13 ms·

A billionaire targeting contrarian, underappreciated causes

48 points by ca98am79 11y ago

crdoconnor 11y ago
Billionaire financial leech wants to slash the pensions of people who work for a living. News at 11.
- fennecfoxen 11y ago
  As opposed to the elected political leeches who want to use taxes slash the paychecks of people who work for a living? Politicians who aren't even honest enough to represent the true cost of the pensions they're paying up front, instead assuming a 10% return on investment every year forever and let the next council candidate make the unpopular decisions and deal with the crisis when they end up like Stockton and Detroit? (Or perhaps we can imagine that every single state or municipal pension system can make up the shortfall by taking money from all the billionaires they have lying around. Ha.) I'll tell you what, though. The "billionaire-financial leech" is spending money that he already has on a cause, and he will never see it again. The politician is spending someone else's money, and as thanks for this, he will earn campaign contributions from the relevant unions. Draw your own conclusions.
  - crdoconnor 11y ago
    John Arnold made money trading - a zero sum game by definition. All of that $4 billion is wealth that was extracted from somebody else. Probably some of it from pension funds. He is now using that money to lobby politicians to strip wealth from the working classes. He is paying PR companies to burnish his image for doing so (this article did not come out of nowhere). What. a. hero. >Or perhaps we can imagine that every single state or municipal pension system can make up the shortfall by taking money from all the billionaires they have lying around. Yes, god forbid we should consider raising taxes on the 0.01% and using it to pay pensions for the working classes after they had so much of their money stolen by rapacious oligarchs like him.
    - jensen123 11y ago
      Have you actually tried to calculate how much money you could raise if you increased taxes on the richest 0.01%? And have you checked how much money is necessary to pay out pensions in the future?
      - crdoconnor 11y ago
        The top 0.1% have as much as the bottom 90% (which includes housing wealth as well as pension wealth). So you could raise rather a lot more than you needed, actually. Raising those taxes will also significantly drag down the cost of property (and consequently rents) which is the main outgoing for lower and middle class families.
        minot 11y ago
        I honestly doubt we can raise the marginal tax on income (even just income over $1M a year) to over 50%. Not in the foreseeable future at least as far as the US is concerned.
        harryh 11y ago
        It's already over 50% in CA (as well as various other places). 39.6% (Fed) + 12.3% (CA) = 51.9% There are city taxes as well in some places, for example add an additional 1.5% to that if you live in SF. Thinking about this, I suppose that the fact that you can deduct state taxes on your fed taxes brings this down a bit so maybe it does dip below 50? Not sure about the math. Real close though.
        gergles 11y ago
        The deduction you can make on your federal taxes for state taxes paid vanishes once you're in AMT land which you almost certainly are if you're in the 39.6% tax bracket.
        harryh 11y ago
- morgante 11y ago
  > people who work for a living I'm pretty sure that people on pensions are in fact not working. Also, it's the people "who work for a living" who are forced to pay for these pensions. Someone who sat in a cushy DMV job for 30 years working 40 hours a week gets a better retirement than I will ever have? No thanks.
tonyedgecombe 11y ago
The pensions system for US public workers does seem quite broken to me. Letting politicians with a relatively short term view control investments that have to realise a return in thirty or forty years is a recipe for disaster.
- glesica 11y ago
  The same can be said for private companies. The difference is that private companies are allowed to weasel out of their obligations and the federal government picks up their pension responsibilities... https://en.wikipedia.org/wiki/Pension_Benefit_Guaranty_Corporation https://en.wikipedia.org/wiki/Pension_Benefit_Guaranty_Corpo...
  - bradleyjg 11y ago
    Which is one reason that most private companies now offer defined contribution plans rather than defined benefit plans. That way a worker isn't dependent on the foresight, goodwill, or even existence of his past employer for his retirement. It is a far better for everyone involved. And if workers are nervous about investing these contributions into risky instruments they can use them to buy deferred annuities from AAA rated insurance companies and build their own "pensions".
    - glesica 11y ago
      > buy deferred annuities from AAA rated insurance companies and build their own "pensions". Which, in a post-financial crisis world, also obviously involves relying on government-backing of the insurance companies and bailouts when ratings agencies hand out AAA ratings like candy. Ultimately, only the government can guarantee people a retirement. Which is why I personally think we should say "screw it" and just guarantee everyone a reasonable (livable) payout from social security...
      - bradleyjg 11y ago
        I think you may be conflating AAA rating of a security with AAA rating of a company. It is an easy mistake to make because the rating companies have deliberately conflated the two in order to sell more structured products rating services. In contrast to the structured products ratings, the corporate ratings have held fairly well. For life insurance subsidiaries, which are the units that sell annuities, there is even further protection. The law requires insurance subsidiaries to be bankruptcy remote from their parents, and regulates the types of risks they can take on. To take a famous example, even if AIG had been allowed to go bankrupt, it's life insurance subsidiary -- American General Life Insurance Company -- would not necessarily have been insolvent, and indeed retrospective analysis seems to indicate it would have been fine. I should mention that all this safety comes at a cost, implied return rates for annuities aren't terribly impressive. But that's the nature of the beast, return and risk are proportional.
rayiner 11y ago
> And Arnold, a moderate Democrat who believes a rich country like the U.S. should provide a high safety net for its citizens, sees the stakes as being no smaller than the survival of the very governments that provide that net. Pensions are going to be an issue that deeply divides younger and older liberals. State and local governments face existential crisis. Meeting pension obligations is going to require trading away the future prosperity of these places. What young millenials will want to move somewhere they have to pay high taxes, but get few services in return because all that money is going to paying pension obligations? It's also going to be a major headwind to the trend of millenials moving back to urban areas. Cities have particularly screwed up their finances. E.g. Georgia pensions are pretty well funded, but Atlanta's is a disaster. As millenials get older and have kids, the cuts to public safety and education that will be necessary to meet pension obligations is going to drive many of them to the suburbs.
- crdoconnor 11y ago
  >Pensions are going to be an issue that deeply divides younger and older liberals. Pensions are an issue that divides rich and poor. This guy is rich. We are not. This article seems to be about him trying to destroy our pensions. The so called existential crises were created by the financial sector he hailed from. They did not appear out of thin air. For example: https://www.wsws.org/en/articles/2014/01/14/swap-j14.html https://www.wsws.org/en/articles/2014/01/14/swap-j14.html When the financial sector is in trouble, they get given virtually unlimited bailout money and they have interest rates set to accommodate their desires. When municipalities and pension funds are in trouble they are told to go fuck themselves.
  - Moshe_Silnorin 11y ago
    Yes, the rich who get their pensions and the poor young people who have to pay for them. Unless we get truly spectacular growth in the next 20 years something is going to break.
  - RockyMcNuts 11y ago
    the dynamic is something like - sun-belt city has a lot of young people moving to it, not so many kids, not much infrastructure - city hires young workers, builds infrastructure, assumes a high return to pension funds - city has older people over time, more kids, more infrastructure, needs to raise taxes - taxpayers resist, city assumes even higher return on pension funds, raids pension funds to balance budget - early hires are ready to retire, pension is broke, taxes go up - taxpayers move away to new city or suburb, sun-belt city faces rust-belt city dynamics and can't afford pensions financial market returns have if anything been unusually good the last 30 years regardless of the crisis, volatility, financial sector shenanigans... if you see a true bear market like the 70s God help those new rust belt places. whatever the problems with the financial sector, there's an unstable dynamic where new growing places have a virtuous cycle, and once you cross a threshold and growth slows, it reverses and you have a vicious cycle of decline.
confluence 11y ago
Pension reform makes me laugh. "Oh yeah, this is a massive contract we signed, we want to renege on it." No corporation would stand by this in terms of major signed projects or debts without a massive fight. If renegotiation was required for payment to occur, either in the form of bankruptcy or reduced rates, then it would be a crushing asset grab, with no quarter given. The person who took on a contract they could not afford rightly should be squeezed to crap. But because it's poor people, they are the ones who have to make the sacrifice when someone wants to renege on their contract? Hilarious.
- imgabe 11y ago
  Sure, with a company you can liquidate it and creditors can seize whatever assets are available. How are you going to do that with a city or a state? Is the city of Atlanta supposed to close up shop and hand over whatever assets it has to pensioners? Then what? Atlanta just continues on with no city government to provide public services?
  - confluence 11y ago
    Raise taxes and meet your obligations. Reduce them if need be under negotiation like any kind of bad debt situation, because that's what it is.
    - imgabe 11y ago
      There's a limited amount a city or state can raise taxes. If they're too high, wealthy people will just leave. It's not hard to move if you have money. It does screw over the poor people left behind who now have high taxes and no tax base to pay for government services. Reducing the pension burden is exactly Arnold and others are trying to do. The result of that is that some people are not going to get the pensions they thought they were. That sucks, but it's better than dissolving the government altogether.
    - morgante 11y ago
      > Raise taxes and meet your obligations You mean steal money from other people to pay for promises they had no say in making. That's what's fundamentally unjust about government pensions: I'm being forced to pay for promises made before I was even old enough to vote.
kodis 11y ago
Private industry has largely solved their pension problems by eliminating pensions and instead making contributions to an employee controlled 401(k) plan or similar. This eliminates some of the problems that come with pension plans, but at the cost of requiring some personal responsibility on the part of the individual employee.
kingmanaz 11y ago
Contrarian billionaire request: Fund the Natami project. Amiga needs you.

48 points by ca98am79 11y ago

crdoconnor 11y ago

Billionaire financial leech wants to slash the pensions of people who work for a living. News at 11.

fennecfoxen 11y ago
As opposed to the elected political leeches who want to use taxes slash the paychecks of people who work for a living? Politicians who aren't even honest enough to represent the true cost of the pensions they're paying up front, instead assuming a 10% return on investment every year forever and let the next council candidate make the unpopular decisions and deal with the crisis when they end up like Stockton and Detroit? (Or perhaps we can imagine that every single state or municipal pension system can make up the shortfall by taking money from all the billionaires they have lying around. Ha.) I'll tell you what, though. The "billionaire-financial leech" is spending money that he already has on a cause, and he will never see it again. The politician is spending someone else's money, and as thanks for this, he will earn campaign contributions from the relevant unions. Draw your own conclusions.
- crdoconnor 11y ago
  John Arnold made money trading - a zero sum game by definition. All of that $4 billion is wealth that was extracted from somebody else. Probably some of it from pension funds. He is now using that money to lobby politicians to strip wealth from the working classes. He is paying PR companies to burnish his image for doing so (this article did not come out of nowhere). What. a. hero. >Or perhaps we can imagine that every single state or municipal pension system can make up the shortfall by taking money from all the billionaires they have lying around. Yes, god forbid we should consider raising taxes on the 0.01% and using it to pay pensions for the working classes after they had so much of their money stolen by rapacious oligarchs like him.
  - jensen123 11y ago
    Have you actually tried to calculate how much money you could raise if you increased taxes on the richest 0.01%? And have you checked how much money is necessary to pay out pensions in the future?
    - crdoconnor 11y ago
      The top 0.1% have as much as the bottom 90% (which includes housing wealth as well as pension wealth). So you could raise rather a lot more than you needed, actually. Raising those taxes will also significantly drag down the cost of property (and consequently rents) which is the main outgoing for lower and middle class families.
      - minot 11y ago
        I honestly doubt we can raise the marginal tax on income (even just income over $1M a year) to over 50%. Not in the foreseeable future at least as far as the US is concerned.
        harryh 11y ago
        It's already over 50% in CA (as well as various other places). 39.6% (Fed) + 12.3% (CA) = 51.9% There are city taxes as well in some places, for example add an additional 1.5% to that if you live in SF. Thinking about this, I suppose that the fact that you can deduct state taxes on your fed taxes brings this down a bit so maybe it does dip below 50? Not sure about the math. Real close though.
        gergles 11y ago
        The deduction you can make on your federal taxes for state taxes paid vanishes once you're in AMT land which you almost certainly are if you're in the 39.6% tax bracket.
        harryh 11y ago
morgante 11y ago
> people who work for a living I'm pretty sure that people on pensions are in fact not working. Also, it's the people "who work for a living" who are forced to pay for these pensions. Someone who sat in a cushy DMV job for 30 years working 40 hours a week gets a better retirement than I will ever have? No thanks.

tonyedgecombe 11y ago

The pensions system for US public workers does seem quite broken to me. Letting politicians with a relatively short term view control investments that have to realise a return in thirty or forty years is a recipe for disaster.

glesica 11y ago
The same can be said for private companies. The difference is that private companies are allowed to weasel out of their obligations and the federal government picks up their pension responsibilities... https://en.wikipedia.org/wiki/Pension_Benefit_Guaranty_Corporation https://en.wikipedia.org/wiki/Pension_Benefit_Guaranty_Corpo...
- bradleyjg 11y ago
  Which is one reason that most private companies now offer defined contribution plans rather than defined benefit plans. That way a worker isn't dependent on the foresight, goodwill, or even existence of his past employer for his retirement. It is a far better for everyone involved. And if workers are nervous about investing these contributions into risky instruments they can use them to buy deferred annuities from AAA rated insurance companies and build their own "pensions".
  - glesica 11y ago
    > buy deferred annuities from AAA rated insurance companies and build their own "pensions". Which, in a post-financial crisis world, also obviously involves relying on government-backing of the insurance companies and bailouts when ratings agencies hand out AAA ratings like candy. Ultimately, only the government can guarantee people a retirement. Which is why I personally think we should say "screw it" and just guarantee everyone a reasonable (livable) payout from social security...
    - bradleyjg 11y ago
      I think you may be conflating AAA rating of a security with AAA rating of a company. It is an easy mistake to make because the rating companies have deliberately conflated the two in order to sell more structured products rating services. In contrast to the structured products ratings, the corporate ratings have held fairly well. For life insurance subsidiaries, which are the units that sell annuities, there is even further protection. The law requires insurance subsidiaries to be bankruptcy remote from their parents, and regulates the types of risks they can take on. To take a famous example, even if AIG had been allowed to go bankrupt, it's life insurance subsidiary -- American General Life Insurance Company -- would not necessarily have been insolvent, and indeed retrospective analysis seems to indicate it would have been fine. I should mention that all this safety comes at a cost, implied return rates for annuities aren't terribly impressive. But that's the nature of the beast, return and risk are proportional.

rayiner 11y ago

> And Arnold, a moderate Democrat who believes a rich country like the U.S. should provide a high safety net for its citizens, sees the stakes as being no smaller than the survival of the very governments that provide that net. Pensions are going to be an issue that deeply divides younger and older liberals. State and local governments face existential crisis. Meeting pension obligations is going to require trading away the future prosperity of these places. What young millenials will want to move somewhere they have to pay high taxes, but get few services in return because all that money is going to paying pension obligations? It's also going to be a major headwind to the trend of millenials moving back to urban areas. Cities have particularly screwed up their finances. E.g. Georgia pensions are pretty well funded, but Atlanta's is a disaster. As millenials get older and have kids, the cuts to public safety and education that will be necessary to meet pension obligations is going to drive many of them to the suburbs.

crdoconnor 11y ago
>Pensions are going to be an issue that deeply divides younger and older liberals. Pensions are an issue that divides rich and poor. This guy is rich. We are not. This article seems to be about him trying to destroy our pensions. The so called existential crises were created by the financial sector he hailed from. They did not appear out of thin air. For example: https://www.wsws.org/en/articles/2014/01/14/swap-j14.html https://www.wsws.org/en/articles/2014/01/14/swap-j14.html When the financial sector is in trouble, they get given virtually unlimited bailout money and they have interest rates set to accommodate their desires. When municipalities and pension funds are in trouble they are told to go fuck themselves.
- Moshe_Silnorin 11y ago
  Yes, the rich who get their pensions and the poor young people who have to pay for them. Unless we get truly spectacular growth in the next 20 years something is going to break.
- RockyMcNuts 11y ago
  the dynamic is something like - sun-belt city has a lot of young people moving to it, not so many kids, not much infrastructure - city hires young workers, builds infrastructure, assumes a high return to pension funds - city has older people over time, more kids, more infrastructure, needs to raise taxes - taxpayers resist, city assumes even higher return on pension funds, raids pension funds to balance budget - early hires are ready to retire, pension is broke, taxes go up - taxpayers move away to new city or suburb, sun-belt city faces rust-belt city dynamics and can't afford pensions financial market returns have if anything been unusually good the last 30 years regardless of the crisis, volatility, financial sector shenanigans... if you see a true bear market like the 70s God help those new rust belt places. whatever the problems with the financial sector, there's an unstable dynamic where new growing places have a virtuous cycle, and once you cross a threshold and growth slows, it reverses and you have a vicious cycle of decline.

confluence 11y ago

Pension reform makes me laugh. "Oh yeah, this is a massive contract we signed, we want to renege on it." No corporation would stand by this in terms of major signed projects or debts without a massive fight. If renegotiation was required for payment to occur, either in the form of bankruptcy or reduced rates, then it would be a crushing asset grab, with no quarter given. The person who took on a contract they could not afford rightly should be squeezed to crap. But because it's poor people, they are the ones who have to make the sacrifice when someone wants to renege on their contract? Hilarious.

imgabe 11y ago
Sure, with a company you can liquidate it and creditors can seize whatever assets are available. How are you going to do that with a city or a state? Is the city of Atlanta supposed to close up shop and hand over whatever assets it has to pensioners? Then what? Atlanta just continues on with no city government to provide public services?
- confluence 11y ago
  Raise taxes and meet your obligations. Reduce them if need be under negotiation like any kind of bad debt situation, because that's what it is.
  - imgabe 11y ago
    There's a limited amount a city or state can raise taxes. If they're too high, wealthy people will just leave. It's not hard to move if you have money. It does screw over the poor people left behind who now have high taxes and no tax base to pay for government services. Reducing the pension burden is exactly Arnold and others are trying to do. The result of that is that some people are not going to get the pensions they thought they were. That sucks, but it's better than dissolving the government altogether.
  - morgante 11y ago
    > Raise taxes and meet your obligations You mean steal money from other people to pay for promises they had no say in making. That's what's fundamentally unjust about government pensions: I'm being forced to pay for promises made before I was even old enough to vote.

kodis 11y ago

Private industry has largely solved their pension problems by eliminating pensions and instead making contributions to an employee controlled 401(k) plan or similar. This eliminates some of the problems that come with pension plans, but at the cost of requiring some personal responsibility on the part of the individual employee.

kingmanaz 11y ago

Contrarian billionaire request: Fund the Natami project. Amiga needs you.