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Generational Dynamics Web Log for 19-Sep-2010
19-Sep-10 News -- State pensions systems are in a 'death spiral'

Web Log - September, 2010

19-Sep-10 News -- State pensions systems are in a 'death spiral'

Snakebot: Robot snake climbs a real tree

State pensions systems are in a 'death spiral'

A study by the Chicago Tribune finds that local officials and administrators in cities and towns around the state of Illinois have been colluding with one another, "looking the other way," in order to help each other obtain enormously bloated pensions.

The scam that's used in Illinois and in other states is as follows: In most states, your annual pension amount is determined by your salary in the your last working year. So you save up your vacation, holidays and sick days, and get cash for them when you retire. That money then boosts your final income, and your retirement.

If that were all of it, it might not be so bad. But city officials collude with one another to award bonuses, car allowances and other perks in the last year of work. The result of this collusion is that pension amounts are up to 45% higher than if they had followed the rules.

That's one half of the problem.

The other half of the problem is that officials have essentially been lying about the amount of money available in pension funds. The way that this trick works is to make fastastic assumptions on the returns on the pension funds' investments, according to Wall Street Journal (Access).

The National Association of State Retirement Administrators surveyed 15 public pension systems, and found that they're assuming 8% return on investments, which is enormously unrealistic at a time when interest rates are close to zero.

For example, Calpers, California's giant state pension fund, has been assuming 7.75% annual return on investments, according to the NY Times, even though its returns in the last decade have bee in in the 3-4% range.

As a result, many state pension funds are in a "death spiral," according to an analysis by Bloomberg, with Illinois leading the way.

You have state officials, led by state labor unions, colluding with one another to provide huge pensions, and lying about how much money is available, presumably under the assumption that the Democratic administration in Washingotn will bail them out.

I keep getting into discussions about today's economy with people who scoff at me and tell me that the worst if over. It is totally beyond belief to me that anyone could seriously believe that. I like to point out that the financial crisis that we've already been though was not caused by one or two bad apples -- it was caused by fraud perpetrated by people in almost every major financial institution in the world -- people who were willing to commit fraud and screw as many investors as possible for their own gain.

And exactly those same people are still running those same financial institutions.

And now we see that people in state labor union, supported by people in Washington, have exactly the same attitude -- screw as many people as possible for their own gain. That's certainly was the intended purpose of the "ObamaCare" bill, which is an act of economic insanity.

People in the mainstream media, as well as Democratic politicians, keep making contemptuous remarks about the Tea Party, calling them things like "lunatics" and "wingnuts" (though at least they've stopped using the "teabagger" vulgarity). These people have no idea what's going on.

A couple of weeks ago, I was watching Geraldo Rivera, a liberal commentator on Fox News. He expressed total confusion and puzzlement that Tea Partiers were objecting to raising taxes on "wealthy people" with incomes above $250,000, when the average Tea Partier income is only $50,000. "Why would someone who makes $50,000 object to taxing someone who makes $250,000," he openly and genuinely wondered?

It's because Tea Partiers believe at a visceral level that the people in Washington are all crooks. In most cases they haven't seen this web site's description of how greedy, nihilistic, destructive, self-destructive Generation-Xers have taken charged, supported by greedy, incompetent Boomer managers, have thrown away all moral values except "screw everyone and make money."

Few Tea Partiers have any understanding of those details of what's going on, but they do understand the bottom line at a visceral level, and they're willing to throw out an Republican or Democratic incumbent, in the hope that someone new at least won't be a total crook.

What Rivera doesn't seem to grasp is that Tea Partiers would rather leave all that money in the hands of "wealthy people," who at least are relatively likely to comply with the law, rather than give that same money to the people in Washington who will simply piss it away on their cronies.

I've been saying for many years that the the country is facing a major political realignment that neither Democrats nor Republicans will like, and you're seeing it in action. Sleazy actions by administrators of state and local pension funds is just one more in a long list of reasons.

Snakebot: Robot snake climbs a real tree

One more step in the development of intelligent robots is Snakebot, a robot developed by the Biorobotics Lab at Carnegie Mellon University.

It slinks along like a snake, and then climbs a tree, always looking around with its giant eye (a camera).

Here's the video. It's both eerie and hilarious.

These snakes are not about to take over the world, but it's fascinating to see new developments of this type.

(Comments: For reader comments, questions and discussion, see the 19-Sep-10 News -- State pensions systems are in a 'death spiral' thread of the Generational Dynamics forum. Comments may be posted anonymously.) (19-Sep-2010) Permanent Link
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Generational Dynamics Web Log for 19-Sep-2010 19-Sep-10 News -- State pensions systems are in a 'death spiral'

State pensions systems are in a 'death spiral'

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Generational Dynamics Web Log for 19-Sep-2010
19-Sep-10 News -- State pensions systems are in a 'death spiral'