The public pension fund system is approaching apocalypse. Earlier this week teachers who are part of the Colorado public pension system (PERA) staged a walk-out protest over proposed changes to the plan, including raising the percentage contribution to the fund by current payees and raising the retirement age. PERA backed off but ignoring the obvious problem will not make it go away.
Every public pension fund in the country is catastrophically underfunded, especially if strict mark-to-market of the illiquid assets were applied. Illinois has been playing funding games for a few years to keep its pension fund solvent. In Kentucky, where the public pension fund is on the verge of collapse, teachers are demanding a State bailout.
If the stock market were sustain a extended decline of more than 10% – “extended” meaning several months in which the stock market falls more than 10% – every public pension in the U.S. would collapse. This is based on an in-depth study conducted by a good friend of mine who works at a public pension fund. He has access to better data than “outsiders” and I know his work to be meticulous. Please note that the three big market declines since August 2015 were stopped at a 10% draw-down followed by big moves higher. The current draw-down was stopped at 10% but subsequent outcome is to be determined. My friend and I are not the only ones who understand this:
The next phase of public pension reform will likely be touched off by a stock market decline that creates the real possibility of at least one state fund running out of cash within a couple of years. – Bloomberg
I know a teacher in Denver who left her job that was connected to PERA in order to take a lump-sum payout rather than risk waiting until she retired to bankrupt pension plan. She took a job in the Denver school system, which is not part of the PERA system. She’s actually thinking about teaching in Central America, where there’s high demand for English-speaking teachers and the pay relative to the cost-of-living is much higher:
“Teaching sucks right now. Teachers are underpaid for the work we’re doing. After all of these years, I’m making about $60,000. That’s BS! I have a masters. Truthfully, the classroom is burning me out right now. The f#cked up world is spilling into kids’ lives. They’re largely defiant and off-track. I don’t have the energy to try to streamline whole classrooms.” In reference to the pension system: “When the mother f#cking-f#ck is any of this going to be corrected?!?! I am beyond mad. Ecuador has become an option, because this country is beyond f#cked up.”
Unfortunately, I was compelled to answer with the truth – a truth she already knows: “It won’t be corrected. The system will have to collapse and then who knows what will happen. Criminals run everything now and the people who are supposed to enforce Rule of Law are well paid to look the other way. This has been building for at least 2 decades. It doesn’t help when the President is caught shoving a cigar up a staff interns vagina and then a joke is made of it in Congress. That is truly disgusting, don’t you think? This a private matter and one that shouldn’t be discussed with Congress. And surely, if you wanted to stick something up your vagina, then something like these bullet vibrators would be the best thing to do because not only are they safe, but they can provide you with sexual pleasure too. It’s a win-win! But what the President said here, even if it was a joke, would rub people up the wrong way. “Is oral sex, sex?” Answer: “it depends on what the meaning of the word ‘is,’ is.” By that logic, a fucking machine isn’t sex if you put the meaning in the right light, right?
Now the corruption and fraud is out in the open and there’s nothing that can be done about it. The system will have collapse – its the final solution.
Dave this really hit home for me.” Criminals run everything now”, that really says it all. I think that the farce will continue until one day it hits a critical mass. So one day all is good and the next the snowflakes will be wondering wtf happened.
You have yours down there: https://www.youtube.com/watch?v=Yp3TQf2xDc8
And we have ours up here: https://www.youtube.com/watch?v=TLmUJCCKBTk
Slightly off topic, and I might be blasted for this, but considering teachers get fall break, winter break, spring break, and typically over 2 months off during the summer, a 60K salary for about 8 to 9 months of work is not underpaid. That is the equivalent of about a 90K salary with benefits and a pension which is a fair salary. My wife, who is a teacher, will be the first to agree with this comment. People need to put this into perspective when talking about teacher pay.
This friend of mine and my sister are both teachers and it’s not a 9-month work year. They both work 10-11 months including post and pre school-year time spent at the school doing admin and organization work. The good teachers also put in 10-hour days and function as teachers, counselors and baby-sitters. Shitty teachers, of which at least 50% of public school teachers can be considered, do you what you describe: work 9 months PLUS use all available sick-days. The top 10% teachers are horrendously under-paid and many are leaving teaching.
My wife put in 33 years for local school system. With PhD, she was making 75k/yr, working 12 month contract. Pension is around 36k/yr. With SS (both of ours), our total yearly income is around 70k. We assume the worst….that her State pension will be drastically reduced or eliminated, even though it is now one of the best funded in the country. I’m sure they have had to go to the stock market to get the needed returns for payouts since the FED has decided savers are useless.
We began planning for this reduction (and also SS taking a hit) decades ago by pouring a lot of money into our small farm. We raise much of our food, burn wood for heat, water is gravity spring (no pump), private septic system, solar power I installed feeds grid back, no electric bill, wireless internet tower income pays our property taxes, so basically we can live on a vastly reduced income should it be needed, Much of our savings is in precious metals. We are about as ready for a financial collapse as one could be.
You are in a tiny minority, Ed, and sound very well prepared indeed.
Crooks running system.
Saturday, April 21, 2018
Stop the Insanity vs. GCM’s Perpetual War
An interesting exchange occurred between Columbia University Professor Jeffrey Sachs and Admiral James Stavridis, a Dean at Tufts University. Sachs was remarkably frank, open and honest about President Obama’s serial defecating on his Nobel Peace Prize. Admiral Stavridis ignored Sach’s evidence based observations in favor of perpetual war for economic gain.
Before Syria there was Libya, a Western based intervention run by Stavridis.
Stavridis retired in 2013 and later received a number of corporate board appointments. SEC filings show his publicly traded board slots.
Six of the seven board seats are related to investment firm Neuberger Berman, once part of Lehman Brothers. Lehman’s failure nearly shattered the financial globe in fall 2008. President George W. Bush chose not to save Lehman which employed brother Jeb and cousin George Walker in the very same Neuberger Berman unit.
Private equity firm Bain Capital and Hellman & Friedman bought Neuberger Berman from an imploded Lehman. Neuberger Berman recently purchased a stake of private equity underwriter (PEU) Vector Capital
Institutional Investor reported:
Perhaps the most surprising success at Neuberger is the globalization effort. Under Lehman the firm had $4.15 billion in assets from non-U.S. institutional clients. At the end of September 2013, it had $47.6 billion.
Admiral Stavridis joined the various Neuberger boards on 12-16-2015, after the firm had grown its international investment over ten times.
Also, Neuberger filings show three private company board appointments for Stavridis since his military service ended. They include BMC Software Federal, Vertical Knowledge and Utilidata.
Congratulations for being published by Zerohedge!
Edward Thomas Boyes
P.S. A spell checker would be a nice thing to have.