Vigilant Investor

This past summer, it was confirmed that American’s just don’t save. Already it was known that consumer debt was piling higher and higher, as well as federal and national deficits… But when the official savings rate dipped below 0%… well, that was a stunner, although for those monitoring what’s been happening in this country for the last few decades on this level, it wasn’t terribly surprising.

On that front, we have also been covering the pension plan crisis that has been stewing over the last five years, which means the taxpayer backed Pension Benefit Guarantee Corporation (PBGC) will be picking up the tab for a lot of retirement benefits that will be defaulted on eventually. Already we’ve seen USAirways, United, and now Delphi (and others work this angle ) for more efficiently. But that means more people dependent on other sources, and namely the government programs.

Well, if that were not enough, we know have an Employee Benefit Research Institute survey to confirm that they don’t invest for their retirement through their company plans, either. Kimsnider.com has a good critique of those numbers (WARNING!!: Don’t eat before reading!). However, I would add to her comments that education may not help the problem when most folks are paycheck to paycheck between debt and ordinary living expenses. Something else will have to give.

In the meantime, the politicians make more and more unfunded promises to pinch us all from another angle. Trillions of non existing dollars will be required to meet social security and the ever growing socialized healthcare safety net.

Indeed, something will most certainly give. The question ultimately is, will foreign central banks really want to lend to a bunch of retiring boomers to pay for their retirement? They are currently the primary lenders today. What happens if they say, no more?

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