The Fourteenth Banker Blog

August 10, 2010

Second Estate Issues

Filed under: Running Commentary — thefourteenthbanker @ 7:53 AM

The Second Estate, government, has de-linked itself somewhat naively from the Third Estate, the broader private sector public.

This is the situation we find ourselves in according to Mish.  Public Pensions are becoming such a burden on the state and taxpayers and are so disproportionate with taxpayer retirement security that conflict is sure to erupt.

I’m not saying that trusting government employees are any less screwed than the rest of us. They depended on future promises that are contingent on general prosperity. The politicians squandered the money in the good years and over-promised to curry favor. What is new?



  1. Well, here we have Right Wing Misch. There is a comment by a union retiree that he feels stolen from. Mish tells him not at all stolen from,indeed the retiree is the thief . He belonged to a union that extorted the retiree some ill gotten gains. Now MIsch himself must belong to a number of extortion devices himself using Misch’s ideas.

    Here we have another irreconcilable difference that kills the political social arrangement.

    Pension fund’s across the board are underfunded. Made far, far worse by the financial collapse. This fact has been around for many years. My company was a union company subject to many multi employer pension plan agreements. Under MEPPA signatories are generally jointly liable for shortfalls in pension plan fundings. Consequently, if one major signatory failed and could not fully fund it’s employee liability, the others were on the hook. The ususal course in such failures was for the surviving signatories to take on the most senior pension plan employees among themselves to avoid an assessment if they were terminated from the industry. In practice, this meant that very junior pension plan liability employees got laid off. With a wink , wink from the unions. All the while though short funding continued to build and was covered by ridiculous rate of return assumptions by the union pension plan managers.

    State pension plan funds are usually amalgams of county and municipal employees as well. Teachers are almost all hired outside state sovereignty by school districts which can indeed be bankrupt. There are legal arrangements similar to MEPPA for state segment employees. I imagine it might well be possible to have a judicial special assessment against real estate in school districts affected in a manner not too dissimilar from MEPPA. Does anyone have an understanding about how county ,municipal and school district proportionate pension shortfall’s could be collected by judicial order?

    Virtually everyone in the US, directly or indirectly relies on the private corporate sector or the civil service sector for their livlihoods. There has been a Noah’s flood of angst against the greed and deceit of the private corporate sector. Obviously the civil service sector is just as greedy and deceitful.

    Everyone, to survive decently must rely on greed and deceit to survive it seems. Looking out for #1. Remember the highly popular book on looking out for #1 in the seventies and eighties?

    The end solution out of necessity will be nationalist, xenophobic and mean. One side must put down the other side to survive once we reach the despicable loss of commonwealth suffered in the US.

    Comment by Jerry J — August 10, 2010 @ 4:00 PM | Reply

  2. Here is another source of grief for schools and municiple systems that hasn’t gotten much air time – deliberate fraud, or the equivalent – by the Big Banks of Wall St. Gretchen Morgenson, and now Matt Taibbi, point out some of the schemes.

    Yes, Jerry’s right about the deliberate underfunding of pensions, but they can’t all be painted with the same brush, either. My ex- and my step-son both receive pensions they would not have had if not for their unions.

    It appears to me that all kinds of organizations are capable of seeing any pool of money, corporate or municipal, as a cookie jar to be rifled. But we don’t need no steenking watch-dogs around here.

    Comment by Sandi — August 12, 2010 @ 5:10 PM | Reply

  3. Ooops, meant to post the link to Taibbi’s piece

    Comment by Sandi — August 12, 2010 @ 5:21 PM | Reply

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