Contrary to years and years of promises from bureaucrats, the public pension fund in the Mariana Islands (a US territory) became the first American public pension to declare bankruptcy. It won't be the last. This is just the beginning.
According to this morning's Wall Street Journal story, "it's pension fund couldn't recover from the financial crisis." Really? The stock market has certainly recovered, now standing less than six percent below it's all time high. So, you have to wonder, with better than 8 percent stock market returns over the last 30 years, why is the Mariana Islands Public Pension Fund suddenly going poof?
Let's look at the numbers: The fund has $ 256 million in assets to cover $ 1 billion in liabilities over the next 20 years. Keep in mind that this is a very, very small place with 53,000 total residents. Note the magnitude of this disaster. This is essentially the same problem faced by California, Illinois, New Jersey, New York and every other state and municipality in the US except South Dakota.
Now, the employees that expected to receive juicy pensions will receive approximately 25 % of what they had been promised. And these folks are not eligible for social security. And, when do they find all of this out? Now!
That's the fairness of the politicians who promise future benefits and preach fairness. Do you think taxing the handful of rich people in the Mariana Islands will solve this problem?
No politicians in the US will find this troubling simply because it did not happen on their watch and, besides, most politicians in the US are in the "1 percent." Facing old age penury is not a problem any US politician expects to face, so what do they care if the American public school teachers find out ten years from now that the long promised pension is not coming.
The real problem with all of this -- after all, anyone who has looked at the numbers knows these pensions won't be paid -- is the misinformation received by today's workers, thinking that at some future date they will receive pensions. They aren't going to receive these pensions and they need to be told that now, so that they can be saving and storing up assets for the future. By deliberately misleading America's public school teachers and public employees, the political class is fraudently setting up a disastrous situation for many Americans.
If you want a peek into the future for tens of millions of Americans, take a look at the situation for Mariana Island pensioners. As in Greece, so also in the US. The Mariana Islands are not in Greece; the Mariana Islands are in the United States.
The hypocrisy of politicians knows no bounds.