Category: Pension funds

Stock-taking?: Part 2, “An unconfirmable plan”

16 October, 2014 (10:00) | Bankruptcy, Bonds, California, Debt, Markets, Municipal bankruptcy, Pension funds, Primer posts, Stockton | No comments

[Continued from yesterday's Part 1.] By: David A. Smith Do I have your attention now? Yesterday we saw, via simultaneous articles in The Sacramento Bee (October 1, 2014) and Los Angeles Times (October 1, 2014; navy font), that despite the City of Stockton’s willingness to keep paying CalPERS at 100% even as other creditors were […]

Stock-taking?: Part 1, “Simply Invalid”

15 October, 2014 (10:00) | Bankruptcy, Bonds, California, Debt, Markets, Municipal bankruptcy, Pension funds, Primer posts, Stockton | 1 comment

By: David A. Smith As politics is the process that advances the interests of the majority, law is the process that protects the interests of the minority, and when those who make the laws find themselves forced to live with laws others have mad, including the bankruptcy laws and the Constitution from whence they derive, […]

Whose risk is it, anyway? Part 4, If the funding ratio falls below 80%

16 January, 2014 (09:00) | Actuaries, Bankruptcy, Bonds, Detroit, Investment, Kevyn Orr, Municipal bankruptcy, Municipal bonds, Pension funds, Public choice theory, Risk, Speculation, US News |

By:David A. Smith   [Continued from yesterday's Part 3 and the preceding Part 1  and Part 2.]   In the three days up to this point, we’ve discovered that the City of Detroit, not its employee-retiree pension funds, owns the risk of fund underperformance, meaning we have a classic case of moral hazard combined with principal-agent risk.  […]

Whose risk is it, anyway? Part 2, Negative twelve percent return

14 January, 2014 (09:00) | Actuaries, Bankruptcy, Bonds, Detroit, Investment, Kevyn Orr, Municipal bankruptcy, Municipal bonds, Pension funds, Public choice theory, Risk, Speculation, US News |

By:David A. Smith   [Continued from yesterday's Part 1.]   Yesterday’s post, the first of four parts in this multi-parter, finally started our blog process of explaining the arcana of pension fund investment management and its implications for failing cities and municipal bankruptcies.   Principal sources used in this post Pension and Investments (April 15, […]

Whose risk is it, anyway? Part 1, 52% of the obligations

13 January, 2014 (12:21) | Actuaries, Bankruptcy, Bonds, Detroit, Investment, Kevyn Orr, Municipal bankruptcy, Municipal bonds, Pension funds, Public choice theory, Risk, Speculation, US News |

By:David A. Smith   Throughout my ongoing posts about municipal insolvency and municipal bankruptcies (Chicago, Detroit, Hamtramck, Harrisburg, Jefferson County, San Bernardino, Scranton, Vallejo) , two themes have dominated the liabilities side:   Firefighters gather in front of the federal courthouse protesting possible pension and public safety cuts during a Detroit bankruptcy hearing on July […]