David Hunter – Think Piece

Featuring David Hunter

David Hunter, Partner at First Avenue, discusses the impact of long-term interest rates on the solvency and balance sheet of pension funds, analyses how globalization has changed the cost of capital and labor, and gives a nuanced opinion on Brexit from the mind of a fund manager.

Published on
21 June, 2016
Topic
Pension System, Globalization, Brexit
Duration
49 minutes
Asset class
Bonds/Rates/Credit
Rating
40

Comments

  • TW

    Tom W.

    4 7 2016 23:31

    1       0

    Excellent!!

  • jh

    janet h.

    4 7 2016 21:10

    1       0

    i think he meant Brexit at the end of the discussion

  • NT

    Norman T.

    26 6 2016 20:24

    1       0

    fascinating structural insights

  • LT

    Luc T.

    26 6 2016 09:52

    5       0

    I think there is a slip of tongue at 1:41;
    I thinks he means to say "I would be voting for Brexit " instead of Bremain.
    Does not make sense to me otherwise.

  • GA

    Greg A.

    25 6 2016 16:29

    2       0

    Was a thought provoking piece. I have been saying for yrs that globalization has gone too far. Almost every last cent has been rung out of this IMF project. Globalization having gone too far is why we are seeing the rise of somebody like Bernie Sanders here in the U.S. The problem here is the younger college age crowd ARE confusing this with capitalism has gone too far. We need to focus on our own country and people quite a bit more.

  • MS

    Mark S.

    25 6 2016 14:56

    3       0

    Very thought provoking piece. The balance between capital and labor is one of the most important components of the current geopolitical dynamic.

    Speaking as an American business owner, significant raises to the minimum wage would likely have a major negative impact on domestic job creation. Yet there would be little effect on the behavior of large multinational corporations unless capital controls were also enacted.

    It's difficult to see a good outcome from capital controls given our current policy makers. Tax policy reform probably has to play a significant role in any labor/capital rebalancing - but we have the same policy maker problem there as well.

    Getting the virtuous cycle started is a major challenge. Maybe the starting point is helicopter money spent on infrastructure - although it pains me to think that more government debt might be part of the solution.

  • GS

    Greg S.

    25 6 2016 04:24

    4       0

    Jeez, Grant. I'm thick. I'm going to have to watch and listen to this at least twenty more times to pick up all its nuances. I'm sure I will enjoy it as much or better each time. Just can't get this stuff anywhere else I'm aware of.

  • RS

    Richard S.

    24 6 2016 22:35

    2       0

    like others I will watch this again. Reminds me to see again the old James Goldsmith IV (Google "charlie rose james goldsmith"...interview in 9 short pieces on youtube) when he predicted the long term impact of the WTO change at that time - much of which he was right about. Arguably innovation (esp in energy) has often been THE major driver of productivity gains ; perhaps this will be a renewed focus.

  • TM

    The-First-James M.

    24 6 2016 14:14

    3       0

    As a Brit who voted for Brexit today, I am now even more convinced that I've made a good longer term choice for a better and more sustainable future for both the UK (assuming we remain 'United' for much longer) and Europe. A fantastic and thought-provoking presentation.

  • BB

    Bradley B.

    24 6 2016 12:42

    1       0

    Crazy how much a political leader coming to a country and effectively attempting to tell them how to run their nation can have massive unintended consequences. My portfolio thanks you, Mr. Obama.

  • BY

    Brian Y.

    23 6 2016 23:19

    5       0

    If life insurance companies were required to use investment return assumptions that reflect the current NIRP/ZIRP environment, instead of the much higher risk free returns available years ago - they would ALL be insolvent. Think about that. A change in an assumption would increase their liabilities instantly and make them insolvent today...

  • DS

    David S.

    23 6 2016 21:15

    3       0

    With low bond/equity returns corporate designated pension funds need to be 100% financed by current cash flows. With falling margins and rapid product/services disruptions, designated corporate pension funds will be the Achilles heel for many companies and give employees a false sense of retirement security. Government designated pension funds are in much worse shape. The problems are easy to see. The answers are way above my pay grade.

  • M

    Mark .

    23 6 2016 16:21

    1       0

    I’d like to see him interviewed by someone that disagrees on a lot of it. Still, that’s one of my favorites.

  • M

    Mark .

    23 6 2016 16:11

    2       0

    Really good. I think what he’s saying is, a 100 years of centralized government and central planning has left us with debt and bad pensions. Now we can’t respond to globalization without MORE central planning. What a mess, given that politicians are so stupid. I will watch it again.

  • RM

    Richard M.

    23 6 2016 13:29

    1       0

    Wow, really thought-provoking concepts discussed here (that unfortunately I'm not seeing anywhere else)! I fear that the U.S. elections will not resolve any of these issues (ZIRP/NIRP, failed pension schemes, failed political/financial class structure, etc.). I fear that regardless of who is elected nothing will change. It will take another calamity like the GFC for the people to finally wake up and change our current political system and affect any meaningful change/reform. I wish I was as hopeful as this guest but I'm afraid I'm not. :-(

  • EA

    Ellen A.

    23 6 2016 08:15

    3       0

    Interesting...So Globalization and today's capitalism has helped to raise the standard of living in the East and "Third world countries" (the search for cheaper labor and avoiding environmental laws) but has had the opposite effect on Western nations. Along with the policies of the Central Banks, everything is leading to one great big Welfare State in the U.S. and Europe.....Something for the Elites to think about...Be careful what you wish for...

  • DR

    Dennis R.

    23 6 2016 03:37

    4       0

    I think the think piece is the best part of RVTV and this is another great one. Thank you Mr. Hunter.

  • TS

    Thomas S.

    23 6 2016 02:49

    4       0

    Many great points. Higher wages can be investing in the future instead of zero interest rates borrowing from the future.

  • KS

    Kathleen S.

    23 6 2016 02:35

    2       2

    Pensions need not be bailed out if central banks did not bail out banks w/ zero & negative interest rates. Pension funds represent savers & when they look out to the future and expect to get an 8% return to pay benefits to their savers- for the sake of speculators who safe nothing but gamble with free money I have a problem. If anyone ever needed to take a hair cut is was the banks - I like how you call pension funds schemes (saving is not a dirty word like scheme is). Your suggestions will have great social unrest - keep believing your own hubris.

  • DS

    David S.

    23 6 2016 00:55

    3       0

    The British citizens will decide on Brexit shortly to either take control of their sovereignty or leave their sovereignty with Brussels.

  • RB

    Robert B.

    23 6 2016 00:09

    11       0

    Fantastic interview. Articulate, candid and insightful. The actuarial's perspective on debt, pensions and risk in a zirp world was very educational.

  • RA

    Robert A.

    22 6 2016 22:27

    13       0

    Excellent, timely and relevant presentation by RV TV! I know of no other forum where this gentleman would be able to get his thoughts out and I, for one, was quite interested to hear them!

  • WE

    William E.

    22 6 2016 20:05

    6       0

    Great conversation and I agree with MZ M's comment that speaker addressed head on both limitations of globalization (or at least pace of) and the very slippery slope of our governments taking on all our pension debt (public, think state of Illinois, and corporate) and choosing to simply print money we don't have to meet the obligations; debasing everyone's assets along the way.

  • GC

    Gary C.

    22 6 2016 19:31

    4       0

    Incredible timing regarding Brexit, but more importantly relating to the serious dilemma that pensions and insurers are facing. I'm sure I'm not the only person who has considered taking out the cash value of insurance policies due to concerns of liquidity and solvency of the insurance vendor.

  • MM

    MZ M.

    22 6 2016 19:03

    13       0

    Very good perspective bringing the potential social implications of ZIRP-NIRP world and its effects on Pensions and Insurance funds also suffering from financial repression. I think this topic has been discussed as a tangent to the capital markets and economic talks we've heard but this is the first time the topic has been addressed head on. As we know, governments have taken on heir balance sheets the enormous costs of bank/finance downturns and socialized the losses - but this talk takes the discussion to the next level - where to from here? Thanks Milton!