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The USSR had the second largest economy in the world at one point and it didn't help them. Bigness does not equal soundness - indeed globally smaller countries tend to be much wealthier, better governed, and freer than larger countries. Incidentally this is why I myself agree with Calexit; smaller scale (on average) forces better government due to more competition, and the smaller the better, until we live in a world of Monacos, Liechtensteins, Luxembourgs, and Icelands.
Yes! Nobody can manage 320 million people and a $4 trillion annual budget.
We would be much better off splitting the US into several countries with strong defense and trade ties.
Governments would be best if they competed for citizens in a free market.
When adjusting for the state’s high cost of living, California’s GDP ranking drops to 11th in the world.
France and Brazil also dropped two spots on the list.
And it's mainly due to silicon valley. It's very localized.
I don't understand why people are making excuses for the unnecessary high taxes and irresponsible spending (bullet train to nowhere, fund for helping illegals)
They can't amend it in such a way that it will impair the benefits of retired or current employees, however they can change those benefits for employees who will be hired in the future.
The state has 5 pension systems, Teachers ( excludes Chicago), State Employee, University, Judges and General Assembly. In many cases, there are more retired than active employees. Some enable employees to opt out of pension into 401k.
The state has been requiring active employees to contribute 75% more towards their pensions since 1998.
The number of retired employees exceeds the number of active employees in some of the plans.
The historical actuarial projections were never realized. This has been going on for nearly 70 years. It has not mattered who or which party sat the governor's mansion.
Neither the current governor ( Republican) or Chicago mayor ( Democrat) are responsible for the pension crisis.
Both were devastated when the state Supreme Court ruled accrued benefits were untouchable. All but 7 states have more flexibility than Illinois to manage their pension obligations.
Illinois is one of a handful of states that does not tax pension income. It is also among the 27 states that does not tAx Federally taxable Social Security Income.
Neighboring Wisconsin has one of the best funded pension systems in the US. Wisconsin taxes pensions and tax rates range from 4%-7.65% , depending on income. Conversely, Illinois exempts pensions from taxation and imposes a flat 3.75% rate on income.
It could bridge the gap in pension funding by taxing pensions and Social Security benefits as is done in many other states.
Last edited by middle-aged mom; 06-26-2017 at 08:12 AM..
Not the $2 trillion used to bail out Fannie/Freddie.
It's no coincidence that Cuomo (Clinton Admin) announced the requirement that Fannie/Freddie buy $2.4 trillion in high-risk mortgages made to low-income and credit-compromised borrowers to expand homeownership, and the Federal Reserve subsequently had to create $2 trillion in QE to bail Fannie/Freddie out of that mess.
Barney Frank even admitted that was a mistake and a major cause of the financial crisis. ...After he retired from Congress, of course.
What a strange contortion of facts to put the cause of the financial crisis on Frank.
Frank was a part of the House minority for most of the Bush Administration.
GSE origination peaked in 2003 and declined as the bubble inflated because new money loans did not qualify for FNMA/ FHLMC origination. The independent credit rating agencies gave private label securities backed by garbage investment grade ratings. This enabled institutional investors to gorge on junk bonds. In effect, public and private pension plans were the source of funding seriously sub prime loans.
FNMA/ FHLMC had a lot of capital and invested it in the junk for the same reasons as other conservative institutions, a better ROI than otherwise available.
It demonstrated how so many highly sophisticated institutions relied on Independdnt credit ratings instead of their own due diligence when it came to investment decisions. The relatively few institutions who did the due diligence and took a pass, were challenged and criticized by their boards for being too conservative.
The primary responsibility of a CEO is to create shareholder value. Doing so often means how capital is deployed. Bush Admin declared a tax holiday to encourage repatriation of foreign profits and to juice investment in research and development and thus create US jobs. Corporate response was underwhelming. Those corporations who repatriated some of their profits tended to use those profits to buy back their own stock and thus create shareholder value and did so while shedding hundreds of thousands of jobs.
A corporation can lose substantial market share and continue to increase shareholder value when it deploys capital to investments with better than average ROI. And that's what FNMA and FHLMC did with their own capital.
California go bankrupt? BWAHAHAHA. California is the largest state in the Union, the most innovative, and the 6th largest economy in the world. You wanna talk about too big to fail? There is absolutely no way anybody will ever let California fail.
Illinois on the other hand, Is a festering dump of a has been. It's screwed, like Detroit.
Neither the current governor ( Republican) or Chicago mayor ( Democrat) are responsible for the pension crisis.
Both were devastated when the state Supreme Court ruled accrued benefits were untouchable.
Again, the problem isn't just that ACCRUED benefits are untouchable, but they ruled that even UNACCRUED benefits are untouchable; in essence, all future benefits accrue the second a public-sector employee is hired and future benefits "promised" on that day are frozen in perpetuity. So now state and municipal governments can't even negotiate over future benefits that employees haven't even worked to earn yet.
Like I said before, Illinois property owners don't own their property any more, the public-sector employees do. They just let us live in their collateral properties for a fee.
Illinois' budget crisis has become so dire that the state is in danger of entering a financial "death spiral," as a prominent ratings agency threatens to downgrade the state's credit score to "junk" status.
Doing so would increase the cost of borrowing, worsening the deficit and making it even harder for taxpayers to dig out of the hole.
“We’re in a death spiral—Illinois has the worst pension crisis in the nation and needs the boldest reforms,” Ted Dabrowski, Illinois Policy Institute’s vice president of policy, told Fox News. “There is no doubt that junk bond rating is on its way.”
What a strange contortion of facts to put the cause of the financial crisis on Frank.
I didn't put it on Frank. I merely posted that Frank admitted the Fed Gov (specifically, Cuomo) was at fault for mandating Fannie/Freddie to buy $2.3 trillion of high-risk (rather than conforming) mortgages.
Have you seen the latest back door tax? Gasoline this time. It's already been talked about, the next bubble will be public pensions.
I don't understand why California simply doesn't double their property tax and then all the problems would be solved.
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