Pension Crisis: aka I Actually Agree For Once with Glenn Reynolds

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Chris Dierkes

Chris Dierkes (aka CJ Smith). 29 years old, happily married, adroit purveyor and voracious student of all kinds of information, theories, methods of inquiry, and forms of practice. Studying to be a priest in the Anglican Church in Canada. Main interests: military theory, diplomacy, foreign affairs, medieval history, religion & politics (esp. Islam and Christianity), and political grand bargains of all shapes and sizes.

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9 Responses

  1. Avatar Jaybird says:

    We could always make smoking legal again.Report

    • Avatar mike farmer says:

      We are going to have to get into the dope business.

      Also, don’t forget that commercial real estate is getting ready to crumble.Report

      • Avatar Jaybird says:

        The number one thing that worries me is what is going to happen to the stock market.

        When the boomers start retiring, en masse, they are going to start cashing out their 401ks because they need the money more than they need the stock anymore.

        There will be fewer people buying the stock than selling it, creating a downward pressure on the price.

        The downward pressure on the price will result in lower prices, all other things being equal, and the boomers will say “holy crap, my portfolio is not worth as much as it was yesterday! SELL!!! SELL!!!!” because, again, they will want the money more than the stock.

        And this will create a downward pressure on the price of stocks.

        The downward pressure on the price of stocks, at that point, will create a feedback loop where no one will be willing to buy stock because they know that it will be worth less tomorrow than today. And you know what? It will be.

        And that particular crash will make 2008-2009 look like 2003.

        That said, young folks who are interested in stocks as a long-term investment for, among other things, company dividends (remember when *THOSE* were the reason you bought stocks?) will be positioned to make a fair amount of long-term money.

        If, of course, it’s not the end of the world as we know it.Report

  2. Avatar mike farmer says:

    Hopefully,speaking as a self-centered, evil, business-owner, they will invest in real estate.Report

  3. Avatar E.D. Kain says:

    Have you read the Deep Capture blog at all, Chris?Report

  4. Avatar Dave says:

    The pension fund systems are in a world of hurt right now. The declines in their portfolio values are substantial with certain asset classes being hit harder than others. I know the California public pension funds through their alternative investments divisions have some sizable positions in investments that have probably (at least for now) lost most of their value.

    Sitting from my perch in commercial real estate, what has happened is that pension funds, either due to market uncertainty or due to the denominator effect (i.e. changes in portfolio value making the fund overallocated in a certain asset class), are not putting out any money right now, even on pre-existing committments (they can easily do this to fund managers simply by “suggesting” that a capital call now means they will no longer invest in future funds).

    From my perspective, pension funds are already out of the market and it sucks.

    Mike Farmer,

    Commercial real estate has been crumbling for at least 18 months now, it just may not be visible to those who don’t follow it on a daily basis.Report