Wednesday, January 13, 2016
State and local pension funds will blow up
Just to be clear, pension funds -- the last remaining link to middle class money for millions of Americans -- aren't to blame for any of this. The culprits are the mayors and governors who bought off their public sector unions with promises that would never be kept, and a federal government that's papering over its own malfeasance by lowering interest rates to levels that make it impossible for anyone to generate a reasonable low-risk return.
But however they got here, it's now all but certain that pension funds will soon start blowing up, either defaulting on promised benefit or bond payments, leveraging themselves for one last roll of the dice, or demanding new taxes that cause local political chaos.
That which cannot be paid will not be paid. The math does not work and has not worked for a while. People will have to take control of their own finances and futures instead of relying on some politicians broker promises. I have various advice on how to take control of your financial life here.