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Salvation For Western Pension Funds

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In the prequel to this commentary, I pointed out to readers that the current “Western pension crisis” threatening the economies of many/most Western industrialized nations has two primary drivers. First, with nearly ¼ of the GDP of these various economies consumed in paying interest (in one form or another), these economies can never generate the same average level of return we experienced when our economies were in relative health. Greatly exacerbating this problem is the propensity for pension fund managers to buy the worst investments in the marketplace.

As I previously explained, most of the blame for this second problem lies in the fact that these pension fund administrators have allowed their decisions to be “heavily influenced” by the Western financial crime syndicate – i.e. multinational bankers. When one gets their “investment advice” from career criminals, it doesn’t take a psychic to predict a bad outcome here.

Obviously the first step back on the long (painful) road towards solvency for these pension funds is to totally divorce these funds from any/all connection to these fraud-factories. Don’t buy any shares in the banksters’ own hopelessly insolvent operations. Don’t buy any of their fraud-saturated “financial products”, and don’t listen to anything they say about markets or the economy – since the percentage of time these banksters are either wrong or simply lying exceeds any accurate information they distribute by at least a factor of ten.

There is another more fundamental problem here, however, which I refer to as “other peoples’ money syndrome”. This is a very common, human failure where otherwise responsible individuals will show markedly less concern and diligence when handling other peoples’ money than when handling their own.

While this syndrome occurs in nothing less than “epidemic” proportions in the world of investment management, it is also rampant in any/every other context where people are put in charge of other peoples’ money. Labour negotiations used to be another prime example. Back when we had actual “equilibrium” in our labour markets (i.e. before our governments allowed massive, structural unemployment to take root); in contract negotiations labour would kick the crap out of management time after time after time.

This problem reached its peak in the 1970’s when unions had the audacity to demand that management raise their wages as fast as the bankers were destroying their purchasing power with their rampant currency-dilution (i.e. inflation) – and were successful in doing so. The “solution” to this problem in the eyes of North American governments was a 40-year “genocide” campaign against unions, while allowing structural unemployment to get so bad that tens of millions of North Americans are no longer allowed to work. It was only when the deck was hopelessly “stacked” against labour that management (playing with other peoples’ money) was able to hold its own in negotiations.

We immediately see the first requirement in “pension reform”: require pension fund administrators to invest in the same financial products they are purchasing for pension beneficiaries – at least in their own pension accounts. There can be no argument here.

A pension-fund manager who complains that he doesn’t want to personally hold assets as risky as what he has purchased for the fund is obviously being too reckless. Conversely, there is an obvious rebuttal for any pension fund manager who complains that he/she “can’t get a high enough return” by mimicking fund investments: tell them to accept one of the other, cushy, six-figure job offers which are being dangled in front of them.

Forcing fund-managers to personally hold what they buy can be considered a certain means of getting these administrators to be much more “focused” and “motivated” in administering assets – and less likely to jump at the first “investment” recommended to them by sleazy fraudsters (in very expensive suits). However, “getting their heads in the game” is only the first step.

We obviously need fund administrators with some minimal level of competence in macroeconomics. Those individuals possessing such insight are aware that we are still in the early stages of the most-massive global economic boom in history: the simultaneous industrialization of more than half of the world’s population. The previous greatest economic boom was post-World War II, and the rebuilding of (primarily) Europe. Yet that “boom” only involved about 10% as many people.

Once we have competent people in charge of our pension funds, then they will obviously gravitate en masse to the world of commodities: the building-blocks of the global economy. It is the simplest of observations that the world’s largest economic boom (by a factor of ten) is going to involve much more “building” than at any other time in our history. Parallel to that is the increasing demand on “soft commodities” (i.e. food), as the combination of rapidly rising incomes and steadily increasing populations guarantees extreme pressure on global food supplies.

Here the bankers would retort that “commodities are too volatile for pension funds”. The response to that is to point out how these same banksters have turned all markets into wild, rollercoaster rides – with most of those rollercoasters moving steadily “downhill”.

The other obvious rebuttal to such banker nonsense is to point out that the “volatile” holdings in commodities can be “anchored” with the world’s most-stable financial assets: gold and silver. Indeed, we have recently seen one U.S. pension fund making the news for doing precisely what I am suggesting.

Here we will have to listen to more banker propaganda. They will point to the “massive volatility” in gold and silver markets over the last three decades (i.e. three decades of relentless banker-manipulation), and claim that gold and silver are even less-stable than a basket of commodities.

The facts are as follows. For 5,000 years gold and silver have perfectly preserved their value in our societies (around the world) – that is the real “long term”. In comparison to that, three decades is the mere blink of an eye. Beyond that, the charts (and the data) are unequivocal. For two decades we experienced the most extreme  market-manipulation with gold and silver ever witnessed in human commerce. While the price of gold was pushed to a mere fraction of its real value, the price of silver was manipulated all the way down to a 600-year low (in real dollars).

Over the past decade gold and silver have simply re-asserted themselves. The prices have marched relentlessly higher in spite of the implacable opposition of the most powerful (and corrupt) cabal of bankers in economic history. Now those are the sorts of “assets” I would want in my own pension fund – especially when these two precious metals have only begun to catch-up to their actual value.

The last ingredient necessary to begin to restore solvency to our pension systems is to establish a “rescue fund” to prop-up some of these institutional pension funds which have already been too severely damaged by corruption and/or incompetence. Here we have an obvious source for the revenues we would need for such a fund: the multinational banks themselves.

As the sole culprits for the destruction of our pension systems, they are both morally and factually responsible for this crisis. Of equal importance, they also have an ideal revenue stream to tap into to top-up such a rescue fund: the infinite, exorbitant “fees” they charge for various electronic transactions.

Given that the transaction-costs for the banks for such electronic processing are near-zero, these excessive bank fees represent nothing less than “windfall profits” in the hands of these career-criminals. Obviously taxing windfall profits is the least harmful means of raising revenues in any economy.

Better still, we already have a decade of experience of watching what these banksters do with any/all “windfall profits” which come their way: they pillage every penny of it out of their corporate coffers and call it “performance bonuses”. Thus, when it comes to a choice of either wasting all of these “windfall profits” (in bankster bonuses) or using them (productively) to protect the pensions of tens of millions of people, the “justice” here is undeniable.

The days when Western pension fund administrators could draw fat salaries for serial-failure are over (one way or the other). Allowing these pseudo-professionals to remain on their present course will result in nothing less than mass-bankruptcies throughout our pension systems (shortly followed by riots in the streets).

Our pension funds now require competent (honest) individuals, with rational and viable strategies for producing optimal long-term returns on these assets. Unqualified applicants need not apply.

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Jeff Nielson
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written by Jeff Nielson, September 09, 2011
Bobbbny, the corruption of our markets was essentially a two-stage process. "Stage one" was the most important stage: training the sheep to STOP looking at ANY long-term charts and statistics - and to allow themselves to become completely mesmerized by the short-term gobbledy-gook peddled by these charlatans.

At that point practically all participants in markets became literally "blind", which is why we have all these "experts" claiming they never "saw" the largest housing-bubble in the history of humanity.

Once the sheep (and the so-called "experts") are ALL "blind" it becomes an exercise somewhat simpler than what the Pied Piper engaged in to lead all of these sheep to their own destruction.
bobbbny
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written by bobbbny, September 09, 2011
Jeff, The problem with investing in this day is that everyone on Wall Street has been held captive to false models for evaluating assets. The first problem with these models is that they do not take into account the nature of the Ponzi scheme being run by the worlds central bankers. In an environment such as this, all models must be thrown out the window.
Yet, they have clung to the efficient market theories of people such as Markowitz to find "fair value" based on discounted cash flow or dividend yield models. This simply does not work in a world of criminals, who operate under their own rules.
They have followed the discredited theories of people like Jeremy Siegel, who wrote "Stocks for the Long Run", in which he argued (based on a pathetically short time frame of the post WWII US economy), that the way to create wealth was buying stocks and never selling them!!!
They have followed flash in the pan types like Harry Dent, who wrote in the 1990's (Get ready for this), "The Great Coming Boom", in which he argued that the demographics of the baby boomers, saving for their retirement, would cause the Dow to soar to 40,000!!!
Amazingly, you can still find these frauds as television "guest experts" from time to time.
Unbelievable.
I take issue with your comment that advisors don't care about other peoples money. This may be true of anonymous Pension Fund managers, but not for one who has to look people in the face.
If I pick a bad investment, my stomach churns.
I have been advising people for years now to own high yield bonds (Goodyear is more capable of paying that the US Treasury), oil & other commodity stocks, silver, and gold.
Lately I've been adding commodity currency bonds (Brazil, Australia, New Zealand, Norway).
I tell them about the Ponzi scheme, and they believed me then, and they most certainly believe me now.
They have all survived unscathed (so far).
Jeff Nielson
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written by Jeff Nielson, September 08, 2011
Yes Dylan, and this is one of the greatest tragedies of this whole fascist "looting" of our economies which has taken place. The people who are going to be victimized the WORST (the elderly) are PRECISELY the people who voted these criminals into power - and KEPT THEM there.
Dylan
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written by Dylan, September 08, 2011
Jeff

To me it is as clear as crystal that the vast majority of honest pensioners have been very deliberately scammed out of their earnings from the very beginning. These administrators are inside men, not incompetent but very efficient predators. The worst kind that prey on the weak -Grandma and Grandpa.
Just after the credit default swap scam blew up, a lot of hedge funds shut down in London, one trick ponies. The insider hedgefunds however funneled all the booty into the private accounts of the counterparty shadow banker oligarchs.

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