The Next Market To Melt

“During melting markets, all pension funds come under siege.”

I’m quoting from a February article by John Entine. This Reason magazine cover story is entitled “The Next Catastrophe,” and, like so many things these days, it’s scary. Entine explains how fragile pension funds can become when markets collapse.

Regular listeners know that I’ve been worried about what we might call the Ultimate Catastrophe. Increasing demands on Social Security and other entitlement programs, like Medicare, added to never-ending deficit spending, threaten to bankrupt the nation.

But Entine looks at a different economic crisis. He points out that all pension funds can become unhinged in chaotic markets. Old news. What’s new? Well, many government and union pension funds began taking riskier stances regarding stock investing a few decades ago. And with greater risk comes You Know What.

Worse yet, many funds have been hijacked by well-meaning do-gooders, investing in “socially responsible” causes rather than reasonably run profitable companies. These funds are worth over $2 trillion. That is, they are until their fundamentals prove weak or worse, and they go down, down, down.

As with the mortgage markets, it seems that pension management has undergone a huge paradigm shift, away from security and savvy, towards . . . nonsense.

Things are not looking up, up, up.

This is Common Sense. I’m Paul Jacob.

5 Comments so far ↓

  1. Mar
    6
    3:07
    PM
    Timothy James Maki

    There is a book that says, “money is the ROOT of all evil”. Notice the word ROOT. Money itself is not evil. Money is what is needed to become wealthy. To many people are willing to sacrifice good for evil to gain wealth.

    Greed, all we want is more than we ever had before.

    More more more…. whether it is retirement trust funds or personal. Who out there does not want more? Mortgage companies, banks, unions, management, you, and me too.

    This is the price we pay for greed.

    This is how more becomes less.

  2. Mar
    9
    2:52
    AM
    WorldofCables

    World of cables provide you All kinds of cables ie. Computer Cable, USB Cable, DVI Cables, Audio Video Cables, KVMs Cable, Cat5E Cable, Video Splitter at the competitive price.

  3. Mar
    15
    4:49
    PM
    Robert Allen

    When GM is unable to pay UAW the 20 billion for their pension fund, then in 2010 UAW gives the pension fund requirements to the taxpayer’s Guaranty Trust account!! Is anyone keeping score?
    Episode 2208

  4. Mar
    29
    7:57
    AM
    James Miller

    “When GM is unable to pay UAW the 20 billion for their pension fund, then in 2010 UAW gives the pension fund requirements to the taxpayer’s Guaranty Trust account!! Is anyone keeping score?”

    Why do you think Obama during the recent campaign was telling the auto unions and makers paraphrasing “let us take over your pension and healthcare obligations…” It’s not ONLY to repay the unions, Obama can’t help living and breathing marxism… it’s all he’s ever known or wanted to know.

  5. Nov
    14
    10:44
    PM
    Dreama

    Thanks for sharnig. What a pleasure to read!

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