@derryb said:
Adding one-half cent to local tax specifically to make up for a shortfall in a troubled pension is a bailout at the expense of the taxpayers. Call it what you wish, but it remains a bailout.
If that's the way you want to see it then fine. Others may see it as paying for the cost of maintaining services which everyone wants. The people have a choice of honoring over zealous promises or not.
Does not the cost of all your provided services increase? How is this different?
It differs because it is a bailout to rescue an underfunded pension program. It's not payment for increased service. How do you define bailout?
I defined it earlier. Ask yourself why the pension is underfunded, who's responsibility that falls upon, and who should carry the burden.
I dislike taxes as much as anyone, but they are a fact of life. Of course we should focus on reducing spending rather than increasing taxes, so why did Jacksonvilles leaders decide not to reduce spending? We keep voting for this nonsense.
@cohodk said:
Elemental, the point that is missed is that a great deal of the total return is dividends, take those out and you fall behind very quickly. There are calculators on the interweb that will help you calculate market returns over any time period with and without dividends being reinvested.
But dcarr, at least by my reading, was not trying to capture the total market return. Rather, he was trying to create an arbitrage/hedge situation by buying the index and shorting the individual components, trying to take advantage of changes when the index is modified.
I am not at all convinced that could work, even without transaction costs. But the weakness in this is the transaction costs, not the dividends (or lack thereof).
Dcarr was trying to reinvent the wheel and beat the market. It won't work. What happens if a stock is removed from the index because it was acquired by another company, or it separated itself and formed different companies.
@dcarr said:
Go long on the DOW index, while simultaneously going short on all the individual stocks that make up the DOW index. The next time a stock is dropped from the DOW index, you would likely make money.
This would be a challenge to implement. Unlike the S&P 500 & other major indices, the DOW is capitalization weighted. So your short positions would become 'overweight' relative to the index as soon as they started working in your favor (became in-the-money). To match the index, you'd then have to rebalance your winning shorts by reducing or closing those positions. Over time, you'd be left holding (and adding to) all the shorts working against you. Not sure this works out in your favor.
@dcarr said:
Go long on the DOW index, while simultaneously going short on all the individual stocks that make up the DOW index. The next time a stock is dropped from the DOW index, you would likely make money.
This would be a challenge to implement. Unlike the S&P 500 & other major indices, the DOW is capitalization weighted. So your short positions would become 'overweight' relative to the index as soon as they started working in your favor (became in-the-money). To match the index, you'd then have to rebalance your winning shorts by reducing or closing those positions. Over time, you'd be left holding (and adding to) all the shorts working against you. Not sure this works out in your favor.
I believe that is backwards. SP500 is cap weighted Dow is not.
"S&P 500 companies have bought back $500 billion in stock in the last two years, and $2.1 trillion since 2010. Until recently, individual investors have been net sellers for the last eight years. Pension funds have not been net buyers. That means the entire stock market surge has been reliant upon corporations buying their own stock and Wall Street institutions using their HFT machines to rig the system. And this entire scheme has been enabled by the Federal Reserve’s crisis level low interest rates for the last eight years.
After you’ve run out of accounting gimmicks, refinanced all your debt, and outsourced as many jobs to the third world as possible, how else can you make your earnings per share rise? Why invest your money in capital, innovation, research or human resources to grow your sales, when you can just buy back your own stock and goose earnings per share the easy way. Goosing EPS by reducing the number of shares makes it easier for the Wall Street fleecing machine to pump stocks and it makes it easier for corporate CEOs and their executive teams to “earn” their million dollar bonuses while stiffing their employees with 2% raises.
But it gets better. Since 2009 over $1 trillion of debt was taken on by S&P 500 companies just to buyback their own stock. The narrative about corporations being flush with cash is complete BS.
Corporate debt levels are at all-time highs despite a supposed eight year economic recovery. The debt was used to buyback stock rather than invest in the business." - Stupid is as Stupid does
Why did you change your chart in the other thread that showed gold in a 6 year downtrend? Six terrible years while you touted false news, false fundamentals, and worse yet, ignorant opinion.
Talk about doing as stupid does.
Wouldn't it have been great to stay away from gold and concentrate more on other asset for the past half decade? Yup, smart is as smart does.;) LMAO!!!
In the early 1980s, about 60% of companies had defined-benefit plans. Today it’s about 4% (source: money.CNN).
Such pensions are all but gone from US private-sector employers. They’re still common in government, particularly state and local governments; and they are increasingly problematic. They are another source of angst for retirees, government workers who want to retire someday, and the taxpayers and bond investors who finance those pensions.
In the early 1980s, about 60% of companies had defined-benefit plans. Today it’s about 4% (source: money.CNN).
Such pensions are all but gone from US private-sector employers. They’re still common in government, particularly state and local governments; and they are increasingly problematic. They are another source of angst for retirees, government workers who want to retire someday, and the taxpayers and bond investors who finance those pensions.
Agreed. It is amazing that city, county and state gov'ts continue to dole out (no pun intended) lucrative pension plans to new hires. This stopped in 96% of the private sector long ago. Now taxpayers will again be on the hook for these legal contracts that won't be feasible to pay in the long haul. Heck they're a huge drain now that grows daily.
An example is local firefighters retiring with full pensions and paid healthcare for life at 50 years old. Factor in their mandated 3% annual COA increases and 35 years of drawing on the fund and you've got a mess. Each firefighter accrues over $3 million in pension/healthcare obligations in their career.
My small local municipality with ~23,000 households is sitting on $300 million in obligations for the fire department alone. Add in all other employees (police, etc) with mega-pensions and you're quickly looking at $1 billion. I cannot believe this continues day after day, week after week, month after month for new employees. It's crazy.
In the early 1980s, about 60% of companies had defined-benefit plans. Today it’s about 4% (source: money.CNN).
Such pensions are all but gone from US private-sector employers. They’re still common in government, particularly state and local governments; and they are increasingly problematic. They are another source of angst for retirees, government workers who want to retire someday, and the taxpayers and bond investors who finance those pensions.
Agreed. It is amazing that city, county and state gov'ts continue to dole out (no pun intended) lucrative pension plans to new hires. This stopped in 96% of the private sector long ago. Now taxpayers will again be on the hook for these legal contracts that won't be feasible to pay in the long haul. Heck they're a huge drain now that grows daily.
An example is local firefighters retiring with full pensions and paid healthcare for life at 50 years old. Factor in their mandated 3% annual COA increases and 35 years of drawing on the fund and you've got a mess. Each firefighter accrues over $3 million in pension/healthcare obligations in their career.
My small local municipality with ~23,000 households is sitting on $300 million in obligations for the fire department alone. Add in all other employees (police, etc) with mega-pensions and you're quickly looking at $1 billion. I cannot believe this continues day after day, week after week, month after month for new employees. It's crazy.
Are you suggesting that firefighters don't deserve health care benefits and a pension upon retirement? I hope you never need a firefighter to save your life one day by risking his. Here in New York, there are many firefighters and first responders who became ill or developed cancer due to the effects of 9/11. Would you say those civil service employees didn't deserve the benefits they earned by choosing that line of work?
Collecting 1970s Topps baseball wax, rack and cello packs, as well as PCGS graded Half Cents, Large Cents, Two Cent pieces and Three Cent Silver pieces.
Are you suggesting that firefighters don't deserve health care benefits and a pension upon retirement? I hope you never need a firefighter to save your life one day by risking his. Here in New York, there are many firefighters and first responders who became ill or developed cancer due to the effects of 9/11. Would you say those civil service employees didn't deserve the benefits they earned by choosing that line of work?
Probably don't deserve a pension or health care that is multiple times greater than that of those we send to face death in a foreign desert. I think you miss his point that public sector pension promises have gotten out of control.
In the early 1980s, about 60% of companies had defined-benefit plans. Today it’s about 4% (source: money.CNN).
Such pensions are all but gone from US private-sector employers. They’re still common in government, particularly state and local governments; and they are increasingly problematic. They are another source of angst for retirees, government workers who want to retire someday, and the taxpayers and bond investors who finance those pensions.
Not missing the point at all, your strawman comparison notwithstanding. What I do find interesting about the above statement is that back in the 1980s (and even earlier than that), retirement pensions were fairly routine in the private as well as the public sector yet the amount of public and municipal debt paled in comparison to the present day. A couple of generations ago, you also had one breadwinner in the household, and with a blue collar job, the ability to finance a decent standard of living while buying a home and raising a family. Today, we have a greater disparity in wealth in this country than ever before between the wealthy and the working class, while witnessing the rapid reduction of what we'd once called the middle class, yet pensions are to blame? What about the many corporations who pay little to nothing in federal taxes due to corporate welfare and tax loopholes? Or the bailout money lavished upon those banks and corporations who have demonstrated fiscal mismanagement and irresponsibility? We tend to turn a blind eye to those circumstances, even as executives reward themselves with golden parachutes and bonuses while taxpayers hold the bag, yet we resent the civil service worker trying to raise a family and achieve a decent standard of living for putting in 20 to 30 years of service.
I do agree that veterans should be treated much better than they are today, no question about that. But pension plans for public sector employees are nothing new and generally speaking are well deserved.
Collecting 1970s Topps baseball wax, rack and cello packs, as well as PCGS graded Half Cents, Large Cents, Two Cent pieces and Three Cent Silver pieces.
Healthcare is destroying us. Whether provided to cops or firefighters or retired military or the elderly or the fellow running the cash register at the dollar store. Half the country is obese the other half is hooked on drugs (prescription or otherwise). Few give a rats behind about taking care of themselves but want to be treated for free by the best doctors when their corrupted and neglected bodies shut down.
@Coinstartled said:
Healthcare is destroying us. Whether provided to cops or firefighters or retired military or the elderly or the fellow running the cash register at the dollar store. Half the country is obese the other half is hooked on drugs (prescription or otherwise). Few give a rats behind about taking care of themselves but want to be treated for free by the best doctors when their corrupted and neglected bodies shut down.
I would agree with this assessment~more than most factors, the state of health care and the exorbitant cost of prescription drugs in this country, as well as the medical field's reliance on those prescription drugs, is a much weightier (no pun intended) issue than pension plans.
Collecting 1970s Topps baseball wax, rack and cello packs, as well as PCGS graded Half Cents, Large Cents, Two Cent pieces and Three Cent Silver pieces.
The pension crisis will add to the pain of the middle class. Surreal pension promises have created a growing crisis that will have to soon be dealt with. As usual, it all boils down to debt that cannot be repaid without tapping the taxpayer. Chickens usually come home to roost.
Are you suggesting that firefighters don't deserve health care benefits and a pension upon retirement? I hope you never need a firefighter to save your life one day by risking his. Here in New York, there are many firefighters and first responders who became ill or developed cancer due to the effects of 9/11. Would you say those civil service employees didn't deserve the benefits they earned by choosing that line of work?
Probably don't deserve a pension or health care that is multiple times greater than that of those we send to face death in a foreign desert. I think you miss his point that public sector pension promises have gotten out of control.
Agreed 100%. And this problem will be fixed. Benefits will be cut and taxes increased. It's gonna happen. Prepare for it. This brings forth many opportunities, as well as setbacks. We can all choose to focus on the former or the latter.
Are you suggesting that firefighters don't deserve health care benefits and a pension upon retirement? I hope you never need a firefighter to save your life one day by risking his. Here in New York, there are many firefighters and first responders who became ill or developed cancer due to the effects of 9/11. Would you say those civil service employees didn't deserve the benefits they earned by choosing that line of work?
Probably don't deserve a pension or health care that is multiple times greater than that of those we send to face death in a foreign desert. I think you miss his point that public sector pension promises have gotten out of control.
Agreed 100%. And this problem will be fixed. Benefits will be cut and taxes increased. It's gonna happen. Prepare for it. This brings forth many opportunities, as well as setbacks. We can all choose to focus on the former or the latter.
If we have to start small on reforming pensions how about this demographic, no politician anywhere is entitled to a pension or healthcare.
All the complaining about entitlements misses this point, a politician of any type is lower than the lowest welfare recipient buying scratch tickets with an EBT card. Political service should be like jury duty , something that citizens are forced to do against their will. No more career politicians hopefully would mean an end to promises made to get reelected.
Are you suggesting that firefighters don't deserve health care benefits and a pension upon retirement? I hope you never need a firefighter to save your life one day by risking his. Here in New York, there are many firefighters and first responders who became ill or developed cancer due to the effects of 9/11. Would you say those civil service employees didn't deserve the benefits they earned by choosing that line of work?
Probably don't deserve a pension or health care that is multiple times greater than that of those we send to face death in a foreign desert. I think you miss his point that public sector pension promises have gotten out of control.
Agreed 100%. And this problem will be fixed. Benefits will be cut and taxes increased. It's gonna happen. Prepare for it. This brings forth many opportunities, as well as setbacks. We can all choose to focus on the former or the latter.
It's gonna have to happen and sooner rather than later. And of course firefighters deserve a pension and healthcare but they have to be reduced. I won't get into the specifics but having combined police/firefighters as Public Safety Officers would be a far better use of taxpayer dollars in medium to small cities (under 200,000) where there is extensive on-duty downtime for both forces.
On a personal level, my stepfather spent 27 years as a police officer and has now been retired for 28 years. He draws about ~$55k/annually with +3% COLA. There are hundreds drawing same in that small municipality that's not prosperous and has an annual budget of ~ $65 million. They have to plug in 10% annual returns on their pension funds to remain solvent. That's worked out pretty well in recent years.................and now there's the next decade.
Are you suggesting that firefighters don't deserve health care benefits and a pension upon retirement? I hope you never need a firefighter to save your life one day by risking his. Here in New York, there are many firefighters and first responders who became ill or developed cancer due to the effects of 9/11. Would you say those civil service employees didn't deserve the benefits they earned by choosing that line of work?<
If their health problems can be linked to their occupation, sure. But as for pension, no.
Please explain or justify why the public sector should be more taken care of than the private?
Are you suggesting that firefighters don't deserve health care benefits and a pension upon retirement? I hope you never need a firefighter to save your life one day by risking his. Here in New York, there are many firefighters and first responders who became ill or developed cancer due to the effects of 9/11. Would you say those civil service employees didn't deserve the benefits they earned by choosing that line of work?<
If their health problems can be linked to their occupation, sure. But as for pension, no.
Please explain or justify why the public sector should be more taken care of than the private?
If you want to revoke pension benefits for new hires going forward (in lieu of some other benefit or retirement perk), I have no argument with that, as those applicants and employees know the landscape at the time of hiring. However, I'd expect the quality of the individuals applying for said positions to be of a generally lower caliber as those benefits are part of the appeal in the first place. As the private sector knows very well, the compensatory salary and benefits package is typically commensurate with the talent you are able to attract for that position. And while you may not see traditional pension plans in the private sector much anymore, companies generally offer other retirement incentives or benefit plans like matching 401K distributions or salary bonuses.
In those circumstances, I do favor such bonuses being allocated based on merit and job performance, which is obviously not something organized labor or unions will favor.
Collecting 1970s Topps baseball wax, rack and cello packs, as well as PCGS graded Half Cents, Large Cents, Two Cent pieces and Three Cent Silver pieces.
If you want to revoke pension benefits for new hires going forward (in lieu of some other benefit or retirement perk), I have no argument with that, as those applicants and employees know the landscape at the time of hiring. However, I'd expect the quality of the individuals applying for said positions to be of a generally lower caliber as those benefits are part of the appeal in the first place. As the private sector knows very well, the compensatory salary and benefits package is typically commensurate with the talent you are able to attract for that position.<
Thank you for your reasoned reply, grote15.
In my experience, there are numerous private sector occupations that either 1) have a ton of people competing to do the job, 2) require a long apprenticeship or schooling period, or 3) are a 'cost center' far removed from revenue or profit. All three of these could justify lower compensation (of all forms) than one would might otherwise think. Perhaps this is a strawman, but I'm inclined to draw a parallel with the higher-skilled / valued public sector jobs that require extensive training and/or are desireable (police, fire) or require advanced degrees (public defenders, district attorneys, maybe accounting/finance, etc.). My understanding is that many of these still have defined-benefit retirement benefits. In my admittedly narrow experience, the private sector equivalents never do, they only get defined-contribution plans these days. And the salary differentials, from what I hear in the news, do not make up the difference.
If you want to revoke pension benefits for new hires going forward (in lieu of some other benefit or retirement perk), I have no argument with that, as those applicants and employees know the landscape at the time of hiring. However, I'd expect the quality of the individuals applying for said positions to be of a generally lower caliber as those benefits are part of the appeal in the first place. As the private sector knows very well, the compensatory salary and benefits package is typically commensurate with the talent you are able to attract for that position.<
Thank you for your reasoned reply, grote15.
In my experience, there are numerous private sector occupations that either 1) have a ton of people competing to do the job, 2) require a long apprenticeship or schooling period, or 3) are a 'cost center' far removed from revenue or profit. All three of these could justify lower compensation (of all forms) than one would might otherwise think. Perhaps this is a strawman, but I'm inclined to draw a parallel with the higher-skilled / valued public sector jobs that require extensive training and/or are desireable (police, fire) or require advanced degrees (public defenders, district attorneys, maybe accounting/finance, etc.). My understanding is that many of these still have defined-benefit retirement benefits. In my admittedly narrow experience, the private sector equivalents never do, they only get defined-contribution plans these days. And the salary differentials, from what I hear in the news, do not make up the difference.
The defined contribution plans are also a grift . Either the available options suck because fees paid to the usual wall street cronies are too high. Or its an index fund of some sort where all the trades are being relentlessly front run by the aforementioned usual suspects .
Stockman's quote from the OP: "We are burning cash at a $75 billion a month rate. By summer, they will be out of cash. Then we will be in the mother of all debt ceiling crises. Everything will grind to a halt. I think we will have a government shutdown. There will not be Obama Care repeal and replace. There will be no tax cut. There will be no infrastructure stimulus."
To date he has been correct and come the August congressional recess we'll know if the government will in fact face a shutdown
@derryb said:
Stockman's quote from the OP: "We are burning cash at a $75 billion a month rate. By summer, they will be out of cash. Then we will be in the mother of all debt ceiling crises. Everything will grind to a halt. I think we will have a government shutdown. There will not be Obama Care repeal and replace. There will be no tax cut. There will be no infrastructure stimulus."
To date he has been correct and come the August congressional recess we'll know if the government will in fact face a shutdown
@derryb said:
Stockman's quote from the OP: "We are burning cash at a $75 billion a month rate. By summer, they will be out of cash. Then we will be in the mother of all debt ceiling crises. Everything will grind to a halt. I think we will have a government shutdown. There will not be Obama Care repeal and replace. There will be no tax cut. There will be no infrastructure stimulus."
To date he has been correct and come the August congressional recess we'll know if the government will in fact face a shutdown
The darkness has been vanquished....but I bet it returns.
I'm sorry you dont see the economy as being fairly predictable. You view govt regulation or monetary stimulus as unnatural forces, while I see them as completely natural. Since the beginning if the first organized economy there have been rules and regulations and those that exploit them. You view govt as more powerful than markets, I see the opposite.
I believe the economy has been quite predictable as demonstrated right here in the forum over the last decade. Some folks will say if you want to get rich then follow the money. I would advise one to follow the people instead-demographics is not difficult to understand.
your chart in the other thread that showed gold in a 6 year downtrend? Six terrible years while you touted false news, false fundamentals
Hmmmm, maybe it's been a good 6 years to be gradually building a stash. While it's true that this could continue for awhile, it's also true that eventually the market for precious metals will re-assert.
While I don't believe everything that Jim Sinclair puts out, I do subscribe to his advice to get out of the system and to limit exposure to it. While cohodk and Baley always advocate putting money into productive use, I prefer to keep my cards closer to my chest. I think that the system has gone far beyond what's healthy in terms of siphoning off the wealth & energy from those who make the economy tick. Starve the beast.
Q: Are You Printing Money? Bernanke: Not Literally
@jmski52 said:
I think that the system has gone far beyond what's healthy in terms of siphoning off the wealth & energy from those who make the economy tick. Starve the beast.
Francisco, Dagney, Hank, John, Dagnar.... and jmski52 ?!?
My pension is a fixed dollar amount that is not indexed to inflation.
That should make it fairly easy for the pension company who recently bought the rights to distribute it, to show it will be fully funded by buying long bonds at 4%.
Dollar purchasing power will continue to drop going forward due to fiscal policy, debt, and inflation. Which is why I try to move savings into inflation protected bonds, real estate, and hard assets like gold, coins, and even hated physical silver.
The debt "ceiling" is imaginary. Nothing will stop the government from spending more than it brings in. There is no ceiling, only fragile walls.
@derryb@cohodk as this thread is 5 years old. I have a simple question for each of you. It’s a yes or no question. Are you better off financially now than when this tread started? I’m just curious.
You two guys just remind me
Of the Batman and joker.
What if the business isn't capable of being expanded or invested in ?
As Warren Buffet just said, anybody who thinks stock buybacks are all bad is guilty of being financially illiterate. That chart simply shows 2 unrelated variables tracking one another.
I can think of FEW people worse to follow for stock advice than David Stockman. Aside from running a nice-sized company into the ground a few decades ago, he has a TERRIBLE track record of stock market prognasticating and is best characterized as a perma-bear.
He will best be known for showing political courage in being the only Michigan politician to vote against the Chrysler Bailout.
PRIVATE corporations are fully-funded (barely)....multi-employer union plans are about 50% funded and as crooked as they come. State & Local pensions plans are all over the map but many big ones are way underfunded and probably bankrupt.
They're really not pension plans, they are more like slush funds for politicians.
@Goldminers said:
My pension is a fixed dollar amount that is not indexed to inflation.
That should make it fairly easy for the pension company who recently bought the rights to distribute it, to show it > >will be fully funded by buying long bonds at 4%.
Liability targeting doesn't work that way. It would depend on whether the plan is locked, life expectancies, etc. You say your pension is fixed, that would have to be true for ALL plan participants.
Buying long-term Treasuries is probably not wise. Better to invest in quality corporate bonds and get 5-5.50% on AAA/AA/A-rated debt let alone higher yields in BBB/junk, MBS, etc.
6.79% 30 year fixed, could be 10% in 3 months, car loans 6, 10, 15% even on new cars with a 800 credit score. How much more can the general public take? Many banks are offering 4.5%-5% 1 year CD's heck of a lot better than what my 401k and stocks are doing. Going to dump a bit of cash into a CD, God bless us all.
@Martin said: @derryb@cohodk as this thread is 5 years old. I have a simple question for each of you. It’s a yes or no question. Are you better off financially now than when this tread started? I’m just curious.
You two guys just remind me
Of the Batman and joker.
I got married on the ides of March one year after this thread started. Which March 15th, of what year is everything grinding to a halt. ?
My wife's got a honey-do list that is never ending. I'm hoping the OP is right in 2023.
Comments
I defined it earlier. Ask yourself why the pension is underfunded, who's responsibility that falls upon, and who should carry the burden.
I dislike taxes as much as anyone, but they are a fact of life. Of course we should focus on reducing spending rather than increasing taxes, so why did Jacksonvilles leaders decide not to reduce spending? We keep voting for this nonsense.
Knowledge is the enemy of fear
Dcarr was trying to reinvent the wheel and beat the market. It won't work. What happens if a stock is removed from the index because it was acquired by another company, or it separated itself and formed different companies.
Back testing his theory is quite easy. Try it.
Knowledge is the enemy of fear
The Unavoidable Pension Crisis
Give Me Liberty or Give Me Debt
This would be a challenge to implement. Unlike the S&P 500 & other major indices, the DOW is capitalization weighted. So your short positions would become 'overweight' relative to the index as soon as they started working in your favor (became in-the-money). To match the index, you'd then have to rebalance your winning shorts by reducing or closing those positions. Over time, you'd be left holding (and adding to) all the shorts working against you. Not sure this works out in your favor.
Dcarr tossed out an idea and y> @ranshdow said:
I believe that is backwards. SP500 is cap weighted Dow is not.
(Unless they flip flopped in the last few years.)
"S&P 500 companies have bought back $500 billion in stock in the last two years, and $2.1 trillion since 2010. Until recently, individual investors have been net sellers for the last eight years. Pension funds have not been net buyers. That means the entire stock market surge has been reliant upon corporations buying their own stock and Wall Street institutions using their HFT machines to rig the system. And this entire scheme has been enabled by the Federal Reserve’s crisis level low interest rates for the last eight years.
After you’ve run out of accounting gimmicks, refinanced all your debt, and outsourced as many jobs to the third world as possible, how else can you make your earnings per share rise? Why invest your money in capital, innovation, research or human resources to grow your sales, when you can just buy back your own stock and goose earnings per share the easy way. Goosing EPS by reducing the number of shares makes it easier for the Wall Street fleecing machine to pump stocks and it makes it easier for corporate CEOs and their executive teams to “earn” their million dollar bonuses while stiffing their employees with 2% raises.
But it gets better. Since 2009 over $1 trillion of debt was taken on by S&P 500 companies just to buyback their own stock. The narrative about corporations being flush with cash is complete BS.
Corporate debt levels are at all-time highs despite a supposed eight year economic recovery. The debt was used to buyback stock rather than invest in the business." - Stupid is as Stupid does
Give Me Liberty or Give Me Debt
Why did you change your chart in the other thread that showed gold in a 6 year downtrend? Six terrible years while you touted false news, false fundamentals, and worse yet, ignorant opinion.
Talk about doing as stupid does.
Wouldn't it have been great to stay away from gold and concentrate more on other asset for the past half decade? Yup, smart is as smart does.;) LMAO!!!
Knowledge is the enemy of fear
you have been warned. lol
Give Me Liberty or Give Me Debt
Someday you'll be right, but I'll ALWAYS be more right.
Knowledge is the enemy of fear
You da king.
Give Me Liberty or Give Me Debt
And your desire to prove yourself wrong will always remind you of that. Haha
I await the day I can relinquish my crown to you. You'll have to resize it though, cuz I got a big head. Hahahaha
Knowledge is the enemy of fear
Some light pension related reading
http://econintersect.com/a/blogs/blog1.php/angst-in-america-part-4
fun facts from the article
In the early 1980s, about 60% of companies had defined-benefit plans. Today it’s about 4% (source: money.CNN).
Such pensions are all but gone from US private-sector employers. They’re still common in government, particularly state and local governments; and they are increasingly problematic. They are another source of angst for retirees, government workers who want to retire someday, and the taxpayers and bond investors who finance those pensions.
Agreed. It is amazing that city, county and state gov'ts continue to dole out (no pun intended) lucrative pension plans to new hires. This stopped in 96% of the private sector long ago. Now taxpayers will again be on the hook for these legal contracts that won't be feasible to pay in the long haul. Heck they're a huge drain now that grows daily.
An example is local firefighters retiring with full pensions and paid healthcare for life at 50 years old. Factor in their mandated 3% annual COA increases and 35 years of drawing on the fund and you've got a mess. Each firefighter accrues over $3 million in pension/healthcare obligations in their career.
My small local municipality with ~23,000 households is sitting on $300 million in obligations for the fire department alone. Add in all other employees (police, etc) with mega-pensions and you're quickly looking at $1 billion. I cannot believe this continues day after day, week after week, month after month for new employees. It's crazy.
Are you suggesting that firefighters don't deserve health care benefits and a pension upon retirement? I hope you never need a firefighter to save your life one day by risking his. Here in New York, there are many firefighters and first responders who became ill or developed cancer due to the effects of 9/11. Would you say those civil service employees didn't deserve the benefits they earned by choosing that line of work?
Collecting 1970s Topps baseball wax, rack and cello packs, as well as PCGS graded Half Cents, Large Cents, Two Cent pieces and Three Cent Silver pieces.
Probably don't deserve a pension or health care that is multiple times greater than that of those we send to face death in a foreign desert. I think you miss his point that public sector pension promises have gotten out of control.
Give Me Liberty or Give Me Debt
Not missing the point at all, your strawman comparison notwithstanding. What I do find interesting about the above statement is that back in the 1980s (and even earlier than that), retirement pensions were fairly routine in the private as well as the public sector yet the amount of public and municipal debt paled in comparison to the present day. A couple of generations ago, you also had one breadwinner in the household, and with a blue collar job, the ability to finance a decent standard of living while buying a home and raising a family. Today, we have a greater disparity in wealth in this country than ever before between the wealthy and the working class, while witnessing the rapid reduction of what we'd once called the middle class, yet pensions are to blame? What about the many corporations who pay little to nothing in federal taxes due to corporate welfare and tax loopholes? Or the bailout money lavished upon those banks and corporations who have demonstrated fiscal mismanagement and irresponsibility? We tend to turn a blind eye to those circumstances, even as executives reward themselves with golden parachutes and bonuses while taxpayers hold the bag, yet we resent the civil service worker trying to raise a family and achieve a decent standard of living for putting in 20 to 30 years of service.
I do agree that veterans should be treated much better than they are today, no question about that. But pension plans for public sector employees are nothing new and generally speaking are well deserved.
Collecting 1970s Topps baseball wax, rack and cello packs, as well as PCGS graded Half Cents, Large Cents, Two Cent pieces and Three Cent Silver pieces.
Healthcare is destroying us. Whether provided to cops or firefighters or retired military or the elderly or the fellow running the cash register at the dollar store. Half the country is obese the other half is hooked on drugs (prescription or otherwise). Few give a rats behind about taking care of themselves but want to be treated for free by the best doctors when their corrupted and neglected bodies shut down.
I would agree with this assessment~more than most factors, the state of health care and the exorbitant cost of prescription drugs in this country, as well as the medical field's reliance on those prescription drugs, is a much weightier (no pun intended) issue than pension plans.
Collecting 1970s Topps baseball wax, rack and cello packs, as well as PCGS graded Half Cents, Large Cents, Two Cent pieces and Three Cent Silver pieces.
The pension crisis will add to the pain of the middle class. Surreal pension promises have created a growing crisis that will have to soon be dealt with. As usual, it all boils down to debt that cannot be repaid without tapping the taxpayer. Chickens usually come home to roost.
Give Me Liberty or Give Me Debt
Agreed 100%. And this problem will be fixed. Benefits will be cut and taxes increased. It's gonna happen. Prepare for it. This brings forth many opportunities, as well as setbacks. We can all choose to focus on the former or the latter.
Knowledge is the enemy of fear
If we have to start small on reforming pensions how about this demographic, no politician anywhere is entitled to a pension or healthcare.
All the complaining about entitlements misses this point, a politician of any type is lower than the lowest welfare recipient buying scratch tickets with an EBT card. Political service should be like jury duty , something that citizens are forced to do against their will. No more career politicians hopefully would mean an end to promises made to get reelected.
It's gonna have to happen and sooner rather than later. And of course firefighters deserve a pension and healthcare but they have to be reduced. I won't get into the specifics but having combined police/firefighters as Public Safety Officers would be a far better use of taxpayer dollars in medium to small cities (under 200,000) where there is extensive on-duty downtime for both forces.
On a personal level, my stepfather spent 27 years as a police officer and has now been retired for 28 years. He draws about ~$55k/annually with +3% COLA. There are hundreds drawing same in that small municipality that's not prosperous and has an annual budget of ~ $65 million. They have to plug in 10% annual returns on their pension funds to remain solvent. That's worked out pretty well in recent years.................and now there's the next decade.
Markets, a.k.a. we the people, always find a way to change political agendas.
Knowledge is the enemy of fear
Its not about the pensions (or entitlements) themselves. Its about what they do to the economy, tax rate and currency value when they are underfunded.
Give Me Liberty or Give Me Debt
Increasing taxes to pay for pensions is the epitome of wealth redistribution. Some might go so far as to say it's communism.
Knowledge is the enemy of fear
If their health problems can be linked to their occupation, sure. But as for pension, no.
Please explain or justify why the public sector should be more taken care of than the private?
If you want to revoke pension benefits for new hires going forward (in lieu of some other benefit or retirement perk), I have no argument with that, as those applicants and employees know the landscape at the time of hiring. However, I'd expect the quality of the individuals applying for said positions to be of a generally lower caliber as those benefits are part of the appeal in the first place. As the private sector knows very well, the compensatory salary and benefits package is typically commensurate with the talent you are able to attract for that position. And while you may not see traditional pension plans in the private sector much anymore, companies generally offer other retirement incentives or benefit plans like matching 401K distributions or salary bonuses.
In those circumstances, I do favor such bonuses being allocated based on merit and job performance, which is obviously not something organized labor or unions will favor.
Collecting 1970s Topps baseball wax, rack and cello packs, as well as PCGS graded Half Cents, Large Cents, Two Cent pieces and Three Cent Silver pieces.
Thank you for your reasoned reply, grote15.
In my experience, there are numerous private sector occupations that either 1) have a ton of people competing to do the job, 2) require a long apprenticeship or schooling period, or 3) are a 'cost center' far removed from revenue or profit. All three of these could justify lower compensation (of all forms) than one would might otherwise think. Perhaps this is a strawman, but I'm inclined to draw a parallel with the higher-skilled / valued public sector jobs that require extensive training and/or are desireable (police, fire) or require advanced degrees (public defenders, district attorneys, maybe accounting/finance, etc.). My understanding is that many of these still have defined-benefit retirement benefits. In my admittedly narrow experience, the private sector equivalents never do, they only get defined-contribution plans these days. And the salary differentials, from what I hear in the news, do not make up the difference.
The defined contribution plans are also a grift . Either the available options suck because fees paid to the usual wall street cronies are too high. Or its an index fund of some sort where all the trades are being relentlessly front run by the aforementioned usual suspects .
I feel enslaved...at least I'm in paradise, lol.
Stockman's quote from the OP: "We are burning cash at a $75 billion a month rate. By summer, they will be out of cash. Then we will be in the mother of all debt ceiling crises. Everything will grind to a halt. I think we will have a government shutdown. There will not be Obama Care repeal and replace. There will be no tax cut. There will be no infrastructure stimulus."
To date he has been correct and come the August congressional recess we'll know if the government will in fact face a shutdown
Update: Stockman just doubled down with a forcast of a 30% S&P drop
Give Me Liberty or Give Me Debt
I hope nobody is surprised by a 30% sell-off in the equity markets over the next 12 months. They sure shouldn't be surprised anyway.
I really don't think anyone thought there would be a tax cut, or healthcare reform or a $1 trillion infrastructure bill.
I bet I'll be right if I say the darkness tonight will succumb to the light tomorrow.
Knowledge is the enemy of fear
And the economy would be a lot more predictable if it too was governed only by natural forces.
Give Me Liberty or Give Me Debt
The darkness has been vanquished....but I bet it returns.
I'm sorry you dont see the economy as being fairly predictable. You view govt regulation or monetary stimulus as unnatural forces, while I see them as completely natural. Since the beginning if the first organized economy there have been rules and regulations and those that exploit them. You view govt as more powerful than markets, I see the opposite.
I believe the economy has been quite predictable as demonstrated right here in the forum over the last decade. Some folks will say if you want to get rich then follow the money. I would advise one to follow the people instead-demographics is not difficult to understand.
Knowledge is the enemy of fear
your chart in the other thread that showed gold in a 6 year downtrend? Six terrible years while you touted false news, false fundamentals
Hmmmm, maybe it's been a good 6 years to be gradually building a stash. While it's true that this could continue for awhile, it's also true that eventually the market for precious metals will re-assert.
While I don't believe everything that Jim Sinclair puts out, I do subscribe to his advice to get out of the system and to limit exposure to it. While cohodk and Baley always advocate putting money into productive use, I prefer to keep my cards closer to my chest. I think that the system has gone far beyond what's healthy in terms of siphoning off the wealth & energy from those who make the economy tick. Starve the beast.
I knew it would happen.
Francisco, Dagney, Hank, John, Dagnar.... and jmski52 ?!?
Liberty: Parent of Science & Industry
Francisco, Dagney, Hank, John, Dagnar.... and jmski52 ?!?
Who is jmski Galt?
I knew it would happen.
Maybe this year? Haha
Knowledge is the enemy of fear
Maybe unavoidable was the wrong word to use?
https://news.bloomberglaw.com/capital-markets/pensions-are-fully-funded-and-hungry-for-550-billion-in-bonds
Knowledge is the enemy of fear
My pension is a fixed dollar amount that is not indexed to inflation.
That should make it fairly easy for the pension company who recently bought the rights to distribute it, to show it will be fully funded by buying long bonds at 4%.
Dollar purchasing power will continue to drop going forward due to fiscal policy, debt, and inflation. Which is why I try to move savings into inflation protected bonds, real estate, and hard assets like gold, coins, and even hated physical silver.
The debt "ceiling" is imaginary. Nothing will stop the government from spending more than it brings in. There is no ceiling, only fragile walls.
National Commemorative Medals of the U.S. Mint:
https://www.pcgs.com/setregistry/u-s-coins/medals-tokens/national-commemorative-medals-united-states-mint-1940-present/alltimeset/195526
@derryb @cohodk as this thread is 5 years old. I have a simple question for each of you. It’s a yes or no question. Are you better off financially now than when this tread started? I’m just curious.
You two guys just remind me
Of the Batman and joker.
Love the banter between you two, too, to
Martin
What if the business isn't capable of being expanded or invested in ?
As Warren Buffet just said, anybody who thinks stock buybacks are all bad is guilty of being financially illiterate. That chart simply shows 2 unrelated variables tracking one another.
I can think of FEW people worse to follow for stock advice than David Stockman. Aside from running a nice-sized company into the ground a few decades ago, he has a TERRIBLE track record of stock market prognasticating and is best characterized as a perma-bear.
He will best be known for showing political courage in being the only Michigan politician to vote against the Chrysler Bailout.
PRIVATE corporations are fully-funded (barely)....multi-employer union plans are about 50% funded and as crooked as they come. State & Local pensions plans are all over the map but many big ones are way underfunded and probably bankrupt.
They're really not pension plans, they are more like slush funds for politicians.
Liability targeting doesn't work that way. It would depend on whether the plan is locked, life expectancies, etc. You say your pension is fixed, that would have to be true for ALL plan participants.
Buying long-term Treasuries is probably not wise. Better to invest in quality corporate bonds and get 5-5.50% on AAA/AA/A-rated debt let alone higher yields in BBB/junk, MBS, etc.
6.79% 30 year fixed, could be 10% in 3 months, car loans 6, 10, 15% even on new cars with a 800 credit score. How much more can the general public take? Many banks are offering 4.5%-5% 1 year CD's heck of a lot better than what my 401k and stocks are doing. Going to dump a bit of cash into a CD, God bless us all.
Yes
Knowledge is the enemy of fear
Same as 25 years ago. Finally getting back to normalcy, and folk are freaking out. That, is more concerning, not the rates.
Knowledge is the enemy of fear
I got married on the ides of March one year after this thread started. Which March 15th, of what year is everything grinding to a halt. ?
My wife's got a honey-do list that is never ending. I'm hoping the OP is right in 2023.