[quote=CA renter]Yes, I’m referring to the stock market bubble in the late 90s. As you know, that 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, 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. It was this confluence of events (all of which can be blamed directly or indirectly on the Fed) that caused the pension “crisis.”[/quote]
Pension funds have been investing in RE and mortgages for decades, maybe longer. You might remember the San Diego connection to the organized crime syndicate in Las Vegas in the mid 70’s when the Teamsters pension fund lent San Diegan Alan Glick millions to become the 2nd largest hotelier in Vegas behind Howard Hughes. That’s where they put their money. That was the conservative investment.
During the 15 years through 2007 (prior to the crash), CalPers average rate of return was almost 11%. Average. That included the dot com bubble burst. It was fully funded through 2007. They had two years in the ’90’s where their return was over 20%. They couldn’t have made that kind of return in low risk investments. The assertion that they only started making higher risk investments after interest rates fell is unsupportable by the evidence.
