KeNo's Housing and Economic Portal: Sunday June 12 Housing and Economic stories

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TOP STORIES:

Minneapolis discovers a way to boost pension payouts and the solvency horizon - (www.businessinsider.com) Here in Minneapolis, the geniuses in charge of their underfunded police and fireman's pensions came up with this brilliant idea to merge their pensions into a different entity:

The deal would allow the city to slash its police and fire pension liability. That's partly because it would switch them to the actuarial assumptions of the state fund, which assume higher investment returns and lower pension increases. It's also because the deal would give the city 11 more years than it has under current law to fully fund the two plans' deficits... However, the deal would come with several costs for taxpayers. First, the city agreed not to oppose a firefighter bid for a last-minute boost in their pensions to bring them to parity with police. That would cost the city $7 million in future pension costs, figured in today's dollars. Moreover, the deal would substantially boost the checks for police and fire pensioners, all of whom were hired before mid-1980. The police pension would jump by 43 percent to $64,000 in 2015, for example. So, they actually increase their liability, but increase their assets via more optimistic return assumptions. That a bunch of adults find this solution attractive is rather disturbing.

The U.S. Postal Service Nears Collapse - (www.bloomberg.com) He is struck by how many USPS executives started out as letter carriers or clerks. He finds them so consumed with delivering mail that they have been slow to grasp how swiftly the service's financial condition is deteriorating. "We said, 'What's your 10-year plan?' " Herr recalls. "They didn't have one." Congress gave him until the end of 2011 to report on the USPS's woes. But Herr and his team concluded that the postal service's business model was so badly broken that collapse was imminent. Abandoning a long tradition of overdue reports, they felt they had to deliver theirs 18 months early in April 2010 to the various House and Senate committees and subcommittees that watch over the USPS. A year later, the situation is even grimmer. With the rise of e-mail and the decline of letters, mail volume is falling at a staggering rate, and the postal service's survival plan isn't reassuring. Elsewhere in the world, postal services are grappling with the same dilemma—only most of them, in humbling contrast, are thriving…..

It takes an enormous organization to carry out such a mission. The USPS has 571,566 full-time workers, making it the country's second-largest civilian employer after Wal-Mart Stores. It has 31,871 post offices, more than the combined domestic retail outlets of Wal-Mart, Starbucks, and McDonald's. Last year its revenues were $67 billion, and its expenses were even greater. Postal service executives proudly note that if it were a private company, it would be No. 29 on the Fortune 500.

U.S. Has Binged. Soon It’ll Be Time to Pay the Tab. - (www.nytimes.com) SAY this about all the bickering over the federal debt ceiling: at least people are talking openly about our nation’s growing debt load. This $14.3 trillion issue is front and center — exactly where it should be. Into the fray comes a thoughtful new paper by Joseph E. Gagnon, a senior fellow at the Peterson Institute for International Economics, which studies economic policy. Written with Marc Hinterschweiger, a research analyst there, the report states plainly: “That government debt will grow to dangerous and unsustainable levels in most advanced and many emerging economies over the next 25 years — if there are no changes in current tax rates or government benefit programs in retirement and health care — is virtually beyond dispute.” The report then lays out a range of outcomes, some merely unsettling, others downright scary, that face us as a nation if we continue down the big-spending path we are on.

Greece denies missed fiscal targets as EU bickers - (www.rueters.com) Greece's hopes of averting default dimmed on Saturday as fears grew the country may have missed fiscal targets set by its lenders whileeuro zone policymakers bickered on how to respond to the deepening crisis. The country's finance minister denied a report in Germam weekly magazine Spiegel that international inspectors will report that Greecefailed on all its fiscal targets, a condition for getting a key, fifth tranche of a 110 billion euro bailout. "Negotiations continue and will be completed in the next few days. We have every reason to believe the report will be positive for the country," George Papaconstantinou told Greek Mega TV. But pressure continued to pile on the socialist government, which saw its popularity fall behind its conservative opposition for the first time since 2009 elections in the wake of harsh austerity measures to exit the debt crisis.

Gas tanks are draining family budgets - (finance.yahoo.com) There's less money this summer for hotel rooms, surfboards and bathing suits. It's all going into the gas tank. High prices at the pump are putting a squeeze on the family budget as the traditional summer driving season begins. For every $10 the typical household earns before taxes, almost a full dollar now goes toward gas, a 40 percent bigger bite than normal. Households spent an average of $369 on gas last month. In April 2009, they spent just $201. Families now spend more filling up than they spend on cars, clothes or recreation. Last year, they spent less on gasoline than each of those things. Jeffrey Wayman of Cape Charles, Va., spent Friday riding his motorcycle to North Carolina's Outer Banks, a day trip with his wife. They decided to eat snacks in a gas station parking lot rather than buy lunch because rising fuel prices have eaten so much into their budget over the past year that they can't ride as frequently as they would like. "We used to do it a lot more, but not as much now," he said. "You have to cut back when you have a $480 gas bill a month."