Zero Hedge: Over the past year we have provided extensive coverage of what will likely be the biggest, most politically charged, and most significant financial crisis facing the aging U.S. population: a multi-trillion pension storm, which was recently dubbed “one of the most heated battles of a lifetime” by John Mauldin.
The reason, in a nutshell, why the US public pension problem has stumped so many professionals is simple: for lack of a better word, it is an unsustainable Ponzi scheme, in which satisfying accrued pension and retirement obligations requires not only a constant inflow of new money, but also fixed income returns, typically in the 6%+ range, which are virtually unfeasible in a world where global debt/GDP is in the 300%+ range.
Which is why we, and many others, have long speculated that it is only a matter of time before the matter receives political attention, and ultimately, a taxpayer bailout. more …
Opinion: We have over a dozen posts warning about the next government crisis. It wasn’t enough that progressive presidents from Carter to Clinton to Bush nearly bankrupted the entire planet by pressuring banks and mortgage companies to approve loans for people that had no way to pay them off.
Now we are faced with pension obligations to municipal employees (police, fire etc.) that were pegged to unrealistic returns by the same progressive bureaucrats.
Yesterday’s Democrat win in the Virginia Governors race saw Republican municipal employees voting for the Democrat over this very issue. The Dem’s want a bailout and the Repub’s do not.
Will too big to fail be resurrected? Will the US tax payer be called on to pay outrageous retirement packages? Will US government debt climb even higher?
Keep that dial set to this station for the next government debacle.