No, You Don't Have to File for Intellectual Bankruptcy.

Debts Should be Honored, Except When the Money Is Owed to Working People

 

Not only is the sarcasm a swing-and-a-miss, but the comma is also gallingly inappropriate. I get that you’re trying to convey pause, but it just doesn’t work, dude.

Dean Baker

I hate guys named dean. Just like I would despise guys named “Magistrate,” “Professor,” or “Constable.” Women of the world: stop giving your children absurd names.  This is as applicable for ethnic abominations like JaJuan and DeAndre as it is for Aiden, Jayden, Brayden, Hayden and other non-rhyming ovary-producing names.

Co-Director of the Center for Economic and Policy Research

Nice euphemism!

This seems to be the lesson that our nation's leaders are trying to pound home to us.

Yes, yes. The title is a jarring slap in the face to “the man” and your biting wit has deftly drawn us all into the article.

According to the New York Times, members of Congress are secretly running around in closets

Also known as “the Senate floor”

and back alleys

Also known as “K Street”

working up a law allowing states to declare bankruptcy.

I already presented a solution to this problem. The federal government allows the states to declare fiscal insolvency and agrees to guarantee the state’s debt. In return, the state is relegated to territory status until it gets its fiscal house in order. Simple. Brilliant.

According to the article, a main goal of state bankruptcy is to allow states to default on their pension obligations.

I think you/they are missing the point of bankruptcy; the states are already defaulting on their pension obligations. Bankruptcy restructures these debt obligations. Now if you want to argue debt tranches and subordinated debentures, then you have to acknowledge that state pensions are (probably…I didn’t do the necessary due dilligence, but I thrive on wild pronouncements) just as subordinated as other debt obligations…Unless you’re arguing that pensions obligations—because they represent the downtrodden, old, and poor—deserve a higher tranche than the one that has been contractually negotiated. In that case, I’d better not hear any arguments about how “this was the agreement and the state is breaking its word and the judicial system doesn’t work for the poor.” (I’m allowed to write an arduously long sentence when I’m imitating a moron.)

This means that states will be able to tell workers, including those already retired, that they are out of luck.

This happened to private-sector pensioners when the companies guaranteeing their pensions went out of business. This is called default risk. Companies like Moody’s, Fitch, and Standard & Poor’s make buckets of money for publishing their assessments of default risk. It’s called a bond rating, and California’s sucks. Illinois is what’s known as a “junk bond.”

Teachers, highway patrol officers and other government employees, some of whom worked decades for the government,

But most of whom coasted for decades on the state’s dole. (Don’t think I’m a heartless bastard; there’s a reason why productivity among government officials is rock-bottom)

will be told that their contracts no longer mean anything.

                                              

What about the investors who risked their fortunes to finance a struggling state? What about independent contractors who performed necessary services for the state under the understanding that they would be paid?

They will not get the pensions that they were expecting.

Depending on the specific circumstances, they may find their pensions cut back 20 percent, 30 percent, perhaps even 50 percent. There would be no guarantees if a state goes into bankruptcy.

Seriously, does this guy know what bankruptcy actually is?

There has been a concerted effort to bash public sector employees by either highlighting the few instances where pensions actually are exorbitant

Pensions haven’t existed in the private sector since the seventies; all government (nonmilitary—but those are federal) pensions are exorbitant.

or just making things up. Untruths about Goldman Sachs, General Electric or any other major company rarely appear in the media, and are usually quickly corrected when they do.

That is because these companies file annual and quarterly reports. Also, their employees actually work for a living producing something of value.

However, exaggerations or outright fabrication are a standard practice for those who report on state and local budgets when it comes to public employees.

This would be an excellent time for an example of such over-the-top wind-baggery.

The public has been bombarded with stories of public employees retiring with six-figure pensions while still in their early 50s. There may be some instances of such inflated pensions, but that is far from the typical story. If we look to New York State, the hotbed of bloated public budgets, we find that the state's main retirement system pays an average pension of $18,300 a year. For many workers this is their whole retirement income since they were not covered by Social Security.

$18,300 vs. $0 of productive activity. Just saying.

This is the general story of public pensions. Public sector workers are often better situated than their private sector counterparts, in that they even have pensions.

Welcome out of the seventies, dipshit.

But study after study shows that these workers paid for their pensions with lower wages than their private sector counterparts. It is tragic that so many private sector workers cannot count on a secure retirement,

Is it? That’s called freedom, Jack.

but it won't help them to make workers in the public sector equally insecure.

What the fuck is this nonsense? Are you seriously intimating that it’s private sector workers stealing from public sector workers? The goons who administer how we distribute monies collected from the productive section of the economy are accusing the productive ones of stealing from them. Fuck that!

And, there is the matter of paying debts. State governments are legally obligated to pay retirees the pensions they worked for just like any other debt.

In other words…nothing. You said absolutely nothing. The debt has the same debenture as everything else. Which means precisely dick. I hate you.

It is fascinating to see the interest by many pro-business conservative types in defaulting on this debt.

Oh? A return to fiscal solvency is out of character for “pro-business conservative types?”

Many of these same people have been determined to argue that homeowners who are underwater in their mortgages should pay their debts.

There is a vast gulf of difference between being underwater on a mortgage and being economically incapable of raising the funds to pay the mortgage. In fact, being underwater has absolutely nothing to do with bankruptcy. Being underwater merely limits the home’s liquidity. The mortgage-holders are still paying mortgage payments at the agreed upon rate. (Assuming fixed rate. Actually, scratch that. If you got an adjustable rate, you should be accountable to the risk. Plus ARMs have got to be rock-bottom with current interest rates. So there.)

They certainly have not been offering them any assistance in staying in their homes.

How do you know?

In fact, back in 2005, some of the same crew were busy rewriting the bankruptcy law.

This isn’t even close to being a sentence. Try again.

They wanted to make it harder for individuals to get out of their debt through bankruptcy.

Uh huh.

They felt it was so important the people paid their debts to credit card companies and other lenders that they actually applied the law retroactively. People who took out debt under one set of bankruptcy rules suddenly found that Congress had changed the rules after the fact and they would now be subjected to a much harsher set of bankruptcy rules.

Are you arguing that lenders should be responsible for pricing default risk into their rates? Does this not apply to Union negotiators? After all, what is a pension if not a loan to the company/city/state to be paid out in installments after retirement?

Let's see if we can find a pattern here.

I just did.

When families take out a mortgage in the middle of a housing bubble, which may have been misrepresented at the time of sale,

Yes, let’s base policy on a ridiculous parallel that assumes fraud.

the homeowner has an obligation to repay the money to the bank. When people take on credit card debt, they absolutely have an obligation to repay the bank -- even if it means changing the rules after the fact.

Is that sarcasm? Are you intimating that debtors don’t have the obligation to repay the bank or that changing the rules after the fact is okay?

However, when the government signs a contract with workers, it doesn't have to pay the workers' pensions if it proves to be inconvenient.

The point about bankruptcy isn’t that it’s inconvenient. It’s that it’s impossible. That’s why you’re filing for bankruptcy.

Of course, we may also throw in the fact that when the flood of bad mortgage loans issued by the banks threatened to push them into bankruptcy, the Treasury and the Fed give them trillions of dollars of loans at below market interest rates.

Which party supported that and which party [poorly] opposed that? Just sayin’.

There certainly seems to be a pattern here.

Morons bitching about things that they don’t understand? Yeah, that seems to be a theme.

The story has nothing to do with preferences for the market or government intervention.

Does the government interventionist understand that bankruptcy is necessarily government intervention? Which leas me back to my central thesis: this asswipe doesn’t understand what bankruptcy actually is.

The picture here is very simple:

This is why I’m astounded you’re having such a big problem making sense.

The rules get changed whenever it is necessary to make sure that money flows upward from ordinary workers to the rich.

Swing and a miss.

In 21st century America, upward redistribution seems to be the guiding principle.

Hopeless. Just hopeless.