Posted on 12/14/2016 2:00:17 PM PST by Lorianne
After struggling to raise debt from third parties to repair crumbling infrastructure, the state of New Jersey has come up with a "clever" approach to fundraising that entails selling debt to their own insolvent pension funds...something we've dubbed the "Pension Ponzi Squared." Of course, because when everybody else shuns your debt for being too risky who better to sell it to than yourself?
With $3.4 billion in annual benefits payments versus only $1.9 billion in contributions, funds like the New Jersey Public Employees' Retirement System already qualified as a plain vanilla ponzi scheme. But, using what little pension assets they have left (38% net funded) to buy debt in the entity that ultimately backstops their liabilities is a whole new level of madness. As we recall, the mortgage CDO^2 didn't work out so well back in 2008.
(Excerpt) Read more at zerohedge.com ...
Hmm, just like Social Security.
no, not at all. every week with the payroll people pay into social security.
They want to use pension fund assets to buy bonds in the same pension plan??? Is this possible??
But then won’t the pension liabilities still be there??? And still not enough actual cash or cash equivalents, to pay out benefits???
Is this creative accounting???
I don’t see the problem. Isn’t this how modern economics policy works (both fiscal and monetary)? This isn’t going to end well. Hopefully they give us another 10-20 years.
The kicked can has hit the alley wall. Sorry y’all!
Just as long as the pensions of those Democrat politicians are not effected!/S
Definitely; there is no hiding these problems anymore here in NJ. So much current revenue has to be diverted to people who retired decades ago, and there is little left for current services. Never mind horrible roads; until recently I’ve never seen “Stop” signs blocked by tree branches (because the guy that used to prune them left years ago).
however and this can’t be over emphasized....... you are New Jersy
Looking at the article I saw another problem concerning investment income, that they are going to solve with this inspired breathtaking imbecility. From 2014 to 2015 income went from over $4 billion to just over $1 billion. Only a government bureaucrat could imagine that stuffing the portfolios with low grade junk bonds would improve performance.
The money has not been spent wisely in no it seems. GA has income tax, sales tax at state and local level, lottery, and fund education through property tax. No casino gambling though and a requirement that the budget be balanced each year. So far we have been blessed with relatively conservative leadership that have been stewards of the state funds.
Yup, we’re Jersey alright- a Democrat cesspool.
I wish I could talk my wife into leaving New Jersey before it collapses under the weight of these pensions. It’s going to get really really ugly here.
When Christie made the teachers pay a token pittance towards their own health insurance they went ballistic. The wailing, moaning, the rending of their clothes and tearing at their hair! I can only imagine the epic meltdowns when they finally are told "yeah, those pensions you were planning on? Sorry, you aren't getting them. We spent it all."
Yes, one of my wife’s cousins is one of them. A stupid, apolitical low-information person that hates Christie because she now has to do what her employers (the taxpayers) have been doing for years: chip in for her benefits. She makes 6 figures teaching “bilingual”(?) to Third Worlders in one of our ghettoes here in NJ. That’s a lot of money for 180 days (that aren’t 8 hours long)...
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