The Retirement Bubble

Today, I have two difficult topics to raise. I am not happy to have to discuss them. I know that at least some of you, perhaps the great majority, visit my blog in the hopes of finding something positive and inspirational in a world filled with so much that is negative and far from inspiring. The purpose of this blog is indeed to inspire, but it is also to be honest in its analysis and sometimes that means looking at the downside of life today, along with the potential upside of life tomorrow. Have faith, the upside will continue to be the primary focus, but today the downside will receive attention.

Having properly prepared you (I hope!), I will refer you to one news service report and one newspaper article. I will describe each briefly, provide a link to the original, and let you decide whether this is something to read, or something to be set aside for another day. Both refer specifically to the United States and I apologize to my non-US readers for such an emphasis, but I also remind them that 1) what is said very likely applies to your nation as well, even if from a different perspective, and 2) we are all in this together. Those who forget that leave themselves open to even more pain in times to come.

The first is a Reuters news service report titled, “U.S. state pension funds have $1 trillion shortfall”. Reporting on a study done by the very well-respected Pew Center on the States, one of several “centers” sponsored by the non-profit, non-partisan Pew Foundation that deal with a variety of issues. It has great potential significance to readers who have a state pension in the US, but the same can be said of many private pension plans and even the federal government’s pension plan. In the federal government’s case, it can at least print the money to make the payments, even if that money is devalued by over-printing. But the individual states do not have that “luxury”. The depth and breadth of the pension problem is much greater than many people think. If you like, you can read the report here.

The second is a column at today’s Los Angeles Times titled “America, the fragile empire” and written by Dr. Niall Ferguson, a professor at Harvard University and Harvard Business School, and a fellow of Jesus College, Oxford. Dr. Ferguson is not just another academic. He is well-known among many in the global finance and economics community. He is also well-known for his many warnings over the years that the US was headed toward a major crisis. His solutions have always been intelligently written, although sometimes controversial. I respect him as I do a number of other economists capable of writing intelligently, but in a style that can be appreciated by any educated person.

His op-ed column today is very calm, but very serious, as he discusses one potential outcome of the on-going crisis to America’s future. But it also differs from most others. He does not mention any President’s name, past or present. He blames no one person or group for the current crisis. He mentions no political party or ideology. He mentions no specific law or regulation. In fact, he accepts the past, he does not try to dissect it. He proposes no solution. His conclusion is not a specific prediction. It reads like a general forecast, but that is not the proper word either. It is exactly what he chose to call it. It is a warning. Whether the future turns out as he warns it might, I do not know, but I take his words very seriously. If you like, you can read his column here.

Such it is for today! I do promise to do my very best to follow this with something more upbeat and positive! Thank you for your patience.
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