There is no public employees pension crisis; it’s fake news, with an agenda
- The Sky Isn’t Falling.
- Brookings Institute study says public pension plans don't need to be fully funded.
The editors at the Albuquerque Journal, Governor Grisham and the state legislature, they are all running around screaming how New Mexico’s public pensions are going to collapse and how taxpayers are on the hook. But the truth is far different from the fear.
Since the 1990’s politicians and Wall Street bankers have been screaming that the sky is falling on public pensions like PERA and ERB. For almost thirty years these chicken littles have been warning us of impending doom, yet PERA and ERB both weathered the dot.com crash, the 9/11 meltdown and the 2008 fiscal collapse. My gosh, how could they survive if things were so dire? The answer is simple, the pensions are fine, and the sky isn’t falling.
Who keeps feeding these lies to the gullible media and politicians? Investment bankers and pension managers, that’s who.
Why would investment bankers create such a falsehood? The answer is simple, greed.
It’s a money grab. Wall Street wants all the money. Like a person with a tape worm inside, Wall Street is never satisfied with a little, they want it all. Wall Street appetite for our money can never be fulfilled. There is never enough for them.
Imagine if every state fell for this 100% pension fib. Wall Street would be flush with billions, maybe trillions of extra dollars. The year-end bonuses for Wall Street bankers would be astronomical (like they aren’t already).
It’s the scene from the movie Wall Street (1987), where Wall Street banker Gordon Gekko tells other financial bankers, “Greed is good.” That is why they have created this fake emergency, that has been going on for thirty years now. Wall Street wants it all, every penny.
Where is the proof that public pensions must be 100% solvent? PERA has weathered three major downturns in the last thirty years at 75% solvency. So why does Governor Grisham, the Journal editors and PERA Executive Director swallowing whole what Moody’s or any other Wall Street investor is feeding them? Where is their critical thinking? Where is their skepticism? They need to be better stewards of our money.
Just fifteen years ago Governor Bill Richardson had the same chicken little, sky is falling, tantrum regarding Retiree Healthcare and what became of that? Today Retire Healthcare is doing fine, the sky didn’t fall, but if we would have swallowed what Big Bill and Wall Street were selling, thousands of state pensioners would be without health insurance. That is why Governor Grisham must be wary of those who claim the sky is falling. Real New Mexicans will be hurt if she believes the ruse.
Remember that it was Moody’s, along with other Wall Street banks, that in 2007 recommended subprime mortgage loans as wonderful investment tools to pension funds and other investors (AAA ratings). This bad advice cost Americans billions, if not trillions, of dollars. So why are the Journal editors and Governor Grisham so quick to believe them now? Don’t they remember who caused the 2007 fiscal collapse?
There are other investment researchers who say 100% is not necessary, why not report on them?
In a just released report from the Brookings Institute. Authored by Jamie Lenney (Bank of England), Bryon Lutz (Federal Reserve) and Louise Sheiner (Brookings) they concisely explain why public pensions do not need to be 100% solvent. They shoot down all the fear mongering by the Wall Street bankers. How sad, Wall Street won’t get huge investment bonuses if Brookings is right.
The report is lengthy, but the Brookings Blog summarized their finds in one sentence, “Lenney, Lutz and Sheiner conclude that, on the whole, state and local pension systems in the U.S. are not facing an imminent crisis.
Funny, the Journal, Propst and those counseling Grisham have never reported on this, I wonder why.
There will be those who argue that we must obey the God’s of Wall Street because they set our bond ratings. To them I say this, New Mexico has a huge surplus in money, so why do we need Wall Street bankers? As of now New Mexico has enough money to pay for the things we want to do, we don’t need to float bonds. We can pay for what we want.
But if the legislature still wants to float bonds and play the Wall Street game, who cares if Moody’s down grades New Mexico. Interest rates are at such low levels that the difference is minuscule. We have the money in our reserves to toss off the lead blanket of Wall Street bankers who have shown repeatedly that they don’t know what is going on. The only think I am sure that Wall Street bankers know is how to instill false fear, pay themselves huge bonuses and how to grab for every penny that is on the table.
Are there issues at PERA that should be addressed? Absolutely. There are fundamental problems in the Fire and State Workers plans that must be studied and addressed. It is not sustainable continue to allow a worker to retire with full benefits before age fifty (full disclosure, I am one of those workers). The PERA Board is useless and must be reformed.
One issue that does not need to be entertained is that if PERA and ERB don’t get to 100% solvency the sky is going to fall. PERA and ERB has weathered three financial calamities in the last twenty years and they are doing just fine. That is unless you disregard Brookings and instead believe what Wall Street. The same bankers who in 2007 recommended subprime mortgages with AAA ratings and drove the entire world financial system to the brink. Why would anyone in their right mind believe Wall Street.
The sky is not falling at PERA and ERB. It would be wonderful if the Journal editors, PERA Executive Director Propst and Governor Grisham would stop drinking Wall Street Kool-Aid and read the Brookings report.
Then they can all calm down and stop acting like chicken littles.
