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Thread: Michigan AG to defend Public Pensions in bankruptcy

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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by haymarket View Post
    Do you operate under the impression that the City of Detroit has to pay the entire bill for pensions at one time and their current shortfall between income and expenses will prevent them for ever honoring their incurred contractual obligations which are backed by the Michigan Constitution?
    You can look at it your way.. which you are right.. not all of the pension cost is due at once.

    But here is my view, the problem comes when Pension costs are taking up more and more of the government budget (this case Detroit). 25% of your yearly budget is a huge chunk of your budget. It hurts, not on paper but in reality. Detroit can't pay for good basic services which causes more and more people to move out of the city. So you can't fix the exodus without fixing your budget. You can't cut services because that's what's causing the exodus.

    Detroit has only two good choices if it wants a future.
    1) Federal Bankruptcy as that's the only place it's gonna end up if the State of Michigan forces a haircut to bond holders without touching the pensions.
    2) A fair plan that leaves most of the "pain" in two areas.. Bonds and Pensions. Tell bond holders to take a 10 or 20% hair cut (10 to 20 cents on the dollar) and have the General Pension fund (Detroit's largest and most underfunded) take a 5% to 10% hit (if it's 10%, I'd say bond holders would need a 15% to 20% cut).

    Btw..Detroit could cut it's funding to the new hockey arena but that still wouldn't cover the shortfall for this year.
    Every normal man must be tempted at times to spit on his hands, hoist the black flag, and begin to slit throats. It is inaccurate to say that I hate everything. I am strongly in favor of common sense, common honesty, and common decency. This makes me forever ineligible for public office. H.L Mencken

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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by Excon View Post
    I disagree with the underlined. Especially when it comes to Government employment.



    That said ...
    Pensions should be separate from the employer.
    i agree with the second part, but that will require higher wages.

    as for the first, government employees enjoy better salaries and benefits than some in the private sector now, but this has not always been the case. for those who are retired now and for those who are retiring soon, they could have made a lot more privately, and the pension made up for a bit of the difference. my parents were teachers, and weren't paid what they were worth for most of their careers. the pension was deferred salary. reducing it after the fact is unfair, and it's basically breach of contract.

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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by Occam's Razor View Post
    Yes, GM pensions... we're talking about gov't pensions.
    And your words said it was for bonuses. GM's bailout was for GM's pension (UAW). Wasn't about saving GM, rather saving UAW.
    Every normal man must be tempted at times to spit on his hands, hoist the black flag, and begin to slit throats. It is inaccurate to say that I hate everything. I am strongly in favor of common sense, common honesty, and common decency. This makes me forever ineligible for public office. H.L Mencken

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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by austrianecon View Post
    And your words said it was for bonuses. GM's bailout was for GM's pension (UAW). Wasn't about saving GM, rather saving UAW.
    Yes, because there can't be more than one reason for an action. The fact remains that bonuses were paid for failure, mostly with the banks... meanwhile everyone else and their children and children's children get to pay the price for those failures. Bonuses at all are incredibly insulting.

    I also find it incredibly naive to think one of the reasons for the bailout was not to save the auto industry as a whole. Stock holders, executives, labor... the whole shebang.

    Either way, we're still talking about gov't pensions.

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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by Occam's Razor View Post
    Yes, because there can't be more than one reason for an action. The fact remains that bonuses were paid for failure, mostly with the banks... meanwhile everyone else and their children and children's children get to pay the price for those failures. Bonuses at all are incredibly insulting.
    I am against all bailouts, so let's get that straight first.. Banks and Auto Industry should have gone through normal bankruptcies. But 9 of those banks who took TARP were forced to take it because Uncle Sam didn't want people to know who had the bad balance sheets. If all take it, less chance of a bank run.

    I got a bonuses and they aren't paid out based on performance alone. I can have a ****ty year in total returns on investment but I brought in more clients. So I gave a net positive to the Bank. CEOs could justify their bonuses because despite what you think, money from TARP is realized as INCOME.

    Quote Originally Posted by Occam's Razor View Post
    I also find it incredibly naive to think one of the reasons for the bailout was not to save the auto industry as a whole. Stock holders, executives, labor... the whole shebang.
    Saving something means it stays the same. Like I saved you from falling off a cliff.. you are alive and in one piece. That didn't happen in the Auto bailouts. Rather Stock holders were taken to the wood shed and lost EVERYTHING. Bond holders lost 90% of their investment in GM. Dealerships were closed (total of 2,000 of them or about 100,000 jobs lost). While UAW got 93% of the money they were owned by GM at time of the bailout.

    So who did it help? Sure as hell didn't help all those elderly GM bondholders, didn't help car dealerships, didn't help stock holders or even Detroit..but it did help the UAW.

    Quote Originally Posted by Occam's Razor View Post
    Either way, we're still talking about gov't pensions.
    There is no difference between GM pension plan and city pension plan. It has to be funded the same way, except city pensions have absolutely no protections under Federal Law. So it's a haircut or nothing at all for them despite Michigan "law". Federal > State.

    Michigan AG can look pretty while campaigning for future Senator but he's gonna get his ass handed to him in Bankruptcy court and the Supreme Court. Bankruptcy is a federal issue and has been since 1789. Welcome to reality.
    Last edited by austrianecon; 07-28-13 at 02:26 PM.
    Every normal man must be tempted at times to spit on his hands, hoist the black flag, and begin to slit throats. It is inaccurate to say that I hate everything. I am strongly in favor of common sense, common honesty, and common decency. This makes me forever ineligible for public office. H.L Mencken

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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by MaggieD View Post
    Oh, they absolutely did not, Haymarket. Of course, one reason for that is that anyone who works for the City of Chicago OR as a public school teacher must live within the city limits...there's also no city income tax. I was very surprised to hear that Detroit had one. I've never heard of that before.
    Thank you for that information.

    Detroit is not alone with a city income tax in Michigan.

    Albion, Battle Creek, Big Rapids, Detroit, Flint, Grand Rapids, Grayling, Hamtramck, Highland Park, Hudson, Ionia, Jackson, Lansing, Lapeer, Muskegon, Muskegon Heights, Pontiac, Port Huron, Portland, Saginaw, Springfield and Walker all have city income taxes.
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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by austrianecon View Post
    You can look at it your way.. which you are right.. not all of the pension cost is due at once.

    But here is my view, the problem comes when Pension costs are taking up more and more of the government budget (this case Detroit). 25% of your yearly budget is a huge chunk of your budget.
    So in your opinion what is the magic number?
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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by austrianecon View Post
    I am against all bailouts, so let's get that straight first.. Banks and Auto Industry should have gone through normal bankruptcies. But 9 of those banks who took TARP were forced to take it because Uncle Sam didn't want people to know who had the bad balance sheets. If all take it, less chance of a bank run.

    I got a bonuses and they aren't paid out based on performance alone. I can have a ****ty year in total returns on investment but I brought in more clients. So I gave a net positive to the Bank. CEOs could justify their bonuses because despite what you think, money from TARP is realized as INCOME.
    Sure, on the books you couldn't enter it any other way. It's still a failure. You can spin it any way you want. Not bonus worthy. The fact that you display that arrogant and aloof justification shows a truly disconnected rational.



    Saving something means it stays the same. Like I saved you from falling off a cliff.. you are alive and in one piece.
    So saving a life means nothing unless they are unscathed? A person paralyzed in a wreck, but pulled out before burned to death isn't a save... Gotcha! You are truly twisted.


    That didn't happen in the Auto bailouts. Rather Stock holders were taken to the wood shed and lost EVERYTHING. Bond holders lost 90% of their investment in GM. Dealerships were closed (total of 2,000 of them or about 100,000 jobs lost). While UAW got 93% of the money they were owned by GM at time of the bailout.

    So who did it help?
    How about all the vendors and suppliers, the small, often privately held companies that support local economies? Did the execs get to keep their jobs? SAVE! Are they once again accruing stock options? Yup! Do they stand to make more from the new stock options than the old ones? Yes.

    You are profoundly myopic.

    There is no difference between GM pension plan and city pension plan. It has to be funded the same way, except city pensions have absolutely no protections under Federal Law. So it's a haircut or nothing at all for them despite Michigan "law". Federal > State.
    ONLY in matters of interstate commerce. Fed does NOT trump States on matters not enumerated within the constitution. Sorry, dead wrong.

    Michigan AG can look pretty while campaigning for future Senator but he's gonna get his ass handed to him in Bankruptcy court and the Supreme Court. Bankruptcy is a federal issue and has been since 1789. Welcome to reality.[/QUOTE]

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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Quote Originally Posted by Captain Adverse View Post
    No, I am aware how pension plans are supposed to work. What I am saying is that the city entered into bankruptcy because current revenues are unable to maintain current city services and pension plan payments; nor meet city deficits and debt balances. Something has to suffer.

    Trying to meet pensions, existing deficits, and debt paymens in bankruptcy means cutting already reduced city services to the bone and beyond. How can the city continue to function if the bulk of revenue is going to go everywhere but where it is truly needed?
    Yeah, well the fact they don't have any money is highly questionable at best. Gov.Snyder wrote a letter to Orr and the state treasurer approving the bankruptcy being rushed through behind the back of the unions who were more than willing to negotiate. Basically he said in order to continue to put money toward restructuring the city for their grand private-public partnership the pensioners will have to sacrifice. And, I quote, "The only way to do those things is to radically restructure the city and allow it to reinvent itself without the burden of impossible obligations." Detroit files for bankruptcy protection - World - CBC News

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    Re: Michigan AG to defend Public Pensions in bankruptcy

    Let's just say they have prioritized the money

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