Mike Pouraryan
The Upcoming Economic Tsunami
I have written about the "Economic Green Shots" in SP's Sister Site, Outsider Views. Although there seems to be a recovery on the horizon, the fact remains that the recovery continues to be fragile. The plight of the U.S. States is especially worrisome.
The analysis by Orin Kramer of New Jersey's Investment Council worries me a great deal. He notes that US public pension funds face a 2 Trillion Dollar shortfall. This means that either pensions have to be decreased or further monies need to be paid out of the empty public coffers. In California today, there is no money. Where will the states get the money?
Beyond the precarious state of US State and local finances, the bigger problem I see is investment funds who are cutting exposure to US and UK government bonds. The deficit spending that the US and UK have undertaken to fund this fragile recovery is bound to come back to haunt us all. Although I do not wish to be in the position of the policymakers, I think that the decisions over the ensuing months will be even more crucial to insuring that we avoid another Tsunami. Whether that in fact happens is another question.
The analysis by Orin Kramer of New Jersey's Investment Council worries me a great deal. He notes that US public pension funds face a 2 Trillion Dollar shortfall. This means that either pensions have to be decreased or further monies need to be paid out of the empty public coffers. In California today, there is no money. Where will the states get the money?
Beyond the precarious state of US State and local finances, the bigger problem I see is investment funds who are cutting exposure to US and UK government bonds. The deficit spending that the US and UK have undertaken to fund this fragile recovery is bound to come back to haunt us all. Although I do not wish to be in the position of the policymakers, I think that the decisions over the ensuing months will be even more crucial to insuring that we avoid another Tsunami. Whether that in fact happens is another question.
