Jose' Saramago in "The Intermittences of Death" (2005) describes the consequences of a death periodically on "strike". There are some good ones, and not all of them concern the fate of the gravediggers. But let us leave death and old age aside and look at some cases of unintended consequences.
Take the monetary policies of central banks, all intent on creating liquidity in a world that today mostly no longer needs it, given the lack of investment and falling productivity. A relatively foreseeable consequence is the problem of pension funds worldwide. Being generally underfunded, they suffer because with the fall in interest rates the present value of liabilities (pensions to be paid to retirees) has grown much more than that of assets. The Economist estimates, for example, that of the almost six thousand private pension funds in England insured by the state fund, 85% are in deficit: at the end of July, by as much as 408 billion pounds or around 20% of GDP (from "only" 295 billion in May; see graph). I'm sure other developed countries are not far from similar disasters.
Another consequence perhaps more worrying - and less predictable even if today it has become almost banal - is the aggressiveness with which investors have thrown themselves headlong into very dangerous directions in order to balance the lower income generated by liquidity and bonds. As a result, the valuation levels of stock markets around the world have risen (particularly in the United States), the yields offered by corporate bonds of all levels of credit risk have fallen, as well as those of emerging market bonds. In practice, investors have acted as if their portfolio should in all ways produce the desired level of income even if this today would require a complete change in their risk profile. In other words: they fire you and instead of trying to spend less, you go look for other sources of income, perhaps by betting on horse racing. A commentary in The Wall Street Journal (found below in The Breakfast Briefing) highlights this situation perfectly and adds that corporate dividends have become the essential variable in investment choices.
I conclude with another example of unexpected but, in my opinion, almost "announced" consequences in this case. Recently the employees of some American management companies have sued their employers for having included household products in their pension funds (obviously they didn't believe it!). This phenomenon quickly spread to the employees of some prestigious universities who accused them of offering overpriced products (old story) and giving too many choices (???). For European and even more Italian funds/employees, despite the regulatory tangle, we feel like the next century.
