Like Eliza, my fellow Joizy girl says....of course those Governors didn't suffer any consequences. Nor did the state legislature that voted for those changes to the pension plans. It's the "kick the can down the road" game we've been playing for years and years.
And let me be clear. Not every state is in the pickle that New Jersey, New York, Connecticut, California and Illinois are in....some states, albeit a very small minority, have their act together. Usually they are smaller states or states like Alaska that are wealthy thanks to commodities.
So, I''m not trying to be Chicken Little here. I don't think that the world is coming to an end. I'm not buying Gold, Ammo, Guns and Rice. But I'm saving like mad.
I love my state. I've lived in California and Florida, but New Jersey is my home. California though....that was a great place to live for awhile in my late 20s
. But we are in a deep pile of pooh in New Jersey.
And listen, I'm not even going to stand here on a soap box and judge these state legislators. Most of them make next to nothing for their effort. And they have really tough decisions to make. Like..."we don't have the money to fund A, B, and C. And "A" is Charity Care for poor people needing medical care, "B" is for pre-school programs for kids in urban areas so their parents can work (as they can't afford child care), and "C" is replenishing the beaches with tons and tons of sand after they've been walloped by Nor'Easter after Nor'Easter.
These aren't easy decisions to make. But the *really* tough decisions to make are...."we can't meet our payroll obligations". Meaning....state workers won't get paid, retirees won't get their pensions checks....on and on. So what do they do?
They raid the pension funds....and even worse, they don't contribute to the fund for an entire fiscal year....making the problem infinitely worse. I don't think the pension fund in this state has been funded in the last few years. All that money that the state workers and teacher pay in....goes somewhere else. I can't even imagine how angry I would be if I was one of those people....knowing *my* money was going elsewhere.
And how do they try to make up for the underfunding of these pensions plans? They bring in some "hedge fund" money manager who then tries to make up the shortfall by selling billions in bonds.....investing it in the market in say.....2006, and we all know what happened after that. This is essentially taking a cash advance on your credit card and buying individual stocks. Not exactly a great idea.
There's been a lot of gambling going on with the taxpayers money in my state. And everyone on Wall St. gets a piece of the pie. Where do you think that this money is invested? And do you think that those investment houses are offering their investment services for free? Of course not. It's a cash cow for them.
The Great State of New Jersey (and many others as well) are going to have to get used to getting by with far fewer services.
It's not like we haven't had similar issues in the past, albeit not nearly as severe. We've weathered recessions before.
But as we've said a zillion times on this board. This time really is different. Tax revenues are going to be down for years....not months. We're in this for another 6-7 years....of slow growth and stubbornly high unemployment. This is a straight up balance sheet recession. Not the usual "excess inventory" gig we see with average recessions.
The Muni bond defaults are coming....it's just a matter of time. And then you have to wonder if the Feds are going to let California, New York, New Jersey, Connecticut or Illinois default on their debt. Right now there's no appetite at all for any more bail outs. But, the Feds won't let that happen. They can't.
I've always been a personal finance junkie...but got serious about reading into the serious issues with the states and Fed Government with respect to entitlement programs about 10 years ago.
What the financial crisis of 2008-present has done is moved that timetable up....in a big way.
You want the *good* news. Europe is in worse shape than we are....
I'm just incredibly thankful that my parents are the last of a dying breed....my father and FIL were employees who received gold watches and rock-solid pensions and are enjoying really sweet retirement years. One thing that motivates my DH and I to save so much...is to be able to leave a large nest egg to our 6, 5, and 4 year old niece and nephews.....because they are surely going to need it.
