The reckoning is coming!! Another interesting fact about a growing list of cities is who runs them. Overwhelmingly liberals run the cities....right into the ground! DEI bull crap helps that along but it’s been going on a long time now.
Chicago and Illinois are the worst. People simply have no idea how these public sector defined benefit pensions work and cost. Can you imagine a private entity paying you to not work from the age of 50 or 55 until you die, at 75 to 85% of your last three years' highest earnings with 3% compunded annual increases? Do the math, it's not hard, but people don't care to try. And the reason they don't is because public unions are the hard-working middle class needing our protection. Except there are 2 middle classes and the one made up of private sector workers are not represented at the bargaining table when public union backed and paid-for politicians negotiate the contracts - see Exhibit A, Chicago Mayor Brandon. Ponzi scheme is too kind a description for the reaming this is.
Pittsburgh consistently finishes the year at $0, and the City hasn’t raised taxes in like 15 years, last I read. One of the few democrat run cities that can say this. Plus City residents can own guns, and visitors don’t need an extra CCA like in Philly.
Ah, to look where no one wants to look. Another great post, thanks so much.
Those who have not already left for the country will find it very expensive to do so now. Those who already have strive for self-sufficiency.
When the cities fall, there will be two kinds of people we'll have to worry about: those who want what we have and those who don't want us to have what we have. So I guess I'll stock up on diesel to keep the backhoe running...
There is no escape to a responsible city, or even a town in the countryside. These cities are like enormous political cockroach nests. When the nests collapse the roaches don't die, they spred out, far and wide, and politically infest new locations. For example, Arizona, once a solid red state, is now a purple state due to the cockroaches fleeing California and Illinois, bringing their political diseases with them. In Phoenix and Tucson, crime, poverty, spending, and debt are all rising. These new nests will grow until they too collapse, spreading their own poltical cockroach infestation upon the land.
Although the frequency of your posts has decreased, the quality of work is still top-notch. This will be viewed by future versions of ourselves as an historically accurate prediction of the mess that is to come. Unfortunately too many people will continue to ignore the problem, and vote with their beer-goggle on looking at the hag that is in front of them after 10 rounds thinking “she isn’t that bad...”
Yehp, and entirely predictable — the dynamic you describe was inevitable. Allowing governments to borrow money, especially with accounting done on a cash basis, was always a recipe for disaster, second only to expecting politicians to pass laws to fix it. There will be no course correction. Brace for impact.
There has been a gradual shift from self reliance to government dependency. I hate to think it’s planned and believe it has to do with inept leadership, and as you mention “buying votes.” We need to rethink the pension thing. I saved for my individual retirement. We need more of that to offset the pension burden. But it’s worse than that: Infrastructure, one of government’s fundamental responsibilities has been neglected due to fungible budget practices. Roads in California once lauded as the best are now the worst. Yet we pay extra taxes on gas and car registrations to maintain them. Dams are deemed unsafe and so rainwater, precious in a drought prone area, is wasted by being discharged to keep reservoirs at 30% as per State mandate. Development is rampant and driven by the affordable housing mantra, which has resulted in bond issues being passed by ballot initiatives that fail to deliver. Look at California No Place Like Home: promised 20,000 units in 2018 and has delivered 1700 in 5 years. Why? Any construction work done with “state funding” must be by union workers. No wonder a homeless unit costs $800,000 to build. The largest funders of democratic candidates in California are unions. What started out as a way to protect the workers has evolved into a way to control the state government.
All of these problems stem from campaign finance practices and won’t be fixed until we demand its reform.
More and more of my friends who are California liberals are moving away from the Democrats and plan to vote Republican in order to rebalance California. A reckoning may be coming in November.
Municipal debt analyst here specialized in distressed municipal issuers. Cut my teeth as part of the NYC bailout team in mid 1970s. Depending on the State, municipal bankruptcy court under 9 is a viable option. States are gatekeepers and can tell a muni to pound sand. But if public pension expenses are the problem (and they tend to be), the only way to reform public pensions is to file for bankruptcy. Otherwise you can only reform around the margins. Bailouts are less frequent now and we have learned a lot about how bankruptcy courts work. Apart from family law, the most latitude is available to bankruptcy court judges. I covered Detroit for a money management firm. But here is the real truth. Municipalities will stiff “those pesky RICH bond holders first and lightly hair cut those pensions. The press will make much of a slim haircut to pensions but stiffing bond holders doesn’t play well for the narrative. Now, do people realize that retired people with limited savings are the ultimate bond holders? Hardly. They just think it’s billionaires playing with them to lower their taxes. You should know that your own Puerto Rico was a completely orchestrated default, right? GDB was the worm hole for that. I remember when GDB was headquartered on Wall and Williams Streets and staffed by old timer NYC investment bankers and then they moved to PR. Now, thanks to PROMESA, all US territories can file for bankruptcy. And the Congress critters blamed that on the hedge funds! The hedgehogs were late to the party as crossover buyers of PR. Think the States aren’t trying to get the power to file bankruptcy? And all the law firms that will reap hefty fees to help them are in favor of that. IL would be my first choice as to states filing.
"these pension ideas were put into practice when life expectancy was 65. now it’s in the 80’s. that’s an awful lot more years of defined benefit payout" - Wouldn't it be convenient for the gov if there was a slow kill bio-weapon released (mostly injected) that would lower life expectancy by a couple of decades? Whole lot of their self made problems go away.
The reckoning is coming!! Another interesting fact about a growing list of cities is who runs them. Overwhelmingly liberals run the cities....right into the ground! DEI bull crap helps that along but it’s been going on a long time now.
Chicago and Illinois are the worst. People simply have no idea how these public sector defined benefit pensions work and cost. Can you imagine a private entity paying you to not work from the age of 50 or 55 until you die, at 75 to 85% of your last three years' highest earnings with 3% compunded annual increases? Do the math, it's not hard, but people don't care to try. And the reason they don't is because public unions are the hard-working middle class needing our protection. Except there are 2 middle classes and the one made up of private sector workers are not represented at the bargaining table when public union backed and paid-for politicians negotiate the contracts - see Exhibit A, Chicago Mayor Brandon. Ponzi scheme is too kind a description for the reaming this is.
where’s the break point you say?
My leading indicator is the markets "lagging" indicator:
Commercial real estate
It's so obvious and all around. Pick any building in an city and take a visit yourself.
A what is the common underpinning of all of this? The Democrat Party.
Pittsburgh consistently finishes the year at $0, and the City hasn’t raised taxes in like 15 years, last I read. One of the few democrat run cities that can say this. Plus City residents can own guns, and visitors don’t need an extra CCA like in Philly.
Ah, to look where no one wants to look. Another great post, thanks so much.
Those who have not already left for the country will find it very expensive to do so now. Those who already have strive for self-sufficiency.
When the cities fall, there will be two kinds of people we'll have to worry about: those who want what we have and those who don't want us to have what we have. So I guess I'll stock up on diesel to keep the backhoe running...
There is no escape to a responsible city, or even a town in the countryside. These cities are like enormous political cockroach nests. When the nests collapse the roaches don't die, they spred out, far and wide, and politically infest new locations. For example, Arizona, once a solid red state, is now a purple state due to the cockroaches fleeing California and Illinois, bringing their political diseases with them. In Phoenix and Tucson, crime, poverty, spending, and debt are all rising. These new nests will grow until they too collapse, spreading their own poltical cockroach infestation upon the land.
Although the frequency of your posts has decreased, the quality of work is still top-notch. This will be viewed by future versions of ourselves as an historically accurate prediction of the mess that is to come. Unfortunately too many people will continue to ignore the problem, and vote with their beer-goggle on looking at the hag that is in front of them after 10 rounds thinking “she isn’t that bad...”
Yehp, and entirely predictable — the dynamic you describe was inevitable. Allowing governments to borrow money, especially with accounting done on a cash basis, was always a recipe for disaster, second only to expecting politicians to pass laws to fix it. There will be no course correction. Brace for impact.
Greatest country in the history of the world! Just ask every ass kissing politician and virtue signaling MSM talking head.
Country's a fucking joke of ignorance and sloth. And more than a little evil thrown in for good measure.
Those of us who were young adults in the 1970's........
with home grown energy crises!
Geez. Is it 1975 again already?
There has been a gradual shift from self reliance to government dependency. I hate to think it’s planned and believe it has to do with inept leadership, and as you mention “buying votes.” We need to rethink the pension thing. I saved for my individual retirement. We need more of that to offset the pension burden. But it’s worse than that: Infrastructure, one of government’s fundamental responsibilities has been neglected due to fungible budget practices. Roads in California once lauded as the best are now the worst. Yet we pay extra taxes on gas and car registrations to maintain them. Dams are deemed unsafe and so rainwater, precious in a drought prone area, is wasted by being discharged to keep reservoirs at 30% as per State mandate. Development is rampant and driven by the affordable housing mantra, which has resulted in bond issues being passed by ballot initiatives that fail to deliver. Look at California No Place Like Home: promised 20,000 units in 2018 and has delivered 1700 in 5 years. Why? Any construction work done with “state funding” must be by union workers. No wonder a homeless unit costs $800,000 to build. The largest funders of democratic candidates in California are unions. What started out as a way to protect the workers has evolved into a way to control the state government.
All of these problems stem from campaign finance practices and won’t be fixed until we demand its reform.
More and more of my friends who are California liberals are moving away from the Democrats and plan to vote Republican in order to rebalance California. A reckoning may be coming in November.
Municipal debt analyst here specialized in distressed municipal issuers. Cut my teeth as part of the NYC bailout team in mid 1970s. Depending on the State, municipal bankruptcy court under 9 is a viable option. States are gatekeepers and can tell a muni to pound sand. But if public pension expenses are the problem (and they tend to be), the only way to reform public pensions is to file for bankruptcy. Otherwise you can only reform around the margins. Bailouts are less frequent now and we have learned a lot about how bankruptcy courts work. Apart from family law, the most latitude is available to bankruptcy court judges. I covered Detroit for a money management firm. But here is the real truth. Municipalities will stiff “those pesky RICH bond holders first and lightly hair cut those pensions. The press will make much of a slim haircut to pensions but stiffing bond holders doesn’t play well for the narrative. Now, do people realize that retired people with limited savings are the ultimate bond holders? Hardly. They just think it’s billionaires playing with them to lower their taxes. You should know that your own Puerto Rico was a completely orchestrated default, right? GDB was the worm hole for that. I remember when GDB was headquartered on Wall and Williams Streets and staffed by old timer NYC investment bankers and then they moved to PR. Now, thanks to PROMESA, all US territories can file for bankruptcy. And the Congress critters blamed that on the hedge funds! The hedgehogs were late to the party as crossover buyers of PR. Think the States aren’t trying to get the power to file bankruptcy? And all the law firms that will reap hefty fees to help them are in favor of that. IL would be my first choice as to states filing.
If only there were some way to get rid of a bunch of those expensive retirees without them noticing.... 🤔
"these pension ideas were put into practice when life expectancy was 65. now it’s in the 80’s. that’s an awful lot more years of defined benefit payout" - Wouldn't it be convenient for the gov if there was a slow kill bio-weapon released (mostly injected) that would lower life expectancy by a couple of decades? Whole lot of their self made problems go away.