test

Thanks, just a lurker and noticed no comments so figured something was wrong on my end, turns out I was just quick. back to lurking

So in my tiny little head I figure they have taken huge losses and are waiting for it to come back before they report. Is there any rules on when they have to report?

I'll bet anyone five dollars that when the truth comes out these guys got f'in killed. They were sold BS by WS. 'nough said....

I see that you joined my bandwagon.

How are annuities doing?

S

A little Ch. 11 will take care of pension funds.

This blame goes squarely on the executive suite. I know many people in the industry who offered free asset/liability analysis to CEOs during the golden years who were met with chortles and eye-rolls.

Why not just cut your interest payments, sure the bond has a 6% coupon, but we just decided to cut it to 2%. Really is the same thing. Employees in effect lent money to the govt in return for a future return, aka a pension.

This is different, CR 'bot; it almost looks like haloscan! Where is the "preview," and count of users?

The end will not be caused by printing press failures. It will be caused when people start realizing that the system is non working.

They won't consider this a big deal until they are budgeting direct payments to retirees in a given fiscal year. As it is now, it is just a really big "soft" liability.

This is different, CR 'bot; it almost looks like haloscan! Where is the "preview," and count of users?

That is not the worst problem.. The worst (normal) problem involves something else..

How can 'poor' baby boomers buy enough to keep their kids employed so that they can pay enough taxes to keep the boomers going. It is a peculiar problem.

My ouija board says that Dow 6666 or S&P 666 may be signifigant levels, but won't tell me which of the two will be signifigant.

Aiding public pension plans is a political briar patch; but the private ones are no doubt in trouble too; who would pay if an airline's pension plan went belly up? IBM's? GM's? Yes, I know about federal pension plan insurance; it's a joke.

What we're seeing is the end of "private" social services provided by employers; even the public employee pension plans are by definition "private." Next stop: Scandinavia, or some place like it. Or loss of confidence in the social contract between the governors and governed, and chaos.

Now, we have to distinguish between executive pensions and otherwise in this - and demand some pension clawbacks i think - there's been some great reporting on this in the WSJ -worth rereading as we watch pension plans implode:

recent piece on converting pension funds to executive pay:
Companies Tap Pension Plans To Fund Executive Benefits - WSJ.com

older stuff:

As Workers' Pensions Wither, Those for Executives Flourish
Executives Get Pension Security While Plans for Workers Falter - WSJ.com

I've suggested that the agencies hold auditions. The pay scale is reduced until there are only 5 qualified applicants for every position. The problem now is that they take the single best of 400 when HR science would tell us that is the worst candidate.

exactly, if pension funds are unfunded, then pay less benefits, tax them and raise payroll taxes on those workers. that easy.

Ouch!

"Join us at the beatiful 'Duck and Run' retirement community in the great city of Detroit." Paid for by the DAR.

"fix the fiddle in California that bases their pension on their past 2-3 years average salary including overtime. "

right on target. that type of ponzi scheme should be ilegal and voters should punish the hell out of the politicians that allow this to happen.

firefighters and cops make up most of the employees making the highest municipal salaries. For example 75% of those making over 100K in the city of san Diego are cops or firefighters. And they get earlier pensions. You need to go after the salaries/pensions for the same reason Willie Sutton went after the banks. Its where the money is.

How much is fair to pay someone to rush into a burning building?

Well, the places I've lived, there are far more firefighter applicants than positions, and by orders of magnitude. That suggests, all other things being equal (which they aren't) that fair pay is less than what's offered.

Heck, people volunteer to do it.

Now, because in theory what you're paying for is eventual expertise you might want to overpay to retain talent. Still you need not assume that because it would take a lot of money for you to run into a burning building a municipality needs to compensate everyone at that level.

In a town where there are volunteers, you can see what it's really all about. There is a lot of tension (i.e. not much interaction) between the volunteers and the pros. The pros just do not like the volunteers, because it really is all about the money.

The stock market is not a savings account.
Mutual funds are not savings accounts.
401ks are not risk free.
Investment banks are risk-free millionaire makers.

Just the opposite. Only 25% of the US population qualifies for a pension yet, they are guaranteed by the other 75% of tax payers who don't get on. This is not sustainable.

LOL!

So the retirement funds fluff up the markets, in order to get better returns, in order to beat inflation, triggered by easy credit and fluffed up markets, attracting retirement funds...

Anybody who thinks $1T is reasonable is living in a fantasy world. CalPERS lost $4b in January. Down 40% since Jun '08. And even past growth projections were not enough to cover outflows.

"foreign pension funds" is an oxymoron.

Isn't it amazing how all of the things that don't add up... aren't adding up?

Honestly, is there any real difference between Madoff and the various pension funds both effectively promising impossible returns? If Calpers could really get reliable 8% returns, then getting out of a hole would only require leverage -- loans are still available at less than 5%.

Some comments on poorly performing commercial debt if anyone is interested: Commercial Real Estate Risk

I don't think they will start defaulting til 2010. We shall see though.

If you read the Center for Retirement Research report
http://crr.bc.edu/images/stories/Briefs/slp_8.pdf
on funding of a sample of locally administered plans, you find that the funding shortfall is only a small part of the problem. There's another Tri$$ion plus shortfall in the Retirement Health Funding.

Here is their concluding paragraph of their 7-page report (plus 7 pages of appendices):
"Nevertheless, the positive aggregate picture of
locally administered plans as of 2006 is consistent
with our assessment of state plans. And these results
are fully consistent with those of the U.S. Government
Accountability Office, the Pew Center on the
States, and Wilshire Consulting. These studies report
substantial funding of state and local pension plans.19
The disconnect between these findings and the press
stories is that the positive news about the level of
pension funding is overwhelmed by the lack of funding
for state and local government retiree health care
promises. States and localities have not, as a rule,
prefunded these costs as they have employee pensions.
Researchers estimate that the total unfunded
liability for retiree health benefits lies between $600
billion and $1.6 trillion, far larger than the unfunded
liability for state and local pensions. Funding and
managing these obligations is the real retirement
challenge that states and localities face.

My ex-financial planner did a "Monte Carlo" simulation on my portfolio using 7% and 8% as returns. I sent it back to her and made her do it with 4%.

When I got it back, I fired her.

right on target.

Tell that to my TEG. The one stock that I held through all of this because it was supposed to be a safe deflation play.

What did they loose? money? was it ever anything other than notional?

( Opus Opus Corporation - Google Finance )

The real crime is claiming 7.75% return is achievable over the long term.

Whats that saying about if something grows faster than the rest of the economy it becomes the whole economy.... Humm......

Show us a 40 year period where you couldn't get 7.75 annual return.

How about the last 40 years - late winter 1968 to now.

I got DOW in Apr 1 1968 at about ~900 (897.80)... plug that into MoneyChimp Interest Calculator... calculate at 7.75% for 40 years and you get 17,777.50... that is where the DOW should be NOW given the Dow in April 1st 1968 40 years later at 7.75%.

Comes up a tad short of 7.75%...

"Show us a 40 year period where you couldn't get 7.75 annual return."

Post hoc, it's easy. Just gold, cash, and timing information would get 100% returns in the last year.

I got the day wrong, Bloomie has it up for Thursday on the forward calendar. I don't want to be right about this but there have been some curiosities recently and yields are still rising on all 2 -10 year durations, and only fractionally off on the long bond.

C

One positive outcome of all this is a closer family - grandparents, parents, kids, great grandparents - all living in the same house.

"Show us a 40 year period where you couldn't get 7.75 annual return"

That 7.75% is a recursive buildup of debt over 40 years, which means it isn't real growth, but debt predicated upon debt, which is why we are here, right now, on this site.

I work for a Fortune 100 company, and the most conservative option in our 401K plan is a "Stable Value Fund". Basically a high-quality bond fund with some synthetic wrap contracts that insulate the value of the bonds against duration and interest rate risk. Those wrap contracts will work perfectly well until TSHTF, and then we'll see if I have just a plain-jane bond fund or not.

anti-disestablishment test

I've got a 401k option in the Greater East Asia Co-Prosperity Sphere: China, Taiwan, Hong Kong, Japan, Australia, et.al. I'm taking a serious look, since these guys actually seem to have some actual cash, unlike the rest of the planet.

The guy shorts everything. He's a shorts trader. Period. This has zero relevance to what I can actually do with the 401k. Shorts aren't in the plan. It's mutual funds, bonds, or cash. Since the bonds and cash are already tied to the dollar, and all the risk in that, the closest thing I've got to a hedge is something that isn't tanking. And for the moment that's Asia.

"We really are beyond the range of historical experience here"

Not really. There's Japan 1990 and Russia 1989-2000 and John Law bubble in France and tulip bubble that took down the Dutch empire. So many to choose from!

I've been trying to find a video of the Russian army shelling their Parliment building in 1993 but haven't found on on youtube yet.

Pension shortfall? Private (in)equity to the rescue.

Here's the gig. We use pension money and huge amounts of borrowing from friendly bankers to take over public companies. We then lay off slews of employees from the company. This raises the unemployment rate (more on that in a minute). We also dress the debt loaded pig (aka company) with lots of lipstick. All the while we pay ourselves a yearly 2% (mis)management fee.

We repeat this process hundreds of times throughout the eCONomy. As the unemployment rate rises due to all our layoffs, the fed cuts rates. This makes our debt temporarily appear more manageable and our pig temporarily more valuable to the market place.

Here's the good part (for us). We sell our pig back to the pension funds that helped us originally take the company private. Usually, at this part of the cycle, the economy totally collapses and the value of the company permanently tanks due to the debt load. But hey, that's not our problem. You see, we took a 20% cut when we sold the pig back to the pension funds.

[Look what we have instead. We can't even do a depression right, anymore.]

Give it some times, MB - It hasn't even started yet......

BH,

You lost me.

I'm sure if we keep wildly overpaying management and boards of directors they will eventually figure out a way to pay for pension obligations.

Or we could try the typical goobermint solution - throw money at the problem.

From the BIS:

The US dollar shortage in global banking1

http://www.bis.org/publ/qtrpdf/r_qt0903f.pdf?noframes=1
Understanding the global financial crisis and the stresses on bank balance sheets requires a perspective on banks’ international investment positions and how these positions were funded across currencies and counterparties. This special feature uses the BIS international banking statistics to identify the cross-currency and counterparty funding patterns for the largest banking systems, and to assess the causes of the US dollar shortage during the critical phases of the crisis. ...

..........just like geting wet by drizzle..........

What a difference a day makes.

“The period of acute financial crisis is behind us,” Andrew Burns, lead economist at the World Bank’s development prospects group, said today at the Australian Bureau of Agricultural and Resource Economics conference in Canberra. “Now we are moving forward under weaker conditions but growth will come back and we expect that toward the end of this year.”
(3/2/2009)

Australia GDP shrinks 0.5% on-quarter in fourth quarter
(3/3/2009)

I figured out which comment was yours, but one question: is Setser smart enough to realize when a fool has been made of him?

And Ben says there are no zombie banks.

OK we layoff Firemen and do away with their
pensions. Then the fires reduce housing stock.
Two birds, one stone.

Re: Four Bad Bears, I think it would be interesting to see if any particular news caused the markets to rise in previous bear markets. If anyone else has interest and/or has good sources for historical news and historical stock prices (I usually use Yahoo), I would be happy to look into this.

“OT
The United States can never win an undeclared war. Can anyone name the last undeclared war we won?
War on drugs, War on Terror, Vietnam, Korea, Iraq War, Afghanistan? Can anyone name just one undeclared war we won?

No worries.

The impact of pension shortfalls can be mitigated with prudent management of life expectancies.

Pension funds. Like when my daughters teacher announced her husband, who from Wachovia, got wiped out?

or

The looks on people who I work with who are 55 and know that their 401k is been cut in half. That would be from not enough to I am so f'ed if I get sick or forciably retired...

This is not how you go about creating a functioning society.

Did POIC lose his job today?

"Come to think of it I guess I can see the US following in their footsteps [Bulgaria & Romania] with its experimental centrally planned economy,...."

......dream on, Buckwheat - no central planning for this old boy - unless it's coming from the center of my easy-chair.

This is painfully slow tonight.

Or just plain 'painful'...

I knew this play had been performed before. Obama reminded me of some past leader but I had a hard time connecting him with anyone except for Jimmy Carter, then today, it cam over me.

Obama reminds me of Nero Claudius Drusus Germanicus, the Roman Emperor. Today while the stock market was dropping to near record lows, Obama stated that the market did not matter. It was just like some political tracking poll, meaningless. While trillions of dollars have been lost since his election, he thinks our pension money is like a tracking poll!

Nero’s father died when he was a young child while Obama’s went on to some other women.

Whether or not true, while Rome burned Nero(Obama) stood by to watch and then to take advantage of the situation. Nero(Obama) built new mansions and palaces in the ruin.

Nero(Obama) becoming unpopular after the ruin of either the city or the financial system had to find some other group to blame it on. Both find scapegoats for their incompetence or in Nero’s case irrational. The jury is still out on Obama, but I am not betting against it.

Nero burned many Christians to death at night. Obama is finding others. Nero is immortalized as the first Antichrist and in many peoples eyes Obama is getting close.

Nero in his quist to collect taxes made the wealthy sign over all their property to him in a will and then quickly took the life of the victim. Cash was needed to keep up with the massive new spending programs in Rome. If we took all the wealth of the United States it could not keep pace with the utter worthless spending of the Obama administration.

Just like Rome in Nero’s time, the United States is on the very brink of a major financial crisis of debt. In the end the Romans learned their lessons of bad leadership. The United States is still in the process of learning how bad of a leader we do have.

What time is Conjure's pension fund collapse at?

The real question about pension funds collapse is-

How will people take the news?

with little surprise i hope

That and some marbles should get you some squirrels.

"Can anyone name the last undeclared war we won?"

The War On Savers looks like a solid win.

"Can anyone name just one undeclared war we won?"

Yeah, the Vietnamese War. Look at the cars on your street. Plenty of Japanese and German cars, right? No Vietnamese cars. See, we stopped them...

The ingredients for a gap down at tomorrow's market open are coming together.

The QQQQ's, XLF and IYR got hit hard after hours, and now the USD/EUR did a moonshot.
Something rotten in Europe, most likely.

If we do gap down hard, it will be a good opportunity to cover some shorts and take profits.

If avatars had audio, BH, I believe yours would be singing "Just a Gigolo."

Not that there's anything wrong with that...

When Bretton Woods was alive and well, the US had a strong influence on the expansionist plans of other countries. Although the record is detailed and mixed, but the US was the center of the world --- politically and economically --- for decades. (This includes the IMF and World Bank obeying the 'Washington Consensus.')

As the country sinks farther and farther under water, the constraints are vanishing. China is much freer to invade border countries without fear of US reprisal. Russia can invade neighbors, as well. With little effort, you can add to the list. Passive conflicts and disputed territories will become active wars. Wars-in-progress will rise to more extreme levels.

Well that's a recipe to keep America on the top of the heap for another 100 years or so... assuming we stay out of that crap. Destroy all their capacity and we go back to inventing & making stuff.

That and some marbles should get you some squirrels.

ball bearings make great wrist rocket ammo.

Did I mention that agriculture is going the way of the horse and buggy?

One could hope! We invested in a sturdy big Shetland to harrow our fields and pull a cart.

Seven Trees blog
<A href="http://www.7trees.org/phpbb/index.php".Green Branch forum

SC RSIC @ 7:42:55 - got a link for that?

wow, I don't know about those situations personally but I'll take your word on it... nothing it surprising anymore.

Illinois pensions are behind a big part of the now "$116 to $132 billion" of unfunded liabilities, up from $100bn 3 years ago
report
newspaper summary

but I want to see Texas. Goes back to when they fought the Federal government very strongly to prevent public disclosure of pension obligations. Many years of tax averse, pension gift friendly politics

Oooh, I hope not. There is still a mostly poor populace that will not take well to a lack of opportunity. Before that happens the China gov will spend domestically instead of on U.S. Treasuries.

So, Bonds would need to go boom, first.

"everyone now knows that houses do not go up forever. The illusion is gone, never to return"

Yeah, that's what they said about stocks in 2001, but television, Jim Cramer and artificial sweeteners softened everybody to buy back in again.

Worked for George Costanza.

"What the hell is with all this anti-Canada crap."

Please ignore. Every once in a while, a poster here goes off his meds and starts ranting about Canada...he's admitted committing immigration fraud, and Canada booted his azz.
Unfortunately, here in the US, we have no standards, so he lives here now.
Don't you feel better?

"The impact of pension shortfalls can be mitigated with prudent management of life expectancies."

.........make sure you keep Gramps & Gramma away from THIS deep thinker!

Thakshin - data will lag, perhaps more intentionally than usual, but if they can't get a coherent story together on energy use / intensity, exports and internal transport, and control for the bankruptcies and layoffs, then I think we're at the point on giving up on the language of "growth slowing" in favor of "contraction". I suspect from the shipping story that they may already be there, but manning up to it will take a quarter or so. Shanghai and HK equities will suggest points along the way. I'd also keep an eye on rural and factory disturbance rates.

My instinct is that the party working group on fin/ec is largely working on a comms strategy at the moment, in order to lay out a series of announcements over the coming quarter to prepare both the domestic public and the foreign investment community for what they project will happen.

There are some interesting countervailing dynamics with offshore bottom feeding in minerals. Could get a bit shouty.

But essentially the way they manage the first major shock since 93 will be regime-defining stuff. 98 will look like a walk in the park.

As for everyone else...

C

Ha! All those dudes were massively marginalized after the 89 shoot-out. They've waited 20 years to unite??? Good luck with that.

C

No bail outs for eastern europe [meaning no bail out for western european banks]

I don't think that this is the case. If you look at this post where I quickly translated this Spiegel article thats says:

... Merkel went against the thrust of Baden-Württemberg's Minister President Günther Oettinger (CDU) to let the wounded HRE go insolvent. The reasoning: It has been internationally agreed that no more banks that could topple others would be allowed to go bankrupt. The state has to take care of Hypo Real Estate. Another collapse such as the one of U.S. bank Lehman Brothers has to be prevented. ...

This is one of the most significant quotes IMO in the past few months and it hasn't attracted a lot of attention. I don't know why. There must be a major agreement somewhere...

Yep, this was the substance of the last G20 Fin Mins meeting. Kind of a do not beggar thy neighbor policy.

Which means the bailouts will continue in the US and EU, because they're too overleveraged and interconnected to fail, which means the bond issues will continue at pace to fund the bailouts, until the bond market says fk u this is going nowhere.

BOOYAH! Double dare. Double down. Double skrood.

AAA paper issues to fund losing positions. Excellent.

C