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A pensions time bomb spells disaster for the US economy

Underfunded government pensions to the tune of $1.3 trillion, with a gap that just can’t be filled, is the ticking time bomb facing the US economy, which faces dramatic cuts in public services and potentially riots reminiscent of Athens six years ago.

Danielle DiMartino Booth is the tough talking former Federal Reserve advisor and President of Money Strong, with an insider’s perspective on finance. As she picks apart the danger signs with the US on the precipice of recession, it’s the impending pensions crisis that’s really keeping her awake at night.

With so few people privy to what little recovery we’ve had and given how stretched pensions are, checks are going to have to be written from Washington sooner than you think, DiMartino Booth told Real Vision TV in an interview.

“The Baby Boomers are no longer an actuarial theory,” she said. “They’re a reality. The checks are being written.”

A bulldozer couldn’t fill the state pensions gap

The $1.3 trillion pensions deficit just takes into account state and municipal obligations and with promised returns of 8% and funds compounding at 3% for decades it will take nothing short of an economic miracle to recover. “The average state pension in the last

fiscal year returned something south of 1%. You cannot fill that gap with a bulldozer, impossible,” DiMartino Booth said. “Anyone who knows their compounding tables knows you don’t make that up. You don’t get that back unless you get some miracle.”

The last time we saw significant market weakness, the baby boomers pretty much accepted that they would be retiring at 70 instead of 65, she added. “Well, guess what? They’re turning 71. And the physiological decision to stay in the workforce won’t work for much longer. And that means that these pensions are going to come under tremendous amounts of pressure.

“And the idea that we can escape what’s to come, given demographically what we’re staring at is naive at best. And it’s reckless at worst,” DiMartino Booth said. “And when you throw private equity and all of the dry powder that they have — that they’re sitting on — still waiting to deploy on pensions’ behalf, at really egregious valuations, yeah, it’s hard to sleep at night.”

Pension fund underfunding is Ground Zero

The interview with Real Vision was held in Dallas, which DiMartino Booth said is Ground Zero for the pensions crisis, where returns for the $2.27 billion Police and Fire Pension System have suffered due to risky investments in real estate made over a decade ago.

Huge withdrawals are now taking place, amid concerns over the future viability of the pension scheme, which commentators say could be flat broke in a little over ten years. “We’re seeing this surge of people trying to retire early and take the money. Because they see it’s not going to be there. And if that dynamic and that belief spreads– forget all the other problems,” DiMartino Booth said. “The pension fund — underfunding is Ground Zero.”

The gravity of the situation with the lack of returns is magnified by the fact that the underperformance has been going on for between ten and 15 years. Calpers, the California Public Employees’ Retirement System is a case in point, amid reports that it returned just 0.6% last year compared with its long term target of 7.5%.

With the legal language tightly written on pensions like this across the country, such that states and municipalities won’t be able to break free of their obligations, DiMartino Booth thinks the endgame will evoke memories of the Winter of Discontent in London in 1979 and more recently the riots in Athens as key public services are cut.

Angry country, angry world – The wealth effect is dead

“This is where the smile comes off my face. We are an angry country. We’re an angry world. The wealth effect is dead. The inequality divide is unlike anything we’ve seen since the years that preceded the Great Depression,” she told Real Vision TV.

“Where’s the money going to come from? And the answer is, for now, they cut services. I’ve just written about the Winter of Discontent and the rubbish piled up in central London streets in 1979, as Thatcher was coming in. I worry about the ambulance not getting there in time. I worry about firefighters being cut to the bone and policemen.”

The seriousness of the issue might not have hit home yet in Denver, where the state budget for tulips had to be cut recently to top up the pension fund, she said, but what happens when you are not talking about flowers anymore and when you are talking about a very populous state like Illinois?

“If the actuaries are going to force the checks to be written and reduce the rate of returned assumptions to anything remotely related to reality, then we won’t be laughing anymore looking in the rear view mirror at the riots in the streets of Athens a few years back,” DiMartino Booth warned.

Real Vision TV is the only financial video-on- demand service where the world’s greatest investors, economists and strategists dive deep into their investment framework and give you actionable trade ideas. Start a free 7-day trial and profit from knowledge.

http://www.businessinsider.com/a-pensions-time-bomb-spells-disaster-for-the-us-economy-2016-12

You could soon look up body cam footage from your local police online

FILE- In this Jan. 15, 2014 file photo a Los Angeles Police officer wears an on-body camera during a demonstration in Los Angeles. The Los Angeles Police Department’s effort to equip officers with body cameras has run up against an unlikely obstacle, the ACLU of Southern California. The civil rights organization sent a letter Thursday, Sept. 3, to the U.S. Justice Department urging it to deny funding for the cameras until the LAPD revamps its camera policy, which the ACLU said is seriously flawed. (AP Photo/Damian Dovarganes, File)

FILE- In this Jan. 15, 2014 file photo a Los Angeles Police officer wears an on-body camera during a demonstration in Los Angeles. The Los Angeles Police Department’s effort to equip officers with body cameras has run up against an unlikely obstacle, the ACLU of Southern California. The civil rights organization sent a letter Thursday, Sept. 3, to the U.S. Justice Department urging it to deny funding for the cameras until the LAPD revamps its camera policy, which the ACLU said is seriously flawed. (AP Photo/Damian Dovarganes, File)

Police Department got a strange request from a local citizen.

The SPD had been running a pilot program in which officers wore body cameras, and the person was asking for access to every piece of footage the department had collected up to that point.

Under the Freedom of Information Act (FOIA), the agency had a legal obligation to hand over the footage. But from a logistics point of view, the request was a mighty undertaking. There was no easy way to blur sensitive information in all the files and get them to the resident.

Ultimately, the department managed to get the footage over, but to avoid similar hassles in the future, it wrote some experimental code that heavily blurred people’s faces and addresses. The idea was that this software could allow people to comb through an “over-redacted” catalog so they could find and request just the footage they needed.

Today, that experiment is on the way to becoming a commercial product that any department can adopt, in the form of a service called CrimeReports.

Already in use at 1,100 police departments around the US, CrimeReports compiles body-cam footage uploaded by police departments in a searchable database. Users can conduct online searches based on location, date, and crime type.

If there is footage available for the particular incident they want, users can view the over-redacted preview through the website. If it seems relevant, they can submit a FOIA request (like the Seattle citizen did) for the lightly redacted version, which can be viewed in a secure online portal called the CommandCentral Vault. (Even the FOIA-approved footage will often be redacted to comply with local laws that protect citizens’ identities.)

The service is expected to hit the general public by mid-2017, says Tom Guthrie, vice president of Smart Public Safety Solutions at Motorola Solutions, which helps log the footage in CrimeReports.

Ultimately, the goal is to help people feel safe and build trust between citizens and law enforcement through increased transparency. But making footage available up front also saves agencies time, since it cuts down the amount of footage police department staff have to gather, redact, and send. Instead of combing through hours of video, they can easily select a two-minute clip.

Robin Jones, senior vice president at Socrata, which runs the actual CrimeReports interface, says that transparency could also help police do their job better. If citizens have greater access to public camera footage, they could submit tips to their local agencies if they suspect someone is stealing packages from a neighbor’s porch or vandalizing a library, for example.

And even if cops don’t want to wear body cameras, local businesses and private residents can register their cameras with the local PD to be used as public records in the database.

Body-worn cameras have become a major point of discussion over the last couple years as police killings continue and make national news. Earlier this year, however, an Associated Press review found cities have been slow to adopt the technology due to costs and resistance from police unions.

Guthrie hopes CrimeReports could persuade law enforcement to prioritize building the kind of trust that has been waning recently. If citizens and police officers could both hold one another accountable, maybe the investment in transparency could work out.

“We want to create an environment of citizen engagement” within law enforcement, Guthrie tells Business Insider. “And part of that is if you want them to help provide you with information, you provide them with open information. So I think we’re helping our customers take that first step.”

http://www.businessinsider.com/motorola-solutions-body-cam-footage-public-2016-10

Scranton mayor wants Pennsylvania to manage city pension funds

(Reuters) – Scranton, Pennsylvania, Mayor William Courtright said on Thursday the state should take over the city’s pension system after a report found problems with past benefit awards in one of the funds.

Courtright, a Democrat, said the most recent report was a “wakeup call” and that he will ask for the support of Governor Tom Wolf in moving all of the funds to the Pennsylvania Municipal Retirement System.

“Bill after bill, report after report, and study after study have recommended taking this step,” Courtright said in a statement, adding the benefits were awarded under a different mayor, city council, and pension board. “It’s our job to fix it.”

While many U.S. states have passed pension reforms aimed at improving their underfunded pension systems, thousands of small local governments still run their own funds across the country, some of which face difficulties. Pennsylvania alone has 3,200 such plans, nearly all of them with less than 100 members each.

Scranton’s plan for non-uniformed employees is funded at 23 percent and could run out of money in two years. Its fund for retired firefighters is just 16 percent funded and could need emergency state aid to avoid insolvency, Pennsylvania Auditor General Eugene DePasquale said in May.

DePasquale released a report on Wednesday criticizing double benefit payments promised to non-uniformed employees as a retirement incentive in 2002. The city did not properly authorize the offers or analyze their financial impact, his report found.

The double pension payments cost the city about $2.9 million and contributed to the plan’s dire financial condition, he said.

The report recommends that Scranton finish reviewing benefits paid to those retirees and consider whether to claw-back some of the payouts.

(Reporting by Jessica DiNapoli in New York; Editing by Hilary Russ and Andre Grenon)

http://www.businessinsider.com/r-scranton-mayor-wants-pennsylvania-to-manage-city-pension-funds-2015-6