Pension Issue Gaining

The media has finally begun to pick up on the next big disaster - The U.S. Pension System.

The bailout for the pension system will easily top $1 Trillion.

The misleading numbers posted by retirement fund administrators help mask this reality: Public pensions in the U.S. had total liabilities of $2.9 trillion as of Dec. 16, according to the Center for Retirement Research at Boston College. Their total assets are about 30 percent less than that, at $2 trillion.

With stock market losses this year, public pensions in the U.S. are now underfunded by more than $1 trillion.

That lack of funds explains why dozens of retirement plans in the U.S. have issued more than $50 billion in pension obligation bonds during the past 25 years -- more than half of them since 1997 -- public records show.

The quick fix for pension funds becomes a future albatross for taxpayers.

Got that?  And to cover cash flow issues these pension funds have been issuing "Pension Obligation Bonds".  Nice name. Catchy.  Problem is, it is the taxpayers that are going to get caught in this one, too.

By law, states must guarantee public pension fund debts.

Read "TAXPAYERS must guarantee public pension fund debts".  My bet is that at some point, taxpayers without pensions or mortgage problems are going to react badly to these bailouts.

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I took off most of my precious metal's positions over the last 2 weeks or so.  It was a great run, but trees don't grow to the moon.  I will own Gold again when it gets a little cheaper, same with Silver.   The Mad Scientist showed me his short gold/long oil rational and I bought into it.  Ratios exist without cash being a necessary intermediary.  Gold/Silver, Gold/Oil, Oil/Corn, Dow/Gold, etc... are all worth paying attention to.  Someday the inflationary spiral WILL begin, but we are still in the grips of deflation.  Markets can reach tipping points so quickly that they strip the bark right off of you over a weekend.  The 3$ Trillion 2 year deficit hasn't happened YET - but markets do tend to anticipate.  That's why this is so difficult.

Productive farmland is very rentable.  The roof doesn't leak (there is no roof) and the tenant never calls in the middle of the night because the heat is out (there is no heat, either). Besides not needing a lot of maintenance, productive properties are easily traded, and you can have a management service handle renting, rent collection, etc... at today's prices the rent return is very competitive with 10 year Treasuries, and at the end of 10 years my bet is the land will be worth more than you paid for it, particularly if inflation rears its ugly head.

A little homework, some common sense, and you too could be a member of the Landed Gentry.

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A bear market rally could be on tap. Markets just don't go the same way, every day, day after day.  I would use it as an opportunity to get out of equities.  These rallies are really just short covering, and they can feel great... but don't let it fool you.  Trade it if you want, just don't be a believer.  If said rally does materialize, look for a 10 - 30% move, and get as much as you dare!

Just don't forget to sell.

Good Luck!

Mentatt (at) yahoo (d0t) com