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Thread: AS I stated Major pension crisis starting in 2017

  1. #11

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    Quote Originally Posted by vanslem6 View Post
    Shocking…(yawn)

    Wake me up when 401k and IRA accounts are under fire, please.
    They will be don't you worry, the bagpack of the PTB-power-devil is never full...

    Golditiki2+++

  2. #12
    Join Date
    Sep 2012
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    Quote Originally Posted by WhatsUpDoc1958 View Post
    First they came for the pensions. Then they came for the IRAs...
    Obozo's "MyIRA" was the first indication of just that .........
    All that big fat, low lying juicy fruits of your my and everybody's retirement accounts is just too, too, too mouth watering to a insolvent, broker than broke Government.
    They will one day be Nationalizing Retirement Accounts (along with next to everything else).
    Just what your Golden years need ....... Forced to hold Bonds of a broke entity.

  3. #13

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    And this from Karl Denninger:


    A couple of years ago when the debate was over whether The Fed would stop QE. I argued at the time that math required them to do so, in that bond ladders would force the decision.

    I was right, but the decision may still have been taken too late, which is incidentally the Fed's history in virtually everything it has ever done.

    Let me remind you of the problem: Any sort of firm that has an "annuity" style business, such as an insurance company, is required by both basic common sense and business balance to build a laddered portfolio that can satisfy its obligations.

    So, for example, let's say you have an annuity business and your math wonks (actuaries) tell you that the average duration of your obligation to these people is going to be 20 years. You will, as a result, go out and build a bond portfolio with a duration that stretches over that time or perhaps a bit longer, and 1/20th of those bonds will mature each and every year and have to be replaced.

    This matches your income (from premiums) with your outflow (from payments.)

    Every insurance-like business, whether it be an actual insurer or a firm that has parts of its business book that act like one, has this sort of structure in its financial picture. It must because otherwise there is no reasonable assurance that such a long-dated obligation will be able to be paid.

    Remember that a dividend is elective; any company can choose to suspend or revoke its dividend at any time. A pension, annuity or other similar payment is not elective; it is an obligation and if they do not pay as-agreed they're in default and the immediate next step is bankruptcy and dissolution of the firm.

    Now here's the problem: The Fed drops short term rates from 4% to 0%. The entire curve collapses, and bonds that used to yield 6-7% for a 20 year duration, or 5% at the "risk free" rate (e.g. TYX) drop to half that or less.

    This would instantly destroy said firm's cash flow except that they have that ladder in place. So instead what happens is that the first year 1/20th of the cash flow drops by half -- in other words, their incoming cash flow drops by an almost-imperceptible 2.5%.

    But for each year that ZIRP continues so does the accumulation of the damage. By the time we get five or six years into this stupidity cash flow has dropped by 15% against a fixed obligation at the higher, original and contractual amount.

    What's worse is that if you stopped ZIRP tomorrow the damage would continue until that entire segment of the portfolio rolled off; that is, it would not start to dissipate for another fifteen years.

    All companies have some reserve amount of cash laying around, or available from various sources (e.g. borrowing, the market, etc) for some period of time. But once the market figures out what I just outlined above, and that income will be less than expenses for the next decade, people start to run the numbers on those reserves and every one of those companies looks bankrupt at some deterministic point in the future and there is nothing that anyone can do about it.

    It's starting folks, and there is no policy response that can be made which will "fix" it.

    So in addition to pension plans blowing up, all that insurance and annuity money was based off a positive yield! Just shows how deep the problems created by low interest rates to prop up the banks!! Ah what a contagion world that is created by the money changers!!!

  4. #14

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    Quote Originally Posted by infohound View Post
    And this from Karl Denninger:


    A couple of years ago when the debate was over whether The Fed would stop QE. I argued at the time that math required them to do so, in that bond ladders would force the decision.

    I was right, but the decision may still have been taken too late, which is incidentally the Fed's history in virtually everything it has ever done.

    Let me remind you of the problem: Any sort of firm that has an "annuity" style business, such as an insurance company, is required by both basic common sense and business balance to build a laddered portfolio that can satisfy its obligations.

    So, for example, let's say you have an annuity business and your math wonks (actuaries) tell you that the average duration of your obligation to these people is going to be 20 years. You will, as a result, go out and build a bond portfolio with a duration that stretches over that time or perhaps a bit longer, and 1/20th of those bonds will mature each and every year and have to be replaced.

    This matches your income (from premiums) with your outflow (from payments.)

    Every insurance-like business, whether it be an actual insurer or a firm that has parts of its business book that act like one, has this sort of structure in its financial picture. It must because otherwise there is no reasonable assurance that such a long-dated obligation will be able to be paid.

    Remember that a dividend is elective; any company can choose to suspend or revoke its dividend at any time. A pension, annuity or other similar payment is not elective; it is an obligation and if they do not pay as-agreed they're in default and the immediate next step is bankruptcy and dissolution of the firm.

    Now here's the problem: The Fed drops short term rates from 4% to 0%. The entire curve collapses, and bonds that used to yield 6-7% for a 20 year duration, or 5% at the "risk free" rate (e.g. TYX) drop to half that or less.

    This would instantly destroy said firm's cash flow except that they have that ladder in place. So instead what happens is that the first year 1/20th of the cash flow drops by half -- in other words, their incoming cash flow drops by an almost-imperceptible 2.5%.

    But for each year that ZIRP continues so does the accumulation of the damage. By the time we get five or six years into this stupidity cash flow has dropped by 15% against a fixed obligation at the higher, original and contractual amount.

    What's worse is that if you stopped ZIRP tomorrow the damage would continue until that entire segment of the portfolio rolled off; that is, it would not start to dissipate for another fifteen years.

    All companies have some reserve amount of cash laying around, or available from various sources (e.g. borrowing, the market, etc) for some period of time. But once the market figures out what I just outlined above, and that income will be less than expenses for the next decade, people start to run the numbers on those reserves and every one of those companies looks bankrupt at some deterministic point in the future and there is nothing that anyone can do about it.

    It's starting folks, and there is no policy response that can be made which will "fix" it.

    So in addition to pension plans blowing up, all that insurance and annuity money was based off a positive yield! Just shows how deep the problems created by low interest rates to prop up the banks!! Ah what a contagion world that is created by the money changers!!!
    the only way to mend the situation is to restore the production/ consumption ratio and that means they should revise their treaties which enabled globalization and also stop blowing money for free without input from the receiver of the benefits.
    It means there must be a political consensus because to revise the one hurts republicans and the other democrats, so you need a duo Hillary - Trump presidency to get to that ratio.

    Golditiki2+++

  5. #15

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    Our friends in Congress approved the cutting of pensions with legislation in 2014. Thank the FED and the ZIRP for the loss of earnings to keep them afloat.
    What's the Frequency, Kenneth?

    432Hz

  6. #16
    Join Date
    Sep 2012
    Posts
    7,257

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    Quote Originally Posted by redraspberry View Post
    Our friends in Congress approved the cutting of pensions with legislation in 2014. Thank the FED and the ZIRP for the loss of earnings to keep them afloat.
    Bringing America and Americans to their knees.
    Just as intended.
    Via Monetary means, just one of many tools in the Globalists WE WILL BREAK YOU torcher box.

    Obozo's certainly done his part / carried out his Marching Orders.
    See what the next Puppet's got in store for us.
    Last edited by joeinnj; 02-20-2016 at 01:53 PM.

  7. #17

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    Thousands of retirees brace for pension cuts


    Their proposed rescue plan is being considered by the U.S. Dept. of Treasury and if approved, will go into effect July 1st.


    http://www.abc17news.com/news/Thousa...-cuts/38089460

  8. #18

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    High civil unrest and war cycles hitting the same time pensions start to blow up……2017-2020 Pain is coming. Plan accordingly…….







    West Chester widow to testify on pension cuts

    Lewis will testify at a hearing of the Senate Finance Committee on Tuesday on the potential pension cuts 48,000 Ohioans, including herself, will face in the wake of looming cuts made possible by a recently passed federal law.

    "I'm going to lose about $4,000 a month
    ," she told the Enquirer. "This is going to be devastating to me, more than I'm already devastated after losing the love of my life.


    http://www.cincinnati.com/story/mone...cuts/80850508/
    Last edited by Silver and Gold; 02-27-2016 at 09:31 PM.

  9. #19

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    I know someone who currently works for UPS and planed on retiring in a couple of years but now he is being told his pension will not be what he thought it was going to be. They are making cuts.




    Why 8,737 UPS retirees are bracing for pension cuts


    UPS earned more than $3 billion last year. But 8,737 of its former workers could see their pension checks cut next summer.
    The problem is that some UPS retirees receive their pensions from the cash-strapped Central States Pension Fund, which covers hundreds of thousands of workers from different companies. That fund says it needs to make cuts in order to keep from running out of money.
    Jim Dopp, 63, is one of the former UPS truck drivers. He retired in May of 2007 after more than 30 years on the job with a monthly pension check of $2,903. But last month, he received a letter saying his check could be slashed in half -- to $1,452 -- as soon as July, if the Treasury Department approves the plan.
    The real kicker is that UPS would've covered the cuts made to his pension if Dopp had retired just eight months later


    http://money.cnn.com/2015/10/27/reti...entral-states/

  10. #20

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    Hungary Forces Private Pension Fund Members Back to State Scheme (year 2010)
    http://blogs.wsj.com/emergingeurope/...-state-scheme/

    Hungarian government to seize remaining private pension fund assets (Year 2014)
    http://www.ipe.com/countries/cee/hun...47.fullarticle


    Unlike Russia, the U.S. Government Won't Take Your Pension Outright? (2014)
    http://www.bloomberg.com/bw/articles...he-u-dot-s-dot

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