City of Central Falls, RI Declares Bankruptcy

[OCGuy]

Stay tuned, folks. Pensions are going to be a thing of the past.

This is just the start. Governments are finally going to have to live within their means.

 

[DaveSimmons]

What happened with that city was that they were forced to go into arbitration every time with the union. After every arbitration, the panel gave the union increases in pension. There was no way the lawmakers could stop the increases even if they couldn't afford it. Again, unions with too much power.

Interesting if true. Do you have a link for that?

 

[xj0hnx]

😀 You got me there. It's probably not a good idea to have 60 year old firemen.

I stand corrected.

There's administrative positions they can fill, same with police, you were right the first time.

 

[GuitarDaddy]

The sad part about these public employee pension problems is that most of these employees have been persueded to work for less than market wages in crappy jobs because of the insane bennies and pensions. Only to find out that not only are their jobs and pay shit, so are their bennies 🙁

Just another way of fleecing the working class. And it hasn't always been gov employees. Back before 401k's it was pretty common for company pension funds to disappear, happened to my dad. He worked 40yrs for a bank and was the most senior member of their pension fund and was vested for 400k in 1970's dollars when through a series of bank acquisitions in about 5yrs and a couple of paper bancruptcies in the itermediate banks wound up with less than 20k in his pension at retirement time

 

[Fern]

I find it funny that the political right has no problem violating Constitutionally protected contract law as soon as it comes to either public employees or unions.

Not sure what this has to do with the "political right". This is a self-described "progressive" city in a fairly liberal state.

And I'm still looking for that part of the Constitution that has to do with contract law. Which amendment are you finding that in?
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Folks, I think you all you need to know is that this city has only 18K people. When you realize that and then see $80 million in unfunded liabilities etc is should be obvious that this was financial fustercluck that should have taken no one by surprise.

Note: If you bother to work out the math, realize that many of 18k are likely kids in school. I.e., not working or owning homes.

Fern

 

[Slew Foot]

Unions ruining America, one locality at a time.

 

[Darwin333]

They elected the folks who signed these in good faith so yes they should in fact foot the bill.

They had plenty of time to step in before this.

With declining revenue where exactly do you think they should get the money to pay them?

The fact is that most unions and politicians they negotiated with can do the basic math required to know that the deals they both signed would never be sustainable in the long term. What did they care anyway, they would both be gone by the time the math caught up with them. A ton of states/cities are in the exact same boat right now and the math is quickly catching up to them as well.

It doesn't matter what you or I think is right or wrong, the fact is a lot of people that are expecting X amount in pension and medical benefits will only receive a portion (if they are lucky) of what they were promised. This is simply the tip of the iceberg.

 

[Darwin333]

I find it funny that the political right has no problem violating Constitutionally protected contract law as soon as it comes to either public employees or unions.

I wasn't aware that the constitution outlined contract law nor was I aware that the constitution did not allow debt to be discharge in bankruptcy. I bet a bunch of banks are extremely interested in your outline of why bankruptcy is unconstitutional.

 

[spacejamz]

The sad part about these public employee pension problems is that most of these employees have been persueded to work for less than market wages in crappy jobs because of the insane bennies and pensions. Only to find out that not only are their jobs and pay shit, so are their bennies 🙁

Just another way of fleecing the working class. And it hasn't always been gov employees. Back before 401k's it was pretty common for company pension funds to disappear, happened to my dad. He worked 40yrs for a bank and was the most senior member of their pension fund and was vested for 400k in 1970's dollars when through a series of bank acquisitions in about 5yrs and a couple of paper bancruptcies in the itermediate banks wound up with less than 20k in his pension at retirement time

They can blame their union bosses who made their beds with their wheeling and dealing with the local politicians then...All of these union members have votes and this is the path they chose.

This is what happens when you stick your head in the sand when a problem that was known long ago is never addressed...

 

[KB]

I feel bad for the pensioners at first. They planned for their pensions to be there, they put money into it and spent like they would have a comfortable retirement. But then I remember: expecting the government to keep its monetary promise is like expecting that Nigeria prince to actually have 20 million dollars to give you. Giving additional money to government entities for the purpose of receiving later returns (i.e. Social Security), just gives the politicians more money to waste. They never save what they are supposed too, unions or no unions.

 

[Genx87]

This is a good thing. The more these stories happen. The more people will wake up and realize how cold and thoughless govt truely is.

 

[werepossum]

They can blame their union bosses who made their beds with their wheeling and dealing with the local politicians then...All of these union members have votes and this is the path they chose.

This is what happens when you stick your head in the sand when a problem that was known long ago is never addressed...

Probably true in this case, but GuitarDaddy is correct in the larger sense that one can, through no particular personal fault, end up shafted. And almost always the people in charge don't seem to be gritting their teeth there next to you.

I feel bad for the pensioners at first. They planned for their pensions to be there, they put money into it and spent like they would have a comfortable retirement. But then I remember: expecting the government to keep its monetary promise is like expecting that Nigeria prince to actually have 20 million dollars to give you. Giving additional money to government entities for the purpose of receiving later returns (i.e. Social Security), just gives the politicians more money to waste. They never save what they are supposed too, unions or no unions.

That's a valid point, but I still feel sorry for the pensioners.

 

[thraashman]

Not sure what this has to do with the "political right". This is a self-described "progressive" city in a fairly liberal state.

And I'm still looking for that part of the Constitution that has to do with contract law. Which amendment are you finding that in?
----------------------

Folks, I think you all you need to know is that this city has only 18K people. When you realize that and then see $80 million in unfunded liabilities etc is should be obvious that this was financial fustercluck that should have taken no one by surprise.

Note: If you bother to work out the math, realize that many of 18k are likely kids in school. I.e., not working or owning homes.

Fern

It's not an Amendment. There's parts of the Constitution that aren't Amendments
http://en.wikipedia.org/wiki/Contract_Clause

And I wasn't saying the city, I was referring to the political right on this forum who think that a company, city, state, federal government, whatever should be allowed to violate contracts if it involves unions or public employees.

 

[Fear No Evil]

To put things in perspective a bit, I wonder how many of the same people who are screaming that government should not be allowed out of its contract would also agree that if they defaulted on their mortgage or credit cards should not be allowed to declare bankruptcy. You signed an agreement to pay your credit cards or mortgage and no longer can, should you be forced to pay it anyway? Perhaps your children and immediate family should be required to pay for you if you cannot? How is that any different than asking taxpayers to pay more and bail out these people?

 

[actuarial]

Blaming the union for unfunded pension liability is like blaming the bank for someone being underwater on their mortgage.

 

[spacejamz]

It's not an Amendment. There's parts of the Constitution that aren't Amendments
http://en.wikipedia.org/wiki/Contract_Clause

And I wasn't saying the city, I was referring to the political right on this forum who think that a company, city, state, federal government, whatever should be allowed to violate contracts if it involves unions or public employees.

But all is okay when Obama does it when the fed bails out the likes of GM? His union buddies jumped in line ahead of those that were legally 'first in line' to collect.

 

[actuarial]

To put things in perspective a bit, I wonder how many of the same people who are screaming that government should not be allowed out of its contract would also agree that if they defaulted on their mortgage or credit cards should not be allowed to declare bankruptcy. You signed an agreement to pay your credit cards or mortgage and no longer can, should you be forced to pay it anyway? Perhaps your children and immediate family should be required to pay for you if you cannot? How is that any different than asking taxpayers to pay more and bail out these people?

If I declare bankruptcy I have to sell off my assets to pay my creditors. In this case, the city is not required to sell off its assets.

 

[Genx87]

It's not an Amendment. There's parts of the Constitution that aren't Amendments
http://en.wikipedia.org/wiki/Contract_Clause

And I wasn't saying the city, I was referring to the political right on this forum who think that a company, city, state, federal government, whatever should be allowed to violate contracts if it involves unions or public employees.

This doesnt have anything to do with this situation at all. Read your own link.

 

[Thump553]

But all is okay when Obama does it when the fed bails out the likes of GM? His union buddies jumped in line ahead of those that were legally 'first in line' to collect.

BS. If bankruptcy law was violated (and I saw no violations in that case from what I reviewed) then the aggrieved party would have a slam dunk win on appeal. Bankruptcy statutes are pretty specific and clear, especially on the order of priorities.

The rumor you posted is frequently circulated on rightwing blogs and is totally made up.

 

[ProfJohn]

^This. If all parties agreed to the contracts, it should be honored. Because some scumbag politicians and city employees might have used pension money for something else, it is not the fault of the unions.

You're right... except there is no money to pay them.

Why don't you whip out your check book and donate some money to the city to help them out.

 

[spacejamz]

BS. If bankruptcy law was violated (and I saw no violations in that case from what I reviewed) then the aggrieved party would have a slam dunk win on appeal. Bankruptcy statutes are pretty specific and clear, especially on the order of priorities.

The rumor you posted is frequently circulated on rightwing blogs and is totally made up.

No law was violated because the bond holders agreed to the deal laid out by the government which heavily favored the union.

I wonder what your sentiment would be if you were a GM Bond Holder when this deal was approved....

 

[ProfJohn]

Don't interpret this to mean I am pro-union, because I am not, but what about fire fighters?

When they are too old to fight fires you can find other jobs for them until they are old enough to retire.

Unless we feel that paying someone to fight fires for 30 years (age 20-50) is worth paying them for 50+ years (age 20-70)

 

[ProfJohn]

It's not an Amendment. There's parts of the Constitution that aren't Amendments
http://en.wikipedia.org/wiki/Contract_Clause

And I wasn't saying the city, I was referring to the political right on this forum who think that a company, city, state, federal government, whatever should be allowed to violate contracts if it involves unions or public employees.

I suggest you read up about the auto bailout and how Obama and Co screwed over bond holders and put the unions first.

Ironically most of the bond holders were other government union workers...

 

[actuarial]

You're right... except there is no money to pay them.

Why don't you whip out your check book and donate some money to the city to help them out.

They are not required to sell off their assets to cover the debt. So yes, there is money to at least partially pay them, they just don't have to do it.

Can I just rack up a bunch of credit card debt and turn around and declare bankruptcy, but then keep all my assets?

 

[actuarial]

When they are too old to fight fires you can find other jobs for them until they are old enough to retire.

Unless we feel that paying someone to fight fires for 30 years (age 20-50) is worth paying them for 50+ years (age 20-70)

Well maybe they should have thought of that BEFORE agreeing to do it.