Nobody Will Escape the Coming Pension Storm—It Will Be Every Man for Himself

Friday, September 29, 2017
By Paul Martin

By: John_Mauldin
MarketOracle.co.uk
Sep 27, 2017

The coming pension and unfunded government liabilities storm is so big that many of us simply can’t get out of the way, at least not without great difficulty. This holds true not just for the US but for almost all of the developed world.

I did a lot of thinking after we published last week’s Thoughts from the Frontline about the coming pension tsunami (subscribe here for free)—especially as I was reading your comments—and I wished I had made my warning even more alarming.

So here I am, banging the same drum.

Getting back to the topic, we’re all trapped on small, vulnerable islands. Multiple storms are coming, and evacuation is not an option. All we can do is prepare and then ride them out.

And we all have some very important choices to make.

It Will Be Every Man for Himself
Although I’m known far and wide as “the Muddle Through Guy,” the state and local pension crisis is one that we can’t just muddle through. It’s a solid wall that we’re going to run smack into.

Police officers, firefighters, teachers and other public workers who expect to receive the promised retirement benefits will be bitterly turned down. And the taxpayers will complain vigorously if their taxes are raised beyond all reason.

Pleasing both those groups is not going to be possible in this universe.

So what will happen?

It’s impossible to say, just as we don’t know in advance where a hurricane will make landfall: We just know enough to say the storm will be bad for whoever is caught in its path. But here’s the twist: This financial storm won’t just strike those who live on the economic margins; all of us supposedly well-protected “inland” folk are vulnerable, too.

The damage won’t be random, but neither will it be orderly or logical or just. It will be a mess.

Some who made terrible decisions will come out fine. Others who did everything right will sustain severe hits. The people we ought to blame will be long out of office. Lacking scapegoats, people will invent some.

Worse, it will be a local mess.

Imagine local elections that pit police officers and teachers against once-wealthy homeowners whose property values are plummeting. All will want maximum protection for themselves, at minimum risk and cost.

They can’t all win. Compromises will be the only solution—but reaching those unhappy compromises will be unbelievably ugly. In the next few paragraphs I will illustrate the enormity of the situation with a few more details, some of which were supplied this week by readers.

The Problem Is Reaching a Critical Point

The Rest…HERE

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