In a world where central banks have repressed savers with over a decade of zero and negative interest rates, crushing the middle class and turning the US into a banana republic whose middle class is now shrinking so fast…
… it is perhaps remarkable that workers are still able to leave the workforce and enjoy some years of peaceful retirement instead of working every day until they die.
Of course when it comes to retirement, some countries are more equal than others – especially those where worker entitlements have been historically so generous that removing them would lead to nothing short of a revolution, even if it means a slow-motion fiscal suicide for the state which can no longer afford such generosity.
So for all those asking which countries have the most generous retirement systems, here it the answer. We doubt it will come as a surprise that some of Europe’s most fiscally challenged countries are also those that offer the longest retirement across the entire OECD universe. Incidentally, those pointing out the “sexism” that women tend to live longer and enjoy a longer retirement, we are confident that no feminists will touch that particular “inequality” with a ten-foot pole.
A tangent of the chart above: just because some of Europe’s most socialist nations have the most retirement regimes right now, does not mean they will in the future: as the next chart shows, in an progressively aging world, where there is roughly 45 retirees per 100 workers, this number is set to skyrocket by 2050, when such retirement havens as Italy and Greece will sport more than 100 retirees per 100 workers, a regime that is absolutely unsustainable.
And one bonus chart: yes, places such as Greece may have one of the most generous retirement regimes, but working all those long years to finally hit retirement in the thrice insolvent European nation is hardly a walk in the park: as the next chart shows, there is a great dispersion between those countries that have the most stressful working environment such as Greece, Turkey, Hungary and Spain, and those where work is a joy such as Scandinavia, New Zealand and the UK (although we somehow doubt the latter will remain on this list for long). Perhaps it’s only fair that after working in hell, one should at least be entitled to a few years of peaceful retirement.
America, you officially have a debt problem, and I am not just talking about the national debt. Consumer bankruptcies are surging, corporate debt has doubled since the last financial crisis, state and local government debt loads have never been higher, and the federal government has been adding more than a trillion dollars a year to the federal debt ever since Barack Obama entered the White House. We have been on the greatest debt binge in human history, and it has enabled us to enjoy our ridiculously high standard of living for far longer than we deserved. Many of us have been sounding the alarm about our debt problem for a very long time, but now even the mainstream news is freaking out about it. I have a feeling that they just want something else to hammer President Trump over the head with, but they are actually speaking the truth when they say that we are facing an unprecedented debt crisis.
For example, the New York Times just published a piece that discussed the fact that the bankruptcy rate among retirees is about three times higher than it was in 1991…
For a rapidly growing share of older Americans, traditional ideas about life in retirement are being upended by a dismal reality: bankruptcy.
The signs of potential trouble — vanishing pensions, soaring medical expenses, inadequate savings — have been building for years. Now, new research sheds light on the scope of the problem: The rate of people 65 and older filing for bankruptcy is three times what it was in 1991, the study found, and the same group accounts for a far greater share of all filers.
Overall, Baby Boomers are doing a whole lot better financially than the generations coming after them, and so this is very troubling news.
Not only are more older people seeking relief through bankruptcy, but they also represent a widening slice of all filers: 12.2 percent of filers are now 65 or older, up from 2.1 percent in 1991.
The jump is so pronounced, the study says, that the aging of the baby boom generation cannot explain it.
Of course it isn’t just Baby Boomers that are drowning in debt.
Collectively, U.S. households are 13.15 trillion dollars in debt, which is the highest level in American history.
All over the nation, companies are also going bankrupt at a staggering pace. This week we learned that the biggest mattress retailer in the entire country “Is considering a potential bankruptcy filing”…
Mattress Firm Inc, the largest U.S. mattress retailer, is considering a potential bankruptcy filing as it seeks ways to get out of costly store leases and shut some of its 3,000 locations that are losing money, people familiar with the matter said.
Mattress Firm’s deliberations offer the latest example of a U.S. brick-and-mortar retailer struggling financially amid competition from e-commerce firms such as Amazon.com Inc (AMZN.O).
We have seen retailer after retailer go down, and it is being projected that this will be the worst year for retail store closings ever.
But it isn’t just retailers that are hurting. Yesterday, I came across an article about a television manufacturer in South Carolina that just had to lay off “94 percent of their workforce”…
A TV manufacturer based in South Carolina have blamed Trump’s trade tariffs for laying off 94 percent of their workforce.
Element Electronics now has just eight employees in their company after letting 126 members of staff go.
They said the tariffs imposed on goods from China mean they can no longer buy essential components for their TVs.
During this next economic downturn, I believe that we are going to see the biggest wave of corporate bankruptcies that this country has ever seen.
State and local governments don’t go bankrupt, but they are drowning in debt as well. State and local government debt has ballooned to the highest levels on record in recent years, and one of the big reasons for this is because we are facing a coming pension crisis that threatens to absolutely overwhelm us…
Many cities and states can no longer afford the unsustainable retirement promises made to millions of public workers over many years. By one estimate they are short $5 trillion, an amount that is roughly equal to the output of the world’s third-largest economy.
Certain pension funds face the prospect of insolvency unless governments increase taxes, divert funds or persuade workers to relinquish money they are owed. It is increasingly likely that retirees, as well as new workers, will be forced to take deeper benefit cuts.
Meanwhile, the federal government continues to engage in incredibly reckless financial behavior. When Barack Obama was elected, we were 10 trillion dollars in debt, and now we are 21 trillion dollars in debt.
What that means is that we have been adding more than a trillion dollars to the national debt per year since 2008, and we continue to steal more than 100 million dollars every single hour of every single day from future generations of Americans.
And even though the Republicans have been in control in Washington, very few of our leaders seem to want to alter the trajectory that we are on. But if something is not done, absolute disaster is a certainty. At this point, it is being projected that our debt will reach 30 trillion dollars by 2028 if we stay on this current path. It would be difficult to overstate the grave danger that we are facing, but nothing is being done to turn things around. Here are some more projections from the Congressional Budget Office…
In 2022, the Highway Trust Fund will run out of full funding. In 2026, the Medicare Hospital Insurance Trust Fund follows. In 2032, the Social Security trust fund surpluses run dry, and all beneficiaries regardless of age or income level will face a 21 percent across-the-board benefit cut. Before 2030, we could have trillion-dollar annual interest payments. Interest rates have been low until now, but that is changing. As rates go up, we have to pay more on new debt and on all accumulated debt.
The amount we pay in interest on the debt is set to triple over the next ten years. But if interest rates rise just 1 point higher than expected, the government will owe an extra $1.9 trillion over 10 years.
On top of everything else, everyone else around the world has been on a massive debt binge as well.
After several years of steady investment growth and higher contributions from taxpayers, most of America’s public sector pension plans are still awash in red ink.
According to a new report from the Pew Charitable Trusts, the states collectively carry more than $1.4 trillion in pension debt—and only four states have at least 90 percent of the assets necessary to meet their long-term obligations to retirees. The Pew paper, which is based on states’ 2016 financial reports, shows that pension debt increased by about $295 billion since the previous year, making 2016 the 15th consecutive year in which state-level pension debt increased.
The really scary part is that pension debt keeps increasing despite the fact that taxpayers’ contributions to state-level pension plans have doubled as a share of state revenue in the past decade. Also worrisome: Pension plans are chasing increasingly risky investments. The gap between returns on safe investments and state pension plan investment assumptions was the highest in decades, the Pew researchers note, leaving pensions more vulnerable to market volatility and raising concerns that another downturn could drive already deeply indebted systems over a cliff.
Higher contributions from taxpayers and good returns in the market should bring well-structured pension plans back to good health. But only four states—New York, South Dakota, Tennessee, and Wisconsin—have at least 90 percent of the necessary assets to cover their retirement liabilities, Pew says.
Pew Charitable Trusts
There are two problems here. One is embedded in the very design of public sector pension plans. The other involves the politicians who are trusted to keep those plans funded properly.
“Our citizens should know the urgent facts…but they don’t because our media serves imperial, not popular interests. They lie, deceive, connive and suppress what everyone needs to know, substituting managed news misinformation and rubbish for hard truths…”—Oliver Stone
