Neubarth
At the Ballpark July 30th
California Pension Shortfall: June 2008 55 Billion to March 2010 500 Billion!
A study released Monday by Stanford University estimates that California's three largest state-operated, public-employee pension fundsthe California Public Employees' Retirement System, California State Teachers' Retirement System and University of California Retirement Systemcurrently face a total shortfall of more than $500 billion.
The figure dwarfs the funds' own combined shortfall estimate of $55 billion as of July 2008, according to the report, which doesn't account for the more than $100 billion loss sustained by the funds during the recession. That adds a further wrinkle to California's already precarious fiscal situation.
The study, prepared by Stanford graduate students for Gov. Arnold Schwarzenegger, used a more conservative formula to estimate the pension systems' unfunded obligations, an approach advocated by a growing chorus of experts. The report also recommended increasing contributions to the funds, investing in less risky assets and trimming pension benefits for future employees.
Gov. Schwarzenegger warned Monday that pension-fund shortfalls could lead California, which faces a $20 billion budget gap in the coming fiscal year, to divert more funds from other state programs to cover pension costs.
Shortfall Awaits California's Big Pension Funds - WSJ.com
L.A. to Run Out of Cash in a Month, Controller Says
April 5 (Bloomberg) -- Los Angeles will run out of cash on May 5, city Controller Wendy Greuel said today in a release in which she requested a $90 million transfer of reserve funds to pay bills.
The controller said she received a letter from the Los Angeles Department of Water and Power today indicating the utility wouldnt send an anticipated $73 million payment to the citys general fund. That money is part of an annual contribution of 8 percent of power revenue that the utility makes in lieu of paying taxes to the city, according to Ben Golombek, a spokesman for the controller.
The question I have been asked most often during the budget crisis is, When will the city run out of money? Greuel said in the e-mailed release. Unfortunately, we finally have the answer.
Greuel, 48, said in the release that the city might not be able to make payroll. She asked Mayor Antonio Villaraigosa and the City Council to release $90 million from reserve funds to meet what she described as an urgent cash need. The controllers financial reporting division estimated that the city would need $90 million to ensure solvency through the fiscal year that ends June 30, according to Golombek.
The mayor supports the controllers request for $90 million from the reserve fund, said his spokeswoman, Sarah Hamilton, in an e-mailed comment. He also called on city managers to adhere to spending controls he asked for in March, according to Hamilton.
Fiscal Crisis
This is the most urgent fiscal crisis that the city has faced in recent history, and it is imperative that you act now, Greuel said in her release.
There is no surplus money to transfer at this time, S. David Freeman, interim general manager of the department, said in a letter today to Greuel that was released by Golombek.
The City Councils vote to block a proposed electricity rate increase last week may push the Department of Water and Power into deficit, the Los Angeles Times cited Freeman as saying. L.A. to Run Out of Cash in a Month, Controller Says (Update1) - Bloomberg.com
Protect Your Wealth From Exploding Debt as States Implode
Lets put things in perspective. Greeces gross domestic product (GDP) is approximately $357 billion. Meanwhile, the state of Illinois has a GDP of around $633 billion and, on Monday, Fitch Ratings downgraded Illinois credit rating and warned of possible further action, leaving the states credit on negative watch.
Why? Because Illinois has a $13 billion budget deficit and is careening into a liquidity crisis.
Is Illinois not big enough for you? California is the largest U.S. state with roughly $1.8 trillion in GDP the eighth largest in the world. That puts it roughly on par with Russia, Spain, or Brazil. How bad are things in California?
California is wrestling with a $22 billion budget deficit.
The deficit is expected to get worse, and hit $25 billion in 2012. And thats a CONSERVATIVE estimate. Other estimates put it over $40 billion.
Including state pension obligations, Californias debt burden is 37% of its economic output.
The crisis is so bad, the credit default swaps or insurance against default on California general obligation debt now show Californias bonds are at greater risk than the bonds of Kazakhstan, Croatia, Bulgaria and Thailand. Thats right, Kazakhstan! Where Borat comes from!
The financial situation is so severe that California is paroling prisoners early, slashing what once were deemed essential services, and doing the equivalent of rifling the couch cushions (shifting funds temporarily) to try and bridge the fiscal gap.
http://www.marketoracle.co.uk/Article18433.html
A study released Monday by Stanford University estimates that California's three largest state-operated, public-employee pension fundsthe California Public Employees' Retirement System, California State Teachers' Retirement System and University of California Retirement Systemcurrently face a total shortfall of more than $500 billion.
The figure dwarfs the funds' own combined shortfall estimate of $55 billion as of July 2008, according to the report, which doesn't account for the more than $100 billion loss sustained by the funds during the recession. That adds a further wrinkle to California's already precarious fiscal situation.
The study, prepared by Stanford graduate students for Gov. Arnold Schwarzenegger, used a more conservative formula to estimate the pension systems' unfunded obligations, an approach advocated by a growing chorus of experts. The report also recommended increasing contributions to the funds, investing in less risky assets and trimming pension benefits for future employees.
Gov. Schwarzenegger warned Monday that pension-fund shortfalls could lead California, which faces a $20 billion budget gap in the coming fiscal year, to divert more funds from other state programs to cover pension costs.
Shortfall Awaits California's Big Pension Funds - WSJ.com
L.A. to Run Out of Cash in a Month, Controller Says
April 5 (Bloomberg) -- Los Angeles will run out of cash on May 5, city Controller Wendy Greuel said today in a release in which she requested a $90 million transfer of reserve funds to pay bills.
The controller said she received a letter from the Los Angeles Department of Water and Power today indicating the utility wouldnt send an anticipated $73 million payment to the citys general fund. That money is part of an annual contribution of 8 percent of power revenue that the utility makes in lieu of paying taxes to the city, according to Ben Golombek, a spokesman for the controller.
The question I have been asked most often during the budget crisis is, When will the city run out of money? Greuel said in the e-mailed release. Unfortunately, we finally have the answer.
Greuel, 48, said in the release that the city might not be able to make payroll. She asked Mayor Antonio Villaraigosa and the City Council to release $90 million from reserve funds to meet what she described as an urgent cash need. The controllers financial reporting division estimated that the city would need $90 million to ensure solvency through the fiscal year that ends June 30, according to Golombek.
The mayor supports the controllers request for $90 million from the reserve fund, said his spokeswoman, Sarah Hamilton, in an e-mailed comment. He also called on city managers to adhere to spending controls he asked for in March, according to Hamilton.
Fiscal Crisis
This is the most urgent fiscal crisis that the city has faced in recent history, and it is imperative that you act now, Greuel said in her release.
There is no surplus money to transfer at this time, S. David Freeman, interim general manager of the department, said in a letter today to Greuel that was released by Golombek.
The City Councils vote to block a proposed electricity rate increase last week may push the Department of Water and Power into deficit, the Los Angeles Times cited Freeman as saying. L.A. to Run Out of Cash in a Month, Controller Says (Update1) - Bloomberg.com
Protect Your Wealth From Exploding Debt as States Implode
Lets put things in perspective. Greeces gross domestic product (GDP) is approximately $357 billion. Meanwhile, the state of Illinois has a GDP of around $633 billion and, on Monday, Fitch Ratings downgraded Illinois credit rating and warned of possible further action, leaving the states credit on negative watch.
Why? Because Illinois has a $13 billion budget deficit and is careening into a liquidity crisis.
Is Illinois not big enough for you? California is the largest U.S. state with roughly $1.8 trillion in GDP the eighth largest in the world. That puts it roughly on par with Russia, Spain, or Brazil. How bad are things in California?
California is wrestling with a $22 billion budget deficit.
The deficit is expected to get worse, and hit $25 billion in 2012. And thats a CONSERVATIVE estimate. Other estimates put it over $40 billion.
Including state pension obligations, Californias debt burden is 37% of its economic output.
The crisis is so bad, the credit default swaps or insurance against default on California general obligation debt now show Californias bonds are at greater risk than the bonds of Kazakhstan, Croatia, Bulgaria and Thailand. Thats right, Kazakhstan! Where Borat comes from!
The financial situation is so severe that California is paroling prisoners early, slashing what once were deemed essential services, and doing the equivalent of rifling the couch cushions (shifting funds temporarily) to try and bridge the fiscal gap.
http://www.marketoracle.co.uk/Article18433.html