Skip to comments.Fannie Mae and Freddie Mac were a politicized financial disaster wait until pension funds implode
Posted on 02/03/2009 9:28:11 AM PST by shielagolden
Next Catastrophe Think Fannie Mae and Freddie Mac were a politicized financial disaster? Just wait until pension funds implode.
Funds worth trillions of dollars start to plummet in value. Political pressure to be socially responsible distorts the market decisions of government-related enterprises, leading to risky investments. Investors who once considered their retirements safely protectedwake up to a sinking feeling of uncertainty and gloom.
Sound like the great mortgage-fueled financial crisis of 2008? Sure. But it also describes a calamity likely to hit as soon as 2009. State, local, and private pension plans covering millions of government employees and union workers with defined benefit accounts are teetering on the brink of implosion, victims of both a sinking stock market and investment strategies influenced by political considerations.
From January to October 2008, defined benefit fundsthose promising a predetermined amount of retirement money to the payeeaveraged losses of 26 percent, according to Northern Trust Investment Risk and Analytical Services, making it the worst year on record for corporate and public pension funds. The largest public pension fund in the United States, the California Public Employees Retirement Security System (CalPERS), lost a staggering 20 percent of its value in just three months last year. In May 2008, Vallejo, California, became the largest city in the state ever to file for Chapter 9 bankruptcy, thanks largely to unmanageable pension obligations. The situation in San Diego looks worryingly similar. And corporations with defined benefit plans are seeking relief in Washington as part of a bailout season that shows no sign of slowing down.
If the stock market remains in a funk for even a few more months, corporations that oversee union pension funds and state and municipal leaders responsible for public retirement pools may be faced with difficult choices. First on the docket might be postponing cost-of-living increases and reducing health care coverage for retirees. Over the longer term, benefits for new employees will have to be shaved and everyone is likely to see an increase in personal payroll contributions. Corporations will have to resort to more cost cutting and layoffs of their own just to guarantee the solvency of their pension funds. And things could go from bad to terrible if the managers of those funds do not quickly revise their investment practices.
During melting markets, all pension funds come under siege. If youre covered by a defined contribution plan, contributions are invested, usually by your employer and usually in the stock market, and the returns are credited to the employees account. Your retirement savings grow if the market rises or, as is the case now, bleed when it crashes. You carry the risk on your shoulders.
The risk shifts to the employer under defined benefit plans, in which future outlays are guaranteed. That seemed like a great idea for business as recently as 2007, when the market was rising and the pension funds of Americas 500 largest companies held a surplus of $60 billion. Now theyre at a deficit of $200 billion, with fund assets dropping like a lodestone.
The Pension Protection Act of 2006 requires that companies keep the accounts fully funded over time, meaning that they have to have enough money to pay all of their retirees should they decide to withdraw their funds. Yet more than 200 of the 500 big-company plans are nowhere close to meeting that standard, and those dire numbers are increasing.
Companies with defined-benefit pensions may soon find themselves choosing between making payroll or pumping money into their pension plans. If companies are forced to make up the shortfall out of their assets, which seems likely, that would send profits tumbling even more, further destabilizing the stock market. And even with a cash infusion, many businesses might still have to freeze or even cut benefits.
Both the corporations and the pensioners are victims of a market meltdown whose depth and duration almost no one predicted. Yet the investment performances of their corporate pension funds, while dismal, are holding up better than the returns of many public and union defined benefit plans. Those funds are facing their own reckoning, but in this case a lot of the pain is self-created and exacerbated by politics.
Social Investing Shenanigans
There is about $3.5 trillion sloshing through the U.S. retirement system, scattered across more than 2,600 public pension funds and federal retirement accounts. Another $1 trillion or so covers union workers at corporate jobs in which the union has key management control of the fund. These public and union-based defined benefit plans cover 27 million people and represent more than 30 percent of the $15 trillion dollars held in U.S. retirement accounts.
Traditionally, public investments and union-based corporate pension funds were managed according to strict fiduciary principles designed to protect workers and taxpayers. For the most part they invested in safe government securities, such as bonds or U.S. Treasury bills. Professional managers oversaw the funds with little political interference.
But during the last 30 years, state pension funds began playing the market, putting their money into riskier and riskier securitiesfirst stocks, corporate bonds, and foreign investments, then real estate, private equity firms, and hedge funds. Concurrently, baby boomers whose politics were forged in the 1960s and 70s began using those pension funds to advance their social visions. Investments designed for the long-term welfare of retirees began to evolve into a political hammer. Some good occasionally came from the effort, as when companies were pushed to become more accountable in their practices. But advocacy groups often used their clout to direct money into pet social projects with dubious fiduciary prospects. Sometimes the money went to the very companies and financial instruments that, in the wake of the market meltdown, are now widely derided.
Many union funds and larger state pension plans screen stocks and investment opportunities based on what are known as socially responsible investing, or SRI, principles. Instead of focusing solely on maximizing value, fund managers have used the economic clout of concentrated stock holdings to make a statement by divesting from companies that dont make it through certain sin screens. These included companies involved with weapons, nuclear energy, tobacco, alcohol, natural resources, and genetic modifications on agriculture, many of which did well over the past decade. Stocks of public companies deemed to have poor records on labor, environmental issues, womens rights, and gay rights are also frequently screened out, as are corporations that do business with regimes that activists consider unsavory. In some cases, investments have been withheld altogether from some of the markets expected to best weather the current financial storm, including China and India, because of perceived transgressions.
Socially responsible investing now claims a market of more than $2 trillion, according to the Social Investment Forum, the trade group for social investors. There are dozens of mutual funds and investment advisory companies that incorporate ideological screens. Most of them are liberal, although there are now a few conservative funds and some based on religious principles, such as Islamic law. Activist treasurers and pension fund managers in numerous states and municipalities, most notably in California, New York, and Connecticut, have incorporated social screens into their investment strategies.
Many of these funds prospered in the 1990s, when the basic material stocks that they frowned upon swooned, while the favored sectorsmostly technology and financial stocks, which were considered clean investmentsdid great. But the technology and communications bust of 200002 knocked out one of SRIs pillars, and now the crash in financial stocks has destroyed the other. Despite much hype to the contrary, socially responsible stocks, as measured by major broad-based SRI stock funds, have significantly underperformed the market this decade, and some of the most aggressive pension funds that use responsible screenssuch as the California Public Employees Retirement Systemhave taken some of the largest hits.
Investing in socially responsible stocks just because they are socially responsible is notunderline nota valid investment thesis, says Steven Pines, a senior investment consultant for Northern Trust. Many of the largest socially responsible mutual funds, including a leading benchmark, the Domini Social Index, have been laggards for years. The Sierra Clubs high-profile social fund, which had regularly trailed the benchmark S&P 500 index by about 6 percent a year, liquidated in December, a victim of its poor performance record. As recently as last November, 76 out of the 91 socially responsible stock funds were underperforming the Dow, according to the investment research company Morningstar.
This crisis highlights the limitations of social research methods, says Dirk Matten, who holds the Hewlett-Packard chair in corporate social responsibility at York Universitys Schulich School of Business. Although some socially responsible research models are more sophisticated than others, particularly ones that eschew simplistic screens, social investors have downplayed the actual business of a business, including whether it can create jobs and spread wealth, while overweighting what Matten believes are more symbolic concerns, such as announced programs to combat climate change.
Sometimes corporate social responsibility can mask or come at the expense of responsibility to shareholders. Fannie Mae, for instance, was named the No. 1 corporate citizen in America from 200004, based on datacompiled by the top U.S. social research firm, KLD Research and Analytics in Boston. Well, it does have a great diversity program.
As recently as mid-2008, three of the top eight holdings by the leading social investing organizations in the country were financial stocks: AIG, Bank of America, and Citigroup. AIG was praised for its retirement benefits and sexual diversity policies; Bank of America strove to reduce greenhouse gas emissions and promote diversity; and Citigroup donated money to schools and tied some of its loans to environmental guidelines. The stock prices of all three companies tanked in 2008.
From South Africa to the Shop Room Floor
The catalyzing event that changed pension funds from boring retirement pools to political operators was the international boycott of apartheid South Africa in the 1980s and the campaign to limit investments in companies that did business with Johannesburg. The success of the campaign energized baby boomers, now entering their prime earning years, who were committed to making a difference with their dollars. Taking a cue from these social investors, pension funds began dabbling in what came to be known as economically targeted investmentsinjecting money into communities or projects that addressed social ills, with healthy returns becoming a secondary concern.
The earliest pension fund social investing initiatives were often cobbled together during crises, with little appreciation for unintended consequences. In the 1980s, for example, the Alaska public employee and teacher retirement funds loaned $165 million35 percent of their total assetsfor the purpose of making mortgages in Alaska. When oil prices fell in 1987, so did home prices in the nations most oil-dependent state. Forty percent of the pension loans became delinquent or resulted in foreclosures.
While unions and social investors often work together, their investment strategies are not always in sync. In 1989, under union pressure, the State of Connecticut Trust Funds invested $25 million in Colts Manufacturing Co. after the beleaguered gun makerhardly a favorite of the SRI crowdlobbied the state legislature to save jobs. Colts filed for bankruptcy just three years later, endangering the trust funds 47 percent stake.
In the late 1980s, the Kansas Public Employees Retirement System, then considered a model of activist social investing, placed $65 million in the Home Savings Association, after its lobbyists told top officials that this would help struggling segments of the state economy. That investment evaporated when federal regulators seized the thrift. All told, the Kansans wrote off upward of $200 million in economically targeted investments.
Olivia Mitchell, executive director of the Pension Research Council at the Wharton School, has reviewed the performance of 200 state and local pension plans from 1968 to 1986 . She found that public pension plans earn[ed] rates of return substantially below those of other pooled funds and often below leading market indexes. In a study of 50 state pension plans during the period 198589, the Yale legal scholar and economist Roberta Romano concluded that public pension funds are subject to political pressures to tailor their investments to local needs, such as increasing state employment, and to engage in other socially desirable investing. She noted that investment dollars were directed not just toward social investing but also toward companies with lobbying clout.
Because of poor returns, these early experiments in economically targeted investments lost their allure. Most states and municipalities steered clear of social investing for a time. That hesitancy eroded during the 1990s, partly as a result of a new strategy employed by organized labor.
With their membership falling, union leaders found it harder to influence companies or politics from the factory floor. The new approach was to ally with social investors and adopt one of their key tactics: lobbying through shareholder resolutions intended to pressure corporations. The strengthening of shareholder democracy promises to further empower investors to address governance issues such as out-of-control executive pay as well as environmental and social issues such as climate change, Jay Falkpresident of SRI World Group, which advises pension funds on social investingsaid in 2007, as the tactic was gaining traction.
Union-led pension funds are also trying to rattle political cages, but theyre running closer to empty every day. Even before the sell-off, in the summer of 2008, while nearly 90 percent of nonunion funds met minimum safe funding thresholdsmeaning they had adequate cash on hand to pay their benefits40 percent of union funds were at risk. These are high risk numbers even in a steady economy, writes Diana Furchtgott-Roth, a pension fund specialist with the conservative Hudson Institute, in a recent study. Furchtgott-Roth notes that union fund management practices are opaque, costs are higher than at nonunion funds, and the plans have promised more than they can ever hope to deliver. When workers entrust their retirement assets to an outside party, it is important that this partys only interest be achieving the best returns possible, she argues. Unions clearly do not do this.
The biggest comeback of socially responsible investing also took place in the 1990s, when elected officials in New York, Connecticut, Minnesota, andmost notablyCalifornia began to dabble in asset allocation decisions based on a growing list of social concerns. CalPERS is the 800-pound gorilla among public pension funds. At its peak value in October 2007, CalPERS and its sister fund, CalSTRS (the state teachers pension system), held over $400 billion in assets. Their portfolios have more global influence than the entire economies of most sovereign nations. And during just three months last fall, more than 20 percent of the funds combined value evaporateda horrendous performance for public investments designed to minimize risk and protect retirees. We have ups and we have downs, said Pat Macht, CalPERS assistant executive officer, as the fall 2008 massacre unfolded.
CalPERS and CalSTRS began flexing their financial muscles by demanding corporate governance reform, publicly excoriating companies they deemed to be poorly managed. It was an aggressive, almost unprecedented demonstration of the growing corporate transparency and accountability movement. The states pension fund meddling went into high gear in 1998 with the election of Phil Angelides as California treasurer. If there is a face to pension fund activism, its Angelides. As political issues go, treasury and pension fund investments are not the sort of hot-button topics that ambitious California politicians usually ride to glory. But Angelides had a vision: to use retirement dollars as a way to change the world, and the state treasurer position became his tool.
Under Angelides direction, CalPERS emerged as a leading voice on behalf of shareholder rights, at least as he defined them. To this day, the California funds instigate a dizzying number of proxy fights at the companies in which they invest, focusing not just on governance-related issues like executive pay but on everything from carbon taxes to divestment from companies that do business with Sudan. This social activism has acted as a model for public pension funds in other states. Laws directing funds to scrap investments in companies that invest in disfavored countries have passed or are being considered in 20 states, including Texas, Maine, Tennessee, New Jersey, Florida, and Idaho.
In 1999 Angelides funds committed $7 billion to a program called Smart Investments to support environmentally responsible growth patterns and invest in struggling communities. As in Alaska and Kansas in the 1980s, however, there were no accountability provisions to measure the impact of the venture, let alone to determine its financial consequences.
Supported by labor unions and minority groups, Angelides argued that the state had too many billions stashed away in so-called emerging marketsThird World nations where democracy is weak and wages are lowand not enough invested at home creating jobs and housing. So in March 2000, he rolled out an ambitious social investing program, dubbed the Double Bottom Line, which included dumping $800 million in tobacco stocks and persuading fund managers to shed investments in countries that Angelides thought had questionable environmental or governance practices. He claimed the initiatives would not sacrifice investment returns, saying at the time: I feel strongly that we wouldnt be living up to our fiduciary responsibility if we didnt look at these broader social issues. I think shareholders need to start stepping up and asserting their rights as owners of corporations. And this includes states and their pension funds.
How has this social engineering worked out? Angelides left his job as state treasurer in 2006 for an unsuccessful run for governor, but his legacy of politicizing pension fund investing remains. In 2003 CalPERS rejected a recommendation from its financial adviser, Wilshire Associates, to invest in the equity markets of four Asian nationsThailand, Malaysia, India, and Sri Lankabased on their alleged misdeeds. That was a costly decision, as their stock markets roared in the ensuing years. Another decision to shun investment in China, India, and Russia cost the fund some $400 million in forsaken gains, according to the funds own 2007 internal report.
Under sharp criticism and amid devastating declines, CalPERS last August finally repealed the screening policy, claiming victory in its reform efforts. Year by year, scores [of countries and corporations that invest in them] are improving, and many countries have responded to our standards for investing, CalPERS President Rob Feckner said in a press release.
CalPERS tobacco boycott was equally disastrous. With the float of most large cigarette companies so large, disgorging even a sizable fraction of one companys shares has little impact on the stock price; its akin to taking a thimble full of water out of the deep end of a pool, only to have it dumped back in the shallow end when the buyer makes his purchase. Since California sold its tobacco shares, the AMEX Tobacco Index has outperformed the S&P 500 by more than 250 percent and the NASDAQ by more than 500 percent. That one decision alone cost California pensioners more than $1 billion, according to a 2008 report by CalSTRS.
Some of the most steadily performing sectors, through both good and bad times, have been the very vice stocks that are no-nos for most social investors. When times get tough, the sinners get sinning. Demand for drinking, smoking, and gambling remains pretty steady and actually increases during volatile times, says Tom Glavin, chief investment officer at Credit Suisse First Boston. Alcohol, tobacco, and gambling stocks rallied solidly during two of the last three major recessions, in 1990 and 1982. Many of these industry groups tend to be beneficiaries of the flaws of human character, Glavin says.
So what stocks did the California funds buy instead? High on the list were financial stocks, which have been given a green bill of health by social investors. CalSTRS recently acknowledged it had lost hundreds of millions of dollars on Lehman Brothers, AIG, and other fallen icons that were recent favorites of social investors.
But those losses may pale when the tab comes due for misplaced bets on the boom-to-bust California real estate market. According to a report released last April, CalPERS had 25 percent of its $20 billion real estate assets in the California market, which has declined faster than the real estate markets in most of the rest of the country.
In the summer of 2007, CalPERS was more than 100 percent funded. Its now under 70 percent funded and falling, and that doesnt fully factor in its plummeting real estate investments. Funding levels stand near a dismal 50 percent for Connecticut, where State Treasurer Denise Napier has been a vocal proponent of social investing. Both states are far below mandated minimum funding standards, and they pale in comparison to even the beleaguered ratios of corporate defined contribution plans, which have mostly avoided using social screens.
Large public pension funds have a selfish notion of risk: heads they win, tails you lose. If they gamble on risky investments that pay off, they are heroes, although the predetermined benefits dont increase. But if those investments go south, tax dollars will have to bridge the gap. This is adding insult to injury, says Jon Coupal of the Howard Jarvis Taxpayers Association. At the same time were seeing our own 401(k)s get hit, were on the hook to make up the shortfalls for public employees who are guaranteed their full pensions without any risk.
When public funds slide in value, taxpayers get hit from all sides. The municipalities and school districts that hire firefighters, police, teachers, and other workers have to cut their staffs to recapitalize funds. Last October the Los Angeles County Board of Supervisors learned that the county would have to come up with an extra $500 million to keep its pension fund whole. That means the county may have to raise local taxes and cut services to deliver on overextravagant promises it failed to safeguard.
Public and union pension funds will be increasingly important factors in financial markets for the foreseeable future. As part of their fiduciary mandate to maximize investment returns, their trustees certainly have a right and duty to lobby for changes in corporate behavior that could result in better returns for their pension holders. But judging by the words and actions of some pension activists, shareholder value has become synonymous with cause-related investing, justifying a range of actions that may put at risk, directly or indirectly, pensioners retirement holdings.
If the goals of pension managers and retirees are not the sameas is often the casethen pension plans should not engage in social investing. In many instances, SRI amounts to union leaders or politicians gambling with other peoples money in support of ideological vanity.
A few politicians have begun speaking out against risking pension funds on political causes, for fear of limiting returns in a difficult investment climate. New York state and New York City public funds prohibit investing in new tobacco stocks, a policy that has drawn the ire of Mayor Michael Bloomberg, even though he is a zealous opponent of smoking. I dont think we should be using the citys investment policies to advance social goals, no matter how admirable those goals are and no matter how much I believe in it, he has said.
Pensions are being dragged into treacherous waters by investors who consciously choose to direct their money in socially conscious ways. Its a questionable risk for cautious times. The use of political criteria may be fine for affluent investors and activists who gamble their own money and assume the extra risk, but pension funds should be held to a higher standard.
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Too bad the same rules don't apply to SS.
Fed Secretly Lends $2 Trillion to Banksters without Oversight
February 3, 2009
It turns out the bankers are not finished looting the American tax payer. As the American News Project video posted below reveals, the Federal Reserve has doled out around $2 trillion to unknown suspects behind our backs, described as a staggering, enormous, unprecedented sum of money. Of course, we have a pretty good idea who the recipients are, never mind all the secrecy the international bankers, the same people who took more than $8.5 trillion under threat last year from your children and grand-children.
Alan Grayson, Democratic Congressman in Floridas 8th congressional district.
If not for freshman Congressman Alan Grayson of Florida, you might not be any wiser about this latest scam. In the video, Grayson grills Fed vice-boss Donald Kohn over the lending of an addition $2 trillion to unspecified institutions, a highly unusual situation because our congress critters rarely with the notable exception of Rep. Ron Paul take on bankster operatives at the Fed or the Treasury. I guess I havent got the memo on questions not to ask and people not to question closely, Grayson told the American News Project. In fact, Congress has no oversight of the private banker held Federal Reserve.
Donald Kohn admits during testimony why the Fed keeps its transactions secret. Id be very concerned, Congressman, that if we published the individual names of who was borrowing from us, no one would borrow from us. The purpose of our borrowing is not to support individual institutions but the credit markets. In other words, the international bankers making oodles of ill-gained profit from the Feds out-of-thin-air funny money dont want the people to know who they are. Criminals dread the light of day.
Kohn understands well enough the real purpose of this lending to the credit markets to further indebt the nation to the bankers. The international banking cartel are the underwriters of the U.S. public debt. The bailout is conducive to the consolidation and centralization of banking power, which in turn backlashes on real economic activity, leading to a string of bankruptcies and mass unemployment, writes economist Michel Chossudovsky. The bailout proposed by the US Treasury does not constitute a solution to the crisis. In fact quite the opposite: it is the cause of further collapse. It triggers an unprecedented concentration of wealth, which in turn contributes to widening economic and social inequalities both within and between nations.
It also turns us into debt slaves. In this regard, it is worth repeating Thomas Jeffersons warning, written in a letter to the Secretary of the Treasury Albert Gallatin in 1802:
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Watch the video:$1.2 Trillion Slush Fund: Congressman Alan Grayson Grills Fed Vice Chair Donald Kohn
Not one word in the whole article about the possibility of REDUCING the benefits to retirees. Oh no! Just keep taxing the working guy and taking away the benefits of new hires. Either that or just go broke!
Maybe we need to make some adjustments in pension payments and/or health benefits. All these years, people have demanded "cost of living" increases. Now that things have gone south, there is never any mention of a "cost of living" decrease.
Ron Paul Grills Fed Governor 1/13/09
The Money Masters - How International Bankers Gained Control of America
There is the chance we old geezers will rebel.
After 35 + years of paying pension & S/S taxes, then having to live in tent city may not sit well with many.
Of course the young blood may want to look into more of the euthanasia solution the younger generation has been toying with.
Whatever you decide, you may want to keep in mind that you will also grow old.
... Well perhaps you will.
Same to you. ;)
Too bad the same rules don't apply to SS.
Traditionally, public investments and union-based corporate pension funds were managed according to strict fiduciary principles designed to protect workers and taxpayers. For the most part they invested in safe government securities, such as bonds or U.S. Treasury bills. Professional managers oversaw the funds with little political interference.
The trouble with the Social Security Trust Fund, over and above the pyramid scheme aspect, is that the SSTF is invested in "safe government bonds." Which sounds fine - until you realize that when the retirement boom hits and the SSTF needs to cash in those "safe government bonds," the Treasury will be obligated to redeem them from your grandchildren's taxes. And there aren't enough young Americans to carry that burden.
100% safe investment is illusory.
I know the points you make are valid. And, by the way, I am retired. I see many around me living the good life and having all of their health care benefits paid. I am just saying, we may need people (hopefully the ones with plenty) to start taking responsibility for more of their daily needs. The monthly checks are pretty much sacred. Some of them are exorbitant. Those people should not also be getting benefits free. Use some of the monthly income to pay for it.
You see when I signed on, there was no stipulation that should I hit the lottery, or made a fortune smuggling moonshine, that I would forfeit my pension, or S/S.
BTW ... In my post #12 ... "Whatever you decide, you may want to keep in mind that you will also grow old.
... Well perhaps you will."
The you should have been they.
Sorry about that.
He's got this one at least partially wrong.
My defined contribution pension plan is more like a bank account. There's a guaranteed interest rated stated every year. And the balance raises accordingly. My nominal savings grows every year, it doesn't ever reduce.
That's not to say there isn't risk. The risk I have is that the company didn't play safe with the funds behind the nominal balance, and can't meet their obligations when it comes time to pay.
One elephant in the room that’s not covered here:
The coming bout with inflation will reduce even these devalued retirement accounts by half or more (easily).
So sorry old-timers, the money will not be there (for you or for me). The money was already spent. It is gone.
pay everyone every red cent of SS that they contributed, but after that, index it all....
over the last 30 yrs, when the govt went to "fix" SS or the pensions, all it did was increase my taxation and my work life.....
We are watching government entities go broke. Just like the UAW, they are drowning in retiree indebtedness. I'm not saying you can just take away everyone's pension. I'm saying you have to take a look at the "fat". Some of those pensions are exorbitant. In those cases, more of the burden needs to fall on the recipient. You can't just keep raising taxes on the young to pay for the retirees' lifestyle. For example, say a retiree has a pension of $80K or $100 a year. Let's say he also gets a $400 a month stipend to cover his Medicare costs. (Heaven forbid he have to use his fun money to pay for something as banal as health care!) I love the idea as long as it is sustainable. Just like the UAW - I love the good fortune of their retirees as long as the auto industry pays for it. But, when the entity that is paying the pensions and stipends no longer has the funds to cover them, it is time to look for ways to reduce the benefits, not increase revenue.
What makes me the maddest is people's refusal to recognize how great things were. For so many years we lived through the highest standard of living imaginable. During those same years, libs could only talk about the "worsening economy". They watched the stock market go nuts, saw people living like kings, businesses booming and could only point out how "bad" things were (Bush's fault). They never acknowledged how good things were.
Ok, excuse the rant!
Are you? Really?
By double dipping I assume you mean a person completes a term of service, (a contractual agreement) for say twenty five years as a LEO, for a certain retirement package.
After that, this person is contractually hired by, say, the Post Office, and serves the required time for retirement.
Add on a third job for the so called triple dippers.
If this follows your assumption of "dipping" then you have drunk the Kool Ade of the socialist fools of the world, and are nothing but a tool being used by them.
It's that, or you have absolutely no idea, none, of what a contract is.
Should you and REPANDPROUDOFIT, and others, wish to send your contractual retirement benefits back because of some misplaced (MHO) feelings, feel free to do so.
As for me? All my life I have live up to my financial contractual agreements.
I fully expect those I deal with to live up to theirs.
Case in point: As far as I know these Pension Managers do not fall under "Sarbanes Oxley" just like Pelosi and Reid do not. Although the pensions fall under ERISA, I found it curious the duality of social investment and at the same time willingness to go to emerging markets and hedge funds to take non-preduent and definitely void of "Fiduciary" (google it, an up and coming concept/title) responsibility.
What happened to a 50% 50% mix of low cost indexes and STRIPS, etc with all different maturities as the 50% balance? These fools shooting for the moon instead of a conservative 8% are part of the problem IMHO. They shouldn't made the promises they couldn't keep in the 1st place, but that is a different story.
The fragility of the pension system underscores what the lack of "Moral Hazard" in the CMO's and other funky mortgage instruments and Hedge Fund betting for lack of a better term, did to Joe Q public. What I mean by that is, Joe Q utilized a no-load index in his 401(k) run by a reputable firm and he was whipsawed by exogenous forces not behaving in a moral way. He invested in a highly regulated instrument, with an industry that has a pretty good record against malfeasance, only to to have his unrealized gains and intrinsic wealth destroyed by greed/in-moral risk by those playing by no rules.
If you want to play by no rules, then partake in venture capital where investing in a new product that might have a positive effect on humanity. How many of Madoff's investors could have changed the world had they gone this route and given "Capital" to those starved for it?
Capitalism works for these pension funds and our economy, but doing the right thing, i.e. being moral and prudent is a prerequisite, somehow that was forgotten.....
We will probably never agree on this subject. I am just trying to be as clear as possible.
Your feelings are paramount to contractual agreements.
Any whom chose to deal with you in a business manner should beware.
You probably made a great mother. A reason I think women are ill suited to be politicians.
That being said, your sort probably believes you aren't stealing when you rob Peter to pay Paul., while your male counterpart knows full well what he is doing.
It is a video. Hope you enjoy it. ;)
My, my! Testy aren't we!
Though hard for you to believe, I too am a believer in sanctity of contract. But sometimes you have to follow reason. Take the UAW, for example. Their retirees contracted fairly for a very nice retirement that includes gold plated health care FOR LIFE! No Medicare for them at age 65. The auto industry can no longer afford those terms, so now you and I are paying for them through the
auto union bailout. That just isn't right. Make them go on Medicare like the rest of us. I don't like adding them to the Medicare rolls any more than you do. But given a choice between 1) handing over billions of dollars in regular bailouts (there will be more) or 2) making them "make do" with the same senior health care as the rest of us - I choose the latter.
Sure, when legal contracts are concerned.
As far as your example of UAW goes ... We, as a nation are not obligated to pay for corporate bailouts. Of course our corrupt Congress sees that in completely different light. It's called paying back your supporters for their voting you in office.
The auto industries should go bankrupt, if they cannot make a profit. As should all businesses.
The UAW's knew they were taking the companies down the road to ruin. It has been well reported for decades.
When the companies went belly up, and the pensions were not protected by law ( that Congress could, if they did not, protect by law ) that is to bad for the union thugs and their membership. Now they must give up that new car every other year, (or whatever that deal was) lose their heath care, lose their pensions and live on S/S.
Now, as it is, it is to bad for you, I and every tax paying slob in the country.
BTW ... are you beginning to like our nationalization of corporate America (Reads: Socialism) now?
You should, because what you & others are suggesting be done on a voluntary basis, will be forced down our throats.
When Officialdom comes and tells you that you have no need to live in such a big, or expensive home, as you are old and have no need for it. Then tells you what temperature you are allowed to set your thermostat to, and how many calories you are allotted each day, perhaps you will understand.
Anyway ... this is JMHO. After all, and exchange of ideas is good for the soul. Thanks.
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