From The Ramparts
Junious Ricardo Stanton US Pensions In Danger “The US economy is facing a pension crisis of unprecedented magnitude. The truth is that the cast majority of all pension funds in the United States both public and private are extremely underfunded. With millions upon millions of baby boomers now at retirement age, there is simply no way that all of these unfunded pension obligations can be met. Robert Novy-Marx of the University of Chicago and Joshua D. Rauh of Northwestern’s Kellogg School of Management recently calculated the collective unfunded pension liabilities for all 50 US states for Forbes magazine. So what was th total that they came up with? 3.2 trillion dollars.”
10 Huge Flashing Danger Signs That the US Economy Is Headed For Disaster- The Truth 02-17-10
Despite what the lying Obama administration says, the US economy is not getting better. In fact we are in the throes of a full fledged Depression. I was doing research for an article and I typed “US Pensions In Danger” in my browser and one site caught my eye, The Truth
with an article that was posted in February of 2010 entitled 10 Huge Flashing Danger Signs That The US Economy Is Headed For Disaster
. Look it up and see for yourself just how bad things really are throughout the whole economy. I was merely interested in the pension situation because I’m a baby boomer myself and I’m retired. Plus I have seen rumblings in the media that the money changers and the kleptocrats are trying to get their hands on public and private pensions just like George W Bu$h tried to do with Social Security in 2004. Can you imagine how bad off we would be now if he Bu$h had succeeded with his larcenous plans?
But don’t sigh too loudly because the there are more plots being hatched to get our money. Obama is no joke when it comes to placating Wall Street and the international banksters. There is a plan afoot for the ongoing transfer of our wealth (as precarious as it is) to the super rich. Pension funds feature prominently in this transfer. The banksters have already enticed pension fund managers to invest heavily in stocks, bonds and the various Ponzi schemes Wall Street cooked up over the last few years. That would be great except in recent years the Wall Street wiz kids have turned the stock and commodities markets into a giant casino. Just like in most casinos, the game is rigged to favor the house. Unfortunately the losses for investors have been staggering but Wall Street successfully bogarted Congress by frightening them into bailing out the largest investment banks at the expense of the US tax payers and everyone else, including pension funds. “U.S. pension funds contributed to the record $1.2 trillion that private-equity firms raised this decade. Three of the biggest investors, state pensions in California, Oregon and Washington, plunked down at least $53.8 billion. So far, they only have dwindling paper profits and a lot less cash to show the millions of policemen, teachers and other civil servants in their retirement plans.” Pension Plans’ Private-Equity Cash Depleted as Profits Shrink Bloomberg
If fraudulant insider market manipulation weren’t cause enough for alarm, it’s getting really scary because most pensions both public and private in the US are severely underfunded. This means they don’t have the money on hand or in investments to pay off their liabilities and obligations! With more and more folks reaching retirement age, this is currently and in the future will pose major problems for the companies, unions and governments. “However, with the U.S. housing collapse not yet at the half-way point (see “U.S. mortgage-crisis to get MUCH worse in 2010-11”), and losses from Wall Street's Ponzi-scheme having already siphoned more than $10 TRILLION in hand-outs and pledges to the banksters, a new multi-trillion dollar, pension nightmare has begun. By the end of 2008, losses in U.S. equities had depleted the total assets of U.S. state and local pension plans by roughly $2 trillion. Even when the U.S. economy appeared to be at the peak of its economic health, funding for U.S. pensions (excluding health care) was barely adequate. Thus, there is no ‘cushion’ to absorb these losses.” U.S. Pension Crisis: the $3 TRILLION question www.bullionbullscanada.com
US states, counties and municipalities which were already under funding, “borrowing” from or skimming funds from their workers’ pension funds just to make ends meet are now even more cash strapped due to the Wall Street created financial meltdown. Most have no “rainy day” fund or contingency plan to catch up. The pension problem for state and city governments is one of the biggest debt hurdles localities face. The U.S. Government Accountability Office (GAO) released a study in November that examined the unfunded pension liabilities for the 50 states and 39 largest local governments. It found that these entities had liabilities exceeding $530 billion, led by California on the state level at $62 billion and New York City on a city basis at $60 billion. Yet the pension burden potentially is even worse. To calculate unfunded pension liabilities, we turned to professors Robert Novy-Marx of the University of Chicago and Joshua D. Rauh of Northwestern's Kellogg School of Management. They calculate benefit costs based on states purchasing a portfolio of risk-free Treasury bonds to supply sufficient cash flows to pay current pension obligations. States invariably use a higher discount rate when calculating their unfunded pension obligations. The GAO study found that states' cumulative unfunded liabilities were $405 billion, while Novy-Marx and Rauh figure $3.2 trillion is a more accurate number. Even their estimates of future costs, high as they seem, are far lower than can be expected. Pension benefits are based on an employee's final working years, for example, so as state workforces age the pension obligations rise dramatically. These estimates also don't include any future workers added to the state payroll. Rhode Island has the highest unfunded pension costs per capita, according to Novy-Marx and Rauh, at $20,271, while Nebraska fares the best with a per-capita cost of $4,878.” The United States Of Debt Kurt Badenhausen Forbes.com
The various governmental options are extremely limited. “With a federal government which must now print money just to pay the interest on existing debt, the obvious question is what will be done with the $3 trillion pension short-fall for state and local governments? Potential “solutions” can be broken down into only three categories. Either state/local governments must boost contributions, reduce benefits, or panhandle money from the bankrupt federal government. Each of these options carries a list of negative consequences.
Boosting contributions means state/local governments must raise taxes and/or reduce spending (i.e. slashing jobs). State and local governments have resisted doing either of those things – since they both fuel the current downward spiral of the U.S. economy. Clearly, attempting to make up any more than a tiny percentage of this $3 trillion nightmare through raising contributions would have a devastating impact on the overall economy.
This brings us to slashing benefits. This is not only certain to occur, but will almost certainly account for the majority of the $3 trillion in savings which is required – meaning taking $1 to $2 trillion out of the pockets of new and existing retirees. This comes at a time, when the average retiree has a mere $60,000 in their retirement portfolios, and very little more in other savings.” ibid.
This is what we are seeing overseas in Greece, Italy, Spain and Portugal in the call for “austerity measures”; meaning working class folks and the old take a major hit while the lifestyles of the young plummet precipitously. But the bankers and con men who created this mess in the first place will continue to live large off the backs of the working classes. This is why the people are taking to the streets over there. In the US retirees are facing the prospect of cuts in benefits or escalating tax increases just to pay for their own retirement!! For example one cash strapped state, New York is engaging in all types of bookkeeping sleight of hand tricks to create the illusion the state is not facing default. “The N.Y. State pension fund has decided to borrow money -- from itself -- to cover this year’s payments. Having learned truly nothing from the last 10 years, Gov. Patterson and his ilk announced Friday a tentative agreement to fund required state pension payouts with a $6 billion loan taken from the very same pension plan. Seriously. The plot, of course, hinges on a booming U.S. stock market over the next few years. The borrowed funds are due to be paid back to the pension plan, with interest, starting in 2013. If the market doesn’t return at least 5% a year, the scheme will likely cause an even larger loss. It’s hard to imagine this working, even a little bit, with much less than 10% annual stock returns.
But if things don’t go as planned, there’s always the taxpayer. Unlike private 401(k)s, state pension plans have defined payouts that can’t be altered when the market plunges or the economy stinks. Thus, if the money truly runs out, the state will have to choose between higher taxes or default. For reference, check out Vallejo, Calif.” http://5minforecast.agorafinancial.com
In addition to borrowing from itself to make ends meet, New York has also changed the rules for workers to even qualify for a pension. “New York also declared that new state employees must work at least ten years to qualify for a pension, up from five years. And the state limited the use of overtime pay in calculating individual employees’ pensions — a major money-saving step. The actual savings from New York’s reforms, and similar moves elsewhere, won’t be realized until newly hired employees start hitting retirement age, which will be 20 years or more down the line in most cases. But at least it signals the reversal of decades of mindless, continuing sweetening of public pension benefits. So do the moves afoot in several places to increase public employees’ contributions to their retirement plans, reversing years of making those contributions lower.
The auto industry has set a positive example for state governments by adopting a Voluntary Employees’ Beneficiary Association trust, which allows employers to prefund retirement health care benefits for employees on a tax-deferred basis. In 2007, with their own financial storm brewing, GM, Ford and Chrysler persuaded the UAW to establish a VEBA trust.” Trillion-Dollar Pension Crisis Looms Large Over America www.iimagazine.com/pensions_and_endowments/
To add insult to injury the kleptocrats in New York, Washington DC and London are plotting to take workers’ pension money to shore up failing banks!? Why, because that’s where the money is. “March 8 (Bloomberg) -- U.S. regulators are encouraging public pension funds that control more than $2 trillion to inject capital directly into the banking system by buying failed lenders, said people briefed on the matter. The Federal Deposit Insurance Corp. is trying to attract pension funds that want to buy stakes or assets of distressed bank-holding companies, according to two of the people. Direct investments may allow public retirement funds to reduce fees for private-equity managers, and the agency to get better prices for distressed assets, the people said. They declined to be identified because talks with regulators are confidential.” FDIC Said to Encourage Pension Funds to Invest in Failed Banks Bloomberg Businessweek
Don’t get caught up in the media diversions, distractions, disinformation and flim-flam; it’s time we got hip to the real agenda of the thugs in the corporate suites. Their goal is to pilfer and pillage the wealth from working and middle class folks and transfer it to the supper rich, a reverse Robin Hood. And thus far their plan is working to a tee.