The proverbial can only be kicked so far before the can rusts away to nothing. That is what Police in Stockton, California have found out and that is what the pensioners in the entire Illinois retirement system will soon find out.
Stockton Can Suspend Police Accrued Vacation Payouts
Stockton, the central California city trying to avert bankruptcy, can continue suspending accrued vacation and sick time payouts for its retiring and departing police officers, a state judge ruled.
San Joaquin County Superior Court Judge Lesley D. Holland yesterday rejected the Stockton Police Officers' Association's request for an order reinstating the pay. David E. Mastagni, a lawyer representing the association, said some officers have spent 30 years accruing the compensation.
"I'm proceeding on the assumption that bankruptcy, if not a certainty, is a highly probable outcome," Holland said. The city is trying to remain solvent and win concessions from creditors through negotiations under a state law designed to discourage municipal bankruptcies, the judge said.
City Default
The City Council on Feb. 28 agreed to extend its fiscal emergency declaration, default on $2 million in bond payments and suspend sick leave and vacation payouts to retiring workers. Officials decided to suspend the payouts to discourage workers who fear the mediation would lead to a cut in their benefits from retiring early and draining city coffers.
On April 12, San Francisco-based Wells Fargo & Co. (WFC), the fourth-largest U.S. bank by assets, was awarded possession of three Stockton parking garages in a separate lawsuit it filed as a bond trustee against the city. San Joaquin County Superior Court Judge Roger Ross made the decision about who controls the garages after Stockton missed a $779,935 payment on lease revenue bonds issued in 2004.
The City Council on Feb. 28 agreed to extend its fiscal emergency declaration, default on $2 million in bond payments and suspend sick leave and vacation payouts to retiring workers. Officials decided to suspend the payouts to discourage workers who fear the mediation would lead to a cut in their benefits from retiring early and draining city coffers.
Stockton has already made a mistake. It lost nice parking assets because it has not yet filed for bankruptcy. It should have filed first, then missed the bond payment. Two groups should lose in this mess: city employees with untenable pension benefits and bondholders.
This month, the Teachers' Retirement System of the State of Illinois made a dire announcement to its members. TRS, which covers most public-school teachers in Illinois outside Chicago and has more than 360,000 members, said the following:
"If the General Assembly does not continue to provide all of the funding called for in state law, calculations done by TRS actuaries show that the System could become insolvent as soon as 2030. Preventing insolvency may include significant changes for TRS -- new revenues must be generated and if they are not benefits may have to be reduced."
The teachers' fund is one of the country's worst-financed statewide pension systems, reporting that it is only 47 percent funded. And that's if you buy the system's rosy accounting assumptions, including that it will achieve 8.5 percent annual returns on its assets. This level is tied for the most aggressive investment assumption among state pension funds in the country, and the fund has had to get creative in an effort to meet it. Pensions & Investments magazine says it has the fourth-riskiest pension investment portfolio in the U.S., with less than 17 percent of its investments in fixed income and cash.
The system's funding status is so poor that it achieved a 23.6 percent return on investments in 2011 and still managed to shave only $2 billion off its $46 billion unfunded liability. And it's not as though the fund can make such gangbuster returns consistently -- in 2009, it returned negative 22.7 percent.
Closing the TRS funding gap -- and the gap at the State Retirement Systems of Illinois, which is only 36 percent funded -- will depend on taxpayers' willingness to start paying far more than they ever did for pensions. And as the TRS statement makes clear, that is far from a sure bet, meaning that pensioners may see their benefits cut.
Chris Christie Willing to Sacrifice Career to Take on Teachers' Unions
As Greece wonders whether its debt crisis will eventually spell its exit from the euro, one town, Volos, has formed an alternative local currency as noted by the BBC in Greece Bartering System Popular in Volos.
A few months ago, an alternative currency was introduced in the Greek port city of Volos. It was a grass-roots initiative that has since grown into a network of more than 800 members, in a community struggling to afford items in euros during a deepening financial crisis.
From jewellery to food, electrical parts to clothes, everything here is on sale through a local alternative currency called TEM.
It works as an exchange system. If you have goods or services to offer, you gain credit, with one euro equivalent to one TEM.
You can then use your "savings" to buy whatever else is being offered through the network, leading to some rather original exchanges of goods.
It's all reminiscent of an ancient bartering system returning to today's Greece.
"I can get language classes or computer lessons in return", says Stavros Ntentos from his stall where he sells children's underwear.
"It's a very good idea because we need to make people realise we can all buy and sell something; we don't only need euros."
"We can buy bread or meat in exchange for our products, or the girls can go to the hairdresser," says Peri Mantzafleri, who runs the co-operative.
"I grew up in a village - this was how it used to work in the old days, before money became involved. So this could be a chance to start again."
"Spain Would Be Dead Without ECB Loans"
Articles that appear in this blog translated from Spanish frequently appear in one of the major English news outlets a day or two later.
The Spanish government approved a number of measures on Friday to crack down on tax fraud as part of its efforts to reassure investors that Madrid can replenish the public coffers by bringing to the surface some of the country's hidden wealth.
Jaime García-Legaz, the Spanish secretary of state for the economy, told the Spanish television channel laSexta on Friday that Spain "would be dead" without the loans provided by the European Central Bank.
To counter a deepening recession — the second in three years — the government of Prime Minister Mariano Rajoy is hoping to bring out some of the revenue buried in an underground economy that was estimated by the previous government to represent about 20 percent of gross domestic product.
The efforts to combat fraud come on top of a squeeze of 27 billion euros, or $35 billion, in the central government's budget this year, as well as regulatory changes in labor markets and other areas.
As part of the measures approved at a cabinet meeting Friday, corporate cash transactions will be limited to 2,500 euros ($3,300), with fines as high as 25 percent of the transaction's value levied upon any transfers above the limit. Individuals and companies will also face sanctions beginning next year for failing to declare all assets held overseas.
Use of 500 euro notes, worth about $657, is thought to have expanded considerably during Spain's construction boom as a way of paying for large — and sometimes undeclared — property transactions or building materials. Spaniards came to call the 500 euro notes "bin Ladens": everywhere and yet never seen.
Cayo Lara Moya, leader of the United Left party in Spain, argued during a parliamentary session this week that the government should push for the complete removal from the euro zone of 500 euro notes, one of the largest denominations used in Western economies.
Banning "bin Ladens"Cannot Possibly Work
The idea that banning 500 euro notes "bin Ladens" would accomplish anything is ludicrous. Moreover, as bad a the fraud is now, it is 100% guaranteed to get worse.
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