advertisement 1
advertisement
SEARCH:
Sunday, July 23rd, 2017                                                 SUBSCRIBE TO OUR RSS FEEDrss feed

Pension Fund Killers: Milken and Bernanke

Published by on October 12, 2012

Pension Fund Killers: Milken and Bernanke thumbnail

by Victor Misek

THE PENSION FUND CRISIS in the United States extends into the public and private sectors of the economy to an extent unprecedented in the history of mankind.  It’s instructive to compare two of the most notorious individuals involved in the mass destruction and destabilization of pension funds invested in debt instruments.  The two individuals in my cross-hairs are Michael Milken and Benjamin Bernanke, a pair of Wall Street types specializing in contrasting methods of financial mass destruction.

Michael Milken’s career began in the 1970s when he noticed that many corporations had over-funded their employee pension plans with high quality securities.  He reasoned (correctly) that such corporations would jump at the chance to refinance these plans with cheaper high yield junk bonds.  The high quality securities could be sold off and replaced with cheaper junk. The corporation could then pocket the difference, in effect looting the pension fund and using the proceeds for corporate expansion, executive bonuses, etc.  Major corporations swallowed the bait and things went swimmingly until an economic downturn caused major defaults in the junk bond universe.  The resulting pension fund failures caused thousands of employees and retirees to lose their pensions, often their entire life savings.  Michael ended up with a ten year prison sentence and banishment from the finance industry, a trivial punishment considering the heartbreak and misery he caused.

Ben Bernanke as head of the Federal Reserve Board used his position to slash interest rates through massive bond-buying schemes called “quantitative easing” (QE). For years this has caused the yield on most debt paper to remain at historic lows, in effect strangling the income stream of pension funds.  The capital requirements of pension funds are calculated on an income assumption based on available interest rates.  Funds based on an income assumption of 9% suddenly found themselves looking at available rates of 3% or less. To maintain the stability of such a fund it would either have to triple its capitalization or cut its benefits by 66.7% ! Many funds did not reduce their payout to adjust to the reduced income, causing them to expend capital to maintain monthly benefit rates.  Worse yet, the injection of thousands of billions into the economy has had an inflationary effect, eroding the purchasing power of the shrinking remainder.

The pensions destroyed by Milken were restricted to a limited number in the private (corporate) sector. He specialized in destroying capitalization through high risk junk bond default.  At the height of his popularity he was known as the “Junk Bond King.” Once convicted and imprisoned he was called other less friendly names.

The pensions destroyed by Bernanke dwarf in number and extent the damage caused by Milken.  Bernanke will be remembered as the greatest pension fund killer of all time. The current ultra-low interest rates are causing the failure of public, private, corporate, municipal, state, and federal pensions.  At the height of his popularity he was known as “Helicopter Ben” because he at one time proclaimed that he would dump money from helicopters like confetti, if necessary, to “juice up” the economy.  Now that he is destroying the retirement plans of millions of Americans, new, less complimentary, names are being heard.

Unsustainable pension plans have already caused the bankruptcy of various cities in California, the bankruptcy of General Motors, and the insolvency of the US Postal Service.  Money market, short term treasury, savings account, checking account. and bank CD yields are near zero — while food and fuel prices spiral upward, indicating a shredding of the US dollar.

Government policies are also stimulating the influx of excess labor into our country, causing collapsing wages, high unemployment, welfare overload, home foreclosures, and personal and business bankruptcies — and all of these effects massively reduce the contributions to pension funds from wages.  As in the case of Michael Milken, serious prison time is needed for the drunken-spending politicians and Fed personalities responsible for this disaster.

 

SHARE THIS VIA EMAIL OR SOCIAL MEDIA:
Email this to someoneShare on FacebookShare on VKTweet about this on TwitterShare on Google+Share on TumblrShare on RedditPrint this page

Related Articles:

Readers' Comments





  • Mary Phagan, fogotten victim
  • Literature, US News »

    Homeless Jack on “Grabbing Some Pussy”

    November 7, 2016

    Homeless Jack on “Grabbing Some Pussy” thumbnail

    We discovered this piece scrawled on some foolscap left on our doorstep, an all-lower-case Kerouac-style stream of consciousness rap, and offer it as we found it. by H. Millard trump is an american original and a throwback to the days when americans were bursting with confidence and energy and the sheer joy of freedom and […]

    Africa, History »

    ‘The Choice of Achilles’: John Alan Coey Against the New World Order

    January 3, 2013

    ‘The Choice of Achilles’: John Alan Coey Against the New World Order thumbnail

    by T.R. Bennington AS EVER, BUT ESPECIALLY in our present state of civilizational malaise, there is a need for figures with the power to inspire — men who in less confused and cynical times would have been unabashedly described as heroic. One such figure is Corporal John Alan Coey, a young soldier who has perhaps […]

    Science »

    Quarter of Americans Convinced Sun Revolves Around Earth

    March 2, 2015

    Quarter of Americans Convinced Sun Revolves Around Earth thumbnail

    “DOES the Earth go around the Sun, or does the Sun go around the Earth?” If you answered the latter, you’re among a quarter of Americans who also got it wrong, according to a new report by the National Science Foundation. A survey of 2,200 people that was released Friday revealed some alarming truths about […]

  • Reader’s Comments

  • Categories

  • Archives

  • Pages

  • Login / Register / RSS

  • Vintage Mercury »

    Jailbirds

    June 7, 2017

    Jailbirds thumbnail

    by Jim Tully; from The American Mercury, September, 1928; transcribed by Kevin I. Slaughter THE jail room was thirty-five feet long, twenty-five feet wide, and seven feet high. In this large cage were fifty prisoners. Some had been sentenced and were serving jail terms; others awaited trial, or removal to the penitentiary. The floor was of […]

    Opinion »

    The Old Right and the Antichrist

    June 7, 2017

    The Old Right and the Antichrist thumbnail

    by Richard Spencer (pictured) The following address was given to the H.L. Mencken Club’s Annual Meeting; November 21-23, 2008. BEFORE William F. Buckley settled on writing God and Man at Yale in 1951, the 25 year-old had something quite different in mind as a debut volume. Buckley planned, and may have begun drafting, a book caustically […]

    Radio »

    The Fame of a Dead Man’s Deeds Audio Book: Introduction

    July 21, 2017

    The Fame of a Dead Man’s Deeds Audio Book: Introduction thumbnail

    by Bradford L. Huie TODAY WE begin one of the most important audio book series of our new century — one which we believe will become more and more relevant as the century matures: Vanessa Neubauer’s reading of Professor Robert S. Griffin’s masterful biography of Dr. William Luther Pierce, The Fame of a Dead Man’s Deeds. […]

  • Names and Topics



  • FEATURED ARTICLES

    Vintage Mencken »

    A Primeval Uplifter

    February 12, 2015

    A Primeval Uplifter thumbnail

    LUCY STONE: Pioneer of Woman’s Rights, by Alice Stone Blackwell; Boston: Little, Brown & Company; reviewed by H.L. Mencken IF THIS biography is a shade partial the fact is surely not surprising, for Miss Blackwell is not only Lucy Stone’s daughter but also a firm believer in all of the reforms that she advocated, excluding, […]

    Classic Essays »

    Oliver on Homosexuality

    February 11, 2015

    Oliver on Homosexuality thumbnail

    Originally written for inclusion in Frederick Seelig’s book Destroy the Accuser, this is Professor Revilo P. Oliver’s learned and insightful analysis of the homosexual question. by Revilo P. Oliver (pictured) THE APPALLING STORY told by Mr. Seelig in the foregoing pages is much more than a personal tragedy that must excite sympathy and pity in […]

    Opinion, Reports »

    What’s Wrong with the Real Right? – part 1

    October 19, 2014

    What’s Wrong with the Real Right? – part 1 thumbnail

    by T.R. Bennington FOR ANY political movement that seeks eventual ascendancy, it is incumbent to engage in regular bouts of self-analysis. As a casual but sympathetic observer of the so-called far-right, I have compiled a list of what I believe to be some of the tactical errors and misconceptions made and held respectively by many […]

    Fiction »

    Homeless Jack on Taking the Path

    June 29, 2014

    Homeless Jack on Taking the Path thumbnail

    by H. Millard “LOOK, MAN, a lot flows from the basic principle in Arman’s Teachings about what we call Code A. And, understanding what he teaches about Code A helps us sort out lots of things about morals and values and how we should live our lives. “Now, I follow Arman’s Teachings as best I […]

    History »

    A Mercury Exclusive: Tom Watson on the Leo Frank Case

    March 19, 2014

    A Mercury Exclusive: Tom Watson on the Leo Frank Case thumbnail

    Exclusive to the American Mercury by Bradford L. Huie ON THE 100th anniversary of his initial article on the Leo Frank case, the American Mercury is proud to be the first online publication to present, in full, the groundbreaking series of articles about the case by populist reformer and muckraker Thomas E. Watson from his […]

    History »

    Tom Watson: The Rich Jews Indict a State!

    March 19, 2014

    Tom Watson: The Rich Jews Indict a State! thumbnail

    The Whole South Traduced. In the Matter of Leo Frank. by Thomas E. Watson (pictured), Watson’s Magazine, Volume 21 Number 6, October 1915 ABNORMAL CONDITIONS prevail in this country, and the situation grows more complicated, year by year. We have carried the “asylum” idea to such extravagant liberality, that the sewage of the whole world […]

    History »

    Tom Watson: The Official Record in the Case of Leo Frank, a Jew Pervert

    March 19, 2014

    Tom Watson: The Official Record in the Case of Leo Frank, a Jew Pervert thumbnail

    by Thomas E. Watson (pictured), Watson’s Magazine, Volume 21 Number 5, September 1915 IN NEW YORK, there lived a fashionable architect, whose work commanded high prices. He was robust, full of manly vigor, and so erotic that he neglected a handsome and refined young wife to run after little girls. As reported in the papers […]

    History »

    Tom Watson: The Celebrated Case of The State of Georgia vs. Leo Frank

    March 19, 2014

    Tom Watson: The Celebrated Case of The State of Georgia vs. Leo Frank thumbnail

    by Thomas E. Watson (pictured), Watson’s Magazine, Volume 21 Number 4, August 1915 THE LAWS OF Georgia are extraordinarily favorable to a person accused of crime. He is not only protected in all of his rights under the Constitution of the United States, but he enjoys privileges far beyond those limits. No indictment against him […]

    History »

    Tom Watson: A Full Review of the Leo Frank Case

    March 19, 2014

    Tom Watson: A Full Review of the Leo Frank Case thumbnail

    by Thomas E. Watson, Watson’s Magazine, Volume 20 Number 5, March 1915 ON THE 23rd page of Puck, for the week ending January 16, 1915, there is, in the smallest possible type, in the smallest possible space, at the bottom of the page, the notice of ownership, required by law. Mankind are informed that Puck […]

    History »

    Tom Watson: The Leo Frank Case

    March 19, 2014

    Tom Watson: The Leo Frank Case thumbnail

    by Thomas E. Watson (pictured), Watson’s Magazine, Volume 20 Number 3, January 1915 AN AGED MILLIONAIRE of New York had a lawyer named Patrick, and this lawyer poisoned his old client, forged a will in his own favor; was tried, convicted and sentenced—and is now at liberty, a pardoned man. Through the falling out among Wall […]