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I wouldn't bet the mortgage on the states insuring anything. They are having enough issues with their own employee pensions.
certain things i think are pretty low risk of default and of course no one knows for sure but i think these funds will always be bailed out by the fed.
certain things i think are pretty low risk of default and of course no one knows for sure but i think these funds will always be bailed out by the fed.
Laughing out loud as quitely as I can. Any state employee banking on getting 100% of their pension as advertised may need to think about it. I as much as anyone has been supportive of the financial postion of Many state pensions if reforms are implemented now. I have also said on multiple occassions that we are planned for a 20% reduction in SS and our pensions. Probably won't need it based on current conditions but that is the point is is based on current conditions and the future isn't now!
there are a few things so ingrained in our structure that to mess with them would cause a terrible de-stabilization in american life. one of which is social security ,2nd is fdic and 3rd is letting pensions or annuities fail.. the fed would find money for any of this as we saw how quickly they found a trillion bucks for the bail outs.
i do agree 100% with you that states will look to shed as much legacy benefits as they can but thats true of most companies today. but thats quite different then letting existing ones default and fail.
you may not get what you bargained for as the airlines learned when they failed but you will get the terms of the guarantee funds more then likely. if those things fail i listed above ever defaulted chances are any and all investments you had in anything else would fail as well . then its just bullets and beans.
there are a few things so ingrained in our structure that to mess with them would cause a terrible de-stabilization in american life. one of which is social security ,2nd is fdic and 3rd is letting pensions or annuities fail.. the fed would find money for any of this as we saw how quickly they found a trillion bucks for the bail outs.
i do agree 100% with you that states will look to shed as much legacy benefits as they can but thats true of most companies today. but thats quite different then letting existing ones default and fail.
you may not get what you bargained for as the airlines learned when they failed but you will get the terms of the guarantee funds more then likely. if those things fail i listed above ever defaulted chances are any and all investments you had in anything else would fail as well . then its just bullets and beans.
There are four states that have serious pension problems. If the feds bailed one out and I have a hunch this congress wouldn't, that would be the end of pension reform elsewhere and the doomsday clock would hit midnight. If the fed bailed one out why not let them bail us out. Illinois is planning to sell billions of state bonds to finance pension obligations. Will anyone be buying and if so at how large a premium?
Not sure of how the nuts and bolts will workout but im pretty confident all will still work out in the end when all is said and done.....
a state defaulting on its pensions would be like you said a doomsday event.
Not sure of how the nuts and bolts will workout but im pretty confident all will still work out in the end when all is said and done.....
a state defaulting on its pensions would be like you said a doomsday event.
A full default no, except in possibly Illinois which has it's head in the sand and actually could reach the zero point. With over 2 trillion in assets just about all state pension funds could reach full funding with an up to 20% reduction in current benefits including current retiree's. Not at all likely but why I plan for such.
i thought california already held that slot along with michigan playing the role of spain.
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