Eat, drink, and be merry
If you'd rather not think that our country is headed for an even bigger fall than it suffered a couple of years ago, don't read this:
ALBANY — Gov. David A. Paterson and legislative leaders have tentatively agreed to allow the state and municipalities to borrow nearly $6 billion to help them make their required annual payments to the state pension fund.We are not done crashing yet, folks.And, in classic budgetary sleight-of-hand, they will borrow the money to make the payments to the pension fund — from the same pension fund.
| Posted at 11:23 AM | Permalink |
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Comments (10)
Finally, validation that I have been handling my personal finances correctly all along.
Posted by Gibby | June 12, 2010 11:58 AM
Functionally, isn't that the same as simply putting an IOU in the till?
Posted by Isaac Laquedem | June 12, 2010 1:01 PM
Can you say Greece anyone? Or is it grease, as in bend over folks?
Posted by phil | June 12, 2010 1:04 PM
A couple more years of investment under-performance is all it will take for Oregon PERS to be in the same predicaments as California, NY and NJ.
We need to find a way to quarantine PERS very soon and remove state-backed payout guarantees or it will take the entire state down with it.
Measures 66/67 were driven in large part because of new (and anticipated) PERS costs. Every new tax is packaged as 'for the kids' but it is just another way of backfilling PERS obligations.
Posted by PanchoPDX | June 12, 2010 1:54 PM
That is rich - ROb the pension fund to pay the pension fund premiumu,
God, the day of reckoning will be ugly because employee beens get paid before anything else like police and schools.
Poor Wyden's kids will only get 3 days a week of school pretty soon.
Posted by Steve | June 12, 2010 2:11 PM
That sounds a lot like a Ponzi scheme.
... as in bend over folks?
I think it's "Bend o'er again".
Posted by none | June 12, 2010 2:47 PM
It's not a Ponzi at all. As Isaac said, it's really no different from the fund taking an IOU from the state instead of cash. Cf. Social Security. But see AIG, Bear Stearns, Lehman Brothers, etc.
Posted by Allan L. | June 12, 2010 3:33 PM
"it's really no different from the fund taking an IOU from the state instead of cash."
They are taking money out and repalcing it wheich means a net of zero and no interest earned. If they paid in the premiums, they'd be getting that much more in returns over time.
NY is just hoping for the King Kong of returns on their money, 'cause when payout time comes they need to make up that diff somehow. Probably thru increased premiums down the road.
Posted by Steve | June 12, 2010 9:22 PM
Courtney and Hunt down in Salem think we are out of the woods. No worries there. PERS and the $2 Billion deficit is soon disappearing.
Posted by lw | June 12, 2010 11:15 PM
The effect of the IOU is of course that the state is admitting that it is unable to pay its current expenses as they come due, which for private parties is a test of insolvency.
Posted by Isaac Laquedem | June 13, 2010 8:04 AM