[quote=briansd1][quote=CA renter]
yet the financial sector parasites are scapegoating them for all the damage inflicted by the financial industry (both booms and busts).[/quote]
Why invest with Wall Street if they are such parasites?
The pension funds could have bought more conservatives investments. The problem with that is that pension contributions would have been much higher for the same level of guaranteed benefits.[/quote]
Wanted to address this, too, as it’s a valid point.
Originally, the public pension funds were not allowed to invest in “speculative” securities. They were primarily invested in high-grade bonds.
Unfortunately, Wall Street and their enablers got their hooks into the pension funds (can’t let that much money circumvent them, can they?), and the pension funds were allowed to get into riskier and riskier positions over time.
Whereas the funds used to manage most of their investments in-house, they’ve been moving more and more toward using private, for-profit outside managers, advisers, hedge funds, etc. Needless to say, I despise this and think that it forces too much risk onto public employees and tax payers. We need to get Wall Street/private, for-profit entities OUT of public finance. There have been too many conflicts of interests and a few corruption cases, and it’s tied (as always) to the revolving door between public **and private** enterprise. Very rarely do you have this level of corruption in an agency that is not tainted with **private-sector** money/blackmail.
It’s also interesting to consider that if the pension funds were only allowed to invest as they used to, I doubt we’d have the “pension crisis” we do today.
One more clarification I wanted to make WRT CalPERS: it is not a private entity. It is a state agency, but various govt agencies contract with them for their healthcare and pension programs…but not all govt agencies contract with them as many manage their own funds. Just wanted to make that clear.
I would LOVE to roll-back time and undo the damage caused by the Fed’s inflationary policies and pro-speculation stance (like the Greenspan/Bernanke put) which have the undesirable effect of forcing public agencies to invest in more speculative vehicles…and promise unsustainable benefits. I would gladly welcome the return of more modest investment gains and more modest benefits if we could eliminate the inflationary policies of the Fed/govt and speculative activities pursued by those in the financial markets.
