Jon Hamm, chief executive of the California Association of Highway Patrolmen, nailed it in a
letter to CalPERS in early 2003 (small pdf). He knew exactly what would happen,
and he clearly spelled it out.
Jon Hamm is chief executive of the 14,000-member California Association of Highway Patrolmen, where he has worked for 26 years. He has never held a position in finance or economics. Rather, he is an economics junkie who pores over financial websites in his free time. “I don’t count myself to be an expert,” the 51-year-old Hamm says.
Members of his union and acquaintances have been among Hamm’s key economic indicators. Around the time he sent the letter, he had been mentally filing away anecdotes about highway patrol officers and friends purchasing $400,000 homes. Hamm negotiates union members’ salaries–officers earn an average of around $60,000 a year–so his antennae went up.
The madness went on another 4 years. And since Hamm sent his letter,
Investment losses at CalPERS, stemming from general market declines but also from real estate and venture capital deals that flopped, resulted in a $601-million increase in the amount that state taxpayers put into the pension system this year.
Although California has always been expected to contribute some cash from the state budget, the total taxpayer contribution in the current fiscal year is nearly $3.9 billion, up from about $156.7 million in 2000.
I wouldn't care if this was just California's problem,
but the fact is it's a problem for all of us because of the federal bailouts to state governments. We're just shifting the costs around and obfuscating where the money goes via grants and "loans" that likely won't be paid back.
4 comments:
My thought about this is that we all are going to get raped financially, so we better have found a way to get a piece of the bubble and have hidden it away for the future.
One way or the other pension plans and FNM/FRE/FHA debt will be paid in full by the taxpayer. Only question is will it be a slow bleed or will there be some kind of massive "one time" crack on the head.
It's about power and wealth for those running the system. Enron had it's off book related companies which to me resembles FMA etc. Promise untold fortunes in the future to workers to keep the current budget lower while gaining a relection voting block, and then cook the pension books to hide the liability by kicking it down the road. Old story and works most of the time.
The only way out save revolt, is to meet those pension deals with junk paper.
Savers will get punished, debtors rewarded. Which is kind of along the lines of people who work, do the right thing get taxed( Punished ).
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