All Things in Moderation

Morning Report 7/17/12

12 Responses

1. 

   bannedagain5446, on July 17, 2012 at 8:17 am said:

   Calpers Badly Misses Target as Return Drops to 1%”

   http://www.cnbc.com/id/48203539

   “Despite Calpers’ meager gain in the recent fiscal year, Dear said the fund’s new 7.5 percent return target is a realistic long-term goal.

   The reduced rate is a pressing matter for local governments in California, including financially troubled cities like Stockton and San Bernardino, as it will require them to increase contributions to the retirement system to bolster its funding.

   Local governments managing pensions through Calpers will begin making increased payments to the fund in June 2013. Calpers will inform them of the charges this fall.

   State agencies and school districts began paying increased contributions this month.

   Calpers’ staff had initially urged the fund’s board to approve a return target of 7.25 percent.

   Concerned about the potential financial strain that would impose on state agencies and local governments struggling with lean budgets, the fund’s board instead opted for the 7.5 percent target and for phasing it in over two years instead of one.”

   For record, Calpers invests about 20% of their total assets outside the US including China,which is good because they never could have made money last year without commodity trading and emerging market investments.

   The longer we stay at these interest rates, the greater the risk in other asset classes that CALPERS has to take take with their money and the more local and state governments have to put aside.

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2. 

   jnc4p, on July 17, 2012 at 8:37 am said:

   William Raspberry died today. I always found his columns to be a worthwhile read:

   http://www.washingtonpost.com/local/obituaries/william-raspberry-dies-washington-post-columnist-wrote-about-social-issues-including-race-poverty/2012/07/17/gJQAS210qW_story.html?hpid=z2

   Edit: A partial column archive from the Washington Post.

   http://www.washingtonpost.com/wp-dyn/content/linkset/2005/03/24/LI2005032401732.html

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3. 

   Brent Nyitray, on July 17, 2012 at 9:11 am said:

   “Despite Calpers’ meager gain in the recent fiscal year, Dear said the fund’s new 7.5 percent return target is a realistic long-term goal.”

   And unrealistic return on assets assumptions is the only way any pension fund is staying “solvent” these days.

   Jim Graham’s “The Trouble With Prosperity” goes through how the low interest rate environment of the 40s and 50s annihilated pensions and insurance companies.

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4. 

   jnc4p, on July 17, 2012 at 9:34 am said:

   Amusing E-mail receipt language for online campaign donations:

   “GARY JOHNSON 2012

   Your Purchase has been approved

   This receipt confirms payment for your purchase from GARY JOHNSON 2012. This order will appear on your credit card statement as GARY JOHNSON 2012.”

   At least the phrasing wasn’t:

   “This receipt confirms payment for your purchase of GARY JOHNSON 2012.”

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5. 

   bannedagain5446, on July 17, 2012 at 11:17 am said:

   brent

   somebody should hit me over the head with a frying pan for putting this tory elsewhere. I simply don’t learn that most people in this country don’t know what they don’t know.

   I just tried to explain that Bain was not an investment bank and that went whoosh!

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6. 

   bannedagain5446, on July 17, 2012 at 11:18 am said:

   jnc:

   He’s a libertarian, you have to pay in gold coins

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7. 

   Brent Nyitray, on July 17, 2012 at 11:35 am said:

   @john:

   it is hot in Vietnam this time of year!

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8. 

   Brent Nyitray, on July 17, 2012 at 11:36 am said:

   john, great cartoon on Grant’s Interest Rate Observer this week:

   Picture of the Fed, captioned “But market manipulation is MY job!”

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9. 

   bannedagain5446, on July 17, 2012 at 11:39 am said:

   “While some Washington leaders demanded Tuesday that the Federal Reserve come through with more stimulus, the reality could be that it has run out of ways it can help.

   Fed Chairman Ben Bernanke gave his annual address to Congress on Tuesday and encouraged lawmakers to resolve their fiscal differences.

   Instead, he faced challenges from some — in particular New York Democrat Charles Schumer — who want more central bank action. Schumer called the Fed “the only game in town” because of Washington gridlock and urged Bernanke to “get to work.”

   But with the Fed already holding interest rates near zero, American corporations and banks awash in cash and the central bank’s balance sheet near $3 trillion, the Capitol Hill stalemate over deficit reduction looms as the economy’s much bigger obstacle.

   “Nothing is being done to promote the real economy and that’s the real issue,” Mohamed El-Erian, CEO at bond giant Pimco, told CNBC’s “Squawk Box” program. “I feel sorry for Bernanke because the data is telling him he should be more active but there’s a recognition that his policies are less effective.”

   Chuck Schumer is a piece of work. Apart from being a complete shill for the investment banking people, he’s telling an electrician that the plumbers aren’t coming so he better figure out how to fix that water main break himself. and be quick about it.

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   • 

     markinaustin, on July 17, 2012 at 4:26 pm said:

     he’s telling an electrician that the plumbers aren’t coming so he better figure out how to fix that water main break himself

     I like that. I understand that. Thanx.

     The drunk has been drinking so much he can’t work—and therefore can’t afford to pay his tab. So it’s up to the bartender to pour another cocktail and extend the tab a bit longer. “

     Also good.

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10. 

    bannedagain5446, on July 17, 2012 at 11:40 am said:

    brent

    It’s just crazy talk that he’s me worried more than the fiscal cliff

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11. 

    bannedagain5446, on July 17, 2012 at 12:58 pm said:

    I love John Carney:

    “The Senate Banking Committee’s grilling of Federal Reserve Chairman Ben Bernanke just got weird.

    Senator Charles Schumer, the New York Democrat, proposed a novel theory of political management of the economy shortly before 11 am Tuesday morning.

    The gist of the theory: If the elected branches of government cannot agree to act, the responsibility for the economy falls to the Fed.

    Schumer’s argument amounted to the idea that that because disagreements between Republican and Democrats (and, of course, the political ambitions of members of both parties in a presidential election year) are blocking any agreement to provide fiscal relief to the economy, the Fed should “get to work.”

    It’s tempting to say that this is the drunk’s theory of the bar tab.

    The drunk has been drinking so much he can’t work—and therefore can’t afford to pay his tab. So it’s up to the bartender to pour another cocktail and extend the tab a bit longer. “

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