Biggs
estimated that the entire amount of unfunded pension liability in the U.S.
was $4.6
trillion in 2011, but this figure did not include municipal bond debt
which, when combined, brings the total unfunded pension and muni bond liability
to $8.3 trillion. This amount is far greater than the mortgage meltdown
and is not included in the Treasury Department's balance sheet or the
national debt.
But unlike the mortgage credit bubble that
led to the 2008 crash, public pensions are not debts, since the money to
finance them was not borrowed, it is just allocated to be paid by future appropriations,
i.e., your taxes………
These
pensions are created behind closed doors, have no limits and are out of
control. In 2014 Robyn Gordon Peterson of the Long
Beach Public Transportation Co. had a pension of $1.2 million dollars and this
did not include benefits. The Los Angeles Police and Fire Depts. and San Diego
City; have one retired Assistant Fire Chief whose pension is $871,605; three
others with pensions in the $800,000s; (from 800K to 899K) seven in the $700,000s;
twenty-three in the $600,000s; seventy-four who receive in the $500,000s; and
seventy-nine who receive pensions in the $400,000 range. This means just 194
people collect over $80 million a year. And this doesn’t include tens of
thousands who collect pensions in the $300,000 range, the $200,000 range,
etc………..
This disconnect is why all state public
sector pension plans are underfunded. The average public pension is only
41% funded. This is the quintessential definition of a bubble.
And when they crash, they will crash under
different circumstances than the mortgage meltdown. It’s important to realize
that this crash will not occur all at once, as when the MBSs crashed. It will
be a spreading financial crisis that moves from one pension-bankrupted city to
another. This is already
happening.
