Public Pensions Look at Leverage Strategy - WSJ.com

Public Pensions Look at Leverage Strategy - WSJ.com

You don't believer public pensions are extravagant. Let's see a couple of examples from the news.

1) Orinda California fire chief retired in June 2009 at $300,000 per year - fully indexed for inflation - I'd say that's way beyond rich! Certainly extravagant.

2) New York City Teacher's Union - pay in 3% of salary for 10 years toward a pension; then pay nothing. Average income before retirement $100,000. Again, I'd say both are extravagant.

3) Philadelphia unions striking for pay increases (2009) when we have 10% unemployment (can we say, they don't care a hoot about their neighbors).

If you want to think about wages and why there is such angst - think about the need for more investment into jobs and to education (but, of course, Charter schools or educational performance are anathema to the unionized teachers); and, no politician wants to tell Americans that they have been overspending and underinvesting.

So, the new bubble is the huge Federal borrowing to support domestic consumption and transfer payment and benefit programs. Rather than investing in technology, education and capital creation, the government is largely borrowing to support consumption and social benefits.

People are blaming banks for lending money to them to bid up the price of housing - but, people had no problem playing the Ponzi scheme of the housing bubble. Now, they have no problem with government borrowing - ostensibly to create jobs; but, the investment behind the jobs isn't there, so the jobs aren't sustainable. A bubble that people (except a slight majority in Massachusetts) seem willing to abide.

What happens, happens. Maybe a third party could change things - but????? A free lunch is always nicer - if, one can believe there is such a thing.