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Ben Bernanke's Latest Casualty: The Pension Plan

Tyler Durden's picture




 

With every passing day, the destructive consequences of Ben Bernanke's ruinous monetary policy on the broader economy become more and more apparent.

Nowhere is this more evident than the observation of a record high stock market - benefiting just a tiny portion of the population - correlating directly with the record number of Americans on food stamps - the wealth effect "trickle down", or lack thereof, for everyone else (not to mention an economic growth rate four years after the "end of the recession" that is the worst recovery in recorded history).

Less hyperbolically, this can be seen empirically in the anti-correlation between the US economy and corporate profits. Through his "central" scheming, Bernanke has turned the discounting paradigm on its face, leading to a world in which the market no longer "discounts" or anticipates any information or fundamentals, but merely cares about how big the next latest and greatest liquidity hit will be, and in which there is an inverse correlation between profitability and general economic well-being.

And so on, and so on: which is to be expected from a world gone upside down as a result of the biggest doomed economic experiment ever conducted on a global scale to preserve a system which can only survive following debt liquidation, and yet one which we are told day in and day out needs just a little bit more debt... to fix a problem resulting from record debt.

For the the latest "unintended casualty" of Bernanke and his ZIRP policy, we look at corporate pension funds, which as WaPo reports, are finally starting to crack under the weight of pervasive central planning, brought to the brink by none other than the Chairman's "good intentions."

On the surface this makes no sense: after all pension funds invest in assets - the same assets that Bernanke's policy of serial cheap credit funded bubble creation are supposed to inflate. And they do. The only problem is that pension funds also have offsetting matching liabilities: or the amount of money a company has to inject in order to cover future retiree obligations. And in a period of low discount rates brought by a record low interest rate environment, these liabilities painfully and relentlessly increase when discounting future cash needs.

Quote WaPo:

Assets held by pension plans of the firms that make up the Standard & Poor’s 500-stock index increased by $113.4 billion in 2012, according to a report by Wilshire Associates, a consulting firm. But largely because of low rates, company liabilities increased even more: by $173.6 billion. That left the median corporation’s pension plan 76.9 percent funded, with just over $3 of assets for every $4 of liabilities.

 

Low interest rates hurt firms that provide pensions in two ways: They are required to set aside more money to pay for future pensions even as the liabilities appearing on their balance sheets grow larger.

And therein lies the rub: because while the NPV of future benefits in a bubbly environment results in higher asset values, it is the plunging rate used in the DCF that is dooming companies to a slow, painful cash bleeding death as they scramble to prefunded already underfunded (and ever more so) liabilities.

Visually, this is as follows:

In brief: the longer ZIRP drags on, the uglier the monetary reality that private (for now) workers will have to face when they finally choose to retire.

“Low interest rates are certainly a significant issue for employers,” said Judy A. Miller, director of retirement policy for the American Society of Pension Professionals and Actuaries. “The lower the interest rates, the higher the value of the benefits you have to provide and the higher the required contributions.”

Fear not though: in a world in which the recovery is so strong, Mark-to-Market accounting for banks still has to come back four years after it was killed at the altar of central planning, corporations are the next to realize that out of sight means out of mind, and what better way to ignore the pension issue than to just move it "off the books."

[F]irms are moving pension liabilities off their books. Last year, Verizon Communications transferred $7.5 billion in pension obligations — about a quarter of its total — to Prudential Insurance, to limit its liabilities and bolster its financial profile. The move came after General Motors paid Prudential to assume $25 billion of its pension risks.

Congress is in on it too now:

Congress moved last year to provide relief from the pension damage being caused by low rates by allowing firms to temporarily use a 25-year interest rate average when calculating how much money they had to funnel into funds.

 

“It phases out over the next five or six years,” said Joshua D. Rauh, a Stanford University professor who studies pension plans.

 

But the relief does not change how pension liabilities appear on a firm’s balance sheet. In addition, firms could find that under the new law, their pension-related liabilities could quickly rise after 2013 unless interest rates return to more normal levels. This has dampened the appeal of the change for many companies.

Nothing like legislating 'magic' accounting into law, allowing companies to reap the benefit of low interest rates and soaring asset values, while pricing in the future benefits of inflation that will magically come (but not impair the asset values of course) and sweep all their underfunded liability concerns away.

Of course, since everyone is in on the scheme - most certainly the workers who stands to receive less and less the longer the lies are perpetuated - it has no chance of working. Instead, what companies are doing is simply cutting off the "welfare" illusion tentacle at the core, and finally starting to freeze pension funds.

That has left many firms to conclude that it is best to freeze their pension plans, cutting off contributions for current workers and making new employees ineligible for the benefit.

 

At ILM, which sells commercial insurance to building-supply manufacturers and retailers, the pension plan had been a source of pride in a benevolent company culture developed over 117 years.

 

“Personally, I think a pension is a tremendous benefit,” said Don W. Blackwell, ILM’s chief financial officer and treasurer. “This is a very valuable benefit to our employees. We did not want to take it away.”

 

But with the pension plan causing the firm to report a $8 million liability at the end of last year and with no end in sight for low interest rates, “we waved the white flag,” Blackwell said. “It was a waiting game and we blinked. We had no idea that interest rates would remain this low.”

There is still the hope and the illusion that as companies switch from traditional pensions to that most direct bubble beneficiary, the 401(k), that everyone will live happily ever after? Well no: here is the side by side comparison:

Once it froze its pension plan, ILM started to contribute 3 percent of each worker’s salary to a 401(k) plan. It’s something, but nowhere near enough to provide the same level of retirement security that the company’s pension did.

 

Blackwell said an employee with a $40,000 annual salary who received a 3 percent raise each year, set aside 7 percent of his pay for retirement and received a 3 percent company contribution would wind up with roughly a third less money in his retirement fund after 25 years than he would have with the pension plan.

In the private sector, surprisingly, some still prefer realism over lies:

Still, ILM employees are taking the pension fund’s demise in stride. “To be honest, I am surprised that the plan was not frozen a while back,” said Traci Barber, 42, a service center manager who has been with ILM nearly 13 years. “I was surprised when I took this job that it even offered a pension plan.”

 

Knotts, the firm’s vice president for human resources, said that many employees do not seem to understand the security that a pension’s guaranteed monthly payments offer in retirement. “When people get hired here,” she said, “they are not thinking about that. All of the questions are about salary and paid time off.”

 

She was among the executives who fretted over cutting the pension plan, deciding to back the decision even though she knew it is bad for employees. Keeping it, she said, would be even worse for the company.

 

David J. Riese, who retired as vice president of claims in 1997 after 16 years at ILM, said he values the security provided by his company pension. Current employees, he added, will not have it as good.

At least someone dares to admit defeat in the face of ubiquitous central planning. And as always, the private sector is the first to realize that in the New Normal, all workers will be worse off.

The question we have is how long until the same logic and methodology, which is absolutely universal, is transferred from the private to the public sector, and how long until the tens of millions of state and federal servants, most of whom do their tedious and menial tasks with a matched enthusiasm, only so they can reap the benefits of a luxurious lifetime pension upon early retirement, still based on a discounting math from the Old Normal?

Because the start of the unwind of the welfare myth, if only in the private sector for now, made worse by Ben Bernanke's endless tinkering in what was formerly a free market, should be making the guardians of the status quo very, very nervous... and certainly has the disciples of the Bismarckian welfare state delusion on their toes, because they can see very well what is coming down the road.

 

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Mon, 05/27/2013 - 15:54 | 3601666 Racer
Racer's picture

Pension fund liablitlities are well contained

Mon, 05/27/2013 - 16:31 | 3601765 WestVillageIdiot
WestVillageIdiot's picture

Who cares about liabilities?  All that matters are assets.  Just pump those up as high as possible and everything else will take care of itself.  Just ask Bernanke, Krugman, politicians, your neighbor, your dog.  Well, not your dog.  Your dog is smart enough to realize that ignoring liabilities is to ignore reality.

Is your neighbor smarter than a cocker-spaniel?  I doubt it, if your neighbors are like mine. 

Mon, 05/27/2013 - 16:37 | 3601776 ZerOhead
ZerOhead's picture

You almost have to question the wisdom of putting money aside into a pension to begin with.

It's a Rehypothecation Nation out there which means you probably don't even own what you think you own and the actual effect of saving is just providing the Wall Street arsonists with yet more gasoline... all aimed at inflating the value of your bonds and fixed incomes away or stuffing you into a dogshit stock that's ready to go for a dump... oh... and skimming what precious little is left over in the process...

Mon, 05/27/2013 - 17:02 | 3601843 TuesdayBen
TuesdayBen's picture

Friend of mine just got a cushy Gubmint job at the Pension Benefit Guaranty Corp. Seems they are staffing up. Gubmint will end up controlling all as the statist boys work their poison. They will make this country very ill.

Tue, 05/28/2013 - 09:56 | 3603354 NotApplicable
NotApplicable's picture

Yep, eventually PBGC will own ALL pensions as they collapse from ZIRP.

Mon, 05/27/2013 - 18:11 | 3602019 bank guy in Brussels
bank guy in Brussels's picture

Not surprising they arrest the 'little' people in America who are investigating things

When they even murder the big people who investigate corruption

Some dead Americans who maybe deserve a mention on the US 'Memorial Day'

Ten notable US national political figures, all found murdered or suspiciously dead - Senators, Congressmen, Federal Judge, Governor, CIA Director - after questioning corruption or disturbing US oligarch leadership ... since the 1963 JFK assassination

(1-2)
Two Congressmen, Thomas Hale Boggs, Sr, House Majority Leader, along with Alaska Congressman Nick Begich, killed in the same plane crash, 16 October 1972; Boggs was involved in JFK assassination investigation

(3)
Congressman Larry McDonald of Georgia was killed on 1 September 1983, booked onto the Korean airliner that was shot down over the ocean; McDonald had filed bills asking the US Congress to investigate the globalist bodies, the Trilateral Commission and the CFR (Council on Foreign Relations)

(4)
Former US Senator from Texas John Tower, killed in plane crash 5 April 1991, after criticising Reagan-Bush scandals

(5)
William Colby, former director of the U.S. Central Intelligence Agency, found dead 27 April 1996, laughable story he drowned after paddling his canoe by his Maryland weekend house; Colby had made revelations critical of US policies

(6)
Sonny Bono, singer from Sonny & Cher, Congressman on the key House Judiciary Committee, killed 6 January 1998, after gaining position to investigate corruption at America's highest levels, Bono handled files on judicial corruption and the CIA drug trade ... story that excellent skier Sonny went head-on into a tree ... even ex-FBI people say it was murder

(7)
US Missouri Governor Melvin Eugene 'Mel' Carnahan, killed in plane crash 16 October 2000, opponent of vicious US Attorney General John Ashcroft, Carnahan won an election even after being dead

(8)
US Senator Paul Wellstone from Minnesota, killed in plane crash 25 October 2002, after leading opposition to the US Iraq War

(9)
Former US Congressman Wayne Owens from Utah, found dead in Tel Aviv, Israel, 18 December 2002, while investigating the triangle of US-Israeli-Palestinian Authority corruption

(10)
US Federal Judge John Roll shot dead in Tucson, Arizona, 8 January 2011, shortly after ruling against Obama and the US gov't ... drugged up 'lone gunman' promptly supplied, 'confessing' and otherwise barely seen

Mon, 05/27/2013 - 19:27 | 3602162 Never One Roach
Never One Roach's picture

<< $3 of assets for every $4 of liabilities. >>

 

Close enuff for Gubbermint work.

Mon, 05/27/2013 - 22:01 | 3602491 Chuck Walla
Chuck Walla's picture

Laws and rules make a scam into a system.

FORWARD SOVIET!

Mon, 05/27/2013 - 15:55 | 3601670 radwon
radwon's picture

Wait for it......

 

Wait for it.......

 

Wait.........

 

FUCK YOU BERNANKE.

Mon, 05/27/2013 - 16:01 | 3601688 booboo
booboo's picture

"I don't run a car manufacturing company, I run a pension plan and insurance company"

Richard Wagoner President of GM 1998-2003

Mon, 05/27/2013 - 16:31 | 3601769 WestVillageIdiot
WestVillageIdiot's picture

"I run a hedge fund with a used car lot out back." 

Tue, 05/28/2013 - 03:25 | 3602891 Boris Alatovkrap
Boris Alatovkrap's picture

"I am sell shrub and bush from back of used car"

Boris Alatovkrap, CEO Sputnik Fruit & Beverage Co., Minsk

Mon, 05/27/2013 - 16:38 | 3601784 disabledvet
disabledvet's picture

"and i speculate massively in real estate on the side. but don't worry...Tesla is the real evil one when it comes to Government bailouts. We only needed 100 billion." i mean honestly...this isn't Bernanke's fault...this is the retards "in charge of capitalism" who did this. theses pension plans should be swimming in money. they fired everyone didn't they! actual wages are DECLINING. benefits died over 30 years...EVERYTHING has been foisted on the Government to "save the rich people from their own excesses." give me a break. the whole thing is so ridiculous you really can't make it up. the only funny part is the REALITY that interest rates are "at or near zero forever" actually. if that's the global economy is deflating...and i fail to see how anyone can't see it as such...then obviously you need to be long "the war effort" so defined as their the only ones providing liquidity that is in fact be recycled back into the economy. "the rest of the planet gets the American consumer" who only has dimes and nickels right now. long dollar stores: http://seekingalpha.com/symbol/fdo?source=search_general&s=fdo if that new Ford maxi van can get "no fuel necessary" mileage then guess what...there's your winner. "the trucking industry will need to adjust."

Mon, 05/27/2013 - 17:07 | 3601858 TuesdayBen
TuesdayBen's picture

The gubmint foists obligations onto itself via policy set up to create failure, Gubmint rescue, Gubmint control. That is the MO of the statist. Capitalism is not at fault. Statism is.

Mon, 05/27/2013 - 20:22 | 3602292 cpzimmon
cpzimmon's picture

Sorry...couldn't wait.

I said fuck you Bernanke immediately.

Mon, 05/27/2013 - 15:57 | 3601675 Seasmoke
Seasmoke's picture

Well this one i consider a positive

Mon, 05/27/2013 - 16:01 | 3601687 fonzannoon
fonzannoon's picture

Funny...the federal pensions can just siphon off tax revenue to maintain solvency. It's the corporate pensions that end up moving over to defined contribution plans and forcing participants to hold even more of their life savings in stocks and bonds. It almost seems deliberate....

Mon, 05/27/2013 - 16:10 | 3601718 LawsofPhysics
LawsofPhysics's picture

"the federal pensions can just siphon off tax revenue to maintain solvency" - you are optimistic, doesn't one have to actually have a job in order to be "taxed"?

I remain long black markets and sharecropping.

Mon, 05/27/2013 - 16:17 | 3601729 fonzannoon
fonzannoon's picture

the math does fail all around in the end. good point. Yet we sit around on here and contemplate when the fed is going to end qe and risk the probability that markets end up blowing their brains out one asset class at a time. It's absurd, and yet I see everyone on here fall for the possibility day after day.

Mon, 05/27/2013 - 16:27 | 3601754 knukles
knukles's picture

Goddammit Fonz!
I just golfed today with a whole buncha California public employee toadies who just now laugh at us, the rest of us in the private sector when we bitch about their pensions.  Way the hell too generous, Defined Benefit as a matter of course, with the most outlandish colas and additional years purchase/overtime plans... nobody anywhere is even close to this shit anymore and all they say is...

Are you ready?
You can see it coming, no?

Raise taxes to complete the funding for their benefits that they've worked so very hard for.
And they even truly know and admit its a fucking taxpayer ripoff.

Moreover, out here in the People's Republic (That being redefined as the government workers being the "People" that benefit from the "Republic" which has no bearing on the legislative/representative structure) the CalPers and CalSters systems do not even report as do their private counterparts, not marking worthless shit to market... keeping discount rates too high, over stating returns... Hell, the SEC recently took some public entity to task (fined them) for misrepresentation of financials to bond buyers for fucked up lies about pension liabilities....
And that practice is prevalent across the board.
And you all think the Detroit trustees going to Hawaii is outlandish?
These fucker pillage the plans ....

What a fucking mess.
And everybody talks about deficits, this is the straw that's gonna break the camels back...

Mark my words...

Mon, 05/27/2013 - 16:36 | 3601775 WestVillageIdiot
WestVillageIdiot's picture

Turn on your TV today and watch the over-the-top bullshit propaganda that accompanies Memorial Day.  It is obvious that the public unions, including the MIC, have bought the best publicists, marketers, and propagandists that money can buy.

"Support the troops"
Just pay no attention to the fuckers that are giving them orders or all of the immoral orders they are carrying out.  Just support the troops and shut your fucking piehole.  Otherwise you are an unpatriotic peace of shit.  Just ask the sheep.

Happy Memorial Day (sadly, not much of America left to memorialize)

Mon, 05/27/2013 - 16:47 | 3601811 disabledvet
disabledvet's picture

"spray and pray"...only this time it's with money. obviously if you're a California retiree you've knocked the cover off the ball here. Real estate values can't be printed...yet they're right back to bubble highs...and beyond...already. running surpluses. massive recovery in the tech sector. "house as ATM machine" is back with a vengeance. vineyards, public debt, IPO's, "special cash enhancements"...that place is swimming in money if you've got any. "last thing you want to be doing is working for a living" of course...unless it's a movie...or being an extra in one. don't even get me started on Texas. 12 billion dollar surplus? SICK! yeah, you want to build an Underground Economy all right. "finally someplace cool where people can relax for a change and not be bothered by tornado's and shit." make it part of their zoning code or something. most of the Texas real estate i saw was scrub brush. anywho...yet another "Wild West Americana thingy" underway.

Mon, 05/27/2013 - 17:58 | 3601967 knukles
knukles's picture

West Village...
I was just getting ready to spew forth.  Mrs K was looking for the Yankees game and while doing so, ran across the Nationals.  Washington Nationals.  They have their Memorial Day uniforms on.  With caps and numbers made of camouflage.  Desert pixel camo pattern.  Now that there is a real tried and true Good Olde American Memorial Day Color Scheme, no?

Not red white and blue, not any old other pattern, but desert camo.

FFS, it's a downright bit o propaganda and perceptions management, that Memorial Day is being Subconsciously Sold to the Public to be remembered as the Current Desert Pixel War of Terror.

Forget WWII or any of the others, anything before the Empire Americana...
What a perversion of free thought and ideals.

Mon, 05/27/2013 - 16:42 | 3601799 Binko
Binko's picture

The people who work at Calpers really just care about one thing: keeping their own salaries, benefits and future pensions on track. This means that maintaining the illusion of sustainability is the primary task. Since the state legislators also really just care about one thing: keeping their own benefits, perks, salaries, kick-backs, campaign contributions and future private employment opportunities on track they also will happily collaborate on maintaining the illusions. 

Basically there is not just one wizard behind the curtain. Their are 20 million or more government employees busily beavering away at shining up turds and convincing the public that everything is golden. 

Mon, 05/27/2013 - 16:45 | 3601807 WestVillageIdiot
WestVillageIdiot's picture

Please don't use beavers in an analoy about public employees.  I don't think I should have to explain my reasoning on that one.  Never insult the beaver.

Mon, 05/27/2013 - 17:51 | 3601978 fonzannoon
fonzannoon's picture

knukles I have some lib buddies and I can barely hear their rants about their entitled pensions anymore. To have to hear them rant about it while cheating at golf almost seems like you are begging to be abused.

Mon, 05/27/2013 - 17:56 | 3601987 knukles
knukles's picture

Nah.  I get 'em wound up on the pension thingie and then tell them that the next deal will be Chapter 11 in Federal Court where any contract can be abrogated and they'll lose everything.
(Harvey Penick's Needle... and then their game slowly unwinds as I collect the skins.... They don't argue with me anymore.  Neither do the neo-cons, for I just call their bullshit so they leave me alone...  LOL)

Mon, 05/27/2013 - 17:59 | 3601992 fonzannoon
fonzannoon's picture

LOL I have told some of my buddies a similar thing. I don't think a word has been invented yet than can express the flash of anger that I see in their eyes.

Tue, 05/28/2013 - 07:31 | 3603021 fiftybagger
fiftybagger's picture

That which cannot go on forever, won't.  You think the DHS needs billions of bullets for the tea party?  Think again.  Once those pensions go poof those leeches will be burning cars in the street.  I say open fire.  They deserve everything that's coming to them :-)

Mon, 05/27/2013 - 16:06 | 3601704 yellowsub
yellowsub's picture

It doesn't mention public pensions which is going to be guaranteed by you.

Mon, 05/27/2013 - 16:38 | 3601787 WestVillageIdiot
WestVillageIdiot's picture

But they are just "serving" the public.  They have earned it all.  From the surly bitch at the DMV, to the psychotic badge wearing cop that is busy shitting on your constitutional rights to the politician that is banging hookers (or pages) and selling you out at every turn.  I forgot to mention all of the teachers we are supposed to worship that can really only do well when the parents are highly involved in the process, thus taking credit more for the efforts of the parents than their own efforts.

Just keep paying and STFU ZHers.

Mon, 05/27/2013 - 19:32 | 3602172 malikai
malikai's picture

Don't forget the TSA, irradiating and molesting you so the terrorists don't have to.

They deserve their fair share of what's yours.

Mon, 05/27/2013 - 16:07 | 3601710 Everyman
Everyman's picture

Wouldn't it be better if instead of "this is another causality of the Bernanke, that we get a "list"?  Can someone just make a list of all that Bubble Bennie has fucked up with his ZIRP and endless money printing, in tabular form.

Mon, 05/27/2013 - 16:29 | 3601758 knukles
knukles's picture

Let's make that easier...
Hows about a list of anything NOT FUCKED UP by ZIRP....

Mon, 05/27/2013 - 16:40 | 3601792 WestVillageIdiot
WestVillageIdiot's picture

I checked out Zillow for the first time in a long time today.  Prices in my hometown are indeed going up once again, and very rapidly.  I bet SNAP and EBT are also through the roof. 

Winning!

Mon, 05/27/2013 - 16:26 | 3601714 FreeMktFisherMN
FreeMktFisherMN's picture

21 years old here, and phyzz. PMs (and maybe scaling into some miners soon here depending on if one more big raid happens) will be my retirement account (doubt retirement will even be the case, though). The only thing I ponder even is whether I want to buy some platinum or palladium, to 'diversify' my portfolio of PMs, or just stick with silver which is a leveraged play on gold and is consumed/excellent conductor/antimicrobial, as well as some 1/10 ozt. gold coins. A bit different 'diversification' than the sheep modern portfolio theory/'risk-free rate'/LTCM models employ. 

Mon, 05/27/2013 - 17:28 | 3601916 Ben Jammin Bernanke
Ben Jammin Bernanke's picture

Thats ridiculous. If you were retiring on a 10-20 year term Im right behind ya but you have no idea what your ideal retirement strategy will look like for a target 60+ years from now. Remember, world war ii only ended 70 years ago. Would you have been able to predict a reasonable retirement strategy for year 2000 from back then? The only thing you can say with confidence is that there is no telling how the next decade will change the (investment) world.

Mon, 05/27/2013 - 20:02 | 3602256 FreeMktFisherMN
FreeMktFisherMN's picture

Bottom line is I'm not investing in paper promises. I'm saving in PMs, whose value over thousands of yrs. is that they store value.

Mon, 05/27/2013 - 16:09 | 3601715 LawsofPhysics
LawsofPhysics's picture

Fucking idiots, rewarding irresponsible behavior is nothing new for the government/corporate fascist.  The socialization of private losses continues...

 

Mon, 05/27/2013 - 16:14 | 3601722 lunaticfringe
lunaticfringe's picture

Meanwhile, gravity still causes things to fall and the rich get richer. Same story, 1534  days later.

Mon, 05/27/2013 - 16:14 | 3601724 dolph9
dolph9's picture

Pensions are broke, it's all a debt based lie.

You're "retirement" will move to being your savings and social security.  But savings in fiat money is a lie too, so then you're retirement will just be social security.  But social security will go bust paying for all the disabled, so that's a lie too.

So in the end, you will only retire on your physical precious metals, that's it.

Mon, 05/27/2013 - 16:22 | 3601746 debtor of last ...
debtor of last resort's picture

In the third world, many children are needed for the elders to survive. Maybe it's time to save some energy and go to bed early.

Mon, 05/27/2013 - 21:57 | 3602480 s-logic
s-logic's picture

really good one.

Mon, 05/27/2013 - 16:18 | 3601733 debtor of last ...
debtor of last resort's picture

OT, as we speak, Dijsselbloem told Portuguese pm that Portugal will get more time to solve debt issues, on msm. Next subject: a student loan is a good investment for the future.

Mon, 05/27/2013 - 16:19 | 3601735 solgundy
solgundy's picture

it's "trickle up poverty"

Mon, 05/27/2013 - 16:29 | 3601756 I am Jobe
I am Jobe's picture

Now if they can apply the ame logic to State and Federal , we will see the effects.

So when do states and federal employees see their Pensions disappear?

 

Mon, 05/27/2013 - 16:31 | 3601768 knukles
knukles's picture

At their funerals.  Unless of course there are survivor benefits.

Mon, 05/27/2013 - 16:29 | 3601759 slotmouth
slotmouth's picture

Prudential is the new AIG.

Mon, 05/27/2013 - 16:40 | 3601793 fonzannoon
fonzannoon's picture

yes they are, and so is Met. Everyone scrambling for tbtf status.

Mon, 05/27/2013 - 16:30 | 3601762 Tombstone
Tombstone's picture

Benny is ready to go Abe times 3.  Problem solved.

Mon, 05/27/2013 - 16:41 | 3601798 ZerOhead
ZerOhead's picture

Abe will see that bet and raise Benny times five...

Mon, 05/27/2013 - 16:30 | 3601763 ebworthen
ebworthen's picture

History will list Ben Bernanke with Benedict Arnold.

Mon, 05/27/2013 - 16:43 | 3601802 WestVillageIdiot
WestVillageIdiot's picture

You are partially correct.  Benedict Arnold was a hero before he was a villain.  I can't imagine that Bernanke has done one thing even mildly heroic in his entire pathetic fucking life. 

Mon, 05/27/2013 - 18:41 | 3601813 Miss Expectations
Miss Expectations's picture

Benedict Arnold gave up...would that Ben would do the same.

“Neglected by Congress below, distressed with the small-pox; want of Generals and discipline in our Army, which may rather be called a great rabble, our credit and reputation lost, and great part of the country; and a powerful foreign enemy advancing upon us, are so many difficulties we cannot surmount them.”  Benedict Arnold

Mon, 05/27/2013 - 17:42 | 3601951 Ballin D
Ballin D's picture

Not a very good comparison in my opinion. Someone above called benedict arnold a hero. Simply calling him a hero is an understatement. The man was a self made entrepreneur who personally devoted himself, and his wealth to the defense of the nation. He repeatedly proved himself as a brilliant military leader and a hero in battle but was held back by TPTB in the military and congress. He eventually swapped sides after he was repeatedly sandbagged by the people he served.

Fuck you bernanke.

Mon, 05/27/2013 - 16:44 | 3601804 rsnoble
rsnoble's picture

Summarized work till you drop.

Mon, 05/27/2013 - 16:46 | 3601809 fonzannoon
fonzannoon's picture

the whispers will happen again at some point. XYZ insurance company has a huge derivative bet going the wrong way on them. some interest rate hedge or something...their very own London whale. except Bernak will sit back and let the lions rip each other apart. The only question is what direction does everything go from there.

Mon, 05/27/2013 - 16:57 | 3601831 pitz
pitz's picture

ZIRP has inflated assets at the pension funds though, so it can't/shouldn't be blamed for the demise of pensions.  Structurally the problem with pensions is that their promises simply exceeded what could be realistically provided under *any* sort of interest rate environment. 

Mon, 05/27/2013 - 16:58 | 3601833 U4 eee aaa
U4 eee aaa's picture

This is proof that these predators steal from the poor and the old. The weakest among us. All that's left is to steal from little kids. Oh wait! They do that too in the form of all these debt obligations

This is the dirty little secret of inflation and fractional reserve banking. It is designed to steal from the weakest among us while opiating the masses

What a bunch of monsters!

Mon, 05/27/2013 - 17:13 | 3601867 Floodmaster
Floodmaster's picture

The baby boomer is the most subsidized generation ever.

Mon, 05/27/2013 - 17:37 | 3601921 foodstampbarry
foodstampbarry's picture

Yep, these fuckers have been living like kings and we get the bill.

Mon, 05/27/2013 - 19:16 | 3602133 WillyGroper
WillyGroper's picture

We'll see how many get the SS that's been fleeced from them.

Mon, 05/27/2013 - 17:33 | 3601925 Don Levit
Don Levit's picture

You cannot have assets without liabilities.  It's like love and marriage, they go together like a horse and carriage.

What you owe, you owe.

What you own, you may not own.

Liabilities are even more important than assets!

Don Levit

Mon, 05/27/2013 - 17:33 | 3601926 buzzsaw99
buzzsaw99's picture

EXECUTIVE BONUS TIME AGAIN!!

Mon, 05/27/2013 - 19:43 | 3602210 chubbar
chubbar's picture

That's spelled Bone Us.

Mon, 05/27/2013 - 18:28 | 3602044 q99x2
q99x2's picture

I feel better that I haven't worked for the last 17 years now that I've read this. I'd hate to have something taken if I ever had something to be taken and now its my time to be taking my nap.

Mon, 05/27/2013 - 20:57 | 3602370 s2man
s2man's picture

Yup, its magic.  My retirement fund is now 99+% funded due to the new accounting rules.  I feel so much better.

Tue, 05/28/2013 - 00:22 | 3602745 evernewecon
evernewecon's picture

 

 

Pensions certainly provide a quickly quantifiable

glimpse of the cost of benchmarking to free

reserves for bad banks.  


 

But for every bad banker’s dollar invested

in the top of the mortgage bubble there was

the dollar of someone who sold their folly.


 

Considering the trillions the banks are in for,

imagine then that the real policy of Treasury

and the Fed since 2008 has been one of

“hand it over.”  


 

Just being someone who made a sensible

decision, selling a preposterously aggregious

bubble, does not rate with large banks, but

those don’t rate with favored monopolists

(TBTF is monopoly of the currency going by

Mr. Bernanke’s response, but otherwise

welfare queen to the stars Treasury policy,)

which is why this appears working really as a

flat out shakedown (as well as a false

quality based regulation) by the latter, and the

government, of the former.


 

http://www.bloomberg.com/news/2012-09-10/big-banks-hide-risk-transforming-collateral-for-traders.html 


 
 

https://www.youtube.com/watch?v=LN2hBOIXhBs 


 

Back to the business at hand, ENEN.


 

Those who sold the bubble received variously

substantial to full equity from their properties,

which but for TBTF teflon policy would have

been earning an unfettered return instead of a

real negative one for what’s now going on 5

years.  The persons who sold for a mill

is out what, going on $200,000 pre-tax

earnings now.   


 

That value has instead been auto-materialized

for a loaner to the bankers, with mortgage

securities als being bought not at market

value, which, going by the macro reality reported

on this very site, has been all-in good money

chasing bad, and by all in, we really are

talking about untapped reserve by virtue of

this:

http://www.zerohedge.com/news/2013-04-21/us-gdp-will-be-revised-higher-500-billion-following-addition-intangibles-economy 

http://pages.citebite.com/g1o7j1x5e8qyr

(also has been “Free Article Pass:”)
http://online.wsj.com/article/SB123336541474235541.html


It should just be non-recourse.  Most those people

just put down a tiny percentage equity.   The

mods’ are just free cash for banks and holding borrowers’

feet to the fire.   But really, with the mortgage securities

sold off not at market value, a “mortgage release program”

just might soon hit the real estate market (play some

Jurow videos.)

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