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"It’s clear that violence is being legitimized and we can’t control what’s happening any more…."
http://www.thenation.com/print/artic...reece-meltdown
http://www.thenation.com/print/artic...reece-meltdown
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Re: greece update
I was just in the US, and now am back in Greece. I hate to say it, but the prosperity Greece enjoyed the past decade was a false prosperity. I don't think a nation can return to such a false prosperity. Yes, the politicians in Greece made out like bandits. But there is little difference with US politicians. The only difference lies in the system. In the US, through lobbies and PACs, and post political career 5 figure speeches to corporate benefactors, the enrichment of politicians is institutionalized - there is an existing legal framework.
I'm from NJ. An acquaintance of mine from high school just retired from the police force. He is in his early forties. That's earlier retirement age than most Greek government employees enjoy.
What Greece is going through is nothing unique. It is the fate of most western nations.
I have my concerns with the EU and how Germany is running things. But even if things were done differently, the big picture, I fear, would still be dire.Comment
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Re: greece update
In time pensions may be seen as one of the historical aberrations of the Cold War.Originally posted by gnk View PostComment
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Re: greece update
I was thinking about pensions the other day, and the big problem with them is that they promise to provide things that aren't necessarily going to be available. Dollar amounts don't matter so much as what the dollars represent. If pensions are privatized and forced to face the uncertainties of investing, then you may have aging helpless people without enough to survive on. So it's a difficult issue. Certainly a person retiring on a pension in their 40's is not an outcome we want to see. What we really want are pensions that provides a minimum standard of living and scale up a little bit for those who put more into it, but back down if those people have substantial private retirement income. But how do you work that out in a fair way. It's practically an impossible to solve problem. It makes you consider the possibility of eliminating pensions altogether, but what about the people who spent their lives paying in?Comment
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Re: greece update
We face a dire situation in Illinois with public and teacher pensions.
It is a political football between the tax payers and the union members.
Yes members paid in,
Yes the politicians did not adequately fund the pensions.
Yes, The ignorant politicians thought an 8% y-o-y return was easy.
Now with 16% unemployed and under-employed we are being asked to pony up to top off the pensions. We can't do it.
I just finished my Ill tax return. Our rate went from 3% to 5%. There were no additional deductions or exemptions granted.
Anyone who has a cash flow big enough to operate a home, is going to have to cough up another $1300 +, with no wage increases.
How many mortgage payments is that 1, 2?? The state has just pulled the marginal family underwater.
I think the only fair thing to do is to somehow come up with a fair present value of the trust, and re-distribute it as a private retirement account.
Some formula needs to be put into place to notice the difference between the 80 yr old drawing a pension vs. the 55 yr old getting ready to retire and the 25 yr. old who is just starting to contribute. There will be pitch forks. There is going to be pitch forks anyhow. We might as well try to to a controlled unwind rather than a crash and burn asset grab.
Throughout history it seems that pension funds under public control are slush funds for the politicians to spend, with the deluded promise that somehow they can
pay it back later. Later has come, and the state is broke.Comment
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Re: greece update
One of the reasons I left NJ was due to the high property taxes. They doubled in a five year period. Should we pay back government employees the amount they paid into the system? I say hell yeah:
-Gov. ChristieA retired teacher paid $62,000 towards her pension and nothing -- yes, nothing -- for full family medical, dental, and vision coverage over her entire career. What will we pay her? $1.4 million in pension benefits and another $215,000 in health care benefit premiums over her lifetime. Is it 'fair' for all of us and our children to have to pay for this excess?
LINK
I know BK just posted a very good thread about Governor Christie and his property tax "reform" that left out increases due to pensions. Christie's "reform" just kicked the can down the road.
I have very little empathy for the Greek civil servant. Yes, I hate the bankers, and I hate the way the Euro is set up currently and how Greece is being treated, and I even believe that Greece would be better off with the drachma. But if you live anywhere in the western world, and your country has a large FIRE component in its economy, a large government employee sector (in the US Federal employees - on average - make more than the private sector) and also your country relies on deficit spending to compensate for trade deficits, then this economic collapse in Greece is coming to a theater near you.
Why? Because as these deficit spending pyramid schemes collapse, aggregate demand collapses and that also affects the private sector. That is happening in Greece right now. All those useless overpaid government workers don't shop or eat out anymore. Now the private sector feels the pain.
The same holds true on a global scale. Deficit countries are the "customers" of trade surplus countries. So at the end of the day, how stable are trade surplus countries when most of their trading partners are basing their economies on a pyramid scheme? Are Germany and China truly "success stories" if their trading partners need to run perpetual government deficits to compensate for trade deficits? How long does Germany or China's success last? When do they start looking a little like Greece?
The global architecture of trade and finance has become one rotten structure that is collapsing from its own weight. These global bailouts (EU/IMF, QE I, II, currency devaluations, etc..) are the equivalent of nailing down random pieces of wood on a termite ridden bridge that is sagging.
No one wants to admit that the bridge is a tear down and nothing else.
What we are seeing in the western world is a slow collapse of a system, that to me, represented the greatest misallocation of capital in the history of the world. But you know what else happens when there is a severe misallocation of capital? There is a corresponding misallocation of labor as well. Thus, when the capital flows eventually change, or diminish, so too does the labor structure.
I am a doomer - more so than many on this site, including EJ. We are far from out of this, and I see the US, and many other countries going through what Greece is going through. It's unavoidable and no alternative economic theory will alleviate this. There is no going back. We're in full destruction mode and doing the right thing will only matter after the end of the collapse, when we need to rebuild. Yet due to the energy crisis the world is going through, the new world that will emerge will not look like the one we used to live in.
But there is also the morality narrative the video alludes to. Why are bankers unfairly being enriched or at least, bailed out? Guess what, they always were bailed out and unjustly enriched. It's just that during the good times, we all were well fed and no one noticed. Even if we (and we should) rectify how these banks are run, the system, I fear is still structurally unsound.
But back to government pensions. When local, state and federal governments hit the wall in terms of deficit spending, that's when the pension system edifice starts coming down in earnest. When these governments ran deficits, it hid the economic pain of funding pensions. In NJ, property taxes are still increasing to pay for these programs as well as overpaid public employees. People are getting fed up.
Greece is going through this right now. Everyone in Greece that counted on some form of monthly government stipend is feeling pain as their amounts are frequently cut. Greece is cutting just about everyone's salary and pension. I see it everywhere. But it's not unique to Greece. As I said before, Greece is the first example of what awaits most of the western world.
I don't welcome the collapse, but this collapse is also corrective to the economy and unfortunately, unavoidable.Comment
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