Special Reuters Report: How a vicious circle of self-interest sank a California city

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    Nov 14, 2012 1:05 AM GMT
    Nationally in the US, this will be far, far worse than Enron with unfunded pension obligations in the US exceeding 1.4 trillion. Yep, that's *trillion*.
    http://www.marketwatch.com/story/public-pension-funds-face-vast-shortfall-2012-11-13

    This is one city:

    http://www.reuters.com/article/2012/11/13/us-bernardino-bankrupt-idUSBRE8AC0HP20121113

    Yet on close examination, the city's decades-long journey from prosperous, middle-class community to bankrupt, crime-ridden, foreclosure-blighted basket case is straightforward — and alarmingly similar to the path traveled by many municipalities around America's largest state. San Bernardino succumbed to a vicious circle of self-interests among city workers, local politicians and state pension overseers.

    Little by little, over many years, the salaries and retirement benefits of San Bernardino's city workers — and especially its police and firemen — grew richer and richer, even as the city lost its major employers and gradually got poorer and poorer.

    Unions poured money into city council elections, and the city council poured money into union pay and pensions. The California Public Employees' Retirement System (Calpers), which manages pension plans for San Bernardino and many other cities, encouraged ever-sweeter benefits. Investment bankers sold clever bond deals to pay for them. Meanwhile, state law made it impossible to raise local property taxes and difficult to boost any other kind.

    No single deal or decision involving benefits and wages over the years killed the city. But cumulatively, they built a pension-fueled financial time-bomb that finally exploded.

    In bankrupt San Bernardino, a third of the city's 210,000 people live below the poverty line, making it the poorest city of its size in California. But a police lieutenant can retire in his 50s and take home $230,000 in one-time payouts on his last day, before settling in with a guaranteed $128,000-a-year pension. Forty-six retired city employees receive over $100,000 a year in pensions.

    Almost 75 percent of the city's general fund is now spent solely on the police and fire departments, according to a Reuters analysis of city bankruptcy documents - most of that on wages and pension costs.
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    Nov 14, 2012 1:09 AM GMT
    riddler, Can police/firemen be OUTSOURCED/OFF-SHORED?

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    Nov 14, 2012 1:25 AM GMT
    JockTheVote saidriddler, Can police/firemen be OUTSOURCED/OFF-SHORED?



    If you're planning to pay pensions of $128,000 a year and retirement payouts of $230,000 - yes. Many times over.
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    Nov 14, 2012 1:29 AM GMT
    Interesting case. How many other examples of this can you present?

    Another question:

    You present yourself as a specialist in OUTSOURCING/OFF-SHORING...so you're a good person to ask here.

    What percentage of American jobs do you think could be sourced elsewhere?
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    Nov 14, 2012 1:56 AM GMT
    JockTheVote saidInteresting case. How many other examples of this can you present?

    Another question:

    You present yourself as a specialist in OUTSOURCING/OFF-SHORING...so you're a good person to ask here.

    What percentage of American jobs do you think could be sourced elsewhere?


    To the first point, you asked. To the latter point, probably not that many can be offshored given how many design and engineering jobs are technically offshored to the US. Did you know for instance that the US remains the manufacturer to the world? They simply do it with greater capital investment - mechanization, automation, and innovation.

    Have you tracked the unemployment rate in the US and the corresponding offshoring? What's the relationship? And why do you suppose that is?

    Do you feel that the generous unfunded pensions negotiated by complicit politicians and unions will help or hurt?
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    Nov 14, 2012 2:06 AM GMT
    A vicious circle of self-interest recently got voted out of office, and is currently encountering a devolving level of public support.
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    Nov 14, 2012 2:10 AM GMT
    paulflexes saidA vicious circle of self-interest recently got voted out of office, and is currently encountering a devolving level of public support.


    And they're still left with massive unfunded debts and overgenerous packages to public employees... People locally voted for these politicians so it's not like they have much of an excuse nor is there cause for sympathy but the same thing is happening throughout the US. And you're right the politicians are going to keep being turfed, but that seems a bit late...
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    Nov 14, 2012 2:11 AM GMT
    riddler,

    EXPLAIN THIS A LITTLE MORE IF YOU DON'T MIND:

    "Have you tracked the unemployment rate in the US and the corresponding offshoring? What's the relationship? And why do you suppose that is?"


    I know you are an enthusiast of American companies off-shoring. Are you suggesting that there is a benefit to American workers as well?

    You are based in Hong Kong and you specialize in OUTSOURCING/OFF-SHORING.

    I suspect you know more about the topic of American job loss and Chinese manufacturing----than most of us here.

    So any insights you can offer will be much appreciated.


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    Nov 14, 2012 2:20 AM GMT
    JockTheVote saidriddler,

    EXPLAIN THIS A LITTLE MORE IF YOU DON'T MIND:

    "Have you tracked the unemployment rate in the US and the corresponding offshoring? What's the relationship? And why do you suppose that is?"


    I know you are an enthusiast of American companies off-shoring. Are you suggesting that there is a benefit to American workers as well?

    You are based in Hong Kong and you specialize in OUTSOURCING/OFF-SHORING.

    I suspect you know more about the topic of American job loss and Chinese manufacturing----than most of us here.

    So any insights you can offer will be much appreciated.


    Um I'm not an enthusiast of American companies offshoring - I help with contract manufacturing. I am not based in HK. I'm based in Toronto - my firm and companies are based in Hong Kong.

    Obviously there's a benefit to American workers. It's allowed for the creation of new service industries, it's moved jobs into higher pay and white collar quadrants. It's also improved the standard of living for Americans by reducing the cost of products to consumers. To answer the question since you apparently aren't particularly familiar with trade, there's been little if any relationship between offshoring and US unemployment.

    How's that possible? Sure there's short term change but these jobs get moved into more productive areas - look at what Apple makes versus what they pay for factories to produce. Look at the salaries at Apple versus what is made abroad. It's always been a give and take. The irony? Foxconn, the infamous maker of Apple products abroad is considering automation and production in the US as wages increase in Asia:

    http://www.theregister.co.uk/2012/11/08/foxconn_us_factory_plan_rumor/

    Again, how do you square the peg that the US remains the largest manufacturer to the world?
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    Nov 14, 2012 2:25 AM GMT
    JockTheVote saidYou are based in Hong Kong and you specialize in OUTSOURCING/OFF-SHORING.

    I suspect you know more about the topic of American job loss and Chinese manufacturing----than most of us here.


    Wait, whatever happened to you thinking I was being paid by the Republican party/plant?
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    Nov 14, 2012 2:26 AM GMT
    "Again, how do you square the peg that the US remains the largest manufacturer to the world?"

    TALK ABOUT SQUARING INFORMATION:

    During the entire Romney Campaign,

    we heard nothing but Doom & Gloom

    about the state of American manufacturing.
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    Nov 14, 2012 2:27 AM GMT
    riddler hates anyone who works for a living.
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    Nov 14, 2012 2:28 AM GMT
    JockTheVote said"Again, how do you square the peg that the US remains the largest manufacturer to the world?"

    TALK ABOUT SQUARING INFORMATION:

    During the entire Romney Campaign,

    we heard nothing but Doom & Gloom

    about the state of American manufacturing.


    Not sure what your point is. The US still remains competitive for manufacturing but after these 4 years, do you think it has become more so or less so? During the Romney campaign, the argument has - and the evidence is there that suggests that it's become less so.

    But do you think issues like unfunded public pensions on over-generous packages make American manufacturing let alone American business in general, more or less competitive?
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    Nov 14, 2012 2:30 AM GMT
    riddler78 said
    JockTheVote said"Again, how do you square the peg that the US remains the largest manufacturer to the world?"

    TALK ABOUT SQUARING INFORMATION:

    During the entire Romney Campaign,

    we heard nothing but Doom & Gloom

    about the state of American manufacturing.


    Not sure what your point is. The US still remains competitive for manufacturing but after these 4 years, do you think it has become more so or less so? During the Romney campaign, the argument has - and the evidence is there that suggests that it's become less so.

    But do you think issues like unfunded public pensions on over-generous packages make American manufacturing let alone American business in general, more or less competitive?


    Your side lost the election. Get over it.

    Manufacturing has increased under Obama.

    Unfunded pension liabilities are the result of relentless tax cutting that you support. icon_rolleyes.gif
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    Nov 14, 2012 2:34 AM GMT
    riddler, your hyphenated sentence:

    "Um I'm not an enthusiast of American companies offshoring - I help with contract manufacturing."

    could be paraphrased to:

    'I don't approve of what I do- But I do it anyway'.

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    Nov 14, 2012 2:36 AM GMT
    Christian73 said
    riddler78 said
    JockTheVote said"Again, how do you square the peg that the US remains the largest manufacturer to the world?"

    TALK ABOUT SQUARING INFORMATION:

    During the entire Romney Campaign,

    we heard nothing but Doom & Gloom

    about the state of American manufacturing.


    Not sure what your point is. The US still remains competitive for manufacturing but after these 4 years, do you think it has become more so or less so? During the Romney campaign, the argument has - and the evidence is there that suggests that it's become less so.

    But do you think issues like unfunded public pensions on over-generous packages make American manufacturing let alone American business in general, more or less competitive?


    Your side lost the election. Get over it.

    Manufacturing has increased under Obama.

    Unfunded pension liabilities are the result of relentless tax cutting that you support. icon_rolleyes.gif


    Unfunded pension liabilities have nothing to do with tax cutting. Are you that inept at the accounting? And regardless of who won or lost the election - given that the American electorate saw fit to ensure that the Republicans retain the leadership in the house and the leadership in 30 states, your side certainly didn't "win" outright - nor does it change the math or reality.
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    Nov 14, 2012 2:38 AM GMT
    JockTheVote saidriddler, your hyphenated sentence:

    "Um I'm not an enthusiast of American companies offshoring - I help with contract manufacturing."

    could be paraphrased to:

    'I don't approve of what I do- But I do it anyway'.



    You could paraphrase it in that way, but you'd be wrong. Offshoring isn't the same as contract manufacturing - sometimes it's a subset, sometimes it's not. Further, I do approve of what I do given that most of our clients are small and midsized firms who use us to ensure their survival but also to build products they wouldn't otherwise be able to. This often means they can hire and create higher wage jobs like designers and engineers. So yes, I approve of what I do.
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    Nov 14, 2012 2:41 AM GMT
    " the American electorate
    (and REPUBLICAN GERRYMANDERING)

    saw fit to ensure that the Republicans retain the leadership in the house and the leadership in 30 states"

    MOST RELEVANT INFORMATION ADDED FOR YOU, you're welcome.
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    Nov 14, 2012 2:46 AM GMT


    lol, I wondered when this was all finally going to come out.

    "You are based in Hong Kong and you specialize in OUTSOURCING/OFF-SHORING."

    ...and this really takes the cake for most convoluted fake piousness of this century so far:

    " I am not based in HK. I'm based in Toronto - my firm and companies are based in Hong Kong. "


    icon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gif


    ( and BTW everyone, the corporate tax rate in Hong Kong is the same as the US and a tiny bit higher than in Canada- mid teens all around)


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    Nov 14, 2012 2:46 AM GMT
    riddler,

    If your success in luring American jobs to China...

    ...is similar to your track record on influencing American politics..

    AMERICAN MANUFACTURING

    IS QUITE SAFE.


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    Nov 14, 2012 2:51 AM GMT
    JockTheVote saidriddler,

    If your success in luring American jobs to China...

    ...is similar to your track record on influencing American politics..

    AMERICAN MANUFACTURING

    IS QUITE SAFE.




    I think you're going to find out the ugly opposite.
    I think it quite likely he's found offshoring to be quite lucrative.

    You know what his method of getting the jobs back here would be? Scrapping minimum wages. Then of course as no American or Canadian would be willing to do them, those companies would then be able to bring in foreign workers.

    icon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gif

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    Nov 14, 2012 2:56 AM GMT
    meninlove said

    lol, I wondered when this was all finally going to come out.

    "You are based in Hong Kong and you specialize in OUTSOURCING/OFF-SHORING."

    ...and this really takes the cake for most convoluted fake piousness of this century so far:

    " I am not based in HK. I'm based in Toronto - my firm and companies are based in Hong Kong. "


    icon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gif


    ( and BTW everyone, the corporate tax rate in Hong Kong is the same as the US and a tiny bit higher than in Canada- mid teens all around)




    If you thought otherwise, you're an idiot - I've never hidden what I do - in fact it's laid out on my profile with the vast majority of my time spent in Toronto. HK also however has no capital gains and isn't higher than Canada and is in fact considerably less than the US just Canadian corporate tax rates are now considerably lower than the US.
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    Nov 14, 2012 2:58 AM GMT
    meninlove said
    JockTheVote saidriddler,

    If your success in luring American jobs to China...

    ...is similar to your track record on influencing American politics..

    AMERICAN MANUFACTURING

    IS QUITE SAFE.




    I think you're going to find out the ugly opposite.
    I think it quite likely he's found offshoring to be quite lucrative.

    You know what his method of getting the jobs back here would be? Scrapping minimum wages. Then of course as no American or Canadian would be willing to do them, those companies would then be able to bring in foreign workers.

    icon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gif


    And yet, I repeatedly prove you wrong on this point. As a corollary you must think it's affordable for businesses to pay hundreds of thousands of dollars per employee just like the public sector. Then you can really bring in more jobs to the US and Canada. Again you beclown yourself - but that's pretty much what you do best cuz we certainly know it wasn't finance icon_wink.gif
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    Nov 14, 2012 3:00 AM GMT


    Nice deflection, but I've been here longer than you an remember when you arrived. There was no such narrative on your profile and I don;t bother to keep checking.
    You're a fake and a fraud. Your interests have nothing to do with the good of our countries.

    ...and how mice for you, make the money in HK, pay less tax, and get your entitlements in Canada.

    icon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gif

    What a user.
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    Nov 14, 2012 3:04 AM GMT
    meninlove said

    Nice deflection, but I've been here longer than you an remember when you arrived. There was no such narrative on your profile and I don;t bother to keep checking.
    You're a fake and a fraud. Your interests have nothing to do with the good of our countries.

    ...and how mice for you, make the money in HK, pay less tax, and get your entitlements in Canada.

    icon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gif

    What a user.


    My profile has pretty much remained the same since I joined the site. Sadly while you're not a fake or a fraud, you remain woefully ignorant of basic economics, finance, and are apparently cursed with an inability to read or do math. You have been here longer than I have, but apparently don't have a particularly good memory. The irony is that you even have a few mutual buddies who know me quite well - and one is even a roommate.

    I suspect the bigger user is you since I've contributed far more to the economy than you apparently ever could - and given your cognitive abilities (or more appropriately lack thereof) that you seem to want to so proudly display, that's a good thing. icon_lol.gif