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business newsThe End of Federal Benefit Insulation
By
Peter Atwater
Jun 06, 2011 9:40 am
To these eyes, Europe is a preview of the painful process we as a nation face ahead.
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While I will leave the specific debate on federal pensions to others, I thought the editorial staff’s concluding comment captured so much about the difficult choices we face.
To believe the Journal, “burden sharing”, whether it’s reducing benefits on public employees here or imposing losses on sovereign or financial institution bondholders in Europe, is not about the purposeful creation of hardship, it is about ending “insulation”.
Unfortunately, one man’s “insulation” is another man’s expectation of normal -- as it has always been, thus it should always continue to be. And anything less than that is loss. And where I come from, loss is hardship, despite valiant editorial attempts to suggest otherwise.
As I have said so many times, it's all about the re-syndication of loss. And one need only Google “Greek bailout” to witness the real time resyndication efforts of governments, supra-governments, sovereign and financial institution creditors and voters (across Europe).
To these eyes, Europe is a preview of the painful process we as a nation face ahead as insulation is ended. And I strongly doubt that federal government employees will be the only ones affected in this process. As I look ahead, those most insulated to date from “the economic and fiscal trends that affect all workers” appear most vulnerable to deteriorating social mood.
Last fall, when I wrote Our Zero Sum Economy many believed that governments would continue to “insulate” wherever they had to, in order to protect their economic recoveries.
Clearly that's no longer the case.
Insulation is ending. And investors would be wise to consider the implications to their portfolios.
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