Pensions Have $4 Trillion In Unfunded Liabilites

It is amazing how many trillions of dollars we are short in so many places:

A recent report from Moody’s states that “US public pensions funds’ adjusted net pension liabilities (ANPLs) surpassed $4 trillion nationwide in 2016”. The report also indicated that this increase in unfunded pension liabilities was a result of “poor investments” and “declining discount rates”. Three different investment return scenarios are offered in the report- base, upside and downside- to project pension liability debt levels in 2020. According to the report, the downside scenario places public pension debt at dangerous new levels with a expected 59% increase in total liabilities.

In order to stave off this possible forecast, pension would have stabilized their funds through sound investment allocation. Unfortunately, even in the upside best case scenario, pension liabilities will not decline. Furthermore, the sample of 56 pension plans used in the study provides a dismal picture for the future. According to the sample, investments in the pension plans achieved 1% returns on average within the last year. Their investment targets were an assumed 7.5%. This portends a dire situation if pension investments continue to perform poorly.

So this bomb is ticking, along with about fifty others, and it sounds bad now. These are $4 trillion under now, with stock prices at record highs, and that number is growing. So in five years it could be ten trillion, with the stocks still topping out. But when the collapse hits, those stock prices will plummet, and that $4 trillion or ten trillion could become anything. $50 trillion, $100 trillion, it just depends on how long they hold off the collapse, and how low stocks go when it all hits.

Some think that trigger is coming now:

Marc Faber, the editor of “The Gloom, Boom & Doom Report’ and a perennial bear, isn’t backing down from his latest dire prediction that would send stocks plummeting by 40 percent or more.

A drop of that size could take the S&P 500 Index down from Friday’s closing price of 2,438 to 1,463.

He used the meteoric rise of FANG stocks, which reflects Facebook, Apple, Netflix and Google (Alphabet), as a glaring bearish signal.

“We’ve had more than eight years of a bull market. The Nasdaq is being driven by very few stocks,” said Faber on Friday’s “Trading Nation.” That rally “is not a particularly healthy sign from a technical point of view, and valuations are very high,” the investor added.

Faber’s comments come exactly two weeks after the Nasdaq set its latest intraday record high of 6,341.70.

“You know we have a lot of volatility, and when things will start to go down, they’ll go down a lot,” he said…

“We could print enough money that the Dow goes to 100,000. All I’m saying is it will end very badly, extremely badly,”

The problem is that everything is being run on credit now, which requires lenders and the lenders are only lending because they think they will get paid later, but that is never going to happen. We know this now, but nobody needs the money right now so they operate as if they already own it, even though it is fantasy. The retirement money will always be paid, so why not spend freely now?

When the environment becomes scary enough to stop investors from loaning money to government, government will slow the spending and the freebies, which will affect businesses. Businesses will suddenly not be making money, and that will motivate people to get out of stocks, then real estate prices will plummet, and then pensions will find themselves unable to pay out disbursements, which will bring us back to declining business prospects.

Then government will go looking for sources of wealth to take from people to even out the pain, and hopefully keep government in control of the peons.

That will be what you call K-selection, and nobody will be peacefully sitting around while their lives fall apart then.

Tell everyone about r/K Theory, because ITZ going to hit fast when it happens