2010 May 05 Wednesday
Public Pensions Bankrupting Los Angeles

Richard Riordan, former mayor of Los Angeles, and Alexander Rubalcava, president of an investment advisory firm write in a Wall Street Journal Op-Ed that the city of Los Angeles is headed for bankruptcy. Read the whole thing.

Los Angeles is facing a terminal fiscal crisis: Between now and 2014 the city will likely declare bankruptcy. Yet Mayor Antonio Villaraigosa and the City Council have been either unable or unwilling to face this fact.

According to the city's own forecasts, in the next four years annual pension and post-retirement health-care costs will increase by about $2.5 billion if no action is taken by the city government. Even if Mr. Villaraigosa were to enact drastic pension reform today—which he shows no signs of doing—the city would only save a few hundred million per year.

Los Angeles shows us America's future. The rest of the country will catch up eventually.

The city assumes a ridiculous 8% annual return from its pension funds. The current mayor and city council are tools of the public worker unions. The city is going to keep squandering the taxpayers' money on overpaying public workers. That is part of a much bigger pattern of more rapid compensation increases in the government sector than in the private economy. That pattern is headed for a collision with a solvency crisis for many cities and states.

See Inevitable Bankruptcy Seen For Los Angeles and US States In Deeper Financial Trouble. I expect the sovereign debt problem in the US to hit in full force during the next recession. I expect the next recession to be caused by dwindling reserves of oil. The Deepwater Horizon accident in the Gulf of Mexico is a symptom of how desperately we must now pursue oil under extreme conditions in order to keep our economy going.

Share |      By Randall Parker at 2010 May 05 12:10 AM  Economics Sovereign Crises


Comments
Big bill said at May 5, 2010 5:14 AM:

California has become a mini-Mexico, a mini-China: millions of shoeless peasant mouths to feed and no actual productive capacity to take care of them ... At least not to White European standards. Isn't there some way to ratchet down Mexican and Asian expectations to a level more in keeping with the peasantry of their homelands? Mexican and Asian police, teachers, and firemen make lousy money, yet they keep doing their jobs. A little baksheesh or mordida here or there seems to work just fine. With a Mexican mayor in charge of LA and Mexican reporters and Mexican newscasters one would think the transition would be relatively easy. They know the culture, they know the drill. As long as they don't start fleeing to the remainig European portions of the country to Mexify them, I think we could live with LA as an anything-goes El Tijuana Mejor. Let the remaining Anglos clear out and take their losses or stay with radically reduced pensions as they wish. Once they complete the Mexification, anyone retiring in California should be able to live fairly comfortably even on the reduced pensions and Social Security.

The Third Worldization of California is almost complete. Their only remaining problems are due to their stubborn refusal to recognize this and accept it. White Mexicans like Villaraigosa and his many women have no problem ruling over a poverty-stricken and exploited peasant underclass. It is the few bleeding heart Anglos that are getting all choked up over this, believing that somehow LA (and California, generally) can support tens of millions of Indios and Mestizos at a German/English standard of living AND educate their children to be the Rocket Scientists and Brain Surgeons of tomorrow.

The smartest thing the Anglos could do is to change their name to "Rodriquez" and start with that kumbaya we-are-all-one-people Mestisaje religion that the White Mexicans have used for generations to fool the Brown Mexicans into accepting their peasant status in Mexico. Once the Anglos disguise themselves with a Mexican name and develop a taste for tacos and mariachi, the sooner they can get themselves and their kids a slot in the coming California ruling class.

One thing seems clear, however. This dreamy old Founders of America English/German/Jeffersonian educated villager yeoman farmer backbone of the nation crap just doesn't work in a colonial exploitation culture like Mexico (and now California). The few remaining Anglos just don't get it.

Toadal said at May 5, 2010 10:09 PM:

California is one Democrat governor away from becoming another Detroit. This falls election should prove interesting.

Public Notice said at May 11, 2010 7:13 AM:

This video from www.bankruptingamerica.org says it all: http://www.bankruptingamerica.org/2010/04/20/new-video-is-washington-bankrupting-america/


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