Pension funds are one of the big dominoes in all of this. They are silently being killed by the extended low interest environment and are taking ever increasing hits on bond yields through their laddered purchasing structure. The pain comes on gradually as the laddered structured rolls though since the bonds were purchased to match the pension obligations. The pain comes on gradually and is ramped up as each year of continued low rates passes. They cannot escape this trap as that would instantly crystallize their losses. Couple this with healthcare spending that now consumes 19-20% instead of the 3-4% that the funds were set up and structured around and you have a massive spending shortfall that grows worse and worse over time. This makes them do crazy things in an attempt to grow returns and yields and will eventually lead to implosion of the pension funds and the entire economy because no body is willing to reign in the out of control over all spending and rapidly increasing healthcare costs. The whole thing is going to unwind in a spectacular fashion there is no escape and no safe haven to be had. |