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March 30, 2009



PBGC .. the ultimate "(leap) day trader"

Fresh Air

Can I get a guide somewhere that will tell me which federal agencies' performances were Bush's fault and which ones were courageously independent? It's so hard to tell, sometimes. For example, when some guy at CIA spills the beans on the top secret wire transfer information we have on terrorists to the New York Slimes, am I supposed to blame Bush or the pinko who squealed? Or when the Coast Guard flies over 4,000 sorties in 10 days and saves hundreds of lives at great risk to their helicopter crews, is that Bush's fault or the Coast Guard defying orders?

It's so hard to keep up with these things! I'm sure in the Age of Zero things will be much clearer.

Charlie (Colorado)

indignant yet underinformed Josh Marshall....

There's a title you could use regularly.

...that some very bad happened here

This is a PhD?


Question, when's the last time that Josh Marshall got the story right, crickets. . .
funny I recall, around this time, they were talking about how the pension fund, had gone down because it wasn't accruing enough
revenue, I read that somewhere


BTW, Clarice, great piece on the astroturfing phenomenon in the American Thinker.


Sounds to me like the PGCB is perfectly positioned to take full advantage of the "buying opportunity" that O is so excited about. Maybe they can invest heavily in GM. How could the company not take off, now that the best and brightest minds in government are in charge?

Jim Miller

Correct me if I am wrong, but I think Josh Marshall got a story right years ago. If I recall correctly, he found that opinion on the death penalty was not that different in the United States and most European countries. (I concluded that our system is more responsive to actual voters.)

But that was years ago.

(And I am sure that Marshall, after he thinks about it a bit, will agree with Boatbuilder. We are now in the best of hands.)


I'm guessing GM is the next Amtrak.

But as for the overall situation, is Daniel Hannan the man or what? Here he is on MSNBC today.

Which American pol could think through and answer these questions in such a principled way?

Charlie (Colorado)

I'm guessing GM is the next Amtrak.

Honest to God, folks, I'm the depressive: why are you all despairing? The Obama folks do seem to be susceptible to political pressure, especially if it makes it appear Obama did something Wrong or that Looks Bad.

Don't give up now.

Fresh Air


Maybe Newt Gingrich or John Cornyn, though I'm really not too sure about either one, especially now that Newt has drunk the Glowball Warming Cocktail (2 shots of Everclear, 1 shot of socialism, 1 shot of concentrated stupid, stir until your arm hurts, drink until data no longer make sense).

Charlie (Colorado)

Fresh, if it's gotten to the point that you're suggesting Newt isn't a True Conservative, isn't it possible you're setting the bar a little high?

Fresh Air

No, I think he's a true conservative. But this AGW nonsense seems to infect people one would have thought impervious to it, like Paul Volcker, Newt Gingrich and Richard Posner. Until they're cured of the disease, I'm not sure it's safe for them to be near keyboards and microphones.


I had forgotten about that story, Jim, that was also a very heretical piece that put him in the penalty box for a week or so. One recalls though from my narrow study of con law, that statistically legerdemain, which Dave Barry would say, is a great name for a band. like the Baldus study, which seeks to return the Death penalty to the Post Furman era, where Charles Manson escaped the noose. The kind of argument Elena Kagan, who has never argued a case
before the court.

Bill in AZ

Newt? I'm not so sure. Someone big was behind the "we gotta move to the muddle to get elected" nonsense, and I'm not convinced it wasn't Newt. The GloBull Warming nonsense is, well, just more of that same crap - move to the muddle, agree with some muddle crap to make us look "smart", or something.


Talked to a couple of equipment salesman yesterday. One made the comment, "For the economy being so bad, we sure are selling a lot of $10,000 Lawnmowers."

What this means I haven't a clue.


So Bill, who convinced these mopes that elucidating and STANDING on conservative principles isn't what gets one elected? It's precisely what made Sarah Palin so exciting.


That's the beauty of journolist. If one person is wrong--everyone is.


Link please to Clarice's astroturfing piece on AT?


Journolist = negative feedback in a liberal echo chamber.


Ok I'm no lawyer and maybe the question has been answered .Where did Obama get the legal authority to take over the warranties of GM?


Where did Obama get the legal authority to take over the warranties of GM?

Who's going to challenge him?


Congress knew of the policy, and had been warned of the risks. See this letter from the Congressional Budget Office to to House Education and Labor Committee Chairman George Miller (a Democrat, incidentally).


I called Ted Olsons law firm And asked them to take a look at the situation pro bono.Doubt I'll get anywhere,but maybe someone will find it an interesting question.


Oh, and the GAO did a report last summer on the PBGC investment change. It's here. The GAO did not like the idea much, and thought the PBGC had inadequate controls to implement it successfully. But this issue, while obscure to credentialed bloggers, was known to the pension community and to the Congresscritters to whom the GAO reports.


Speaking only for myself, I intend to refrain from tearing out what is left of my hair...

Don't mess with my visuals, TM!!

OTOH, hair is waaaaay overrated.

Robert E

Also note how the same voices decrying the move away from "safe" bonds are insisting that GM bondholders "share the pain".


Emptywheel lazy? Joe Wilson's stenographer lazy?


The real outrage is that moving the fund more heavily into equities puts it right into the sector that the OBama administration has targeted for destruction. It seems that destroying the value of an economy can actually make it harder to pay future pension benefits. Who knew?


Thanks, Appalled for those links to the cbo and gsa docs. For anyone interested in getting ring-sized seats to the upcoming pension disasters nationwide, Pension Tsumnami is a good website: pensiontsunami.com/

Also, read this Reason piece entiltled, "The Next Catastrophe, Think Fannie Mae and Freddie Mac were a politicized financial disaster? Just wait until pension funds implode."

Charlie (Colorado)

What this means I haven't a clue.

Hobby farmers buying tractors?

Charlie (Colorado)

OTOH, hair is waaaaay overrated.

Dig it.

hit and run

OTOH, hair is waaaaay overrated.

Dig it.

It's not the amount of hair in the fight, it's the amount of fight in the hair.


I had a hare once that was a heckuva fighter...


Th PBGC website has all the annual reports back to the 1990s. Apparently Clinton was comfortable with equity investments too.

From the 1999 Annual Report page 17: "Cash and fixed income securities represented 60 percent of the total assets invested at the end of the year, as compared to 66 percent at the end of 1998, while the equity allocation stood at 39 percent of all investments compared to 33 percent one
year earlier." The equity increase was most likely from stock market gains (as the report indicates). But the level of equities is about the same as it was during the Bush years.

Brian G.

What are these people going to do with themselves when the "Blame Bush" mantra is too far gone to be useful?


They are going to blame deregulation.



Watching CNN in the Hotel Room this morning it was

1) Sy Hersh of the NYTimes says Dick Cheney illegally used assasination squads of army men to kill his enemies, and that Cheney also told Israel that Obama was not ready for the big leagues. Jonathan Mann started the bogus reporting off, and was unable even to read his own teleprompter correctly, as his smarmy recitation of Cheney's supposed quotes did not match the actual words rolling in the background. Next came Wolf Blitzer, multiple times quoting Sy Hersh as the "Award Winning Journalist", as opposed to his multiple mentions of Cheney without positive adjectives. This was followed by

2) Wolf doing a story publicizing an Anti-Limbaugh Bus Tour. I'm not making this up.

Completely sick of that I tried MSNBC and was rewarded with

3) features on Michelle Obama's magnificent wardrobe and how everybody in England worships her. Strange how nobody in England worshipped Sarah Palin's wardrobe from the Campaign Trail.

Thank goodness I've got a decent Library book .


Kristen @11:55 has an interesting link on coming pension fund problems.

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 2000–04, 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.

Even before the sell-off, in the summer of 2008, while nearly 90 percent of nonunion funds met minimum safe funding thresholds—meaning they had adequate cash on hand to pay their benefits—40 percent of union funds were at risk.


Once one reads that article, I am convinced that you will sleep less well tonight.

The Next Catastrophe
Think Fannie Mae and Freddie Mac were a politicized financial disaster? Just wait until pension funds implode.


put them into highly speculative investments -- hedge fund, equities, etc. -- just before the stock market collapsed.

Incompetence doesn't cut it as an explanation.

Nor does ignorance on the writer's part. Hedge funds come in all different sizes and colors, flavors too. One of the main attractions of many hedge funds in pension portfolios is low correlation to equities. Perhaps those hedge funds prevented steeper losses and possibly had significant gains during the market crash.

joe.shuren, bouvet island

Domestic equities would be reduced under the plan, not increased. The reason PBGC in the past had much more in stock was simply that when penson funds fail and get taken over, their assets are transferred to PBGC, and in many cases that is stock. It is not that PBGC buys stock, it is trying to diversify away from domestic stocks that might impose systemic risk, many failing in a downturn like today. You see that the plan diversifies to foreign stocks, not increasing domestic stocks.

So then one might question instead whether it is wise to encourage or allow employers to fund pension funds with stock, or be required to fund with fixed income vehicles. Defined benefits would not be used unless they were more attractive than 401Ks, and unions and employers would like to make benefits competitive, so increased risk comes with increased employer payments to the fund.

It is hard to say that stocks are any worse under present conditions than bonds, considering the collapse of the CDS market. The proper assessment should not be the current state of the stock market and alternative 401Ks, but the discount rate necessary to invest over the long term to satisfy liabilities that will accrue over a long time as employees retire. This is a perennial problem, compare Obama's budget, and one that can be settled either through prudent accounting or politics. Insurance companies have invested in corporate bonds, but that involves risk of corporate default, when bondholders can be wiped out, at the same time as pension funds fail. If PBGC were to invest in Treasuries, currently it might have negative income from that.

There are a couple of problems that could be addressed by Obama's team. One is governance, the board of directors doesn't now provide much, and Congress has too much influence. Another is the problem of a private corporation sponsored by Congress. As with Fannie Mae, it has a moral conflict, moral hazard. It is charged to make money so the taxpayer doesn't have to bail it out, and also be free from risk to protect pensioners and employers. As with the GSEs, it turns out that in many situations it is really impossible to satisfy both demands simultaneously, there is no free lunch. In the end the fund must depend on the "full faith and credit" of taxpayers.

We don't know which scenario will prevail in the auto industry, but if there are failures then PBGC may have to double its deficit to $22 billion. In normal bankruptcies, employers can shed pension liabilities. But in big bankruptcies or in reorganizations not going through a judge, then unions can exercise power through Congress to manipulate the results.

There is the impending bankruptcy of many municipalities. Vallejo plans to shed pension liabilities under Chapter 9, and many other cities may find that employer payments will increase to unsustainable levels, this will create social unrest. It is good to discuss how things work and various policy alternatives now.

PBGC guarantees up to $54,000 a year (in a complicated formula, up from $30,000), but many auto workers and public employees want more. Will a bailout provide that? Or will PBGC have to ask for a bailout like Fannie Mae and Freddie Mac? If so, how much depends on your view of the economic future. It is simply wrong to blame this on a Bush administration move about stocks. Is it a matter for accountants and economists, or should it be settled with a class war between workers and capitalists?
What is the difference between looting by the bosses, by the workers, or by the taxpayers?


The night of the fight, you may feel a slight sting. That's pride f*cking with you. F*ck pride. Pride only hurts, it never helps.

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