Moody's escalates plutocracy's attack on public worker pension plans
The latest move by the American ruling class to push public worker pension plans out of defined benefit plans and into the woes of casino capitalism of defined contribution plans and 401k type plans came to light in Chicago on July 3, 3012, when Moody's Investors Services announced that it will "recalculate" the expected burdens of Chicago and Illinois public pensions. No mention is made in the article or in Moody's analysis of the fact that virtually all of the plans have been paid up by the public workers and that the failure of the public bodies to pay their full share has resulted in the current problems.
The following article appeared on line at Crain's Chicago Business on July 3, 2012.
Pension debts in Illinois and Chicago would soar under new Moody's ratings plan
By Paul Merrion July 03, 2012
(Crain's) — In a proposal that could heighten the stakes for pension reform in both Illinois and Chicago, a leading credit rating agency plans to recalculate public pension liabilities with much more conservative financial assumptions than most states or cities have been using.
The new methodology could triple the nation's public pension debt, at least by this one measure, and nearly quadruple how much state and local governments should contribute to cover their obligations at a time when many governments already are struggling to meet annual pension payments, according to Moody's Investors Service Inc.
The agency noted that it already has downgraded the credit ratings on Illinois and Chicago as pension liabilities escalated in recent years.
While the new assumptions are meant to provide a more accurate comparison of pension funding burdens, they are not meant to be a new standard for setting contribution levels.
“We propose these adjustments for the purpose of providing greater clarity and comparability to
investors, and to assess the scale of pension liabilities in a way comparable to debt obligations,” the New York-based credit reporting agency said in a report. “We are not suggesting that they be a guide, standard or requirement for a state or local governments to fund these obligations.”
Moody's issued a request for comments Monday on its proposal to use several new uniform criteria for evaluating how pension liabilities compare among states and cities.
For instance, Moody's proposed an investment return assumption of 5.5 percent, based on an index of high-grade corporate bonds, instead of relying on widely varying and usually much higher rates of return assumed by most public plans, which tend to reduce future liabilities. Most public plans assume they will earn 7.5 to 8.25 percent annually on their assets.
Moody's also wants to calculate assets at market value, eliminating the common practice of “smoothing” investment gains or losses over several years. In addition, the agency wants to apply a uniform discount rate of 5.5 percent on pension liabilities and a 17-year period to pay them off, a much shorter time period than most states employ.
No states are expected to see lower ratings as a result, but the tougher comparison could reveal some cities whose pension debts are high relative to their current ratings, Moody's said. Chicago's rating likely wouldn't change, either, the company indicated.
Read more: http://www.chicagobusiness.com/article/20120703/NEWS02/120709966/pension-debts-in-illinois-and-chicago-would-soar-under-new-moodys-ratings-plan#ixzz1zZMmTyPB Stay on top of Chicago business with our free daily e-newsletters
By: J. S. Whitfield
Happy bastille Day !
From a retired Wisconsin companero
Happy Bastille Day
In these grim days let us not forget that there was a time when we not only destroyed "the prison they told us would outlast us all" but leveled a thousand year old Old Regime as well - system of oppression and war; as Harvey Goldberg used to say, so entrenched that no one thought it possible to overthrow it or that the grandiosity of lying politicians would be exposed and cause their downfall.
This is a song I learned at summer camp many years ago when we celebrated the French Revolution by reenacting the storming of the Bastille. (please excuse any misspellings). A joyous Bastille Day to all.
Queen Antoinette she promised she
Queen Antoinette she promised she
Would cut the throat of all Paris
Would cut the throat of all Paris
But this she could not do,
Now Antoinette is through,
Dans san La Carmenoil
Viva la song, Viva la song
Dans san la Carmenoil
Viva la song, du canon
King Louis pledged his loyalty,
King Louis pledged his loyalty,
But what's a vow to royalty
But what's a vow to royalty
Since he broke his vow
We give no mercy now
Dans san La Carmenoil
Viva la song, Viva la song
Dans san la Carmenoil
Viva la song du canon
Ken