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With all due respect to Yogi Berra, the original quote, “The opera ain’t over till the Fat Lady Sings,” was made by Dan Cook, a sports writer for the San Antonio Spurs.
Today, the opera (story of tragedy) of the coming pension crisis in America appears to be entering its final stages.
In fact, the recent actions of the California Supreme Court, makes you think that the Fat Lady is, indeed, clearing her vocal chords.
California and its underfunded pension system is broke. (Unfortunately, this is also true of most public funded pensions in America today).
So, the California Supreme court is going to decide if cutting its pension benefits is legal or not.
In plain English, this means the beneficiaries are going to get screwed.
Ironically, this is like deciding if it’s legal for a coyote to chew off its own foot to get out of a trap.
However, just like the coyote, the pensions will chew off their foot no matter what gets decided. They have no other alternative.
Cali isn’t the only one caught in this trap.
You see, most pensions were set-up on the basis of getting a 7-8% average rate of return. This was based on being conservative and buying bonds to provide a safe income.
Since the 2008 meltdown (when most pension fund managers foolishly sold at the low) rates have fallen to near zero.
What’s worse is the pensioners, expecting to receive their benefits, are clueless as to what’s going on. They foolishly believe they’re money’s safe.
Reality check, folks: “Feeling entitled to historical rates of return won’t make them come true.”
Bottom line…they can’t make up for losses. Pension bene’s are going to be cut. And it won’t be pretty.
See how it affects the markets (HERE)
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