Muni Meltdown Economic Impact?

william the wie

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Nov 18, 2009
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With Chicago, Boston and NYC headed for bankruptcy probably after the election but likely before the 2016 presidential race what is the likely result in terms of economic impact?

As Detroit and many smaller cities have demonstrated public service union pensions are a big target of bankruptcy courts but so are the taxes imposed on industries in the affected area. I'm trying to get data and info on likely outcomes such as NYC bankruptcy would see increased movement of operations to Salt Lake City by bankers and brokers but not necessarily a shift of exchanges. Any other obvious outcomes?
 
Cities were going broke in the '80's, yet we all survived.
Partially because we had a much different economy in the '80s. We were barely ten years into a forty year decline in real wages even as rising productivity generated even more profits for employers. Consumer debt and overwork postponed the inevitable until 2007, but since that time it seems like those who did the most to cause the Great Recession are being rewarded with the spoils of Detroit autoworkers' pension plans, for example.
 
Cities were going broke in the '80's, yet we all survived.
Partially because we had a much different economy in the '80s. We were barely ten years into a forty year decline in real wages even as rising productivity generated even more profits for employers. Consumer debt and overwork postponed the inevitable until 2007, but since that time it seems like those who did the most to cause the Great Recession are being rewarded with the spoils of Detroit autoworkers' pension plans, for example.
True and many retired municipal workers have gone from decent retirement to ERISA payouts if they are lucky. Municipal and state workers are not automatically part of Social Security.
 
Cities were going broke in the '80's, yet we all survived.
Partially because we had a much different economy in the '80s. We were barely ten years into a forty year decline in real wages even as rising productivity generated even more profits for employers. Consumer debt and overwork postponed the inevitable until 2007, but since that time it seems like those who did the most to cause the Great Recession are being rewarded with the spoils of Detroit autoworkers' pension plans, for example.
True and many retired municipal workers have gone from decent retirement to ERISA payouts if they are lucky. Municipal and state workers are not automatically part of Social Security.
"What is ERISA?

"The Employee Retirement Income Security Act of 1974, or ERISA, protects the assets of millions of Americans so that funds placed in retirement plans during their working lives will be there when they retire.

"ERISA is a federal law that sets minimum standards for pension plans in private industry. For example, if an employer maintains a pension plan,

"ERISA specifies when an employee must be allowed to become a participant, how long they have to work before they have a non-forfeitable interest in their pension, how long a participant can be away from their job before it might affect their benefit, and whether their spouse has a right to part of their pension in the event of their death.

"Most of the provisions of ERISA are effective for plan years beginning on or after January 1, 1975.

"ERISA does not require any employer to establish a pension plan. It only requires that those who establish plans must meet certain minimum standards. The law generally does not specify how much money a participant must be paid as a benefit."

http://www.dol.gov/ebsa/faqs/faq_compliance_pension.html

I'm not clear on how a non-forfeitable interest in a pension relates to current bankruptcy actions?
 
Partially because we had a much different economy in the '80s. We were barely ten years into a forty year decline in real wages even as rising productivity generated even more profits for employers. Consumer debt and overwork postponed the inevitable until 2007, but since that time it seems like those who did the most to cause the Great Recession are being rewarded with the spoils of Detroit autoworkers' pension plans, for example.
True and many retired municipal workers have gone from decent retirement to ERISA payouts if they are lucky. Municipal and state workers are not automatically part of Social Security.
"What is ERISA?

"The Employee Retirement Income Security Act of 1974, or ERISA, protects the assets of millions of Americans so that funds placed in retirement plans during their working lives will be there when they retire.

"ERISA is a federal law that sets minimum standards for pension plans in private industry. For example, if an employer maintains a pension plan,

"ERISA specifies when an employee must be allowed to become a participant, how long they have to work before they have a non-forfeitable interest in their pension, how long a participant can be away from their job before it might affect their benefit, and whether their spouse has a right to part of their pension in the event of their death.

"Most of the provisions of ERISA are effective for plan years beginning on or after January 1, 1975.

"ERISA does not require any employer to establish a pension plan. It only requires that those who establish plans must meet certain minimum standards. The law generally does not specify how much money a participant must be paid as a benefit."

http://www.dol.gov/ebsa/faqs/faq_compliance_pension.html

I'm not clear on how a non-forfeitable interest in a pension relates to current bankruptcy actions?
States and local governments are not subject to ERISA either but there is talk about using it for the folks who get totally screwed by municipal bankruptcy.
 
True and many retired municipal workers have gone from decent retirement to ERISA payouts if they are lucky. Municipal and state workers are not automatically part of Social Security.
"What is ERISA?

"The Employee Retirement Income Security Act of 1974, or ERISA, protects the assets of millions of Americans so that funds placed in retirement plans during their working lives will be there when they retire.

"ERISA is a federal law that sets minimum standards for pension plans in private industry. For example, if an employer maintains a pension plan,

"ERISA specifies when an employee must be allowed to become a participant, how long they have to work before they have a non-forfeitable interest in their pension, how long a participant can be away from their job before it might affect their benefit, and whether their spouse has a right to part of their pension in the event of their death.

"Most of the provisions of ERISA are effective for plan years beginning on or after January 1, 1975.

"ERISA does not require any employer to establish a pension plan. It only requires that those who establish plans must meet certain minimum standards. The law generally does not specify how much money a participant must be paid as a benefit."

http://www.dol.gov/ebsa/faqs/faq_compliance_pension.html

I'm not clear on how a non-forfeitable interest in a pension relates to current bankruptcy actions?
States and local governments are not subject to ERISA either but there is talk about using it for the folks who get totally screwed by municipal bankruptcy.
I hope that won't foster a culture of dependency or entitlement among the retirees...:eek:
 
Yeah, there have been a few suicides attributed to this problem already.
I can understand why.
After retiring at 62 myself, I required either a part-time job or financial aid from my local community college to support myself until I turned 65 and became eligible for a $250/month SSI "bonus." Had I found myself in the position of many victims of the latest Wall Street Looting without the benefit of Social Security benefits and a bankrupt pension plan, I would have been homeless, at least, and with little chance of ever recovering.
 
Yeah, there have been a few suicides attributed to this problem already.
I can understand why.
After retiring at 62 myself, I required either a part-time job or financial aid from my local community college to support myself until I turned 65 and became eligible for a $250/month SSI "bonus." Had I found myself in the position of many victims of the latest Wall Street Looting without the benefit of Social Security benefits and a bankrupt pension plan, I would have been homeless, at least, and with little chance of ever recovering.
We got out of debt in 1992 and we could have retired right then and there but I worked until 2003 and Gail called in her retirement three weeks ago.

It's amazing how rapidly paying off debt makes you feel like one of the 1%. It made a bigger impact than me making a minimum of 22.45% in the DRIP/DSP market 1994-2007 before that loophole got closed.
 
With Chicago, Boston and NYC headed for bankruptcy probably after the election but likely before the 2016 presidential race what is the likely result in terms of economic impact?

As Detroit and many smaller cities have demonstrated public service union pensions are a big target of bankruptcy courts but so are the taxes imposed on industries in the affected area. I'm trying to get data and info on likely outcomes such as NYC bankruptcy would see increased movement of operations to Salt Lake City by bankers and brokers but not necessarily a shift of exchanges. Any other obvious outcomes?

good luck with that :eusa_whistle:
 
Yeah, there have been a few suicides attributed to this problem already.
I can understand why.
After retiring at 62 myself, I required either a part-time job or financial aid from my local community college to support myself until I turned 65 and became eligible for a $250/month SSI "bonus." Had I found myself in the position of many victims of the latest Wall Street Looting without the benefit of Social Security benefits and a bankrupt pension plan, I would have been homeless, at least, and with little chance of ever recovering.
We got out of debt in 1992 and we could have retired right then and there but I worked until 2003 and Gail called in her retirement three weeks ago.

It's amazing how rapidly paying off debt makes you feel like one of the 1%. It made a bigger impact than me making a minimum of 22.45% in the DRIP/DSP market 1994-2007 before that loophole got closed.
War slaves and debt slaves, maybe?

"A tenet of the American legal system is that it treats the poor and rich alike. The Supreme Court made this clear in 1970, 1971 and 1983, ruling that it is fundamentally unfair and violates equal protection under the Constitution for a judge to lock up an indigent or unemployed person because he cannot afford to pay a speeding ticket or a fine for a misdemeanor."

When I turned 65 and finally escaped what Marx (and Lincoln) referred to as "wage slavery" I had the same general feeling as getting out of jail. I'm wondering if 21st Century debtors' prisons aren't looming on the horizon for others who are not so lucky?

http://www.nytimes.com/2012/07/14/opinion/return-of-debtors-prisons.html?_r=0
 
I think that article doesn't really pertain to the topic. For one thing, it's about criminals, people who have broken the law. For another, the claim that 'you can't earn money while in prison' is false: a great many people can and do - as order-takers for some of the companies with which you may well do business (they are monitored, of course).

Not to mention it's an op/ed column and not a report, so of course everything's cherry-picked......
 
I can understand why.
After retiring at 62 myself, I required either a part-time job or financial aid from my local community college to support myself until I turned 65 and became eligible for a $250/month SSI "bonus." Had I found myself in the position of many victims of the latest Wall Street Looting without the benefit of Social Security benefits and a bankrupt pension plan, I would have been homeless, at least, and with little chance of ever recovering.
We got out of debt in 1992 and we could have retired right then and there but I worked until 2003 and Gail called in her retirement three weeks ago.

It's amazing how rapidly paying off debt makes you feel like one of the 1%. It made a bigger impact than me making a minimum of 22.45% in the DRIP/DSP market 1994-2007 before that loophole got closed.
War slaves and debt slaves, maybe?

"A tenet of the American legal system is that it treats the poor and rich alike. The Supreme Court made this clear in 1970, 1971 and 1983, ruling that it is fundamentally unfair and violates equal protection under the Constitution for a judge to lock up an indigent or unemployed person because he cannot afford to pay a speeding ticket or a fine for a misdemeanor."

When I turned 65 and finally escaped what Marx (and Lincoln) referred to as "wage slavery" I had the same general feeling as getting out of jail. I'm wondering if 21st Century debtors' prisons aren't looming on the horizon for others who are not so lucky?

http://www.nytimes.com/2012/07/14/opinion/return-of-debtors-prisons.html?_r=0

This is in fact likely to increase as more jobs get automated out of existence. Also prisons are not subject to minimum wage so an amazingly large amount of our industrial output and services are in fact the result of prison labor.
 
We got out of debt in 1992 and we could have retired right then and there but I worked until 2003 and Gail called in her retirement three weeks ago.

It's amazing how rapidly paying off debt makes you feel like one of the 1%. It made a bigger impact than me making a minimum of 22.45% in the DRIP/DSP market 1994-2007 before that loophole got closed.
War slaves and debt slaves, maybe?

"A tenet of the American legal system is that it treats the poor and rich alike. The Supreme Court made this clear in 1970, 1971 and 1983, ruling that it is fundamentally unfair and violates equal protection under the Constitution for a judge to lock up an indigent or unemployed person because he cannot afford to pay a speeding ticket or a fine for a misdemeanor."

When I turned 65 and finally escaped what Marx (and Lincoln) referred to as "wage slavery" I had the same general feeling as getting out of jail. I'm wondering if 21st Century debtors' prisons aren't looming on the horizon for others who are not so lucky?

http://www.nytimes.com/2012/07/14/opinion/return-of-debtors-prisons.html?_r=0

This is in fact likely to increase as more jobs get automated out of existence. Also prisons are not subject to minimum wage so an amazingly large amount of our industrial output and services are in fact the result of prison labor.
It would be the ultimate irony if former public employees of Detroit, Boston, New York, and Detroit finish their lifetime's labor in a federal or state prison working for next to nothing because Wall Street plundered their pensions.

At some point, I would think some version of a guaranteed annual income will have to be considered as a solution to increasing job automation.
 
I think that article doesn't really pertain to the topic. For one thing, it's about criminals, people who have broken the law. For another, the claim that 'you can't earn money while in prison' is false: a great many people can and do - as order-takers for some of the companies with which you may well do business (they are monitored, of course).

Not to mention it's an op/ed column and not a report, so of course everything's cherry-picked......
I agree we've drifted a little from the Muni Meltdown Economy of Detroit, New York, Boston, and Chicago. I also believe debtors' prisons could be seen as a viable corporate solution to an impending tide of relatively penniless retirees.
 
I think that article doesn't really pertain to the topic. For one thing, it's about criminals, people who have broken the law. For another, the claim that 'you can't earn money while in prison' is false: a great many people can and do - as order-takers for some of the companies with which you may well do business (they are monitored, of course).

Not to mention it's an op/ed column and not a report, so of course everything's cherry-picked......
I agree we've drifted a little from the Muni Meltdown Economy of Detroit, New York, Boston, and Chicago. I also believe debtors' prisons could be seen as a viable corporate solution to an impending tide of relatively penniless retirees.
Given that IL is on the express lane to default and post-2017 at least state exchange states under ACA will be the recipients of poorer, older and sicker medicare/medicaid patients that could push them over the edge into default, I think a separate thread dealing with state defaults might be called for.
 
I think that article doesn't really pertain to the topic. For one thing, it's about criminals, people who have broken the law. For another, the claim that 'you can't earn money while in prison' is false: a great many people can and do - as order-takers for some of the companies with which you may well do business (they are monitored, of course).

Not to mention it's an op/ed column and not a report, so of course everything's cherry-picked......
I agree we've drifted a little from the Muni Meltdown Economy of Detroit, New York, Boston, and Chicago. I also believe debtors' prisons could be seen as a viable corporate solution to an impending tide of relatively penniless retirees.
Given that IL is on the express lane to default and post-2017 at least state exchange states under ACA will be the recipients of poorer, older and sicker medicare/medicaid patients that could push them over the edge into default, I think a separate thread dealing with state defaults might be called for.
I agree.
The "impending tide" I referred to is more like a tsunami of rapidly aging baby boomers whose numbers could well swamp medicare and medicaid.
Why did you pick 2017?
I know I'm drifting from your OP at this very moment. but Thom Hartman has recently suggested 2016 as a likely possibility for the next major economic upheaval:


"Could the United States face another economic collapse? Writer and broadcaster Thom Hartmann looks back at past financial crises and comes to a startling conclusion. 'As long as you don’t look too closely at our nation, things seem under control — the United States looks whole … but when you go around to the "dark back side" of the nation, you see the shocking truth. There you see a nation whose core fundamentals have been hollowed out,' writes Hartmann in his new book, 'The Crash of 2016: The Plot to Destroy America — And What We Can Do to Stop It'"

 
With Chicago, Boston and NYC headed for bankruptcy probably after the election but likely before the 2016 presidential race what is the likely result in terms of economic impact?

As Detroit and many smaller cities have demonstrated public service union pensions are a big target of bankruptcy courts but so are the taxes imposed on industries in the affected area. I'm trying to get data and info on likely outcomes such as NYC bankruptcy would see increased movement of operations to Salt Lake City by bankers and brokers but not necessarily a shift of exchanges. Any other obvious outcomes?

Odd that one cannot find ANY comments about the upcoming bankruptsy of the above noted cites EXCEPT here at USMB.


I did find THIS though...

20 Cities That May Face Bankruptcy After Detroit
 
With Chicago, Boston and NYC headed for bankruptcy probably after the election but likely before the 2016 presidential race what is the likely result in terms of economic impact?

As Detroit and many smaller cities have demonstrated public service union pensions are a big target of bankruptcy courts but so are the taxes imposed on industries in the affected area. I'm trying to get data and info on likely outcomes such as NYC bankruptcy would see increased movement of operations to Salt Lake City by bankers and brokers but not necessarily a shift of exchanges. Any other obvious outcomes?

Odd that one cannot find ANY comments about the upcoming bankruptsy of the above noted cites EXCEPT here at USMB.


I did find THIS though...

20 Cities That May Face Bankruptcy After Detroit
Before considering some other obvious outcomes from muni meltdowns prior to the next presidential election, would it help to fix the blame for "runaway labor costs" that are driving the bankruptcies?

"What do most of these ailing cities all have in common? Well, consider that the vast majority are located in states with forced unions, non-right-to-work states.

"Right-to-work laws attract people and businesses,' says labor economist Richard Vedder of Ohio University. 'Non-right-to-work states repel them.'

"His statistics show that cities in states with right-to-work laws have sturdier tax bases and higher employment levels.

"Unions control state legislatures and city halls in non-right-to-work states, so it can become politically paralyzing to try to fix the problem of runaway labor costs."

If NYC follows Detroit, would the bankers and brokers who relocate to Salt Lake City be any less likely continue their securitization scams that have scuttled so many pension plans?

20 Cities That May Face Bankruptcy After Detroit
 
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