Thursday, May 5, 2016

#PensionCrisis To Fuel Tommorrow's Finger-Pointing

The United States' $3.4 trillion pension problem will likely be 'resolved' by crisis rather than management. Federal and state budgets, deteriorating as the global economy contracts, need low to negative interest rates to survive. The Federal Budget (FB), for example, services existing debt through new issuance. If the cost of new issuance rises under a backdrop of rising rates, the FB's servicing cost will rise exponentially. This why the Fed and it counterparts face intense pressure to maintain zero or negative interest rate policies (ZIRP or NIRP) by global governance, Ultra Low Interest Rates To Trigger Next Crisis #PensionCrisis, April 12th.

Central banks, highly influenced by special interests such as Goldman Sachs, have introduced substantial medium term costs of "persistent ultra-low interest rates that "sap banks' interest margins...cause pervasive mispricing in financial markets...threaten the solvency of insurance companies and pension funds...and as a result test technical, economic, legal and even political boundaries."

The pension crisis, already in motion despite a general headline blackout about it, won't be reversed by the incoming President. Trump and Sander's unexpected popularity on the campaign trail implies that the public recognizes something is wrong. Translating this recognition into decisive action, however, won't be so easy. The next President, a certain recipient of finger point and hindsight analysis as the crisis finally reaches the headlines in 2017, means political turmoil and likely a single term for all. If Clinton wins, her financial ties to bankers supporting negative interest rate policies (NIRP) will make her an ease target in a target rich environment. Any attempt to re-brand herself as a crusader against the greed of Wall Street will be ignored once finger-pointing starts. Trump has to know this.

Headline: Bank of Japan made ‘fateful’ error last week, says Goldman Sachs

The Bank of Japan (BoJ) made a "fateful miscalculation" when it opted to hold interest rates at its meeting last week, Goldman Sachs has said.

The BoJ maintained its -0.1 percent deposit rate and its 80 trillion yen ($0.8 trillion) base money target on Thursday, surprising market watchers who had forecast further stimulus measures.



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