May
11
Amazing piece by Bloomberg on the pension crisis which will soon be front page news. This article is filled with excellent research, insight and analysis. Bloomberg.com is a great resource for in-depth journalism. Their Recipe for Famine series last December provided great insight on the economics (facts) behind global food shortages.
Like most problems left to politicians, the pension crisis has been avoided as long as possible. As the market has declined and evaporated trillions of dollars of wealth for everyone, this issue has now been dragged out of the closet, naked and shivering for all the world to see.
Some of my favorite excerpts are:
Fund accountants using “smoothing” to distort reality. It is this type of deliberate, fine-print deceit which all investors and taxpayers must be vigilant against. This type of smoothing occurs even in “earnings” announcements by companies like GE, which is a major reason why companies “beating earnings” should always be taken with a grain of salt.
As always, the taxpayer bears the cost of unrealistic government promises.
Finally, flat out stupidity by those “in charge”
Takeaway: Everyone has an incentive for the market to go higher and let the good times roll. This attitude manifests in numerous levels of opacity. This opacity ranges from the fund manager who smooths earnings, to the politician making outrageous promises, to Joe Taxpayer who complacently watches and does nothing. Only during a market downturn do these instabilities and crises manifest. As a grown man or woman, arming yourself with An Accurate Model of Reality is paramount to developing a healthy sense of skepticism and uncovering the truth before it is too late.
Kudos again to Bloomberg for shedding more light on this future front-page story.
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