<blockquote>'They worry more about the advantage for return of having greater insight and influence on governance at the asset level. As for liquidity, that is largely illusory for a big pension plan.
Based on my own research over the last four years into accelerating technological change, particularly as it relates to water and energy, Norway will have lots of opportunity to combine the profitable and desirable through private investments in more efficient and more environmentally friendly infrastructure. The main hold-up is the historical underpricing of most social infrastructure services like water, sewage, and roads.
- Leo de Bever (
Giant Pensions Turn To Infrastructure? December 16, 2015)</blockquote>
'When people tell me the Greek pension fiasco can never happen elsewhere, I tell them to open their eyes as it's already happening all around the world, including in the United States where the trillion dollar state funding gap is set to explode higher as rates keep sinking .. My bet remains on global deflation and I see the Greek pension disease spreading all over the world in the not too distant future, wreaking more havoc on our already frail pension systems.'<blockquote>'Unfortunately, Greeks don't have much of a choice. Either they reform pensions, which means merging them, introducing real governance which shields them from political interference, and risk-sharing so that they're sustainable over the long-run or else those pensions are going to disappear altogether.
Of course this is Greece and nothing in Greece ever gets done without drama. I've given up hope on Greece and Greeks. It's quite shocking how they fail to grasp reality and this is reflected in the clowns they keep voting into power. I think Alexis Tsipras is finally taking the right stance but it's a day late and a dollar short. The titanic is sinking and I expect another "Greek crisis" in the near future which will only exacerbate Europe's deflation crisis (keep shorting the euro on any strength!).
..
When people tell me the Greek pension fiasco can never happen elsewhere, I tell them to open their eyes as it's already happening all around the world, including in the United States where the trillion dollar state funding gap is set to explode higher as rates keep sinking.
Mark my words, a prolonged period of debt deflation will be brutal and unrelenting, especially for underfunded pension plans. Why do you think central banks are busy trying to save the world, introducing all sorts of unconventional monetary policy measures including negative interest rates?
Will they succeed? I have my doubts and fear that the Fed is set to make a huge policy blunder if it raises rates next week. What really worries me is rising inequality and how deflationary this is for the U.S. and global economy.
In fact, Nobel-Prize winning economist Joseph Stiglitz wrote another great comment for Project Syndicate, When Inequality Kills, which discusses how rising inequality is literally very unhealthy for the U.S. economy and contributing to higher rates of drug abuse, alcoholism, and suicide.
..
..My bet remains on global deflation and I see the Greek pension disease spreading all over the world in the not too distant future, wreaking more havoc on our already frail pension systems.'
-
Greek Pension Disease Spreading? December 11, 2015</blockquote>
'High and unsustainable debt in the developed world: Government and household debt levels are high and unsustainable in many developed nations. This too constrains government and personal spending and is very deflationary.'<blockquote>'In stocks, I've been warning my readers to steer clear of emerging markets (EEM), Chinese (FXI), Energy (XLE), Oil Services (OIH), Oil & Gas Exploration (XOP), and Metals & Mining (XME) and/ or to short any countertrend rallies in these sectors. It's been a brutal year for these sectors and unless you're convinced that the global economy has hit bottom and is going to significantly surprise to the upside, you're best bet is to continue avoiding these sectors (or trade them very tightly as there will be countertrend rallies).
My investment approach and thinking is always governed by one major theme: DEFLATION. Are we truly at the end of the deflation supercycle? I don't think so and keep referring to these six structural factors which explain why deflationary headwinds are here to stay for a very long time:
The global jobs crisis: Jobs are vanishing all around the world at an alarming rate. Worse still, full-time jobs with good wages and benefits are being replaced with part-time jobs with low wages and no benefits.
Demographics: The aging of the population isn't pro-growth. As people get older, they live on a fixed income, consume less, and are generally more careful with their meager savings. The fact that the unemployment rate is soaring for younger workers just adds more fuel to the fire. Without a decent job, young people cannot afford to get married, buy a house and have children.
The global pension crisis: A common theme of this blog is how pension poverty is wreaking havoc on our economy. It's not just the demographic shift, as people retire with little or no savings, they consume less, governments collect less sales taxes and they pay out more in social welfare costs. This is why I'm such a stickler for enhanced CPP and Social Security, a universal pension which covers everyone (provided governments get the governance and risk-sharing right).
Rising inequality: The ultra wealthy keep getting richer and the poor keep getting poorer. Who cares? This is how it's always been and how it will always be. Unfortunately, as Warren Buffett and other enlightened billionaires have noted, the marginal utility of an extra billion to them isn't as useful as it can be to millions of others struggling under crushing poverty. Moreover, while Buffett and Gates talk up "The Giving Pledge", the truth is philanthropy won't make a dent in the trend of rising inequality which is extremely deflationary because it concentrates wealth in the hands of a few and does nothing to stimulate widespread consumption.
High and unsustainable debt in the developed world: Government and household debt levels are high and unsustainable in many developed nations. This too constrains government and personal spending and is very deflationary.
Technology: Everyone loves shopping on-line to hunt for bargains. Technology is great in terms of keeping productivity high and prices low, but viewed over a very long period, great shifts in technology are disinflationary and some say deflationary.
All these factors are deflationary and bond friendly which is one reason why I dismiss any talk of a bond market bubble from gurus who clearly don't understand the bigger picture (the bond market is always right!).'
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Canadian Pensions Betting On Energy Sector? December 17, 2015</blockquote>
Context<blockquote>
('The Age of Deleveraging (2012 - 2025)) - '..Few readers believe chronic deflation is in the wings..'Former Fed Governor Thomas Hoenig Says US Banks Undercapitalized; Unsafe, and Unsound Banks, April 12, 2015
Europe’s Banks Are Still Drowning in Bad Loans, November 27, 2015</blockquote>