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Here is an interesting email from "David" in response to Six-Figure Federal Salary Gravy Train. The response was not what I expected when I first saw the Email. David Writes:
Hello Mish.Email From DOE Employee
I read your article about the salaries of government workers compared with the private sector. I am a police officer. I won't say where, let's just say it's one of the most expensive cities.
I am 29 years old and I make about $130k a year with overtime. Most of the officers make this and some even make $185k a year. A few supervisors in Internal Affairs have made of $200k along with detective sergeants.
To be honest, I think our salaries are totally out of touch with not only the private sector, but with America. It's absolutely ridiculous. When I became a police officer we were all making way below what private sector employees made. I took the job knowing I will never be rich but knowing I will have a stable job with benefits.
Little did I know my union would secure very good contracts at the expense of pillaging the public. This cannot go on. I have studied and read Robert Prechter's Conquer The Crash book and how he (and you also) say we will have a deflationary collapse. I agree totally.
I'm just paying off debt while the going is good and have put most of my money in gold (at $800 an ounce). I'll probably sell that gold soon because it's getting popular in the media and on the radio. So yes, I just wanted to let you know that these govt/federal/state jobs are ridiculous. I know because I have one. 90% of the workers sit around and work for about 2 hours throughout the day and get paid 6 figure salaries. They have full benefits and pensions, 6 week vacation plans, and sick days galore.
It's gotten to the point where the private sector cannot compete because these senators keep bringing home the pork for these bloated corporations with unions. The small business man can never compete. This is socialism at its worst that has crept into America over the past quarter century.
Anyway, like I said, I cannot complain. I'm making a mid six figure salary as a police officer but at the same time my cost of living as a percentage of what I make is more than middle America. The only way for this to be cleaned out is either massive deflation and total collapse, or a currency collapse.
Either way, one of these scenarios has to happen if we are to gain control of our country again. It will be painful, but it needs to happen. If we go on like this we will turn into the Dominican Republic where most are poor except for the elite rich.
US citizens better wake up. They voted for a fraud who is a blatant con artist looking to sell America down the river by loading us up with debt. Little does he know all this debt will be defaulted on. Thanks for reading!
Here is an email from "MM" a Department of Energy Employee
Hello MishSalaries and Pensions Out of Line
Hi Mike, I enjoy your analysis very much, well done . I have been an employee of the DOE for 10 years and I was in the private sector for 20 years before that. Working for the federal government has been an eye opening stunner for me.
Not only are many nitwits paid well over $100,000 a year (I call this welfare for the educated) but many of these employees don't even bother showing up for work. Senator Tom Coburn did an official study on this: Missing in Action:AWOL in the Federal Government.
The Washington Post commented on the report in Absenteeism Report Irks Federal Employees.
Also see Report Highlights Growing Trend of Federal Employees Missing in Action
2.8 Million Hours of Work Lost Per Year Because of AWOL Absences. The federal government has 2.6 million civilian workers, making it the nation's largest employer. But, it turns out a growing number of these workers are not working.
"People have just flat not shown up for work," said Sen. Tom Coburn, R-Okla. "My question is: If people aren't showing up for work, why are they still employed by the federal government?"
Shocked at $100,000 folks never showing up to work, I opened a whistle blower case with the DOE.
Stupid me, thinking that folks not showing up to work and not actually performing any work would be a problem solved in a jiffy. A year and a half later, the problem persists, even after the colleagues of these folks told the auditors that these folks do no work. Amazingly it was turned into a telecommute problem!
If I hadn't seen this problem with my own eyes, I simply wouldn't believe it myself. Enjoy the Coburn study. I should remain anonymous.
"MM" (not her real initials)
As "MM" suggests, salaries are way out of line, with some not even bothering to show up for work. Pension promises compound that problem by orders of magnitude more. Police and firemen often get to retire at age 55 with full pension benefits for the rest of their lives.
Finally, plan assumptions are frequently in the range of 8 percent a year.
Five Massive Problems
1) Salaries are out of line with reality
2) Retirement age is out of line with reality
3) Benefits are out of line with reality
4) Plan assumptions are out of line with reality
5) People do not even do the work they are paid to do.
In regards to plan assumptions, here is a pertinent snip from Texas Teacher Retirement Plan in Shambles; Pennsylvania Teacher Retirement Costs Soar by 70%
With 10-year treasuries yielding 3.55% there is no reasonably safe way to assume 8% returns. The only way to get 8% is to take a lot of risk. If teachers want that risk, then teachers, not taxpayers should take the hit when risk blows sky high again (which it will).The Pennsylvania Teachers' Trustees just approved a taxpayer contribution spike to 8.22% from 4.78%, a contribution hike of $500 million to $1.1 billion.
An 11% return for the next 10 years is simply not going to happen. Nor is a 38% one-year return followed by a string of 8% returns.
All of these plan assumptions were put in place in the biggest credit expansion and PE expansion in history. They simply are not valid. The Teachers' association will be lucky to get 6% a year for the next ten years, very lucky in fact.
The odds of another huge stock market dip in 2010 or 2011 are huge. The odds of another recession in the next 10 years are also huge. Heck, the odds of double-dip recession in 2010 or 2011 are very substantial.
Fundamentally, a huge wave of boomer retirement is coming up, and those retirees will be drawing down funds and lowering lifestyles, not contributing and consuming more. Moreover, global wage arbitrage still has not played out and there is huge downward pressure on wages and jobs.
Structurally, unemployment will remain high for a decade. And finally, consumer attitudes towards debt and risk have reached a secular peak and have turned.
That is not a backdrop for a huge bull market in equities. Pension plans better figure this out and act accordingly or they are going to dig themselves an even deeper hole.
In 2012 the taxpayer tab is expected to exceed $4 billion. If you get the idea the Pennsylvania Teachers' Trust will blow sky high by 2012, you are correct. Pennsylvania is obviously not alone.
Mike "Mish" Shedlock
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