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What Can’t Be Paid, Won’t Be Paid—Not Even to Government Pension Funds

16 Oct

Is Nothing Sacred?  Not Even Gov-co Pensions?! [courtesy Google Images]

Is Nothing Sacred? Not Even Gov-co Pensions?!
[courtesy Google Images]

According to The New York Times article “In Ruling on California Town’s Bankruptcy, Judge Challenges Security of Pensions”:

 

 “A federal bankruptcy judge on Wednesday upended the widely held belief that public workers’ pensions have a special status in California that makes them impossible to cut, further chipping away at the idea that pensions are sacrosanct in a municipal bankruptcy.”

 

The judge ruled against the sanctity of CalPERS pensions and declared the CalPERS liens on the city of Stockton, California to be null and void.

What’s that mean?

It means that a federal judge has ruled that a government—albeit the relatively small government of the city of Stockton, California—that’s bankrupt, doesn’t have to pay its debts—not even to California government workers now on CalPERS pensions.  That means the the debt owed by the city government of Stockton to the pensions of government employees, will not be imposed on the people of Stockton.  If the city government is bankrupt, the city’s government’s debts are null and void.

The city employees (who’ve been sticking it to the city taxpayers for years) argued that being associated with the government, they were special and, if the bankrupt city government couldn’t pay their pensions, then the city’s chumps (the taxpayers) would still have to be held responsible.

The bankruptcy court disagreed.

The court said that if a city government becomes bankrupt, all of it debts–even those owed to other governmental agencies–can be discharged and left unpaid.

Pretty shocking, hmm?

This means that if government employee wages and/or pensions become so high that they help force a government into bankruptcy, the government employee pension funds could also wind up bankrupt.  And that means that if government workers want to collect their pensions, they’d better not get too greedy.

The City of Stockton bankruptcy case implicitly acknowledged what I’ve been saying for years:  Government debt is too great to be paid.  What can’t be paid, won’t be paid.  If the Stockton government is bankrupt, even debts owed to government pensions must be, and will be, rendered void.

 

•  On a national level, the City of Stockton ruling is at least consistent with the observation that, as the value of the dollar rises, the real value of the National Debt also rises, the government’s ability to repay its falls and hastens a moment (like that in Stockton, California) when an overly-indebted government must repudiate its debts.

When that moment arrives, creditors (in this case, former government employees) holding their wealth in the form of paper debt instruments denominated in fiat dollars (in this case CalPER’s pension funds) will lose their assets.

Sooner or later, the same drama we see in Stockton, California, is going to play out on the national level.  Unable to repay the National Debt, the federal government will have to admit it’s insolvent and, either by means of hyperinflation or open repudiation, the government will have to admit and declare that its debts are void and the correlative debt instruments (US bonds, So-So Security, government pensions, etc.) are worthless or at least significantly devalued.

In the meantime, while we wait for the stuff to strike the fan on the national level, highly-indebted state and local governments that are going broke under the growing weight (purchasing power) of fiat dollars, will be increasingly allowed and even forced to declare bankruptcy and repudiate their debts.  When they do, their creditor will lose their assets just as the former municipal workers for Stockton California are losing theirs.

Stories like Stockton’s are bits of evidence that a moment when even the federal government repudiates the national debt is on the horizon and approaching with some speed.

Remedy?  Get your wealth into something other than paper-debt instruments.  Get your wealth into something whose value cannot be repudiated by government.  Get your wealth into something tangible like gold or silver.

 
31 Comments

Posted by on October 16, 2014 in Bankruptcy, Pensions, What Can't be Paid

 

Tags: , ,

31 responses to “What Can’t Be Paid, Won’t Be Paid—Not Even to Government Pension Funds

  1. wholy1

    October 16, 2014 at 2:11 PM

    With the continuing Eric [the race-baiting place] Holder selective enforcement, how about the following “revision: “what can be avoided/disregarded without sanction/indictment-conviction-jail-time/wealth seizure by the “insiders” won’t be paid” ?

     
  2. wholy1

    October 16, 2014 at 2:27 PM

    As a redeemed repentant attempting to pursue daily that ultimate Grace of ” . . . forgive them for they know not . . “, I find it an extremely difficult and tedious attempt to find “empathy” for parasitic government [thug] “agent” present or future “retirees” expecting their padded-to-begin-with pensions to be “fully funded” at current monetary “value” during their “golden years”. (sic)

     
  3. Toland

    October 16, 2014 at 4:55 PM

    Yeah, like Detroit before it, that one-horse town Stockton clearly lacked the savvy to order the Central Banker & Printing Press combo:

    “The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.” –Alan Greenspan

    Or, Stockton should have at least engaged the services of a financial-mob consultant:

    “In the case of governments boasting monetary sovereignty and debt denominated in its own currency, like the United States (but also Japan and the UK), it is technically impossible to fall into debt default.” –Erwan Mahe, European asset allocation and options strategies adviser

    Let this be a lesson to all you amateurs. This is what happens in the game with the big boys, when you get in over your head and go into debt in OPC (Other People’s Currency).

    The pros print their own. That’s why they look so relaxed in their $2,000 suits.

    “There is never a risk of default for a sovereign nation that issues its own free-floating currency and where its debts are denominated in that currency.” –Mike Norman, Chief Economist for John Thomas Financial

    Ah, the good life.

     
  4. Joan of Arc

    October 16, 2014 at 8:26 PM

    Thanks for focusing on something we can act on. So sick of 24 hours of obola coverage.

     
  5. henry

    October 16, 2014 at 10:19 PM

    The United States Government does not need to declare bankruptcy to discharge its’ Social Security debt because there is no debt. Current workers are contributing into a system on the hopes that future workers will contribute into the system that will pay them. There is no contractual obligation for the government to pay you anything. When the number of people paying into the system who realize this is bigger than those collecting then people will be elected with that view and they will end social security.

     
    • Adask

      October 16, 2014 at 10:46 PM

      I’d be astonished if the US gov-co ever explicitly declared bankruptcy. But that doesn’t mean that they’ll never actually “be” bankrupt. It doesn’t even mean that the US gov-co isn’t already bankrupt.

      However there is a So-So Security debt that’s associated with the SS Fund: the rows of filing cabinets in the SS Administration buildings that carry reams and reams of “notes” that the US gov-co issued to the SS Administration in return for the funds paid into SS that have been “loaned” to the US gov-co. If the US gov-co fails or refuses to repay the funds represented by the reams of Notes in SSA filing cabinets, the SSA will be broke and unable to fulfill its pension obligations to those who’ve contributed into SS over the past 40 or 50 years.

      Incidentally, I wonder how many verified copies of the notes given by gov-co to the SSA are in existence and where they might be found.

      If there were no verified copies and the only actual debt-instruments that could be enforced are those Notes in the SSA filing cabinets, then it would seem to follow that if “terrorists” attacked those SSA building and destroyed those Notes with fire, explosives, etc., then there might not be any more admissible evidence of the debt owed by the US gov-co to the SSA. Thus, it’s at least theoretically possible that if those Notes were destroyed, the gov-co’s obligation to repay those Notes might be destroyed or at least confused and postponed for some years into the future.

      If I were a SSA officer or employee, I don’t think I’d feel comfortable working around a “terrorist target” as obvious as the filing cabinets full of Notes from the feds promising to repay currency “borrowed” from SS Fund.

       
      • henry

        October 17, 2014 at 9:05 AM

        It is true that the contributions to social security have been loaned out to other government agencies to allow them to not go to the public to finance their debts. But, is there a contractual obligation on the Social Security Administration to distribute those funds to the contributors? Could congress say that the cost of living adjustments will be eliminated? Could they say that social security payments will be reduced or eliminated if your net worth or income is too high? If one party can alter the contract without the approval of the other parties then there is no contract at all.

         
      • Adask

        October 17, 2014 at 11:15 AM

        I don’t believe SS is a “contract”. Insofar as it supplies “benefits,” I believe it’s a trust. Insofar as contract requires a meeting of the minds (plural), there must be at least two people who are not only party to the contract, but have each signed the contract. Two signature. I’m not aware of any second signature that’s affixed to any application for SS. The “beneficiary” signs the application all by himself. One signature does not a contract make. I believe that one signature constitutes only a unilateral pledge–which can be far more dangerous than contract. By means of your single-signature pledge, you may subject yourself to the authority of whatever entity you made your pledge to.

        In any case, I’m unaware of any evidence to support the contention that SS is a “contract”. Whatever SS is, it’s not that.

         
      • Jethro

        October 17, 2014 at 7:03 PM

        Al, I agree that SS is most likely a TRUST. However, the beneficiary isn’t you, the purported eventual recipient of benefits, it’s the government. Which means that SS participants are likely fiduciaries. Fiduciaries can go to jail for a breach of fiduciary duty, which would explain why a “failure to file” charge can be a “criminal” matter.

         
      • Oliver

        October 18, 2014 at 3:56 AM

        I started getting a SS check 5 years ago. About 2 years ago I got a notifcation letter stating the the SSA would no longer be paying me the monthly amount. It would now come from a private company. A few months later I got notification that it was now being paid by an insurance company. The money is still being paid, but I tossed the letters. Sorry. So i figured I’m not the only one. Do any of you guys have knowledge of this? Bet an insurance company COULD go out of business because of bankruptcy. Its not an entity that can print FRN’s. Alfred???… Anyone

         
      • Adask

        October 18, 2014 at 4:50 AM

        It’s news to me. Never heard of it before. I’d like to have read the letters announcing the transitions from SS to the insurance company.

         
  6. Henry

    October 16, 2014 at 10:32 PM

    Let us not forget this gem published by the Federal Reserve Bank of St. Louis:

    “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e. unable to pay its bills.”

    In other words, when the going gets tough, the printing press gets going.

    Which is hardly news to readers of this blog. In recent months alone, Al has shown us multiple videos in which John Williams, Jim Willie, Harvey Organ and others generously share their prediction that the US dollar will show unmistakable signs of hyperinflation by the end of 2014.

     
    • pop de adam

      October 16, 2014 at 11:50 PM

      Crane paper co.

      As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e. unable to pay its bills

      Do they make income upon the creation of bills? Ink and paper? Are these losses or gains? It always has been.

       
  7. pop de adam

    October 16, 2014 at 11:37 PM

    MY parents attempted to give me a social security number, they did this for themselves, to receive more of the money they earned. They left it so I might continue on enriching them at my own expense, I can’t fault my parents for partaking in that which may ease their efforts. This had nothing to do with myself. That I would choose this is laughable.

     
    • pop de adam

      October 16, 2014 at 11:42 PM

      I have never applied for a social security number

       
  8. Roger

    October 16, 2014 at 11:47 PM

    State governments can’t “declare bankruptcy”. There are fundamental reasons for this, including the fact that the federal bankruptcy code does not allow for it.

    Cities, towns and counties can file for bankruptcy, but only if their state allows it, which about half the states do under certain conditions.

     
    • pop de adam

      October 16, 2014 at 11:52 PM

      Death to your officers….the respect is gone.

       
    • Toland

      October 17, 2014 at 1:10 AM

      @Roger

      Not only are the states unable to declare bankruptcy, so is the federal government.

      What the federal government can do however, at least in theory, is simply default on its debt payments, like Iceland did. But, since we’re posting quotes in this thread for some reason:

      “In the case of the United States, default is absolutely impossible. All U.S. government debt is denominated in U.S. dollar assets.”

      — Peter Zeihan, Vice President of Analysis, STRATFOR

      In other words: Gentlemen, start your presses.

       
  9. pop de adam

    October 17, 2014 at 12:07 AM

    “including the fact that the federal bankruptcy code does not allow for it.”

    if it is a bankruptcy code I’m sure it allows for bankruptcy.

    Answer this simple question. do you owe me money or do I owe you money?

     
  10. pop de adam

    October 17, 2014 at 12:14 AM

    answer?

     
  11. pop de adam

    October 17, 2014 at 12:25 AM

    roger and henry won’t answer as they are caught up in the altenative.

     
  12. palani

    October 17, 2014 at 8:37 AM

    What happens is a different government gets installed. The old one will create the new one and then emancipate it. That means the new government is not responsible for the old governments debt and the old government is not responsible for the new governments debt. That is the message in the number 346,681,016 which is the final debt of the government that failed in 1868. It is not counted in the debt of the new government because it doesn’t belong to them. The old government didn’t fail per se. It just stopped operating and people failed to recognize that a new entity was on the scene because everything appeared the same, even down to the name of the new entity. What has proven to be successful in the past will be used again and again in the future so expect it to come to pass.

     
  13. moon

    October 17, 2014 at 10:21 AM

    Regardless of what the move/trick may be called, any USD source can be disappeared. It’s fraud to begin with…why would a rational man play the game?

     
    • palani

      October 17, 2014 at 1:32 PM

      “why would a rational man play the game?”
      You are forced into the game because your suppliers demand it.

       
      • moon

        October 17, 2014 at 5:24 PM

        Forced into the pension/USD game? Obviously you haven’t met my “suppliers”.

         
      • palani

        October 17, 2014 at 6:11 PM

        “you haven’t met my “suppliers””
        I haven’t met YOU!!!

         
      • moon

        October 17, 2014 at 10:40 PM

        Most likely you haven’t met me. What is your point?

         
    • Cody

      October 27, 2014 at 8:43 PM

       
  14. Oliver

    October 18, 2014 at 3:55 AM

    I started getting a SS check 5 years ago. About 2 years ago I got a notifcation letter stating the the SSA would no longer be paying me the monthly amount. It would now come from a private company. A few months later I got notification that it was now being paid by an insurance company. The money is still being paid, but I tossed the letters. Sorry. So i figured I’m not the only one. Do any of you guys have knowledge of this? Bet an insurance company COULD go out of business because of bankruptcy. Its not an entity that can print FRN’s. Alfred???… Anyone

     
    • pop de adam

      October 20, 2014 at 12:41 AM

      These are but numbers. I don’t own any numbers, If I were to own a number it might be 18, or more importantly 17.835, this latter number I spent hours distilling. It is important in computing fret placement upon guitar necks. do I own it? I think not, own a number, really? I did it independently using a DOS 386, yet it manifested upon the internet later anyhow.

      To print FRNs take out a loan, from a bank.

      The problem is there seems to be no distinction between being paid and servicing this debt. Others may contract to service this debt and spend these notes, they assume this debt/interest travels with the currency. yet others assume it as final payment. How can this be so?

       
      • pop de adam

        October 20, 2014 at 12:59 AM

        In computing taxes, you are expected to recognize gross income. We compute taxes using gross income yet after we have both computed and paid taxes upon such we are left with gross income.

        Are you an idiot?

         

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