I see no potential problems with this strategy:
States and companies have started investing very differently when it comes to the billions of dollars they are safeguarding for workers’ retirement.
Companies are quietly and gradually moving their pension funds out of stocks. They want to reduce their investment risk and are buying more long-term bonds.
But states and other bodies of government are seeking higher returns for their pension funds, to make up for ground lost in the last couple of years and to pay all the benefits promised to present and future retirees. Higher returns come with more risk.
It would be nice if our legislators were smart enough to point out that regulatory reform might not be such a bad thing, considering your pension might be at stake. Since that will never happen and spring is around the corner, I’m just going to recommend a little practice gardening, canning, fishing, and learning how to make your own soap.
It’s like Atrios accurately predicted the future and his reward is that now he is damned to live it.
Jim, Foolish Literalist
Man, if they do that in January of last year they can’t lose!!
Taterstick
Well, since my IRA “pension” went to hell in a handbasket a couple of years ago, and we then had to “borrow” from it early in order to survive – well, suffice it to say that I am boning up on recipes for road-kill so that I will be prepared for our “golden years.”
God save the Queen.
freelancer
It’s #1 foam finger time! Why doesn’t Obama tell the world more about American Exceptionalism? Does he not love his country? USA! USA! USA!
Green Balloons indeed.
Tonal Crow
Well you can’t, you know, (whisper) raise taxes (/whisper) or anything like that to help right the fiscal ship, so you gotta do what Orange County did and play the markets with wild abandon.
This will turn out well.
General Egali Tarian Stuck
Personally, I’m going to raise Jackalope and invest in Chinese jaun/ that way i’ll be able to have some meat and buy noodles at the peoples state noodle store when we are foreclosed on by the Reds. Shouldn’t be that much longer.
wasabi gasp
Old people like casinos.
someguy
Perhaps its time we considered getting retirement planning entirely out of the hands of the private sector, which seems only able to squander money on fat bonuses and lousy investments. Maybe we should make pensions a government-only business. They’d be a lot more secure that way.
mr. whipple
“I’m just going to recommend a little practice gardening, canning, fishing, and learning how to make your own soap.”
I’m gonna have an internet fund raiser!
demimondian
John, those fish belong to the Crown. You’re encouraging poaching!
slag
This sounds like a lot of work. How about if I just go work for an investment company instead? I hear the bonus plans are fabu!
Mike Kay
@someguy:
Maybe we should get government to run NetFlix (with organic popcorn, of course).
I can see it now. Stupak will vote against the public NetFlix option if they include any nudity, and Kuchinich will vote against unless everyone received a free edition of “Close Encounters of the Third Kind”.
mr. whipple
@demimondian: LOL!
BombIranForChrist
This is yet another example of how horrible Alan Greenspan was for our economy. There was a time that you could safely park some money in a nice little safe CD and make a small bit of change. Now, in order to get any yield at all, you have to stick your neck out and get into equities, derivatives and all other kinds of crazy shit. He should be tarred and feathered, old school.
Corner Stone
Ok. Sexy High Heels .com? You had me at Hello.
ajr22
@someguy: Sounds like a commie plot to me…
Brian J
@Tonal Crow:
Raising taxes won’t help private companies.
Corner Stone
@BombIranForChrist:
Did we ever actually do this? Not sure it’s very effective.
Jim, Foolish Literalist
@Corner Stone: Did we ever actually do this? Not sure it’s very effective.
According to the HBO John Adams movie, we did.
Midnight Marauder
@Corner Stone:
Most definitely. That [picture brings a whole new meaning to Project Wonderful.
Svensker
@Corner Stone:
Why not give it a try on Greenspan? If it doesn’t work, there’s not much lost. And if it does? Win!
Corner Stone
@Svensker: I like where you’re going with this. Win / Win eh?
It’s so rare in life you get a guaranteed return on your investment.
Brian J
I wonder what would happen if there was a greater effort to get people to invest in 401Ks through some combination of an opt-out requirement and match for lower-income people. I doubt that, at its height, the latter would cost more than a couple of billion per year, and overall, as a supplement to Social Security and other programs like that, it seems like that such accounts are a good way to help people build wealth. But is this doing anything more than creating a house of cards?
Corner Stone
@Jim, Foolish Literalist:
I love Paul Giamatti – in small doses. I just couldn’t finish that mini but I’m sure it’s really good.
mogden
Since they’ve done such a great job with public pensions, let’s hurry up and have the government take over health care as well!
Corner Stone
@Midnight Marauder:
Holy shit! There’s a woman attached to those things. I had never got past the shoes til you said something.
Brachiator
@wasabi gasp:
Fixt.
If California is any example, legislators will never see the light. Out here, the state house is convinced that there is a pot of gold at the end of the rainbow in the form of higher taxes and fees.
Added to this, state tax revenues will never match budget projections, and around June the budget deficit will mushroom to outrageous proportions. Flirting with disaster chasing higher returns for pension investments will only add to the pain.
These guys never learn.
Corner Stone
I just freakin love Law & Order. Spotting former good guys / bad guys / bit players that they recycle is so much fun.
Mike Kay
@Corner Stone:
A shoe fetish?
Nothing beats a big pair of boobies!
https://www.msu.edu/course/isb/202/ebertmay/images/boobies.jpg
demimondian
@Mike Kay: Look at the…FEET…on those boobies!
Yutsano
@Mike Kay: I’m going to assume NSFW unless you assure me they’re birds. Then I might take a peek at the work computer while I’m bored.
Mike Kay
@Yutsano:
Breast Actress at last night’s Oscars (safe for work)
http://www.daylife.com/photo/03iPcu84QzbIS?q=Christina+Hendricks
Corner Stone
@Yutsano: Unfortunately it is 100% SFW.
DougL (frmrly: Conservatively Liberal)
@demimondian:
I’ve always preferred Hooters. With a pair of Hooters you get four boobies!
Double the pleasure, double the fun, …
Martin
Utterly OT: Good news for Mac gamers – Steam is coming to the Mac, and from the sounds of it, they aren’t fucking it up – buy a title and you can run it on Mac or PC. That’s refreshingly non-douchey.
jl
I remember reading that a mainly bond investment approach called bond-matching worked the best for meeting pension commitments, and both public and private pension plans have used it successfully. But I have not kept up with that since the crash. I wonder how bond-matching has fared over the last two years.
For those who cannot obtain wild fish regularly, I also suggest looking into getting crawdads from irrigation and other assorted ditches (liver is good bait), and looking into the delights of opossum cuisine, which some people out in the sticks near where I grew up love.
I guess if you get real desperate, you can attract pigeons to nest someplace right next to your house and eat ‘street squab’.
demimondian
@jl: I suspect that dovecotes are probably regulated under the same municipal statutes which regulate chicken coops.
DougL (frmrly: Conservatively Liberal)
@Martin:
Yep, one day soon you Mac users will be able to have almost as much fun gaming as the pc users have been having for years now! ;)
Sorry, couldn’t resist that one…lol
SP
If only the “brightest minds” of the GOP knew that risk and return are related.
Corner Stone
I love Robot Chicken and I don’t care who knows it.
Martin
@DougL (frmrly: Conservatively Liberal): Yeah, because this and this don’t actually exist, but every improvement helps.
Tonal Crow
@Brian J: The article John cited contrasted many private companies’ approach of reducing risk by exiting equities with many public entities’ approach of seeking higher yields by taking greater risks. My point was that tax-phobia is driving much of the perceived need to take those risks.
ajr22
Watching a movie called sugar about a Dominican kid coming to the states to play baseball. Pretty good flick, especially if your a baseball fan.
16 shells from a thirty aught six
I’m just going to put in my application at McDonalds and under Date available to start: ‘1 Jan 2041.’
Joseph Nobles
We rebelled against England because of the way English corporations were abusing the colonies, and now we’ve grown our own corporations and are slowly delivering ourselves into their hands.
I’m going to learn battery technology. Why learn to garden when Costco is selling one-year supplies of dehydrated and freeze-dried foodstuffs? Comes with a handheld wheat mill and everything!
theturtlemoves
@Joseph Nobles: Good to see that Costco brings their bulky goodness to the coming apocalypse. I was impressed by the gigantic bag of pretzels currently in my pantry, but food fit for a fallout shelter? If they start selling Pip-Boys, my Vault will be complete…
mr. whipple
@16 shells from a thirty aught six:
Nice handle.
Brian J
@Tonal Crow:
Oh, my bad. That’s a good point, actually.
scarshapedstar
I think they should invest all their money in cutting-edge hedge funds, preferably those that are too big to fail.
Just to be safe.
I can haz millions of dollars?
Brick Oven Bill
Wow. John Cole is starting to sound like…
Glenn Beck.
jl
@demimondian:
Dovecotes? Dovecotes? We’re talking about dovecotes?
&^%##** dovecotes.
Dude you are starving in some smoking post-financial dystopia where everyone has forgotten how to make anything. We will be like cavemen trying to figure out how to eat burned out lightbulbs and dead batteries.
You just have a bunch of messy old pigeons roosting and shitting all over the outside of your rotting ruin of house. If some gummint man comes around yammering about a dovecote, you shoot him and feed him to pigeons.
Problem solved. QED. Also.
Martin
@Joseph Nobles: Ok, that’s pretty awesome. If I could fit it in my car I could take my family camping for 3 months. I wonder if my boss would give me the time off.
jl
My understanding that the LDS community has this emergency supply stockpile stuff down cold. Should check where they go buy their supplies.
But that may be wrong. I got this information from my heathen, and somewhat liberal, southern Idaho anti-Morman family contingent.
Michael G
@Midnight Marauder: Since we’re talking about the Sexy High Heels ad, FYI the model is Masuimi Max. She ate a bug on Fear Factor. I am ashamed of myself for knowing this.
gwangung
The picture may be SFW, but my reaction is not…
jl
@Michael G: What kind of bug? That makes a big difference.
I will not judge until I have all the facts.
And, to add extra special class to my reasoning process, what was she wearing and how hot is she?
Yutsano
@gwangung: Methinks you just had an overshare there. Not that there’s anything wrong with that. Or it’s not anything I’ve done myself here.
Brachiator
@Tonal Crow:
It wasn’t just about the OC being tax averse, although that is a good point. Orange County Treasurer Robert Citron was Dancing With Derivatives back in 1994, without sufficient oversight, and with a huge amount of hubris. And when questioned about his investment strategy, he would point to his past track record and claim any inquiries were politically motivated.
Looking back, it is amazing how much the Orange County debacle in miniature foreshadowed the later global financial meltdown.
Anybody care to sing, “We won’t get fooled again?”
DougL (frmrly: Conservatively Liberal)
@Martin:
Yes, I am aware that if all else fails a Mac user who likes to game then they can run Windows on a VM. Yup, there’s nothing like investing a wad of cash into a system and OS just so you can buy another OS to run within it to play games on that run almost as well as they do on the real thing! ;)
I really don’t care about Mac/PC wars, I work on both and they pay the bills. I do like to needle the Mac users periodically because it’s guaranteed that you will always get a rise out of them. :)
It’s cool that Mac users will get Steam, it’s a great service and I enjoy it a lot. Looking forward to Portal 2 right now, two player Portal ought to be real fun! I wish it could be four or more players but I understand the complexity of what they are doing. As it is, two player Portal ought to be a blast.
Yutsano
@Brachiator: Aww don’t make me say it. We’re all thinking it anyway.
Martin
@jl: Yes, the LDS community does have that down cold. We’re not rockin’ a year’s worth of food to stave off the harsh descent into soshulism, just a week in case the local fault line decides to get ornery. It’s capable of 7.5 quakes and it’s 4 miles away, so a container of MREs seems a reasonable precaution.
Jimmm
@wasabi gasp:
This.
Martin
@DougL (frmrly: Conservatively Liberal): Having a Microsoft FTE license from work makes it no problem, and no added cost.
Steam will help the Mac quite a lot. The move to Intel has opened up gaming opportunities at the same time as killed a lot of Mac-specific game development in favor of just running Bootcamp.
Ah well, sales go up, the stock goes up, I’m happy.
Joseph Nobles
I’m glad you guys are enjoying my link, but you better get your orders in quick. Eric Massa is sitting down with Glenn Beck on Fox News tomorrow for the full hour.
I may have to run to the liquor store myself. 750 ml of Abelour a’bunadh may not be enough.
Yutsano
@Joseph Nobles: Absinthe from Europe is about the only way to get through that mishegas with any semblance of sanity. Or I could be doing it wrong.
MikeTheZ
Is it just me, or is this whole thing one giant conspiracy by the liquor makers?
DougL (frmrly: Conservatively Liberal)
@Martin:
That makes you one of the lucky ones. :)
Ah well, sales go up, the stock goes up, I’m happy.
If it leads to full employment then I’m all for it!
What is funny for me is that while the majority of my work has been on Intel or AMD based PC platforms, I started out in computing testing and debugging Motorola 680×0 procs (the 16/32 bit 68010 & xx012 and later the first 32 bit procs, the 68020 & xx030) that were to be used as a systems controller for marine (yacht) systems. The company eventually went tits-up but the pay was good!
Problem was having nerds build stuff and not planning for the environment it would be used in. Good idea, poor execution.
Good stable procs though.
Corner Stone
@gwangung:
“Don’t act like you’re not impressed!”
16 shells from a thirty aught six
@mr. whipple:
Why thanks. Happened to be the song playing when I first commented here.
jl
@Martin: Thanks. That sound sensible, actually. I was misinformed by my familial Idaho informants. Sounds like something you would learn how to do at my local NERT training program.
DonBelacquaDelPurgatorio
Oh great, my first week of retirement and this thread.
The Raven
Why, you might almost think the state governments wanted their pension plans to fail. But, hey, that’s all right: the financial wizards say this is the only thing to do, so they’ve got to do it, right?
asiangrrlMN
@gwangung: Now I haz a confused. I thought you batted for Yutsano’s team?
@Yutsano: I wanna try absinthe. I am such a lightweight, though, that it probably will be the death of me!
Gah. Gotta work out, let out some of the toxicity.
Yutsano
@asiangrrlMN: What? He can’t switch hit?
asiangrrlMN
@Yutsano: Far be it for me to say someone can’t play for all teams, but I got the impression that gg played strictly for your team. Then again, those breasts could turn many a waffling man, I suppose.
Yutsano
@asiangrrlMN: You know the difference between a straight man and a gay man, right? You know, a six pack? Hehehe.
drunken hausfrau
One of Beck’s advertisers is selling “Crisis Seeds” for your survivalist veggie patch…
asiangrrlMN
@Yutsano: So, awesome breasts have the opposite effect?
@drunken hausfrau: I thought they weren’t supposed to spill their seeds onto the ground.
WereBear
@Corner Stone: Yes, we did, I learned the real deal from reading Anthony Adverse. The tar was boiling, and the feathers were to protect the townspeople as they “ran him out of town on a rail” which inflicted grave injuries.
It sure weren’t funny at the time. And yes, it’s horrible and cruel and I’m glad it’s not a practice anymore…
R.
And for private pension funds, there’s always outright theft. (Still amazed how buried this story was — 2005!)
GReynoldsCT00
Well we could start a hippie cyber commune and trade our wares in the Balloon Juice store…
The Raven
@GReynoldsCT00:
Welcome to the future. The good part is we’ll probably do OK that way. The bad part is that we’re going to have to.
inthewoods
Not a new problem – this one has been around for years and years. And state pensions are, for the most part, big underperformers anyway – as the people running them are often taken for expensive dinners by financial wizards who tell them exactly what to buy. Here in MA, they’ve taken over pensions that were underperforming the state-controlled pension (I think Worcester had this happen). Bottom line, this has been a problem 10 years in the making, both in state pensions and in companies where they were allowed to underfund the liabilities, and also assumed an unrealistic growth rate for the funds. The other irony is that if the pensions rush into bonds right now, they will likely get killed if we see long-term interest rates continue to rise.
Fergus Wooster
Yup. Digging a garden this weekend. Spent last weekend butchering a hog, putting the belly, jowls and ham in a cure.
Thought it was a hobby, but it’s looking to be basic survival skills. . .
sparky the self-puncher
seems like a good plan–worked in fla for jeb–invest Florida’s $ with Lehman, then get a job with them. what could go wrong?
i do think there’s a typo in the original, tho:
safeguardingacting as agent forwhich means
play with till we get caught with our pants down or skirt up, as the case may be, then declare bankruptcy and spin off the obligations to the Fed.
4jkb4ia
Good for John for realizing this was an important story. The angle I saw was not financial reform, but that state budgets have one more thing to worry about when many of them cannot even pay teachers. If the assumptions remain unrealistic these pension funds will invest in the most high-return things they can get.