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Thread: Detroit Files for Largest Municipal Bankruptcy in US History

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    Re: Detroit Files for Largest Municipal Bankruptcy in US History

    Quote Originally Posted by greyhat View Post
    Pensions are based on future guarantees- that's the whole reason they've gone away- they're expensive even if your Pros can manage the assets well, there is still a much higher cost of funding.

    A good approach would be to allow 401k plan participants to hire pros to help them; however ERISA rules make this a very tricky process.
    What's also happened with these pension plans is that the projected returns remain as they've been for years; and actual returns? Well, they're in the toilet . . . so municipalities are forced to make up the difference. It's a whore's nightmare.
    The devil whispered in my ear, "You cannot withstand the storm." I whispered back, "I am ​the storm."

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    Re: Detroit Files for Largest Municipal Bankruptcy in US History

    Quote Originally Posted by cpwill View Post
    Mine was and remains that we should apply the law.
    Fair enough. I'm just not convinced that any real kind of law can apply to corruption. The mere fact that Wall Street did to Detroit what it did to homeowners makes my blood boil. They conned the city (and many others in the US) into borrowing money using complex loans that their own finance people didn't understand while they manipulated the market. Now everyone loses in this mess except Wall Street bankers. A must read, "Only Wall Street wins in Detroit Crisis" -Bloomberg

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    Re: Detroit Files for Largest Municipal Bankruptcy in US History

    Quote Originally Posted by MaggieD View Post
    What's also happened with these pension plans is that the projected returns remain as they've been for years; and actual returns? Well, they're in the toilet . . . so municipalities are forced to make up the difference. It's a whore's nightmare.
    Not only did Detroit borrow from its own pension funds to pay expenitures they also underfunded them by 100 million and then they entered into swap agreements to make up for its shortfall. What happened was pure corruption and to say that all public pensions are bad and use a corrupted situation as an example is frankly disingenuous.

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    Re: Detroit Files for Largest Municipal Bankruptcy in US History

    Quote Originally Posted by rabbitcaebannog View Post
    Not only did Detroit borrow from its own pension funds to pay expenitures they also underfunded them by 100 million and then they entered into swap agreements to make up for its shortfall. What happened was pure corruption and to say that all public pensions are bad and use a corrupted situation as an example is frankly disingenuous.
    And to believe you without a link would be, ummmmm, foolish.

    Please be so kind as to refute my statement in the meantime, yes? What is the projected rate of return built into the pension plans? That's a huge problem today.

    You can't blame people if they don't know the truth -- and you don't present it. Can you.
    The devil whispered in my ear, "You cannot withstand the storm." I whispered back, "I am ​the storm."

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    Re: Detroit Files for Largest Municipal Bankruptcy in US History

    Quote Originally Posted by MaggieD View Post
    And to believe you without a link would be, ummmmm, foolish.

    Please be so kind as to refute my statement in the meantime, yes? What is the projected rate of return built into the pension plans? That's a huge problem today.

    You can't blame people if they don't know the truth -- and you don't present it. Can you.
    Sure, I can give you a link-

    "From 1995 through 2011, the median annual rate of return for defined benefit plans was 8% compared with about 7.3% for defined contribution plans, according to the Towers Watson & Co. analysis.

    “DB plans have some inherent advantages that have helped them historically outperform their 401(k) counterparts, such as lower investment fees, longer investment time horizons and management by investment experts,” Dave Suchsland, a senior retirement consultant in Towers Watson's Philadelphia office, said in a statement.
    http://www.businessinsurance.com/art...S03/130529945#

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    Re: Detroit Files for Largest Municipal Bankruptcy in US History

    Tell me, wasn't Obama elected to help the "little people" and not Wall Street? Who is still benefiting today, wall street or main street?

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    Re: Detroit Files for Largest Municipal Bankruptcy in US History

    Quote Originally Posted by Conservative View Post
    Tell me, wasn't Obama elected to help the "little people" and not Wall Street? Who is still benefiting today, wall street or main street?
    Obama's cabinet consist of Wall Street.

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    Re: Detroit Files for Largest Municipal Bankruptcy in US History

    Quote Originally Posted by rabbitcaebannog View Post
    Sure, I can give you a link-

    "From 1995 through 2011, the median annual rate of return for defined benefit plans was 8% compared with about 7.3% for defined contribution plans, according to the Towers Watson & Co. analysis.

    “DB plans have some inherent advantages that have helped them historically outperform their 401(k) counterparts, such as lower investment fees, longer investment time horizons and management by investment experts,” Dave Suchsland, a senior retirement consultant in Towers Watson's Philadelphia office, said in a statement.
    http://www.businessinsurance.com/art...S03/130529945#
    I really don't mean to be difficult, but this is a subject I have keen interest in. While your source says what IT says, this source says otherwise:

    At least three of the nation's largest U.S. public pension funds have already announced returns of between 1 percent and 1.8 percent, far below the 8 percent that large funds have typically targeted.

    The fund's targets have been "unrealistic," said Michael Lewitt, a portfolio manager at Cumberland Advisors in Sarasota, Florida. "They've been fooling themselves because there is no realistic case they can make that."
    Public pension funds to face calls to set realistic targets | Reuters

    You can obviously see what happens when the projected return is too high . . . it initially looks like pension funding will be $1 million ("Hey, we can afford that!") when in reality, because rosy projections are used, the actual funding ends up at $2 million. (Or whatever...poor example, but I think you get it.)
    The devil whispered in my ear, "You cannot withstand the storm." I whispered back, "I am ​the storm."

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    Re: Detroit Files for Largest Municipal Bankruptcy in US History

    Quote Originally Posted by rabbitcaebannog View Post
    Obama's cabinet consist of Wall Street.
    Exactly!! You have it figured out. Too bad the diehards don't

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