Is New York City the Next Detroit?

[Geee]

Front Page Magazine:

Shortly, New York may be ruled by a governor who helped cause the financial meltdown, while New York City may have a mayor who was forced to resign from Congress and its comptroller will be a former governor who was forced to resign for transporting a prostitute across state lines. He will be replacing the current comptroller who may go to jail for campaign finance fraud.

 

All of that sounds like an elaborate setup to a punch line. And it is.

 

 

New York State has the 33rd highest unemployment rate in the country. New York City’s unemployment rate is even higher at 8.3%. In June, New York City, with a population of 8 million, added just 3,100 jobs. Most of those jobs were in the city’s tourism trade which bulks up during the summer.

 

While Bloomberg was playing hooky, using city resources to push gun laws in other states, the specter of Motown was creeping over the Big Apple.

 

New York City comes in second on the list of cities with the largest unfunded pensions. After Detroit.

[Valin]

@Geee

 

Via Meadia: Detroit, Is That You? Chicago In Big Trouble

7/30/13

 

It looks like Detroit may yet have competition for the distinction of Americas most poorly run city. The unprecedented triple-drop in Chicagos bond rating and the citys shiny new long-term debt figure$29 billionshould have pols quaking in their boots. The Chicago Sun-Times has published some distressing numbers from Chicagos recent audits:

 

(Snip)

 

It hasnt all hit the fan quite yet, but Chicago seems perilously close to real trouble. The city is all out of money, and with an imploding public education system and harrowing levels of violence, it is losing residents fast. Illinois, which itself lost more than 800,000 people to out-migration in the past two decades, is essentially Chicago on a larger scale, with hundreds of billions in unfunded pension liabilities and complete political sclerosis. The state cannot bail out Chicago, and judging by the feds reluctance to even lift a finger for Detroit, Chicago shouldnt expect much more.

 

Stories like these tend to expose the pointlessness of a lot of American political debate. Defenders of the blue social model will prattle on about its many virtues, and they certainly have some accomplishments to point to. But ultimately the blue model is no longer a matter of choice: cities like Detroit and Chicago and states like Illinois will eventually have to shift away from blue policies whether they like them or not. When the money runs out, one of the luxuries you can no longer afford is self-deception.

 

(Snip)

 

 

Minneapolis' bond rating lowered a notch by Moody's to Aa1

 

 

You'll never guess in a thousand years what the reasons are.

[Valin]

FYI Alert

 

Everything You Need To Know About Our Pension Crisis

 

[Geee]

A couple of those states surprise me.

[Valin]

A couple of those states surprise me.

It should also be noted this is looking at states...not cities. Mn. is doing good, Mpls just got down graded by Moodys

[Geee]

Texas and Alaska surprised me.

[Valin]

Theres a name for this problem: Detroit

William A. Jacobson

Sunday, August 11, 2013

 

Maybe some things just need to fail for the greater good.

 

Heres a good example of a system that needs to fail because its consuming its public host. The parasite and the host cant both survive.

 

Via Michael Graham, Massachusetts Unions Reach Their Ultimate Goal: More Collecting Than Working:

 

(Snip)

[Valin]

Public Pension Shortfalls Are Everyones Problem

the Editors

Aug 8, 2013

 

The pension liabilities that helped bankrupt Detroit have cast a harsh light on similar problems in Chicago and other large American cities, adding urgency to the question of who should close the shortfall. This is a challenge that public-sector workers and retirees shouldnt bear on their own.

 

The public pension problem is by now well known. Detroits emergency manager estimates its unfunded liabilities at $3.5 billion, about a fifth of the citys debt. As of last year, Chicago had funded just 36 percent of its pension obligations, while, as of 2011, Philadelphia had put aside just 50 percent of its promised benefits.

 

States arent doing much better. Thirty-four states failed to make their required pension contributions last year, and nine have set aside less than 60 percent of whats needed. All told, U.S. state and municipal pensions are underfunded by at least $1 trillion, and perhaps much more.

 

The twin questions facing policy makers are how to fix the problem and how to apportion the cost among workers, retirees and taxpayers as a whole.

 

(Snip)

[Valin]

Detroits pension system is built on delusions about future returns

Allison Schrage

8/14/13

 

The state of Detroit public pensions is a very sad situation. I was recently on a panel with a Detroit fireman named Dennis, who spent his career at a dangerous job and made large contributions to his pension. He doesnt have Social Security; his pension is all he has. Not surprisingly, hes fighting to keep his benefits from being cut. Hes not alone. Now the city of Chicago is coming to grips with its underfunded pension and is considering benefit cuts. In many states, benefits are guaranteed by the state constitution, so being paid benefits was assumed to be a certainty. But those promises no longer seem so credible.

 

 

The Detroit police and fireman pension estimates that it has more than $3 billion in assets, so it wont run out of money any time soon. The concern is whether those assets are enough to pay the retirement benefits for future retirees like Dennis. To solve this problem, we need to understand exactly how underfunded these plans are and who will pay the short-fall. The sooner this is done, the solution will be cheaper and more certainty will be provided to state workers.

 

In Detroit, firefighters claim that their pension is 96% funded, meaning they reckon the current assets can finance 96% of the pension promises theyve made to the police and fireman. Emergency manager Kevyn Orr says the plan is only 77% funded. The firefighters accuse Orr of using an unreliable estimate to cut their benefits. We cant know what Orrs motivations are, and I cant vouch for the Millman report Orr is basing his funding rationale on, but he's right the pension is not nearly as well funded as it seems.

 

(Snip)

 

H/T

Via Meadia