Originally Posted by
Bucking Bar
Just as our pensions got scrubbed in bankruptcy, a large number of municipalities simply can not afford the promises they have made. The Federal government has already been clear to Cities like Detroit; "you are not Goldman Sachs." Which is kind of a shame. AIG was forced to pay Goldman and German Banks 100% of their PROFITS on highly speculative derivative deals which right back into offshore accounts and shielded asset pools which may, or may not, get circulated back through the US economy. Mom & Pop public servant do spend their coin right here in the good ol' US of A and the loss of (or large reduction in) pensions will have a very immediate effect on not only them, but the communities where they live.
When the Fed says it is priming the pump, the idea is that money gets re-spent and cruises through the economy generating taxes. Money to Goldman does not prime the pump as effectively as keeping promises to folks who live week to week.
I get what you are saying, but at the same time, a high school graduate can retire from a 20 year career in the fire department with a pretty healthy retirement package... and still be under 40. Nice gig if you can get it I guess. Those retirements are unsustainable, but for some reason the voting public thinks they are more worthy than repaying bondholders who have been defaulted on in some California cities. Good luck to them getting "investors" anymore. I recently talked to my state representative in Florida who said that Rick Scott and the state house in Florida had voted to freeze all existing pensions and any future hires would be on a 401(k) type plan (sound familiar?). But the senate would not go for that. FL has done pretty well in terms of finance, but these retirements still represent a $500 million shortfall. It has to stop.