California pensions are its $206 billion elephant in the room

That bubble, that bubble though! That's my new slang texting term, TBT, that bubble though. Maybe we can get a hashtag trend going on Facebook.



Good. First off most of these government employees produced nothing of value for a majority of their employment, rarely did they work 40 hours a week unless they are police officers and firefighters and they used their positions of power to create opportunities for themselves. Get rid of the damn pensions.

Bloomberg

California Governor Jerry Brown said legal rulings may clear the way for making cuts to public pension benefits, which would go against long-standing assumptions and potentially provide financial relief to the state and its local governments.

Of course, I wouldn't expect any Democrat's or lefties to understand this because they just don't understand how the economy works and why it's been successful. They like stealing through government force so to them this might not feel right.

You better believe that as these benefits continue to get cut there is going to be a major economic downturn that results from this. Big big changes coming.

www.mercurynews.com...

Jerry Brown has been a strong governor and a moderating force on budget issues. But when it comes to pensions, the new state budget projects that California has nearly $206 billion in “unfunded liabilities” for the state’s two public pension funds.

Expect a market contraction when these policies get implement and expect a lot of retirees and older people to be re-entering the workforce. This is going to put pressure on low income employees and further exacerbate the underlying economic issues that are bringing our entire way of life down.

In the long run this well be a good thing but expect massive market changes in the near future. Oh, and buy XRP while it's low it will ICO on Coinbase.

Usually when people retire, they leave California and move to states like Arizona or Florida. So I guess if their pensions are cut, then Florida and other states will suffer too.

a reply to: stormcell

These pensions need to be cut and those resources diverted to area's of government where it is suppose to be spent like on roads and for police officers and firefighters.

a reply to: toysforadults

Older people won't re-enter the workforce, lol. They won't be hired. Over 50's is a not-going-to-hire-taint.

a reply to: sprtpilot

Well apparently so is being a Millennial.

There is nothing new about the unfunded liability issue in the state of California.

The politicians have been shorting the pension funds for decades because they will be out of office long before this becomes an issue. When it does, they will have to reduce the amount of money they send to the retirees. Life will suck if you are living close to the edge and you get your retirement cut.

California used to be a great place to work. It's going to be problematic for young people employed by the state when it comes time to retire.

This is little different then when I entered the workforce. Everyone was predicting that Social Security would go bankrupt before I could retire. I did all my retirement planning based on that expectation . I figured that whatever I got from SS would just be icing on the cake.

Young state employees should do their retirement planning with these unfunded liabilities in mind

a reply to: Wildbob77

How the hell can you plan for retirement when the Fed hasn't been able to raise interest rates in over ten years?

a reply to: toysforadults

I love videos by the MoneyGPS. Dude knows his stuff.... California isn't the only one with Pension problems.

It's scary to be quite honest.

a reply to: toysforadults

A couple of things, for starters these pension funds assumed around 8% annual returns. Which is completely unjustified when the entire GDP has been slowly grinding down for over 30 years. It slows as more and more debt is added. Then the central bank forces interest rates down to make credit more attractive to borrowers so they borrow more.

Pension funds used to have a weighting of 60% fixed investments like bonds to 40% equities, that was considered 'safe'. But when the central banks force rates down to spur lending/borrowing then fixed assets earn less, the 10 -year treasury bond has earned around 2% a year for over 10 years now as the central bank has kept the interbank lending rate around 0%.

So, pension funds have switched from fixed assets to equities in order to try and meet those 8% returns. But people live longer, everything gets more expensive and overall returns grind down. In general, financial assets could safely earn the same as GDP. If GDP is increasing around 2% a year, then the safest return you could get would be around 2% a year. So all these funds should have been adjusting their promised payouts as interest rates dropped. But they didn't do that did they? They kept promising 8% returns, taking in the pensioners retirement contributions. They also have to pay for the management of the funds, no one works for free. So adding in say 2% for all their overhead, returns would actually have to have been around 10% a year.

This is all ludicrous and it's driven by the central bank that forces down interest rates so that banks can make more loans. What really needs to happen is for less banks to exist. They need to go out of business if people don't want or need loans. Instead they keep churning out more loans which the economy cannot absorb or doesn't need so the credit flows into asset bubbles that blow then pop.

It's criminal and they should all be going to jail but they won't because the public is brain dead.

I bet the government/FED will simply create the money needed by punching a bunch of 0's & 1's on their keyboard. Poof, and now these plans are fully invested. They will probably setup something like the PBGC to make it legal.

Whats the down side? It isn't like anyone understands forcefully expanding the monetary base or inflation anyways.

Cal along with NY, NJ, & of course Ill... the 4 horsemen of Socialist excesses in promising outlandish Pensions which are paid for from the overtaxed working resident of that particular shakedown State.

the workforces payrolls cannot come near matching the Overly Generous promises of present & future Pension recipients
It seems only the sitting State Representative Alone actually get the Gravy-Train payouts... the rank-&-file get more promises to hang their hopes on.


you sure don't hear much about Sustainable Pensions do you ?!

a reply to: toysforadults

Pensions are a problem in every state not just California. They are pretty much all underfunded.

Nobody wants to acknowledge this, but unless we get wicked good growth of the economy for a sustained period of time, this problem is going to rear it's head.

Even if that happens, in all likelihood pension promises will have to be cut. Quite frankly I think they should be, most are far to generous. It is ridiculous public workers get far more in retirement than people in the private sector do for working just as hard.

originally posted by: proximo
a reply to: toysforadults

Pensions are a problem in every state not just California. They are pretty much all underfunded.

Nobody wants to acknowledge this, but unless we get wicked good growth of the economy for a sustained period of time, this problem is going to rear it's head.

Even if that happens, in all likelihood pension promises will have to be cut. Quite frankly I think they should be, most are far to generous. It is ridiculous public workers get far more in retirement than people in the private sector do for working just as hard.

You are correct.

You can only kick the can so far down the road with pensions. That day is coming for Cali.

originally posted by: toysforadults
In the long run this well be a good thing but expect massive market changes in the near future. Oh, and buy XRP while it's low it will ICO on Coinbase.

I promoted XRP weeks ago on here in a bitcoin thread. You are right, it will be listed on Coinbase in the next few months. But even without coinbase listing I think it is by far the best crypto to invest in. Great performance, Real use case, great programming team behind it, working with regulators not against them, and making deals for its use with large Financial Institutions.

originally posted by: FamCore
a reply to: toysforadults

I love videos by the MoneyGPS. Dude knows his stuff.... California isn't the only one with Pension problems.

It's scary to be quite honest.

Found his channel a few weeks ago. The guy is on point. If I listen to him and Peter Schiff I can really get a sense of what's going on.

originally posted by: sprtpilot
a reply to: toysforadults

Older people won't re-enter the workforce, lol. They won't be hired. Over 50's is a not-going-to-hire-taint.

I hear 7/11 is hiring.

Once they get the illegals out of crappy jobs, us old people can get a pay check and feel useful.

a reply to: ClovenSky

The downside is hyperinflation of the currency unit, see Wiemar Germany and the mark.

But yes, this is what I always thought they would do. Obama and his krew floated the idea of MyRa that is taking everyone's retirement funds and rolling it into a new and revised national retirement plan like social security. But you know what would happen, they would just take all that money and dole it out to social security and welfare.

Either way you look at it, we're screwed because politicians, banks and 'financial planners' have been lying for over 30 years now. You can ignore reality but you cannot ignore the consequences of ignoring reality.

a reply to: toysforadults

California is a mess.

This is the same State that worked out their annual budget based on facebook's IPO before it even happened...and then it's stock tanked.

a reply to: toysforadults

I don't like pensions, but if someone is working their entire life under the assumption that they are accruing a pension then it is unfair to suddenly just change the rules and take it from them. California put themselves in this position and now they need to keep their word to their employees.

What is happening in places like Chicago and Dallas is that cities are increasing taxes to pay for their underfunded pension funds. So the same cities that hired the financial planners to create the funds and then allowed them to basically steal all the money and lie are now asking tax payers to pay off the pension promises.

This is bad, no one realizes how bad it really is and how much worse it's going to get. I mean people don't want pissed off firemen and policemen right? But why don't they hold these planners feet the fire? We're getting robbed right and left by this white collar criminal network.