Eurozone: are unfunded pension fund liabilities the next big thing?
740 sats \ 15 comments \ @TomK 3 May econ
These days, everyone is looking at the debt crisis in the United States. The massive net new debt that the government in Washington is pushing ahead with is causing the financial markets to tremble. At the same time, a fire is smouldering in the eurozone that almost no one is prepared to report on, and then there is the politically avoided issue of the unfunded payment obligations of individual countries' pension funds. As the chart shows, these figures have already reached a level in 2021 that makes it difficult for us as economists to classify them as manageable.
And yet, to date, we have not been able to register any major symptoms of crisis in this inherently ailing Ponzi scheme. So are the friends of the MMT movement right? Can every social problem really be solved with the money printer? The latest figures on the productivity development of the economies in Germany, Japan and the United States indicate that the crowding-out effect that this interest rate manipulation entails will kill the economy in the long term. The crisis will come suddenly, there is no glide path to it.
write
preview
related posts
63 sats \ 0 replies \ @grayruby 3 May
Woah 500% of gdp in some cases.
reply
63 sats \ 2 replies \ @Satosora 3 May
I think the USA solved this problem. The companies just go bankrupt. Problem solved.
reply
0 sats \ 1 reply \ @TomK OP 3 May
Lol
reply
63 sats \ 0 replies \ @Satosora 3 May
Its bad. If I am to look for a job, and it has a good pension...I dont even know if that pension will be there when I retire. A 401K seems more reliable...but you have to fund it yourself.
reply
63 sats \ 1 reply \ @Undisciplined 3 May
By some estimates, America's unfunded liabilities are close to 1000% of GDP.
reply
23 sats \ 0 replies \ @TomK OP 3 May
This really gives me hope...
reply
42 sats \ 0 replies \ @halalmoney 3 May
Don’t worry. A Keynesian and an MMT advocate have this all figured out:
https://njump.me/nevent1qqs8lzdngfuuyevzzmqkdvjm9r7yqr995q2xxfgnnmytug4ze243rcszyqmnrctf6zeczm62f2dvsnrx4fpr6n6w5rmck44pm7gxpxu9hcyg2qcyqqqqqqgpz4mhxue69uhkyetkduhxummnw3erztnrdakszgrhwden5te0ve68qtngv9kxjenp0qh8yam5dqkkzctrdpjkutnyv5q3vamnwvaz7tmjv4kxz7fwdehhxarj9e3xzmnyqyvhwumn8ghj7enjv4jkccte9eek7anzd96zu6r0wd6qzxnhwden5te0dehhxarj9eekzargdashyer9wghxxmmdqyxhwumn8ghj7mn0wvhxcmmv7jrfyt
reply
42 sats \ 5 replies \ @halalmoney 3 May
I think about this a lot. How can something so bad last so long?!
The same problems which the establishment cause create emergencies leading to an economic shock. The expected inflationary impact of monetary expansion is (temporarily) offset by a massive fall in monetary velocity; the sheeple squirm, the establishment comes to the rescue which brings a temporary relief within a broadening and deepening of the inherent problems.
‘I think of it as the tidal flows of the sea. If the establishment can fine tune the credit expansions and credit contractions then the economic sea will appear relatively stable. Doomers predict a devastating tsunami but the establishment will expand and contract credit with relative skill.’
#352034
reply
0 sats \ 4 replies \ @TomK OP 3 May
this strange ponzi scheme only survives with massive state propaganda, which supports insurance companies, building societies etc., then with the help of the media the inflation robbery is covered, this helps extremely to preserve liquidity in these structures and in addition there are always cross-subsidies via the various political budgets.
reply
76 sats \ 2 replies \ @halalmoney 3 May
This perhaps explains why Bitcoiners are so much into healthy living and longevity.
The battle between hard money & freedom and the ponzi & socialism is likely to be a long drawn out affair.
reply
0 sats \ 1 reply \ @TomK OP 3 May
This might be very possible
reply
84 sats \ 0 replies \ @Satosora 3 May
This is similar to our social security system, too.
reply
42 sats \ 0 replies \ @halalmoney 3 May
Things are so back to front that even Cramer is frustrated:
“CNBC’s Jim Cramer said Thursday that investors need weaker figures from Friday’s labor report if they want stocks to rally, adding that inflation data is what is truly driving market action.
“We often get ‘bad news is good news’ moments at this point in the business cycle, but it’s rarely as excessive as it’s been lately,” he said. “I wish the market didn’t work this way, but that’s the reality, and it’s why you need to bet against the U.S. economy tomorrow if you’re hoping for higher stock prices.”
Cramer bemoaned Wall Street’s fixation with the Federal Reserve’s next decision about interest rates. Investors are hoping for a rate cut, but the Fed has indicated that inflation is too high and the economy remains too strong to issue one just yet.
Cramer said he hates having to root against the economy, but investors are so focused on what “big picture data” might signal to the Fed that information such as the April jobs report controls market action — even during an influential earnings week.
This dynamic frustrates Cramer because it makes him feel like “companies have no control over their own destiny.” He also said the focus on the federal funds rate makes the stock market a “plaything” for those who want to bet on the Fed’s next move.
“We all know that every single point gained today can be wiped out by the wrong employment number tomorrow, and right now, wrong means stronger than expected,” Cramer said. “It’s absurd — it’s the opposite of a stock picker’s market.””
https://www.cnbc.com/2024/05/02/cramer-says-inflation-data-is-driving-market-action-and-not-earnings.html
reply
42 sats \ 0 replies \ @p_peloton 5 May freebie
I think the main difference between countries is how much the system is built purely on a pay-as-you-go-system and how much is built on a funded system (Nordic countries are succeeding in this transformation quite well, although there are still challenges ahead), many Central European and Southern European countries rely on pay-as-you-go systems mainly and the system is not sustainable (see e.g. Mercers report https://www.mercer.com/insights/investments/market-outlook-and-trends/mercer-cfa-global-pension-index/ ). In the countries where reforms are not done, the system will not necessarily implode but pensions will be more and more financed additionally through tax money (which might still be economically doable, but it can be doubted whether this is politically and socially acceptable in the long-term)
reply
42 sats \ 0 replies \ @p_peloton 5 May freebie
The pension systems in the eurozone are very different and I am not sure if the chart gives the right picture of the current state (it might also be impossible to do without simplifications). Just to give one example where I think the graph is not right is Finland, where there are about 250 billion euros invested in assets by pension insurance companies as part of the public pension insurance (you don't see them in the graph).
reply