Federal bankruptcy judge Christopher Klein ruled on April 1 that Stockton, Calif., can file for bankruptcy via Chapter 9 (Chapter 11’s ugly cousin). The ruling may start the actuarial dominoes falling across the country, because Stockton’s predicament stems from financial assumptions that are hardly restricted to one improvident California municipality. […]
Pension math is more art than science. Actuaries guess, er, compute how much money is needed today based on life expectancies of retirees as well as the expected investment return on the pension portfolio. Shortfalls, or “underfunded pension liabilities,” need to be made up by employers or, in the case of California, taxpayers.
In June of 2012, [the California Public Employees’ Retirement System] lowered the expected rate of return on its portfolio to 7.5% from 7.75%. Mr. Milligan suggested 7.25%. Calpers had last dropped the rate in 2004, from 8.25%. But even the 7.5% return is fiction. Wall Street would laugh if the matter weren’t so serious.
all your base belong to us
CalPERS Aristocracy
http://www.youtube.com/watch?v=DLcamWN0SEo
The fiction that all these cities are going to pay off on all their muni-bonds is all that keeps the fixed income market from imploding. No word yet what’s going to happen when all the residents of these cities facing bankruptcies and tax hikes pack up the U-haul and move out past the city limits.
Personally I’m looking forward to watching the public employee unions riot. All those grotesquely fat government chair polishers out there, just a cursin’ and a swearin’… I may even get cable!
In other news, residents of broke towns have discovered how reasonable the rates of private security companies are. And unlike the cops, the Pinkerton man comes when you call them.
“The fiction that all these cities are going to pay off on all their muni-bonds is all that keeps the fixed income market from imploding”
~the Phantom
I haven’t been keeping up too much so I’ll post this(likely already been posted here)
http://www.youtube.com/watch?v=Njp8bKpi-vg
This is relative to the Phantom’s bond point.
Governor What’s-his-face says he’s gonna have a surplus, so there’s no problem at all, keep doin’ what yer doin’….
Only problem is these Blue State cities go bankrupt and the welfare crowd moves on over to a Red State and then takes us down. It sure could be a long term domino effect.