It is amazing that whereever you turn in the US, there are huge amounts of debt. Besides the federal and state spending, consider pension funds in the various states. Furthermore, these pension finds are guaranteed by state constitutions, which means they MUST payout before payroll and other state obligations.
One of the most debt-ridden entities in the US seem to be pension funds. As we have mentioned in the past states like New Jersey have an acculmated pension deficit of $46B and the city of Chicago alone has a pension deficit of $18.5B. While Illinois itself has a pension deficit of $35B. Other states and municipalities are not necessarily in better shape.
http://articles.chicagotribune.com/2010-03-07/news/ct-met-public-pensions-cost-0308-20100307_1_pension-funds-public-pension-funding-deficit
http://www.chicagobusiness.com/cgi-bin/news.pl?id=8191
And yet the pension funds continue to play Russian roulette with their funds expecting Vegas-like returns. Consider the following item reported in the NY Times. The pension funds "gave" private equity firms $17B just so that they can have illiquid assets.
"The nation’s 10 largest public pension funds have paid private equity firms more than $17 billion in fees since 2000, according to a new analysis conducted for The New York Times, as the funds flocked to these so-called alternative investments in hopes of reaping market-beating returns. [http://www.nytimes.com/2010/04/03/business/03equity.html]
Showing posts with label pensions. Show all posts
Showing posts with label pensions. Show all posts
Saturday, April 3, 2010
Monday, March 1, 2010
The Economic Destruction of Illinois
In a previous post regarding the financial condition of the US, I mentioned that for the time being I would not consider state issues. This post is a little detour.
The state of Illinois has an estimated $13bn deficit. That number is one-half of the revenues that the state brings in. Of course the revenues of $27bn is also an estimate for this year. Furthermore, the pension systems are underfunded to the tune of $62bn. In one county, the sheriff's patrol cars have been repossessed.
There is no way that Illinois can recover without federal aid. But that is only Illinois, what about California? New York? For example, California faces a $20bn deficit. And that is for the current fiscal year. Next fiscal year, 2010, the shortfall is predicted to be $40bn.
As reported by The Telegraph, according to the Economic Policy Institute states face a shortfall of $156bn in fiscal 2010. In any case, the federal government can only subsidize the states for a limited period of time. So while the President and Congress fiddle with health care and wars, Rome is burning.
http://online.wsj.com/article/SB10001424052748703795004575087733732827118.html
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7338857/Dont-go-wobbly-on-us-now-Ben-Bernanke.html
http://sunshinereview.org/index.php/State_budget_issues,_2009-2010
The state of Illinois has an estimated $13bn deficit. That number is one-half of the revenues that the state brings in. Of course the revenues of $27bn is also an estimate for this year. Furthermore, the pension systems are underfunded to the tune of $62bn. In one county, the sheriff's patrol cars have been repossessed.
There is no way that Illinois can recover without federal aid. But that is only Illinois, what about California? New York? For example, California faces a $20bn deficit. And that is for the current fiscal year. Next fiscal year, 2010, the shortfall is predicted to be $40bn.
As reported by The Telegraph, according to the Economic Policy Institute states face a shortfall of $156bn in fiscal 2010. In any case, the federal government can only subsidize the states for a limited period of time. So while the President and Congress fiddle with health care and wars, Rome is burning.
http://online.wsj.com/article/SB10001424052748703795004575087733732827118.html
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7338857/Dont-go-wobbly-on-us-now-Ben-Bernanke.html
http://sunshinereview.org/index.php/State_budget_issues,_2009-2010
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