Monday, September 10, 2012

Public Employees: They Are Different From You and Me...

(Note: for those unaware, my title is a play on F. Scott Fitzgerald's quote: "Let me tell you about the very rich. They are different from you and me.")
We live in a self-entitled society and no sector is more self-entitled than those who work for the Government, supported by taxpayers with guaranteed salaries and pensions.  Their sense of self-entitlement is worse than that of the lumbering herd of overweight middle class houseswives who drive around in their gas-guzzling, over-sized SUVs, running up credit card debt and chatting on their cellphone the second they get into their car...  - Dave in Denver, 9/10/12
Teachers in Chicago went on strike today over demands for a 19% pay raise and refusal to accept a teacher evaluation system which would hold teachers accountable for performance.  The first thing that needs to be pointed out is the obvious:  Illinois is running neck and neck with California over status as the most bankrupt State.  Illinois operates in a deficit on a daily basis and, even if teacher pay hikes were warranted, can not afford it.

But here's some numbers that will shock you:  The average teacher pay in Chicago is $71,000, not including benefits.  The average Chicagoan makes $30,203 and the city's unemployment as measured by the Government is 11%.  I don't think the teachers will get any support outside of their own kind for higher pay, especially when you factor in the fact that teacher pensions are guaranteed by the taxpayers and they are eligible for retirement benefits after 20 years of service.  And don't forget that teaching is a 10 month endeavor, at least for the ones that care about the product they produce - the rest of them coast along at the end of the summer until they have to walk into the classroom. 

In hearing from teachers I know who are hard-working and care about their classroom performance, the tenure system needs to be completely overhauled.  Teachers should be required to demonstrate competence and good performance.  I know a few teachers who rarely use up their full allotted time off during the school year and feel compelled to make up the for laziness and incompetence around them. On the other hand, I personally know a teacher who takes more than her allotted personal time and sick leave days, exploiting the willingness of the school principal to look the other way.  I know this dynamic is pretty common in the school systems in Colorado, I can only imagine how bad it is in the major cities like Chicago, L.A. and NYC.

This is the kind of crud that needs to be weeded out the teachers union and the system for hiring and retaining teachers.  The fact that teachers can feel entitled to big pay raises, while their private sector peers are struggling is beyond absurd.  Compensating teachers based on tenure is the recipe for poor results.  The education system in the United States ranks 14th, 25th and 17th globally in reading, math and science respectively, according the OECD (Organization for Economic Cooperation and Development).  Given the level of pay and benefits for teachers in this country, that fact is just appalling.

And this problem is not just with teachers, although it hits home the hardest because the teachers in our public school system spend almost as much time with our kids from age of 5-18 as do parents. But every category of Government employee demands a much higher level of pay than is given in the private sector.  How many private sector jobs have guaranteed pay and benefits? (note: I'm talking about pay for rank and file, not Wall St. or upper management, but that's another issue).  I do not know of any.  And a lot of large-company 401k plans are comprised of a high degree of corporate stock.  No guarantee there either.  Teacher pensions are essentially deferred cash payments guaranteed by the Taxpayers.

I don't know when and how Government employees in general assumed the mantel of self-entitlement, but the salary and benefit packages given to public servants is another "bubble" in our economic/political system that is contributing to the overall collapse our country.  It starts with Congress with things like Congressmen having their own healthcare plan, thereby avoiding the highly disastrous Obamacare.  And it continues with  teachers demanding more pay when States can't afford it under any circumstances and with refusal to implement pay for performance compensation plans in lieu of pay for tenure.

It makes me sad to see the Chicago teachers exhibit this high degree of self-entitlement with their contract demands.  But it speaks volumes about the degree to which our system has deteriorated and is in a state of collapse...


  1. Dave:

    I believe the parents in Chicago will be screaming for a strike settlement., For at least two reasons:

    1) they need to send the kids to school so they, the parents have free days to do what they want;

    2) since most do not pay much in the way of income taxes or property taxes or sales taxes, its no skin off their backs if taxes increase or the city goes more into debt.

    So the parents will support the teachers.

    I am getting closer to believing that voters should be paying income taxes to be real stakeholders in this society.

    1. Agree with that BUT I firmly believe that NO ONE should vote and then our Government will not be legitimate and we can get some real change.

    2. Since that's never going to happen, the only thing that will encourage change is systemic collapse.

  2. I understand your no vote position.

    IMO it would be better for us to vote but write in "none of the above" as if those were counted, as they should be, it would be a heck of a statement because I bet there are a heck of a lot of middle class folks who are like us and need a a peaceful way of making a statement, with a final alternative being a not so peaceful way of making our voices heard.

    Back in 1969 when I graduated college, I received my 1-A classification and a notice to be drafted in 3 months. I actually applied to the Chicago Board of education for a job which would have given me a deferral (like many other guys just graduated). I changed my mind as I felt my career potential was much better in the private sector and it was until 10 years ago when I see how I could have worked maybe 40 weeks a year, no evenings, no weekends no holidays no grief and age 55 retirement with 200k in pension (I have a neighbor getting 170k a year retiring at age 55 and teacher friends getting 80-90k plus full healthcare-we constantly have verbal battles).

    on the other hand, we know Calif and Il pensions are underfunded and states are broke. The taxing ability by states is in theory there--but I know many high income/hi net worth folks who have left both Calif and IL for no tax states like NV and FL. How many immigrants in Chicago earning 30k a year are needed to offset the loss of one multi millionaires' taxes? Answer-infinite since how many people earning 30k pay taxes to begin with? I hate to be glib but its a problem our elected leaders (a word chosen lightly) cannot see or intentionally ignore--are they plumb stupid or corrupt--pick 'em.

    One solution would be to let the gangs run wild. Then people move out of the city (my kids just did)and the problem exacerbates. Look at how Calif loses folks to NV with no tax (think stateline, NV)or even Arizona with its 3.5% tax.

    The reset is coming. All we have open is when and how bad.

    I have to go lite the grill.

  3. One word to describe public employees and their entitlement system: UNSUSTAINABLE.

  4. worse than the lumbering herd of overweight middle class houseswives who drive around in their gas-guzzling, over-sized SUVs, running up credit card debt and chatting on their cellphone the second they get into their car...

    you better duck brother......(he he he .. i know , i know .. the golden "truth" hurts)

  5. I posted similar sentiments at letthemfail regarding the Wisconsin debacle ... and the outrage from the unemployed spouses of teachers was deafening !!

    1. LOL. Not surprising. Funny how illegal immigrants can find jobs in this country but no one else can...

  6. Off-topic:
    I just received an offer in the mail from Chase:
    Open a Chase Savings account with $10,000, maintain that balance for 90 days, and receive $150.

    1. Interesting. I get mailers for offers of $125 after 6 months if you open a checking acct with direct deposit of your paycheck with JPM.

      It really points to the need for liquidity at JPM

  7. BlackRock Fined $15 Million by U.K. FSA Over Client Money

    LONDON (Reuters) - BlackRock, the world's largest asset manager, has been fined 9.5 million pounds ($15.2 million) by the UK's financial regulator for failing to adequately protect some of its clients deposits.

    The Financial Services Authority said it issued the largest ever fine handed out to an asset manager after it failed to put trust letters - a method of ring-fencing certain deposits from its own assets should it face insolvency - in place.

    The error occurred as a result of systems changes that followed after BlackRock acquired BIM in 2006, previously known as Merrill Lynch Investment Managers Limited, the FSA said.

    "Identifying and protecting client money should be at the top of every firm's agenda," Tracey McDermott, FSA director of enforcement and financial crime, said.

    "Despite being part of one of the largest asset managers in the world, BIM's systems were simply not adequate, and the basic step of notifying banks that the money was held on trust for clients was not done."

    Fink Says BlackRock to Cut Some ETF Fees Amid Competition
    Higher Fees
    BlackRock may need to cut fees for certain products to maintain or attract institutional loyalty and win more individual investors, according to a Sept. 5 research note by Sanford C. Bernstein & Co.

  8. Iran Gold Imports From Turkey Surge To $8 Billion YTD - $3.2 Billion Worth Of Bullion In Q2 2012

    Central bank demand internationally continues and demand for gold in the increasingly volatile Middle East remains robust as seen in data from the Istanbul Gold Exchange.
    It showed that Turkey’s gold imports were 11.3 metric tons last month alone. Silver imports were 6.7 tons, the data show. Much of these imports may be destined for Iran where imports have surged an astonishing 2,700% in just one year – from $21 million to $6.2 billion.

    In the first seven months of this year, Turkey's exports to Iran have also skyrocketed to $8 billion, up from $2 billion in the same period last year. And it is widely believed that the major portion of the increase, which is $6 billion, stems from the export of gold.

    There is speculation that the Iranian central bank is buying gold and that they may be accepting gold in payment for oil and gas in order to bypass western sanctions.

    Turkey is paying for the oil and natural gas it is importing from Iran in gold, Turkish opposition deputies have claimed, drawing attention to the enormous increase in Turkey's gold exports to Iran in 2012.

    “Gold is being used as an instrument for payment. Under the guise of exportation, gold is being sent to Iran in exchange for oil,” Sinan Aygün, a deputy from the Republican People's Party (CHP), has told Turkish daily Today's Zaman.

    Iranian people, encouraged by the state are also buying large quantities of gold and saving in gold in order to protect against inflation and the devaluation of the Iranian real.

    Turkey's total gold and precious stone exports have amounted in the first seven months of 2012 to nearly $8.9 billion, while the figure was only $1.8 billion in the same period last year. Some $3.2 billion of Turkey’s $4.4 billion of gold sales to Iran in the first half of the year were in bullion form.

    Iranians purchased $4.8 billion worth of gold in 2012's second quarter, up from roughly $1 billion in the first quarter of the year.

    Iran appears to be circumventing western sanctions in this way.

    The rise marks the continuation of a gold buying spree that saw sales in the first half of 2012 grow more than eight fold over the first half of 2011.

    The US is said to be uneasy about Iran's skyrocketing purchases of Turkey's gold and has been following the sales closely.

    makes you wonder.....

    1. "makes you wonder....."

      No, not really!

      The Inside Story on the Gold-for-Oil Deal that could Rock the World's Financial Centers

      -Sicilian Gold

  9. Big Banks Hide Risk Transforming Collateral for Traders
    JPMorgan Chase & Co. (JPM) and Bank of America Corp. are helping clients find an extra $2.6 trillion to back derivatives trades amid signs that a shortage of quality collateral will erode efforts to safeguard the financial system.

    Starting next year, new rules designed to prevent another meltdown will force traders to post U.S. Treasury bonds or other top-rated holdings to guarantee more of their bets. The change takes effect as the $10.8 trillion market for Treasuries is already stretched thin by banks rebuilding balance sheets and investors seeking safety, leaving fewer bonds available to backstop the $648 trillion derivatives market.

    The solution: At least seven banks plan to let customers swap lower-rated securities that don’t meet standards in return for a loan of Treasuries or similar holdings that do qualify, a process dubbed “collateral transformation.” That’s raising concerns among investors, bank executives and academics that measures intended to avert risk are hiding it instead.

    “The dealers look after their own interests, and they won’t necessarily look after the systemic risks that are associated with this,” said Darrell Duffie, a finance professor at Stanford University who has studied the derivatives and securities-lending markets. “Regulators are probably going to become aware of it once the practice gets big enough.”

    Adding to the concern is the reaction of central clearinghouses, which collect from losers on derivatives trades and pay off winners. Some have responded to the collateral shortage by lowering standards, with the Chicago Mercantile Exchange accepting bonds rated four levels above junk.

    Derivatives allow buyers to bet on the direction of currencies, interest rates and markets to protect their holdings, insure against defaults on bonds or lock in a price on commodities. More than 90 percent of the trades are privately negotiated, according to the Bank for International Settlements. That exempts them from the rules of futures exchanges, which require an initial collateral posting as a good-faith deposit to ensure bets are covered. Traders have to post more collateral, usually in cash, when positions move against them.

    Securities Shortage
    Adding to the pressure, new banking-safety rules will compel lenders to keep more cash and easy-to-liquidate investments on hand for emergencies. That may boost demand for high-grade assets by $2 trillion to $4 trillion, according to an April report from the International Monetary Fund.


  10. Your post is just infuriating ... wait wait from the point of view that everyone wants a free ride since the 1% is getting a good ride.

    That is why Democracy never will work - since it's hard not to want promises of something - and never the promise of spending less. everyone wants a free school, food, land etc etc.

    For me the "Fuck It" moment has long since past. Whatever is discussed now is all irrelevant.

    Moody's a little too late as with the subprime case. The derivatives markets want better collatorel. What fucking collateral will cover 700Trillion. And Gold isn't yet a big part of it, never mind the p£$%& Jeff C. Has he got any clients left?

    As for the Germans - I am one but don't live in Germany - those idiots want to be the responsible ones now when the pregnancy has been confirmed. So do they honestly want to do the same a British police officer did to end his girlfriends pregnancy by bunching her n the stomach. If they wanted to be responsible they should have done it a long time ago. Now whatever they decide will be immaterial too - their Banks made sure of that. Afterall they are the most levered in the world!!

    The only solution really is to incourage the collapse to happen faster, so we can build up again.

    1. We're on the same page there, brother.

    2. In fact to encourage the collapse is perhaps Peter Schiff's new approach with his "sarcastic" video about banning Profits. So instead of berating daft decisions lets change direction and support all of them. The sooner the collapse happens the better for your kids.

  11. (Quinn in Littleton)

    Great article today Dave. I think about this topic often, as I am married to a teacher and I have seen first-hand how the private sector lives compared to the public sector in retirement.

    I have gotten to a point where I don't pay much attention to the shake down scheme. I read When Money Dies and in Weimar Germany the public employees were the ones that were most devestated when they had their hyperinflation, I don't see any reason it will be different here.

    To me, the high-on-the-hog lifestyles of most retired government workers is the most glaring sign that our system is broken and headed for a reset.

    Who knows Dave, one day we might look back and see that the Chicago teacher strike was the staw that broke the camels back. I mean, those teachers are such clueless pawns that are are literally being used to prove you can squeeze blood(cash) from a turnip(Illinois).

    1. Thx. I used to live with a woman who is a high school teacher in the Aurora School system. You would not believe the horror stories she came home with. In fact, the super of the APS system is an ex-Marine who gets paid $750k/year in compensation PLUS he gets his retired military bennies. It's unbelievable. And the APS system SUCKS.

  12. I'm quite aware there needs to be fundamental changes with public school teachers as there are far too many out there with tenure that have become far too complacement, always looking to get over in some shape or form and virtually impossible to fire.
    That being said it is quite clear it has become a race to the bottom with private sector jobs with many if not most cutting pay, outsourcing jobs and eliminating benefits and pensions stating that 401k's (if they're even offering those anymore) are more than suffice for you to live happily ever after in your retirement. I think we all know what a colossel lie that's turned out to be. 401k's were initially supposed to supplement pensions not replace them
    With the average salary hovering around 26k a year it is virtually impossible to live on let alone retire on. If this is what the private sector demands then the prices for most goods should and services come down accordingly. Don't see that happening anytime soon

    1. Chicago Teacher on Why He’s Striking Against Rahm Emanuel’s Pro-Business Education Agenda

      But even more importantly, I wanted to educate Mr. Brizard about what it means to “help or hurt our kids”.
      When you make me cram 30-50 kids in my classroom with no air conditioning so that temperatures hit 96 degrees, that hurts our kids.
      When you lock down our schools with metal detectors and arrest brothers for play fighting in the halls, that hurts our kids.

      When you take 18-25 days out of the school year for high stakes testing that is not even scientifically applicable for many of our students, that hurts our kids.

      When you spend millions on your pet programs, but there’s no money for school level repairs, so the roof leaks on my students at their desks when it rains, that hurts our kids.

      When you unilaterally institute a longer school day, insult us by calling it a “full school day” and then provide no implementation support, throwing our schools into chaos, that hurts our kids.

      When you support Mayor Emanuel’s TIF program in diverting hundreds of millions of dollars of school funds into to the pockets of wealthy developers like billionaire member of your school board, Penny Pritzker so she can build more hotels, that not only hurts kids, but somebody should be going to jail.

      When you close and turnaround schools disrupting thousands of kids’ lives and educations and often plunging them into violence and have no data to support your practice, that hurts our kids.

      When you leave thousands of kids in classrooms with no teacher for weeks and months on end due to central office bureaucracy trumping basic needs of students, that not only hurts our kids, it basically ruins the whole idea of why we have a district at all.

      When you, rather than bargain on any of this stuff set up fake school centers staffed by positively motived Central Office staff, many of whom are terribly pissed to be pressed into veritable scabitude when they know you are wrong, and you equip them with a manual that tells them things like, “communicate with words”, that not only hurts our kids, but it suggests you have no idea how to run a system with their welfare in mind.

      When you do enough of this, it makes me wonder if you really see our students as “our kids” or “other people’s children”.

    2. What does anything in this gripe list have to do with the demands of the teachers union? Monopolies always deliver poor service at high cost. End the state public school monopoly and contract out education delivery to private companies through a full and open competitive bid process. Better yet, give every parent with school-age children a credit to take to any accredited private school of their choice. Why should only the kids of Rahm Emanuel and the rest of the Leftist elites get the benefit of a private school education?

  13. As a public employee who has been sucking away at the teat for 24 years and counting ($75,000/year, full health benefits including a fairly comfortable defined benefits pension, etc, etc, etc), all I can say is "right on". No, I really don't give a damn about who is slaving their guts away in some shithole and who is barely getting by because I've been there and done that, and it truly sucks. How do I justify my screw-everyone-else-I'm-ok attitude? Simple, I just tell myself that if it wasn't me squeezing the tit, it'd be some other canine copulator. Hey, a guy has to make his living somehow.

  14. Dave, I understand your frustration very well when you say you will not vote, since voting is voluntarily participating in your own enslavement by a bunch of control freaks, sociopaths and parasites. However, wouldn't it be better to vote for the worst scumbag possible, thereby hastening the collapse and the needed reset? Just one pig's opinion.

    1. Ya I guess that would be one theory. I think if everyone didn't vote, though, it would mean that the public is ready to rock-n-roll with real change. Where we're headed is very ugly under any circumstances, so it's best to just enjoy what you, while you can, as much as you can.

      Everyone needs to have moral high road and mine is the road of not voting.

    2. You're right, Dave. So long as voting is voluntary, I'll abstain. When it becomes mandatory, as in Australia, then I'll vote for the worst of the worst (think Al Sharpton for president and Oprah as his running mate....yeah!)

  15. just think--if a huge number of people wrote in "none of the above" not only for president but for congress too, it would be one hell of a survey indictment of this countries' leaders.

    I can tell you, the public employees are rather dependent on their annuities they received at age 55. Since most pension-public and private are so underfunded, the system will run out of money--then we have the "ah ha" moment.

    It will not be pretty because aside from the huge number of folks receiving pensions which will stop--they will stop spending rather suddenly which will be a bunch of nails in the economy.

  16. This goes hand in hand with voting or not voting....

    Regarding the German's - the decision....(I am a German, so .....)

    What a bunch of dithering idiots!!! Either you abort or you don't!!! Either you light the fuse or you don't!!! But this half hearted crap should just make you realize one thing...

    There is no way out of this mess and nobody is going to want to be the face and take the responsibility of the pain that will follow, absolutely nobody. We need to start realizing that. I think the the leaders want us to start realizing that because they don't want to be the ones making the decisions anymore because they are just too tuff.

    So it's really all up to the individual.

    Here in the UK is a great story again today about a family of Bulgarian's who came recently and are now in a council apartment within weeks. And Britain takes it.

    Everywhere we look just tells you that you are on your own now and sensible decision aren't made by your "Rulers". Nobody wants to leave that legacy of who's fault it is.

    Wake up.

  17. Hey Dave, how are you?

    The birth of the URSE (The Union of the Socialist European Republics)

    Il Folletto

  18. The Senate's Mendacious Attempt to Kill Dodd-Frank

    Then finally we examine the latest attempt by the Wall Street banking lobby to undo the Dodd-Frank post 2008 reforms. Amit Narang, Public Citizen’s regulatory policy advocate and Editor of The Administrative Law Review joins us to discuss how a bi-partisan group of Senators are pushing a poison pill bill posing as financial reform that will enable Wall Street to smother attempts at oversight with endless delays through litigation.

  19. The Demographic Case for Gold [09-11-12 11:50 AM]
    Global demographics and a greater appreciation for gold as a store of value in Eastern cultures means that prices aren't likely to fall far below where they are now. Don Coxe, Strategy Advisor, BMO Financial Group, explains.

  20. MF Global’s chief financial officer for North America, Christine Serwinski, told investigators that her boss, MF Global’s chief executive, Jon Corzine, was well aware of the use and possible misuse of the customer funds during the firm’s final days, and as a result, Corzine may end up in “jail,” these people add.

    Serwinski’s initial account of MF Global’s bankruptcy -- and who might be to blame for the loss of $1.6 billion in customer funds -- has yet to be disclosed, and could add a new dimension to the year-long federal investigation into the firm’s implosion.

    Read more:

  21. Jimmy Carter slams ‘financial corruption’ in U.S. elections
    'We have one of the worst election processes in the world,' former president says

    Former U.S. president Jimmy Carter issued a blistering indictment of the American electoral process Tuesday, saying it is shot through with "financial corruption" that threatens democracy.
    Speaking at the international human rights centre that bears his name, Carter said "we have one of the worst election processes in the world right in the United States of America, and it's almost entirely because of the excessive influx of money."
    The dynamic is fed, Carter said, by an income tax code that exacerbates the gap between the wealthiest Americans and the rest of the electorate, allowing the rich even greater influence over public discourse and electioneering.
    The 39th president lamented a recent U.S. Supreme Court decision that allows unlimited contributions to third-party groups that don't have to disclose their donors.