The Pension Benefit Guaranty Board, which backstops defined benefit plans (yes, Virginia, they still exist) faced a rather sizable gap between its expected returns on its $64 billion in holdings and its expected liabilities.
So in a stroke of sheer genius, it increased its allocation to risky assets considerably at precisely the time those assets started tanking. It even managed to cut its allocation to Treasuries way back, reducing its participation in the big Treasury rally of last year.
Now anyone who was finance literate would look at the PGB's new asset allocation and recognize it as conventional wisdom as dispensed by pension fund consultants. And if you had read Benoit Mandelbrot or Nassim Nicolas Taleb, you'd also know that those pension fund consultants base their prescriptions on theories that simply do not pan out empirically, and worse, greatly understate risk.
Read on...
There is little doubt that one of the reasons the Pension Guaranty Corporation switched to equities, was to prop up the stock market, prevent a crash during Bush's presidency and give big fees to Wall Street movers and shakers. This is the same reason Bush was so desperate to privatize social security. So now we have pension plans all over North America and the world that are unable to meet their obligations.
Do you think it is different in Canada? Is Air Canada's pension secure? Is GM Canada's? Is Ford Canada's? Is Manulife's? Peacenik just emailed and asked if Peacenik's penison is secure. Ominously Peacenik has not gotten an answer. The whole corrupt system has imploded. And the commerical real estate markets and credit card markets are only in the early stages of collapse. But Harper says Canadian banks are a model for the world. Harper says things are going to get better. Thank goodness.
So in a stroke of sheer genius, it increased its allocation to risky assets considerably at precisely the time those assets started tanking. It even managed to cut its allocation to Treasuries way back, reducing its participation in the big Treasury rally of last year.
Now anyone who was finance literate would look at the PGB's new asset allocation and recognize it as conventional wisdom as dispensed by pension fund consultants. And if you had read Benoit Mandelbrot or Nassim Nicolas Taleb, you'd also know that those pension fund consultants base their prescriptions on theories that simply do not pan out empirically, and worse, greatly understate risk.
Read on...
There is little doubt that one of the reasons the Pension Guaranty Corporation switched to equities, was to prop up the stock market, prevent a crash during Bush's presidency and give big fees to Wall Street movers and shakers. This is the same reason Bush was so desperate to privatize social security. So now we have pension plans all over North America and the world that are unable to meet their obligations.
Do you think it is different in Canada? Is Air Canada's pension secure? Is GM Canada's? Is Ford Canada's? Is Manulife's? Peacenik just emailed and asked if Peacenik's penison is secure. Ominously Peacenik has not gotten an answer. The whole corrupt system has imploded. And the commerical real estate markets and credit card markets are only in the early stages of collapse. But Harper says Canadian banks are a model for the world. Harper says things are going to get better. Thank goodness.
