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The Deputy and Teacher: The Economy and Their Pension


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Guest dealraker

I go on a ski trip (I still snowboard at 55 and it ain't nuthin' pretty) each year with a group from Knoxville TN.  I had this (over a couple of beers) conversation with a deputy from Knoxville which I will try to sum up quicky.

 

His view: "I don't care what the economy does!  I have a pension that is tied to local taxes and it is guaranteed!  It will be x amount and it is written into the law there.  So I have nothing to worry about.  **** the economy."  He isn't a butthole but his economic arrogance (several of us) caught struck of us who work in the private business world as being quite arrogant. 

 

I have a school teaching family member who is part of a group going down to Raleigh, NC to march against Bev Perdue because "She didn't give us our raise this year....and by damn we always get a raise!  They just don't appreciate us!"

 

Slowly but surely people in these groups above are going to experience one of two things: Either their pension benefits will be cut or they will themselves pay for their own pensions via much, much, much, much, much, much higher taxes.

 

The local government where I live is rapidly buying up real estate of bankrupt businesses to expand.

 

I am a liberal democrat!  But I am a staunch believer in Charlie Munger's republican economics!  Anyone with a brain can look out and see that what is happening in this country DOES NOT WORK!

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I think the public sector in most cities needs to be restructured, they feel the impact of the recession in terms of layoffs and furlows, but there is too much overtime and an entitlement culture by those who are high enough to avoid these such things. I think alot more things need to be outsourced using a blind low bid strict quality setup.

 

When you have civil employees saying they dont care about the Economy, you have a problem. Its like auto suppliers with long term contracts saying they dont care about the fall in car volumes. Eventually it will effect them one way or the other.

 

The pension issue will be a nightmare. Roger Lowenstein had a good book about it. GM first and New York and California next. Im probable the most liberal person on this board, but Cops, Fire Fighters and Nurses should be making $200k due to overtime. Outside of Police and Fire FIghters young retirements shouldnt be on the tax payers dime.

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Guest dealraker

Myth, you have no clue how much what you just wrote is correct.  Within the school system, something I used to have a role within in my area, today the "connection" culture still allows (no matter what you read this is still happening) "double dipping."  Now they get around the "no doubble dipping" by simply not employing those double dippers full time.  So what you have is a retired principal getting a classroom and is pay is huge and his pension still there and he's not considered full time- but is working full time (yes they work more than the contract says).  And of course the 100 young teachers that had jobs 2 years ago are on the right side of our paychecks in the deductions section because they got laid off.  They, of course, were costing 1/3rd that of the retired/rehired well-connected bunch.

 

In the US public sector where performance is a low priority issue it is all about connections.  I used to be included in that culture and still could, but it is something I don't think we'll ever rid ourselves of.  We have all these guys and girls in our community who retire from this one large business where the pension was a wonderful thing.  But it didn't pay health insurance.  So what do these intelligent "system milkers" do?  They get a job with the schools for a couple of years in their early 50's.  They drive a bus for the handicapped kids, or they assist the school in one way or another for a couple of years and then WHAM BAM!  Society, i.e. "taxes," gets to pay their health insurace from now till the end of their time here on the face of the earth.

 

Milk it baby.

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Guest misterstockwell

Pensions are poison. Every government employee should be responsible for their own retirement just as most other Americans are responsible for their retirement saving. They get a salary--let them save part for retirement. I don't want to pay for their retirement and my own as well. I am looking at my real estate tax bill right now--I spent $743 last year on other people's pensions! No wonder people are pissed.

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Pensions are poison. Every government employee should be responsible for their own retirement just as most other Americans are responsible for their retirement saving. They get a salary--let them save part for retirement. I don't want to pay for their retirement and my own as well. I am looking at my real estate tax bill right now--I spent $743 last year on other people's pensions! No wonder people are pissed.

 

I agree that there is a lot of entitlement and that pensions in many cases are too generous.  However, I do not think pensions themselves are a bad idea. Group pensions can be an important societal tool to keep people out of the poorhouse -- particularly people without the common sense to save money throughout their working years. I think this adds financial stability to our society which is better for businesses as well (there is less social unrest).

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Myth, you have no clue how much what you just wrote is correct.  Within the school system, something I used to have a role within in my area, today the "connection" culture still allows (no matter what you read this is still happening) "double dipping."  Now they get around the "no doubble dipping" by simply not employing those double dippers full time.  So what you have is a retired principal getting a classroom and is pay is huge and his pension still there and he's not considered full time- but is working full time (yes they work more than the contract says).  And of course the 100 young teachers that had jobs 2 years ago are on the right side of our paychecks in the deductions section because they got laid off.  They, of course, were costing 1/3rd that of the retired/rehired well-connected bunch.

 

In the US public sector where performance is a low priority issue it is all about connections.  I used to be included in that culture and still could, but it is something I don't think we'll ever rid ourselves of.  We have all these guys and girls in our community who retire from this one large business where the pension was a wonderful thing.  But it didn't pay health insurance.  So what do these intelligent "system milkers" do?  They get a job with the schools for a couple of years in their early 50's.  They drive a bus for the handicapped kids, or they assist the school in one way or another for a couple of years and then WHAM BAM!  Society, i.e. "taxes," gets to pay their health insurace from now till the end of their time here on the face of the earth.

 

Milk it baby.

 

Thanks Dealranker. Truth be told we have the same sort of things in the private sector. I work in oil and gas and whenever things go down we have massive layoff at the plants. They will layoff 15 people making $15 an hour but will keep the over head at the same level. We could layoff 1 of the 40 VPs we have and keep 10-15 workers who are probably adding more  value. The difference is its paid for in the private sector either now or later by shareholders.

 

Pensions are poison. Every government employee should be responsible for their own retirement just as most other Americans are responsible for their retirement saving. They get a salary--let them save part for retirement. I don't want to pay for their retirement and my own as well. I am looking at my real estate tax bill right now--I spent $743 last year on other people's pensions! No wonder people are pissed.

 

I dont have a problem with pensions or stock options or salary. Its all compensation. If you have a pension with healthcare after 20 years of work and can retire at the age of 40 then you probably shouldnt make more than $25k giving the long term annuity stream you are getting.

 

I think Government work should have extremely low pay, rewarding work, and no risk at all. Its public service or it should be high pay, rewarding work, with the same risks as the private sector. We have Charter schools in Houston where you start off at $55k, work 60 hours a week, and can be fired at anytime with 401k like retirement options or you have public schools with $40k pay, 35 hour weeks, and really nice pensions. You can have either but, no mixing and matching.

 

The public sector wants the pay of the public sector with the risks of the pubic one. They simply bribe the politicians with votes, cash, and manpower for elections and get the best of both worlds. Its a nice racket.

 

The big issue with pensions is they are too easy to muck around with. The payments are far off into the future. There should be some sort of office that audits pensions for governments and a law saying pensions must be paid and are irrevocable once agreed unless there was fraud or (we have this on the books), we should have a matching law saying they must be funded in full each year with serious fines for underfunding. That would solve the problem.

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Guest misterstockwell

I agree that there is a lot of entitlement and that pensions in many cases are too generous.  However, I do not think pensions themselves are a bad idea. Group pensions can be an important societal tool to keep people out of the poorhouse -- particularly people without the common sense to save money throughout their working years. I think this adds financial stability to our society which is better for businesses as well (there is less social unrest).

 

It could be a good thing for those who won't save, except there are greater fools running the pensions! How many have gone bust or been drastically reduced? Airlines? Autos? Steel workers? States? My state of Illinois is $54 billion underfunded. Who will get to pay for their incompetence? I'm sure it will be me and my fellow taxpayers since there is no way they will CUT pension payouts.

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It could be a good thing for those who won't save, except there are greater fools running the pensions! How many have gone bust or been drastically reduced? Airlines? Autos? Steel workers? States? My state of Illinois is $54 billion underfunded. Who will get to pay for their incompetence? I'm sure it will be me and my fellow taxpayers since there is no way they will CUT pension payouts.

 

Legally I dont think they can. My advice is to move to Texas, or Florida. Cali and NY are in worse shape.

 

This is a great documentary on retirements. Should be required watching. View it if you have time.

 

Frontline's Can You Afford to Retire - http://www.pbs.org/wgbh/pages/frontline/retirement/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid

 

This is a great book on pensions and should be required reading.

 

Roger Lowenstein - While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis (Paperback)

 

http://www.amazon.com/While-America-Aged-Bankrupted-Financial/dp/0143115383/ref=sr_1_5?ie=UTF8&s=books&qid=1271257512&sr=1-5

 

 

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dealraker,

 

I think your friend is living in 'hope', not reality.

 

We all know that laws can change and contracts can be broken. Just take a look at GM where the government broke the bond debenture contract or the lawmakers have (or attempting to) break employment contracts. Another example from my home state of Florida. A good friend of mine works for the county/state and they just changed their retirement plans, retroactively! This was due to a shortfall in, you guessed it, state revenue.

 

I would not be surprised at all that in the next several years we will start to hear an uproar of the slashing of state pensions. The biggest elephant out there is in California. Time will tell though.

 

 

Cheers

JEast

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The arrogance of gov't employees is outrageous. Why should they be any different than any other person during a recession. We can get fired or have our salaries reduced in order to adapt to the changing economic environment. Why should they have guaranteed employment and salary increases when the people paying their salaries and benefits are being hurt. The irony is that gov't was one of the institutions that caused the crisis in the first place. 

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His view: "I don't care what the economy does!  I have a pension that is tied to local taxes and it is guaranteed!  It will be x amount and it is written into the law there.  So I have nothing to worry about.  **** the economy."   He isn't a butthole but his economic arrogance (several of us) caught struck of us who work in the private business world as being quite arrogant.  

 

I have a school teaching family member who is part of a group going down to Raleigh, NC to march against Bev Perdue because "She didn't give us our raise this year....and by damn we always get a raise!  They just don't appreciate us!"

 

Slowly but surely people in these groups above are going to experience one of two things: Either their pension benefits will be cut or they will themselves pay for their own pensions via much, much, much, much, much, much higher taxes.

 

I've been a front row seat spectator watching a group of people (about 80 of them) who felt similar entitlements lose those entitlements and I can say the real damage is in how their mindsets have been completely detached from reality and are then zapped when reality sets in.  It's resulted in bitterness and depression and relegated a group of 80 or so interesting and fun loving people into more or less miserable bitter and cynical bunch you don't want to be around.  I guess this would exist in any situation where a deemed entitlement is removed.  The degree to which a person does not give a damn about the economy is inversely proportional to the size of the zap they receive when economic reality knocks down the door.

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Pensions are just deferred compensation. In Canada the public sector worker takes home around 15% less than the private sector, & doesn't get bonuses; they get a gold-plated pension plan instead. Nobody forces you to work in the private sector, & individuals moving to the public sector are just being rational.

 

The economically arrogant typically don't live that long, & their estate typically doesn't get paid the full amount of their actuarial reserve at time of death. It's more for everyone else, & what pays for all the extras.

 

So give those folks an extra six-pack, a 2nd steak off the BBQ, & a couple of cigars. They're doing you a favour!

 

SD 

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Good poing sharper, but the milk the system part is what I was writing about.  The double dipping and lay-over for a couple of years to get helth insurance is a problem- at least in my opinon.

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It could be a good thing for those who won't save, except there are greater fools running the pensions! How many have gone bust or been drastically reduced? Airlines? Autos? Steel workers? States? My state of Illinois is $54 billion underfunded. Who will get to pay for their incompetence? I'm sure it will be me and my fellow taxpayers since there is no way they will CUT pension payouts.

 

Legally I dont think they can. My advice is to move to Texas, or Florida. Cali and NY are in worse shape.

 

This is a great documentary on retirements. Should be required watching. View it if you have time.

 

Frontline's Can You Afford to Retire - http://www.pbs.org/wgbh/pages/frontline/retirement/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid

 

This is a great book on pensions and should be required reading.

 

Roger Lowenstein - While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis (Paperback)

 

http://www.amazon.com/While-America-Aged-Bankrupted-Financial/dp/0143115383/ref=sr_1_5?ie=UTF8&s=books&qid=1271257512&sr=1-5

 

 

Myth, thanks for posting that Frontline piece on retirement plans.  I found it extremely interesting to read the material on the frontline website about the history of the 401k.  It seems that the shift from Defined Benefit pension plans toward 401k plans will have a profound effect on society in coming years, as most of those retirees did not contribute enough to their 401k.  It could result in significant effects on the economy and society at large when these boomers hit retirement and lose their working income (without sufficient retirement savings).

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This is a great documentary on retirements. Should be required watching. View it if you have time.

 

Frontline's Can You Afford to Retire - http://www.pbs.org/wgbh/pages/frontline/retirement/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid

 

 

Warning: rant coming below

 

I just watched this since I had time today - this is so slanted it is not even funny.  I'll pick on the section on United's bankruptcy for example.  The journalists never allowed that seeing United go bankrupt would have means (1) no jobs, (2) no heath benefits, and (3) no pension.  This was just shoddy reporting, very socialistic (the government must provide, the company is evil) and seemingly rejects all tenets of America's founding.  Yeah, it bites to see your pension go down by 30% while having to work more for less money on which you now have to also save for retirement - but life is not fair either.  If uncertainty kept me alive at night like this poor flight attendant says it does, I'd try to do something about it: get a better job, try to understand more about my future needs and see what I can do to improve it, anything.

 

Also, all these people complaining that now they'll have to work till they drop - is everyone forgetting that up until a few decades ago, retirement didn't exist?  How fast people forget, how fast people feel entitled.  "I want, I need, I deserve".  Argh!  >:(

 

Anyway - off my soap box... I don't mind pensions; indeed, I have one.  The difference is that I don't count on it anymore than I count on SS; as far as I am concerned, they are just taxes that I 'may' see a return on.  My retirement will be what I make of it.

 

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This is a great documentary on retirements. Should be required watching. View it if you have time.

 

Frontline's Can You Afford to Retire - http://www.pbs.org/wgbh/pages/frontline/retirement/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid

 

 

Warning: rant coming below

 

I just watched this since I had time today - this is so slanted it is not even funny.  I'll pick on the section on United's bankruptcy for example.  The journalists never allowed that seeing United go bankrupt would have means (1) no jobs, (2) no heath benefits, and (3) no pension.  This was just shoddy reporting, very socialistic (the government must provide, the company is evil) and seemingly rejects all tenets of America's founding.  Yeah, it bites to see your pension go down by 30% while having to work more for less money on which you now have to also save for retirement - but life is not fair either.  If uncertainty kept me alive at night like this poor flight attendant says it does, I'd try to do something about it: get a better job, try to understand more about my future needs and see what I can do to improve it, anything.

 

Also, all these people complaining that now they'll have to work till they drop - is everyone forgetting that up until a few decades ago, retirement didn't exist?  How fast people forget, how fast people feel entitled.  "I want, I need, I deserve".  Argh!  >:(

 

Anyway - off my soap box... I don't mind pensions; indeed, I have one.  The difference is that I don't count on it anymore than I count on SS; as far as I am concerned, they are just taxes that I 'may' see a return on.  My retirement will be what I make of it.

 

 

hey uhuru, I did not notice a socialistic slant, but I did not actually watch the videos... I only read the articles and interviews that they linked to on the frontline site. 

 

I agree with your point about retirement as a recent development and how it has quickly become an entitlement, however, these people had defined benefit pensions that were supposedly secure, based on their contract with their employer. They were working under those assumptions for the last 45 years of their career... and then 2 years after they retire, poof.. it all goes up in smoke.  If you include changes to their health care coverage costs, it was more like an 85% cut to monthly income..

 

If you read the articles on the site: they point out that it was leglislation introduced by US congress in the last 20 or 30 years which allowed companies to underfund pensions without making up the difference immediately. They point out that in the Netherlands the govt requires that the pensions be funded to 105% at all times which seems to prevent this problem from occurring when a company goes bankrupt (because the pensions are fully funded).  If a company is going to have a defined benefit plan then that is the way it should be done!

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Little tidbit.

 

The Cdn financial regulator requires all foreign coys to hold an asset position in a Cdn trust account, equal to a minimum 102% of their Cdn liabilities, all at MTM, & reviewed for compliance on a monthly basis. Add in restrictions on the net asset exposure to the parent, & bi-annual ALM reviews, & your annuity (pension) is probably amongst the safest in the world.

 

If the foreign parent bankrupts the cdn liability may be 5-10% underfunded at worst, with a very good chance of it being recovered as the liabilities go through runoff.

 

SD 

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This is a great documentary on retirements. Should be required watching. View it if you have time.

 

Frontline's Can You Afford to Retire - http://www.pbs.org/wgbh/pages/frontline/retirement/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid

 

 

Warning: rant coming below

 

I just watched this since I had time today - this is so slanted it is not even funny.  I'll pick on the section on United's bankruptcy for example.  The journalists never allowed that seeing United go bankrupt would have means (1) no jobs, (2) no heath benefits, and (3) no pension.  This was just shoddy reporting, very socialistic (the government must provide, the company is evil) and seemingly rejects all tenets of America's founding.  Yeah, it bites to see your pension go down by 30% while having to work more for less money on which you now have to also save for retirement - but life is not fair either.  If uncertainty kept me alive at night like this poor flight attendant says it does, I'd try to do something about it: get a better job, try to understand more about my future needs and see what I can do to improve it, anything.

 

Also, all these people complaining that now they'll have to work till they drop - is everyone forgetting that up until a few decades ago, retirement didn't exist?  How fast people forget, how fast people feel entitled.  "I want, I need, I deserve".  Argh!  >:(

 

Anyway - off my soap box... I don't mind pensions; indeed, I have one.  The difference is that I don't count on it anymore than I count on SS; as far as I am concerned, they are just taxes that I 'may' see a return on.  My retirement will be what I make of it.

 

 

So someone enters into a contract with a company, fulfills there end for 40 years. Then has Company default after collecting. This seems like a broken Contract. You think having your contract torn up when it comes time for the other person to fullfill thier end of the bargain is fair game. You dont think the enforcement of a contract has a place in Capitalism.

 

So now its socialist to bitch when you are basically defrauded?

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hey uhuru, I did not notice a socialistic slant, but I did not actually watch the videos... I only read the articles and interviews that they linked to on the frontline site. 

 

I agree with your point about retirement as a recent development and how it has quickly become an entitlement, however, these people had defined benefit pensions that were supposedly secure, based on their contract with their employer. They were working under those assumptions for the last 45 years of their career... and then 2 years after they retire, poof.. it all goes up in smoke.  If you include changes to their health care coverage costs, it was more like an 85% cut to monthly income..

 

If you read the articles on the site: they point out that it was leglislation introduced by US congress in the last 20 or 30 years which allowed companies to underfund pensions without making up the difference immediately. They point out that in the Netherlands the govt requires that the pensions be funded to 105% at all times which seems to prevent this problem from occurring when a company goes bankrupt (because the pensions are fully funded).  If a company is going to have a defined benefit plan then that is the way it should be done!

 

Fair enough - I agree that a 55 or 60yr old wouldn't be able to much about it; not so with the 40yr-old flight attendant they interviewed though.

 

Ok, so I may be harsh.  My own parents haven't saved a dime (besides a beautiful house) for their own retirement, and will be living on their pension/social security.  As civil servants, they should be ok at least until inflation (aka 'stealth tax') eats away are their revenue - yet I have been telling them for at least 20 yrs that they should save for the rainy day.  I guess I'm just wired that way: by age 5 or so, I already knew to defer gratification to buy that cool toy a year later with the money I'd save till then.

Myth, you think you are cheap? I'll give you a run for your money ;)  What I really think is that we are all a bunch of misfits & psychos on this board :P

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So someone enters into a contract with a company, fulfills there end for 40 years. Then has Company default after collecting. This seems like a broken Contract. You think having your contract torn up when it comes time for the other person to fullfill thier end of the bargain is fair game. You dont think the enforcement of a contract has a place in Capitalism.

 

So now its socialist to bitch when you are basically defrauded?

 

It is not socialistic to bitch when you are being defrauded, but I take issue with the tone of the reporting: "bad lawyers, bad CEO, bad company".  If a company goes bankrupt, the ownership changes - so why complain about the new owners, when the old ones already have been all but wiped out? by the way, the old owners were you and I and any one with money in some indexes or funds or pensions or what not; that would also include these same folks who are complaining about their own pension being slashed by the way. Hey, aren't you also taking issue w/ Greenspan saying "no-one could have known"?  As they say in the CalculatedRisk blog, "whocoodanode" (i.e., "who could have known") - pleading ignorance shouldn't be a free pass to stupidity or inaction.

 

Any time you have a large part of society being disconnected from the consequence of their actions, bad things happen.  They don't think they have any stake in the well being of their company or the economy - the same point that has been made over and over in this thread.  I am fine with differences of opinion and political sensibility, I don't like slanted journalism. Come to think of it, that's probably why I don't watch television at all and stopped reading the Opinion section of the newspapers I do read.

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Little tidbit.

 

The Cdn financial regulator requires all foreign coys to hold an asset position in a Cdn trust account, equal to a minimum 102% of their Cdn liabilities, all at MTM, & reviewed for compliance on a monthly basis. Add in restrictions on the net asset exposure to the parent, & bi-annual ALM reviews, & your annuity (pension) is probably amongst the safest in the world.

 

If the foreign parent bankrupts the cdn liability may be 5-10% underfunded at worst, with a very good chance of it being recovered as the liabilities go through runoff.

 

SD  

 

Why in the hell dont we have logical rules like this. Then CEOs who promise employees the world would have to pay for it, and justify it to there shareholders. 

 

It is not socialistic to bitch when you are being defrauded, but I take issue with the tone of the reporting: "bad lawyers, bad CEO, bad company".  If a company goes bankrupt, the ownership changes - so why complain about the new owners, when the old ones already have been all but wiped out? by the way, the old owners were you and I and any one with money in some indexes or funds or pensions or what not; that would also include these same folks who are complaining about their own pension being slashed by the way. Hey, aren't you also taking issue w/ Greenspan saying "no-one could have known"?  As they say in the CalculatedRisk blog, "whocoodanode" (i.e., "who could have known") - pleading ignorance shouldn't be a free pass to stupidity or inaction.

 

Any time you have a large part of society being disconnected from the consequence of their actions, bad things happen.  They don't think they have any stake in the well being of their company or the economy - the same point that has been made over and over in this thread.  I am fine with differences of opinion and political sensibility, I don't like slanted journalism. Come to think of it, that's probably why I don't watch television at all and stopped reading the Opinion section of the newspapers I do read.

 

1st I agree with you - we are all a bunch of misfits & psychos on this board  :-*

 

2nd My girlfriend thinks im the cheapest guy in the world. I was telling her about the significant amount of money I made this week on stocks and we were using my airline miles to purchase tickets for vacation. The ticket was 70k miles and $182 in fees for both tickets. I then told her I got an unexpected raise and my largest holdings were up significantly. Then asked her would she mind paying the fee. She said no and that she would right a check. Its the cheapest ticket she has ever bought to fly international back home. See said she would get me the $90. I really wanted her to write a check for the whole amount because I was losing the miles and thought she should pay for the benefit. I was going to tell her she was still saving $300 off the full fare but, figured it didnt sound right considering my week was so good. I passed on correcting her on the amount and still have a strange feeling about it.

 

It reminds me of the story of Graham asking Buffett for a dime to make a phone call when they were in a hurry and him going off to try to find change for a quarter because she only asked for a dime.

 

They say being able to defer gratification is the surest way to predict success. Have you heard of the Marshmellow test.

 

-----

 

3. I really like Frontline and feel like they tell things how they are. I do agree with you that the discount of employees causes huge problems. Management makes promises during good times that dont make sense under the treat of unions who want thier pound of flesh.

 

I feel like these folks got screwed, but dont have much sympathy for Auto Workers and only a small amount for Teachers Unions. I think you poison the well with things like job pools where workers or pedophiles go and play cards all day vs simply letting a company downsize and lean up and letting bad teachers go. I believe that the right to organize is fundamental, but you have cant cripple the hand that feeds you.

 

Pensions are one of those things that should be fully funded from the start. Wages and job security need to be allowed to flow with the market. Unions should try to soften the landing, not completely prevent their employees from feeling the fall.

 

 

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Just a few thoughts:

 

Unions started outbeing a benefit to society. Now the pendulum has swung to the other extreme and they are basically destroyers of companies and industries in order to grab as much as they can in the short term.

 

All defined pension plans need to be outlawed and transformed to 401ks and IRAs. Everyone needs to be responsible for there own life. Personally, I think you have to be nuts to cede control of your retirement funds to company mgt, particularly an airline company. This is an industry that has been in and out of Chapter 11 for years. What makes the employees think the company can responsibly handle there pension plans when they can't run their own businesses. 

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Unions started outbeing a benefit to society. Now the pendulum has swung to the other extreme and they are basically destroyers of companies and industries in order to grab as much as they can in the short term.

  I would generally agree that the pendulum has swung too far.

 

All defined pension plans need to be outlawed and transformed to 401ks and IRAs. Everyone needs to be responsible for there own life.

  Disagree. Most people are way too stupid to handle their own investments. This is why we have welfare, social security, it helps protect people that need assistance. Managed pension plans are better for most people cause most people are financially illiterate. However, I am not saying that the benefits under those plans should remain at the current levels.

 

Personally, I think you have to be nuts to cede control of your retirement funds to company mgt, particularly an airline company. This is an industry that has been in and out of Chapter 11 for years. What makes the employees think the company can responsibly handle there pension plans when they can't run their own businesses.  

I don't think company manages the pension per se.. it is done by a pension manager.  The company only decides whether to correctly fund the pension obligations.  That's why, in some other countries, they actually REGULATE AND ENFORCE the rules surrounding pensions.  Right now, it is looking like the US regulators have no teeth to enforce the rules (pensions, banking, fraud, etc, etc,) And Congress continues to erode the pension rules in favor of corporations.

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I don't get this thread at all.  Either you believe that public employees are being overcompensated, or you don't.  People point to the pensions as an unreasonable part of their remuneration, but it needs to be considered as part of the broader package.  Incomes in the public service are adequate to launch a family solidly into the middle class, but it is most certainly not the path to become wealthy.  So, is it acceptable that somebody with a Masters degree who works in public administration should earn $70-80k plus benefits?  I would posit that somebody with similar education in the private sector could quite easily be in the $100k+ range, and might have stock options, bonuses or other incentives. 

 

The economy has turned south.  Nobody wanted a civil service job in 2005.  What's with the bitching and moaning now?  We make more money in the private sector, but it's a bit of a gamble.

SJ

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There are several problems I have:

 

Public sector employees expect to be uneffected by macro events. In a severe crisis that we now have, they still expect 100% job protection (no layoffs), and salary increases, even though state governments are in horrible fiscal shape due to rediculous spending mandates put in place during the credit bubble which falsely inflated tax receipts. Why should they not expect to tighten their belts like the rest of us. They consider themselves a protected class. This is arrogance.

 

Why should taxpayers be on the hook 100% for their pensions plans. This eliminates moral hazard. If they hire a terrible asset manager and the pension becomes underfunded due to terrible management, their attitude is: So What, the taxpayers will bail us out. Gee, that's a great postion to be in. Many corporations years ago converted their defined benefit plans to 401Ks and IRAs. We should mandate this for public employee pension plans as well.

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