DetNews: Detroit Pension Trustees “Effectively Robbed” Funds

[Packman41]

Somebody should be going to jail for commingling trust fund monies.

From yesterday’s paper:
http://www.detroitnews.com/article/2...funds-misspent

And another reason the retirees should want their representatives at the negotiations to be different than those for the active employees.

According to this report, pension fund trustees allowed active employees to set up an additional annuity savings account that was separate from the defined benefit plan. Seems the annuity account paid interest rates above what the general marketplace offered and “Many times, pension trustees gave employees a “far greater” rate than what the fund earned on investments.” They paid rates as high as 7.5% of interest.

When the interest paid out the active employees exceeded the interest earned on investments, then the trustees apparently dipped into the funds that were supposed to be held in a trust account for the retirees. Over the last 5 years $532 million was shifted from the trust account to the active employee’s annuity account. This is known as commingling of funds and in the real world people would be going to jail.

No wonder the pension trustees think they are underfunded by $829 million – they gave away $532 million of that amount to the wrong people!

While the report says this is “effectively robbing” from the trust fund, IMHO there was nothing “effective” about it – this commingling of funds is downright stealing.

If I were a current retiree, then I would be asking for the pension fund trustees to get that money back from the active employees or take it from the trustee’s pockets.

And then the article goes on to talk about the abuses of the 13^th check. It never seems to end with these guys – articles are coming out almost daily. And the trustees and their supporters, will be the only ones shocked if the EM takes control of the pension funds.

[mwilbert]

The practices described in the article are unsound and should not ever have been legal. I'm reasonably sure they would be prohibited under ERISA, which unfortunately does not apply to state and municipal retirement funds.

[Locke09]

You can't trust the daily newspapers around here to report anything accurately or objectively.

First - the pension fund trustees did not establish the annuity plan [[which the newspapers conveniently refer to simply as a savings plan - big difference). Those plans were established through contract negotiations with the City. Some of the rules regarding this might actually be in the charter. Anyway, the entire fund benefits from the contributions of the employees each year [[more on that later).

Second - The City guarantees a minimum rate of investment return [[7.9%). There is no way pension trustees could have committed the City to this on their own. They wouldn't even have proposed it. All deferred annuities [[which this is) offer minimum investment rates. 7.9 is rather high, but I have one from many years ago that guarantees a minimum 4%. When I check my annual report, there are a few years when they did not achieve that. They had to give me the 4% interest anyway.

Third - There are numerous years that the funds received far greater than 7.9% return [[looking at their annual reports). When that happens, there is a formula for deciding what percentage of the excess gets distributed to annuity accounts, and what percentage goes to reduce the unfunded pension liability. So there have probably been just as many years [[if not more) that the retirees have benefitted from the annuity contributions as there have been years that the City [[not the retirement funds) has had to supplement in order to keep the guaranteed minimum promise. You see, the City's contribution amount goes up or down depending on whether the funds received more or less than 7.9%. It's not actually being taken from retirees and given to active employees.

Fourth - The 13th check given to retirees is actually an example of retirees getting something they might not even have contributed to. If they never made any annuity contributions, they shouldn't be distributed any portion of excess investments. But this was appropriately stopped two years ago.

Fifth - They also changed the way they determine how much interest employees get on their annuities when they underperform. Again, this was not in the hands of the trustees. I seem to recall City Council voting on something proposed by the City a couple of years ago. Again, because there are charter rules regarding the pensions and annuities.

So, I hope Conway Mackenzie doesn't get paid if all they "discovered" is something that has already been talked about for years and was fixed two years ago and is not at all the fault of the trustees.

The trustees did help the City out by changing their smoothing formula from 5 years to 7 years, reducing the amount that the City had to contribute annually as a result and making the funds even more underfunded. The retirees should get mad about that.

There is nothing illegal about what they did and they did not take pension funds to "pay out" active employees. There are separate reserves [[you can see it in the reports) and the City has to make up the shortage wherever the shortage appears.

[Novine]

Packman41 - How many of the retirees returned those 13th checks?

[Gistok]

Locke09... I think that your reputation on this forum took a hit when you mentioned in another thread that the city is not bankrupt, and that the city CAN pay its' obligations... I'm sure you were well in the minority on that idea [[although maybe Tom Barrow would agree with you).

Now your defense of the Detroit Pension Fund Board again is admirable... athough somewhat misplaced. For whatever good the City Pension Fund trustees may have done... they in all probability should have been fired 20 years ago, and replaced with a professional team...

Does anyone on this board remember GRAND TRAVERSE RESORT in Acme Michigan? That was a BIG Detroit pension fund boondoggle that lost the pension fund TENS OF MILLIONS...

And if folks on this forum are not familiar with this gross incompetence in the city's pension fund management... these 2 articles will inform you about how it started...

http://www.webgolfer.com/sept01/history.html

And how it ended up...
http://static.record-eagle.com/2002/aug/23resort.htm

But what it leaves out is this... [[3rd topic down)... the gross incompetence of the trustees...

http://www.engagingnews.us/select/KS...tion-Corp.html

"Detroit Free Press Doron Levin Column.[[Originated from Detroit Free Press)[[Column)
Knight Ridder/Tribune Business News [[Fri, 22 Aug 1997) Aug. 22--GRAND TRAVERSE HURT PENSION FUND LITTLE: The $45-million sale of Grand Traverse Resort to KSL Recreation Corp. of La Quinta, Calif., this month closes an embarrassing decade-long chapter for the City of Detroit's pension fund, which lent the project $70 million in the 1980s and then spent another $40 million to buy it at foreclosure in 1993. Net loss to the pension fund: $25 million, in addition to the lost opportunity to invest $70 million in a roaring bull market or elsewhere, rather than have it tied up in a floundering golf resort. In hindsight, the fund certainly shouldn't have lent so much money to a single real estate project..."


You can say what you will... the history of the fund trustees speaks for itself... and this is just ONE example of their investments gone awry....

[Packman41]

Packman41 - How many of the retirees returned those 13th checks?

I didn’t see any mention in the DetNews article regarding anyone returning the extra, 13^th checks. You can see here for yourself:
http://www.detroitnews.com/article/2...funds-misspent

Or it might be among these articles from the Detroit Free Press:
http://www.freep.com/article/9999999...heme=PENSION09

Maybe you can find the answer there.

[Ray1936]

As one who generally does not like to click on imbedded links as refrences [[especially to the News, Freep, or TV stations), I would like to remind all that there are TWO Detroit Pension Funds. One is the General Fund, for general city employees, and the other the Police and Fire Pension System for those sworn employees.

When entering a post about C of D "pension fund", please indicate which fund [[or both, if applicable) you are referring to.

[Locke09]

Locke09... I think that your reputation on this forum took a hit when you mentioned in another thread that the city is not bankrupt, and that the city CAN pay its' obligations... I'm sure you were well in the minority on that idea [[although maybe Tom Barrow would agree with you).

You can say what you will... the history of the fund trustees speaks for itself... and this is just ONE example of their investments gone awry....

I'm not at all worried about my reputation on this forum. When I make a statement, it's not based on the opinions or summary reports I read from someone else. It's based on math and critical analysis of data. If I make a mathematical error or am missing some data, or misrepresent a fact, I'll own up to it, unlike those who just spout opinions, make sarcastic remarks or point to articles in the newspaper.

The City of Detroit is not bankrupt, and Tom Barrow is not the only other person saying this. Many financial experts outside of Michigan are saying Detroit did not have to file bankruptcy as well. That they are in the minority doesn't mean they aren't right. The City had cash flow problems, but it wasn't missing any of the debt payments until Kevyn chose to miss them. The City also had concerns that it could not raise the cash needed to do service improvements without eliminating some of it's debt. The City has concerns about losing further population, and then truly being unable to pay it's bills in the future if that happens. But today, the City can pay it's bills if it wants to. Instead, it is starting many more costly projects.

Even the casino money Kevyn says must be freed up, he expects to use that for improvements, not to pay bills that couldn't be paid.

Back to the pensions. I made no assertion about the competence of the boards over the last 20 years. I simply said the article has errors in some places and is misleading in others.

I acknowledge that the 13th check never made any sense because the pension portion is all city contribution [[although as the Free Press says, that is the norm nationally for public pensions).

But if I have 100K that I placed out of my pocket in a deferred annuity, and it earns 24% interest, I can make a case that I should reap some of the benefit of that extra interest. You might counter that you are giving me a guaranteed 7.9%, but I will still say we should share the excess. Anyone with a deferred annuity will tell you that there is a formula for sharing excess earnings - generally called dividends. The dividends aren't sent to the employees in a check, it remains in the fund for reinvestment. But the Detroit News gives the impression that the money is lost to the funds. The Free Press article today is more thorough and more accurate.

You might say put experts in charge. Okay, but does the State have experts? Because their pension fund is quite a bit worse off than Detroit's. Detroit's fund has always received high marks from the industry in terms of stability. But if you change the assumptions, as Kevyn is trying to do, you can make any fund look worse. And if you apply Kevyn's new formula to the rest of the state, well then everyone just gets even worse than they are now, because they all use fundamentally the same formulas.

It might also be a good idea to ask Milliman what assumptions they recommend to their other customers, because it's not the same very conservative assumptions they are recommending for Detroit.

In short, I don't need any credibility. I'm just another person posting comments. I just need people to think and do research for themselves.

[corktownyuppie]

I acknowledge that the 13th check never made any sense because the pension portion is all city contribution [[although as the Free Press says, that is the norm nationally for public pensions).

But if I have 100K that I placed out of my pocket in a deferred annuity, and it earns 24% interest, I can make a case that I should reap some of the benefit of that extra interest. You might counter that you are giving me a guaranteed 7.9%, but I will still say we should share the excess. Anyone with a deferred annuity will tell you that there is a formula for sharing excess earnings - generally called dividends. The dividends aren't sent to the employees in a check, it remains in the fund for reinvestment. But the Detroit News gives the impression that the money is lost to the funds. The Free Press article today is more thorough and more accurate.

Well, I agree with your analysis here. The only thing is that if you are entitled to share in the excess, then you are also obligated to share in the shortfalls.

As for your statement about bankruptcy, there are several ways of looking at insolvency. One is that you are insolvent once you are no longer able to pay your bills and have to miss an obligated payment.


You are correct in saying that we are not there.

Another way of looking at it is that the structural deficiencies in the finances are so abysmal, that unless changes are made, we will arrive at the first definition. We definitely meet this scenario.

And so we have a choice. We could wait til we get there. Or we could pull the plug now and use the remaining resources that are available and stop the bleeding before the whole thing goes to oblivion.

[Locke09]

Well, I agree with your analysis here. The only thing is that if you are entitled to share in the excess, then you are also obligated to share in the shortfalls.

As for your statement about bankruptcy, there are several ways of looking at insolvency. One is that you are insolvent once you are no longer able to pay your bills and have to miss an obligated payment.


You are correct in saying that we are not there.

Another way of looking at it is that the structural deficiencies in the finances are so abysmal, that unless changes are made, we will arrive at the first definition. We definitely meet this scenario.

And so we have a choice. We could wait til we get there. Or we could pull the plug now and use the remaining resources that are available and stop the bleeding before the whole thing goes to oblivion.

I respect your critique of the specific arguments I made. Some offering annuity savings will say just that, "If I am giving you a minimum guarantee, then the excess is mine." Others will say, "The minimum guarantee will be low, and you can get some small percentage of any excess, smoothed out over X years." Since the City guarantees 7.9 percent, I can see a case for saying the City should keep the excess.

I agree with your statement about bankruptcy too. But I have pointed elsewhere to some specific things, outside of bankruptcy, that the City can easily do to reduce the structural deficiencies, which the City says are about 85-100 million per year. Healthcare changes for retirees alone would take care of that and wouldn't require bankruptcy to do it. By my estimates, what Orr proposes to do to retiree healthcare saves $135 million per year.

I welcome anyone to check my math.

[Honky Tonk]

“This doesn’t sound like a very wise plan,” said Eric Lupher, director of local affairs at the Citizens Research Council of Michigan. “You can’t pay what you don’t have.”
SOP for the COD. If I pulled out a gun and took your money, I'd end up in the pokey. These guys did it, and were rewarded with $25K trips to Hawaii. I'm sorry, "networking conventions".

[Locke09]

“This doesn’t sound like a very wise plan,” said Eric Lupher, director of local affairs at the Citizens Research Council of Michigan. “You can’t pay what you don’t have.”
SOP for the COD. If I pulled out a gun and took your money, I'd end up in the pokey. These guys did it, and were rewarded with $25K trips to Hawaii. I'm sorry, "networking conventions".

The trustees have done nothing illegal or odd in respect to the issues raised by these recent articles. Their job is to administer the funds in accordance with the City Charter, negotiated contracts, state statutes, federal statutes and acceptable industry practices. They cannot just make stuff up.

The news articles are an obvious attempt to assist Kevyn in hi-jacking control of the pension funds by removing the trustees and having sole control in the hands of one person. This would be a blatant conflict of interest. Not to mention, find me someone who invests their money in an annuity fund [[public or private) and they are not allowed to vote for at least one of the trustees of that fund. No matter how big the fund, the people who invest can vote for trustees. If those who invested their money in Detroit's annuity savings plan cannot vote for a trustee, their money needs to be returned to them.

As I have already stated, point by point, the articles are erroneous and misleading in terms of blaming the trustees. Verification of this is easily obtained by reviewing Chapter 47 of the Detroit City code. This establishes the funds and sets forth the rules governing the funds. The papers say the trustees established the annuity savings plan. Anyone who understands what the word "trustee" means should readily have seen that this couldn't be true. This code also established the 2.25% COLA, which was recently rescinded.

This code also specifically states that the Annuity Reserve Fund must be made whole by moving money from the Pension Accumulation Fund, if necessary. The trustees didn't make up that rule. There are 5 funds and the Pension Accumulation Fund is not the fund retirees are paid from. It is the Fund the City contributes to to make up for shortages in the other funds. It could very well have been called the Pension/Annuity Accumulation Fund. So the papers are erroneous in saying money was taken from retirees or the retirees were robbed. The rules say the City has to make both funds whole. The trustees followed the rule.

The Free Press does note that Archer tried to stop the 13th check, but Detroit voters voted down his referendum. Council eventually stopped it in 2011.

The CRC guy says you can't pay what you don't have. Well, as I have said, if you have a guaranteed minimum, the company has to pay it even if they didn't earn the guaranteed minimum. That's why any guarantee should be set low enough that it is met or exceeded in most years. So pithy little quips like these sound good but have no relevance to the actual situation.

To sum it all up, the issues they point to involve things primarily established by the Charter and City Code [[set by Council) and contract negotiations [[city and unions). The trustees just administer what was established. They might be responsible for the 13th check, I haven't figured out how that was established long ago, but the good citizens of Detroit co-signed for that when they voted down Archer's referendum.

Blame the people who created those funds decades ago. Blame the administrations and the unions. Even blame the citizens. But you can't blame the trustees for this one, however incompetent they might be. Unless you just need to in order to steal a pension.

[Honky Tonk]

The trustees have done nothing illegal or odd in respect to the issues raised by these recent articles. Their job is to administer the funds in accordance with the City Charter, negotiated contracts, state statutes, federal statutes and acceptable industry practices. They cannot just make stuff up.

The news articles are an obvious attempt to assist Kevyn in hi-jacking control of the pension funds by removing the trustees and having sole control in the hands of one person. This would be a blatant conflict of interest. Not to mention, find me someone who invests their money in an annuity fund [[public or private) and they are not allowed to vote for at least one of the trustees of that fund. No matter how big the fund, the people who invest can vote for trustees. If those who invested their money in Detroit's annuity savings plan cannot vote for a trustee, their money needs to be returned to them.

As I have already stated, point by point, the articles are erroneous and misleading in terms of blaming the trustees. Verification of this is easily obtained by reviewing Chapter 47 of the Detroit City code. This establishes the funds and sets forth the rules governing the funds. The papers say the trustees established the annuity savings plan. Anyone who understands what the word "trustee" means should readily have seen that this couldn't be true. This code also established the 2.25% COLA, which was recently rescinded.

This code also specifically states that the Annuity Reserve Fund must be made whole by moving money from the Pension Accumulation Fund, if necessary. The trustees didn't make up that rule. There are 5 funds and the Pension Accumulation Fund is not the fund retirees are paid from. It is the Fund the City contributes to to make up for shortages in the other funds. It could very well have been called the Pension/Annuity Accumulation Fund. So the papers are erroneous in saying money was taken from retirees or the retirees were robbed. The rules say the City has to make both funds whole. The trustees followed the rule.

The Free Press does note that Archer tried to stop the 13th check, but Detroit voters voted down his referendum. Council eventually stopped it in 2011.

The CRC guy says you can't pay what you don't have. Well, as I have said, if you have a guaranteed minimum, the company has to pay it even if they didn't earn the guaranteed minimum. That's why any guarantee should be set low enough that it is met or exceeded in most years. So pithy little quips like these sound good but have no relevance to the actual situation.

To sum it all up, the issues they point to involve things primarily established by the Charter and City Code [[set by Council) and contract negotiations [[city and unions). The trustees just administer what was established. They might be responsible for the 13th check, I haven't figured out how that was established long ago, but the good citizens of Detroit co-signed for that when they voted down Archer's referendum.

Blame the people who created those funds decades ago. Blame the administrations and the unions. Even blame the citizens. But you can't blame the trustees for this one, however incompetent they might be. Unless you just need to in order to steal a pension.

Legally? Well, yeah, kinda, sorta. Morally? Another answer altogether. Everyone thought it was "cool" to get the 13th check, now if the fund dies out, who's to blame? Of course, Orr and everyone else might be spouting BS, and there really is no danger of the funds drying out.

[Packman41]

Ronald Zajac was the attorney and general counsel that advised both the pension funds for over 30 years.

It was during Zajac’s watch that trustees Monica Conyers, Jeff Beasley, Paul Stewart, DeDan Milton et.al. were indicted/convicted for taking bribes to get certain investments approved.

It was during Zajac’s watch that outside advisors, Chauncey Mayfield, Roy Dixon Jr., John Orrecchio, Adrian Anderson, Robert Shumake, et. al. were indicted or plead guilty or under federal investigation for improper dealings with the two pension funds.

And now we find that Ronald Zajac is under indictment on charges of bribery and conspiracy involving more than $200 million in investments before the two pension funds.

So now you have to wonder if Mr. Zajac was instrumental in advising the city council and others in drafting the documents for the “negotiations” that took place for the 13^th check and annuity accounts.

BTW, I like CTY’s comment: “ ,…snip>…that if you are entitled to share in the excess, then you are also obligated to share in the shortfalls.”

If it is OK to hand out any “excess money” [[according to the fund’s projections), then when their projections fail [[which they did) you don’t get a second grab for the missing money. Someone needs to take responsibility for that and it is NOT the taxpayer.

That is only fair. If it was acceptable going up, then it is acceptable going down.

According to the front page article in the September 8^th Free Press http://www.freep.com/apps/pbcs.dll/a...=2013309080062

“By the time the practice was outlawed, the General Retirement System board, which represents nonuniform employees, had already distributed $951 million in excess earnings from 1985 to 2008, according to an actuarial report performed for the council in 2011 by independent statistician Joseph Esuchanko.

He estimated that the total accumulated cost to the city of not leaving the excess payments in the funds to grow with interest would be $1.9 billion as of June 30, 2008, a figure that would likely have grown even higher by today.”

So look to the CofD or trustees or whomever, but don’t ask the taxpayers to refill the pension account again - you already received that check.

[Ray1936]

For what it's worth.......It was the city's General Pension Fund for General employees who issued 13th checks regularly. The Police and Fire Pension System only issued one 13th check in its history, and that was about ten years ago.

But don't let facts get in your way.

[Packman41]

Ummm…

Ray1936 in an earlier posting you asked for the two funds to be identified as you were adverse to linking onto the DetNews and Freep links that I provided. In my latest post I copied the exact quote from the Free Press so that you could read what fund gave up what money.

And it says right there it was the GENERAL RETIREMENT SYSTEM. And that fact is courtesy of the independent statistician hired by the city council in 2011.

[Locke09]

Ronald Zajac was the attorney and general counsel that advised both the pension funds for over 30 years.

So now you have to wonder if Mr. Zajac was instrumental in advising the city council and others in drafting the documents for the “negotiations” that took place for the 13^th check and annuity accounts.

BTW, I like CTY’s comment: “ ,…snip>…that if you are entitled to share in the excess, then you are also obligated to share in the shortfalls.”

So look to the CofD or trustees or whomever, but don’t ask the taxpayers to refill the pension account again - you already received that check.

Come on, critical thinking.

Detroit wasn't established 30 years ago and the annuity accounts weren't established 30 years ago. They precede Zajac and Zajac reaps no benefits from them. So no, we don't have to wonder. We do know that Zajac did not draft the legislation that created the annuity accounts. Update: He was the attorney for almost 40 years and the current plan was established 1973 - so conceivably he could have assisted in drafting it, but he could only draft what the city had already agreed to. He couldn't arbitrarily put the City on the hook for plans the City didn't approve of. And he's a lawyer, not a trustee. So what's with trying to blame current trustees for this?

I appreciate the comment about sharing in shortages as well as gains too - and said so. But I also know first-hand that there are annuities that offer a more modest guaranteed minimum that offer dividends on extra gains as well. So it's not something the Detroit Pension Fund trustees dreamed up. If it's harming the funds - stop it, but don't blame the trustees.

Stop letting taxpayers off the hook as if they are innocent in all of this. They voted to keep the 13th check. Council ultimately had to stop it. How soon we forget.

I'm not interested in blaming anyone though. I'm interested in our newspapers and appointed/elected leaders having integrity and not using lies and misrepresentations as a ruse to snatch control of other people's money.

The other lie related to pensions that is about to get exposed - that City Council voted last Tuesday to give a contract to the Michigan Chronicle that Hiram Jackson publishes. A contract that includes giving them $90,000 to refurbish some office space for themselves. In reality, the contract was approved by Kevyn Orr while Council was on recess. It was brought to Council as information - with the claim that a list of contracts Orr planned to approve had been sent to them while they were on recess and since they didn't "hold" this one they were assumed to be in agreement with it.

The papers publish this as though it is another thing reflecting City Council's poor judgment. Orr's mouthpiece claims they didn't know anything about the relationship between Hiram Jackson and previous issues with pension investments. Well how can that be so when Orr is auditing the pension funds and their "egregious" practices? Let's see what Orr's mouthpiece has to say when a Council member asks for it to be "reconsidered" so it can truly be voted on.

At what point do we start asking our newspapers and EM entourage to be honest and accurate? When it's too late?

[Locke09]

Legally? Well, yeah, kinda, sorta. Morally? Another answer altogether. Everyone thought it was "cool" to get the 13th check, now if the fund dies out, who's to blame? Of course, Orr and everyone else might be spouting BS, and there really is no danger of the funds drying out.

Oh let's not talk morality. Bankruptcy has nothing to do with morality. I argue that it is immoral to make a vow to retirees and not keep it. I am considered naive - at best - because of that. Morality is that you keep these kinds of promises even when it is tough to do so.

Since retirees received COLA, I don't think they ever should have received these bonus checks, even when the funds were doing well. But they didn't steal it or cheat to get it.

[Ray1936]

Ummm…

Ray1936 in an earlier posting you asked for the two funds to be identified as you were adverse to linking onto the DetNews and Freep links that I provided. In my latest post I copied the exact quote from the Free Press so that you could read what fund gave up what money.

And it says right there it was the GENERAL RETIREMENT SYSTEM. And that fact is courtesy of the independent statistician hired by the city council in 2011.

Thanks, Packman. I wasn't targeting anyone in particular, though.

[Wesley Mouch]

Oh let's not talk morality. Bankruptcy has nothing to do with morality. I argue that it is immoral to make a vow to retirees and not keep it. I am considered naive - at best - because of that. Morality is that you keep these kinds of promises even when it is tough to do so.

Since retirees received COLA, I don't think they ever should have received these bonus checks, even when the funds were doing well. But they didn't steal it or cheat to get it.

Yet uou are trying very hard to create a moral universe where its possible to keep all vows intact. Your moral logic of vow-keeping only remains solid if you can find a scapegoat. So you do. Orr and Co.

Your repetition that bankruptcy was unnecessary is hallow.

It might have been possible to avoid bankruptcy. Except it didn't happen. Like saying that there was nothing keeping that train in Spain fro making it around that corner -- except that it was going too fast.

Detroit did not do the things you say could have avoided bankruptcy. Does not matter that they could have. They didn't. The engineer could have slowed down. He didn't. He liked going fast.

[Hermod]

Oh let's not talk morality. Bankruptcy has nothing to do with morality. I argue that it is immoral to make a vow to retirees and not keep it. I am considered naive - at best - because of that. Morality is that you keep these kinds of promises even when it is tough to do so.

But perfectly well to stiff the bondholders? That isn't immoral as well? You promised to pay and pledged your "full faith and credit".

[Novine]

Orr is the one stiffing the bondholders and trying to do the same with the pensioners. What's your point?

[Locke09]

But perfectly well to stiff the bondholders? That isn't immoral as well? You promised to pay and pledged your "full faith and credit".

I have already stated on previous threads that I don't think it's okay to stiff anyone. I try to be consistent. This thread is about the pensions.

[Locke09]

Yet uou are trying very hard to create a moral universe where its possible to keep all vows intact. Your moral logic of vow-keeping only remains solid if you can find a scapegoat. So you do. Orr and Co.

Your repetition that bankruptcy was unnecessary is hallow.

It might have been possible to avoid bankruptcy. Except it didn't happen. Like saying that there was nothing keeping that train in Spain fro making it around that corner -- except that it was going too fast.

Detroit did not do the things you say could have avoided bankruptcy. Does not matter that they could have. They didn't. The engineer could have slowed down. He didn't. He liked going fast.

I have expressed my views about vows at length and they do not boil down to creation of a moral universe where scapegoats are needed. I haven't created any scapegoats and don't need to, since I'm not interested in punishment or sacrifice of the innocent, but in preventing unnecessary harm. It's others who are interested in punishment and they are the ones who rail daily against the scapegoats that they have created on these forums and in the press, to justify the course of action they want taken.

Don't know what the train in Spain has to do with anything either. Guess I'm just not very good with analogies that have no relevance to the issue at hand. For instance, the train cannot be uncrashed, but Detroit still has time to not stiff the people it made vows to. I'm one of those people who will keep yelling slow down until the train has crashed.

[Ray1936]

Vows, schmows. Any time you invest money anywhere, you are taking a chance. If that upsets you, buy a big mattress.