The age crisis will prove to be bigger than this financial crisis. Old people expecting the handouts they were promised will bankrupt the rich countries of the world.
Japan Airlines (JAL), once the leader of the airline industry, is in bankruptcy, just as Japan is bankrupt. Pension-related obligation account for over 25 percent of JAL's interest-bearing liabilities. The retirees of JAL stepped up to the plate and agreed to a 30-percent cut in pension pay and benefits.
The question is: Will the US, Japan, Ireland,Iceland,Spain, and England's old people agree to do the same? Will your friends and relatives counting on SOcial Security and Medicare be willing to take a cut in future pay? Can they afford to? Can our once-rich countries afford to be so generous?
If a country's credit rating drops below AA due to excessive debt, high interest payments, old people, and lower tax collections, their ability to raise capital by borrowing will be over. Their debt will be rated as too risky and the big money of the world will stop buying their bonds.
The world is in a precarious situation.
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