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June 20, 2013 at 11:50 AM in reply to: Another excellent Economist Mag article on the terrible state pension issues #763082
The-Shoveler
Participant[quote=FlyerInHi]
In San Diego, do we care if Detroit goes bankrupt and pensioners’ benefits are cut? That’s their problem to solve. Otherwise, why not federalize everything and get rid of state and local governments?[/quote]Careful what you say, I think the next step will be the Fed buying state/city bonds (insert bailout moral hazard warning here), knowing full well they will never be paid back.
Anyway that’s my prediction.
(this kind of goes with the automation economy, IT doing well, everyone else not so much, that’s why you are seeing more and more people on disability, but I think I am getting off the subject sort of).
The-Shoveler
ParticipantPersonally I don’t see an exit that does not involve 7-10% inflation for several years.
Any attempt at an exit without the inflation would be a drastic event IMO.
(IMO I don’t see an exit anytime soon)
June 20, 2013 at 7:07 AM in reply to: Another excellent Economist Mag article on the terrible state pension issues #763060The-Shoveler
ParticipantWhatever the reality is little to nothing is being done to remedy the short fall.
Right now for the City of Los Angeles pension cost are 18% of budget, by 2015 they are projected to be about 30%.
Sorry that is just not doable IMO.Any repeal or whatever is going to have to be voted on (there is no King of L.A. to ordain new taxes last I checked).
June 19, 2013 at 2:48 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #763028The-Shoveler
ParticipantDelete
June 18, 2013 at 6:26 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762987The-Shoveler
Participant[quote=FlyerInHi]So far, it’s the employee unions going to court on technical contractual grounds to stop the will of the voters and the decisions of politicians. It’s their right, so let the process unfold.
Courts cannot impose new taxes. Courts can only deal with the resources now available.
If you want to make your solution work, you need to sell you plan to the public and your elected representatives.[/quote]
interesting, but My money says even Garcetti (who campaigned on pension and wage reform is in the union pockets)
(new Mayor of L.A. in case you did not know that)
June 18, 2013 at 6:21 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762986The-Shoveler
Participant[quote=SK in CV][quote=FlyerInHi]So far, it’s the employee unions going to court on technical contractual grounds to stop the will of the voters and the decisions of politicians. It’s their right, so let the process unfold.
[/quote]
Where is this happening?[/quote]
Where have you been!!
Stockton, San Diego, the list grows
Proposition B (June 2012) passed with 65 % of vote , that’s a landslide folks
June 18, 2013 at 3:29 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762968The-Shoveler
ParticipantWhatever, but I think that is exactly the problem, the city of L.A. budget issue are not being addressed.
With all this and they cannot even argue the coming January 5.5% pay increase for the city of L.A. public employees.
Even in the Los Angeles’ mayoral race, the two candidates vying to lead America’s second-largest city agreed on this: its finances are terrible, and runaway wages and pensions paid to workers need to be reined in to avoid fiscal meltdown.
You think Garcetti will do anything, personally I don’t.
Nothing will get done until it finally has no other recourse but BK IMO.
June 18, 2013 at 2:17 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762957The-Shoveler
ParticipantWell with Over 70 percent of the city of L.A. general use funds are spent on salaries and benefits for police and firefighters,
city pension costs have increased at a 25 percent average annual rate over the last decade.
In fiscal year 2002-03, pensions consumed 3 percent of the city’s budget. That is projected to jump to 18 percent, or $1.3 billion, this year, the report stated.Unfunded liabilities – the amount of extra money the city has to pay to meet its long-term obligations – have increased from $87 million to $9.4 billion in the past 10 years. The report states that using a more realistic investment return rate, the figure is probably nearer $26 billion.
I think you can close all the libraries and it will not make any difference.
So I guess you are left with lot less police/fire people hmm don’t think that will fly.June 18, 2013 at 12:06 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762947The-Shoveler
ParticipantWell I think this is where the City of Los Angeles
(the 800 pound gorilla in the room standing in the corner), is going to be pivotal and set precedence for the entire country IMO.Because eventually (unless possible Fed intervention or voluntary pension and pay reductions), L.A. is going to be insolvent.
Heck they can’t even stop the 5.5 percent raise that is due in January.
We will see what transpires fairly soon IMO (my guess within 10 years)
Interesting times.
June 17, 2013 at 4:14 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762908The-Shoveler
ParticipantEven if the most optimistic case (~3 time total revenue) maybe, just maybe if we never never get a recession ever again.
In the more realistic case ~ 8 times total revenue,
I don’t think it will even come close.
June 17, 2013 at 4:02 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762903The-Shoveler
ParticipantOK so you screw the bond holders, and you get rid of prop 13 for non-owner occupiers ,
In the extreme Case that is L.A. city, That will Still not get L.A. out of the giant hole they dug, or get them any further from the impending insolvency.
On top of that no one will ever (EVER) lend you money ever again (EVER!).June 17, 2013 at 1:43 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762893The-Shoveler
ParticipantBK and readjustments (regardless of current laws) I think would be the way things will eventually go.
There will probably be minimums where it won’t apply (not all were excessive) but Where there is clear excess.
The-Shoveler
Participant[quote=FlyerInHi]Yes American real estate is cheap. But taxes and maintenance are high.
If you’re a global businessman, buying a house so you kid can go to a top university is a bargain. The house will not diaapear so the capital is still preserved.
Interest rates are low so parking money in real estate, especially If it’s something you can use is not a bad deal at all.[/quote]
Just a note on that,
The China Gov has been hinting fairly strongly that they intend to impose property tax at some point in the future.Also for SDR,
Not all countries have FDIC insurance, just look at Cyprus also some are a little nervious about bonds, not that I worry about the U.S. Bonds but some do.
The-Shoveler
Participant[quote=FlyerInHi][quote=freshman]They have to pay cash because they cannot get a loan here as they don’t have business or job here . Also a rumor is the new “no corruption” policy came in from the new china president took the seat. They are afraid their money from laundry will be taken away, so they move their money out from china , buy whatever in other countries to save their properties oversea.[/quote]
I spent a lot of time talking to these people when they travel.
These guys are not corrupt politicians but businessmen and traders who speak English already and have been involved in international trade.
They earned their money fair and square. Maybe they didn’t pay much income taxes in their home countries, but that a different story. It’s not unusual for a small business to net $200k per year. Asians are thrifty and usually own houses paid off already (from their parents). So after a decade in business, they can easily buy a house all cash.
Same thing for people from Latin America, South Africa, etc. we live in a globalized world.[/quote]
I would add when you look around the world, at first and second world countries (and some third),
The U.S.A. is in the RE Fire sale bargain ben (not as much as we were two years ago but still a relative bargain).
Try buying a Condo in shanghai. -
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