March 25, 2009 – 9:34 am

First the housing market took a dive. Then the stock market imploded. Now the blast of the bursting credit bubble is taking jobs and employee pensions.

I have mixed feelings about the pensions. Many pension plans, especially municipal ones, are very generous, but many also compensate for the low salary while on the job. A recent ground-breaking ruling allows the City of Vallejo to squirm out of its pension plan, an outrageous breach of contract. Of course the argument has another side as well.

The union wage and pension agreements were absurd; the union refused to give in; and now the union got what it deserved for bankrupting Vallejo, California. This is a victory for Vallejo taxpayers, and actually, taxpayers in general as this is likely to be a precedent setting case.

Expect to see more cities file bankruptcy or threaten to, in order to get major union concession on pension funding. I am tired of sky high taxes for the benefit of the few while most private plans have suffered.
This was a good ruling. A tip of the hat goes to U.S. Bankruptcy Judge Michael McManus.

The AIG bonus bailout was outrageous, but the administration’s monster Lawrence Summers upholds the sanctity of law for the billionaires.

Even so, the administration can’t abrogate existing contractual obligations without shaking confidence in the legal system, Summers said.
“The easy thing would be to just say, you know, ‘Off with their heads,’ and violate the contracts,” he said. “But you have to think about the consequences of breaking contracts for the overall system of law.”
I know, it’s just one billionaire covering the butts of a bunch of billionaire buddies, but if the argument works for them, let’s be damn sure it works for us too.