixty feet above sea level, forty feet below the lowest Hoover intake.
https://www.newyorker.com/tech/elements/where-the-water-goes
[/quote]My own reading of the tea leaves is a perfect storm is brewing, so given climate change,…
https://www.piggington.com/climate_change_one_biggest_crises_facing_humanity
and fiscal mismanagement,…
http://www.TinyURL.com/InvestorWarning
its going to be interesting to see what ends the party
huh,… the better question is
SADLY,… WHO WILL RUN vs WHAT’S NEEDED
Given we’ve had way too many politicians w/ law and business back grounds,… which is how we arrived at the place where we are (i.e. up $hit creek)
[quote]
Why Trump Supporters Believe He Is Not CorruptWhat the president’s supporters fear most isn’t the corruption of American law, but the corruption of America’s traditional identity.
…Once you grasp that for Trump and many of his supporters, corruption means less the violation of law than the violation of established hierarchies, their behavior makes more sense. Since 2014, Trump has employed the phrase rule of law nine times in tweets. Seven of them refer to illegal immigration.
Why were Trump’s supporters so convinced that Clinton was the more corrupt candidate even as reporters uncovered far more damning evidence about Trump’s foundation than they did about Clinton’s? Likely because Clinton’s candidacy threatened traditional gender roles. For many Americans, female ambition—especially in service of a feminist agenda—in and of itself represents a form of corruption. “When female politicians were described as power-seeking,” noted the Yale researchers Victoria Brescoll and Tyler Okimoto in a 2010 study, “participants experienced feelings of moral outrage (i.e., contempt, anger, and/or disgust).”
So my wish for the next POTUS would be for woman w/ a solid science back ground,… (FYI its not out of the realm of possibility given)
https://en.wikipedia.org/wiki/Angela_Merkel
https://www.quora.com/Which-topic-did-Angela-Merkel-do-for-her-PhD-in-Physical-Chemistry
so for your consideration,…
https://chemistry.princeton.edu/seminars-events/shaughnessy-naughton
thoughts?
[quote=carlsbadworker]What signs?[/quote]
news report(s),…
[quote]
State Supreme Court orders appeals court review of San Diego pension overhaulSan Diego Mayor Kevin Faulconer did his best to put a positive spin on a California Supreme Court ruling that may force the city to pay millions of dollars to workers who lost benefits under the city’s 2012 pension reform effort.
“San Diego pension reform remains the law of the land and today’s Supreme Court decision keeps Proposition B in full force and effect,” Faulconer said in a statement. “While the court’s deference to an earlier ruling means the debate over this issue is not over, it does not change the fact that voters amended the City Charter to bring fairness to city pensions.”
Some 66% of San Diego voters approved the pension reform initiative in 2012, according to the mayor’s office.
The state’s highest court ruled on Thursday that the placement of San Diego’s pension cutbacks on the ballot was invalid because city officials failed to negotiate with labor unions before pursuing the measure.
https://www.bondbuyer.com/news/state-supremes-order-appeals-court-to-review-san-diego-pension-ruling
[/quote][quote]
San Diego’s pension mess just got a lot messier. Now what?…the court sent the case back to an appellate court for “judicial remedy,” raising huge questions about whether the reforms — approved by two out of three San Diego voters in 2012 and unique in the state — would survive and how much — $20 million? $100 million? — the city might have to cough up to remedy the violation. No one knows.
http://www.sandiegouniontribune.com/opinion/sd-pension-reform-supreme-court-20180802-story.html
[/quote]basically taxpayers lose again,…. all because the public pension portfolio as structured and operated is DISHONEST and DUMB
nothing will be done (until its vary obvious the system is about to crash or has crashed, 2020 timeframe???), because in the meantime politicians who voice support for the existing pension setup get to keep their office along w/ tacit union support AND retired public employee union members get to keep various benefits like the 13th pension payment (the nonsensical justification being EXCESS EARNING),… so seems its inevitable things are destined to end badly
http://www.TinyURL.com/ExcessEarningsBS
the only loser w/ the status quo is the taxpayers who have to endure fewer services AND are expected to pick up an ever increasing tab due to the “California Rule” (basically an understanding that taxpayers are suppose to make up any shortfalls)
a news report about the SD county, shows,…
[quote]
Transparent California, a research group that is critical of excessive government pensions and salaries, says in a new study that benefits promised by the San Diego County Employees’ Retirement Association (SDCERA) jumped 1,237 percent from 1986 to 2016 — a rise that was four times more than the 372 percent increase of personal income in the county.
https://www.sandiegoreader.com/news/2018/jul/26/ticker-study-county-pension-benefits-soar/
[/quote]the chart tells me this trend is unsustainable AND given another “sign”
[quote]
Joe Nation (Stanford University “conference”) on California’s pension systemstarting @ 2 min 56 sec
“let’s get a sense of how things [PUBLIC PENSIONS] are at the local level,… the share of payroll that those entities will need to pay in order to cover pension and OPEB unfunded liabilities as you see the worst one is the city of SAN DIEGO”
https://drive.google.com/file/d/0B66GMOho0KtxUE1pYVBhMERDVkE/view
[/quote]the future does not look too bright,… as I see things, unfunded public pension debt is akin to stress slowly building up between tectonic plates,… so when there is too much stress on a fault line that has built up over time, in other words when the forces are too great to hold things together, the result is a “sudden” and “violent” earth quake event (2020 timeframe???)
BTW public pensions have no other back stop other than taxpayers, and existing troubled pension systems are using up existing pension insurance at a pretty alarming burn rate
http://www.crfb.org/blogs/pension-insurer-expects-be-out-funds-2022
https://www.nytimes.com/topic/organization/pension-benefit-guaranty-corporation
to give you some idea of the magnitude of just the “public pension” problem, consider a group out of stanford puts the “market basis” of the pension debt in the TRILLION$
(note the “market basis” implies using the “risk free rate” or the rate of return of a hypothetical investment with no risk of financial loss, over a given period of time)
https://www.investopedia.com/terms/r/risk-freerate.asp
BOTTOM LINE the amount of public pensions promised is much greater than the ability of system to deliver,…
When TSHTF (2020???) what is going to prevent economic recovery is the “California Rule” because its implied tax payers are on the hook for the self inflected $hit that happened (caused by politicians AND public employee unions),…
PS
[quote]
…states that also use a contract rights approach to public pension benefits have chosen to follow the principles of the California Rule. Those states are:Alaska
Colorado
Idaho
Kansas
Massachusetts
Nebraska
Nevada
Oklahoma
Oregon
Pennsylvania
Vermont
Washington
[/quote]PPS the final nail that is going to kill off the economy is derivatives (basically this is going to freeze money in big banks since these instruments have senior status over ordinary bank deposits)
https://www.thebalance.com/what-is-a-bail-in-and-how-does-it-work-1979089
[quote=FlyerInHi]300,000 homes is nothing. They can just move!
$140 billion is what we spend in the Middle East in about a year.[/quote]perhaps you should considered various knock on effects (which is akin to a “Domino Chain Reaction”)
in other words, affluent literally underwater properties
due to melting ice in the polar regions AND/OR storms, will knock over the FIRE economy (i.e. “finance,” “insurance” AND “real estate”)
[quote]
Coastal Mortgage Value Collapse…Debate the cause if you want to expend more hot air denying science. But it’s a fact that resale values of coastal homes in Miami, Atlantic City and Norfolk, Va. are already starting to erode.
…“A large share of homeowners’ wealth is locked up in the equity in their homes,” Becketti wrote.
“If those homes become uninsurable and unmarketable, the values of the homes will plummet, perhaps to zero.”
…“Forty percent of Americans live on the coast, which means you have trillions of dollars at risk for climate change that hasn’t been modeled for default increases.”
[/quote][quote]
National Flood Insurance Program Will Pay Out Billions For A Few Properties…The National Flood Insurance Program will be paying out billions this year floods. Floods for insurers are a risky business. That’s why there is government intervention in the market. But some houses are especially risky. A tiny number of insured properties – around 1 percent – have been responsible for about a quarter of the claims paid. Planet Money’s Noel King went to one of these homes just outside Houston.
The National Flood Insurance Program was operates like an insurance company in many ways except one: it just about always loses money.
https://www.npr.org/2017/09/13/550607447/why-the-government-loses-money-on-selling-flood-insurance
[/quote][quote=EconProf]Phaster: you are correct, sadly enough.
Pension plan managers essentially have to predict future outflows and future inflows in order to determine their solvency. The outflows are fairly easy to predict–# of pensioners, amount owed to each, their longevity, etc.
Inflows are future contributions from employees and employers, plus investment returns. Today’s politicians and pension managers overstate their likely future returns by saying it will be between 7 and 8 percent. (Private sector companies must be more realistic and are at about 4%). This allows government plans to push the true cost into the future, a future that is now arriving with a vengeance.[/quote]what I find sad is there isn’t more understanding of the issue(s),… IMHO the sooner people wake up to the problem the better,… because as I see things stress on the system is building up AND at some point there might not be a way to reverse the damage done if various things blow up simultaneously
BTW you’re being too generous w/ your description of responsible financial professionals (if you are referring to CalPERS) because yet again there seems to be yet more bull$hit that they want to sweep under the carpet,…
[quote]
CFO OUT AT CALPERS DUE TO QUESTIONABLE RESUMECalPERS CFO ‘No Longer with’ Pension Fund
Departure comes after scrutiny over credentials, past work experience.
Just eight months after he was named the chief financial officer of the California Public Employees Retirement System (CalPERS), Charles Asubonten has departed following a controversy over his qualifications.
…Sources say Asubonten was asked to leave the retirement system after a review concluded he had overstated his work experience on his resume, including his job as managing director at a private equity firm,…
http://stump.marypat.org/article/995/california-crazy-governance-and-management-problems-at-calpers
[/quote]likewise there seem to be no local responsible professionals associated w/ the local pension portfolio,…
[quote=phaster]
May 2, 2018 – 9:28am[quote]
San Diego County Sues Pension for Not Cutting BenefitsRetirement association says enacting lower tier of benefits would be illegal.
https://www.ai-cio.com/news/san-diego-county-sues-pension-not-cutting-benefits/
[/quote]what I still find unbelievable is past dishonest
http://www.TinyURL.com/SanDiegoSpikingPension
and dumb
http://www.TinyURL.com/PensionRebuttal
behavior WRT managing a pension portfolio,… which
created the problem(s) in the first place
[/quote]bottom line,… seems the idiots in charge of managing money (at the state and local levels) basically just have one unique ability,…. they squeeze taxpayers to pay for their mismanagement/corruption
[quote=EconProf]Again, think what a normal recession or stock market correction would do to these underfunded pension plans. Public services will be cut and taxes raised. People will flee the pension-irresponsible states like CA, NJ, IL, and go to the states with more honest and realistic public sector pension plans.[/quote]
as for “People will flee the pension-irresponsible states like CA,…” when TSHTF, sadly I don’t think there will be much shelter in other states simply because the way various pensions AND “derivatives” are structured,… the trend of financial markets being interconnected is ever increasing,… so FWIW one simple strategy I’m using is,… I’m trying to keep a majority of my power dry @ strong locally focused financial institutions that have no direct derivative exposure
[quote=EconProf]Speaking of pension problems….
That is yet another reason to leave California. It is well established that our public sector CA pension systems are grossly underfunded, a result of overly generous pension benefits, super early retirement plans, and “kicking the can down the road” by failing to levy high taxes on current taxpayers.
But the math is catching up with CA, as we now face vastly higher taxes or reduced government services to pay for public sector retirees. Pension costs can eat up a quarter to a third of localities labor costs, up from a tiny amount a few years ago.
And this is with a buoyant stock market and booming economy feeding the investment income of those pension plans. Think what would happen if we had a normal recession, or a stock market cut in half (it has quadrupled from its low). How ironic is it that the Trump economy is currently propping up CA tax revenues such that they are exceeding past projections.[/quote]yup,… in the short run math can be ignored,.. BUT eventually it punishes those that ignore its warnings or fail to think things out in the first place
[quote]
Study: Some public pensions funds could run dry in downturnMany pension funds for public workers already owe far more in retirement benefits than they have in the bank, and the problem will only grow worse if the economy slows down, according to a report released Thursday.
The study from The Pew Charitable Trusts found that the New Jersey and Kentucky funds are in such perilous shape that they risk running dry.
…The Pew study, published by the Mossavar-Rahmani Center for Business and Government at Harvard University, examines what would happen to pension funds in 10 states under various economic scenarios.
…Notably absent from the report was California, which has the two largest public pension funds in the nation. They had a combined $168 billion in unfunded liabilities in 2016, according to another recent Pew report. Mennis said California’s funds were not included in the stress test study because they are so large and uniquely structured.
https://apnews.com/f1f873f4e73e4d429bf4012b6d1f6fd4
[/quote]FYI “a combined $168 billion in unfunded liabilities” in just this state alone IMHO is an optimistic figure based on an unrealistic “high” discount rate which has been in place for decades
[quote]
Pensions Are Still Making Ludicrous Assumptions About Future Returns…Many state-funded pension plans today assume an 8% nominal return for the indefinite future. Some are beginning to forecast lower returns, but very few would forecast lower than 7%. Moody’s argues that somewhere in the range of 4% nominal is more realistic. Notice that the difference after 40 years is well over four times. Even if you assume that magic returns to the markets after 2020 and returns go up to 8% thereafter (the green line in the chart), there is still a gap of $5 billion after 40 years. On assets of $2 trillion, that is a gap of $10 trillion. If you assume only a 4% nominal return for the entire 40 years, the gap is $30 trillion. For the mathematically challenged, that is not a rounding error.
[quote]
The discount rate changes approved by the [CalPERS] Board, for the next three fiscal years (FY), are as follows:For public agency and school employers:
FY 2018-19: 7.375%
FY 2019-20: 7.25%
FY 2020-21: 7.00%
PS one last thing to think about this memorial day,… “derivatives” (as in the movie THE BIG SHORT) are mathematically chaotic which compound the “risk” to the global finance system,… in other words given mismanaged/corrupt public pension portfolio(s) and “the california rule” which placed the average california taxpayer between a rock and a hard place,… if we add in the danger of “derivatives” then imagine being stuck between a rock and a hard place AND THEN KICK IT A NOTCH!!!
