Thread snips are below. Vicky suggests: "Tell your local government to stop breaking the law. A lot of time and money could be saved this way." She left out "stop doing what is legal yet stupid." There was no rule against the Titantic racing full speed ahead. But it was stupid. She correctly states: "We must stop pretending that money comes from Heaven. All of It comes from someone else's pocket." Our pension funds are current day Titantics racing full speed ahead in ice berg filled waters.
This is where I came in when I joined the list earlier in the year. It is still a "rant" topic for me. Senator Daniel Patrick Moynihan tried to get the SS deduction reduced a couple decades ago as it was all going to the General Fund and not being invested (much of the 1990s surplus was SS "over" payments). That never found traction in either party ("3d rail of American politic," remember?). When SS was started there was an investment part in the Senate version that FDR had taken out in conference, starting a dependency cycle. Al Gore's father, in the last year of his life, had a pension that was 3 times what he earned his last year as a senator. Some reports show that congressionals will get $3 million each in pension payouts. A report on the floor last year showed that if current retirees had invested, prudently, not in risk stuff, today, 40 years later, they would be earning $6,200/month each. That is the power of investment. But invested people are financially independent and less easy to boss around. Today, if you die before getting SS your estate gets nothing. That's like paying for insurance with so many "act of God" clauses that you could never collect. Guys I know in their 40s have done the math and say if they could invest what is deducted themselves, starting from scratch today, they would still make more in retirement than staying with the program. Vicky mentions GM: this is not just a government thing. The private sector is also affected. Since that article came out, current analysis suggests that the GM pension problem may well be a major facto in GM's bankruptcy. That will distress everyone, liberal and conservative alike. This is serious stuff. In Oregon we have a PERS (public employees retirement system). Here is the deal: they figured the fund needed to make 8% annually to meet payout expectations. They passed a law that said it would be "unfair" if it didn't and so the taxpayer would have to make up any difference if it doesn't return 8%. But "fairness" rules: it wouldn't be fair for the stock market to make 15% and they just get 8% so the tax payer, law passed, has to make up that differnce too. It was established to pay 55% but, with pers recipients on the board, rose to, in some cases, 125% of last year of salary. White collar "entitlements." So where is the accountability for the money managers? None. They take trips uttering the Alfred E. Newman mantra, "what, me worry?" Now they have a $14 billion shortfall. The only picture that comes to mind is tuxedoed pigs at the trough with bibs around their necks, sun glasses on, burbing with great smiles. Congressionals have this all figured out. The whole purpose of redistricting (done by which ever state party is in power) is to prevent unelection. Thus, 95% of the House is virtually defeat proof except in those states that don't allow gerrymandering redistricting (hence the phenomenon of companies in "blue states" leaving for "red states"). So, between governments, unions, and corporations (did I leave anyone out?) mismanagement, misallocation, or just plain ol raids, some pension funds (private or public sector) are in great jeapordy. Those in jeaporday have turned their back on the one engine, capitalism (gasp) that has brought more people out of poverty than any other for the ponzi scheme of "tommorrow". The bulge Vicky talks about is like the Python that swallowed a pig. As the pig travels through the digestive track, it creates a giant bulge. Recall that the 15 year baby boomer period resulted in twice as many births than in any other 15 year period. Do the math. The swallowed pig will in turn swallow the system unless major changes are made at both the allocation and investment ends. The worst approach is do nothing until systems collapse with nothing to salvage (our current course). The best answer is to establish pension rules that prevent governments, unions, and corporations from raiding them AND establish private sector low risk investment options. Currently, corporations are acting more swiftly to clean up their acts than unions or governments (the latter two can "tax"). The reality is that some governments and corporations will wait until the first wave of defaults start, and then act. Like WWI. Waves from the trenches will have to be sacrificed before it is figured out that killing off your Army of citizens and employees is self-defeating. We have two choices: we can learn from the mistakes history teaches us or believe we are somehow different from our predecessors, that it can't happen to us, and we'll be smarter and avoid the mistakes. It all depends on whether or not we see the emperor wearing any clothes. Peter Jessen, Portland -----Original Message----- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] Behalf Of Victoria Heller Sent: Thursday, October 02, 2003 7:14 AM To: Minneapolis Forum Cc: [EMAIL PROTECTED] Subject: [Mpls] Pensions and other Ponzi schemes........ Vicky Heller writes Our Listmanager posted a link about union contract negotiations at Border's which reminded me of an important issue that I have previously written about: The ticking time bomb of pension shortfalls - both public and private. Minneapolis taxpayers have the right to know how much we pay annually for pensions and healthcare, and what promises have been made for the future. A related article from today's Briefing.com..... Rising pension costs have taken a significant chunk out of Detroit's cash flow, and industry analysts expect this to remain a drag on profitability going forward. Jim Bernstein states: "Pensions are earned. They are not welfare." Vicky replies: We need some arithmetic here. If you contribute $50,000 to your retirement plan, and draw $500,000 of benefits after you retire, who pays the difference? David Shove says: Why to we buy insurance? To take part in a very large pool. Chris Johnson writes: Nobody pays in $50,000 to social security and draws out $500,000 unless.... The Social Security system was orginally set up to provide a safety net for people, without regard for how much they paid in. It was never a Ponzi scheme and only recently have the current contributions been used to pay current benefits. We could solve a lot problems simply by requiring politicians to live by the same rules and limitations that the rest of us do. And they wonder why the electorate is digusted and angry. David Brauer writes: Light not heat department... Apropos the current pension discussion, some readers may want to check out the big pension story Scott Russell of the Southwest Journal did last year. It's a good primer on the ins and outs of Minneapolis pension financing. http://makeashorterlink.com/?C6F023416 Vicky replies: We need some arithmetic here. If you contribute $50,000 to your retirement plan, and draw $500,000 of benefits after you retire, who pays the difference? In the case of public pensions (including social security), the taxpayers pay - as long as they are willing and able to do so. Some call it welfare, but I call it a Ponzi scheme that is destined to fail. The only way for it to work would be to find millions and millions of new taxpayers who are willing to support those who preceded them. Keep in mind the boomer population bulge (pun intended.) Minneapolis specific: How much is a former City Council person expecting to receive? At what age? I remember reading that he or she can expect a monthly income equal to 75% of his or her highest salary. Who knows what they include as "salary" for the calculation, but let's assume $60,000 per year. If these numbers are correct, a former Council Member would receive $45,000 per year, plus first class healthcare for 10, 20, 30 years. That kind of annuity is worth a lot -- in the millions. How much did he or she pay for the annuity? Not much. It would be nice if someone from the City would give us the correct numbers so that we can do these calculations accurately. We must stop pretending that money comes from Heaven. All of It comes from someone else's pocket. Vicky Heller North Oaks REMINDERS: 1. Think a member has violated the rules? Email the list manager at [EMAIL PROTECTED] before continuing it on the list. 2. Don't feed the troll! Ignore obvious flame-bait. ________________________________ Minneapolis Issues Forum - A City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:[EMAIL PROTECTED] Subscribe, Un-subscribe, etc. at: http://e-democracy.org/mpls REMINDERS: 1. Think a member has violated the rules? Email the list manager at [EMAIL PROTECTED] before continuing it on the list. 2. Don't feed the troll! Ignore obvious flame-bait. ________________________________ Minneapolis Issues Forum - A City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:[EMAIL PROTECTED] Subscribe, Un-subscribe, etc. at: http://e-democracy.org/mpls