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Sunday, November 28, 2010

Pensions Nightmare in the waiting, Pensions and Actuaries in Crises

Pensions nightmare in the waiting

Pensions and Actuaries in Crises

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I believe the pensions of America in all aspects government, private, and corporate are in a major meltdown waiting to happen. I believe this will be the next bomb to drop on Wall Street, Main Street, and easy street.
Actuaries all over this country, HAVE BEEN DEAD WRONG, for a very long time,  Their forecast matrix models have had a low range of 7 to 10 % market returns via the s&p 500 and or the other broad indexes.  We all know how the 10 year return in this country has been in a real number world. (15%), but pensions and people do not live in a real number world.  They live in a weight adjusted number world OIL GOLD REAL-ESTATE AUTOS FOOD.  And many if not most actuaries have used the P.P.I. and or the C.P.I. government or their own as their Inflation barometer.
·         P.P.I., C.P.I.   10 year annual up less than 3 %
·         GOLD  10 year annual return up over 100%
·         OIL  10 year annual return up over  70%
·         REAL ESTATE annual 10 year return up over 15%
·         Commodity (food) annual return up over 15 %
I will put it this way Two years ago while visiting my Daughter in Manhattan over Christmas I attend a party and a couple young actuaries where in attendance.  I was introduced because of my profession as a derivative wealth protection guy.   One made the statement to me that “we have not even seen Inflation yet”.  The other was in total agreement.  I did not say much but I thought to myself “are you kidding, NO INFLATION how asleep are they”.  Again they were thinking and using the   U.S.   P.P.I.  and C.P.P. numbers,
        I as a weighting wealth mind set knew the real Inflation numbers over the past decade 2000 2010.   They had gone crazy the only thing that did not inflate over the said decade was equity prices. (How bad was the market over that decade BAD WEIGHTED HORABBLE)?

This is history repeating itself in the late 70s and early 80s the pensions of this country where failing for the same said reasons and corruption.  So congress acted and the individual retirement account was born.
        Of course we all know how empowered that industry ( and I do mean INDUSTRY) has become.  THE GIANT BEAST OF WALL STREET and easy street, FUND MANGERS making huge money with no accountability, TALK ABOUT EASY STREET.
        Stay tuned I will be writing and commentating via video on this page in regard to the said subject matter.  This nightmare is only beginning, 80 million fat unhealthy baby boomers retiring SOON.  You think  health care is in for a major crises (which it is) wait until every cop, teacher, janitor, professor, and insurance investor,  FEELS THIS nightmare.
Kevin D. Blanch 10/8/10

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