First Public Pension Fund Files For Bankruptcy: Will Yours Be Next?
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  • David Fischer

    Were it so simple, Professor. Is our prudent citizen to put his savings under the mattress where it will evaporate at 2% [ed. “10%”] per annum? Or does he have recourse in the financial industry with their impenetrable “products” that depend upon prevailing political winds rather than fundamentals?

    • Walter Russell Mead

      @David Fischer: Nothing is easy. Find work you love, do it well, and plan to do it as well as you can for as long as you can. Save enough to be able to invest conservatively and still meet your goals. Learn to love some activities that don’t cost much money and save a little more.

  • Jacksonian Libertarian

    The simple fact that you are calling this the “First” indicates that you believe there will be a “Second” and a “Third”. Your talk of an economic recovery charging in to save the day is mostly wishful thinking with little evidence that there will be the capital for such growth with the Government taking $1.3 Trillion per year out of the economy’s fuel tank.

  • thibaud

    A pity our pension funds aren’t managed by savvy, well-regulated financial pros, as Canadian funds are. Instead of the hacks, cronies and patsies-for-hedgefund-sharks that fill so many US pension fund investment boards.

    In this as in so many other areas of economic and public life, Canada, Sweden, Holland are all leaving us in the dust.

    Fortunately, there are still a few smart and open-minded US leaders such as Mayor Bloomberg who understand this fact and are trying to nudge our dinosaurs toward the Canadian model of pension fund management.

    Maybe if more Americans knew about the merits and achievements of our northern cousins, here and in Europe, they too would join Bloomberg in demanding we swap out our hack-ridden, failing pension management system for one modeled on Canada’s system. Here’s a solid overview of that system from the latest issue of The Economist:

    http://www.economist.com/node/21548970

  • Anthony

    “Courts are where messes (public policy) made by cowardly politicians go to get resolved…” And if it sounds to good to be true, it probably isn’t despite our desire to fantasize – a lie is an allurement, a fabrication, that can be embellished into a fantasy. Reality is more difficult (no such thing as a free lunch) and sometimes unpleasant.

  • Kenny

    “Hopefully the economic recovery will lift some of the funds out of the red zone, and over the long run the prospects for American growth are bright.”

    “The” economic recovery!

    You’re kidding, right?

  • vanderleun

    They say they are “American.” They say they are working in the finest traditions. And yet, and yet, over and over they take those that believe in them and vote for them and still plan to do so to this end:

    “All fixed, fast frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned …”

  • Corlyss

    “Pensions can be reduced by court order, without union negotiation, without legislative votes.”

    I’m really concerned that the Feds’ bailout interference in what should have been normal bankruptcy process has tainted the option forever. Unions will run to Congress with their hands out begging for an intervention and will likely get it. I’m convinced that bankruptcy will cease to be a realistic option for firms that really should have their unions crushed, while it will remain the preferred outlet only for poor trash like single parents, careless young people, and trapped Soc.Sec.-supported seniors.

  • Corlyss

    “Hopefully the economic recovery will lift some of the funds out of the red zone, and over the long run the prospects for American growth are bright.”

    Naturally one hopes for a better outcome than that anticipated. However, let’s be realistic here. This is no different from the behaviors on exhibit in Europe. Improvements in the prospects only delay the reckoning. Good times are used to hide from the problems; bad times are used to expand the supports. And the debt clock counts down the seconds to midnight (mixing the existing debt clock metaphor with the nuclear countdown x minutes to midnight metaphor).

  • JKB

    Providing for your own isn’t the solution either. A couple of weeks ago, I paid my state’s rich widow tax, or as they call it, dividend and interest income tax. Imposed during the Depression to tap the income of the wealthy widows whose husbands had made prudent investments in income producing companies.

    Any pool of cash will sooner or later be looted by the government in their insatiable need for other people’s money. Unless, of course, it is looted by fund trustees and managers first.

  • Public pensions simply are a scam to buy Dem votes. Not a single thread of logic supports my saving for my retirement AND some else’s – with their retirement having priority for my earnings. An adult nation would outlaw public sector unions and requirements for any taxpayer to fund the retirement of any other person. I put money into my retirement fund. Everyone else can, too.

  • ” the fund, based in the Mariana Islands, . .”

    Sounds suspicious already. When are we going to close down tax havens in the middle of the ocean? Those tax cheats are cheating the American tax payers.

  • You have to know when to hold ’em, when to fold ’em, when to walk away, and when to run.

  • dearieme

    Are all US colonies called commonwealths?

  • While I don’t doubt the premise of this article and believe there’s trouble on the horizon with public pension funds, the CNMI (Commonwealth of the Northern Mariana Islands) is a unique place and situation with corrupt officials taking advantage of the geographical distance from the U.S. mainland to grab all they can with both hands.

    I fully believe the CNMI retirement plan expects a bailout from the U.S. government. We’ve done it before. Oversight of the Marianas has been lax. And there won’t be any squawk about a bailout here, because 99% of Americans have never heard of the CNMI.

  • Kris

    [email protected]: “Are all US colonies called commonwealths?”

    Only those with public sector unions.

    [/sarc]

  • MyRealName Raymond King

    @thibaud,

    Why do liberals continue to compare the US economy, social issues etc. to, in your words, Canada, Holland and Sweden? The population, of all three countries, is approximately 44.7 Million people. Roughly the same as California and New Jersey combined. Knowing this conversation is deeper, than your simple suggestion of following other Socialist models that are failing. Given a simple understanding between the differences of infrastructure requirements, social wants of certain groups etc.(the list goes on). How do you figure that a society of three countries, who’s internal requirements pale in comparison to that of the US, can be used to model an economic system of our size?

  • Raymond King

    @thibaud,

    Why do liberals continue to compare the US economy, social issues etc. to, in your words, Canada, Holland and Sweden? The population, of all three countries, is approximately 44.7 Million people. Roughly the same as California and New Jersey combined.  Knowing this conversation is deeper, than your simple suggestion of following other Socialist models. Given a simple understanding between the differences of infrastructure requirements, social wants of certain groups etc.(the list goes on). How do you figure that a society of three countries, who’s internal requirements pale in comparison to that of the US, can be used to model an economic system the size of ours?

  • thibaud

    @ Raymond – most US public pension money is managed and regulated at the state level, so it’s fair to compare New Jersey to Ontario, say, or a large US state to Australia or Holland.

    The key issue is not, as WRM would have it, the “blue” model per se but the quality of governance and professionalism in pension management.

    The state of US governance is in many states and municipalities abysmal. The state of Canadian, Dutch, Australian Swedish etc governance is quite good. This is why their pensions have much higher solvency ratios than ours.

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