Unfunded

So this week brings word of yet more pension fund failures. This installment is brought to you by Cobb Our-S***-Doesn't-Stink County, Georgia, and the state of Nevada. (Okay, Nevada hasn't tanked yet but there's nothing to check its demise.) Let's be clear, these are not failures of the market. These are failures of the people that manage these funds. There's a four word term I want everyone to practice repeating: Pension Benefit Guaranty Corporation. Get familiar because they're going to write your checks one day. For some reason public sector fund failure doesn't bother me as much a private sector one. After all, there's only so much you can do with government financing. But when a big fat company like United Airlines simply doesn't make its fund payments, causing it to fail, and then goes running to bankruptcy and passes off it's fund to PBGC, that's criminal with malice and aforethought. Bonus round: The United CEO got $37 million in stock and bonuses upon the company's emergence from bankruptcy.

PBGC's increasing load piggybacks nicely with the US Government going into the mortgage business. (Aside note: My understanding, and I could be wrong, of the Freddie/Fannie failure is that it wasn't their bad loans but their inability to continue packaging and reselling their debts. Some guy named Ponzi first came up with that idea.) Dovetailing with this theme congress is setting up to see who can give the biggest handout to the domestic auto industry. Because we really need subsidized Tahoes and F-250's. Behold, the era of small government is upon us. To those that argue for the privatization of social security I say what's the point? Athena, where was it you read a few years ago where someone described the US Government as the world's largest insurance company with guns?

The terrain is changing beneath our feet. Without much in the way of public consent and little in the way of discourse the fundamentals we've counted as solid are being renegotiated. Thirty years from now, when the academics and pundits sit down to write histories of the days we're living now, we are going to be excoriated for hubris. In the mean time, mom better get to work on a Plan B.

Ares