Juggling Dynamite

This is an excellent summary of where we are at. And yes it can seem hopeless to fix. But we must nonetheless.

“Since 2008, the United States has missed out on over $4 trillion in National Income from unemployed workers and capital due to insufficient demand. Meanwhile, inequality and corruption is skyrocketing in our country.

This is a wonderful speech about corruption in the United States: from Washington DC and Wall Street, including the entire financial/banking system.

This video is being posted only for educational purposes and to have this important viewpoint as public record.

From the event at the Philadelphia Fed on April 17th, 2013 (04/17/2013) conference segment “Fixing the Banking System for Good”.

“The amount of utter criminality and financial fraud is absolutely enormous and its almost daily.” Here is a direct link.

The S&P 500 has now clocked a truly incredible 20% rally over the past 6 months. Particularly striking since the global economy and corporate revenues have been declining throughout. There are few skeptics left it seems, but for anyone who is at all concerned about support or sustainability of rocket high stock prices, here is a chart worth considering. More than 50% of the market gains since November have come on Tuesdays each week. See: This is your S&P; this is your S&P without Tuesdays

Indeed without Tuesday price gains each week, the S&P would be flat year to date since January.

Groovy Tuesdays indeed! Ah yes the incredible Tuesday effect, I remember learning all about this naturally recurring phenomenon in my market dynamics studies and investment text books. Sure, perfectly natural. No whacky computer trading at work here at all.  Solid investment climate….all good; why question–all on board.

The Ontario Municipal Employee Retirement System (OMERS) is the 4th largest public pension plan in Canada with approximately 60 billion dollars under management. Although it is known as being one of the best run pensions in the country and doubtless has access to some of the best investment opportunities and managers available, it is still struggling to make up losses experienced in the 2000 and 2008 bear markets. Today like most pension funds, OMERS is running a deficit and is approximately 89% funded according to its website here.

An aging population that is living longer than ever before, is presenting unfavorable funding demographics in pretty much every pension in the world, and with 100-year lows in interest rates, low dividend yields and an ongoing secular bear market in stocks, the answers needed are more than just optimistic return hopes. The way back to sustainable plans includes lower benefit amounts, later retirement dates, less annual indexing and increased funding from employers and employees alike. Stakeholders trying to avert contribution hikes at OMERS have recently tabled proposals to lower benefit accruals, extend retirement dates and lower annual CPI indexing by 50%. These are all steps in the right direction although they will be hugely unpopular and hotly contested by union representatives; still facts must be faced eventually. One of the proposals aptly explains the rational for reforms as follows:

The grim economic picture facing Ontario and its citizen impacts on the affordability and sustainability of the current OMERS Plans. This is especially true when it is unlikely that current contribution levels can be reduced to normal cost levels for many years. Infact there is a real prospect that contributions may increase as set out in the 2013 projections.

Current members and their employers should be protected as much as possible against further contribution increases. If earnings of the OMERS plans in the next few years do not surpass on average the assumed rate of 6.5% further increases in contributions and reduced benefits may be required under SPDOS. To attempt to avoid such an occurrence it is proposed to reduce benefits accrued by members to the OMERS plans after December 31, 2015.