A town in Alabama has stopped pension checks because it has no money.
There will be more. There isn’t enough money in the world to pay the promises given by the political class.
Cities and counties are going to be forced into bankruptcy and states will default. It’s not if, it’s when and you don’t want to be holding those bonds when the music stops.
It was inevitable. At some point reality was going to have to crash headfirst into Liberalism.
I wonder if I could buy the town? I also wonder if anyone else is still getting paid (non pension). You’d think the place would be forced into bankruptcy.
LAPD retirees in Sand Point Idaho are having difficulty with their CA unpaid-for health insurance.
Pensions may be next. CA has a lot of 50+ year-old emergency service people who took advantage of the state’s very loose definition of PTSD, and retired at full pay.
“You’d think the place would be forced into bankruptcy.”
According to the *NYT* article I read, the city tried to file for bankruptcy, “but a judge denied the request”. I suspect that there’s more going on here than the *NYT* or CNBC are telling us.
There is always more going on than they’re telling us.
A falling domino implies that there is some chain of events with an observable progress. I think this quote from the article amply demonstrates that most of the dominoes are going to fall at once:
“So the declining, little-known city of Prichard is now attracting the attention of bankruptcy lawyers, labor leaders, municipal credit analysts and local officials from across the country. They want to see if the situation in Prichard, like the continuing bankruptcy of Vallejo, Calif., ultimately creates a legal precedent on whether distressed cities can legally cut or reduce their pensions…”
So let me see if I understand this correctly: these pinheads are unclear about whether the pension checks stop when the account from which they are drawn has a zero balance? What are they going to do about it, sue the town back into the black?
Alabama is an open shop state. I think the legislature should impose a 50% pension funding pay deduction from every unionized government worker until the books are balanced. Solidarity, union brothers! Don’t like it? Leave the union and negotiate a pay rate based on skill and merit.
OT, but Merry Christmas, Alan.
You aren’t parseing the report accurately; pritchard has money still, it doesn’t have sufficient to pay its existing infrastructure and pay it’s retiree pension obligations as well. The point of widspread interest is whether or not a city/county/state/national government (and presumably corporate entity as well) has the legal option to renige on it’s pension contractural obligations when or as it finds it convient to do so. Who’s interests come first, the current recipients of the goods/services the entity (government or business) currently provides to – and who are the ones currently paying for same – or those who hold claim to existing revenue by way of previous association?
One thing seems certain, the actual causers of this dilemma, the past and current “leadership” that mis-allocated the funding in the first place, won’t be the one’s shelling out the cash to make up the difference.
I understand the author’s perspective, but he shares the same bureaucratic bunker mentality as the poor, confused fellows who don’t understand why pension checks can’t be drawn against an empty bank account. The article really does demonstrate the distorted economic perspective of those who have no experience surviving in an open market. I have fading hope that even cutting revenue will help the folks in government figure it out, because they lack the judgement to determine what is necessary and therefore what has priority.
I like to pose this question to people in this era of crumbling infrastructure: is government “health care” spending more important than road maintenance? Those who haven’t thought about it previously generally say, “Yes.” So in turn I ask, “Really? How are you going to get to the hospital?” The human mind is the world’s most sophisticated information filter, and it is not well suited for broad risk analysis–at least not without discipline. People have evolved to make quick decisions based on the information presented to them, and so they don’t always realize that certain decisions require a greater context.
Despite the public sector’s desire for a new electorate, government is and always will be a contract between the political class and the rest of us. If you had agreed on a product and price with some private seller, and he instead took your money and handed it out as employee benefits without giving you the product on which you had agreed, you would rightly label this as fraud. The truth of the matter, then, as that the money is actually *not* there; as cruel as it may be, a pensioner is worthless compared to a productive municipal employee who puts out destructive fires, one who guards a neighborhood while its inhabitants sleep or a crew that fixes crumbling roads so the people can go to work and ultimately pay the taxes that provide these services. If the services are not provided–or even if they are not adequately provided–the contract is broken.
The tax-consuming class is largely without understanding of economics, so they see pricing as a matter of perception only, and therefore the obvious solution to them is to dictate pricing information to the people. This doesn’t work, especially when the tax-consumers see available funding as every last penny of the taxpayer’s income and every last scrap of his property, but the taxpayer has a more practical understanding of the minimum income required, that he may continue to be a healthy, productive member of society and a reliable source of tax revenue. It also doesn’t work because the taxpayers have poor pricing information about government services. This is what happens when neither party operates under the influence of normal market forces.
I feel for the pensioners who were suddenly thrown into poverty, I really do, but what all those politicians, analysts and labor “leaders” need to keep in mind is that a society of thieves has never existed because thieves are dependent on a larger population from which they steal. The real story is that in a rare and unexpected move, some local politicians decided to trim a worthless expense in order to continue being useful to the people that pay them. If the pensioners were so close to financial ruin, why don’t those politicians, analysts and union leaders take a closer look at who has been chopping away huge chunks of the pensioners’ income all those years prior?