The bets are being made using an exotic but increasingly popular financial instrument known as a pension obligation bond. Cities, counties and states use the bonds to take out high-interest loans from private investors to plug shortfalls in their employee pension funds.
If the pension funds make smart investments with the borrowed money, the returns can help pay the interest due to borrowers and sometimes even spin off some extra cash to pay pension costs. If they don't, the bonds can create additional costs for taxpayers, put the retirement funds of teachers and firefighters in jeopardy, and, in the worst case scenario, force municipalities into bankruptcy.
Why the fuck shouldn't they do it again? They pissed all over us in '08 and we bent down to lick up the run-off. Why is this happening? Because we let it.
This, by the way, isn't a new scam but part of the old. Everything that's occurred since the Collapse has been utterly predictable.
Solution? Socialism. Capitalism must end; and equality, democracy, and public ownership of industry take its place.
http://www.latimes.com/business/la-fi-pension-bonds-20120327,0,5884419.story
