The Next Crisis Is HereThe city of Vallejo is in bankruptcy dueto excessive pensions and other benefits given to its municipalunions. This practice of granting huge pay increases and benefitsto unionized municipal and other government workers is the crisisthat has not yet hit the media but which is severely harming theeconomic recovery. Many government workers now earn considerablymore than private sector counterparts performing the same work.Vallejo is simply the canary in the coal mine. A fireman earns$171,000. He also has a pension based on his last year of wages anda healthcare program for life. Yet if you listen to the unions andpoliticians we are supposed to help the poor municipal workers liketeachers and firemen. Where I have my beach house school teachersearn $95,000 for 9 months of 8-4:00 hours. They also have pensionsand healthcare.The result of all this is that local and state taxeshave to rise, services have to be reduced, and the local economy isbadly harmed because there is no money for infrastructure, betterservices or economic development. Towns like Vallejo cut back,raise taxes and deteriorate further in a death spiral. Police jobsare reduced and crime rises, further discouraging business andeconomic growth.New York City and Times Sq proved that by addingcops, reducing crime and revitalizing the area, business flocks in,tax revenue is generated and people return to retailers andentertainment. This demonstrates how these excessive pensions andother union benefits and wages negatively affect real estate valuesand development in places like Vallejo and many towns acrossAmerica.Whatever good may be done by the Fed and other stepsto generally try to improve the economy is being severelyrestrained at the local level by the unions greed and power. Theypayoff the politicians with campaign contributions, free campaignworkers and publicity, and in other ways. Yet when developers orcorporations undertake similar efforts to influence politicaloutcomes or real estate development, it is considered by the mediato be undue influence and corruption. The unions are protected byCongress and Obama who took over $400 million of union payoffs forhis campaign. Now we see how they were protected in the healthcarebill along with the tort lawyers.More towns and cities will befiling bankruptcy over the next two years, more taxes will beraised, and your real estate projects will suffer more harm alongwith the economy. The big pension funds like Calpers are not goingto be able to cover the liabilities to workers. The result is goingto be higher taxes to help pay to cover these obligations. Lesscapital will be made available to invest in real estate. There is amassive transfer of wealth form the earners to the unions and Obamaand Pelosi are doing all they can to encourage and protect theunions. If we do not push for major reform of the municipalemployee pensions and other benefits, it will do severe harm to thereal estate recovery.