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US tax cuts will fail as Trump’s demographic deficit replaces Reagan’s demographic dividend

No country in the world now has a top quality pension system.  That’s the conclusion from the latest Report by pensions consultants Melbourne Mercer.  As the chart above shows: Denmark and The Netherlands have fallen out of the top category In the G7 wealthy nations: Canada is in category B; Germany and UK in C+; […]

The post US tax cuts will fail as Trump’s demographic deficit replaces Reagan’s demographic dividend appeared first on Chemicals & The Economy.

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Pensions crisis finally becomes a mainstream issue

It has been 5 years since we first warned of a looming pensions crisis in Boom, Gloom and the New Normal.  Now, finally, it is becoming a mainstream issue.  The latest round of central bank stimulus policies has clearly been the proverbial “straw that breaks the camel’s back” for anyone connected with pension funding. The […]

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US pensioners pay the price for Fed’s monetary policy failure

There was one bit of good news this week.  For the first time since the financial crisis began, a Governor of the US Federal Reserve acknowledged that today’s demographic changes are having a major impact on the US economy. John Williams, of the San Francisco Fed, argued that: “Shifting demographics….(mean that) interest rates are going […]

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Crunch time for pensions as $13tn of global bonds now have negative interest rates

Around a quarter of global bonds now have negative interest rates.  This means that you get less money back at maturity than you originally invested.  And the number of bonds impacted is rising exponentially, as Bank of America Merrill Lynch reports: $13tn of global debt has negative yields, compared to $11tn before the Brexit vote, […]

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Pension funds suffer as retirement ages have fallen whilst life expectancy has risen

10k Americans have been retiring every day since 2011, and 18k Europeans, as the BabyBoomer generation reaches the age of 65.  But pension schemes have not adapted to the fact that average life expectancy is now 20 years at age 65.   This is causing major problems for the economy as pensioners leave the workforce […]

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Stock markets weaken as ‘Ring of Fire’ fault-lines open

“Central banks have created a debt-fuelled ‘Ring of Fire’, and we will no doubt have felt many tremors (large and small) as a result, by the time my next 6-monthly update appears in September“. That was my forecast for world stock markets back in March, and I imagine few would argue with it today, as we review developments […]

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Swiss pensions bankrupt by 2025: US Social Security by 2030

Nobody would imagine that the SFr 800bn ($840bn) Swiss pension scheme could go bankrupt.  But Swiss pension experts suggest it “will be bankrupt within 10 years (without)…a radical overhaul of the retirement system.”  The problem is simple – a combination of low/negative interest rates and an increase in life expectancy. A major analysis in the Financial Times […]

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Oil consumption growth has slowed as prices have stayed high

As promised yesterday, the blog looks today at the impact of today’s high prices on oil consumption growth. As the chart, based on BP data shows, the ‘easy money’ policies of the central banks have only partially mitigated the impact of the oil price rally since 2009.  Consumption growth has not fallen to the 0.8%/year level […]

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Oil price costs remain close to 5% of global GDP

Oil markets have been driven by speculative excess since 2009.  None of the factors that were supposed to create supply shortages have ever occurred.  Markets have never even been close to scrambling for product.  And the rallies are getting shorter and shorter, as this simple fact is finally being better understood. Thus traders’ most recent efforts to create […]

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Pension promises unaffordable due to demographic change

As promised yesterday, the blog looks today at the impact of today’s rapidly ageing populations.  The key point is that global life expectancy been rising for over 40 years, whilst fertility rates have been falling.  A paradigm shift is thus inevitable, where future demand will be very different: 1970 Onwards.  Growth accelerated, as the population became concentrated in the […]

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Fed Chair Yellen ignores demographics, goes back to stimulus

So, here we are again.  Each year it seems to take less and less time for the US Federal Reserve to give up on its confident New Year forecasts of economic recovery. New Fed Chair, Janet Yellen, argued in February that the weather was responsible for the economy’s poor performance.  But now she seems to have decided the […]

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UK tinkers with higher pension ages, ignores impact on GDP

Many readers have asked to see how the UK economy is being impacted by its ageing population, following the blog’s December series on the US, China, Japan, Germany and France.  As the chart shows, it is in a very similar position to all of these countries: Life expectancy has increased by 17% to 81 years today, from […]

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France’s pension age stays low, whilst New Old 55+ generation increases

France, with GDP of $2.6tn, is the 5th and final profile in the blog’s series on the impact of ageing populations on economic growth.  Its importance lies not just in the size of its economy, but also in the fact that its relationship with Germany has been the driving force behind the European Union and the Eurozone. France […]

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“We really see retirement as the next big financial crisis”

How much money will you actually get when you retire?  And how secure will that income be? Slowly but surely a debate is starting to open up about the impact of ageing populations on economic growth.  And as a result, a second and equally important debate is starting about what is actually happening to pensions. “We […]

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Pension fund speculation boosts oil prices as consumers suffer

Think back over the past 5 years.  Can you remember a single time when oil supplies were actually difficult to find?  If you can’t, then you have the same memory as the blog. Official statistics support this view.  Thus last week’s US EIA report noted that “U.S. crude oil inventories are near the upper limit […]

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Pension risks growing as pretence continues "all will be well"

We all hope to live long enough to receive a pension. But few of us have any real idea of how much money is needed to fund our retirement.

Many happily assume that savings of $250k, for example, will easily fund round-the-world travel and major hom…

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Most pension funds have negative returns since 2007

The chart above should be of great interest to anyone who hopes to retire on a pension. It should also be required reading for any executives planning their business portfolio for the future.

Published by the Financial Times, it shows the actual perf…

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Oil markets break out of their ‘triangle’

There has never been any fundamental basis for the rise in oil prices over the past 3 years:

• At no time has there been any actual shortage of product
• In fact, inventories have always been at comfortable levels

They rose only for two reasons:
…

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Europe’s €30trn pension fund ‘hole’

Pensions were one of the great inventions of the past century. Now the European Central Bank (ECB) has issued a ‘wake-up call’ on the affordability issues that lie ahead.

The reason is very simple. As we note in ‘Boom, Gloom and the New Normal’, pe…

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Pensions fall as financial market turmoil continues

Increasing life expectancy is an enormous benefit for today’s population. We can all, whether in developed or developing countries, expect to live a decade or more longer than our grandparents’ generation.

Yet pension systems haven’t adapted to thi…

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Lower earnings, pensions, hit US consumers

Wall Street analysts have their bonuses to consider at this time of year. So it is no surprise that they are talking up the prospects for the Christmas season – the peak shopping period of the year in the West.

But those involved in shipping goods do…

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Low Western pensions will change demand patterns

Next week, the blog publishes Chapter 5 of its ‘Boom, Gloom and the New Normal’ eBook, co-authored with John Richardson. This looks in detail at the major changes taking place in demand patterns as the BabyBoomers (those born between 1956-70) enter th…