Jim’s Mailbox

Posted at 9:06 AM (CST) by & filed under Jim's Mailbox.

Dear Jim,

You were the very first to suggest the most endangered species on the planet walked on two legs and had a pension! How can this possibly be…with stocks at all time highs and valuations stretched to the no longer planet Pluto? Interest rates are still stupid low by any historical standard which means bonds are still stupidly high in price…yet Calpers is broke? Can you imagine the negative net worth they would have if not for the PPT, false interest rates and a central bank that spews $trillions to paper over losses from the last cycle? You should take a well deserved bow for calling this so far ahead that no one even understood what you were talking about. I am so proud to be your business partner and individual student! Article courtesy of JB.



“CalPERS Is Near Insolvency; It Needs A Bailout Soon” – Former Board Member Makes Stunning Admission
February 25, 2018

Two weeks ago, in the aftermath of the February 5 volocaust, we quoted David Hunt, CEO of $1.2 trillion asset manager PGIM, who said ignore the volatility spike, the real financial timebomb was and remains public pensions: “if you were going to look for what’s the possible real crack in the financial architecture for the next crisis, rather than looking in the rearview mirror, pension funds would be on our list.”

In a brief discussion wondering what municipalities and states will do when local tax revenues decline and unemployment worsens, Hunt said “we’re worried about those pension obligations.”

He is hardly alone: having reported over and over and over (and over, and over) again that public pensions are in deep trouble, two days ago none other than Steve Westly, former California controller and Calpers board member – manager of the largest public pension fund in the US, made a stunning admission, confirming everything:

“The pension crisis is inching closer by the day. CalPERS just voted to increase the amount cities must pay to the agency. Cities point to possible insolvency if payments keep rising but CalPERS is near insolvency itself. It may be reform or bailout soon.”