Friday, July 11, 2003

Speaking of the S&L solution (yesterday), the Wall Street Journal quotes Treasury Secretary John Snow comparing the looming pension crisis to the S&L crisis of the 1980s*

"When you think about pensions, we've got a brewing problem somewhat analogous to the savings-and-loan situation"

I don't know quite how I feel about the developing pension crisis- something I need to work out. I am sure that pensions (by which I mean defined benefit plans and not the 401(k) savings account) are an employee benefit though companies no longer (if they ever did) operate them primarily for that purpose (earnings management baby). What's not clear, to me at least, is the role of corporate greed, gamesmanship, and rulemaking/ breaking involved versus the impact of a no to low growth economy (particularly on the investment side). My instinct is to make employers pony in the cash and not allow temporary rules to make the problem appear to not be a problem (that would truly be the S&L solution). But such a course may wreak great violence on the American worker. What have we got ourselves into?

* As in the crisis developed during the entirety of the 1980s, only breaking into public consciousness in 1989, you know, shortly after the election. Does that make this 1983? or 1987? on that timeline? (For some reason, my guess is that 1984 is just around the corner).


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