Is Trump here in time?
Decades upon decades of leftists promising state workers the moon in exchange for votes and power have created a ticking time bomb. Will it go off under Trump?
Underfunded government pensions to the tune of $1.3 trillion, with a gap that just can’t be filled, is the ticking time bomb facing the US economy which faces dramatic cuts in public services – and potentially riots reminiscent of Athens six years ago – according to former Federal Reserve advisor, and President of Money Strong, Danielle DiMartino Booth.
A Bulldozer Couldn’t Fill the State Pensions Gap
The $1.3 trillion pensions deficit just takes into account state and municipal obligations, and with promised returns of 8% and funds compounding at 3% for decades it will take nothing short of an economic miracle to recover. “The average state pension in the last fiscal year returned something south of 1%. You cannot fill that gap with a bulldozer, impossible,” DiMartino Booth said. “Anyone who knows their compounding tables knows you don’t make that up. You don’t get that back unless you get some miracle.”
The last time we saw significant market weakness, the baby boomers pretty much accepted that they would be retiring at 70 instead of 65, she added. “Well, guess what? They’re turning 71. And the physiological decision to stay in the workforce won’t work for much longer. And that means that these pensions are going to come under tremendous amounts of pressure.
“And the idea that we can escape what’s to come, given demographically what we’re staring at is naive at best. And it’s reckless at worst,” DiMartino Booth said. “And when you throw private equity and all of the dry powder that they have — that they’re sitting on — still waiting to deploy on pensions’ behalf, at really egregious valuations, yeah, it’s hard to sleep at night.”
Pension Fund Underfunding is Ground Zero
The interview with Real Vision was held in Dallas, which DiMartino Booth said is Ground Zero for the pensions crisis, where returns for the $2.27 billion Police and Fire Pension System have suffered due to risky investments in real estate made over a decade ago. Huge withdrawals are now taking place, amid concerns over the future viability of the pension scheme, which commentators say could be flat broke in a little over ten years.
“We’re seeing this surge of people trying to retire early and take the money. Because they see it’s not going to be there. And if that dynamic and that belief spreads– forget all the other problems,” DiMartino Booth said. “The pension fund — underfunding is Ground Zero.”
Simple,deny goverment workers their pension or renegotiate benifits,,they all,get social security anyay
Don’t for one minute think that politicians won’t relish pulling the plug on the economy under Trump’s watch.
The question is, “Who will be the first to remove the thin veneer covering a totally uncivilized society? What will remove the lynch pin and let America slide into Hell?”
Zero Hedge loves to hang crêpe.
Nevertheless, like my Granny told me, “Live each day as though it’s your last, because one day you’ll be right.”
Seniors, you’re going to be using those good ol’ tax-free Municipal Bonds as kindling in your fireplace.
🙁
“Don’t for one minute think that politicians won’t relish pulling the plug on the economy under Trump’s watch.”
No, they don’t even understand what makes the economy grow. They’re clueless. Have you looked at the market lately? Trust me money doesn’t like sitting still, on the side lines. You’re about to witness a stampede of cash. It’s already started.
@ Bad Brad
Unfortunately, that “stampede” will gain momentum and pull the average investor beyond his cash limits and into margin purchases. Then, a national or world incident will result in a market slide and the resulting margin calls.
Hello 1929… Welcome Back! 🙁
the economy is a house of cards
in the next month, watch for them to do what they never would have during the last 8 yrs
it has all been cosmetic with no foundation
talk about fake news, the phoniest has been that the economy has recovered under obama and we are out of the woods
we are just entering the woods
Sylvia,
“Margin Purchase”
You have no idea what I’m fucking talking about. Think VC
I’m old. Explain.
Trump has to pack the lower courts as well as the circuit and appeals courts. Ginzberg and Breyer have to be convinced to be retired and conservative (and fiscally aware) replacements appointed. Then he has to start the public pension reformation and be prepared to go directly to the people to explain how the problem occurred, how big and critical it is and what he’s doing to fix it in a fair way. Trump has to realize he’ll be under attack by the media for his entire term and he’ll need to regularly talk directly to the people.
TSHTF is gonna go off sometime…unless…
It’s like having your single engine 172 blow and you have to glide in. It’s possible but one wrong decision and you gonna go in hard.
Fact is Hillary would have akin to being blindfolded when you had that engine failure…Trump OTOH, we have a chance to walk away.
Trillions in promises forsaken are going to leave a lot of pissed off people. Tough world ain’t it?
“…he’ll need to regularly talk directly to the people.”
Fireside Tweets?
Hey, did I hear someone mention 1929? 👿
@ Bad Brad
If it looks like the economy is going to Hell, angel investors will fly away. You’re ignoring the power of the Fed. Untouchable and in total control.
But I’m a recovering journalist, not an economist.
I cashed out for gold when I retired.
Is trump still going to get rid of the illegals?
State pensions are not federal problems and Trump won’t let them be.
Federal pensions can and should be cut. No private sector employee has the lavish pensions and perks than the federal employees who did nothing productive for 40 years. Parasites should not be encouraged.
States should start with the “double dippers”, those employees who put their required 10 in on one state job and then retired out of their second with TWO pensions. How this ever got approved (well, I know how it got approved)! Same for retired military, fire, police, etc. No matter how may gov’t jobs you retired/vested in, you should only get one pension.
The first clue that we’re overpaying gov’t employees is the coffee klatch talk about how they hit the jack pot upon retiring.
Public plans are exempt from ERISA. This means that these plans do not have the financial, accounting, or actuarial foundations required by ERISA. If a private company tried to set up a pension structured like a state or municipal plan, it would be shut down and the fiduciaries imorisoned.
Cyrus – FYI: Most State and municipal employees do not get Social Security. Throws a bit of a monkey wrench into the idea that such plans can simply abandon their participants.
Unfunded pensions are Ponzi schemes .
You don’t see many states with fully funded pensions. In Illinois, where they tried to fix the pensions, the state Supreme Court ruled the fix unconstitutional, so nothing is being done to fix the worst funded pensions in the country.
$1.3 trillion? California alone has a $945 billion shortfall between CalPers and CalStrs. And that doesn’t include their revolving bonds and debt service. So that leaves just $90 billion for the other 56 states? I don’t think so.
Karma for living off the taxpayer by the point of the gun. Rot in hell ex-government workers. That’s what you get when you work for Satan.
@Help us Mr.Trump *you’re* our only hope: I sure hope that gold you cashed out for was physical gold, in your possession. Mining stocks and gold funds are paper, same as dollars are.
People who live off Social Security have been fu*ked for so long, these gov’t workers can get used to it, too.
PS, ^ That’s their “fair share”.
Better this bomb goes off under Trump than Cankles. Were Cankles in control, the liability would double and we’d all pay for it. Under Trump, the pensions will get renegotiated and people who benefit will get their “fair share” instead of an unrealistic union forced payout.
No shit.
Those are only the closest.
The total is more akin to $220 Trillion, though not all will come due on Mr. Trump’s watch.
“… they all,get social security anyay …”
BULLSHIT!
I paid into Socialist Security (for my income before and outside of FedGov earnings), and ALL that money was confiscated. I am not “entitled” to so much as a single cent of it, thanks to Jimmy Fukkin Carter and the unholy band of thieves and liars in Congress.
Mr. Trump’s task, (indeed, America’s) is Herculean, to say the least.
The socialists have been planning and executing the destruction of America for a century and a catastrophe is looming – just as it is for Europe, Asia, and Africa.
And they (the socialists) will do everything in their considerable power to obstruct Mr. Trump from his attempts to save America.
izlamo delenda est …
Trump is not inheriting a time tomb. The governors of those insolvent states have inherited it. Demand the governors do their jobs and fulfill their contractual obligations. Trump will have enough problems with Social Security.
Go to transparentcalifornia.com to look up pension amounts and then search deferred compensation plan. The thieves in uniform retire at 50 with a full salary and continue working to receive second full salary while putting first full salary in dcp and then retire again 5 or 10 years later and receive an million or so payout from first salary and continue to receive said full salary plus health for life. You can’t make this shit up.
Sorry, not dcp. It’s DROP.
When you throw in derivatives the number we are under water is probably 600 Trillion or more. The only way out of this is for them to print money(add more 0’s) which means cash will be near worthless or go default. Now you know why the elite have been building bunkers.
Paper Money has NEVER worked in the long run.
It’s both amazing and a little unsettling to me there is so much antipathy towards public servants on this site. When I joined the PD I was making $4.60/hr and working a 6 days on, 2 days off work schedule. Because I worked evenings and nights I got an extra nickel an hour. I got shot at and missed, shit on and hit, broken ribs, busted wrist and shoulder and you people that say I should lose my modest pension after 45 years in law enforcement can go fuck yourselves.
“… physical gold, in your possession.”
I got some virtual gold, in my own posesseshun. Well, gold paint, actually.
Jill caught me wile I was painting the cat, an tooken most of it away, but I securt some of it under tehs stairs.
Hey sig94, there’s nothing “modest” about California’s safety officer retirement. Thanks for your service to your community, the law enforcement people are an important part of our society, but…. So are the garbage men, the farmers, the plumbers, etc., none of which have publicly funded defined payout pensions that are going to strangle the financial future of my grandchildren.
sig94
Here’s you big mistake. You should have done that job in Cali. We have a family friend that was Fire Chief for Sacramento Metro. $395K a year. Retired after 5 years at full salary. Plus all the beni’s.
Are these State and Local pensions Federally Guaranteed? I don’t think so.
I’m with you, sig94. I’ve worked for state government for 38 years. I can’t afford to retire – I’d have to get another job just to pay for health care for me and my wife. ONE of us might be able to live (meagerly) on my retirement but not both of us, so if you tell me one of us has to die then I say phuq you.
I was so worried Obama was going to raid my bank and retirement accounts like Greece and other countries did. As is, he made sure there was NO interest earned the last 8 years, and THAT is what screwed me being able to retire. I’ll most likely never be able to afford it – they’ll carry me out in a body bag.
SSI/SSDI trust find was due to be insolvent in 2016 due to the explosion is disability applications. Ryan must have thrown some borrowed cash on it because I haven’t heard anything. But I’m getting ready for another hike in my withholding. I do have a military pension after 24 years in active duty but that doesn’t even cover my current federal tax bill, and my spouse and my combined income are way below 0bama’s $250,000 arbitrary “rich” line.