Category: Risk

The unexpected hanging: Part 2, Too many banks here anyway

24 July, 2015 (10:00) | Austria, Banking, Consumer protection, Currency risk, Eurozone, Global news, Homeownership, Lending, Mortgages, Risk, Swiss franc | No comments

[Continued from yesterday’s Part 1.] By: David A. Smith Yesterday’s Part 1 told half the story of an Austrian homeowner and acquaintance of columnist/ pundit David Frum. as described six months ago in The Atlantic (January 29, 2015), whose astonishment at being assessed a €12,000 mandatory loan prepayment demand, because though paid in Euros and […]

The unexpected hanging: Part 1, Before it was pushed

23 July, 2015 (10:00) | Austria, Banking, Consumer protection, Currency risk, Eurozone, Global news, Homeownership, Lending, Mortgages, Risk, Swiss franc | No comments

By: David A. Smith The man was sentenced on Saturday. “The hanging will take place at noon,” said the judge to the prisoner, “on one of the seven days of next week. But you will not know which day it is until you are so informed on the morning of the day of the hanging.” […]

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 3, Unrealistically high projected rates of return

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

By:David A. Smith   [Continued from yesterday’s Part 2 and the preceding Part 1.]   In yesterday’s post on the net unfunded liabilities of Detroit’s two principal public-employee unions (the non-uniformed GRS and the uniformed FRP), we had reached the point of knowing that Detroit was on the hook for any shortfalls, even as the pension funds […]

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, […]