Great Interview. 🎯 Definatly have this guy on again! His Answers were direct and precise and really helped me to connect the missing Dots that I've had for the BIG PICTURE of todays markets. Very clearly explains what FORCES are blowing the Bubbles and how they lead to Booms and Busts.
it is so refreshing to have someone talk with such honesty about what is happening in our markets. Thank you Mr. Reynolds for speaking the truth and Real Vision for making interviews like these possible.
There is a lot of garbage on RU-vid but once in a while, you come across a gem like this. This interview explains so much about what is really going on in the world today. Priceless.
One of the best interviews I have seen. The flow of pension money into stock buybacks is a very logical explanation why the markets continuously march higher despite crumbling fundamentals. The corporate sector is extremely over leveraged.
4:30 So is he saying that state pensions are buying heavily into corporate bond market, and the corporations are using that public money to buy stocks? Wow, that sounds SUPER shady!
Pension funds are investing their money into investment funds whose strategy is to make returns lending money to public companies, i.e., buying corporate bonds. to Once those funds pick public companies and lend them money, those public companies companies take the money and perform share buybacks with the loans, boosting the public companies' stock prices. The Pension Fund managers and government administrators know exactly what they are doing, but they will blame everybody else when it goes teats up.
@@movinon1242 My point is detailed, but in short pension funds invest in company debt because they expect some margin of safety by buying debt as opposed to buying stocks that get most easily wiped out in bankruptcy! Speaking of belly up. See when a company goes bankrupt, the stock holders are wiped out usually because companies must first pay all the businesses they deal with as accounts receivables are loans as eventually they charge late interest and fees. Then need liquidate everything and then the bond holders get paid according to their terms. But in the end, most bond holders get made whole. In fact if a company is getting really bad the bond holders can sue them to force liquidation so they don't loses more money and not have enough to pay them back. In short bond holders paid back first while being made whole or close to it and stock holders last and likely to get zero'd out.
He was talking about the Libor rates. What is saying is in the old days, the Dog (stock market) wagged the tail (debt market). Now the debt market is wagging the stocks. It is hard to understand, but things change. Heck I kept thinking banks had the student loan debts, but it was the Federalized and most loans are now Federal government issue for student loans.
You guys need to get this guy on an interview again. His depth of knowledge and understanding of the interconnectedness of our financial markets is outstanding. Subscribed.
They are not "unfunded pensions." They are pensions that have had their funds embezzled/stolen. Pensions are supposed to be set aside when the worker earns them. It is stealing if that earned income is used for other purposes and not available when payments are due.
Yes. As an example, Pete Wilson, Governor of California took money out of PERS since it was flush with cash and doing so well, and used it funding other state programs. Social Security was raided also. Something that is never mentioned. But I remember what that Governor did to this day. The three card Monte shuffle is how politicians solve their state financial problems.
@Rabble Repository Can or can't? Read what Pete Wilson did back in 1992. Maybe they can't now, since the backlash. About 18 paragraphs down. calpensions.com/2009/04/04/a-kinder-gentler-raid-on-calpers-funds/
Have we ever really experienced capitalism? Normally, a free market is its premise. But since its supposed rise, the market has always been regulated in favor of a few elite while suppressing (even repressing) competition from the lesser classes. Socialism and communism, too. Parasitic behavior if the self-designated, colluding elite.
the oracle of past present and future. this incredible basically watching the endgame of markets and being able to position on time before the facts. thank u for shang.
They tell us things that are not true, they lie to make us believe. The World is in a real mess and yes they do deceive. They take away our dignity it's us that feel the pain, they take away our hopes our homes and yet they feel no shame. But looking back through history it's always been the way, for the rich and the powerful to bleed us dry each and every day
Like he said, it used to take 30% of volume to make it move, now 5% of the volume can make it move. It moves both up and down. But during downturns there is HUGE buybacks. Here is an example. Look at AGIO stock. Huge institutional buy at 31 bucks a share from another Biotech company Celgene(that was recently bought out by BMY). It totally stopped the stocks down trend. A few more buyouts and mergers and boom the bloodbath in Biotechs was over.
raising taxes to keep the pension scheme going, oi vey. and this, my friends, is the problem with growing government. gov't grows, more gov't workers are hired and it's simply one more pension "mouth to feed." as simple as, smaller gov't means less pension liabilities which means less taxes. just shrink the gov'ts down to nothing and then the pension problem becomes minuscule.
"So it's just like we go from one asset class to another, within the context of boosting overall leverage." Minute 7:50 That's BECAUSE the entire system is predicated on the idea of exponential DEBT GROWTH. The way the global Money system is structured, Money is created as an interest bearing debt, which requires new Money and debt to be created, in excess of the previous balance, in order to sustain the system. This means that new debt must find a home, which it does in these asset classes, until the bubbles pop. This is baked into the math folks. The system is much like the old Soviet RBMK reactor that exploded at Chernobyl, which subsequently caused the collapse of the Communist Soviet Union. The US Dollar has an equally disastrous design flaw built into it, and one day confidence will be lost in the current system. And you can use basic 2+2=4 math to see it coming a mile away.
Help me understand this in bullet points. - Public Pensions are currently a future promise to pay between tax payers & employees/retires. - Current Employees substantially out number retirees for now. - Pension Fund Managers have told Cities/Counties/States that they can make an annual 7.5% return on investment to pay all future employee pensions, so these public agencies can an knowable flat rate & budget for the future. - Public Agencies currently budget for pension benefits & pay annual premiums to the Pension Fund. - Since there are currently more employees than retirees, the Pension Fund keeps accumulating cash that must be invested and get an annual return of 7.5%. - Pension Funds are currently flooded with cash. - The Pension Funds want safe investments and predominantly choose to buy bonds. - The flood of pension fund excess is often being invested in corporate bonds that are in turn leveraged 5:1 by corporations to buy back their own stock. - Corporate buy back drive up the Stock Market. - In the current economy Pension Fund Managers now realize they can’t safely obtain 7.5% annual returns and they woefully underestimate longevity of retirees. - What happens to this credit cycle when there are significantly more retirees than working employees? - Will credit tighten? - Will the stock market turn bearish with low Corporate stock buy backs? - Will Public Agencies need to cut public services, maintenance and risk bankruptcy? Let me know how you think this will turn out. Pat
Bleedin’ marvelous interview! I love at 27:40, “We’ve been issuing bonds in the last couple of weeks for European banks, for Russian banks. And for African nations. All with overwhelming demand”. The interviewer responds with “Yeah” for everything except “Russian banks”, where he says “Amazing”. I’ve been living in Russia since 2014. My Russian wife and I had a nice giggle. Cheers!
The force is strong with this one. I am not an economist far from it, but damm I understand what he is saying. The northeast will fall and the southeast of the U.S. will rise due to the pension obligations.
I'm curious Brian says that commercial real estate will be the next problem. Is it that commercial real estate is in a bubble and getting bigger? He did mention pensions buying junk bonds which in turn gives $$ to corporations to over inflate their prices but is this money also going toward commercial real estate thus over inflating those prices? I"m looking at investing in commercial real estate (strip mall) so this is why I'm asking.
So many state workers retire at 55 with pensions, health care and 401 3b. If you tell them to prepare in case pensions go south, they think it can’t happen- the tax payer will bail them out. The same ones without pensions or free/cheap health care forever? Same ones that will lose their 401k? I know teachers making over $100,000 in pension at 55 and pay no state tax. Compared to average worker, their plans were too rich- who is the real public servant?
this is genius i was thinking about this before i could not figure out why things were so out of wack and i did not see any euphoria yet just brilliant brian reynolds straight talking
Wow Brian’s insight is fantastic! Please invite him back soon! His explaination of the credit vs equity markets was very helpful, especially how pensions are inflating the stock market. I’m still unclear why commercial real estate is in trouble.
Probable because most are so high up into debt they can't pay the over inflated prices..and still get groceries and gas for the car. middle class does not look so good any more..
They are borrowing and keep on borrowing. Probably have no equity in their companies. It's all debt. Like re-financing your house to buy a boat, vacations etc.
I came here via Robert Kiyosaki's book called "Who stole my pension". He literally said to watch this video. This was a great interview. I am a federal employee reading about how the pensions work and wow what an interview. The people that run Calpers need to watch this video. In his book he was talking about how the pensions are giving their money to active money managers and should be sending their money to passive indexes so you save on the fees charged by the money managers.
Do you get it? If the pensions don't fulfil their obligations to the pensioners then those people basically become wards of the state, state liabilities.
Pensions are 7 Trillion underfunded today. Lol. That will double or more during this next recession/depression. No ward of the state- the states are broke. Lol. Families and extended families will live together as other countries do.
Finally someone who understands what is going on and why this market is not acting as the market has in past cycles. As usual, it’s the baby boomers indirectly. States are trying to prepare (at the last minute) for the massive payouts as boomers continue to retire. Once over half the boomers retire, the pensions will likely be insolvent (along with social security) or the US economy will be in massive inflationary tailspin from this endless flow of credit. Millennials are already struggling with debt so I don’t see them affording to save the boomers retirement. It’s going to be an interesting decade ahead.
Money is not a real thing, you don't even need to print it, just modify the numbers on an electronic account. Of course you can't do it for yourself lawfully, but there are institutional ways of creating, destroying and redistributing money apart from the normal flows of trade. Which makes money function as a real thing is the underlying economy, the goods, services, work, promises, agreements, expectations and rules that runs on it - and the interaction between the people, businesses and other agents. If you increase the money supply heavily, but the real economy can't keep up, that can create unfulfilled promises or big troubles in the long run. Either you bail out the reckless (companies and/or individuals who are overspending) and let the sensible people pay for the other's faults (as long as you dry out those sensible people) or just let your fake systems collapse.
If social security is insolvent, they better be ready for revolution. They took the money from everyone's paycheck every week. If those fucking thieves stole it, they better be ready to hang.
My only disagreement is on his idea of a federal bailout for state pensions. Several such attempts have been rebuked. The states that did not mismanage their pensions, states with right to work laws , and states with only a few well run conservative pensions will not allow their state taxpayers to bail out the millions of over promised union pensioners. It is the unions who voted for the idiots that caused this crisis.
very fine commentary by tyler neville. i have been following the financial mess for a decade and haven't heard these fundamentals so well explained. thank you for this.
The 1990 - 2000 recession was caused by a stock market crash in 1997, the early 2000's recession was caused by the tech market crash and then the banking crisis, these are the best times I have seen for the world wide economy ( 2010 - )
Quick way to reverse this. Companies may not use cash for stock buybacks until unfunded pensions are reduced. Public entities may not give further pay raises until unfunded liabilities are reduced and eventually eliminated.
Very clear & informative! I’d like to know, where can I find info on pensions funds. To be precise, how can I find if these pension funds are buying or selling? Per the “on/off” analogy Brian was referring to.
Listen to the video again. The pensions are being opaque. They are not buying and selling SEC governed public bonds. These are private deals. Privacy and you have no visibility into their dealings, hence the shadow banking system!
Private markets aren't listed on the stock exchanges so its irrelevant for public investors. By the time you're able to invest into any of those companies the pension already exited their position.
I don't see where this is sustainable much longer. Yesterday the Fed went from $75 billion overnight to now $120 billion...no question where the money is going to. How long can they prop?
Silver mines will be filing for bankruptcy soon if demand doesn’t tick up. Mining sector is at an extreme low. Who knows how long this goes on which is why I hold miners that pay dividends. The rules of this market have changed. If should have corrected by now but the lending has been endless.
I am retired and in Calpers as a retired Fire Fighter. I already stack silver regularly for the last few years and continue to. How else can I protect myself? Should I consider a buyout of my pension? If so what should one do with the money?
I am confused by the concept of investing in credit. Is he just talking about investing in the bond market? I thought bonds were at 30 year lows, how are the pensions pulling out 7%?
