Rhode Island cuts pensions, gets backing from federal court

[Belsnickel]

(02-09-2018, 02:55 PM)michaelsean Wrote: I guess paying interest to yourself is better than paying it to some investor. Or maybe they have to borrow to pay it back so it doesn't matter that they are paying interest to themselves because eventually they will be paying it to some outside person or entity.

Yeah, they have to borrow to pay the interest, which then we still have to pay the interest on...

 

(02-09-2018, 02:55 PM)michaelsean Wrote: If they don't get a return on their higher pay, then we are moving towards a welfare program.

They get a return, they just don't see much of it. SS is tax free for low-income individuals that aren't working. If you are still working, you may end up reducing your monthly benefit. If you make so much money, it is taxed. People that hit that cap are often in that "making too much money" segment. So, they are taxed on the SS, and usually end up having to return it all to the government when combined with their other income. Some don't file for it at all because of the hassle involved. I've done taxes for a couple of people like that, where they just never bothered filing for it. But they also had a different viewpoint than a lot of people do towards this program.

[*michaelsean*]

(02-09-2018, 03:04 PM)Belsnickel Wrote: Yeah, they have to borrow to pay the interest, which then we still have to pay the interest on...

 
They get a return, they just don't see much of it. SS is tax free for low-income individuals that aren't working. If you are still working, you may end up reducing your monthly benefit. If you make so much money, it is taxed. People that hit that cap are often in that "making too much money" segment. So, they are taxed on the SS, and usually end up having to return it all to the government when combined with their other income. Some don't file for it at all because of the hassle involved. I've done taxes for a couple of people like that, where they just never bothered filing for it. But they also had a different viewpoint than a lot of people do towards this program.

I was talking more of people who weren't working anymore.   So if you are paying on your total income rather than capped at a lower income, then they have to pay you benefits on that total income.  If there are tax implications due to other retirement money, that's fine, but you should at least get the full benefits initially.

[Yojimbo]

This guys short article explains that the SS trust is basically just full of IOU’s.

https://www.davemanuel.com/how-much-money-does-the-us-government-owe-the-social-security-trust-fund-155/

[JustWinBaby]

The difference is the federal govt can print however much money it needs to pay its bills. The question is how much you can print before inflation becomes a serious problem. And at some point they will lower the benefit and increase the withholding, extending it at least a few more decades.

Many states have serious pension issues. I saw a proposal to break-up IL into three states mainly because the state constitution prohibits the restructuring/changing of pension benefits. I know it sucks if your benefit is reduced, but why is it the responsibility of a taxpayer today for an unrealistic benefit promised 20-30 years ago? Like all of us non-pensioners, if the markets don't do well you might have to accept a lower standard of living in retirement and/or work a few more years.

[fredtoast]

(02-09-2018, 12:32 PM)StLucieBengal Wrote: And we should all have the option to opt out of SS.

Then people would just opt out and not save anything.

Or some people who work hard and save will see their pension plans disappear because Wall Street is a rigged casino.

[GMDino]

(02-20-2018, 06:53 PM)JustWinBaby Wrote: The difference is the federal govt can print however much money it needs to pay its bills.  The question is how much you can print before inflation becomes a serious problem.  And at some point they will lower the benefit and increase the withholding, extending it at least a few more decades.

Many states have serious pension issues.  I saw a proposal to break-up IL into three states mainly because the state constitution prohibits the restructuring/changing of pension benefits.  I know it sucks if your benefit is reduced, but why is it the responsibility of a taxpayer today for an unrealistic benefit promised 20-30 years ago?  Like all of us non-pensioners, if the markets don't do well you might have to accept a lower standard of living in retirement and/or work a few more years.

Serious question: If we've been printing money all this time why didn't we see inflation?  And why are interest rates going up now because wages are (finally) going up and there is a fear of inflation?

[StLucieBengal]

(02-20-2018, 07:40 PM)fredtoast Wrote: Then people would just opt out and not save anything.

Or some people who work hard and save will see their pension plans disappear because Wall Street is a rigged casino.

I don’t care if people do not save anything for themselves or their family. It’s their life and it’s on them.

[JustWinBaby]

(02-20-2018, 08:54 PM)GMDino Wrote: Serious question: If we've been printing money all this time why didn't we see inflation?  And why are interest rates going up now because wages are (finally) going up and there is a fear of inflation?

It's generally called the global deflation dividend.  In other words, had we not been printing so much money and with such low interest rates, we actually would have seen deflation.  So that was soaked up or offset with what actually amounts to a hidden tax.

The Fed has a lot of influence over the short term interest rate.  They want to put bullets back in the gun for the next recession, but have wanted to normalize rates for a long time.  It was just the economy wasn't all that strong to do a lot of raising.  Markets, however, tend to determine the longer-run interest rate outlook....with the 10-yr being a proxy (generally what mortgage rates get set off of), and that just isn't moving much.  So this is called a flattening of the yield curve, which tends to precede a recession.

Also, slack in the labor market (unemployment, underemployment, and artificially lower participation) is a big part of why wages weren't moving.   That apparently is starting tighten up, but I have my doubts.  I think companies are passing on some of those tax cuts because they don't want to see a wave election for Dems end-up rolling things back.  I'm just worried if and when we finally get to a truly healthy economy it will be short lived before another severe recession hits.

[ballsofsteel]

Screw SS. We need to spend as much as we can on the military so those defense contractors can engorge their bank accounts and pass on their bribe money to the politicians. Although we already are 10 times stronger than all the armies in the world combined, we need to be twenty times stronger. Cha Ching.

[GMDino]

(02-21-2018, 12:32 AM)JustWinBaby Wrote: It's generally called the global deflation dividend.  In other words, had we not been printing so much money and with such low interest rates, we actually would have seen deflation.  So that was soaked up or offset with what actually amounts to a hidden tax.

The Fed has a lot of influence over the short term interest rate.  They want to put bullets back in the gun for the next recession, but have wanted to normalize rates for a long time.  It was just the economy wasn't all that strong to do a lot of raising.  Markets, however, tend to determine the longer-run interest rate outlook....with the 10-yr being a proxy (generally what mortgage rates get set off of), and that just isn't moving much.  So this is called a flattening of the yield curve, which tends to precede a recession.

Also, slack in the labor market (unemployment, underemployment, and artificially lower participation) is a big part of why wages weren't moving.   That apparently is starting tighten up, but I have my doubts.  I think companies are passing on some of those tax cuts because they don't want to see a wave election for Dems end-up rolling things back.  I'm just worried if and when we finally get to a truly healthy economy it will be short lived before another severe recession hits.

Thanks for that.

From what I've been reading I'm not sure a much healthier economy is sustainable no matter who is in charge. Mainly because oversight and regulations to keep an eye on bad practices are being waylaid.  But a recession is inevitable in any case.  These things are cyclical as we all know.  It's just a matter of how far we fall and how long it takes to recover, IMHO.

[JustWinBaby]

(02-21-2018, 10:24 AM)GMDino Wrote: ...oversight and regulations to keep an eye on bad practices are being waylaid. 

The govt does pretty well at fixing problems [regulation, or lack thereof] after the fact.  Nothing Obama did, or that Trump un-did, is going to matter.  EVERY major "financial crisis" has been Wall Street innovation running way ahead of regulation and models.  That will never change - you can't fix what you can't see.

In the last 3+ decades, we've had at least 3-4 financial crises.....every one a failure of risk mitigation models.  Hubris, yes, greed or indifference, no.  You don't agree because everything you read and hear says otherwise - because everyting you and everone else reads is partisan propaganda. You're not stupid, you just don't have the experience and education to know better. Friends and colleagues talk all the time how we wish people could get the truth.

I AM afraid of the next recession, because Obama's recovery is basicaly Bushanomics on steroids.  W's economic growth was fraudulent - it was fueled by financial services (mostly mortgage financing).  But Obama's isn't any better.  More easy money, more cheap financing.  We didn't learn our lesson the first time and the next time will probably be worse.  Nothing to do with regulations - but your politicians will make sure you "know" otherwise.

[JustWinBaby]

Just as a point of reference.....junk bonds caused the '87 financial crisis and recession. Today, they are a HUGE and VALUABLE part of economic growth, more commonly referred to as "high yield". IMO, this is an identical story to CDO's and CMO's blamed for the mortgage crisis.

You have to actually understand how regulation works. It is, to oversimplify, based on risk-adjusted values. And when your risk models are junk with new financial instruments....

[GMDino]

(02-23-2018, 04:16 AM)JustWinBaby Wrote: The govt does pretty well at fixing problems [regulation, or lack thereof] after the fact.  Nothing Obama did, or that Trump un-did, is going to matter.  EVERY major "financial crisis" has been Wall Street innovation running way ahead of regulation and models.  That will never change - you can't fix what you can't see.

In the last 3+ decades, we've had at least 3-4 financial crises.....every one a failure of risk mitigation models.  Hubris, yes, greed or indifference, no.  You don't agree because everything you read and hear says otherwise - because everyting you and everone else reads is partisan propaganda.  You're not stupid, you just don't have the experience and education to know better.  Friends and colleagues talk all the time how we wish people could get the truth.

I AM afraid of the next recession, because Obama's recovery is basicaly Bushanomics on steroids.  W's economic growth was fraudulent - it was fueled by financial services (mostly mortgage financing).  But Obama's isn't any better.  More easy money, more cheap financing.  We didn't learn our lesson the first time and the next time will probably be worse.  Nothing to do with regulations - but your politicians will make sure you "know" otherwise.

Just to the bolded:  But you can react and try to mitigate that happening again.  Which Obama tried to do.  I won't sit here and say he got it 100% right, but I will say that Trump then completely undid it at all.  I'm not sure how that is good when we did see it and now we're not going to do much of anything to stop it from happening again.

[Belsnickel]

(02-23-2018, 04:16 AM)JustWinBaby Wrote: I AM afraid of the next recession, because Obama's recovery is basicaly Bushanomics on steroids.  W's economic growth was fraudulent - it was fueled by financial services (mostly mortgage financing).  But Obama's isn't any better.  More easy money, more cheap financing.  We didn't learn our lesson the first time and the next time will probably be worse.  Nothing to do with regulations - but your politicians will make sure you "know" otherwise.

What scares me about the next recession is not only the potential severity because of what you state here, but also that we have put ourselves in a position where trying to dig ourselves out of it will be very difficult. We've talked on here before about true Keynesian theory and how it isn't being followed. Because we have been engaging in the behavior that we should be doing in economic downturns even when we aren't in one it is going to mean we may not have anywhere to go when the recession hits.

[*Nately120*]

(02-20-2018, 10:58 PM)StLucieBengal Wrote: I don’t care if people do not save anything for themselves or their family.   It’s their life and it’s on them.

I don't care either, but then again I'm not one of those people who thinks he's going to have to answer to Jesus "handouts and healing for everyone" Christ, one day.