It should be noted that it is illegal under Oregon law, ORS 59.135 (a Class B felony) to commit fraud in connection with the sale of any securities or municipal bonds. That includes the making of any false statements, or the omission of any material facts.

And my favorite quote on this subject comes from Oregon's Division of Finance and Corporate Securities, which has a publication titled, "Oregon Securities Law: A Guide For Law Enforcement."

On page 17, under the heading, "The Bottom Line," the guide states, "If your initial investigation doesn't meet the 'smell test,' it's worth a hard look."

So, how is it that law enforcement investigators see no evil, hear no evil, speak no evil, and smell no evil when it comes to the actions of public officials in connection with the sale of municipal bonds?

I listened to economists debating this pending disaster a few months ago. One promient guy predicted that widespread violence could occur as public pensions dry up. A small town with a few hundred left out in the cold is one thing. He suggested that as numbers grow so could widespread civil unrest.

I have to agree. Pensioners are not sworn to protect, nor do they exist any longer to serve the public. I doubt they will simply step aside, look for other work, or hope for a bailout. Not as interesting or sad as it is downright scary.

Well, we'll just have to wait and see how muni bond sales go. Right now, we are the kinda nervous stage, but people are still buying T-bills like crazy.

Be nice if the local pols came to their senses and set some aside for schools and bridges (and mental health care) so we'd have educated and well-adjusted people riding all of those TriMet trains.

It's just a hope, of course, that they'll look beyond their own immediate self-interest and really address problems.

With regards to the hiring of "unqualified minions" as trough-feeding consultants for the city, here is an interesting letter to the editor from yesterday's NYT magazine, from the president of a local firm. The bit about "separating stakeholders from the design process" is right up Sam "Mayor Creepy" Adams's alley, and stands as a surprisingly honest assessment of the current status quo in our graft-ridden city. At any rate, worth a read:

"Regarding David Segal’s article about the ‘‘new breed of consultants’’ helping corporations come up with fresh ideas, governments also need help. We need such consultants in the public sector to help our governments transform to meet the budgetary and service challenges of the 21st century. In business, there is one bottom line to innovate to: profit. In government, there are many interests and dynamics that can undercut innovation. We need to develop specific techniques that address the unique situation of government. In my work to help governments innovate, I have found that separating stakeholders’ input from the design process is very useful. We need more ideas, more support and more commitment to innovation in government. I hope next year we see these ideas highlighted.
Beverly Stein
President, the Public Strategies Group
Portland, Ore."

I've been subscribed to The Pension Tsunami.com for the past few years, and it's been an eye-opener. It's mostly California-centric, but Oregon and other places crop up in there as well.

I'd like to see the only acceptable definition of "stakeholder" become "taxpayer."

One promient guy predicted that widespread violence could occur as public pensions dry up.

I doubt it would come to violence, although it would be kind of funny to see grandparents rioting. I'm sure they'd take care to wear sweaters and comfortable shoes.

In all seriousness, though, I can see generational "warfare" at the ballot box. Old people vote more reliably than young people, so look for more legislation, regulation, and government spending favoring the needs of retirees and senior citizens. The AARP already has something like 40 million members, and retiree and senior citizens groups will gain more influence at all levels of government, particularly as Boomers retire over the next couple of decades.

It will pit young voters and families who want schools and parks against old people who want lower taxes and pensions protected and/or bailed out. It could tear apart unions as their older members with the most seniority fight to protect pensions and health care for themselves at the expense of younger members who will be laid off and face benefits cuts when revenues shrink. (Anyone here who thinks all Oregon public employees are pampered PERS 8-percenters really needs to talk to some public employees under the age of 40).

Unfortunately, there won't be enough workers in the workforce to support all the retirees, so catering to them will mean continued disinvestment in public services and infrastructure and more borrowing from China. I certainly don't want to begrudge my Boomer parents a comfortable retirement free from worry about their finances and health care needs, as they've earned it. But as someone with children approaching school age as well as the likelihood of getting back none of the Social Security money I've been paying into the system for the last 20 years, politically speaking my priorities and theirs will almost certainly diverge in the years ahead.

There's almost like a death spiral to this town. The more government bennies handed out to penniless young folks and others down and out, the more of these folks drawn into this town. These folks have no material property or income to tax so they vote in increasing numbers for more spending and debt financing. If it weren't for federal and state subsidies, I don't think this spiral could continue, at least not anywhere close to the current rate.

As TalkingPointsMemo points out today, the one state that everyone conveniently overlooks is Texas, which is facing a $25B shortfall, despite the fact that it is a no-union state, and very conservative. But because it doesn't fit into the ZOMG-teh-unionz are-bad!1!1!!! conservative narrative, it gets left out of the picture. Interesting.

For more than a decade I've listened to some very thoughtful people predict that Oregon's public pensions were unsustainable.

It took me a while to join the chorus because (like every other "the end is near" prediction involving government debt) I secretly wondered if the threat was being overblown.

I don't any longer. In 2008 when GWB had to bailout the banks to avoid worldwide financial collapse, I knew we'd been right all along to sound the alarm bells about every kind of government debt.

I just hope there is enough time to reach some accord before things turn ugly.

Here's one thing I know: when they start talking about "haircuts" for Tier 1 PERS recipients, the biggest PERS' buzzcuts need to go to the (ex-)legislators who are responsible for this mess.

Here, here, to that!

That's really the problem, isn't it? Politicians and legislators doing stupid and foolish but not illegal things, walking away scot-free later, and the citizen having to pay the bill for their mistakes, like a parent having to bail out foolish children, except this time the folks are broke and can't offer much help.

Beverly Stien
"In government, there are many interests and dynamics that can undercut innovation. We need to develop specific techniques that address the unique situation of government."

The biggest problem is saturation of inept people in public office.
You can't "technique" around obstackles like Sam Adams, Rex Burkholder and Lynn Peterson.
They must be removed.
I Oregon we have hundreds of the everywhere casuing programs of mass dysfunction.

Dave J.
"one state that everyone conveniently overlooks is Texas, which is facing a $25B shortfall"

NY has a $300 billion unfunded fringe benefits liability.

The Bev Stein's quote helps fortify her Urban Studies degree from Berkeley, her 3 terms in the Oregon Legislature and her time as Multnomah Co. Commissioner. She knew about the pension debt problems for years, but all she could give is a quote like this.

Well, Stein being a recipient of all these various pensions, why would she ever question them? That's the problem.

Eric, I don't disagree with you in the slightest, but there's a bit more to the situation in Texas than people think. We've never had a state income tax due to the money coming in from oil and gas leases: everyone in state government knows that the oil and gas is running out, but they're hoping that the responsibility of finding alternate income sources falls on their kids and grandkids. (We also have three separate amendments to the Texas State Constitution preventing a state income tax. Even mentioning the possibility of a state tax is a good way to lose political office: a lot of noise was made about George W. Bush's dirty tricks during the 1994 gubernatorial election, but the real reason why Ann Richards lost the governor's office was because she dared ask how we were going to pay the tax shortfall.)

Sadly, I don't see anything getting any better out here, either. Rick Perry, our current unbearable cross, is gleefully giving even more tax abatements to "encourage new business," mostly to companies owned by big campaign contributors. At the same time, he keeps talking about the same mythological "billion-dollar surplus" that his predecessor Bill Clements pushed back in the Eighties. We can't have a state income tax, current gas leases through North Texas are undercharged to encourage drilling and "fracking", and essential infrastructure upgrades and repairs held off for thirty years are becoming essential. We're gonna blow up, too, but it's just going to be a different sort of boom.