Yes. And when something costs very little, what does that say about its value? ;)
Pension funds were in a world of hurt during and right after the GFC. The only thing that saved them was the re-inflation of the asset bubble, which got bigger (and thinner walled) that it has ever been. That asset bubble inflation was possible due to the artificially low interest rates that had been maintained ever since. It should have been obvious that this was unsustainable and would have to end at some point.
Public pension plans in particular have been an understated scandal for years--government NEVER funds them adequately.
However, the lack of cash on hand moves them that much closer to the sort of liquidity crisis that scared the piss out of the BoE a couple months back.
Whenever the liquidity shock hits, the frailty of the financial system is going to express itself as contagion on an epic scale.
" Interest rates are the cost of money."
Yes. And when something costs very little, what does that say about its value? ;)
Pension funds were in a world of hurt during and right after the GFC. The only thing that saved them was the re-inflation of the asset bubble, which got bigger (and thinner walled) that it has ever been. That asset bubble inflation was possible due to the artificially low interest rates that had been maintained ever since. It should have been obvious that this was unsustainable and would have to end at some point.
Public pension plans in particular have been an understated scandal for years--government NEVER funds them adequately.
However, the lack of cash on hand moves them that much closer to the sort of liquidity crisis that scared the piss out of the BoE a couple months back.
Whenever the liquidity shock hits, the frailty of the financial system is going to express itself as contagion on an epic scale.