Watching a train wreck unfold and pissed

[Chris Scoreboard Johnston]

My best friends brother runs a small MBS fund that is doing fine. He is very picky about the notes he buys, and as a result experiences very low fallout. Even with that being the case, I still declined when he asked me to put some $$ in during the beginning of 2006. These big guys that have to take on alot of crap to get the good stuff are paying for it now, as we all knew they would.

There are never enough chairs when the music stops.

[Chris Scoreboard Johnston]

My best friends brother runs a small MBS fund that is doing fine. He is very picky about the notes he buys, and as a result experiences very low fallout. Even with that being the case, I still declined when he asked me to put some $$ in during the beginning of 2006. These big guys that have to take on alot of crap to get the good stuff are paying for it now, as we all knew they would.

There are never enough chairs when the music stops.

[HereWeGo]

There’s definitely a bear market in housing, a lot of rich folks lost money betting on the prospect of mass indentured servitude, no doubt about that. I don’t see evidence of a recession though, at least not at this point.

Chris, I know you own CAT (sure wish I could say the same,) what are your thoughts heading into Friday? Is CAT going to run to 100, or was the UBS guy right?

[HereWeGo]

There’s definitely a bear market in housing, a lot of rich folks lost money betting on the prospect of mass indentured servitude, no doubt about that. I don’t see evidence of a recession though, at least not at this point.

Chris, I know you own CAT (sure wish I could say the same,) what are your thoughts heading into Friday? Is CAT going to run to 100, or was the UBS guy right?

[DaCounselor]

“Drunkle I hope that is still the case since that was 26/07/2005.”
______________________

Actually, it’s no longer the case. The fund is now much larger, with a current market value of $248 billion.

Also, it’s probably worth recalling that Calpers lost about $20 billion – that’s right I said billion – in ’01-’02 as the market went south. They lost about a billion on Enron alone.

Just a little perspective.

[DaCounselor]

“Drunkle I hope that is still the case since that was 26/07/2005.”
______________________

Actually, it’s no longer the case. The fund is now much larger, with a current market value of $248 billion.

Also, it’s probably worth recalling that Calpers lost about $20 billion – that’s right I said billion – in ’01-’02 as the market went south. They lost about a billion on Enron alone.

Just a little perspective.

[drunkle]

yeah, all the talk about pension funds being awash in these bad investments may be overblown. i thought it’d be a mess too, but thinking about the actual number “140 million” made me wonder how much exactly is calpers worth. turns out, billions so this loss is just… roadkill… wipe out the whole thing, it’s a 5% loss on the portfolio, but considering how much they made on the ride up…

i guess the real question is: what is the pensioner’s return on his “investment”?

edit: nevermind 5%… .5% now? i wonder how much of that value is due to asset appreciation and how much due to increased contribution…

[drunkle]

yeah, all the talk about pension funds being awash in these bad investments may be overblown. i thought it’d be a mess too, but thinking about the actual number “140 million” made me wonder how much exactly is calpers worth. turns out, billions so this loss is just… roadkill… wipe out the whole thing, it’s a 5% loss on the portfolio, but considering how much they made on the ride up…

i guess the real question is: what is the pensioner’s return on his “investment”?

edit: nevermind 5%… .5% now? i wonder how much of that value is due to asset appreciation and how much due to increased contribution…

[jennyo]

CalPERS is worth oodles of billions, so $140 mil is a drop in the bucket. As for return on investment, the state witholds 5 percent of salary from employees for the PERS contribution. The “employer contribution” varies annually based on a calculation set by PERS. In years where PERS has done well, the employer contribution (which comes directly out of the state budget) has been as low as zero. In “bad” years, it goes up. For 2006-07 it was around 17 percent (30 percent for law enforcement). The “return” depends on how long retirees live after retirement. If I retire at 55 and live to be 95, I get a pretty good deal at 50 percent of my highest year of salary plus annual COLAs for the rest of my life. If I die at 57, taxpayers get good deal.

[jennyo]

CalPERS is worth oodles of billions, so $140 mil is a drop in the bucket. As for return on investment, the state witholds 5 percent of salary from employees for the PERS contribution. The “employer contribution” varies annually based on a calculation set by PERS. In years where PERS has done well, the employer contribution (which comes directly out of the state budget) has been as low as zero. In “bad” years, it goes up. For 2006-07 it was around 17 percent (30 percent for law enforcement). The “return” depends on how long retirees live after retirement. If I retire at 55 and live to be 95, I get a pretty good deal at 50 percent of my highest year of salary plus annual COLAs for the rest of my life. If I die at 57, taxpayers get good deal.

[waiting hawk]

Here is the email they sent me after my very negative email sent to them:

“In response to media reports about risky collateralized debt obligations
(CDOs), or packages of securities backed by bonds, mortgages and other
loans. There have been related news stories about borrowers defaulting
on loans to put these investments at risk. At least one article
suggested that banks who sold these securities to CalPERS were trying to
put something over on us.

Here is our response:

CalPERS owns $140 million in CDOs. The facts are:

1. None of these CalPERS investments are tied to the sub-prime market
that is having problems.

2. These investments are top-rated bank loans that are doing extremely
well.

3. Our CDO investment represents less than .1 % of CalPERS assets. There
are plans to expand our investment in this area in about 1-2 years. It
requires a big quantitative effort which we hope to build over the next
few years. We have purposely kept this program small until we get those
capabilities. We are collecting data and will forward information as it
is completed.

4. We are well protected and not at risk. We are not exposed to the Bear
Stearns meltdown.

Clark McKinley
Information Officer
CalPERS Office of Public Affairs
916/795-4196; fax: 916/795-3507”

[waiting hawk]

Here is the email they sent me after my very negative email sent to them:

“In response to media reports about risky collateralized debt obligations
(CDOs), or packages of securities backed by bonds, mortgages and other
loans. There have been related news stories about borrowers defaulting
on loans to put these investments at risk. At least one article
suggested that banks who sold these securities to CalPERS were trying to
put something over on us.

Here is our response:

CalPERS owns $140 million in CDOs. The facts are:

1. None of these CalPERS investments are tied to the sub-prime market
that is having problems.

2. These investments are top-rated bank loans that are doing extremely
well.

3. Our CDO investment represents less than .1 % of CalPERS assets. There
are plans to expand our investment in this area in about 1-2 years. It
requires a big quantitative effort which we hope to build over the next
few years. We have purposely kept this program small until we get those
capabilities. We are collecting data and will forward information as it
is completed.

4. We are well protected and not at risk. We are not exposed to the Bear
Stearns meltdown.

Clark McKinley
Information Officer
CalPERS Office of Public Affairs
916/795-4196; fax: 916/795-3507”

[lonestar2000]

SD Realtor,

I think it is fair to say that most of us just want a house we can afford, nobody is serious about wanting a recession. Most of us here have no idea just what that means overall.

Home prices are several multiples over what they should be for the average household to purchase today. We’re simply looking for the correction that will put them back into the realm of possibility.

[lonestar2000]

SD Realtor,

I think it is fair to say that most of us just want a house we can afford, nobody is serious about wanting a recession. Most of us here have no idea just what that means overall.

Home prices are several multiples over what they should be for the average household to purchase today. We’re simply looking for the correction that will put them back into the realm of possibility.

[kewp]

I’ll second that, Lonestar.

For us savers, we’ve been living in a self-induced recession for the last decade. It’s about time the overconsumers went on a diet.

[Author]

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