Let the facts of the theoretical situation tempt you away from immediately withdrawing your interest and sway you over to the side of reinvestment. 33.33. While this may sound like only drop in the bucket, just wait until you get a glimpse of the ultimate end result and make your view then. 11,272.72. And all this just for letting your money sit down quietly in a separate account untouched by you. What if I Early Need to Withdraw?
Now, Judge Rhodes pauses to point out that Michigan could have characterized the public pension obligation as something apart from a agreement right, such as, for example, a house interest. The first & most essential difference, of course, is that the pension as contract is at the mercy of impairment in chapter 9, as the pension as property asset of pensioners is not subject to impairment.
The other primary difference is that there is far less chance of a municipality to fudge the books on its pension funding. By using heroic investment income projections, the municipality can underfund the defined benefit plan, and leave pensioners with only an underfunded guarantee to pay subject to impairment. With a precise contribution plan, there are no future investment assumptions involved, just a current annual financing amount that the municipality must meet. Judge Rhodes also went to point out that Detroit’s public pension obligation was not secured by any assets.
If security had been given, then your pension property would be treated as a secured responsibility, and entitled to a higher priority of payment than unsecured obligations, and not at the mercy of impairment as unsecured obligations. The obvious choice of security for the pension responsibility was the pension possessions themselves. However the public unions might have been even more creative, and defensive of their pensioners. For instance, Detroit’s open public pension obligation could have been secured by every one of the world class (and unencumbered) artwork owned by Detroit and shown in the Detroit Institute of Art (DIA).
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Does it sound unusual to secure Detroit’s pension responsibility with its treasure trove of artwork? Well, all of this must be right, because that is the way the municipal fund press and twitterati refer to the universe of municipal finance! Indeed, prominent investment bank and mutual fund companies subscribe to this view! Hogwash. Because when is life in general, and finance in particular, at the mercy of neat department into such tidy and different parcels? These insured GOs were issued to finance specific public improvements. In other words, the insured GOs are hybrids, income bonds secured not by the proceeds derived from the financed service, but rather from the levy of special fees created regarding the the issuance of the bonds.
These insured GOs are unlimited to the level that the millage, or tax rate, is not subject to limitation. The conditions of the covered GOs are further set forth in the MBIA and AGO joint issue submitted seeking declaratory common sense. I’ve talked about this issue in a preceding post. As to the first possible answer, the Detroit EM may cite to powers reserved to the municipal chapter 9 debtor under Sections 903 and 904 to exercise generally the political and governmental powers of Detroit, including expenditures for such exercise.
While showing off and becoming a member of an invitation-only membership are the interpersonal perks of shopping for artwork, the investment made is not for personal gain, but to cultivate free expression in this country that is quickly dropping its liberty. As Rahel Joseph also highlights, acquire art “because you love it” and “don’t maintain a hurry”. Not sound trading advice exactly, but always think before buying, because chances are, you won’t be offering it for a significant come back.