Meredith Whitney Is Essentially Correct, But For The Wrong Reason

Meredith Whitney has forecast that potentially there could be 50 to 100 municipal defaults. While I believe she could be right in the sense of bond defaults, I define default as something very different. Due to a vast nationwide culture of corruption of the American political system by the service workers and the teachers unions, there is a massive default by politicians on the social contract they have, and are obligated to abide by, with the citizens they are obligated to serve. The two unions contributed over $400 million cash and tens of millions more in manpower to the Obama election. He rewarded them by appointing union hacks to the NLRB in order to accomplish by executive fiat what the elected representatives in Congress refused to authorize in the way of pro union rules. At the state and local level, these unions have contributed in similar fashion to local politicians for several decades, and the result is now the basic employment contract with government workers has been nullified. That is a default with the citizens who bargained for this old agreement. The tradeoff was always, as a government worker you had limited hours, a lifelong job security, and a pension, in exchange for somewhat lower pay than the private sector, and more limited pension and healthcare. The blatant corruption practiced by the unions has now changed that basic contract, and the 95% of citizens who are not government employees are being made to do without in order to pay for the outsize pensions, healthcare and salaries of union workers. This is a default by the politicians on their social contract with the taxpayers. Government workers, and especially teachers, are now materially over paid compared to the private sector comparable jobs. In addition teachers, who only work 9 months a year, have gotten guaranteed job security called tenure, which is nothing more than a guarantee that you do not have to do your job, you just have to stay in place and you are untouchable. In New York City if you are really a bad teacher you are not fired, you just go to a lounge each day and pass the time while being paid in full.  It is the children of America who are paying the price of this defaulted contract of teachers to provide a good education to the future generations. Teachers claim it is all about the kids, but reality is, that it is all about the unions and going to the lowest common denominator of quality education. America simply can no longer afford to have this decline in educated citizens. It is doing grievous harm to our economy and security. This is the sort of default I am referring to.

Quite simply the service workers and the teachers unions have been bribing the politicians with campaign contributions, election workers and other support for reelection in exchange for these payoffs to the unions. You may not call it bribes in the sense of these are not white envelopes of cash to the politicians in many cases, but it is cash, and it is directly to the benefit of the elected official to allow him to have his job, in direct exchange for a specific vote in repayment to expand pensions and other union benefits. If it walks like a duck and quacks like a duck, it is a duck. It is a blatant bribe from the president on down to the local mayor.