Collapsing Pensions Are “About to Bring Hell to America”

The toxic dollar is bringing hell in a handbasket.

Along with the student loan debt bubble and other major financial factors, the looming pensions crisis is bound to be the death of us all.

Because it’s based on a future promise to pay, it has long been a benefit dangled to solve strikes and union disputes – because, in the end, it is just more debt, whether private or public.

With tens of trillions in unfunded liabilities, the weight of an avalanche remains dangling over our heads. An aging population is cashing in on needed retirement benefits while the younger generations must support multiples that are unsustainable financially.

Somewhere between the retiree that needs clothing, food and lodging, and the bankruptcy of cities and state governments is the makings of the next economic crisis.

via AgainstCronyCapitalism.org:

This is one of those things that few will pay attention to until it’s a 5 alarm fire. Then the policymakers will run around with their hands in the air saying they didn’t see it coming.

Of course they did. But addressing the problem is hard and will make people unhappy in the short term.

This blog pointed out the sad, and quiet fact that entities like the government of South Carolina are deep in debt over pensions. Everywhere there are failing social systems.

And somewhere, the rubber is going to met the road, and people are going to get hurt.

As SHTF previously reported:

In 2014 a new Federal law made it possible for pension funds to cut benefits for their recipients.

[I]n October of [2015] the canary in the coal mine fell over and died when Illinois announced that the State was posting pension payments because it ran out of money.

Fast forward a few more months and things have been taken to the next level. The Central State pension fund in Kansas became the first such fund to take advantage of the 2014 law as 400,000 Americans who depend on their monthly pension income to pay for such things as their mortgage, groceries and medical expenses saw an average of $1,400 per month sliced of their monthly benefits.

Unfortunately, there may be no avoiding some very painful lapses in checks in the difficult years ahead.

As Market Watch reports:

But take a look South Carolina’s government pension plan, which covers roughly 550,000 people — one out of nine state residents — but is a staggering $24.1 billion in the red.

This is not a distant concern, but a system already in crisis.

Younger workers are being asked to do much more to support the pensions of retirees. An analysis by the The Post and Courier of Charleston noted recently that “Government workers and their employers have seen five hikes in their pension plan contributions since 2012, and there’s no end in sight.” (Most now contribute 8.66% of their pay, vs. 6.5% before the changes.) At the same time, the pension fund has been chasing more stocks and alternative investments instead of relying on stable investments like bonds that may be much less volatile but generate only meager returns.

And if that’s not troubling enough, South Carolina’s pension fund is far from alone.

Yeah.

California’s Calpers public retriree system is notoriously underfunded and doomed to implode. Chicago, Detroit and other urban wastelands are sagging under abysmal debt. Dallas, Texas pensions went insolvent. Puerto Rico is nothing but a propped up holding corp(se).

Something massive has been swept up just under the carpet.

Read more:

Screwed Over Retirees: Dallas Suspends Withdrawals From “Insolvent Pension System”

$8 Trillion Short On Pensions?! “No One Goes To Jail Because Establishment Is Complicit”

The System Is About to Burst Open: TRILLIONS In Unfunded Pensions “Foreshadow A Bleak Future”

Warning: You May Be Next: 400,000 People Just Had Their Pensions Cut By 50%: “Going to Happen To The Rest Of Pensions in the United States”

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Author: Mac Slavo
Views: Read by 909 people
Date: March 15th, 2017
Website: www.SHTFplan.com

Copyright Information: Copyright SHTFplan and Mac Slavo. This content may be freely reproduced in full or in part in digital form with full attribution to the author and a link to www.shtfplan.com. Please contact us for permission to reproduce this content in other media formats.

“Debt Will Start To Go Bad”: Bankruptcies Rising, Spillover Contagion Possible

This article was written by Michael Snyder and originally published at the Economic Collapse blog.

Editor’s Comment: The pressure upon the system is enormous; lots of good people can’t handle it anymore. Squeezing financial obligations are forcing many consumers, and now commercial businesses, to fold with no way to pay back what they owe. A backlog of mounting debt that has accumulated collectively for years and years is now taking its toll. Things can only be shuffled for so long before a new string of failures tests the resilience of the system… which will be severely lacking.

A very bad cycle could begin – the debt super cycle, which the big banks have warned will be fatal to our economy, and trigger something at least on the scale of 2008, but likely much larger, and more destructive. Keep watch of how things unfold from here…

Debt Apocalypse Beckons As U.S. Consumer Bankruptcies Do Something They Haven’t Done In Almost 7 Years

by Michael Snyder

When debt grows much faster than GDP for an extended period of time, it is inevitable that a good portion of that debt will start to go bad at some point.  We witnessed a perfect example of this in 2008, and now it is starting to happen again.  Commercial bankruptcies have been rising on a year-over-year basis since late 2015, and this is something that I have written about previously, but now consumer bankruptcies are also increasing.  In fact, we have just witnessed U.S. consumer bankruptcies do something that they haven’t done in nearly 7 years.  The following comes from Wolf Richter…

US bankruptcy filings by consumers rose 5.4% in January, compared to January last year, to 52,421 according to the American Bankruptcy Institute. In December, they’d already risen 4.5% from a year earlier. This was the first time that consumer bankruptcies increased back-to-back since 2010.

However, business bankruptcies began to surge in November 2015 and continued surging on a year-over-year basis in 2016, to reach a full-year total of 37,823 filings, up 26% from the prior year and the highest since 2014.

Of course consumer bankruptcies are still much lower than they were during the last financial crisis, but what this could mean is that we have reached a turning point.

For years, the Federal Reserve has been encouraging reckless borrowing and spending by pushing interest rates to ultra-low levels.  Unfortunately, this created an absolutely enormous debt bubble, and now that debt bubble is beginning to burst.  Here is more from Wolf Richter…

The dizzying borrowing by consumers and businesses that the Fed with its ultra-low interest rates and in its infinite wisdom has purposefully encouraged to fuel economic growth, if any, and to inflate asset prices, has caused debt to pile up. That debt is now eating up cash flows needed for other things, and this is causing pressures, just when interest rates have begun to rise, which will make refinancing this debt more expensive and, for a rising number of consumers and businesses, impossible. And so, the legacy of this binge will haunt the economy – and creditors – for years to come.

Despite all of the economic optimism that is out there right now, the truth is that U.S. consumers are tapped out.

If the U.S. economy truly was doing great, major retailers would not be closing hundreds of stores.  Sears, Macy’s and a whole host of other big retailers are closing stores because those stores are losing money.  It truly is a “retail apocalypse“, and this trend is not going to turn around until U.S. consumers start to become healthier financially.

We also see signs of trouble in the auto sales numbers.  Compared to 2016, sales were way down in January this year…

Compared to January last year, car sales collapsed for all three US automakers, and the largest Japanese automakers didn’t do much better:

• GM -21.1%


• Ford -17.5%


• Fiat Chrysler -35.8%


• Toyota -19.9%


• Honda -10.7%


• Nissan -9.0%

For all automakers combined, car sales sagged 12.2% from a year ago.

A lot of attention is given to our 20 trillion dollar national debt, and rightly so, but a similar amount of attention should be paid to the fact that U.S. households are collectively more than 12 trillion dollars in debt.

About two-thirds of the nation is essentially living paycheck to paycheck.  Most families really struggle to pay the bills from month to month, and all it would take is a major event such as a job loss or a significant illness to plunge them into financial oblivion.

In America today we are told that the secret to success is a college education, but most young Americans have to go deep into debt to afford such an education.

As a result, most college graduates start out life in the “real world” with a mountain of debt.  And since many of them never find the “good jobs” that they were promised, repayment of that debt becomes a very big issue.  In fact, the Wall Street Journal has discovered that student loan repayment rates are much worse than we were being told…

Last Friday, the Education Department released a memo saying that it had overstated student loan repayment rates at most colleges and trade schools and provided updated numbers.

When The Wall Street Journal analyzed the new numbers, the data revealed that the Department previously had inflated the repayment rates for 99.8% of all colleges and trade schools in the country.

The new analysis shows that at more than 1,000 colleges and trade schools, or about a quarter of the total, at least half the students had defaulted or failed to pay down at least $1 on their debt within seven years.

If you do find yourself deep in debt, a lot of families have found success by following a plan that was pioneered by author Dave Ramsey.  His “Debt Snowball Plan” really works, but you have to be committed to it.

Getting out of debt can be tremendously freeing.  So many people spend so many sleepless nights consumed by financial stress, but it doesn’t have to be that way.

Most of us have had to go into debt for some reason or another, and not all debt is bad debt.  For example, very few of us would be able to own a home without getting a mortgage, and usually mortgages come with very low interest rates these days.

But other forms of debt (such as credit card debt or payday loans) can be financially crippling.  When it comes to eliminating debt, it is often a really good idea to start with the most toxic forms of debt first.

It has been said that the borrower is the servant of the lender, and you don’t want to spend the best years of your life making somebody else rich.

Whether economic conditions turn out to be good or bad in 2017, the truth is that each one of us should be trying to do what we can to get out of debt.

Unfortunately, a lot of people never seem to learn from the past, and I have a feeling that both consumer and commercial bankruptcies will continue to rise throughout the rest of this year.

This article was written by Michael Snyder and originally published at the Economic Collapse blog.

Why Social Security Is Doomed: “Birthrate At Lowest Level on Record”… And the Future Is Unfunded

Here’s more evidence that the “recovery” never really happened, and good reason to think that the entire social net structure is doomed to fall apart.

The birthrate, long tied to economic growth, has been dropping to its lowest point in recorded history – both nationally and, in particular, in the state of California.

This demographic shift is bad news for the economy – in terms of housing, consumer markets, and especially for the long-term funding of social security, medicaid, medicare and other obligations that younger generations have typically been expected to pay into.

Whether or not you agree with the system in place, the fact that it is virtually certain to go bankrupt before the generation of baby boomers shift off this mortal coil should be troubling to everyone planning a future in the United States.

Official numbers show that the birthrate began to steadily decline in 2008 when the crisis hit and – unlike even during the Great Depression – hasn’t ever picked back up. 2016 saw the lowest point ever for California, even with higher births from immigrants factored in.

via the L.A. Times:

California’s birthrate dropped to its lowest level ever in 2016, according to data released by the state’s Department of Finance.

Between July 2015 and July of this year, there were 12.42 births per 1,000 Californians, the agency said this week. The last time the birthrate came close to being that low was during the Great Depression, when it hit 12.6 per 1,000 in 1933.

But, unlike after the Depression, birthrates haven’t bounced back quickly as the economy has picked up.

California has been experiencing a years-long downward trend that likely stems from the recession, a drop in teenage pregnancies and an increase in people attending college and taking longer to graduate, therefore putting off having children…

“Eventually you think about having a child and by this point in time you’re in your early 30s,” he said… when women’s fertility begins to decrease…

Similarly, the national birthrate began falling in 2008 and continued to do so through 2013, when it hit a record low of 12.4 per 1,000 people.

Already, states and cities are unable to meet their pension obligations. A very bad game of musical chairs is in the works, and unless something major changes, it could spell ruin for aging generations to come, who will be forced to contend with a shrinking pool of support – both officially and unofficially – from younger generations.

As the Wall Street Journal reported earlier this year:

Sales of single-family homes are being weighed down by what Robert Dietz, chief economist at the National Association of Home Builders, calls “the great delay,” the trend of millennials postponing milestones like marriage and having kids. Other ripple effects take years to show up, such as the drag of having fewer young workers paying into Social Security and Medicare…

[…]

“Everything is slower than we expected,” said Sam Sturgeon… he predicts that the total fertility rate won’t go above 1.9 babies per woman for the next five years or longer. An ideal birth rate is around 2.1 babies per woman, demographers say, since that’s the rate that’s needed to replace the current levels of population.

Right now, there is considerable optimism about a renewed age for the free market in America. Business is being wooed back by President-elect Trump.

But in the long term, the demographic pressures could impact the care and survival of the population. All the more reason to prepare for the worst, and reduce one’s dependency on the system as much as possible.

As Michael Snyder explained, the upcoming generation of “snowflake” millenials are, as whole, reluctant to move out of their parent’s basements, have difficulty finding real jobs, are stifled by student loans and a lifetime of debt, are putting off marriage and children – and consequently, will be inadequately prepared to financial support older generations as they age.

What if social security and pensions aren’t there when you need it? What if, even after being forced to pay for Obamacare, health care is adequate or even inaccessible?

At the individual level, this is a clear incentive to prepare, and attempt to build a self-sufficient life that is not reliant on social programs or future-promises of assistance and support.

Promote your own health, and that of your family, and create a back-up plan in case one’s position in the pecking order of society should slip and fall, income should fade or medicines and health care should become out-of-reach.

The same tips to prepare for an emergency can be applied to the long game to prepare for a future of bankrupt and inept social services.

Read more:

Billionaire: “We Are Destroying the Middle Class. That’s What Keeps Me Awake at Night.”

Overpopulation? Economic Ripple Effect From Fewer Babies: “Market Is Not Going to Grow”

“There Will Be Life Altering Ramifications For Those Who Can’t Or Won’t Adapt To New Realities”

Terminal Economy: “Private Sector Will NEVER Recover…This Time, Replacing Humans Altogether”

In the Robotic Near-Future, Most “Will Live Off Government-Provided Income”