Tuesday, October 22, 2013

Signs of intelligent life in Nashville

... as voters forced Mayor Karl Dean to withdraw a plan to borrow $200M to help cover Nashville's unfunded pension liability.

Future Nashvillians are on the hook for about 2.5B (2B for medical pensions, 0.5B for regular pension) to city workers.  To help cover the short fall, the city proposed to borrow $200M at 4% interest, invest it and earn 7.5%. 

If the investments work out, then we can expect to net 3.5%, money that would ostensibly be used to pay down our unfunded liabilities.  In reality, it would likely fund more current government spending.

If the investments don't work out, our unfunded liabilities get even bigger. 

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