First Greece Now Puerto Rico Will Not Be Able To Pay It's Debt

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WhatInThe

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First Greece now the US Territory of Puerto Rico says it cannot pay it's 72 BILLION dollar debt. The power company alone owes 9 BILLION dollars.

http://news.yahoo.com/puerto-rico-governor-says-island-cant-pay-public-041906480--finance.html

They owe over 70 BILLION dollars in public debt. Much of which are municipal bonds held in mutual funds which many people own not knowing their funds contents.

The dominoes are starting to wobble.
 

City of Chicago, City mind you, not State, faces a $9 Billion operating deficit. State of Illinois has four PENSION funds for employees totaling an UNFUNDED $111 Billion dollars.

These numbers appear to be very frightening in comparison to Puerto Rico's problems. imp
 

imp said:
City of Chicago, City mind you, not State, faces a $9 Billion operating deficit. State of Illinois has four PENSION funds for employees totaling an UNFUNDED $111 Billion dollars.

These numbers appear to be very frightening in comparison to Puerto Rico's problems. imp
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The problem with many state's pension systems is that they used them too long. Pensions were used to offset lower pay in decades past but pay has since gotten quite competitive. So not only do these states need money for current pensioners they need to pay the new pensions/ers AND a higher salary the most government pension plans were designed to offset, not actually pay. There needs to more government buyouts and transition to 401k type savings plans.

Never the less it's still a problem that politicians past and present purposely ignored not wanting to be brutally honest with the pensioners or the public/tax payers that will have to fund them. In the end political correctness bankrupts.
 
Speaking of Illinois, pensions and budgets. Chicago laid off 1400 today to free up money for the teachers pension.

http://chicago.suntimes.com/news/7/71/734086/cps-pension-payment-1400-layoffs-borrowing

Ouch but this is just one example of why both the pensioners, employees and city will have to make changes. This is a problem in many US cities and suburbs because the hippy generation is now collecting. And their predecessors are accumulating. Same thing will happen again and again until these cities dump the traditional pension system.
 
Lon said:
Is the U.S. going to be next?
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Won't happen, Lon. We will just print more money to pay on our debts. Can you see where this is going? Harrisburg, PA's state capitol wanted to file bankruptcy, but the then Governor, Tom Corbett, disallowed the filing claiming it unconstitutional under the commonwealth's charter. However, the school district in Harrisburg is under state guardianship because it cannot pay its bills.
 
Are people who collect pubic sector pensions... ie school teachers allowed to collect Social Security? I don't think they are.. In which case, is it really fair to cut their pensions? If you took a 30 or 40% cut in you SS would that be ok? just askin'
 
Yes, some school systems do have their teachers involved in both Social Security and in the state pension system...
 
Ralphy1 said:
Yes, some school systems do have their teachers involved in both Social Security and in the state pension system...
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I'm not so sure... I know that if someone works in a public sector for a time... but also works for a time in the private sector and does contribute to SS enough to qualify, their SS benefits are reduced.. Therefore if a public sector employee does NOT contribute to SS.. no benefits.. So I ask if it's fair for them to have their benefits cut? They contributed toward their pension.. just like the rest of us contributed to our SS.
 
Some say one of the problems with Greece is/were generous government pensions that allowed government workers to retire with 80% of their pay. Germans have a less generous system which one of the reasons they seem to not care or give Greece a hard time.

http://www.economist.com/blogs/charlemagne/2010/02/greeces_generous_pensions

Ironically with Illinois their teacher pension system was started in 1895 and was to pay better than social security.

http://www.wbez.org/series/curious-...inois-teachers-receive-social-security-103958

But again it goes back to era when lower pay was offset by generous benefits. A traditional old school pension system is not needed to offset what is frequently above average pay. Doesn't excuse mismanagement of these funds or the politicians and government union leaders that were not honest or realistic about the feasability these pension plans. Perhaps cuts in the pension accompanied by large lump sum payments into social security could offset some of these problems.
 
I don't believe Social Security was ever intended to be sufficient for full retirement. That is why most of us tried to get jobs with their own retirement plans. Then too, when possible we also invested in things like stocks, insurances, and savings that would also give us some dollars to retire with. All together these things do help make retirement a bit easier. Much better than just waiting for the insufficient SS to do the job.
 
Lon said:
Is the U.S. going to be next?
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Excellent question Lon. Last night my husband found an illustration of what one trillion dollars looks like and the official debt is $17 trillion and with future obligations, that figure rises to about $211 trillion. Those obligations include Social Security, Medicare, military spending etc. There is no way that debt will ever be paid down.

When you look at the last image, you have to look very closely to see that there is a little tiny man standing beside the stacked pallets of $100 bills.

I knew a trillion was a lot, but I had no idea it was that much.

http://www.zerohedge.com/article/what-does-trillion-dollars-look-0
 
Debby said:
Excellent question Lon. Last night my husband found an illustration of what one trillion dollars looks like and the official debt is $17 trillion and with future obligations, that figure rises to about $211 trillion. Those obligations include Social Security, Medicare, military spending etc. There is no way that debt will ever be paid down.

When you look at the last image, you have to look very closely to see that there is a little tiny man standing beside the stacked pallets of $100 bills.

I knew a trillion was a lot, but I had no idea it was that much.

http://www.zerohedge.com/article/what-does-trillion-dollars-look-0
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SOCIAL SECURITY

is not part of the Federal Budget (General Fund). It is a separate account from the General Fund, and has its own source of income ("Payroll Tax"). Social Security payments go in the Social Security Trust Fund (SSTF), and should NOT be counted as general revenue. The SSTF is supposed to be used to pay benefits. But, the Government is under NO OBLIGATION to pay Social Security benefits, and has even borrowed substantially from the SSTF for general operations!

I copied this from http://www.federalbudget.com/

Scroll down below the charts to a pale green area. This SS stuff is there on the right side.
 
QuickSilver said:
I'm not so sure... I know that if someone works in a public sector for a time... but also works for a time in the private sector and does contribute to SS enough to qualify, their SS benefits are reduced.. Therefore if a public sector employee does NOT contribute to SS.. no benefits.. So I ask if it's fair for them to have their benefits cut? They contributed toward their pension.. just like the rest of us contributed to our SS.
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True. My nephew has worked for the school system in AZ for over 25 years, Northern Arizona University, Coconino Community College now, at retirement. However, before the public sector, he worked for private companies for a long time, therefore qualifying for S/S, as well as teachers' pension. To hear him tell it, it's a pretty muddied-up affair. imp
 
Greek civil service workers have announced a 24-hour strike in the wake of today's bailout deal amid insider claims that Prime Minister Alexis Tsipras was 'crucified' during marathon overnight talks.
The union, Adedy, wants workers to protest the terms of the agreement Tsipras negotiated with Greece's creditors when their country's parliament votes on the measures needed to receive a crucial third bailout on Wednesday.
While striking a deal was considered vital to securing Greece's future within the euro and preventing the country's economy collapsing, Tsipras agreed to rush key measures on tax hikes, pension reforms, and a debt repayment fund through parliament.
An eurozone official was quoted by the Financial Times as saying: 'They crucified Tsipras in there. Crucified.'

Greeks have reacted to the news of the bailout deal with fury, saying the tough reforms agreed to by their Prime Minister condemned the country to 'misery, humiliation and slavery'.
Following lengthy overnight talks between 19 eurozone leaders, Greece caved in and accepted a range of reforms to secure a deal worth up to €86 billion - the country's third bailout in five years.
The hard left Athens leader - who was elected on an anti-austerity platform - faced an immediate backlash over the deal, with many Greeks furious at Tsipras' reluctantly accepting even tougher reforms than those categorically rejected by citizens at last week's bailout referendum.

​
 
Hedgefunds want layoffs and cutbacks

Hedge fund investors want Puerto Rico to lay off teachers and/or cut back on education to pay them off since they hold a lot of their debt in bonds. These hedge funds want the international monetary fund(IMF) to help them out/ broker a deal with PR.

http://www.theguardian.com/world/20...-rico-close-schools-fire-teachers-pay-us-back

Should note that PR is a investor tax heaven with little or no taxes on investment income.
 
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