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| Home Front Economy |
| The Next Catastrophe |
| 2009-01-13 |
| Posted by:tipper |
| #3 CNN AM > CLARK HOWARD Segment > Howie proclaimed that sometimes people have to accept the prevailing econ circumstances, however harsh or unfair, and "TAKE THEIR MEDICINE" [aka "bite the bullet/grin-and-bear-it"]. IN THE WAKE OF THE CURRENT NATIONAL ECON CHAOS WID ITS UNCERTAIN DURATION, AMERS MUST NOW BEGIN TO START SAVING [domestic savings rates], AND DE FACTO CHANGE = REVERSE FROM THE HISTORICAL AMER CONSUMER PATTERN OF SPENDING MUCH MUCH MORE THAN THEY SAVE??? * As the Lefty saying goes, "ITS FOR THE CHILDREN" > GLITCH IS AMERS ARE SSSSSHHHHHHHHH NOW RESPONSIBLE FOR OTHER NATIONS' CHILDREN, NOT THE LATTER'S PARENTS OR LOCAL GOVTS, NOR EVEN TO AMER CHILDREN! |
| Posted by: JosephMendiola 2009-01-13 18:12 |
| #2 Just finished a study of municipal bankruptcy, and there is a nexus of unsustainable commitments between the state pensions, local taxes, and public employee employment contracts. The essential problem is that the "full funding" requirement for state pension funds is determined by unrealistically optimistic actuarial assumptions (say, 8%) that are in many cases more than twice what is allowable in more highly regulated private pension funds. When you hear a state's pension fund is "underfunded", it means that the return on assets is not hitting this magically generated number. By state statute "employers" must then make up the difference...usually those "employers" are the state and municipalities of the state. In other words, there is a direct positive correlation between underfunded pensions and higher state and local taxes...the outcome of the Vallejo Chapter 9 case may very well determine the course of the whole pension fiasco. |
| Posted by: mjhlaw 2009-01-13 13:09 |
| #1 Ultimately, all payments (pension, welfare, medicare, whatever) must come from current surplus productivity (or redistributed non-surplus poductivity). All our attempts to save or invest are intended to time-shift that surplus - but when those investments are actually phony balogny (see Madoff, or Social Security Trust Fund) there can be no time shifting. And that's where we are now. |
| Posted by: Glenmore 2009-01-13 08:27 |