In the U.S., we have Social Security and state and local governments have made additional pension commitments. But in most cases, those commitments are only partly funded meaning state and local governments rely upon incoming revenue to fund them and now that revenue is getting squeezed by unending tough times. And Social Security, which is funded by its future recipients has been drained by the U.S. government and is packed with IOU's in the form of government debt. If you live in Europe in the Euro Zone or in England, you know your economy is under siege. This is especially true in Portugal, Ireland, Italy, Greece and Spain but it could easily spread to France and elsewhere throughout Europe.
So how good are all these pension "commitments?" Pretty shaky at best because if these economies don't strongly bounce back, bond holders will try to elbow their way to the front of the line to be sure they get paid before the pensioners. These pensioners include teachers, police, firefighters, paramedics and many other public servants. Meanwhile, inflation even at the 3.6% it is in America as of June 30th, reduces the buying power of those pensions and for everyone else as well.
From today's New York Times is a news article addressing this topic for Americans but wherever you live, please unite with others to do all you can to ensure your government will honor its pension obligations. http://www.nytimes.com/2011/08/13/us/13bankruptcy.html?_r=1&nl=todaysheadlines&emc=tha23
Dick
Thank you to my son Kyle for suggesting this piece.
1 comment:
Sadly like steel workers and auto workers in the past, the pensions promised by the government (be it municipal, county, state or federal), there is a harsh renegotiation in the near future. As governments need more borrowed money more than they need the support of the pensioners, you can guess who will win their space at the feeding trough on any day ending in "Y". Not only should one become politically active but also creating other skills so that should income be cut significantly, there are alternative sources to bring in money to the household. A sorry situation indeed!
Post a Comment