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Thursday, February 13, 2014

MLB Owners Voted to Allow Teams to Cut Pensions of Non-Players

Major League Baseball owners, despite earning more than $8 billion in revenue in 2013, voted in January to allow individual teams to slash or eliminate pension-plan offerings to their non-uniformed personnel….

A source told ESPNNewYork.com that Chicago White Sox owner Jerry Reinsdorf chastised owners for being petty with the lives of ordinary people during an earlier attempt to pass this plan.

CFBF Is A Golden Spider Duck Posted: February 13, 2014 at 10:42 AM | 84 comment(s) Login to Bookmark
  Tags: mlb, pensions

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   1. RoyalsRetro (AG#1F) Posted: February 13, 2014 at 11:55 AM (#4656195)
Look, these are hard times, and we must all make tough choices. Now excuse me while I light my cigar with this $100 bill.
   2. RMc is a fine piece of cheese Posted: February 13, 2014 at 12:01 PM (#4656198)
1. Make $8 billion.
2. Don't give none of it to nobody.
3. Profit!
   3. Jolly Old St. Nick Is A Jolly Old St. Crip Posted: February 13, 2014 at 12:03 PM (#4656201)
Shareholders vs. Stakeholders, part 1581 and counting.
   4. Barnaby Jones Posted: February 13, 2014 at 12:05 PM (#4656205)
Jerry Reinsdorf, people's champion.
   5. CFBF Is A Golden Spider Duck Posted: February 13, 2014 at 12:07 PM (#4656207)
Yeah, when I read that I knew I absolutely had to highlight it. Jerry Reinsdorf standing up against greed and niggardliness.
   6. Pat Rapper's Delight Posted: February 13, 2014 at 12:11 PM (#4656216)
Reinsdorf sees no value in being petty with the lives of ordinary people. He'd much rather be petty with the lives of the MLBPA.
   7. A Fatty Cow That Need Two Seats Posted: February 13, 2014 at 12:12 PM (#4656217)
my country tis of thee *wipes tear*
   8. My guest will be Jermaine Allensworth Posted: February 13, 2014 at 12:21 PM (#4656228)
Reinsdorf's position really isn't surprising. There's a mutual loyalty between him and his employees, and it lasts. The story behind the name of the Bulls' practice facility:

In October 2005, shortly before his Sox won the World Series, the then-69-year-old Reinsdorf told the Chicago Tribune that he had lived a "fabulous life" -- with one exception. In 1991, his longtime assistant, Sheri Berto, died from complications of routine surgery. Reinsdorf called her sudden and shocking death his life's "only tragedy."

But the man who went on to build seven championship teams didn't turn away from tragedy; he gave himself a constant reminder of it. The Bulls had broken ground on a new practice facility one month before Berto's death, and when it was completed a year later, Reinsdorf named it the Sheri L. Berto Center to honor the woman who had been by his side for 17 years.

When Berto died in November 1991, she left behind a husband, Graziano, and a 3-year-old daughter, Tina. The Bertos had planned to give little Tina a brother or sister, but before Sheri could get pregnant again, she needed surgery to remove a nonmalignant tumor from her uterus. During the surgery, her doctor cut a vein and didn't properly repair it, causing her to bleed internally. The doctors and nurses who treated her overnight failed to notice, and the next day, at age 40, her heart stopped.

The Berto family was awarded an Illinois-record wrongful-death settlement of more than $17 million, but no amount of money could heal the feeling of loss for them and for Reinsdorf. After Sheri's death, he commissioned a book about her life, and he gave one of just a handful of printed copies to Tina, so that she might know her mother.


   9. Publius Publicola Posted: February 13, 2014 at 12:21 PM (#4656230)
Surprised Reinsdorf would be the one to object. I would haved guessed him to be one of the hardliners.

But good for him. Makes me revise upward my estimate of him as a man and a leader.
   10. Yeaarrgghhhh Posted: February 13, 2014 at 12:32 PM (#4656236)
Christ, what a bunch of a$$holes.
   11. GregD Posted: February 13, 2014 at 12:38 PM (#4656241)
[8] that is a great story. I mean obviously it's a horrendous story but it's also remarkable. I knew Reinsdorf was famously loyal to his employees but didn't know about that story.
   12. Knock on any Iorg Posted: February 13, 2014 at 12:51 PM (#4656251)
I can believe that the owners are counting on drooling fanboys to work for a pittance with no hope of any kind of safety net just to be around a baseball organization.
   13. Shredder Posted: February 13, 2014 at 01:00 PM (#4656257)
Look, these are hard times, and we must all make tough choices. Now excuse me while I light my cigar with this $100 bill.
It's weird how businesses will spend boatloads on corporate expenses, executive salaries, luxury office furnishings, etc., but really obsess over smallish expenses that in this case have real meaning to the people who are/were benefiting from them. In a way, it makes me think about my own choices. I generally won't think twice about putting my credit card down for a $150 greens fee a couple times per year, but dammit if I don't waste untold time at the grocery store trying to decide whether I really need to pay an extra $.30 for one can of beans over the other.
   14. Davo's Favorite Tacos Are Moose Tacos Posted: February 13, 2014 at 01:01 PM (#4656258)
Jerry Reinsdorf standing up against greed and niggardliness.

Can you say that on television?!?!?!
   15. Yeaarrgghhhh Posted: February 13, 2014 at 01:14 PM (#4656267)
It's weird how businesses will spend boatloads on corporate expenses, executive salaries, luxury office furnishings, etc., but really obsess over smallish expenses that in this case have real meaning to the people who are/were benefiting from them. In a way, it makes me think about my own choices. I generally won't think twice about putting my credit card down for a $150 greens fee a couple times per year, but dammit if I don't waste untold time at the grocery store trying to decide whether I really need to pay an extra $.30 for one can of beans over the other.

I see the same thing at my firm. We'll pay hundreds of thousands of $ to hire Supreme Court clerks when there's no evidence that we benefit financially, but we'll also fret over spending $5000 to send someone to an important industry conference.

Re the beans -- it's only $.30, but food is expensive and adds up really quickly. It always annoys me when you hear people like John Stossel say "how can people getting food stamps also have color TVs?!?!?!" A decent TV is $300-400 and should last 4-5 years. Feeding a family of 4 is at least that much every month, and a lot more if you want to buy decent produce and meat.
   16. Jim Wisinski Posted: February 13, 2014 at 01:21 PM (#4656273)
#5, given the choice between the two I'll take standing up for the ordinary workers and playing hardball with the millionaires every time, value produced be damned.

It would be great if the MLBPA publicly objected to this out of solidarity but I doubt it will happen.
   17. Boxkutter Posted: February 13, 2014 at 01:38 PM (#4656285)
Well, they didn't get rich by giving away money.
   18. TJ Posted: February 13, 2014 at 01:42 PM (#4656289)
FTFA

Rob Manfred, MLB's chief operating officer, noted no team has yet acted to reduce employee pension benefits.

"The change in the rule does not require a club to change anything," Manfred said. "All 30 clubs are free to leave their plans exactly where they are and, in fact, no club has made a change. This change gives the clubs the ability to put together what they feel is a competitive pension program in their particular market."

Since the people voting on this decision were the same people who decide on whether to make any changes, I think it is safe to assume some changes will be made.


Manfred also vehemently objected to any characterization that the owners are going after baseball's employees while owners and players continue to reap huge sums.

"Large corporations all over America make adjustments in their pension plans," Manfred said. "That's like saying because the top line is billions of dollars, they shouldn't be making changes to their pension plans.

True, but those large corporations don't have anti-trust exemptions, protected territory, profit sharing with competitors, etc. Surely Rob Manfred isn't saying that MLB teams should be held to the same legal rules that other corporations have?

Yep, he's going to be your next commissioner...
   19. TJ Posted: February 13, 2014 at 01:43 PM (#4656291)
Manfred also vehemently objected to any characterization that the owners are going after baseball's employees while owners and players continue to reap huge sums.
   20. AROM Posted: February 13, 2014 at 01:45 PM (#4656292)
"I can believe that the owners are counting on drooling fanboys to work for a pittance with no hope of any kind of safety net just to be around a baseball organization."

That's why I kept my day job. Federal gov is one of the last employers out there to offer a realistic retirement plan. Though that may not survive past President Rand Paul.
   21. Bring Me the Head of Alfredo Griffin (Vlad) Posted: February 13, 2014 at 01:51 PM (#4656300)
Pack of ########. Not that it should come as any surprise...
   22. AROM Posted: February 13, 2014 at 01:51 PM (#4656301)
"Re the beans -- it's only $.30, but food is expensive and adds up really quickly. It always annoys me when you hear people like John Stossel say "how can people getting food stamps also have color TVs?!?!?!" A decent TV is $300-400 and should last 4-5 years. Feeding a family of 4 is at least that much every month, and a lot more if you want to buy decent produce and meat. "

A decent TV, if it's not flat screen, is hard to even give away. Even flat screens are cheap if they aren't brand new. Last year I got a new one and considered myself lucky to find someone willing to take my old 37 inch LCD away. Goodwill around here won't even take TVs due to some sort of environmental regulation.
   23. PASTE Thinks This Trout Kid Might Be OK (Zeth) Posted: February 13, 2014 at 02:02 PM (#4656311)
It's weird how businesses will spend boatloads on corporate expenses, executive salaries, luxury office furnishings, etc., but really obsess over smallish expenses that in this case have real meaning to the people who are/were benefiting from them. In a way, it makes me think about my own choices. I generally won't think twice about putting my credit card down for a $150 greens fee a couple times per year, but dammit if I don't waste untold time at the grocery store trying to decide whether I really need to pay an extra $.30 for one can of beans over the other.


My home state of Pennsylvania is at-will but notably employee-friendly when it comes to unemployment compensation; to fire an employee and not have to pay him unemployment compensation for up to six months, a company has to have a mountain of ironclad evidence of Willful Misconduct.

The practical result of this is that when a company wants rid of an employee they won't fire him, goodness no. They'll take whatever steps necessary to armtwist him into quitting (can't collect if you quit, and proving the company forced you to quit to avoid paying UC is pretty much impossible).

A lot of times a person just deserves to be fired, but it's not always so. But an employer will think nothing of doing this to save what adds up to a few thousand dollars--sand off a beach to the company, but possibly the difference between normalcy and bankruptcy for the low-paid employee.

I understand that this is business, but it profoundly saddens me to know this is how people are.
   24. McCoy Posted: February 13, 2014 at 02:15 PM (#4656319)
The idea that a business that you work for should be responsible for your old age non-productive years always boggles my mind.
   25. PreservedFish Posted: February 13, 2014 at 02:19 PM (#4656322)
It's weird how businesses will spend boatloads on corporate expenses, executive salaries, luxury office furnishings, etc., but really obsess over smallish expenses that in this case have real meaning to the people who are/were benefiting from them.


It seems uneven, but isn't this sometimes just how business works? If McDonald's cuts its ketchup cost by 1 cent per packet, they've just saved about a zillion dollars. And those corporate goodies help attract the best and brightest. (Not to say many companies aren't wasteful with such things)

Obviously the issue is more emotional when you're talking about things like pensions, health benefits, etc, instead of ketchup.

I've recently been transitioning from a middle manager type to a corporate office type, and I feel guilty when I work 7.5 hours in an office, half of which are in casual meetings, taking coffee breaks whenever I want, etc, knowing that my employees are busting their butts for half my pay ... but the decisions I make actually have big ramifications for the company.
   26. What did Billy Ripken have against ElRoy Face? Posted: February 13, 2014 at 02:29 PM (#4656332)
Manfred also vehemently objected to any characterization that the owners are going after baseball's employees while owners and players continue to reap huge sums.

"Large corporations all over America make adjustments in their pension plans," Manfred said.


So what you're saying is you're like the large corporations all over America that go after their employees while owners and executives continue to reap huge sums.
   27. Publius Publicola Posted: February 13, 2014 at 02:30 PM (#4656335)
EDIT
   28. Shredder Posted: February 13, 2014 at 02:43 PM (#4656349)
The idea that a business that you work for should be responsible for your old age non-productive years always boggles my mind.
You realize that things like pensions and benefits are compensation, right? You hire someone on the basis that you'll pay them less now, but you'll cover them in retirement. It's a deferred expense. What's so mind boggling about it? Quite frankly, I find it mind boggling that companies will hire people with promises to pay them something in the future, then have no qualms about simply voting not to do so after those employees have earned that compensation. It would be like the Mets just up and deciding "we don't want to pay Bobby Bonilla that deferred compensation we promised him, so we're just not gonna do it anymore."

In the instant case, if baseball teams choose to change their benefits model from a defined benefit to a defined contribution, I don't necessarily have a problem with that, so long as they aren't screwing over the people who were promised the defined benefit and have already earned a portion of it.
It always annoys me when you hear people like John Stossel say "how can people getting food stamps also have color TVs?!?!?!"
Seriously. I love the "they can't be poor if they've got a playstation!" argument. Umm, I've got a PS2 that you can have for free, and sometime in the near future, I'd probably be willing to give away my PS3 as well. Second hand consumer electronics are pretty damn cheap.
   29. Never Give an Inge (Dave) Posted: February 13, 2014 at 02:43 PM (#4656350)
Omar A. Hurricane, who works on laser-driven fusion--sounds like a villain out of a comic book.

EDIT: Since #27 was edited my post no longer makes any sense. It was referring to this.
   30. bookbook Posted: February 13, 2014 at 02:45 PM (#4656351)
"niggardly" isn't etymologically related to that other word of which you refer obliquely! I had always assumed the opposite until today....
   31. The Yankee Clapper Posted: February 13, 2014 at 02:49 PM (#4656353)
"The fact of the matter is that the structure of one's pension, and the appeal of that pension to employees, varies greatly depending upon the makeup of your workforce. We have traditionally had defined-benefit pension plans in baseball, but a lot of young people would rather have a defined-contribution plan [401(k)].

If MLB just switches from a defined benefit plan to an equivalent defined contribution plan, there's not much to criticize here. They would be among the last businesses to make the switch, and as many would likely benefit as have their retirement reduced. Defined benefits are good for the "lifers" but those who switch jobs usually lose out. Of course, given MLB's record, it's fair to question how much effort MLB will put into making any new plan equivalent to the old.
   32. McCoy Posted: February 13, 2014 at 02:55 PM (#4656358)
You realize that things like pensions and benefits are compensation, right?

No kidding. That isn't what boggles my mind. What boggles my mind is that people expect a business that they work for to be responsible for their financial and medical well being when they no longer work for that business.
   33. cercopithecus aethiops Posted: February 13, 2014 at 03:06 PM (#4656372)
What boggles my mind is that people expect a business that they work for to be responsible for their financial and medical well being when they no longer work for that business.


So it boggles your mind that when a business promises to pay deferred compensation to its employees, those employees actually expect to receive that deferred compensation?
   34. McCoy Posted: February 13, 2014 at 03:12 PM (#4656379)
Yes. Were they born stupid or did life make them that way?
   35. What did Billy Ripken have against ElRoy Face? Posted: February 13, 2014 at 03:16 PM (#4656387)
Yes. Were they born stupid or did life make them that way?


So does it amaze you and fill you with gratitude every time you pay for a pizza with a credit card before it's delivered, and then they actually deliver the pizza?
   36. odds are meatwad is drunk Posted: February 13, 2014 at 03:16 PM (#4656388)
so you dont care if your employer decides not to pay you what they had promised for services rendered?
   37. eddieot Posted: February 13, 2014 at 03:17 PM (#4656389)
Rich People Screw Poor People, film at 11...
   38. McCoy Posted: February 13, 2014 at 03:20 PM (#4656395)
so you dont care if your employer decides not to pay you what they had promised for services rendered?

Of course I care but so what? It is absolutely stupid to come to an arrangement with a business to financially take care of you 10, 20, 30 years from now and heavily rely on that agreement 10, 20, 30 years from now.


So does it amaze you and fill you with gratitude every time you pay for a pizza with a credit card before it's delivered, and then they actually deliver the pizza?


If I made arrangements for that pizza to be delivered 25 years from now and it gets delivered it would absolutely amaze me.
   39. Avoid running at all times.-S. Paige Posted: February 13, 2014 at 03:21 PM (#4656398)
Surprised Reinsdorf would be the one to object. I would haved guessed him to be one of the hardliners.

But good for him. Makes me revise upward my estimate of him as a man and a leader.


My thoughts exactly. I'm pretty blown away.
   40. eddieot Posted: February 13, 2014 at 03:25 PM (#4656402)
If I made arrangements for that pizza to be delivered 25 years from now and it gets delivered it would absolutely amaze me.

So paying off my 30-year mortgage makes me stupid? Cool! Can't wait to tell my bank that it would silly for them to expect me to pay them in the future! Thanks McCoy!! My life has changed!!
   41. What did Billy Ripken have against ElRoy Face? Posted: February 13, 2014 at 03:26 PM (#4656405)

so you dont care if your employer decides not to pay you what they had promised for services rendered?

Of course I care but so what? It is absolutely stupid to come to an arrangement with a business to financially take care of you 10, 20, 30 years from now and heavily rely on that agreement 10, 20, 30 years from now.


As a matter of practical reality, you're probably right - but your condemnation should be directed at the business, not at the employee.
   42. Jeff R., P***y Mainlander Posted: February 13, 2014 at 03:27 PM (#4656406)
Omar A. Hurricane, who works on laser-driven fusion--sounds like a villain out of a comic book.


Heh. Yeah, he's pretty much one nuclear accident away from being turned into Dr. Hurricane, latest nemesis of the Flash.
   43. Never Give an Inge (Dave) Posted: February 13, 2014 at 03:28 PM (#4656408)
No kidding. That isn't what boggles my mind. What boggles my mind is that people expect a business that they work for to be responsible for their financial and medical well being when they no longer work for that business.

Someone has to pay for that, right? Either pay me more now so that I can save more for my "unproductive years", or give me benefits that will cover those years. The alternative is that we're all taking care of our elderly parents--in which case, again, you need to pay me more now to cover that expense.

The other alternative, of course, is we all have to reduce our current standard of living in order to save more for retirement. In which case we will all have less money to spend on baseball tickets, cable t.v., and other things that are paying for that $8 billion in revenues the owners are making.
   44. McCoy Posted: February 13, 2014 at 03:30 PM (#4656410)
So paying off my 30-year mortgage makes me stupid? Cool! Can't wait to tell my bank that it would silly for them to expect me to pay them in the future! Thanks McCoy!! My life has changed!!

Banks are kind of stupid for offering these long term loans and as we saw and are seeing they did get burned by them. So what is your point?
   45. McCoy Posted: February 13, 2014 at 03:31 PM (#4656413)
As a matter of practical reality, you're probably right - but your condemnation should be directed at the business, not at the employee.


Why can't I direct it at both?
   46. eddieot Posted: February 13, 2014 at 03:32 PM (#4656414)
Banks are kind of stupid for offering these long term loans and as we saw and are seeing they did get burned by them. So what is your point?

Um, I have no idea how to respond to someone who does not live in the real world.
   47. What did Billy Ripken have against ElRoy Face? Posted: February 13, 2014 at 03:33 PM (#4656416)
Why can't I direct it at both?


Because one party lived up to its half of the bargain and the other did not. Whether the party who performed was stupid or naive or whatever for doing so is irrelevant. How is that not obvious?
   48. McCoy Posted: February 13, 2014 at 03:34 PM (#4656417)
Someone has to pay for that, right? Either pay me more now so that I can save more for my "unproductive years", or give me benefits that will cover those years. The alternative is that we're all taking care of our elderly parents--in which case, again, you need to pay me more now to cover that expense.

The other alternative, of course, is we all have to reduce our current standard of living in order to save more for retirement. In which case we will all have less money to spend on baseball tickets, cable t.v., and other things that are paying for that $8 billion in revenues the owners are making.


We all should reduce our standard of living to save more for retirement and we all should spend less dollars on entertainment and leisure.

The thing is is that the idea that our elderly parents could live without assistance from the family is an absolute freak occurence caused by a rather unique period of economic growth over a few decades. Everybody wants to act like 1960 is repeatable and is the historical norm and it isn't.
   49. McCoy Posted: February 13, 2014 at 03:37 PM (#4656419)
Whether the party who performed was stupid or naive or whatever for doing so is irrelevant.

This is silly. There is risked involved in every agreement and even moreso when you factor in time. Then throw in the fact that you're talking about one's own life and the life of their loved ones and it is absolutely relevant.
   50. McCoy Posted: February 13, 2014 at 03:37 PM (#4656421)
Um, I have no idea how to respond to someone who does not live in the real world.

What world are you living in in which you think banks made good investment choices?
   51. Shredder Posted: February 13, 2014 at 03:41 PM (#4656426)
Banks are kind of stupid for offering these long term loans and as we saw and are seeing they did get burned by them. So what is your point?
This is literally one of the dumbest things I've ever read. No banks got burned because they gave out long term home loans. Banks have given out long term home loans for years and years and years, and will continue to do so well into the future. Banks got burned because they gave a lot of money to people who couldn't afford to pay it back. They did so because (a) they thought home prices would continue to skyrocket, and (b) they could package those loans and sell them off to someone else. It had nothing to do with the length of the loan.

If banks required that home loans be paid off within five or ten years, they wouldn't be making many home loans, because very few people earn enough money to pay them back that quickly.
   52. eddieot Posted: February 13, 2014 at 03:42 PM (#4656429)
What world are you living in in which you think banks made good investment choices?

Non sequitur. The bank and I made a contractual agreement. If one of us violates that it breaks the law.What they do with my money is no matter to me. Period.
   53. What did Billy Ripken have against ElRoy Face? Posted: February 13, 2014 at 03:42 PM (#4656430)
#49, it's relevant to a different question - that of which party is smarter, more realistic, etc. The question of which party deserves condemnation for a moral violation is clear. One side has acted justly, the other has not.
   54. Misirlou's been working for the drug squad Posted: February 13, 2014 at 03:48 PM (#4656439)
I understand what McCoy is saying, but like usual, he's phrasing it badly and/or taking a purposefully belligerent and antagonistic stance, to what end I cannot imagine.
   55. Never Give an Inge (Dave) Posted: February 13, 2014 at 03:49 PM (#4656441)
If the market had stuck to standard 30-year fixed rate mortgages with 20-25% downpayments we probably would not have had a financial crisis. The real problem was the more exotic products that people expected to be able to refinance in a few years when the value of their home went up, as well as things like "stated income" or piggyback/no downpayment loans, etc.

In reality, most 30-year loans are not outstanding for anywhere near 30 years anyway. People refinance or move eventually.
   56. Yeaarrgghhhh Posted: February 13, 2014 at 03:51 PM (#4656442)
Echoing 51, 30 year mortgages had almost nothing to do with the financial meltdown in 2008.
   57. nick swisher hygiene Posted: February 13, 2014 at 04:06 PM (#4656458)
yup. without "innovative mortgage products", there just weren't enough available buyers to pump up the bubble....
and if those products hadn't been securitize-able, they never would've existed in such numbers.
   58. villageidiom Posted: February 13, 2014 at 04:26 PM (#4656474)
So it boggles your mind that when a business promises to pay deferred compensation to its employees, those employees actually expect to receive that deferred compensation?
MLB aside for a minute, in most cases regarding pensions where a union is not involved, a business promises to pay deferred compensation to its employees through a program that, by its rules, allows the employer the right to change the program at any time for any reason. You speak as though it's compensation like in an MLB contract when it's more like an NFL contract. As pointed out above the employee is agreeing to defer compensation, but also agreeing to a system by which the status of that compensation is never secure.

Where unions are involved it often plays out differently. The employer can propose changes to pension plans, but cannot enact them without the union agreeing. Such is the nature of collective bargaining.

Bringing it back to MLB, as far as I'm aware the non-players employed by teams are non-union. I don't know the rules of the teams' non-player pensions, so I don't know if they have the "we can remake the rules" provision. Given the umbrella rule across MLB that the owners just voted on, it doesn't sound like individual teams could have remade the rules before today anyway, so such a provision would have been odd. ("We can remake the rules, if MLB lets us?") Regardless, it's unclear what the story is, other than that something that is generally non-guaranteed in non-union employment is now more explicitly non-guaranteed in MLB.
   59. zonk Posted: February 13, 2014 at 04:29 PM (#4656478)
If the market had stuck to standard 30-year fixed rate mortgages with 20-25% downpayments we probably would not have had a financial crisis. The real problem was the more exotic products that people expected to be able to refinance in a few years when the value of their home went up, as well as things like "stated income" or piggyback/no downpayment loans, etc.


Agreeing with 51 and 56, but I'll just add why did the industry not stick to 30-year fixed/20-25% down?

Growth... or rather, actual market shrinkage... There was an article in the NYT a week or two back about how the middle is getting so enormously squeezed (a surprise to no one) - but focusing on the trouble of retailers like Sears and JC Penny and restaurants like Olive Garden. That market -- which was also the market for your run-of-the-mill, suburban single story home with a 30 fixed -- is disappearing.

So how do you keep feeding the growth monster that is Wall Street and stock price? Well... you expand the pool. You get ever more exotic. And you go even further by treating these things less as "loans" and more as "products"... you expand your product line and hey, look -- by expanding your product line, you've also produced a crap ton of accessories that people (sometimes even the same people, via 401Ks and pension funds!) will buy... and before you know it, you're making more money off the accessories...

   60. Misirlou's been working for the drug squad Posted: February 13, 2014 at 04:44 PM (#4656491)
The employer can propose changes to pension plans, but cannot enact them without the union agreeing.


Or get a bankruptcy judge to do it.
   61. AROM Posted: February 13, 2014 at 04:55 PM (#4656501)
"If banks required that home loans be paid off within five or ten years, they wouldn't be making many home loans, because very few people earn enough money to pay them back that quickly."

Nope. Houses would just be much cheaper, and for the most part smaller. People lived in houses long before anyone offered 30 year mortgage financing.
   62. Johnny Sycophant-Laden Fora Posted: February 13, 2014 at 05:08 PM (#4656519)
People lived in houses long before anyone offered 30 year mortgage financing.


lived in doesn't necessarily mean "owned."

   63. Never Give an Inge (Dave) Posted: February 13, 2014 at 05:20 PM (#4656532)
lived in doesn't necessarily mean "owned."

I haven't seen data going back before 1960, but the homeownership rate has not changed as much as you might think over that period. It went from 62% in 1960 to a high of 69% in 2004 and now it is back down at around 65%. To folks on the margin that is obviously a big change, but AROM is probably right that the bigger effect has been on the price and size of homes. I suspect that there has also been a big increase in the number of people who own second homes since 1960.
   64. GregD Posted: February 13, 2014 at 05:21 PM (#4656534)
I would expect prices to drop but home ownership to drop even faster. Many European societies have tougher requirements for mortgages and therefore have later ages of home purchase and lower rates of home ownership.

That may be a good policy outcome in all kinds of ways. But I don't think the policy outcome would be same level of home ownership as now plus lower prices.
   65. Jolly Old St. Nick Is A Jolly Old St. Crip Posted: February 13, 2014 at 06:18 PM (#4656579)
I haven't seen data going back before 1960, but the homeownership rate has not changed as much as you might think over that period. It went from 62% in 1960 to a high of 69% in 2004 and now it is back down at around 65%. To folks on the margin that is obviously a big change, but AROM is probably right that the bigger effect has been on the price and size of homes. I suspect that there has also been a big increase in the number of people who own second homes since 1960.

I'd also suspect that far more people are stuck with allocating a far greater percentage of their take home pay towards their mortgage** than they were in 1960, regardless of the length or terms of the contract.

**or towards their rent
   66. McCoy Posted: February 13, 2014 at 10:09 PM (#4656673)
I understand what McCoy is saying, but like usual, he's phrasing it badly and/or taking a purposefully belligerent and antagonistic stance, to what end I cannot imagine.

You can argue it is my fault but when one gets bombarded with stupid fake questions it is much harder to place the blame on me.
   67. McCoy Posted: February 13, 2014 at 10:16 PM (#4656678)
A 30 year mortgage allowed the price of land and homes to skyrocket when it never should have which led directly to the problems of 2007 and so on. L
   68. greenback calls it soccer Posted: February 13, 2014 at 11:21 PM (#4656694)
MLB aside for a minute, in most cases regarding pensions where a union is not involved, a business promises to pay deferred compensation to its employees through a program that, by its rules, allows the employer the right to change the program at any time for any reason.

This is misleading, and to make matters worse, you're old enough that the SOA made you learn something about ERISA.
   69. Shredder Posted: February 14, 2014 at 12:12 AM (#4656703)
McCoy, give it up. You're just making it worse.
   70. The John Wetland Memorial Death (CoB) Posted: February 14, 2014 at 01:00 AM (#4656710)
A 30 year mortgage allowed the price of land and homes to skyrocket when it never should have which led directly to the problems of 2007 and so on.


Forget it Donny, you're out of your element!
   71. bobm Posted: February 14, 2014 at 01:22 AM (#4656711)
[65] What Americans spend on housing used to be spent instead on food and clothing.

Spending as a Percentage of American's Total Household Budget
                           2007  1997 1984 1977 1967 1950s
                     Food.  15%   17%  18%  25%  30%   32%
                  Housing   43%   41%  42%  33%  33%   22%
                 Clothing    4%    5%   7%  10%  11%   12%
           Transportation   18%   17%  18%  13%  15%   15%
             Medical Care    6%    7%   5%   8%   6%    5%
               Recreation    6%    4%   4%   5%   3%    2%
Education & Communication    6%    4%   3%   2%  n/a   n/a


http://www.investopedia.com/financial-edge/1009/50-years-of-consumer-spending.aspx
   72. ellsbury my heart at wounded knee Posted: February 14, 2014 at 02:38 AM (#4656718)
EDIT: nevermind.
   73. villageidiom Posted: February 14, 2014 at 08:40 AM (#4656740)
This is misleading, and to make matters worse, you're old enough that the SOA made you learn something about ERISA.
And you're smart enough to know the SOA might have absolutely nothing to do with me, and vice-versa.
   74. Infinite Joost (Voxter) Posted: February 14, 2014 at 10:41 AM (#4656797)
50. McCoy Posted: February 13, 2014 at 02:37 PM (#4656421)
[ Ignored Comment ]


I did this because he's deeply stupid. You guys should follow my lead.
   75. Never Give an Inge (Dave) Posted: February 14, 2014 at 11:30 AM (#4656823)

[71] The more relevant question is not what that represents as a part of spending, but what it represents as a part of income. I don't see savings (or repayment of debt) as a category there, for example.
   76. Never Give an Inge (Dave) Posted: February 14, 2014 at 11:39 AM (#4656832)

A 30 year mortgage allowed the price of land and homes to skyrocket when it never should have which led directly to the problems of 2007 and so on.

But 30-year mortgages have been around since, what, the New Deal? The existence of 30-year mortgages in itself is not the problem as long as downpayments, underwriting, and pricing are rational.
   77. GregD Posted: February 14, 2014 at 11:46 AM (#4656836)
Didn't Britain have a roughly similar housing crisis despite having relatively few 30-year mortgages?

I think there's a part for whole confusion here.
   78. McCoy Posted: February 14, 2014 at 12:36 PM (#4656872)
The ignore functon and the use of it reminds me of the vegetarian joke I once heard.

How do you know who is a vegetarian?

Don't worry, they'll let you know.
   79. Shredder Posted: February 14, 2014 at 01:34 PM (#4656918)
Don't worry, they'll let you know.
This is sort of the running (no pun intended) joke about runners on Deadspin.
   80. Joey B. has reignited his October #Natitude Posted: February 14, 2014 at 01:49 PM (#4656931)
The teams must have taken their cue from the federal government and figured hey, if congress can screw over our military veterans who have served our country (and in many cases risked their lives) for 20 years or more, they can also screw over their weakest employees as well.
   81. Fred Lynn Nolan Ryan Sweeney Agonistes Posted: February 14, 2014 at 02:42 PM (#4656975)
How do you know who is a vegetarian?

Don't worry, they'll let you know.

Or "native" San Franciscans / New Yorkers.
   82. bobm Posted: February 14, 2014 at 02:50 PM (#4656983)
How do you know who is a vegetarian?

Don't worry, they'll let you know.


That's when I remind them that Hitler was also a vegetarian.
   83. Never Give an Inge (Dave) Posted: February 14, 2014 at 02:51 PM (#4656984)
This is sort of the running (no pun intended) joke about runners on Deadspin.

I Don't Own a TV.

I'm a member of two of the three groups referenced in #78-81 (vegetarian, runner, native SF/NYer), but to prove you all wrong I won't say which two.
   84. mog Posted: February 15, 2014 at 09:08 AM (#4657259)
Didn't Britain have a roughly similar housing crisis despite having relatively few 30-year mortgages?


not exactly -- while house prices did plummet in the UK and there were some bad loans etc made, actual losses on non-conforming mortgage deals (their rough equivalent of subprime and alt-a mortgages) have been roughly 3% -- here in the US, losses on subprime/alt-a deals are 20+ and will likely be 40+ by the time the delinquency queues are cleared.

in other words, their crisis was comparatively contained because it only spread "1 level deep" rather than 2, 3 or 4 levels (comparatively limited CDO issuance etc) -- the crisis DID hit some financial lending institutions, but did not reach outside of that the way it did here (such as AIG selling protection on basically every ABS CDO in existence)

the main differences as to why have already been covered earlier in this thread, in that underwriting standards in the UK never approached the looseness that they did here in america. another key difference is that in both the UK and much of continental europe, loans are full recourse, meaning you are 100% responsible for any unpaid principal; the government can garnish your wages etc. if you don't pay. here in the US, you can just walk away and go live in your mom's basement -- the only punishment is that "eventually" your FICO score will get whacked. when someone takes your paycheck, you tend to think twice about not paying (they don't have any strategic defaults in the UK for this reason).

one final note -- you're right in that most UK mortgages are not fixed 30, but rather say hybrid 2/20s -- the idea that your mortgage could get really $$$ also tends to make people think twice about buying...

the crisis i think you're referring to is probably the liquidity/bank run issues from 2007, such as with northern rock, etc. -- the first bank to need a bailout/government loan -- yes, they issued some bad loans, but in their case, they also got squeezed because libor rose very quickly, leaving them essentially unable to even pay for a loan via normal routes. in other words, in the northern rock blowing up was similar to say wamu blowing up; but the UK did not subsequently have their investment banks, insurance companies, etc. blow up as well.

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