Yves Smith takes on the media’s reporting on state pension woes:

“If you live in the world according to the mainstream media, the row between state executives and unions is all about (by implication) greedy unions trying to preserve their perquisites when budget “realities” demand that they suffer.

She points to New Jersey as an example of a more complicated reality about the state’s utter mismanagment of its pension funds, including just not paying into the fund for more than a decade, and she quotes a Forbes article from last year here about the state’s utter mismanagment of its pension funds:

Seeking to make up lost ground without putting up more money, the state’s leaders looked to the magic of the stock market. In 1997 New Jersey sold $2.75 billion of bonds paying 7.6% interest, putting the proceeds into the pension fund to be invested for higher returns.

At that time Whitman said the ironically named Pension Security Plan would save taxpayers about $45 billion. It hasn’t worked out that way. The fund has earned less than 6% annually since the bonds were issued.

They borrowed money at 8 percent to invest in the stock market? Are you kidding me?

— Kevin Drum explains to Matt Yglesias why the gains the very richest have made over the last three or four decades have come at the expense of regular folks.

First, take a look at middle class income stagnation. What caused that? Matt already pointed to one cause: monetary policy since the late 70s that’s kept inflation low at the cost of keeping labor markets persistently loose. To that, I’d add several other trends that have marked the past three decades: trade policies that accelerated the decline of U.S. manufacturing; domestic deregulation policies that squeezed workers; stagnation in the minimum wage; immigration policies that reduced wages at the low end; and a 30-year war against labor that devastated unions and reduced the bargaining power of the working class.

On the merits, you can argue for or against any of these individual policies. But there’s very little question that collectively they are (a) policies strongly promoted by business interests and the rich, and (b) they suppressed middle class wages…

Now, if these policies hadn’t been in place, middle class wages would likely have grown at about the same rate as the overall economy—just as they did in the postwar era. But they didn’t, and that meant that every year the money that would have gone to middle class wage increases instead went somewhere else. It was a vast and steadily growing pool of money, and the chart on the right gives you an idea of its size by 2005. It comes from Jacob Hacker and Paul Pierson, and it shows how much income would have gone to different groups if their income had grown at the same rate as the broad economy. The bottom 80% lost $743 billion by growing more slowly. The top 1% gained $673 billion by growing more quickly. That’s a pretty close match. And the upper middle class, in the 80th-99th percentile? They didn’t score the huge payoffs of the super rich, but they did fine, posting a net gain of $126 billion. In other words, the well off mostly don’t seem to have suffered at the hands of the super rich. Instead, the money gained by the top 1% seems to have come largely from the bottom 80%.

— Have we learned anything from this crisis?

ProPublica’s Jesse Eisinger points out in a New York Times column that the ratings agencies apparently haven’t. S&P is now lowering ratings on 1,200 so-called re-remics, which are the resecuritized toxic bonds Wall Street created in the wake of the crash.

The agencies rated billions of dollars worth of these bonds, mostly in the last two years. With shocking rapidity, even some of those triple A-rated bonds have defaulted. Of the more than $85 billion of re-remics issued since 2009, an estimated $30 billion may be under review by S.&P., according to Bloomberg News.

The parallels with the earlier ratings fiasco are easy to see:

During the mortgage securities boom, bankers knew more about their bonds than the ratings agencies did and took advantage. A similar problem occurred with re-remics. “Chances are that if a bond is getting re-remicked, it’s a bad bond and the holder wants to forestall the inevitable reckoning,” Mr. Kolchinsky said. The ratings agencies somehow missed that.

There also looks to have been “ratings shopping,” where issuers seek out the most lenient firms, rather than the best. S.&P., according to Mr. Kolchinsky, was slower to downgrade residential mortgages than Moody’s was. Lo and behold, S.&P. nabbed the bigger market share in new offerings of residential securities.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.