Mish's Global Economic Trend Analysis

Eye-Opening Arrogance From N.H. Police Union Members; How to Solve the Pension Crisis Overnight

Posted: 11 Mar 2015 01:35 PM PDT

Many cities in New Hampshire use highly paid (overpaid) police officers for routine work like holding stop signs when utilities have to trim trees along roads.

A debate is now brewing in the legislature as to whether to use flaggers instead of police officers for such work.

Courtesy of the New Hampshire Union Leader, here is an image. Click on the link for an article and other details.

Police vs. Flaggers

For the third time in five years, a bill was introduced into the N.H. legislature requiring the use of flaggers instead of police where appropriate. The article noted that in many cities, police chiefs make the call.

The result is just what one might expect. Police cherry-pick the easy jobs, letting flaggers have the rest.

Police work pays in the range of $40 to $50 with an additional $25 or more per hour tacked on by the town for benefits and "administrative charges."

The utilities have to pay this expense. Of course, utilities pass that expense on to local taxpayers.

The police unions object to the new bill. They use storms, utility work, etc., to pad hours of police officers, typically giving the work to officers in their last five years because pensions are based on salary made in the last five years.

These guys get to retire at age of 45-50 with half their maximum salary.

Eye-Opening Arrogance

Check out the arrogance of union worker, Stephen Soares, from a Facebook comment regarding the New Hampshire Union Leader article.

At first I thought the above snip sent by reader Matt might be sarcasm. A perusal through more of Soares' Facebook comments shows that is the real deal.

This public union "servant" actually complains about having to work to age 47 where he can then retire collecting half his salary for perhaps another 30 or more years, making more in retirement than he ever did in public service.

Eye-Opening Arrogance

The absolute arrogance of people who are supposed to be "public servants" is staggering. The only reason pension benefits are as absurd as they are is because corrupt politicians got in bed with corrupt union bosses and screwed the people they were supposed to be serving.

Now they have the gall to complain about the slightest cutbacks in benefits gained by graft and coercion.

I wish I could say his attitude is atypical, but I don't believe it is.

Solve the Pension Crisis Overnight!

If Soares thinks a 12% IRA contribution (actually paid by taxpayers in the form of higher salaries) would have made him better off, then I say give it to him.

Let's take 12% of Soares' earnings for every year back to when he started working, and put those contributions in a back-dated S&P 500 account that also factors in reinvested dividends.

Better yet, let's do that for every police, fireman, and other public union worker in the country. It would solve the pension crisis overnight.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Zombie Banking System Takes Another Leap Forward; Sugar Crisp Buybacks

Posted: 11 Mar 2015 11:41 AM PDT

With the stock market at all time highs, corporations are in a mad rush to buyback more shares. Corporations just cannot get enough of their own shares, no matter how mispriced they are.

The means banks choose to finance buybacks and pay for dividend hikes is irrelevant to most (the unthinking crowd), but amusing or scary to others.

Zombie Banking System Progression

Reuters writer David Henry explains U.S. Banks' Buybacks, Dividends may be no Reason for Shareholder Celebrations.

Big U.S. banks, including JPMorgan Chase & Co (JPM) and Citigroup Inc (C), are expected to win Federal Reserve backing on Wednesday to buy back more shares and increase their dividends in the coming year, but the approvals may be as much about the institutions' financial engineering as any improvement in their health.

Much of the money for buybacks and higher dividends is coming from the banks issuing securities known as preferred shares. These shares are a type of equity that pays regular, relatively high dividends. To investors they look a lot like bonds that pay interest. But for regulators, preferred shares serve as a cushion against any future losses, in part because they never have to be repaid.

Critics of the strategy question how sustainable it is, as banks essentially take money from one set of investors and give it to another, and at an added cost.

Issuing preferred shares to pay for common share dividends and buybacks is a symptom of a "zombie banking system," said veteran banking analyst David Hendler of independent research firm Viola Risk Advisors.

"Banks should be building capital from normal lending and trading profits, but their operating income is terrible," he added.

Selling preferred shares to boost payouts to common shareholders can't go on forever without banks improving their results enough to boost their capital levels significantly.

INVESTORS HOLD THEIR NOSES

Buyers of preferred shares are attracted by the high dividends. They take a sizeable risk because often the bank will never redeem the shares, and they can only be sold to other investors. Dividends may also be suspended on the securities.

"Out of necessity, they hold their noses and buy it," Viola's Hendler said. The shares wouldn't have the same appeal if yields on bank debt weren't so low, he added.

Can't Get Enough

Link if video does not play: 1960's Super Sugar Crisp Commercial

What can possibly go wrong here?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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Wednesday, March 11, 2015

Mish's Global Economic Trend Analysis

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