Pension Pulse

George Soros wrote an excellent comment asking, Does the euro have a future? (HT: Steve): The euro crisis is a direct consequence of the crash of 2008. When Lehman Brothers failed, the entire financial system started to collapse and had to be put on artificial life support. This took the form of substituting the sovereign credit of governments for the bank and other credit that had collapsed. At a memorable meeting of European finance ministers in November 2008, they guaranteed that no other financial institutions that are important to the workings of the financial system would be allowed to fail, and their example was followed by the United States. Angela Merkel then declared that the guarantee should be exercised by each European state individually, not by the European Union or the eurozone acting as a whole. This sowed the seeds of the euro crisis because it revealed and activated a hidden weakness in the construction of the euro: the lack of a common treasury. The crisi...

"One must come to Eleusis stripped of the barnacles which have accumulated from centuries of lying in stagnant waters. At Eleusis, one realizes, if never before, that there is no salvation in becoming adapted to a world which is crazy. At Eleusis one becomes adapted to the cosmos. Outwardly Eleusis may seem broken, disintegrated with the crumbled past; actually Eleusis is still intact and it is we who are broken, dispersed, crumbling to dust. Eleusis lives, lives eternally in the midst of a dying world." - -Henry Miller, The Colossus of Maroussi I begin my post with this wonderful passage and will circle back to it at the end. Ekathimerini reports, EU casts safety net for Greece : French and German leaders emphasized during a teleconference call with Prime Minister George Papandreou on Wednesday that Greece remains an “integral part of the eurozone” despite feverish media speculation about the country’s imminent default, govern...

Larry Eliott of the Guardian reports, Merkel and Sarkozy to hold crisis talks with George Papandreou : Angela Merkel and Nicolas Sarkozy will hold crisis talks with the Greek prime minister, George Papandreou, on Wednesday in an attempt to defuse the eurozone's escalating debt crisis. With President Barack Obama putting pressure on Europe's politicians to show the necessary leadership to prevent a Greek debt default triggering a market meltdown, the German chancellor and the French president will on Wednesday insist that Athens stick to its tough deficit-reduction programme. The US fears the worsening eurozone situation risks a return to the mayhem in the global markets seen three years ago this week when Lehman Brothers went bankrupt. The US treasury secretary, Tim Geithner, will take the unprecedented step of attending Friday's meeting of EU finance ministers in Poland and will urge European leaders to speed up ratification of July's agreement to establi...

Christine Dobby of the Financial Post reports, Pondering a big fat Greek divorce : Fears Greece will ultimately default on it debt roiled global markets on Monday leaving analysts scrambling to assess how it could unfold and what it might mean for the euro. Efforts to keep the country afloat through bailouts and austerity measures continue, but Filippos Sachinidis, Greece’s deputy finance minister, said Monday its cash will run out in October. With Germany pondering whether to keep propping up the struggling nation’s economy or pour its capital into its own banks to stave off exposure to Greek debt, the Mediterranean country’s fortunes are decidedly uncertain. Against this backdrop, many are wondering about Greece’s place in Europe’s economic and monetary union and how it might exit, if at all. “The talk of Greece being booted out of the eurozone will probably escalate,” said Marc Ostwald, foreign exchange strategist at Monument Securities Ltd. in London, England. “Once i...

Didn't make it to Elounda this weekend as we decided to stop off right before at Agios Nikolaos, which in my opinion is the most beautiful city in Crete. The beaches, food, and view are all a feast for one's senses. It was windy but I swam for over and hour yesterday, as far as possible, losing myself deep in the sea. There were currents and I paid the price today as every muscle in my body is aching. But I needed good old "thalassotherapy" to clear my mind and reflect on my life. Realize my biggest disease isn't MS, it's not letting go of the past and accepting certain realities in my life (MS is a major one but there are others). What I enjoyed most about this weekend was the company that I had with my nephew, sister, brother-in-law, and their friends and kids. My brother-in-law's buddy is an engineer who has read a lot on economics and finance. We talked about the current crisis and both agree that "terrorism and disaster" sell. He's a doc...

Heading off to Elounda this weekend, one of my favorite places in Crete. Will attempt to swim across Elounda to Spinalonga island , something I haven't done in over 20 years. But I feel like a million bucks here, healthy as ever, and absolutely love swimming in that sea. When I'm swimming, I forget about all my problems, forget that I have MS, forget the weasels in finance, forget everyone and everything negative in the my life and in the world. It's the best therapy for one's body, mind and soul. Right now, the world is on edge. People are starving to death in Africa and many innocent children are needlessly dying of famine. On Sunday, we will all remember 9/11 and the horrible attacks that took place that fateful morning ten years ago. I remember it like it was yesterday. I was here in Iraklio, Crete, came back from the beach, my dad opened the door and told me "airplanes just hit the Twin Towers." He had this serious look on his face that I'll never for...

John Mellow of CNBC reports, Underfunded Pensions Pressured to Make Riskier Bets : After a tumultuous August, pension funds for companies, governments and unions are falling further under water, raising pressure on boards to take on more risk at a time when the economic and policy outlook has never been more uncertain. Entering 2011, pension plans for companies in the S&P 500 were just 75 percent funded, down from 85 percent in 2010 and roughly 78 percent following the Lehman collapse, according to Goldman Sachs. Funding levels—likely even uglier on a municipal and union level—just got worse. “The recent fall in equity prices and in interest rates has led to sharp declines in the funding position of many institutional investors,” wrote Jim O’Neill, head of Goldman Sachs Asset Management, in a note to clients Thursday. “Recent market movements have left many institutional investors wary of taking risk, but at the same time mindful of the necessity of doing so in a thoug...