More Downgrades To Come

If governments are allowed to break pension contracts because they don’t feel like paying the costs, then the bond holders are in the cross hairs too.

Richard – comment to Another Downgrade

According to documents filed this week by New Jersey defending the state’s refusal to pay a large portion of an already understated pension contribution, defaulting on bondholders was considered.  Page 4 of that brief makes that fact clear:

bond default

Defaulting on bonds was “on the table” but rejected because Christie’s people had a better option available to them.  But what happens after cost-of-living adjustments are confirmed protected, alternative investments blow up, and the courts rule that contractual obligations apply to New Jersey? Will bond defaults then be an acceptable risk? If so, for ratings agencies and bondbuyers, New Jersey won’t be.

5 responses to this post.

  1. Posted by Anonymous on September 6, 2014 at 5:14 pm

    TL is for all of the above, default on bond holders, no pension payments etc. Let the state go as far under as possible so the public workers dont get a dime. She is like a kamikaze pilot that doesnt realize in order for her to be successful she has to crash and burn as well! lmaooo


  2. Posted by Anonymous on September 8, 2014 at 11:39 am

    If you are in the njabp and applied for retirement the process has been interrupted for several years, the Christie Administration was seeking first to reduce your benefits ie max. payout $138,000, that didn’t work, then they tried to borrow money, that was impossible based on the policy language, so they got a big loan July 2014 from Chase who at the time was the fund custodian for TIAA CREF. As of September 5, 2014, Deutsche Bank replaced Chase as the custodian for TIAA CREF Funds. What does this mean NJABP participants with TIAA CREF as their provider have been stuck in the initial payout phase while Treasury explored ways to borrow and reduce to no avail. In March or April the final legislation revision was released, “there is no age requirement” the monies are for the exclusive benefit of participants and beneficiaries, not for the underfunded coffers of the NJ Treasury. The question now is when will the retirees get their payments and will they be retroactive to the original application date.


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