As I was trawling through Zero-Hedge, I can across an article posted there.
Pension Black Holes Set to Explode? ~ by Leo Kolivakis
As it happens I haven’t actually read the article at all, so can’t actually say anything on that, but I did read the Comments section.
I have posted a number of them here, I thought they made for some interesting reading.
by three chord sloth. on Sun, 03/07/2010
Here is the direct link to his post.
by Mr Lennon Hendrix on Sat, 03/06/2010 – 23:03
[….. Pensions are such a huge issue (every adult who has one mentions their pensions to me when I discuss Econ with them). The system is relying on them. Silly system.
by Kreditanstalt on Sun, 03/07/2010 – 00:10
[…. Living standards have been built on a cream puff foundation for decades. They’ve depended on growth rates of 5, 8 or 9%+, rates we’ll not see again. And those rates have never reflected actual growth in productive capacity and in societal WEALTH. One only need look at REAL, not nominal, wage growth and the price of gold. It’s almost as if all growth in the entire western world economy from about 1984-85 onwards was a bubble, a bubble of statistics, borrowed money and ever-rolled-over debt. But no real, owned outright and fully paid for GROWTH.
If these pension behemoths sink, it will only be just. Living standards have to be reduced to a point where real, debt-free gains in wealth begin to occur and where western-made products become internationally competitive again.
These looming insolvencies (or, more likely, desperate tax grabs) are one step on that path.
by three chord sloth on Sun, 03/07/2010 – 01:06
I completely agree, although I would place the bubble’s beginning back in 1973 or so.
by Kreditanstalt on Sun, 03/07/2010 – 01:10
Maybe even earlier…maybe 1971, as many commentators seem to say. You know, gold window closing & end of Bretton Woods. I just remember that most things were going well, my dad could leave my mom at home with the kids, the coinage was silver & our rent was $120/mo., quite affordable back in 1966-69…
by nicholsong on Sun, 03/07/2010 – 01:16
I was going to agree and say 1971 myself, acknowledging that time as the default-by-another-name that it was. Many a salient trend line gets noisy after 1971.
by Anonymous on Sun, 03/07/2010 – 09:02
Trend got worse after 1982 – thats when 401k / IRA system started and middle class started pouring money into equities (artificially) boosting returns for pension funds.
by Rusty Shorts on Sun, 03/07/2010 – 10:52
1982, the paradigm shift. http://www.youtube.com/watch?v=HiW2-hygtzU
by litoralkey on Sun, 03/07/2010 – 15:25
Thomas Sowell had a good series of mainstream media articles related to …. wage stagnation …. The gist of it was African-Americans had not increased their purchasing power index income since 1972-73 for most trades, and no trades had better income purchasing power since the Reagan first term recovery.
by SWRichmond on Sun, 03/07/2010 – 19:25
Ya know, I keep coming back to that, too. It seemed like such a good idea, reinvesting capital in the future and so on. But what it did was nationalize everyone’s investments, or more correclty, it “Wall Street-ized” them. By sending everyone’s investment money to Wall Street, Wall Street was placed firmly in charge. Raise money for local investments? How? Wall Street was placed at the epicenter of all significant investment activity, and the skimmers who get paid anytime anything gets rated, issued, sold or bought got filthy freaking rich from the churn. Greatest scam of the century.
by Close 2 the Edge on Sun, 03/07/2010 – 21:44
I’d go with earlier. ’71 was when we got caught bluffing and the gold window closed as a result. We’d been lying for a few years prior to that about our real financial situation….. Then again, I’ve read quite a few things that show we really paid off the WWII debt through inflation, not actual earnings… Seems the Government doesn’t know how to do anything but fudge when it comes to book keeping.
by nicholsong on Sun, 03/07/2010 – 01:14
I concur. Misallocations must be eliminated…. All the statistical hoodwinkery and ever-rolled debts and stimulus and bailouts and POLICY_MEASURES serve to accomplish is to prevent the price discovery so necessary for an actual recovery of both honest living standards and marketable constructive enterprise.
by Alexandra Hamilton on Sun, 03/07/2010 – 02:24
Growth is overrated anyway. Everything that has a growth rate above 0% is not sustainable midterm given the limited resources we have. Growth will take mankind over the cliff under any circumstances, it’s just a question of how fast. The more growth the faster.
by Winisk on Sun, 03/07/2010 – 09:08
Agreed. Conservation should be on everyone’s minds. Touch the earth lightly. If we can shed this ridiculous short term growth strategy, maintain the peace until the atypical demographic bulge passes on, the environmental stresses should abate as the economy and population naturally downsizes, thus improving everyone’s lifestyle. The economy may not grow but so what. I’m trying to be positive here.
by exportbank on Sun, 03/07/2010 – 06:14
[…. For the past 15-years we’ve committed a couple of huge errors. We allowed secure public sector workers to value themselves more highly that those “at risk” in private sector employment. Probably our greatest sin is stupidity of thinking that jobs that simply push paper from one person to another create long term wealth. I type some words – you type some words – the next guy types some words.. That’s entertainment as opposed to the farmer that plants and harvests a crop or the person that digs up the iron ore and turns it into a scalpel that saves your life. In a recent Leo post he mentioned an increase in employment in law, finance and accounting – these are simple paper pushing jobs that steal from instead of adding to the wealth of the nation.
by Kayman on Sun, 03/07/2010 – 11:57
[….. Without real growth in GNP, all we have seen is ASSET INFLATION financed by DEBT INFLATION. The ILLUSION of wealth.….. The foundation of all nations are crumbling to a greater or lesser extent and our politicians and financial maestros are fiddling the same tired old tune.
by Anonymous on Sun, 03/07/2010 – 13:35
[….. “Pensions” have simply been another lie when things are good.
by sgt_doom on Sun, 03/07/2010 – 13:59
Geez, can anyone spell obvious. Take the pension fund situation in the USA, the state pension funds are heavily managed and controlled by the private equity firms (to the tune, as of 2007 or thereabouts, to $111 billion [according to the PE firms’ own stats]). Pension funds invest in leveraged buyouts and hedge funds, which in turn are heavily leveraged and structured upon CDOs, CLOs, CFOs, with an infinite amount of CDSs thrown in. Big Bang, anyone?
by bingaling on Sun, 03/07/2010 – 14:17
Funny but I read somewhere , way back when, where I thought, not sure about this… that under some crappy accounting law that a lot of publicly traded firms somehow took the pension money and put it on their books as a credit and not a liability , which showed up as growth somehow , it was before the “crisis” that pretend and extend was already going on . The article if I remember right , was worried about all of the boomers retiring and taking that pension money away from the bottom line causing a slow market crash.
And another quote touching on the same issues…
It was always inevitable, on a finite planet, that there would be a limit to economic growth. Industrialization has enabled us to rush headlong toward that limit over the past two centuries. Production has become ever more efficient, markets have become ever more global, and finally we have reached the point where the paradigm of perpetual growth can no longer be maintained.
Indeed, that point was actually reached by about 1970. Since then capital has not so much sought growth through increased production, but rather by extracting greater returns from relatively flat production levels. Hence globalization, which moved production to low-waged areas, providing greater profit margins. Hence privatization, which transfers revenue streams to investors that formerly went to national treasuries. Hence derivative and currency markets, which create the electronic illusion of economic growth, without actually producing anything in the real world.
this comes from:
Crashing Towards a New World Social Order 2012
The end of growth – capitalists vs. capitalism ~ by Richard K. Moore
I am not really into conspiracy theories and the like, but this article makes for some pretty dark and grim reading, and is a kind of alarming cautionary tale.
Not really a path we want to end up seeing ourselves going down…
Read Full Post »