Tuesday, December 03, 2013

Detroit -- Officially Bankrupt

http://www.bloomberg.com/news/2013-12-03/detroit-to-remain-under-bankruptcy-protection-judge-says.html

If you read down in the article, you will see that the emergency manager suggested replacing $5B of pension and other obligations "with a $2B note paying 1.5%.'

Now imagine if you were a Detroit police officer for 30 years and managed not to get killed in the line of duty.  You said, 'Yeah, but I can retire at 50 with full pension......"  Now you realize that your $30,000 a year pension will be replaced with a promise to pay $12,000,  yielding 1.5%.  And if they cannot make that reduced payment.........well, welcome to BK part II -- enjoy your 40% of that 40% ($4,800).

Hopefully, New York state will have a viable pension system at least as long as my parents survive.

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