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Monday, March 28, 2005

11:04PM - NO Guaranty on the Pension Benefit Guarantee

A rehash of something important I posted to my site, and something that will come to haunt us all as everything will appear to hit the fan in the next few years in the economy. Folks with zillions of dollars, particularly in US Treasuries will give a damn what happens here, as will ordinary folks in plenty of old-line industries who thought they could rely upon a fair shake in their retirement plans.

A sea-change has taken place in the last few years for the Pension Benefit Guarantee Corporation (PBGC). The PBGC was created by the Employee Retirement Income Security Act (ERISA) of 1974 to cover the pensions of those under private, defined benefit pension plans.
The original mission was to charge premiums to sponsors of the pension plans in order to generate the revenue needed to cover claims. This works, like everything else, in principle, under ideal conditions. In this case, the recent hit to the economy in the early 2000s, the lower return of the market since the boom's end and the decline, until recently, in interest rates has taken its toll on the PBGC. The legacy airlines' travails have crash-landed on the PBGC's books with the effect of causing a dramatic mismatchbetween assets and liabilities, while also blowing up the size of the PBGC's "Reasonably Possible Exposure" to an all time record high. (Reasonably Possible Exposure refers to the under funded plans associated with companies with speculative-grade bond ratings, aka distressed bonds, if things are really bad enough in our personal viewpoint.) More to come in future discussions, and we fear more to come for the PBGC, but also more, perhaps optimistically, for some distressed airline bond investors if no-one else.

For quickie & dirty chart: check out the one I made a little while ago here: http://www.roosterresearch.com/index.php?screen=VCOWDESC&id=41

Thursday, March 10, 2005

12:20AM - The Hot Peace of the Early 21st Century

This is one of my first entries here, borrowed from my site on the markets, still on my mind
I note a less than random thought - a notion stirred by recent events. The gradual ascension of China, the United States' current global engagement policies and developments on the macro scale lead us to label the recent and coming years as the "Hot Peace" of global multi-lateral jockeying continues. The "Hot Peace" of the early 21st century is our label for one of the threads running through a variety of recent developments, including: The impact recent elections in the Ukraine on the European Union and Russia, the unrelenting strife before and after the recent elections in Iraq, in the mixed success of the global relief effort in Southeast Asia, and in quest for energy and natural resources and solutions (think Yukos, the Chinese and the Japanese friction over petro-resources, the infrastructure challenges developing in Venezuela, the discontent in Natural gas wealthy Bolivia, you get the idea....) The thread can can be reduced to the balance of demand and supply for the world's resources. A resumption and expansion of the "Great Game", that once took place in the Central Asian hinterlands, is writ large in our minds, and will the coming decade's history. A secular rise in prices and renewed speculative interest in the non-correlated market opportunity of futures trading, is here until 2015-2020, basically the first generation of the 21st century. As usual, we have no qualms about sharing our bias with our readers and paying members. As warfare, open and otherwise, takes place in the Middle East, and anywhere potential reserves, resources and technical solutions (hello Nanotech!) are to be found, an uneasy and uncertain "Hot Peace" will shape the global order for the next century. Opinions about the shifting power landscape, at least as we view it from the perch of our own in-house weather vane will be a part of commentary going forward, as time and our caprice occasions us.

Saturday, March 5, 2005

2:38AM - Welcome to the Rooster Blog Spot!

Hello! And welcome to my blog post. I am Ed the creator of www.roosterresearch.com a commercial site and free newsletter subscription portal where I post periodical commentaries and personal market perspective about various trend, contrarian, arbitrage and expert-based market ideas for traders and investors to consider. Please feel free to leave comments and exchange your thoughts and ideas regarding my commentaries I post below.