Public pensions
Salon offers an article on expectations for public sector pensions. Given the demise of many private pension plans and the lackluster performance of 401ks for many people, what’s next?
Relevant and even prescient commentary on news, politics and the economy.
Defined benefit pensions require just a few things:
Regular and adequate funding
Sane investment goals and sound management
An absence of politics and corruption
This is the balancing element of the asset debt system … bad debt … that which cannot be repaid.
The valuations of all the system’s assets are denominated in the value of everything including bad debt …
From 2013 to 2035 the global system will under go a reckoning and ratcheting with respect to bad debt and pension obligation liquidation. Some bad debt will undergo 100 % default and other obligation will be refunded at a 10-80% by central bank money creation.
At the end of the adjustment the global central banks’ value and credibility will be spent.
What’s next? Let me pull out my crystal ball and gaze into the future for an answer. I guess I’m not a member of the political class since I’m not coming up with a clear vision of what is in store for public employees, or any employees for that matter.
What Rusty says is obviously true. Why aren’t all public (or private) pension plans stable and properly funded? That’s a bit of rhetoric. The political class can’t see the future, but they do know that they will gladly pay you next fall for a hamburger they can eat today. By Jove, that’s it. We are suffering from a Wimpy view of pension/retirement planning put into place by our political class. Some systems have better controllers than do others. We have Detroit and we have NYC and never the twain shall operate in the same manner. Unfortunately there are probably more Detroits than there are NYCs and the futures of each such place will stumble along as their political captains change. At one time Wisconsin was thought to be a rational state entity. Things change.