My Two Big Bets on the Pension Crisis
My Two Big Bets on the Pension Crisis by Nick Giambruno – International Man
Public pensions are a financial time bomb… and I see two ways to profit from the explosion.
In the US, unfunded public pension liabilities have surpassed $5 trillion. And that’s during an epic stock and bond market bubble.
Predictably, the government’s go-to “solution” is already making matters worse.
At first, distressed states simply increase taxes.
The state comptroller of Illinois—the most financially troubled state thanks to its pension crisis—summed it up well. He said: “We can’t go bankrupt and we can’t print money. Taxpayers are going to have to pay this bill.”
State governments always squeeze property owners the hardest.
Last year, Americans paid over $300 billion in property taxes. In Illinois and other states, property tax bills exceeding $10,000 per year are not uncommon.
Most governments continually raise property tax rates, especially governments in bad financial health. It’s easy to simply ratchet up property taxes to bring in more revenue.
Case in point: Greece, where the country’s bankrupt government has made owning property a burden.
The following excerpt from The Guardian shows just how far Greece’s government has gone (emphasis mine):
The joke now doing the rounds is: if you want to punish your child, you threaten to pass on property to them… Greeks traditionally have always regarded property as a secure investment. But now it has become a huge millstone, given that the tax burden has increased sevenfold in the past two years alone.
It’s happened in Greece. It’s happened in Illinois, which has some of the highest property taxes in the US (and rising). And it will happen elsewhere, especially in states struggling to meet pension obligations.
Here’s an excerpt from a local Chicago news outlet. The telling headline reads “Cook County property tax bills cause outrage”: