Despite Federal Reserve Chair Janet Yellen’s expression of confidence in raising the federal funds rates, the worst of the tragic consequences of the government bank bailouts is yet to come. Part II of “The People Were Ruined” is on the horizon, and “the people” are going to suffer dramatically.
William Gouge (1796-1863) was credited with the famous quote. His premise is still alive and well. Banks create boom and bust cycles through irresponsible lending. When “bust” comes along it is a surprise and a crisis. Everyone suffers except the political class and banks.
Why? The banks make enormous profits on the upside. When they suffer losses, not only do the taxpayers end up bailing out the banking system, the collateral damage can also be dramatic. The banks are saved and the people suffer.
Part II
Every day I see articles like, “Drained pension fund has retired New York union workers pinching pennies to survive, as doom looms for reserves across US”.
It’s a sad story about hard working union truckers (Local 707) relying on pensions; only to have their benefits cut. Thomas Nyhan, executive director of the Central States Pension Fund weighs in:
“This is a quiet crisis, but it’s very real. There are currently 200 other plans on track for insolvency – that’s going to affect anywhere from 1.5 to 2 million people. The prognosis is bleak minus some new legislative help. (Emphasis mine)
And it’s not just private-sector industries that are suffering; municipal and state plans are the next to go down – that’s a pension tsunami that’s coming. In many states, those defined benefit plans are seriously underfunded – and at the end of the day, math trumps the statutes.”
Could this be another example of pension mismanagement? While that may be a factor, are they all mismanaged? I don’t think so! A decade ago no one projected historically low interest rates. The bank bailouts with their low interest rates have negatively affected all pension plans.
The Pension Benefit Guaranty Corporation (PBGC) is a US Government Agency. Here are some highlights from their Mission Statement:
“PBGC is not funded by general tax revenues. PBGC collects insurance premiums from employers that sponsor insured pension plans, earns money from investments and receives funds from pension plans it takes over.
The Pension Benefit Guaranty Corporation (PBGC) protects the retirement incomes of nearly 40 million American workers in nearly 24,000 private-sector defined benefit pension plans.
…PBGC was created by the Employee Retirement Income Security Act of 1974 to encourage the continuation and maintenance of private-sector defined benefit pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance premiums at a minimum.”
The NY Daily News reports Local 707 is one of 71 penniless union pension funds that rely on the PBGC for support. It’s the tip of the iceberg.
CNN money reports on private sector pension plans:
“The percentage of workers in the private sector whose only retirement account is a defined benefit pension plan is now 4%, down from 60% in the early 1980s.
Meanwhile, the few employers that still offer traditional pensions – typically industries with a strong union presence, … have been working overtime to cut deals to either reduce or eliminate their plans.”
How do you keep the plans solvent?
Solvency depends on three issues, contributions, investment earnings and benefits. If a plan cannot meet its obligations, adjustments must be made.
When the major airlines went bankrupt, their pensions were turned over to the PBGC and employees took benefit cuts. Congress approved a plan to allow the PBGC to cut benefits for unions plans, which they administer.
Why doesn’t the PBGC make the necessary adjustments? Politics is the answer, nothing new here. The Washington Post tells us the PBGC applied to the Treasury Department to reduce benefits for 300,000 truckers covered by the Central States Pension Fund. The plan was rejected and continues on the path to insolvency.
ValueWalk reports the PBGC may also soon become insolvent.
“(T)he PBGC published a report showing that its multi-employer plan program faces a 43% likelihood of insolvency within 10 years … Furthermore, that likelihood rises to 93% within 20 years…”
It’s not just the private sector unions that are in trouble. A Brookings Institute study tells us about the public sector:
“As of 2014, state and local governments sponsored nearly 4,000 pension plans that covered almost 20 million retirees, employees, and former employees who have not yet claimed benefits.
… Many states and municipalities are struggling to fund defined benefit pension plans for their employees. … (I)n order to improve their pension status, almost every state implemented some combination of lower benefit accruals and higher employer or employee contributions.”
Debating about mismanagement is a waste of time. Had “normal” interest rates prevailed over the last decade, many of these plans would probably still be solvent.
The Bail Out, Fall Out Continues
Part I – Working people without pensions have already seen their 401(k) and retirement plans go up in smoke. No actuary had to tell them their retirement projections were not being met. Millions of Baby Boomers have been forced to adjust their lifestyle because the government decided to bail out the banks at their expense.
Part II – PBGC and state and local pensions combined totals 60 million retirees. Part I caused individuals without pensions to have to make adjustments for their own retirement.
| How long before the unions demand a government bailout? Why should, “we the people”, bail out the pensions of others when we are struggling with our own retirement challenges? |
The negative affects of the bank bailouts are rapidly escalating. Retirees expecting their promised benefits rightfully claim they upheld their part of the bargain. As pension funds continue to dry up, the scream for bailouts will be deafening!
“Senator Bernie Sanders, supported by several other Democratic Senators, have been pushing legislation to try to remedy this situation … If Congress does not deal with remedial legislation to try to deal with the issues, the crisis will reach a zenith soon.
The ultimate solution may then be a taxpayer bailout. If that occurs, it could be a bailout of astronomical proportions, with the extent of the cost to taxpayers unable to be determined for decades … This may soon be a nightmare that becomes a reality.”
“…(M)embers of the plan say they hope lawmakers will support alternative legislation that could improve the fund in a way that is less painful to retirees.”
Karen Friedman, executive vice president of the Pension Rights Center adds, “We are thrilled that retirees now can sleep knowing that their pensions are not going to be cut, … this is going to put pressure on Congress to come up with that solution.”
“The prognosis is bleak minus some new legislative help.” – Thomas Nyhan, executive director Central States Pension Fund.
Same song, different verse, and higher octave
When the “crisis” is upon us, “the people” will be told we have an “emergency”, much like the banking crisis. We must do something immediately or thousands of innocent people will be hurt.
It was actually Winston Churchill who first said, “Never let a good crisis go to waste!” This is a dream come true for some politicos.
| Opportunistic politicians will seize upon the government created crisis to demand hard working taxpayers bail out government employees and the politically connected unions. Politically connected “people” cannot be ruined like the rest of the masses! |
Spending other people’s money for political gain is probably the world’s second oldest profession. Politicians and prostitutes are both referred to with the same slang terminology.
Part II is going to cost trillions of dollars and bring about social upheaval. The collapsing pension system is likely to bring class warfare like we have never seen before.
What can you do?
1. Hunker down and protect your own retirement nest egg. Those involved with the bank bailouts treated seniors and savers as “collateral damage”. Social Security is another government promise that is likely to be broken. Like it or not, you are on your own, don’t count on anyone, any government or union to keep their retirement promises. No one is looking out for you!
2. Voice your political concerns. No company or union without a totally solvent pension fund should be allowed to make any type of political contributions. Their political payoffs are better spent funding their insolvent pensions.
I disagree with Karen Friedman from the Pension Rights Center who said, “Retirees can now sleep better.” The longer the problem is ignored, the more draconian the solution becomes. “We the people” don’t want to bail you out! Get your current plans back on their feet now. Fix your own problems.
3. Insist on representative government. Those who favor congressional term limits believe that would solve a lot of our nation’s problem. Many senior members of congress have become politically beholden to their donors and forgotten “We the People”, hire them to represent our best interests in congress.
The never-ending cycle of crisis, emergency and government to the rescue game has to stop. The only way it will stop is if the “people” make it so – that is our responsibility.
| The government of the people, by the people, for the people, shall not perish from the Earth. – Abraham Lincoln, Gettysburg Address |
When it comes to your retirement, you pay for yours and I’ll pay for mine – as it should be.
And Finally…
“A government big enough to give you everything you want, is strong enough to take everything you have.” – Thomas Jefferson
For more information, check out my website.
Download our FREE special reports:
An Honest Person’s Guide to Social Security
10 Easy Steps To The Ultimate Worry-Free Retirement Plan
10 Things You Need To Know, That Brokers Won’t Tell You About Dividend Paying Stocks!
Until next time…
Dennis
www.MillerOnTheMoney.com
Every pension plan, bond yield and savings account is a victim of ZIRP. Until Yellen is jailed and the FED disbanded, nothing useful can happen or be changed.
Well Mr. Miller, I think you forgot #4…..from yesterday’s ‘attitude is everything’ seminar – these folks just need to focus on the positive and see that value that lies in the future or some shit you blathered on about to no end.
Inspire one day, scare the next, fuck these assholes.
http://www.webofdebt.com
Michael Lewis’s “The Big Short”, only tells part of the story.
Visit Rockwell P. Ludden’s, brief, while excellent: http://www.capecodtimes.com/article/20150221/OPINION/150229876
In hedge fund operations “market makers” define the market. In other words, they define a cause and basis for “speculation”; “successful” or otherwise, there are always, at least, two positions to take on any financial adventure.
In the current, on-going Scam of mortgage Fraud, REMICs that are empty- devoid of any “mortgages”- define 1200 Trillion Dollars owed to insurance products (“derivatives- cds, cdos and synthetic cdos; also called “Swaps”) that are taken against “Mortgage-Backed-Securities”, that have no “Mortgages” in them.
These “Special Purpose Vehicles”, these “REMIC Trusts”, these “pools of loans”, all share the same description, while each define, the same thing, an empty, “shell company”.
There are no “Mortgage Loans” in these phony, “Mortgage-Backed-Securities”.
To gain deeper insight into how Eric Holder’s, law firm, “Covington-Burling”, created the first “shell company , “the MERS”, read page 116, of Professor Christopher L. Peterson’s,
http://scholarship.law.wm.edu/cgi/viewcontent.cgi?article=3399&context=wmlr
While the balance of his article is a primer that describes the frauds to come.
The “REMICs- Real Estate Mortgage Investment Conduits” are better described as “REMIFs- Real Estate Monopolized Insurance frauds”; “Insurance Swaps- cds, cdos, synthetic cdos”, taken by wholly-fraudulent claimants, against wholly-fraudulent, “Trusts” that are completely devoid of ANY ASSETS!
There are NO “Mortgages” in the “Mortgage-Backed- Securities”.
The criminals are placing “Insurance Swaps” on “Assets” that don’t belong to them and were never, in fact, the “corpus”, or “RES” (ASSESTs) to ANY REMIC, in the first place.
“Nemo Dat”- in other words: “You can’t sell, or transfer ‘ownership’, to something you never owned in the first place”.
Shooting fish in a barrel is not successful “Speculation”, while instead, an “insider trade”.
The “market makers” to these phony, empty, “Trust” mechanisms, employ forgery (robo-signing), fraud (counterfeit title- digitized copies of mortgage “Notes”: LPS, Black Knight, etc.) and “dual-tracking (fraud in the inducement: promising a modification -Obama’s HAMP and HARP Nonsense- while simultaneously moving forward with a foreclosure that is based on any number of frauds)”.
The “foreclosure notice (once hapless homeowners listened to mortgage bankers that told them to skip payments, in order to qualify for Obama’s HAMP and HARP Nonsense)”, acts as a “Market-Made”.
The mortgage bankers created a “market” by telling homeowners to skip 90 days, in order to qualify for the promised “modification”.
For the homeowner, once in the mix, a foreclosure, under these circumstances, becomes a foregone conclusion… did I mention “Insider Trading”?
The SCAM, listed above, is simply, “Securities” and “Insurance Fraud” and it is given a “nod” and a “wink” by the Court System, that indemnifies these criminal behaviors, because the amounts owed (1200 Trillion Dollars), to these criminal behaviors, are considered a “Systemic Risk”…
A “Systemic RisK”? … to the wholly-fraudulent, hyper-inflationary, bubble, … that has now and forever, allowed the criminals to pervert and destroy “The American Dream”?
… In the absence of Constitutional Remedy…
Indeed .
The REMICs are empty: “Securities Fraud”; now, REMIFs of “Insurance Fraud”.
The heart of America’s Economy is broken and sold to unconscionable Greed, while given to a bubble, presently poised to destroy world markets, once the Brexit pops and the hyper-inflationary, “Federal Reserve Dollar”; now cyclonic-whirli-gig, destined to the fate of Icarus, comes crashing to earth…
So much for American Freedom…
Except: there is time to awaken, while, in fact, the criminal imposters, presently manipulating the intentionally-mislabeled, “Federal Reserve”, have destroyed themselves… NOT, THE AMERICAN PEOPLE.
These Securities and Insurance Frauds, define inter-bank, zero-sum-game, criminal adventures, where there must, in fact, be a winner and a loser.
The fact the criminals have listed themselves claimants to 20 X the combined GDP of every country on the planet (1200 Trillion Dollars) is yet, more of the same: another, criminal prank courtesy of the adolescent mind in residence to Wall Street, where daddy’s money castrates the law, so long as sonny-boy may flee the scene, while described as, in thrall to “Affluenza”…
Enough already! :
Article One, Section Eight, explains: “Congress shall have power… To provide for the punishment of counterfeiting securities and the current coin of the United States…”
The criminals have counterfeit over 1200 Trillion Dollars and the “American Coin” is about to fall on its head.
What are We The People waiting for?
These criminal Filth must be routed out and punished. The “Sovereignty” of our nation demands it and the souls of the victims, the world over, demand retribution.
GMAC Note and Mortgage Discharged: https://livinglies.wordpress.com/tag/gmac-mortgage/
Securitization Fail:
https://livinglies.wordpress.com/2011/01/31/adam-levitin-the-big-fail-securitization-never-occurred/
https://cloudedtitlesblog.files.wordpress.com/2016/12/charlies-wallshein_securitization-fail-part-one-001.pdf
~ Michael Keane copyright 3/17/17, all rights reserved
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tl;dr. Trusting people make great victims of scam artists. We’re still near the top of the largest social mood mania in recorded history, so ours is a WORLD of insanely trusting, open people.
Sooooooooo—–of course we have the highest and longest period of financial con-artistry ever.
Second that; Eliminate the Fed. Create money that represents something real. Kill the banks…
“Kill the banks.”
Yep. It will happen…unfortunately, it will occur only after everything people THINK they have is burned to the ground.
The USA’s total wealth began tracking exponentially 35 years ago. It now stands a solid 300% higher than simply straight-lining the post-WW2 growth trend (which was probably a one-off blessing as it was.) All of that “excess” growth is credit inflation…in the form of debt.
Debt is a promise to pay future cash flows. It has a Net Present Value and a Future Value. Both are doomed to burn, and those promises to pay future cash flows (pensions, free medical care, etc.) will be defaulted upon, producing widespread misery.