Archive for pensions

Global Conglomerates Falling!…Featuring Michael Douville

Posted in Michael Douville with tags , , , , , on February 13, 2018 by paulthepoke

Romans 13:8 Owe no one anything, except to love each other, for the one who loves another has fulfilled the law.


HNA Group of Hainan, China was founded in 2000. Flexing the new found strength of the Chinese Economy, the Company embarked on a multi-year buying spree using highly leveraged Corporate Bond programs to acquire Premium Worldwide companies. HNA has taken huge positions in Hilton Worldwide with reports that it’s ownership has risen to 25%, a 10% stake in Deutche Bank, the largest Bank in Germany and a Global Institution, and Prime Commercial Real Estate in Manhattan, San Francisco, Chicago, and Minneapolis with billions of Financed Dollars!  Reports are now surfacing that HNA is unable to service the debt and Liquidation of assets is starting.

Global Debt has risen far beyond the then record debt of the Great Financial Crisis. Conglomerates, States, Municipalities, and Sovereign Nations have GORGED on cheap rates and tricky financing. These Borrowers are no different than any Household; eventually Debt OVERWHELMS and a period of adjustment ensues. The adjustment usually consists of defaults on loans and bonds causing financial stress to not only the Borrower, but also the Lender that has obligations that must be met from the intended loan servicing. Insurance Companies with Annuity Policies, Health Policies, and Life Insurance Policies as well as Pension Funds with monthly obligations to Retirees will be placed at Risk. Banks and financial institutions may be at risk. Often these Institutions develop a lending relationship and assume too much risk by being the Prime Lender; huge transaction profits initially, then disaster eventually!

Should a Global Slowdown appear and there are indications that one has started, other Highly Leveraged formerly Global Conglomerate Darlings will Fall. The Globe is very intertwined; when Hanjin Shipping of South Korea went Bankrupt, Landesbank in Germany was affected with huge Hanjin debt. Steinhoff of South Africa is in trouble and US Banks are a risk of losing $1 Billion Dollars in loans. Other Chinese firms that have been buying, and buying, and buying are also in trouble. Dalian Wanda, Sunac, Le Eco with massive debt have been mentioned as struggling. Everything is fine until it is not! Leverage allows for enormous profits when all is good, but make a miscalculation, a marketing mistake, or associate with the wrong counter party and Debt will be RELENTLESS. Already, Economic Powerhouse South Korea has reported that the 4th Quarter of 2017 printed not a growth slowdown, but an actual Contraction!

Currently, the Mantra has been “Coordinated Global Growth”! If one looks “Under the Hood”, there are cracks beginning to form. Your FUTURE is at Stake! Check you finances, your debts, your assets, your Insurance and Annuity Policies, and your Pension Provider. There is still time to develop “Plan B”. However, Time may be Running Out!

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Promise Made, Promises Broken…Featuring Michael Douville

Posted in Michael Douville with tags , , , , , , on July 31, 2017 by paulthepoke

MichaelEcclesiastes 5:5 It is better not to make a promise than to make one and not keep it.

How does a City, County, State, or large Industry balance a budget or keep the P/E Ratio in Bonus range? The solution is simple: promise huge Benefits in the distant future.  Just sell the sizzle and promise a rosy future while hoping for the best; a Pension Ponzi Scheme!  Further enhance the story, with results calculated on gains that justify expectations. The Day of Reckoning was far in the future, political and executive terms would expire and someone else would be blamed. Now, Baby Boomers are retiring at the rate of 10,000 per day and are looking to collect. The Day of Reckoning is upon us!

Through mis-management, mis-allocations, possible fraud, or just bad luck, most Pensions in America are dangerously under-funded. The Capital inflows from working members are below the outflows to Retirees in an unsustainable rate.  Illinois, downgraded by both credit institutions was able to pass a budget and avoid Bond “Junk Status”. The Legislator decided to eliminate a $900 million dollar contribution to the Pension Fund! A Great Reset is coming! Those Promised are knocking at the door to collect.  How can a City Worker, Policeman, Fireman, etc., retire at 70% of their last year’s pay which was surely stuffed with all the overtime, vacation pay, and sick days possible and receive benefits payable for LIFE! Then hire a replacement at 100% pay to do the job of the retiree. Unsustainable! Unbelievable!

Pensions benefits will not be fully paid; retirees will not receive the Income they were promised.  These retirees faithfully followed the rules; their retirement was guaranteed. They paid mortgages, car loans, and schools tuition; but not IRA’s or Rental Properties. The Teamsters Mid-States Pension recently petitioned the Federal Government to reduce benefits by 60% to avoid a bankruptcy. Many retirees monthly payments were cut from $3300/month to $1300.  No Golden Years for Mid States Retirees! More dire is the Local 707 Teamsters Pension which has filed for Bankruptcy.  Reduced monthly payments are sent by the Pension Benefits Guaranty Corporation. PBGC is itself struggling under the weight of collapsed Pension Funds and may not survive.

In the next Recession, large Corporations, Cities, Municipalities, and maybe even States will be unable to service obligations. Retirees will be severely impacted. Those with “Benefits”, innocently and faithfully counting on “Others” to fulfill promises, did not personally prepare for their own future. The Retirees will be the first to be sacrificed. They did nothing wrong, they were Lambs to the Slaughter!!

There is still a little time to prepare; consult your Financial Adviser.  Review the Asset Allocation and consider placing a good portion of the funds in Real Assets; or cash flowing conservative entry level homes which will mitigate a downturn due to the consistent immediate Income component.  No longer can you trust the goodwill of others; your Destiny must be in YOUR hands!

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