Detroit
- Thread starter MaryAnne
- Start date
It will be a very difficult situation for many retirees if Detroit seeks to abrogate its existing and legacy pension agreements..
Addy
Stand up for the people!
Would make it hard on many of the retirees.. if they don't have some other financial resources.
Paul Krugman has a good piece on it.. http://www.nytimes.com/2013/07/22/opinion/krugman-detroit-the-new-greece.html?_r=3&
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Excerpt:
Are Detroit’s woes the leading edge of a national public pensions crisis? No. State and local pensions are indeed underfunded, with experts at Boston College putting the total shortfall at $1 trillion. But many governments are taking steps to address the shortfall. These steps aren’t yet sufficient; the Boston College estimates suggest that overall pension contributions this year will be about $25 billion less than they should be. But in a $16 trillion economy, that’s just not a big deal — and even if you make more pessimistic assumptions, as some but not all accountants say you should, it still isn’t a big deal.
Paul Krugman has a good piece on it.. http://www.nytimes.com/2013/07/22/opinion/krugman-detroit-the-new-greece.html?_r=3&
***
Excerpt:
Are Detroit’s woes the leading edge of a national public pensions crisis? No. State and local pensions are indeed underfunded, with experts at Boston College putting the total shortfall at $1 trillion. But many governments are taking steps to address the shortfall. These steps aren’t yet sufficient; the Boston College estimates suggest that overall pension contributions this year will be about $25 billion less than they should be. But in a $16 trillion economy, that’s just not a big deal — and even if you make more pessimistic assumptions, as some but not all accountants say you should, it still isn’t a big deal.
Good, maybe that will destroy their Unions.
connieb
Senator
Most state and municipal employees don't participate in SS taxes - because they are required to have pensions. The state or municipality ALSO doesn't have to pay the SS taxes they would if they were a private employer.
Despite my opinion that the pension and health benefits are far far far too generous to ever actually be reasonably afforded - particularly in light of the declining finances of the city, they made the agreement, and people worked and retired and counted on that, and I certianly don't think our governmental agencies should be able to set the example of shirking their responsibilities.
The thing is if they had been paying SS taxes - and no pension - or a 401K style pension, they likely would not have been in this mess because they would have had to budget for those contributions annually as opposed to the kicking the can down the road planning based on bad actuarial assumptions.
This is however, why largely private companies have done away with defined benefit plans. Aside from the expense, private companies have been required for a long time to make more detailed allowances for their required contributions as well as detailed footnotes to make sure the reader of their statements knows and understands that basically there is a big expense that will need to be funded one day and to be honest, that issue can be a big factor in stock prices, investment ratings, etc.
P
PACE
Guest
The real issue is the prism in which corporations view employees, they are consider a "profit loss" when the scales tip and expenses exceed income.
If you recall, Richard Nixon was the president who ties CEO pay to company profits, to eliminate the kingdom like power a board held over a corporation, in pursuit of their own economic gain.
This legislation has created a very twisted and wordsmithed way of reporting profits;
Inventory is either an asset or a liability dependent on the economic temperature of the market, or the company health itself.
Never before in American industrial history, have employees been lumped into the same category as inventory.
What happened in Detroit was a long time coming; this didn't just boil to the top overnight, its been a steady decline since the early 1980's. We gave away the automotive industry (for the middle class) to the Pacific Rim; they have done quite well, with considerably forgiveness in the US trade laws.
Germany, on the other hand, which still feels the or rather remembers the history of economic collaspe => national socialism => third reich =>WWII has limited the international influence on one of their most precious industries, the automotive industry.
As expected, Detroit plummeted into an economic abyss; now, if you are a proponent of conservative financial philosphy, they should recover.
Question is, when?
Regards
Pace
If you recall, Richard Nixon was the president who ties CEO pay to company profits, to eliminate the kingdom like power a board held over a corporation, in pursuit of their own economic gain.
This legislation has created a very twisted and wordsmithed way of reporting profits;
Inventory is either an asset or a liability dependent on the economic temperature of the market, or the company health itself.
Never before in American industrial history, have employees been lumped into the same category as inventory.
What happened in Detroit was a long time coming; this didn't just boil to the top overnight, its been a steady decline since the early 1980's. We gave away the automotive industry (for the middle class) to the Pacific Rim; they have done quite well, with considerably forgiveness in the US trade laws.
Germany, on the other hand, which still feels the or rather remembers the history of economic collaspe => national socialism => third reich =>WWII has limited the international influence on one of their most precious industries, the automotive industry.
As expected, Detroit plummeted into an economic abyss; now, if you are a proponent of conservative financial philosphy, they should recover.
Question is, when?
Regards
Pace
