NY munipalities borrowing money from pension funds to pay pension funds

Doesn't make sense uh? Well good since it shouldn't make sense... but guess what they are doing it anyways, even if it's total fraud.

To Pay New York Pension Fund, Cities Borrow From It First

When New York State officials agreed to allow local governments to use an unusual borrowing plan to put off a portion of their pension obligations, fiscal watchdogs scoffed at the arrangement, calling it irresponsible and unwise.

And now, their fears are being realized: cities throughout the state, wealthy towns such as Southampton and East Hampton, counties like Nassau and Suffolk, and other public employers like the Westchester Medical Center and the New York Public Library are all managing their rising pension bills by borrowing from the very same $140 billion pension fund to which they owe money.

The important part :

are all managing their rising pension bills by borrowing from the very same $140 billion pension fund to which they owe money.

So basically write another check for the one who already bounced...

Since this is done in the first place and ALLOWED... me thinks the pension funds in NY (and other states) are on the brink of being insolvent...

The end of the rope is very near... and when we reach it, it's gonna get tight around our necks...real tight.

the state of NY is in a financial mess. I spoke with an agent in the tax and finance department a couple of weeks back, about a refund owed a client. Once we cleared up the matter of what was actually owed (we won the battle - yay us), the agent said "unfortunately, you missed the refund cut off for this month so you will have to wait until next month for the check to be issued."

This made no sense since, in the past, the refunds were always issued within days of filing so I asked what she meant.

In a nutshell, the state of NY will now only pay tax refunds one day each month. There is a list of refund payments that are approved for release and there is money allotted for refunds. If you are on the list, and the allotted funds cover everyone on the list before and up, through your spot on the list, you will get the check sent out. If, however, they run out of funds before they get to your number, you will wait until the following month and then you hope and pray that your number is covered by the next release of funds. This is the municipal equivalent of living paycheck to paycheck, hoping you have enough money each month to cover all of your bills.

what makes this even dumber is that, if the state doesn't pay right away, they will have to pay interest on the money so the refunds will probably wind up costing them even more.

that's not possible to even do. are they borrowing money against the pension fund and if so from who?

austerity is coming to America, it's just creeping up on us slowly.

Okay.. Let me make sure I get this right. The Pension funds are busted for cash because corrupt and terrible leadership has, for years, been spending people's retirement money or investing it in ways that lead to it's being wasted away.

To solve this problem of nothing but debt standing for pension obligations, they've come up with a solution to pay the pensions....by creating NEW debt with NEW interest to contend with so the OLD debt and OLD obligations can be dealt with. Is that all about correct?

So... What happens when this NEW debt becomes the OLD debt down the road and the doubling down on stupid this time requires a TRIPLING down on stupid then just to keep their collective heads above water??

What I wouldn't give for just ONE leader.. JUST ONE. All we have are wimps who kick the can down the road, year in and year out...ad naseum. No end in sight.

oh i see now, they're taking money from future pension funds to pay current pension funds, that should go over about as good as cactus on a ski slope.

reply to post by LittleBlackEagle


somehow, it's even more twisted than the ponzi that scam that social security has become. now, they aren't even using current contributions to cover the outflows, they're borrowing against future contributions. Let's say, for arguement sake, the economy goes to pot (I know a long shot) and inflation is rampant (again, another long shot) and current employees, feeling the squeeze, decide to contribute less to their pensions. where will the funds come to cover the debt?

anyone? anyone?

Beuhler......beuhler.....

reply to post by Vitchilo


Im not much of a money man, but isn't this what is happening now in Greece?

People's retirement money, or at least what they had expected to be paid, is now reduced, thorugh no fault of their own.

The benefits are being cut.

That is probably what will happen in the US , benefits cut, till they will be all but elimenated.

reply to post by Wrabbit2000

To solve this problem of nothing but debt standing for pension obligations, they've come up with a solution to pay the pensions....by creating NEW debt with NEW interest to contend with so the OLD debt and OLD obligations can be dealt with. Is that all about correct?

So... What happens when this NEW debt becomes the OLD debt down the road and the doubling down on stupid this time requires a TRIPLING down on stupid then just to keep their collective heads above water??

Basically yeah.

They have adopted the social security/medicare/medicaid model. If it works for the feds, why not cities!

Originally posted by Crakeur
reply to post by LittleBlackEagle

 

somehow, it's even more twisted than the ponzi that scam that social security has become. now, they aren't even using current contributions to cover the outflows, they're borrowing against future contributions. Let's say, for arguement sake, the economy goes to pot (I know a long shot) and inflation is rampant (again, another long shot) and current employees, feeling the squeeze, decide to contribute less to their pensions. where will the funds come to cover the debt?

anyone? anyone?

Beuhler......beuhler.....

thin air, where all the FED money comes from.

reply to post by Vitchilo

I suppose it will work just fine for cities and states until they run out of Peters they can rob to pay all the hungry Paul's out there. Congress can just print more money when it runs out. States and Cities can't. I look forward to the show it should supply when they hit the brick wall and realize in a true way, what that brick wall really means lol....

I cant help but notice that everyone from the credit card burning peon to the paper printing fed have all been working their books like they all expected to be dead by now.

It's like the classic terminal diagnosis comedy of the man destined to die running up tabs, blowing up credit cards, leasing luxury vehicles and dining on caviar every night and after a couple of weeks his doctor calls and says "sorry, we mixed up the tests and you're perfectly healthy."

reply to post by Vitchilo


It's not even a Ponzi Scheme. A Ponzi Scheme you at least use someone elses "new" money to pay the supposed profit.

This is just um .....

Stupidity. No other word for it .. it's blatant stupidity.

What is amazing about this whole thing is they had years and years of knowledge that this was coming down the tubes......(boomers retiring) Nobody wanted to step up to the plate and say hey folks lets tighten our belts now because there is going to be a lot of money going out to the boomers.


Same crap here in Canada they are yakking about extending the retirement age and maybe included but I am not sure is a benefit cut as well.


I have been on Government disability for quite some time and my payments are almost the same as they were in 94, my bills are quadruple that now and our MP's have an enormous pension guaranteed after only 10 years or so....


We probably will be in the same boat as you folks before we know it.

Interesting but yet very scary thread.
S&F

Regards, Iwinder