By Henry C K Liu
More than three years before the current financial crisis, in a series Greenspan, the Wizard of Bubbleland that began on September 14, 2005, I warned:
More than three years before the current financial crisis, in a series Greenspan, the Wizard of Bubbleland that began on September 14, 2005, I warned:
Through mortgage-backed securitization, banks now are mere loan intermediaries that assume no long-term risk on the risky loans they make, which are sold as securitized debt of unbundled levels of risk to institutional investors with varying risk appetite commensurate with their varying need for higher returns. But who are institutional investors? They are mostly pension funds that manage the money the US working public depends on for retirement. In other words, the aggregate retirement assets of the working public are exposed to the risk of the same working public defaulting on their house mortgages.
Peacenik wonders what it will take before the sheeple get out their pitch forks. This article in the Asia Times documents the downward spiral not only of pension plans but of all savings. And the recent talk in the Toronto papers about helping Canadian pension plans may not help them at all. Peacenik doubts that there is enough money in the whole world to fill the black hole. Have a good weekend.
