When I retired I took half my pension in cash to buy my house and the other half in monthly payments. It is a state pension so it might be the last to fold but it looks like that might have been a wise decision.
Depends on which state. Last time I looked at some of the state pension funds, a few such as Illinois were flirting with outright insolvency. Most have only a few years to go before the money well runs dry.
I'd think about selling at slightly less than peak Home stupid and moving to the Costa Rica Central Valley which has a very nice climate and fairly reliable local food supply, of course this is just a short term plan (20-30 years) on account of the current President is a WEF geek so debt, invasion and war is coming to CR too..,because thats what they do.
What is often getting overlooked in the UK pension meltdown is the use by the pension funds of a niche derivative product "liability-driven investing" (LDI).
Yes, derivatives are still the same weapons of mass financial destruction in 2022 as they were in 2007 and 2008.
The US derivative market amounts to about $200 Trillion notional value, which means that as Powell raises interest rates, margin calls and refinancing costs rise accordingly, forcing either defaults or liquidations--precipitating the liquidity crisis the BoE is hoping to prevent with their buying of 30-year gilts. The Powell obsession with the Volcker playbook on fighting inflation very likely means the policy of kicking the debt can down the road has finally run out of road.
The sad irony is that Powell's use of Volcker's tactics aren't even working on inflation. We're getting the liquidity crisis AND the demand destruction AND the inflation all in one go.
If i'm not mistaken, Volcker raised rates above the rate of inflation. And, he wisely raised rates double digits, in one or two fell swoops. This salami head, powell, is, like a typical fraud fed tool, purposely, and purposefully, crashing our economy and financial outlook.
Suppliers rarely "just pass price increases along", owing to most goods being fairly elastic in their demand. Both the corporate and alternate media have a fair number of news articles detailing the cost squeeze facing a number of big and small businesses owing to their inability to "just pass price increases along." Between elasticity of demand and shifting demand due to price fluctuations, even companies like Walmart and Target are facing pressure on their retail margins.
As for interest rates still being negative...no. Real yields are no longer in the negative across the yield curve for Treasuries. Around the end of March and the beginning of April is when real yields moved into positive territory.
When you look at the timing of both inflation indexed (real yield) and nominal rises for the 10 year Treasury, alongside the rise in the Federal Funds rate (the rate the Fed manipulates to set interest rates in this country), pretty much as soon as the Fed started hiking rates, real yields moved into positive territory.
Moreover, with the Atlanta Fed's GDP Nowcast projecting just 0.3% growth for the 3rd quarter, the notion of "cost-push" inflation being at issue here simply does not make sense.
With two quarters of contraction already on record and third quarter at best narrowly avoiding joining them, the overall output to support a thesis of increased costs pushing up prices just isn't there.
Given the multiple supply chain disruptions that have occurred since 2020, this inflation is being driven more by the supply side than the demand side. One reason why the interest rate hikes aren't working--interest rates work on the demand side of the inflation equation, and so do nothing to ease supply pressures.
Nothing like when a pension fund, a promise for a safe future, can't deliver... TODAY
When people finally understand all the paper or lets be honest - digital promises have no future value, there will be a mad rush for tangibles that do.
I think in the 2008 collapse and forced public indemnificatIon of Blackrock when Hank Paulson was running around the Whitehose with his hair on fire rambling "tanks in the streets" was because many (all?) brokerages had been gambling with their customers IRAs and 401ks and lost their customers assets (even though the owners of those assets couldnt gamble with those securities) which is shy the ($7T) bailout had to be made, I presume congress hasn't changed the rules to preclude that after the bailout, am I correct how the system works? This collapse will be far worse than 2008, we have 5X more mortgage debt plus more auto debt plus more student loan debt unless all those autos are gonna go 300k-400k miles and FJBs student loan bailout will work and all those middle income idiots that paid 1-2-3 million dollars for a home pay them off before they get fired.
If the UK pension meltdown is any guide to the US markets, somewhere tucked away in the back of the pension portfolios is some new flavor of derivatives--purchased most likely as a "hedge" against investment risk.
In a rising interest rate environment those derivative contracts become the investment risk--a straight replay of 2008, only with many times more notional dollars involved in derivative contracts ($200T in the US alone, estimates globally are around one quadrillion dollars notional).
I think Europe will be the catalyst for the whole thing to crash. Deindustrialisation of Europe, which is well underway now, will crash the euro, no matter how much money is printed, you can’t print energy.
Today, I picked up laundry detergent and, what do you know, the price went up as the size has shrunk. Many people don't remember, back in the 1990's, when pizza parlors decided to scrap the "real" 18" large/8 slice pizza, for one size using the small 16"/6 slice pizza as the new large, and slicing the six slices into 8. They did this to save money only buying the small pizza boxes, and because they're profit margin was being squeezed. Apparently, they've never gone back. I do notice they still make the large 8 slice pies, to serve when slices are ordered.
Mr. Irons, you sound exactly like the comedian David Cross. I find this to be a Good Thing and believe you should use it. Wouldn't take much to push all this Modern Monetary Theory into the realm of Voltaire.
I may be behind the curve but I hold 1st trust deed notes paying 9-12 percent, I shorted the S and P at 4100, and will soon just cash out everything. I am hoping when it all fails, I can buy assets at a deep discount.
Please Chris, please tell me you don’t support last minute/post birth abortion rights.
That groovy lib you do you and I’ll do me is a monstrous bromide that has led to this point. Last minute and post.
I’m a conservatarian and rabid tenther. Let the states decide. If you don’t like it you’re free to move to California or Vermont or nyc. But your so called abortion rights are a federally enforced mandate to be paid for by me.
Please do not worry.Pensions are collapsing in dollar-denominated countries around the world,ya Japan too.Fundamentally do not rely on public funds and accumulate privates.
Dynamics vs the UK are quite different. LDIs, for example. In the US, you’ll want to watch corporate loans, specifically floating junk bonds. Pensions are not the issue LOL
When I retired I took half my pension in cash to buy my house and the other half in monthly payments. It is a state pension so it might be the last to fold but it looks like that might have been a wise decision.
Depends on which state. Last time I looked at some of the state pension funds, a few such as Illinois were flirting with outright insolvency. Most have only a few years to go before the money well runs dry.
Until they start jacking up property taxes to cover the state revenue losses
My brother did that with his employer’s private pension. Maybe I should have too. Makes me nervous.
Indeed! Congratulations!!
I'd think about selling at slightly less than peak Home stupid and moving to the Costa Rica Central Valley which has a very nice climate and fairly reliable local food supply, of course this is just a short term plan (20-30 years) on account of the current President is a WEF geek so debt, invasion and war is coming to CR too..,because thats what they do.
What is often getting overlooked in the UK pension meltdown is the use by the pension funds of a niche derivative product "liability-driven investing" (LDI).
https://newsletter.allfactsmatter.us/p/the-breaking-begins-boe-intervention
Yes, derivatives are still the same weapons of mass financial destruction in 2022 as they were in 2007 and 2008.
The US derivative market amounts to about $200 Trillion notional value, which means that as Powell raises interest rates, margin calls and refinancing costs rise accordingly, forcing either defaults or liquidations--precipitating the liquidity crisis the BoE is hoping to prevent with their buying of 30-year gilts. The Powell obsession with the Volcker playbook on fighting inflation very likely means the policy of kicking the debt can down the road has finally run out of road.
The sad irony is that Powell's use of Volcker's tactics aren't even working on inflation. We're getting the liquidity crisis AND the demand destruction AND the inflation all in one go.
If i'm not mistaken, Volcker raised rates above the rate of inflation. And, he wisely raised rates double digits, in one or two fell swoops. This salami head, powell, is, like a typical fraud fed tool, purposely, and purposefully, crashing our economy and financial outlook.
That because real rates are still negative and suppliers just pass price increases along, ya know cost-push inflation. I rhymes with Stagnation.
Suppliers rarely "just pass price increases along", owing to most goods being fairly elastic in their demand. Both the corporate and alternate media have a fair number of news articles detailing the cost squeeze facing a number of big and small businesses owing to their inability to "just pass price increases along." Between elasticity of demand and shifting demand due to price fluctuations, even companies like Walmart and Target are facing pressure on their retail margins.
https://newsletter.allfactsmatter.us/p/the-retail-recession-a-demonstration
As for interest rates still being negative...no. Real yields are no longer in the negative across the yield curve for Treasuries. Around the end of March and the beginning of April is when real yields moved into positive territory.
https://data.nasdaq.com/data/USTREASURY/REALYIELD-treasury-real-yield-curve-rates
When you look at the timing of both inflation indexed (real yield) and nominal rises for the 10 year Treasury, alongside the rise in the Federal Funds rate (the rate the Fed manipulates to set interest rates in this country), pretty much as soon as the Fed started hiking rates, real yields moved into positive territory.
https://fred.stlouisfed.org/graph/?g=Uk39
Moreover, with the Atlanta Fed's GDP Nowcast projecting just 0.3% growth for the 3rd quarter, the notion of "cost-push" inflation being at issue here simply does not make sense.
https://newsletter.allfactsmatter.us/p/third-quarter-poised-for-yet-more
With two quarters of contraction already on record and third quarter at best narrowly avoiding joining them, the overall output to support a thesis of increased costs pushing up prices just isn't there.
Given the multiple supply chain disruptions that have occurred since 2020, this inflation is being driven more by the supply side than the demand side. One reason why the interest rate hikes aren't working--interest rates work on the demand side of the inflation equation, and so do nothing to ease supply pressures.
Nothing like when a pension fund, a promise for a safe future, can't deliver... TODAY
When people finally understand all the paper or lets be honest - digital promises have no future value, there will be a mad rush for tangibles that do.
I think in the 2008 collapse and forced public indemnificatIon of Blackrock when Hank Paulson was running around the Whitehose with his hair on fire rambling "tanks in the streets" was because many (all?) brokerages had been gambling with their customers IRAs and 401ks and lost their customers assets (even though the owners of those assets couldnt gamble with those securities) which is shy the ($7T) bailout had to be made, I presume congress hasn't changed the rules to preclude that after the bailout, am I correct how the system works? This collapse will be far worse than 2008, we have 5X more mortgage debt plus more auto debt plus more student loan debt unless all those autos are gonna go 300k-400k miles and FJBs student loan bailout will work and all those middle income idiots that paid 1-2-3 million dollars for a home pay them off before they get fired.
If the UK pension meltdown is any guide to the US markets, somewhere tucked away in the back of the pension portfolios is some new flavor of derivatives--purchased most likely as a "hedge" against investment risk.
In a rising interest rate environment those derivative contracts become the investment risk--a straight replay of 2008, only with many times more notional dollars involved in derivative contracts ($200T in the US alone, estimates globally are around one quadrillion dollars notional).
I hope to God your vaccine card is fake.
I think Europe will be the catalyst for the whole thing to crash. Deindustrialisation of Europe, which is well underway now, will crash the euro, no matter how much money is printed, you can’t print energy.
Today, I picked up laundry detergent and, what do you know, the price went up as the size has shrunk. Many people don't remember, back in the 1990's, when pizza parlors decided to scrap the "real" 18" large/8 slice pizza, for one size using the small 16"/6 slice pizza as the new large, and slicing the six slices into 8. They did this to save money only buying the small pizza boxes, and because they're profit margin was being squeezed. Apparently, they've never gone back. I do notice they still make the large 8 slice pies, to serve when slices are ordered.
Mr. Irons, you sound exactly like the comedian David Cross. I find this to be a Good Thing and believe you should use it. Wouldn't take much to push all this Modern Monetary Theory into the realm of Voltaire.
I may be behind the curve but I hold 1st trust deed notes paying 9-12 percent, I shorted the S and P at 4100, and will soon just cash out everything. I am hoping when it all fails, I can buy assets at a deep discount.
Please Chris, please tell me you don’t support last minute/post birth abortion rights.
That groovy lib you do you and I’ll do me is a monstrous bromide that has led to this point. Last minute and post.
I’m a conservatarian and rabid tenther. Let the states decide. If you don’t like it you’re free to move to California or Vermont or nyc. But your so called abortion rights are a federally enforced mandate to be paid for by me.
Please do not worry.Pensions are collapsing in dollar-denominated countries around the world,ya Japan too.Fundamentally do not rely on public funds and accumulate privates.
CIOs are able to take on leverage? I thought they were in charge of the information infrastructure. Wouldn’t it be the CFOs or CEOs doing that?
Chief Investment Officer in a fund
Haha I was thinking chief information officer
Dynamics vs the UK are quite different. LDIs, for example. In the US, you’ll want to watch corporate loans, specifically floating junk bonds. Pensions are not the issue LOL
🎯