Do You Have a Pension? Are You Sure? Really?

Subprime mortgage crisis? Check. Big Three car companies in trouble? Check. Credit crunch? Check.

And now, Heeeeeeere's the looming pension crisis. Great.

Michael Kranish of the Globe may have ruined your morning coffee by detailing the latest incarnation of doom facing our economy. Thank him for highlighting the potential meltdown of the Pension Benefit Guaranty Corporation (PBGC). The PBGC insures retirement incomes of approximately 44 million Americans. It's a $64 billion insurance fund not based on tax revenue. In February of 2008, the board of directors invested most of the fund in stocks instead of bonds. In September, the fund was $11 billion short, even before the subsequent Dow decline.

How is it possible for such a change in investment strategy to occur when businesses are closing and retirement funds are in jeopardy? Well, one possible theory goes like this: The PBGC was run by Charles E.F. Millard, who once was Managing Director with Lehman Brothers. The Secretary of the Treasury, Hank Paulson in 2008, is on the Board of Directors of PBGC, along with the Secretaries of Labor and Commerce. Paulson ran Goldman Sachs before taking over Treasury in 2006. In 2008, the finance/insurance/real estate sector gave almost $300,000,000 to political campaigns. In 2004, the finance/insurance/real estate sector gave over $300,000,000 to political campaigns.

Two brokers steered billions into the stock market with $600,000,000 in donations riding shotgun. O. I. C.

Wait until one of the Big Three shuts down to see how the PBGC folds.

Flickr photo by Shannon K and available under a Creative Commons license.