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Pensions for City Employees: Up in Smoke

Written by Gary North on July 5, 2012

A recent report issued by Moody’s rating service reveals that local governments are $2 trillion in the red. Why? Pension obligations.

The money has not been put aside. The money that was put aside has not been invested well.

The result is obvious: a Great Default is coming. But no one wants to think about it. Cities give in to demands by employees. The politicians in office today know they won’t be in office when the default comes. So, they cave in.

The union members think they will get paid. The politicians do not tell them otherwise. “Let sleeping dogs lie.”

Here are the facts.

Moody’s says the actual liabilities are over three times what local governments report. Lots of sleeping dogs are out there. The best strategy is to lie to them.

Moody’s isn’t lying. Politicians are.

Moody’s is about to change the accounting rules it uses to assess cities’ liabilities. The cities have their lie-abilities. Moody’s will no longer accept these lies when rating cities’ liabilities.

Cities and counties are likely to experience downgrade. So, borrowing costs will rise.

Here is the killer for cities.

Asset-smoothing, which enables pension plans to spread losses or gains over a number of years, will be abolished. Instead, pension fund assets will be valued based on the market value or the fair value on the actuarial reporting date, Moody’s said.

No more lying with statistics. Well, less anyway.

For more bad news, read the article.

Continue Reading on www.reuters.com

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3 thoughts on “Pensions for City Employees: Up in Smoke

  1. this is the truth

  2. Hey. I came across the weblog the in the search engines. This is an excellent article. I will ensure that you take a note of the idea along with resume learn more of your respective information. Appreciate the submit. I willundoubtedly give back.

  3. "Hasn't been invested well"? No chit? Tell me, with the gummint spending money like drunken sailors, with gummints at all levels p!**ing away our tax dollars to appease the insatiable commie public employees unions , with big corporations robbing us blind with the gummints able assistance, with inflation making our gummint-printed funny money less valuable every day, how can ANY fund make returns that render it self-perpetuating. Hell, they'd have to return 80% profits.