|Californians: Prepare For A 50% Hike In Pension Costs|
|Bloomberg via ZeroHedge, 17/04/2013 (traduire en Français )|
It is no surprise that pension funds in the US are significantly underfunded (median 72% funded). California Public Employees’ Retirement System (CALPERS), specifically, is about 26% short of meeting its long-term commitments. Like most major pension funds, it uses smoke-and-mirrors to avoid this yawning gap by smoothing over a long enough timeframe where 'hope' for growth in assets triumphs over the reality of liabilities (through a 'rolling' 15- or 30-year window - that therefore never comes due). However, under a new plan proposed by CALPERS' chief actuary, they will shorten the horizon from 15 to 5 years and aim for a specific date 30 years from now to be 100% funded (instead of a rolling hope-driven horizon). The impact of this, as Bloomberg reports, may mean California taxpayers municipal pension contributions will rise as much as 50%. "This is clearly the right thing to do," notes the fund's CEO, "as it will reduce the risk of the system," though we suspect the 'system' may just get a little upset at having to face this 50% 'tax-hike'.
|Philadelphia, 5th Largest City in US is Bankrupt; Mayor Holds Closed Meeting With Wall Street to Discuss Asset Sales|
|Mish's Global Economic Trend Analysis, Mike Shedlock, 16/04/2013 (traduire en Français )|
You know a city is in deep trouble when its mayor invites Wall Street but not the press and not private citizens to a closed meeting to discuss the future, including a selloff of city assets.
Philadelphia Mayor Michael Nutter, whose municipality has the lowest credit rating of the five most-populous U.S. cities, did just that.
My translation: Philadelphia is bankrupt, but that easily discernible fact will of course be denied, until it officially happens.
Please consider Philadelphia Holds Closed Meeting With Wall Street
Philadelphia, 5th Largest City in US is Bankrupt
It does not take a genius to figure out what is going on here. Philadelphia is bankrupt. Without even seeing the details, it is safe to assume untenable union wages and pension benefits are are the heart of it all. A 47.6% funded pension is in and of itself rather telling.
Gutless Mayor Michael Nutter does not even have the decency to let the public or the press hear what is going on. Instead he invited Wall Street to a private tour of Philadelphia's assets, hoping to sell assets and stave off the inevitable.
What fundamental issues is Nutter solving?
Union Salaries? No
Bloated Payrolls? No
Instead of inviting Wall Street to a private tour, Nutter ought to be inviting the press and private citizens to a press conference to declare the city's bankruptcy.