The Pension Train Has No Seat Belts | Mauldin Economics
In describing various economic train wrecks these last few weeks, I may have given the wrong impression about trains. I love riding the train on the East Coast or in Europe. They’re usually a safe and efficient way to travel. And I can sit and read and work, plus not deal with airport security. But in this series, I’m concerned about economic train wrecks, of which I foresee many coming before The Big One which I call The Great Reset, where all the debt, all over the world, will have to be “rationalized.” That probably won’t happen until the middle or end of the next decade. We have some time to plan, which is good because it’s all but inevitable now, without massive political will. And I don’t see that anywhere.
...we discuss the numerous public pension defaults I think are coming.
... The only questions are how serious the damage will be, and who will pick up the bill....
Demographics and Destiny
It’s been a busy news year, but one under-the-radar story was a wave of public school teacher strikes around the US. ... Pensions have been an issue in all of them.
...How can one worker support two or three retirees while still working and trying to raise a family with mortgage payments, food, healthcare, etc.?
...city and school district retirees will take major haircuts on expected pension benefits...
...A new Harvard study funded by Pew Charitable Trusts uses “stress test” analysis, similar to what the Federal Reserve does for large banks, to see how plans in ten selected states would behave in adverse conditions...
...Scenario 1 assumes fixed 5% investment returns for the next 30 years.
...Scenario 2 assumes an “asset shock” involving a 20% loss in year one, followed by a three-year recovery and then a 5% equity return for years five through year 30. So, no more recessions for the following 25 years.
...New Jersey and Kentucky state pension systems have the highest insolvency risk....fully-funded as recently as the year 2000
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