Cops retiring as millionaires

A Forbes blogger does the math:

It is said that government workers now make, on average, 30% more than private sector workers. Put that fantasy aside. It far underestimates the real figures. By my calculations, government workers make more than twice as much. Government workers are America’s fastest-growing millionaires.

Doubt it? Then ask yourself: What is the net present value of an $80,000 annual pension payout with additional full health benefits? Working backward, the total NPV would depend on expected returns of a basket of safe investments–blue chip stocks, dividends and U.S. Treasury bonds.

Investment pros like my friend Barry Glassman say 4% is a reasonable return today. That’s a pitiful yield, isn’t it? It is sure to disappoint the scores of millions of baby boomers who will soon enter retirement with nothing more than their desiccated 401(k)s, down 30% on average from 30 months ago, and a bit of Social Security.

Based on this small but unfortunately realistic 4% return, an $80,000 annual pension payout implies a rather large pot of money behind it–$2 million, to be precise.

That’s a lot. One might guess that a $2 million stash would be in the 95th percentile for the 77 million baby boomers who will soon face retirement.

Cops have a better racket these days than during prohibition. It’s not just cops, either — millions of teachers, firefighters, administrators, transit workers, janitors and all kinds of unionized government employees are effectively millionaires.

Video: Public employee of the year awards (SNL)

Mish put this up a few days ago. If you haven’t seen it, it’s a must-watch.


This version may play better in the US:

This is why your state and local governments are bankrupt, as well as the national governments of Greece, Portugal, Spain, Italy and probably soon France.

Selling munis today is like selling Greek bonds six months ago — the numbers guarantee default. The only question is whether or not there are bailouts, but like with the GIPSI states, there will be a lot of uncertainty leading to higher rates in the interim, and in the end they can’t all be bailed out.

Look at these rates. Considering the risks, that’s a pretty skimpy premium over Treasuries, even considering the tax advantage.


Listen to Mish: Public unions and their pensions have bankrupted your city and state.

I don’t care where you live, odds are that your local politicians have put you and your fellow taxpayers on the hook for unpayable quantities of debt, mostly to fund government salaries and benefits that are way out of line with the private sector. This is a huge issue, and the only people who cover it in detail are the blogger Mish Shedlock and author Stephen Greenhut.

This is exactly what has happened in Greece and the rest of the GIPSI states in Europe, and for that matter the US Treasury since FDR introduced the Keynesian the welfare/stimulus state to those shores.

The only ethical solution to the problem is a swift, honest default. Public debt is a racket, the advance sale of stolen goods (interest, extorted at gunpoint) and just another capital transfer from producers to lazy government workers, politicians, bankers, government contractors and other moochers. The alternative to default is a slow death by debt slavery, all to prop up a corrupt system that will fail in the end anyway.

As Murray Rothbard responded to the idea that public debt is ok because “we owe it to ourselves,” the problem is “who’s the we, and who’s the ourselves?”


See more here: Default, Greece, Default

Murray Rothbard on repudiating the public debt (

Strikes and nonsense from Greek unions.

From Bloomberg:

Striking Greek workers shut down transport and tried to storm parliament as lawmakers passed 4.8 billion euros ($6.5 billion) in budget cuts, including wage reductions, needed to trim the region’s biggest budget deficit.

Police with riot shields fired tear gas at demonstrators outside parliament in Athens today as lawmakers approved the measures, which Finance Minister George Papaconstantinou said will show European Union allies and investors that Greece is making good on its deficit pledges. Socialist Prime Minister George Papandreou has a 10-seat majority in the legislature.

“We didn’t create this crisis but now we have to pay for it,” said Manthos Adamakis, who was protesting with other catering workers outside the five-star Grande Bretagne Hotel on Syntagma Square in downtown Athens.

Tram, rail, subway and bus services shut in Athens and other cities as employees rallied against cuts to bonuses and holiday payments. A walk out by air-traffic controllers forced the cancellation of all 58 flights to and from Athens International Airport between midday and 4 p.m. and the rescheduling of another 135, according to a spokeswoman.

“We didn’t create this crisis but now we have to pay for it,” the union member says! Of course they created it, by striking and threatening strikes to demand raise after raise with ever greater benefits. Unions are paying for none of it — their fellow citizens are. And how screwy is the Greek economy that the government sets the wages of hotel caterers, if that is indeed the case?

Most Greeks oppose plans to cut wages and increase value- added tax, according to the first opinion poll published since the austerity moves were announced on March 3.

Seventy-two percent of 530 people surveyed by Public Issue for Skai Television said they disagreed with a drop in bonus- vacation payments, while 68 percent opposed a value-added tax increase. Sixty-two percent said Greece will see social unrest in the next year, according to the poll broadcast yesterday.

The additional budget cuts aim to save 1.7 billion euros through a 30 percent reduction to three bonus-salary payments to civil servants, a 7 percent overall decrease in wages at wider public-sector companies and a pension freeze. The reductions are accompanied by an increase to 21 percent from 19 percent in the main VAT tax as well as in alcohol and tobacco duties.

Further Strikes

Teachers are also striking, closing some schools, and workers at the Public Power Corp SA, the country’s biggest electricity company and controlled by the state, have also called a 24-hour strike today.

ADEDY, which has already held two 24-hour strikes this year after the government backtracked on pledges to grant civil servants a wage increase, is considering holding another 24-hour strike next week.

It seems like everyone in Greece is on the dole, but I believe only 20% of employment is government work.

Where are the taxpayer protests telling these extortionists to go to hell and demanding that parliament repudiate the debt? Majority or minority, the victims in this racket sure are silent. It’s as if they think the money grows on trees (or as if Greece still can print Drachmas!).

The “austerity measures” and tax hikes are sure to fail. The debt is simply unpayable, so default is the only option if Germany is not willing to bail out Greece, Italy, Spain, Portugal, Ireland and maybe even France. What are the odds of that? What happens in those volitile, socialist, economically ignorant countries if the government gravy train dries up? We haven’t seen anything yet.

Detroit, model for future US?

Hat tip to Mish for this explanation of how government ruined one of the wealthiest cities in the world:


Now, if the government had let Chrysler and GM go under, their factories would have been bought by Toyota and Honda and their employees would be turning out cars that people actually want, not gems like the Aztec: