Potpourri: Detroit Pension; Buck Proceeding; NJ Corruption; UC Corruption

Forms season almost done and the 33 filings still due are prepped so here is a potpourri of material that piled up over the last couple of weeks that would normally merit full blogs:

Detroit got a $350 million loan and about $230 million of that will be used to pay off some obligations related to its pension debt, presumably those POBs defaulted on back in June, but after the obvious question as to why anyone would lend to a bankrupt there is the almost as obvious question as to why borrowing costs are being incurred when there is supposed to be $5 billion in that pension plan.  There could be any number of answers but among the honest ones is that the people running this circus want their fees paid.

Rhode Island’s suit against Buck Consultants (Buck) for providing a number of $199 million instead of $189 million (due to a clerical error) when guessing what the savings from a COLA reduction would be based on their arbitrary methodology was allowed to proceed with Rhode Island politicians contending that their action (or inaction) would somehow have been other than what it was based on that 5% difference.  Coincidentally the same day this news came out there was a case we took over from Buck where they defended their totally inappropriate choice of a discount rate by pointing to an internal study of some of the rates their other clients used (though it’s unlikely those other plans were 10% funded).  My point is that actuaries, especially for public plans, are using ill-considered methodologies since everyone else is using them and all their math needs to be exact or they will get sued.  But get the math right using a warped methodology and you are fine.

Chris Christie made his name by putting politicians into jail but when he got to be governor he has turned out to be as big an enabler of corruption in the Soprano State as any governor we have had (except of course for Jim McGreevey*) as last Thursday’s New York Times expose on protecting your own revealed.

As for corruption and chicanery in Union County let’s go to the video:



* And that’s not to say Jim McGreevey was not corrupt but rather that he likely raised legal corruption to an art form.  It’s not only putting his boyfriend/sexual harassee in a key position at Homeland Security but if you ever have to deal with New Jersey officialdom in any way the words ‘McGreevey appointee’ should strike fear.

7 responses to this post.

  1. Posted by Tough Love on October 14, 2013 at 1:42 am

    John, I just loved the paragraph on Rhode Island. While I understand how our (mostly incompetent, and not terribly intelligent “elected officials”) may think any calculation error should be made up in $$$ equal to the error from the party making the error, it boggles the mind why the Courts don’t immediately look at such claims askew as say to such officials …… it doesn’t work that way. You have to PROVE you were financially “harmed ” by that error. Where was the “harm” here ?

    If only we could hold these elected officials personally liable for THEIR mistakes !


  2. Posted by Anonymous on October 15, 2013 at 1:27 pm

    TL, Why don’t you run for office since you are so intelligent? Seriously, you won’t do any worse than these guys. It seems you have plenty of time to respond to this blog, and you seem to enjoy complaining about the poor job they have done(and you are right). As Teddy Roosevelt said “It is not the critic who counts, but the man in the arena himself….” So take a stab at it, and replace one of these jerks.


    • Posted by Tough Love on October 15, 2013 at 2:14 pm

      Funny, In my above comment I wasn’t even calling for a reduction in Public Sector pensions.

      I’m guessing that you are a Public Sector worker and that it bothers you that I have the “nerve” to challenge the Public Sector Pension status quo, and perhaps that I’m actually even “breathing”.

      Well, too bad, if your a public sector worker riding this gravy train, I suggest that you save outside your pensions as there is a good change a large share of it (JUSTIFIABLY) won’t be paid.


  3. Posted by Anonymous on October 21, 2013 at 12:38 pm

    No, not quite, although I have a cousin who is a teacher that hardly qualifies by your definition. Pehaps if more people like you who seem to be knowledgeable on the subject and share your passion, actually ran for office results would be different. I have a passing interest in the subject, but I am not a fanatic about it. Like my neighbor who every time I see him compains about school taxes(rabidly) but never does anything else otherwise to mitigate that. Whether that be running for his local school board or even attending a meeting for that matter, or perhaps moving out of the area to a cheaper place in lieu of that. For better or worse, that is how NJ is set up. Salaries are high and so is the cost of living. It is desinged to benifit those who work here and retire elsewhere and then replaced(in theory) by more workers. Right or wrong this is the way it is. This is what I will most likely do, simply because it is chearper elsewhere. However, I also have relatives in NC and AZ and VA(Shenendoah Valley), who all moved from NJ and all of them either private school their kids or complain of the schools quality(especially when compared to NJ where they all went). They should have waited until their kids graduated if they had that choice. They left too early in my opinion.. Funny how my neighbor never complained about school taxes when his three kids were actually using the services. All I am saying TL, is that with more action and less complaining perhaps you could actually change things for the better here in NJ


    • Posted by Tough Love on October 21, 2013 at 2:48 pm

      Sorry if I was a bit over the top in my earlier comment. The reality is that unless you are willing to put up with the wrath of local Public Sector workers (the teachers, the DPW, an especially the police … tickets anyone ?) it’s very difficult to openly protest these excesses. It if were just me, perhaps I would do so, but it’s wouldn’t be fair to my spouse and children. So …. I put the facts out there ( and point out the lies and misinformation from the Unions) and hope the journalist will carry the ball.

      To illustrate the point, go to a council meeting where cuts in Police pay or pensions, or perhaps the merging of the Police force with another community is on the agenda. The entire police force will be in attendance, NOT sitting quietly in the audience, but surrounding the room’s perimeter, with arms crossed over puffed-out chests and staring at those sitting in the audience The message is clear … we DARE YOU to speak out and suggest anything that will financially harm us. It’s a disgrace. and unfortunately for the youngest members of the Police force who might realize it (but can’t stand up to their Union and more senior associates) there is a significant probability THEY won’t be getting the rich promised pension their predecessors are (or will soon be) collecting.

      It’s a MATH problem, and it is going to end very badly for BOTH the Taxpayers and the workers.


      • Posted by Anonymous on October 22, 2013 at 1:40 am

        Fair enough TL, I have kids too and sometimes it is not worth having your friends and neighbors considering you to be the “go to” person(public worker or otherwise) for all their problems. And insisting that your lone voice will make them 100% satisfied. As for my cousin, she is a sweetheart who married an investment banker, so she should know about pensions. She has one or two teacher friends who fit your profile concerning their “wrath” complaining as does my neighbor(who btw proudly voted to cut garbage pickup to once a week year round 2 years ago, then did nothing but complain about the lack of garbage pickup during the long, brutal heat wave this summer and how his backyard stunk because of the smell from his garbage being picked up once a week). It takes all kinds I guess.


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