#5514: Why should Chicago worry about unfunded pensions when they have taxpayers?
Chicago's largest pension might last 6 years. Maybe. "...[T]he fund will only generate roughly $500mm per year in income compared to benefit payments growing to $1.3 billion...see the problem?"
The problem is that "...even if Chicago's largest pension generates consistent positive returns for the foreseeable future, it will literally run out of cash in roughly 6 years."
Remember, this is in the best possible case--there are no economic dislocations, the Dow-Jones remains high, no crashes, popping bubbles, or other bad news--at the absolute best, they've got six years.
But, hey! There are taxpayers in Illinois, right? So all the Democrats have to do is raise taxes and that'll fix it.
* * *
Morgan Stanley thinks the used car market will see values drop by 50% relatively soon. Again, the best-case scenario here is for used car values to drop slightly. There is no case where they remain steady or rise.
This is bad news for the auto industry. Imagine you've decided to buy a Honda Accord. You've shopped around and have found two cars you like, which fit all your requirements exactly with no extraneous options. One is a new car; the other is two years old, well-kept, in excellent condition with 30,000 miles on it. You don't have a preference for new cars, but you're open to the possibility. The real deciding factor for you is how much? Then you learn that the new one is $40k; the used one is $12k.
On $40,000, a 60-month loan--even without interest--is $667 a month. $555 on a 72-month loan. (Say the 0% interest is an incentive.)
The used car will be $200 a month before interest at 60 months. $250 before interest in 4 years. Add a reasonable amount of interest and you're still under $300 a month. $300 a month for 4 years, as opposed to $555 for six.
Which would you buy?
Another "Cash 4 Clunkers" could fix this, of course, but all that would do is take the older vehicles off the road, not the kind of car in my example. It wouldn't be very much help for automakers.
* * *
So, results of a cat's day at the vet: no one gave him any insulin.
I told the receptionist that I hadn't given him any, and was told that was fine; no one at the clinic gave the cat any, either. Plus side, they're going to credit us the $66 I spent today, which we can use against a rerun of the test with a properly medicated cat.
Argh etc.
The problem is that "...even if Chicago's largest pension generates consistent positive returns for the foreseeable future, it will literally run out of cash in roughly 6 years."
Remember, this is in the best possible case--there are no economic dislocations, the Dow-Jones remains high, no crashes, popping bubbles, or other bad news--at the absolute best, they've got six years.
But, hey! There are taxpayers in Illinois, right? So all the Democrats have to do is raise taxes and that'll fix it.
* * *
Morgan Stanley thinks the used car market will see values drop by 50% relatively soon. Again, the best-case scenario here is for used car values to drop slightly. There is no case where they remain steady or rise.
This is bad news for the auto industry. Imagine you've decided to buy a Honda Accord. You've shopped around and have found two cars you like, which fit all your requirements exactly with no extraneous options. One is a new car; the other is two years old, well-kept, in excellent condition with 30,000 miles on it. You don't have a preference for new cars, but you're open to the possibility. The real deciding factor for you is how much? Then you learn that the new one is $40k; the used one is $12k.
On $40,000, a 60-month loan--even without interest--is $667 a month. $555 on a 72-month loan. (Say the 0% interest is an incentive.)
The used car will be $200 a month before interest at 60 months. $250 before interest in 4 years. Add a reasonable amount of interest and you're still under $300 a month. $300 a month for 4 years, as opposed to $555 for six.
Which would you buy?
Another "Cash 4 Clunkers" could fix this, of course, but all that would do is take the older vehicles off the road, not the kind of car in my example. It wouldn't be very much help for automakers.
* * *
So, results of a cat's day at the vet: no one gave him any insulin.
I told the receptionist that I hadn't given him any, and was told that was fine; no one at the clinic gave the cat any, either. Plus side, they're going to credit us the $66 I spent today, which we can use against a rerun of the test with a properly medicated cat.
Argh etc.