Middle class - worse off than the numbers show

[boomerang]

Maybe I should have gotten into government work. After 25 years you get to retire with a healthy pension and benefits. Imagine starting at 25 and having the chance to retire at 50. All on the public dime.

Don't beat yourself up too bad. The golden goose that is government employment is not even remotely sustainable.

 

[spacejamz]

Maybe I should have gotten into government work. After 25 years you get to retire with a healthy pension and benefits. Imagine starting at 25 and having the chance to retire at 50. All on the public dime.

That bubble you will hear bursting soon will be the unfunded pension liabilities of city, state and federal government workers...there is no telling how far those cans have been kicked down the road but soon or later, it will be time to pay the piper...

 

[Engineer]

Don't beat yourself up too bad. The golden goose that is government employment is not even remotely sustainable.

Hence why new employees over the last few years in many state government jobs have a much worse retirement. Example: My wife missed the old state retirement system by 1 year. Under old one, she could pull in over $1,200 at age 62. Under new system, she will pull in $362 at 62 (both figures per month).

YMMV.

 

[Mai72]

That bubble you will hear bursting soon will be the unfunded pension liabilities of city, state and federal government workers...there is no telling how far those cans have been kicked down the road but soon or later, it will be time to pay the piper...

I understand it's not sustainable. Tell me of one politician that will even touch this topic? They will not even touch it because they fear that they will have difficulty during election time.

Maybe it will get so bad that something drastic will have to happen. Regardless of the public outcry. The NJEA has stated that they will sue Christie because he's determined to take money out of the NJ teacher pension fund.

We are only 3 billion in debt!

 

[Mai72]

Hence why new employees over the last few years in many state government jobs have a much worse retirement. Example: My wife missed the old state retirement system by 1 year. Under old one, she could pull in over $1,200 at age 62. Under new system, she will pull in $362 at 62 (both figures per month).

YMMV.

Huge difference. Do you live in a southern state?

 

[Engineer]

Huge difference. Do you live in a southern state?

As my location under my avatar states, I live in a 'semi-southern' state (Kentucky).

By the way, Kentucky had one of the worst funded public pensions in the nation a few years ago. Not sure now.

My wife has to contribute 6% of her income to the pension on top of that. Would much rather have a 401k type plan!

 

[Mai72]

As my location under my avatar states, I live in a 'semi-southern' state (Kentucky).

Ah. I didn't notice. Sorry.

The retirement adjustment for state workers where you live would never fly in New Jersey. The unions control my state. Hopefully, they will be forced to change because I don't see things improving. People and businesses have been leaving the state in droves.

Christie on pension grab:

http://www.nj.com/politics/index.ss...gainst_pension_plan.html#incart_most-comments

Engineer,

what do people normally pay in property taxes every year in your state? In NJ the average is $6k and can be as high as $14k.

Thanks.

 

[Engineer]

Engineer,

what do people normally pay in property taxes every year in your state? In NJ the average is $6k and can be as high as $14k.

Thanks.

Lexington has just over a 1.15% max property tax rate or so. Somewhere around $1900+ per year for my home. That pays for trash and the rest of the city services (but not sewer/water/etc). It can be lower as there are some sections that have private trash pickup (I would prefer) and other services provided by someone other than the city. Just depends on city location.

 

[Matt1970]

Lexington has just over a 1.15% max property tax rate or so. Somewhere around $1900+ per year for my home. That pays for trash and the rest of the city services (but not sewer/water/etc). It can be lower as there are some sections that have private trash pickup (I would prefer) and other services provided by someone other than the city. Just depends on city location.

You are lucky. Here in NY we pay right at 3% and that is on top of our state income tax, the highest gas tax in the country and I think tied for #2 in state income tax.

 

[Jhhnn]

But the Democrats around here keep saying that the problem was that the stimulus wasn't bigger. I can only assume that means that if the stimulus were bigger, then more would have trickled down.

The stimulus & the bailout mostly saved the financial sector. That's good for all of us- it's not like we don't need it. Are you trying to say that there should have been no stimulus, or that it should have been structured differently with a lot more direct govt employment?

What is it that could have been done differently to make it better?

 

[Matt1970]

The stimulus & the bailout mostly saved the financial sector. That's good for all of us- it's not like we don't need it. Are you trying to say that there should have been no stimulus, or that it should have been structured differently with a lot more direct govt employment?

What is it that could have been done differently to make it better?

Like I mentioned in the other thread, it could have paid out faster, but that sun you into another huffy tirade about republicans and your usual trickle down whining. If the economy needed the money you don't leave it waiting years to get it.

 

[xj0hnx]

In "The Millionaire Next Door" the author says that if you want to be wealthy you need to sacrifice. You only spend money on things you absolutely need.

The wealthy don't have to sacrifice, if they have to sacrifice they aren't wealthy.

If you had a chance to buy a $10k Nissan Sentra or a $40k BMW what would you do? Both cars are going to get you to the same places. The difference is the BMW is a high status car. Most people would choose the BMW because they are concerned with status. In turn, they will probably never be rich because they are too concerned with status. The other person who is saving and investing diligently is more likely to pick the cheaper car.

If you can afford the $30,000 difference then chances are it wouldn't matter that much, if you can't, then yea, you're dumb if you spend the extra just because.

 

[Spungo]

The stimulus & the bailout mostly saved the financial sector. That's good for all of us-

No. The bailout was to save the uber rich at the expense of everyone else.

With no bailout:
-commercial banks begin bankruptcy restructuring
-bond holders and stock holders are completely wiped out
-banks resume their normal operations

With a bailout:
-no bankruptcy
-stock holders lost nothing
-bond holders lost nothing
-banks remain poorly capitalized because they still have worthless garbage on their books
-4 trillion dollars of QE later and they still fail their fed mandated stress tests


You can look at GM as a perfect example of why bailouts are worse than bankruptcy. If GM actually went bankrupt and all of its union pension obligations were gone, they could restructure and rise to be a great American company once again. None of that happened. They're still drowning in hundreds of billions of dollars worth of pension obligations, so it's impossible for GM to make a car that is the same quality and price as a Honda or Toyota. It's a mathematical certainty that GM will go bankrupt again. There's no way they can compete when they're encumbered with debt. Likewise, our banks are just as unstable today as they were in 2007. Since they never went bankrupt, they still have tons of toxic shit on their books and lots of interest rate derivatives that will sink them if interest rates rise. Bailing companies out makes our system less stable.

 

[Victorian Gray]

You can look at GM as a perfect example of why bailouts are worse than bankruptcy. If GM actually went bankrupt and all of its union pension obligations were gone, they could restructure and rise to be a great American company once again. None of that happened. They're still drowning in hundreds of billions of dollars worth of pension obligations, so it's impossible for GM to make a car that is the same quality and price as a Honda or Toyota. It's a mathematical certainty that GM will go bankrupt again. There's no way they can compete when they're encumbered with debt. Likewise, our banks are just as unstable today as they were in 2007. Since they never went bankrupt, they still have tons of toxic shit on their books and lots of interest rate derivatives that will sink them if interest rates rise. Bailing companies out makes our system less stable.

You seem to have wildly inflated the pension obligations of GM. The most recent figures that I've been able to find is that it stands at around $71 billion for the U.S. and around a $135 billion world wide. A hefty figure indeed but certainly not 100's of billion and note that they were able to reduce the American numbers by $28 billion in 2012? (the article is from late 2013 and refers to the reduction in the previous year)

http://www.reuters.com/article/2013/09/27/us-autos-gm-pensions-idUSBRE98Q16520130927

 

[Jhhnn]

No. The bailout was to save the uber rich at the expense of everyone else.

With no bailout:
-commercial banks begin bankruptcy restructuring
-bond holders and stock holders are completely wiped out
-banks resume their normal operations

With a bailout:
-no bankruptcy
-stock holders lost nothing
-bond holders lost nothing
-banks remain poorly capitalized because they still have worthless garbage on their books
-4 trillion dollars of QE later and they still fail their fed mandated stress tests


You can look at GM as a perfect example of why bailouts are worse than bankruptcy. If GM actually went bankrupt and all of its union pension obligations were gone, they could restructure and rise to be a great American company once again. None of that happened. They're still drowning in hundreds of billions of dollars worth of pension obligations, so it's impossible for GM to make a car that is the same quality and price as a Honda or Toyota. It's a mathematical certainty that GM will go bankrupt again. There's no way they can compete when they're encumbered with debt. Likewise, our banks are just as unstable today as they were in 2007. Since they never went bankrupt, they still have tons of toxic shit on their books and lots of interest rate derivatives that will sink them if interest rates rise. Bailing companies out makes our system less stable.

Pure hogwash. The FDIC & the FSLIC simply did not have the money to provide a seamless transition in their usual fashion. Banks aren't under capitalized at all thanks to ongoing QE.

Toxic assets? The FRB swallowed them at a steep discount because they could, because their balance sheet is merely an abstraction.

QE doesn't make the situation any less stable, at all. That's part of how it got stabilized all along. They buy assets with cash, just like investors.

GM? Puh-leeze. Years ago, when sales were hot & workers threatened to strike, management convinced 'em to keep working not for more money but for better pensions they knew full well would never be paid. Bonuses & stock options all around, let somebody else worry about it down the road. I got mine. So long, suckers.

The notion that GM going bust wouldn't have brought down much of the industry is delusional, because of the way that parts production has been outsourced. Auto companies are no longer vertically integrated, but their suppliers, like Delphi, are horizontally integrated into the system, supplying many brands. GM goes bust, Delphi & some others go bust too, and production halts for other makers who depend on their parts. They all run on borrowed money, having been looted & financialized by companies like Bain.

 

[dmcowen674]

Middle class - worse off than the numbers show

http://finance.yahoo.com/blogs/dail...orse-off-than-the-numbers-show-181906188.html

I've wondered about this for some time, and now an article shows up showing that the gains at the top are skewing the averages (but not the medians) of the middle class....the declining middle class.



Wow, middle class looks great in that respect.....but wait, there's more...much more....



Well shit, there went my sunshine....



Bah, they are wrong. There is no way that we are declining, especially after gaining 6 million McService jobs. I demand an investigation.....get those people back in here...turn those machines back on...turn those machines back on!!! (from Trading Places).

This shouldn't be a surprise.

The Oil Thugs use the same skewing with Gas prices.

Because they are paying $3 in Texas they say everyone is paying $3.

 

[ivwshane]

Come down to Houston, there are people who live like that down here. Cinco Ranch, Katy, Woodlands all have high dollar areas.

Personally my income and wealth have been increasing since January 2009. I'm currently making 40% more than I did in December 2008. I just interviewed for another position with the company and it should come with a 10%-15% salary increase due to it not being an exempt (paying overtime) position.

You must have a really small penis or be so insecure with yourself that almost every thread you post in includes a personal antidote about your success that doesn't mean shit to the discussion at hand

 

[dmcowen674]

Originally Posted by Londo_Jowo
Come down to Houston, there are people who live like that down here. Cinco Ranch, Katy, Woodlands all have high dollar areas.

Personally my income and wealth have been increasing since January 2009. I'm currently making 40% more than I did in December 2008. I just interviewed for another position with the company and it should come with a 10%-15% salary increase due to it not being an exempt (paying overtime) position.

You must have a really small penis or be so insecure with yourself that almost every thread you post in includes a personal antidote about your success that doesn't mean shit to the discussion at hand

See what I mean about them Texans

 

[Spungo]

You seem to have wildly inflated the pension obligations of GM. The most recent figures that I've been able to find is that it stands at around $71 billion for the U.S. and around a $135 billion world wide.

It depends on how the accounting is done. Pension obligations are an odd expense because they are charged every year. It doesn't work the same way as other business expenses.

Suppose I buy a truck for my business. The cash cost is $50,000 and I plan to use it for 5 years. On the balance sheet, I write it down as a $10,000 expense every year for the next 5 years. Understanding how things show up on a balance sheet, how would you find the total cost of pension obligations? You can't. The pension obligation might be $10,000 per year until the end of time. If you expect the company to exist for another 5 years, you could say the total pension obligation is $50,000. If you think the company will be around for 10 years, it would be $100,000.

Things like pensions generally show up on the balance sheet as "other liabilities." If we look at GM's balance sheet, the other liabilities are about 8.5 billion per year.
https://www.google.com/finance?q=NYSE:GM&fstype=ii&ei=hXmWU4DVN-KYiQKNoQE
Pensions sometimes also go into the "long term debt" category. There are a lot of different ways the accounting can be done, but it always shows up in the "total liabilities."

I expect GM to be bailed out again and again and again, so I assume those pension liabilities will go on for many years.
I'm not saying GM is uniquely burdened with pensions. Lots of companies have huge pension liabilities. The difference is that companies like Toyota are not unionized, so they can reduce pensions or do lump sum buyouts to reduce the burden as it becomes a problem. GM is heavily unionized, so there's almost no way to reduce the pension burden without going through bankruptcy. GM workers would go on strike, and I don't blame them, but the strike would quickly lead to bankruptcy, then bailout, and we get to start the cycle all over again.


There are similar accounting arguments related to social security and medicare. People on the right generally assume Americans will live a long time, and that's how we get estimates from 100 to 200 trillion dollars of liabilities as baby boomers retire. Liberals tend to assume everyone will be dead before age 70, so cost estimates from the left tend to be much lower. Neither argument is less valid than the other. Nobody knows how long people will live or what future governments will do about these expenses. Maybe the next president will be completely insane and the government's unfunded liabilities will shoot up to 500 trillion. Maybe the next president will somehow abolish medicare and we would have very few unfunded liabilities. Anything is possible.

 

[Zaap]

The wealthy don't have to sacrifice, if they have to sacrifice they aren't wealthy.

Just curious, did you actually read the quote you were responding to?

 

[xj0hnx]

Just curious, did you actually read the quote you were responding to?

Um ...yea, and?

 

[Olikan]

A larger income means that most people will just spend more. They don't necessarily save anything. My father was making $150k at one point.

not true, the income inequality, comes mostly from the rich not spending enouth... and 150k is not rich

the whole concept of the new deal, was to borrow money from the rich to give to small classes...
the new deal didn't needed to exist, if the rich cared to build bridges, roads and stuffs

 

[Spungo]

Pure hogwash. The FDIC & the FSLIC simply did not have the money to provide a seamless transition in their usual fashion. Banks aren't under capitalized at all thanks to ongoing QE.

If the banks declare bankruptcy, all of the toxic assets are wiped clean and the bank is perfectly solvent again. The only down side is that the bank's bonds and stocks would go to 0, and oligarchs like Warren Buffet would lose billions of dollars. The depositors would lose nothing.
The point of QE was to keep the banks solvent without driving their stock prices to zero. It was a gigantic welfare payment to the richest of the rich.

QE doesn't make the situation any less stable, at all. That's part of how it got stabilized all along. They buy assets with cash, just like investors.

QE teaches bankers that there are zero consequences for imprudent business practices. This creates a huge moral hazard. Why bother trying to maintain a well capitalized bank if the fed will backstop everything? If something risky makes money, the bank keeps the money. If it falls flat, the fed promises to buy the toxic assets at par. This strongly encourages banks to screw around.

The notion that GM going bust wouldn't have brought down much of the industry is delusional, because of the way that parts production has been outsourced. Auto companies are no longer vertically integrated, but their suppliers, like Delphi, are horizontally integrated into the system, supplying many brands. GM goes bust, Delphi & some others go bust too, and production halts for other makers who depend on their parts. They all run on borrowed money, having been looted & financialized by companies like Bain.

So what you're saying is that losing a company representing 20% of car sales would cause car sales to immediately and permanently drop by 20%. No other car company would see increased sales, no other car company would build new factories, no other car company would open more dealerships. Yeah, that makes sense.

 

[Cozarkian]

So what you're saying is that losing a company representing 20% of car sales would cause car sales to immediately and permanently drop by 20%. No other car company would see increased sales, no other car company would build new factories, no other car company would open more dealerships. Yeah, that makes sense.

Actually I think he was trying to make an even more outlandish claim than that. It sounds to me like he was saying that losing company representing 20% of car sales would result in a greater than 20% loss of car sales because parts manufacturers would go bankrupt too and other manufacturers wouldn't be able to buy parts to keep selling cars.

 

[Zaap]

Um ...yea, and?

You trotted out one of those trite, meaningless statements that people often cough up... when what you quoted didn't have anything to do with "the wealthy" (let alone a meaningless statement about them) but about someone who WANTS to be wealthy. (See, that means they *aren't* already.) Nothing really complicated at all about it.