Thursday, May 28, 2015


I really want to write about the growing problem of unfunded pension plans which threaten the financial stability of a number of our states and municipalities but to be honest I don't understand it.  One idea that manages to gain traction day by day is the scheme to cover pension shortfalls by issuing debt...despite the fact that in most cases there is no way to pay back the debt except by issuing replacement debt somewhere down the road in the midst of unknowable market conditions or by raising taxes which, if politically possible right now would obviate the necessity to issue debt in the first place.  Problem is I can't write about that either because that's another thing I don't understand.   Then there's the apparent huge demand for this sort of thing from investors...which I don't understand at all.  Oh yeah, I know that if the state of, say, Illinois or any municipality therein issues debt, the interest payments are tax free to residents of that state which is a very good deal indeed if you are of the opinion that you always collect more in interest than you lose in principal--a thought to which I have never subscribed.  Recent experience of the bond holders of Detroit might make some think twice (they got back about 13% in bankruptcy), but nope, the bond gurus keep saying they can sell it.

Which brings me back thinking about how all that stuff back 10 years ago got sold and makes me wonder why no politician is interested in who was buying that stuff and why?  I mean if there's someone who wants to buy debt of Chicago rated junk by one major rating house, why get mad at me if I create some and sell it to that who can read Moody's as well as the next guy when Chi-town goes belly-up?  I guess there's a reason but I don't understand it.

Which brings me to Greece which I don't want to write about but it's something that I think I understand.

Anyway, the Greeks just a couple of days ago said they were just this far away from a deal.  The Euros waited a bit before saying not so fast, the Greeks then said they were making more progress, Jacob/Jack urged both sides to reach a deal and avert the catastrophe of a Grexit (no one was listening to him this time either) and today Chrissy popped up with the opinion that there probably wouldn't be a deal and that a default was "probable."  JUST to top things off, the Rock Star announced that he "would be back"--from where was the obvious question coupled with the prayer that if the dumb bugger has really been away that he not return from wherever that was.

So this I understand.  Everyone involved is mostly out of their mind which is certainly a valid excuse for things having gotten this far unlike the pension crisis which is overrun by the most cynical, greedy, race of self-centered humans on the planet at this time save for the management of FIFA who may, just may, pay a steep price in which case there is cause for hope.  Now it is purely hope you understand, because I don't understand that either.

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