Cries of Betrayal as Detroit Plans to Cut Pensions

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8. It's about delusional thinking coming home to bite people

All city managers knew pension funds have not been making the return necessary to fund obligations for a very long time. No one wanted to raise taxes and/or increase contributions. So when the banksters came a calling with toxic assets with outsized returns, the pensions snapped up the CDOs and CMOs. You can't fund a pension on safe assets making 1-3% with adding more money to the pot. There was a lot of funny math on all sides: the actuaries of pension funds, the folks valuing toxic assets, the rating agencies. Funny thing is that most of the underlings doing the funny math in the financial sector ain't got no retirement either. You need about $700,000 to fund a retirement of $30,000 if you want to retire at 65 and live to 90 like my MIL (that is excluding the value of your home).

The sad thing is that American capitalism can't get outsize returns because it isn't doing much that is really that remarkable. The good but hard way of making money is to sell a product that people need that you can produce efficiently. We knew we had this problem when Jimmy Carter gave his speech about the malaise of American capitalism. We voted for Reagan and the rest is history.

People in Michigan know they have a problem and they voted for Snyder. The people to get better services are the 1%. The rest are thrown back on their families.

Snyder hasn't asked how he is going to provide better services with a labor force that is already paid less than the private sector. The pension and stability was supposed to make up for that. Who is going to take risky governmental jobs like police work or firefighting without some guarantees?

How are you going to give better services to people without some major investment?

You are going to cut pensions and cut food stamps at the same time? Good morning, Calcutta! Someone selling water on the street corner to make a living is what they do on the streets of Calcutta.

Oh yeah, and there is this little thing called race. You are having some white financial manager come in and strip what's left of a black middle class/working class in the city. This is being done in the context of a community feeling a bit bruised from the Trayvon Martin trial.

Absolutely delusional.

We are going to sit and wonder why there is violence and riots. Delusional.