Fair that Detroit bankrupcy will cut retiree pensions?

[Fern]

I can't belive FEDs wont bail these cities out. Trillions to Wall Street banks and nothing to main street? Doesn't sit right with me. Not to mention these troubled cities whats owed is about half to banks anyway. So they'd be bailing out their banking buddies somewhat.

A few things:

1. There's only one Wall Street to bail out. There are many 'Detroits'.

2. The Treasury/Fed can manipulate money ensuring WS makes tons thus guaranteeing the treas/Fed their bailout loans back. Can't do that with Detroit.

3. Political contributions from Detroit - nil -. Political contributions from Wall street - priceless -

4. Washington is infested with (former) WS honcho's who are in a position to be 'beneficial' to WS. Detroit? Not so much, actually not at all.

Fern

 

[Patranus]

I can't belive FEDs wont bail these cities out. Trillions to Wall Street banks and nothing to main street? Doesn't sit right with me. Not to mention these troubled cities whats owed is about half to banks anyway. So they'd be bailing out their banking buddies somewhat.

There is nothing to bail out. The city is a shithole. Productive people aren't coming back to Detroit. It would just be throwing good money after bad.

 

[Zebo]

There has been many wall street bailouts and the FED is still bailing them out buying all their MBS' on books.

 

[Jhhnn]

You're linking the Dailykos?

Yet in another thread you're expressing public outrage over an article by Peggy Noonan because you claim she's biased?

Now I don't care who you are, that's funny.

Fern

Noonan writes opinion pieces based on hearsay, so-called "leaked transcripts" obviously being hearsay. The events described on Kos are a matter of public record.

Saying that they're "the same" is the usual false equivalency of Denial.

 

[OGOC]

I can't belive FEDs wont bail these cities out. Trillions to Wall Street banks and nothing to main street? Doesn't sit right with me.

Bailing out Wall Street shouldn't sit right with you either, and it shouldn't have happened.

i can understand bondholders being shafted at pennies on the dollar.
and maybe even current workers for FUTURE pension promises.

but current retirees?!
i didnt even think it was possible?!

and i think obviously unfair!
they put in their time and work.

Tell that to the non-union workers at Delphi while their union counterparts at GM got sweet deals, all while shafting bondholders who should have been paid first.

January 2, 1962 was the last day that a Republican held the mayor’s office, and the city has been under uninterrupted Democrat and union rule ever since. What was once such a powerful hub of industry and prosperity has caved under the weight of big government and big union policies. Sooner or later liberals run out of other peoples money.

 

[piasabird]

I started saving some of my own money separate from my partially funded pension. I call it a pension but I put money in it and the state is suppose to match it. So it is 50% my money. It is nowhere near enough money for me to survive. I work in Education so there is a Penalty of up to 2/3rds of my SS. (Federal Law) So I am trying to save some extra money on the side, but there is just so much money to go around. I may have to beg on the street.

 

[s0me0nesmind1]

Bailing out Wall Street shouldn't sit right with you either, and it shouldn't have happened.


Tell that to the non-union workers at Delphi while their union counterparts at GM got sweet deals, all while shafting bondholders who should have been paid first.

DAMNIT! I was just going to post that! BAAAAAAAAAH!

 

[boomerang]

I may have to beg on the street.

That street may become crowded.

 

[Exterous]

I can't belive FEDs wont bail these cities out. Trillions to Wall Street banks and nothing to main street? Doesn't sit right with me. Not to mention these troubled cities whats owed is about half to banks anyway. So they'd be bailing out their banking buddies somewhat.

This case will set the stage for other city/state pension plan problems. If you bail the first one out all the others will want in on it and some of them are pretty bad (Illinois with its 40% funded pension and a $100bn shortfall). I hate to say it but an easy bailout would just continue the cycle of poor accounting/investing (assuming 8% every year and no shortfall cushion) and poor funding of plans. The State constitutional law ruling will likewise have wide ranging implications as many states have the same provision

IMO the best case is everyone loses some and Detroit gets a small bailout. Pensioners and bond holders feel some pain and get angry holding the politicians accountable in the future for funding what they promise (hopefully) and the retirees/bond holders aren't completely screwed.

 

[Spungo]

No, I don't think so.

Detroit has two plans. One is a Defined Benefit Plan ("DBP") and the other is a Defined Contribution Plan ("DCP"). There is no obligation for any govt employee to participate in the DCP.

I have never seen a DBP that had employee contributions. I'm not going to research it, but I don't think that is allowed under US law. This would be the pension plan that would be 'cut'. This is the traditional type of pension plan (meaning typically very generous), and most of us will never benefit from one. I know I won't.

My dad had a defined benefit pension and he paid a huge amount of money into it. It amounted to something like 5-10% of his gross income for about 32 years. The defined amount that he gets in return was something like 60% of his income based on the best X number of years within the last 10 years of employment. He ended up dying after only a few years of retirement but my mom will continue to get his pension until she dies.

I can understand taking away the defined benefits but at the very least it would nice for the government to bail out the pension to refund the money workers paid into it.

 

[s0me0nesmind1]

"Ahh don't worry honey, spend all our money! We have the government backing us with THEIR retirement. What could go wrong?"

Toolbags.

I hope they all fall to shambles as I sit here saving 20%+ of my paycheck to try and max out my 401k yearly. Blow me.

 

[s0me0nesmind1]

I can understand taking away the defined benefits but at the very least it would nice for the government to bail out the pension to refund the money workers paid into it.

This and ONLY this I can agree with.

 

[bshole]

I hope they all fall to shambles as I sit here saving 20%+ of my paycheck to try and max out my 401k yearly. Blow me.

And when the government comes around in 25 years and decides to raid your 401k, what do you do then? That is what happened in Greece you know. Don't for a second believe that the government can't or won't take much if not all of that saved money if it decides it needs to.

 

[s0me0nesmind1]

And when the government comes around in 25 years and decides to raid your 401k, what do you do then? That is what happened in Greece you know. Don't for a second believe that the government can't or won't take much if not all of that saved money if it decides it needs to.

....What in the fuck are you smoking? You honestly don't have a single clue what you are saying.

I award you no points. And may god have mercy on your soul.

 

[bshole]

....What in the fuck are you smoking? You honestly don't have a single clue what you are saying.

I award you no points. And may god have mercy on your soul.

oh..... but what about this?

Recent evidence suggests government officials continue to eye the multi-trillion dollar private retirement savings market, including IRAs and 401(k) plans, eyeing the opportunity to redistribute private retirement savings to less affluent Americans and to force the retirement savings out of the private market and into government-controlled programs investing in government-issued debt...Since 2010, the U.S. Treasury Department and the Department of Labor have been holding combined hearings on various plans designed to introduce government-mandated retirement plans and investment options, including government annuities invested primarily in U.S. Treasury debt, into the private retirement savings market.

“This hearing was set up to explore why Americans are not saving as much for their retirement as they could,” explained National Seniors Council National Director Robert Crone, describing a recent Treasury-Labor hearing held in the Labor Department’s main auditorium.

“However it is clear that his is just the first step toward a government takeover. It feels like the beginning of the debate over health care and we all know how that ended up.”

You are living in a fantasy world if you think that the government does not have the power to access and take some or all of your 401k. Wait 20 years when the SS crises is peaking, the government will be so desparate then who knows WHAT they will do?

Retirement is an American's reasonable expectation. We put money into investment plans so that our work today funds our hard-earned leisure of tomorrow.

But many in Washington see our investment accounts not as the expressions of well-planned, disciplined decisions but as untapped reservoirs of wealth they can drain to fix the problems that they caused.

The tax protection that 401(k)s have now can be wiped out by grasping politicians who refuse to do what's right, which is to severely cut spending.

The war on retirement, particularly 401(k)s, is quiet now. But that's because it's a cold war.
And like the postwar tensions between the East and West, it could erupt at any time into a hot war.

One group of retirement plan professionals is warning that the hostilities might be closer than many of us think. The American Society of Pension Professionals and Actuaries launched on Monday, according to Reuters, "a media campaign intended to educate U.S. employers and workers that the federal government might consider changing the tax benefits of retirement savings accounts."

"In plain English," said Gingrich and Ferrara, "the idea is for the government to take your retirement savings in return for a promise to pay you some monthly benefit in your retirement years."

Read More At Investor's Business Daily: http://news.investors.com/ibd-edito...-the-table-for-fiscal-cliff.htm#ixzz2Zn6MNmxR
Follow us: @IBDinvestors on Twitter | InvestorsBusinessDaily on Facebook

 

[s0me0nesmind1]

oh..... but what about this?




You are living in a fantasy world if you think that the government does not have the power to access and take some or all of your 401k. Wait 20 years when the SS crises is peaking, the government will be so desparate then who knows WHAT they will do?

Taking away tax benefits (Which in reality, is simply delaying the tax payments until retirement) is not taking your money. It is simple forcing owed income tax at the time it was earned. Perhaps reading articles and understanding general finance would be of value to you?

 

[bshole]

You responded before I was done editing my post!

"In plain English," said Gingrich and Ferrara, "the idea is for the government to take your retirement savings in return for a promise to pay you some monthly benefit in your retirement years."

Read More At Investor's Business Daily: http://news.investors.com/ibd-editor...#ixzz2Zn6MNmxR


I live in fear of the exact scenario outlined above happening. It seems inevitable.

 

[Darwin333]

While I agree with your sentiment the reality is if Detroit wants access to future credit markets at borrowing rates that are not discouragingly high they are going to have to do something, anything to restore faith with lenders and investors. Otherwise any recovery will be prolonged and difficult. However than again loss of all faith by investors and lenders would force the city work within its means and limits its ability to borrow stupidly to fund activities it knows are not sustainable in the long term.

Shrug, their borrowing costs are going to be sky friggen high regardless. They are far better off keeping whatever assets that may help them go forward than they are selling them and giving the bondholders a few % of what they are owed.

 

[Darwin333]

Yeh, well, here's what pensioners can expect from Gov Snyder & his legal team-

http://www.dailykos.com/story/2013/...wn-by-judge-for-cheating-good-people-who-work

Pure sleaze.

Damn, that is pretty darn sleazy.

OTOH, looks like the judge is looking to get her 20 minutes in the spotlight:

“It’s cheating, sir, and it’s cheating good people who work,” the judge told assistant Attorney General Brian Devlin. “It’s also not honoring the (United States) president, who took (Detroit’s auto companies) out of bankruptcy.” […]

Aquilina said she would make sure President Obama got a copy of her order.

“I know he’s watching this,” she said, predicting the president ultimately will have to take action to make sure existing pension commitments are honored.

Out of curiosity, if it is deemed unconstitutional for Detroit to file bankruptcy and the state says "fuck em", where do they get the money from? IOU's maybe?

 

[werepossum]

My dad had a defined benefit pension and he paid a huge amount of money into it. It amounted to something like 5-10% of his gross income for about 32 years. The defined amount that he gets in return was something like 60% of his income based on the best X number of years within the last 10 years of employment. He ended up dying after only a few years of retirement but my mom will continue to get his pension until she dies.

I can understand taking away the defined benefits but at the very least it would nice for the government to bail out the pension to refund the money workers paid into it.

I could support the federal government bailing out Detroit workers to the point of putting in what money they personally put in and have not yet drawn out.

And when the government comes around in 25 years and decides to raid your 401k, what do you do then? That is what happened in Greece you know. Don't for a second believe that the government can't or won't take much if not all of that saved money if it decides it needs to.

The Democrats have already proposed a "one-time" 10% levy on private retirement accounts. It went nowhere at the time, but I am sure we're going to have regular taxes on such plans in the future. We'd probably have them now if the Dems were sure they wouldn't take a crippling political hit and if the Pubbies were sure the Dems would be blamed.

 

[BlahBlahYouToo]

http://money.cnn.com/2013/07/18/news/economy/detroit-bankruptcy/index.html?hpt=hp_t2

Detroit filed for bankruptcy Thursday afternoon, becoming the nation's largest public sector bankruptcy. The move could slash pension benefits to city workers and retirees, and leave investors holding the city's debt with only pennies on the dollar.


i can understand bondholders being shafted at pennies on the dollar.
and maybe even current workers for FUTURE pension promises.

but current retirees?!
i didnt even think it was possible?!

and i think obviously unfair!
they put in their time and work.

is it fair that creditors and other involved parties get nothing when an individual or corporation files for bankruptcy?

 

[BlahBlahYouToo]

I'm a republican, but I'm not going to blame the Democrats for a problem that largely wasn't of their creation. Any city who lost more than half their tax base like Detroit did when the big 3 moved production elsewhere would be in serious trouble. Trying to place blame is pointless. There is more than enough to go around.

what happened to Pittsburgh after the collapse of the steel industry?

 

[DucatiMonster696]

Shrug, their borrowing costs are going to be sky friggen high regardless. They are far better off keeping whatever assets that may help them go forward than they are selling them and giving the bondholders a few % of what they are owed.

If Detroit wants confidence restored quickly to its lenders then it will have to attempt to make bondholders partially or completely whole. Otherwise they are going to prolong their misery even further into the future.

 

[OGOC]

You are living in a fantasy world if you think that the government does not have the power to access and take some or all of your 401k. Wait 20 years when the SS crises is peaking, the government will be so desparate then who knows WHAT they will do?

Government took people's gold and banned them from owning it for 30 or so years. I have no doubt government would find a way to take 401Ks if they could.

 

[Fern]

-snip-

I can understand taking away the defined benefits but at the very least it would nice for the government to bail out the pension to refund the money workers paid into it.

If the govt employees contributed to the DBP then that money is in there. I.e., that portion of the pension plan IS funded, so it seems to me that they will get it.

It would be the city of Detroit's share of funding that was not actually made. That's the money that is not in the plan. Since that money is not in the plan the employees will (likely) not receive it.

I.e., no reason for any bailout to repay the employees for their pension contributions. They should be getting it all back, plus any investment income. (Assuming it wasn't lost by poor investment. Would be ironic if the pension plan invested in city bonds. Sorry to be 'mean', but if that happened I'd LOL.)

Fern