Yes, I’m referring to the stock market bubble in the late 90s (and would also argue that most asset classes were overvalued as a result of the *credit* bubble that was caused by the Fed’s response to the dot-com bubble, as well…we’ve been relying on asset price bubbles for some time now). As you know, that internet/stock market bubble made the pension funds look over-funded, which is why they were able to pass the pension benefit enhancements “without any additional costs to taxpayers.”

The pension funds have NOT been doing well over the past 15 years. They were UNDER-funded after the stock market bubble burst in the early 2000s, so the funds started investing more and more of their money in real estate, mortgages (and related derivatives), and other “alternative” investments, like hedge funds. They were forced into these riskier positions because of the losses from the internet bubble (which I think the Fed had a hand in), and because the yields on bonds were so low. The losses incurred on these investments hit the pension funds even harder than the bursting of the internet/stock market bubble. It was this confluence of events (all of which can be blamed directly or indirectly on the Fed) that caused the pension “crisis.”