Posted On: Wednesday - March 1st 2017 8:39AM MST
In Topics:   Global Financial Stupidity
After the long series of introductory posts on the Global Financial Stupidity situation, we can now just, more sporadically, have some posts with examples. Zerohedge would be the "go-to" site on this, and here is another in many posts about the impossibility of pension funds to deliver on their promises, as delved into here, more specifically on PeakStupidity. Zerohedge describes NY Teamsters Pension Becomes First To Run Out Of Money As Expert Warns "Pension Tsunami" Is Coming.
This ZH post is a series of a four or five different stories of a few different pension funds of the trucking industries. These trucking guys are usually guys that you don't want to fuck with, but I guess, by definition they will be too old to fight things with tire irons around the time they begin to need this promised money. The post is a kind of meat-and-potatoes post of Zerohedge, or their forte (if you eat French cuisine instead of meat and potatoes). It's real world, good stuff to read and to me what the ZeroHedge site is all about. The commenters most likely have good stuff to add. I can't put the whole thing here - people don't like that, and one can read it there.
The New York Teamsters Road Carriers Local 707 Pension Fund has won the unfortunate award for "First Pension to Officially Run Out of Money." According to the New York Daily News, and a host of angry former truck drivers who've had their pension benefits slashed, the Pension Benefit Guaranty Corp. (PBGC) has officially been forced to step in and take over payments to retirees of the Local 707, albeit at a much lower rate.
Teamsters Local 707’s pension fund is the first to officially bottom out financially — which happened this month.
“I had a union job for 30 years,” Chmil said. “We had collectively bargained contracts that promised us a pension. I paid into it with every paycheck. Everyone told us, ‘Don’t worry, you have a union job, your pension is guaranteed.’ Well, so much for that.”
“It’s a nightmare, it has just devastated all of our lives. I’ve gone from having $48,000 a year to less than half that,” said Chmil, one of five Local 707 retirees who agreed to share their stories with the Daily News last week.
“I don’t want other people to have to go through this. We need everyone to wake up and do something; that’s why we’re talking,” said Ray Narvaez.
OK, I said this didn't I: "Everyone told us 'Don't worry .... your xxxxxx is guaranteed.’ Well, so much for that.” Don't believe that from any big organization (especially government), and more likely you really should only believe this from family and good friends.
Meanwhile, under the maximum benefits provided by the PBGC, many former Teamsters, like Ray Narvaez, said their monthly retirement checks have been slashed by two-thirds.
[snipped out: picture of this guy getting an award for service, yeah that helped ....]
Then Narvaez, like 4,000 other retired Teamster truckers, got a letter from Local 707 in February of last year.
It said monthly pensions had to be slashed by more than a third. It was an emergency move to try to keep the dying fund solvent. That dropped Narvaez from nearly $3,500 to about $2,000.
“They said they were running out of money, that there could be no more in the pension fund, so we had to take the cut,” said Narvaez, whose wife was recently diagnosed with cancer.
The stopgap measure didn’t work — and after years of dangling over the precipice, Local 707’s pension fund fell off the financial cliff this month. With no money left, it turned to Pension Benefit Guaranty Corp., a government insurance company that covers pension.
Pension Benefit Guaranty Corp. picked up Local 707’s retiree payouts — but the maximum benefit it gives a year is roughly $12,000, for workers who racked up at least 30 years. For those with less time on the job, the payouts are smaller.
Narvaez now gets $1,170 a month — before taxes.
I'll say it again. The financial world is in between a rock and a hard place. The plans cannot be solvent at interest rates of 0.5-1.5%. They are basing all of their future payouts on returns of 6-8%. The way to get that high return is risky investments, such as, I dunno, the stock market? The stock market, though based on production of certain industries that are not expanding much at all, must be pumped up anyway, as that's where some of this money is, while more of the money is invested in other funds, which also need to make the high return, but based on what exactly? If the Federal Reserve board raises the rates to the 6-8% range, then the Feral Gov't will be more broke and even sooner, as interest on the direct national debt of $20,000,000,000,000 will be a big part of the budget then, say 1.4 trillion bucks a year (that's at 7% interest) out of a 4 trillion dollar budget, one third of it.
How can we cover that gap, you ask? "No problem", says anyone who's been in government long and knows what he's doing - "we'll just take out a loan for the gap, you know, sell Treasury bonds. C'mon guys, do I have to give you a refresher course - it's all borrowing nowadays!"