Here we go again....
Why is it that, when the stock price of a large publicly traded company drops substantially, nothing happens. Unless of course a big chunk of that stock is owned by a State of Ohio pension fund. Then of course our public officials spring forcefully into action!
A couple years ago it was Attorney General Marc Dann who pressured Time Warner into reimbursing OPERS, STRS and other Ohio pension funds a total of $144 million dollars. The Rest of Us who held Time Warner stock in our 401k plans got nothing.
See Ohio funds get $144 million from Time Warner
Yesterday it was Merrill Lynch's turn to cough up shareholder money, this time $475 million, to STRS. Attorney General Richard Cordray represented STRS and saw to the reimbursement of STRS losses in Merrill Lynch stock.
See Merrill Lynch to pay $475 million to settle suit filed by the Ohio State Teachers Retirement System
I remember a few years back when Putnam Investments was accused of permitting favored fundholders to “market timeâ€
STRS Reimbursed for Losses at the Expense of the Rest of Us
Moderator: Jim O'Bryan
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Tim Liston
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Bill Call
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Re: STRS Reimbursed for Losses at the Expense of the Rest of
Tim Liston wrote:And is it just a coincidence that Merrill Lynch agreed to the settlement on the very same day that its new parent company, Bank of America, received tens of billions in bailout money provided by (you guessed it) the Rest of Us? I think not....
Your story should get more play but it won't. The next step is a grand bargain between Democrats and Republicans to loot the Social Security system to fund government pensions.
We are entering the age of corporate facism.
The people at Fannie Mae and Freddie Mac who received billions in pay and benefits based on fraudulent financial statements get away scot free. The two main congressional players in the sub prime debacle (Barnir Frank and Chis Dodd) are now in charge of the "reform" efforts.
For political reasons the federal government demands that a bank loan money to a bankrupt window company in Chicago knowing that the money will not be paid. How is that different than Jimmy The Nose demanding protection money from the local grocer?
Here is a glimpse of our future under corporate facism:
http://online.wsj.com/article/SB123215299934192217.html
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ryan costa
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conversely
the converse of this is the government throwing business to these Investment Houses, Banks, and Corporations who get on the hook for this.
The origins of NAFTA and smaller free trade deals is an example. Some big bankers lend money to a developing country, promising their investors big returns. Naturally this falls through. Somehow congress ends up pushing through a free trade deal, just as the IMF or someone comes in to loan the developing country more money. Provided they spend it towards things that veer back to the big bankers.
Social Security has been looted heavily for years, beginning with President Ronald Reagan. the supporters of this are good at dodging the question or not really caring when you ask them about it.
Compassionate Conservatives ran on platforms of privatizing social security. essentially, retirement funds for each of us. it would be impossible for each of us to pressure corporations for cash when their stock prices slide. It only works when a small portion of investors can do that.
Most GDP growth is probably the sums of increases in healthcare costs and real estate sprawl. the faster you have sprawl, the faster you have the dereliction of older areas. infrastructure costs skyrocket, as do policing and social working costs. it is the post-industrial paradigm.
The origins of NAFTA and smaller free trade deals is an example. Some big bankers lend money to a developing country, promising their investors big returns. Naturally this falls through. Somehow congress ends up pushing through a free trade deal, just as the IMF or someone comes in to loan the developing country more money. Provided they spend it towards things that veer back to the big bankers.
Social Security has been looted heavily for years, beginning with President Ronald Reagan. the supporters of this are good at dodging the question or not really caring when you ask them about it.
Compassionate Conservatives ran on platforms of privatizing social security. essentially, retirement funds for each of us. it would be impossible for each of us to pressure corporations for cash when their stock prices slide. It only works when a small portion of investors can do that.
Most GDP growth is probably the sums of increases in healthcare costs and real estate sprawl. the faster you have sprawl, the faster you have the dereliction of older areas. infrastructure costs skyrocket, as do policing and social working costs. it is the post-industrial paradigm.
"Is this flummery” — Archie Goodwin
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Tim Liston
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Will Brown
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I have no problem with the trustees of a state retirement fund taking action to protect the pensions of the participants in that retirement system. That is what trustees do.
You are apparently not a participant in such a retirement system. You have your own plans, and are responsible to choosing where you invest, and protecting yourself if there is some misadventure. That means you hire your own lawyer, or find a class-action suit. I don't understand why you think the state should provide you with a lawyer. The state probably doesn't even know what your investments are.
I think we should rename Ponzi schemes, because the biggest, by far, scheme where they take money from "investors" and use it to pay returns to earlier "investors" is Social Security, and I'm glad to see that some leaders are willing to speak up about what happens when such a scheme runs out of new "investors". The combination of longer lives (and thus greater payouts), and fewer workers (due to the end of the baby boom and the current economy) spells trouble for theses programs, sooner than it was forseen (some people still don't see it).
I don't know what the solution for entitlements is, but I think congress made a serious mistake when they restricted investments by the trust funds to government loans. (I certainly know that investments in stocks and property have plunged in the last year; but historically, even given the great depression, prudent and conservative investments in stocks and property have far outperformed money loaned to the government.) Loaning to the government just gives more funds to the congress to spend recklessly, and puts off the day when congress will have to repay those loans. And who will have to come up with the money to repay those loans? Taxpayers and their children and grandchildren, with, no doubt, some contributions from the people who will receive less benefits.
I took early social security because I wanted to get something before the well runs dry; so did my wife. In only a very few years of reduced payments, we have already drawn out more than we ever put in. I tell each of my kids to keep working (I need the money they are paying in FICA taxes), but to insure they are contributing enough to their own retirement plans that they won't need social security, because I see it evolving into a welfare plan. Already they reduce your social security payment if you have income from some other retirement plans, and tax your social security income higher if you have such income.
You are apparently not a participant in such a retirement system. You have your own plans, and are responsible to choosing where you invest, and protecting yourself if there is some misadventure. That means you hire your own lawyer, or find a class-action suit. I don't understand why you think the state should provide you with a lawyer. The state probably doesn't even know what your investments are.
I think we should rename Ponzi schemes, because the biggest, by far, scheme where they take money from "investors" and use it to pay returns to earlier "investors" is Social Security, and I'm glad to see that some leaders are willing to speak up about what happens when such a scheme runs out of new "investors". The combination of longer lives (and thus greater payouts), and fewer workers (due to the end of the baby boom and the current economy) spells trouble for theses programs, sooner than it was forseen (some people still don't see it).
I don't know what the solution for entitlements is, but I think congress made a serious mistake when they restricted investments by the trust funds to government loans. (I certainly know that investments in stocks and property have plunged in the last year; but historically, even given the great depression, prudent and conservative investments in stocks and property have far outperformed money loaned to the government.) Loaning to the government just gives more funds to the congress to spend recklessly, and puts off the day when congress will have to repay those loans. And who will have to come up with the money to repay those loans? Taxpayers and their children and grandchildren, with, no doubt, some contributions from the people who will receive less benefits.
I took early social security because I wanted to get something before the well runs dry; so did my wife. In only a very few years of reduced payments, we have already drawn out more than we ever put in. I tell each of my kids to keep working (I need the money they are paying in FICA taxes), but to insure they are contributing enough to their own retirement plans that they won't need social security, because I see it evolving into a welfare plan. Already they reduce your social security payment if you have income from some other retirement plans, and tax your social security income higher if you have such income.
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Gary Rice
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For more than 20 years of my 30 year career in public education, my salary was abysmal, compared to those having similar degrees working in the private sector. The one bright light at the end of my tunnel was the fact that, INSTEAD of Social Security, teachers had their own retirement pension fund, so that when we did retire, we would get a decent monthly check.
Private sector people were exactly that...private. They made their big dough and blew it in on big houses, cars and toys, while those entrusted with the care and education of their children drove used beaters and lived in modest surroundings. They invested in tax-deferred and often high risk shenanagans (in ADDITION to their social security) that were not guaranteed by any government.
These days, those same private sector people whose businesses have tanked and whose houses of cards have fallen now look with envy on what collective bargaining and responsible planning have achieved.
I understand the angst, I get that. My heart goes out to anyone who has taken a bath in these times. Some of our own family investments have not done so well either.
It's just that there is a PUBLIC trust involved here with STRS.
Neither the states, nor the federal government can violate these types of trusts without unthinkable consequences.
Private sector people were exactly that...private. They made their big dough and blew it in on big houses, cars and toys, while those entrusted with the care and education of their children drove used beaters and lived in modest surroundings. They invested in tax-deferred and often high risk shenanagans (in ADDITION to their social security) that were not guaranteed by any government.
These days, those same private sector people whose businesses have tanked and whose houses of cards have fallen now look with envy on what collective bargaining and responsible planning have achieved.
I understand the angst, I get that. My heart goes out to anyone who has taken a bath in these times. Some of our own family investments have not done so well either.
It's just that there is a PUBLIC trust involved here with STRS.
Neither the states, nor the federal government can violate these types of trusts without unthinkable consequences.
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Gary Rice
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Tim Liston
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My mom and dad both worked, each for around 30 years. They made more or less the same amount of money. Both participated in private (defined benefit) pension plans. About the only difference was that my dad's plan paid into the PBGC insurance fund, my mom's plan did not.
My mom's plan failed several years ago but still pays 100% of promised benefits. My dad's plan also failed but he was kicked to the curb, his benefit check substantially reduced for the rest of his life.
My dad was an architect. My mom was an Ohio public school teacher. I'm having a hard time figuring out why it is that they were treated so differently, especially when the one who took the big haircut was the one whose plan paid for PBGC insurance. They both worked hard, and neither spent money cavalierly.
But wait, you say, STRS hasn't failed. It's still operating.
STRS is still operating but it became seriously underfunded several years ago. In fact, in June of 2007, STRS had assets of about $70 billion but was said to be underfunded by about $20 billion, about $4,000 for every household in Ohio. At its peak in November of 2007, STRS had about $80 billion in assets.
Then disaster struck. It turns out that STRS, in an astonishing effort to meet an obviously unrealistic 8% to 10% annual return goal, had 70% of its total assets in equities (stocks). I thought these plans were supposed to be conservatively managed. So, with the market collapse, STRS now has only about $50 billion in assets. That's right, STRS lost $30 billion, about 37% of its plan assets, in just one year. So now the funding shortfall is about $40 billion, or around $8,000 for every household in Ohio.
Looked at another way, $30 billion is about three times the annual budget of Ohio's Department of Education. It's no wonder they're shaking down publicly traded companies that had the audacity to incur share price losses.
The loss of $30 billion in one year just boggles my mind. This has to be the biggest story of 2008 that you didn't read in the Plain Dealer. It's an outrage. STRS never should have been managed that way. And what did the fiduciaries and investment managers get for blowing $30 billion in one year, an amount that exceeded even the recent auto industry bailout? Did they get fired? Did they get jail time?
Nope, they got to share $6 million in bonuses.
I just don't think that STRS beneficiaries should be riding any moral high ground right now. I think they should be figuring out how to mend their plan without reaching any further into the pockets of the taxpayers, or asking for a bailout. The irony is, if Pelosichecks are written to shore up the plan, the losers will be the very group that the teachers claim to serve – our children.
My mom's plan failed several years ago but still pays 100% of promised benefits. My dad's plan also failed but he was kicked to the curb, his benefit check substantially reduced for the rest of his life.
My dad was an architect. My mom was an Ohio public school teacher. I'm having a hard time figuring out why it is that they were treated so differently, especially when the one who took the big haircut was the one whose plan paid for PBGC insurance. They both worked hard, and neither spent money cavalierly.
But wait, you say, STRS hasn't failed. It's still operating.
STRS is still operating but it became seriously underfunded several years ago. In fact, in June of 2007, STRS had assets of about $70 billion but was said to be underfunded by about $20 billion, about $4,000 for every household in Ohio. At its peak in November of 2007, STRS had about $80 billion in assets.
Then disaster struck. It turns out that STRS, in an astonishing effort to meet an obviously unrealistic 8% to 10% annual return goal, had 70% of its total assets in equities (stocks). I thought these plans were supposed to be conservatively managed. So, with the market collapse, STRS now has only about $50 billion in assets. That's right, STRS lost $30 billion, about 37% of its plan assets, in just one year. So now the funding shortfall is about $40 billion, or around $8,000 for every household in Ohio.
Looked at another way, $30 billion is about three times the annual budget of Ohio's Department of Education. It's no wonder they're shaking down publicly traded companies that had the audacity to incur share price losses.
The loss of $30 billion in one year just boggles my mind. This has to be the biggest story of 2008 that you didn't read in the Plain Dealer. It's an outrage. STRS never should have been managed that way. And what did the fiduciaries and investment managers get for blowing $30 billion in one year, an amount that exceeded even the recent auto industry bailout? Did they get fired? Did they get jail time?
Nope, they got to share $6 million in bonuses.
I just don't think that STRS beneficiaries should be riding any moral high ground right now. I think they should be figuring out how to mend their plan without reaching any further into the pockets of the taxpayers, or asking for a bailout. The irony is, if Pelosichecks are written to shore up the plan, the losers will be the very group that the teachers claim to serve – our children.
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Gary Rice
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Tim's point about both of his parents' retirement systems being private?
Hmmmm? Well....if I understand his post correctly,
I fail to see how one could consider STRS could be considered "private", in the strict sense of the word, if that's what he meant.
True, it trades and acts as a private fund does, but at the risk of redundancy, it serves a public trust. In a way, it's kind of a hybrid, I guess.
And yes, many if not most funds unfortunately seem to have lost about a third of their value in the last six months. STRS is not alone in that regard, if that is indeed the case with them.
Admittedly, I know little about his fathers' plan, but I do have a strong empathy for anyone who lost a good part, or all of their pension.
This whole argument tangentally moves in the direction of what, exactly is a good investment? Remember that there have been several times in Ohio history when public fund management has been called into question, whether in one case, as I recall, had to do with the state acquiring collectables, and in the other, purchasing stocks for another fund that went kerfluey....
In either case, when times were good, I don't think too many questioned the investments, but when things start to tank, the Monday morning quarterbacking begins in earnest.
Any business person worth their savvy understands that a fund taking no risks generally gets low rewards. HOW MUCH risk to take is the question. I do not think that too many foresaw our present debacle coming.
This might sidestep the bailout question, but the fact remains that teachers HAD to contribute to STRS in lieu of Social Security. That virtually implies that their pensions were intended to be government supported; good times or bad.
Not directing my frustration to anyone on this thread, but it scalds me to no end how much people love to go after teachers and whatever money and retirement benefits they are able to attain, after a lifetime of ridiculously low salaries.
With all due respect Tim, I think that retired teachers do indeed have the moral high ground here.
Hmmmm? Well....if I understand his post correctly,
I fail to see how one could consider STRS could be considered "private", in the strict sense of the word, if that's what he meant.
True, it trades and acts as a private fund does, but at the risk of redundancy, it serves a public trust. In a way, it's kind of a hybrid, I guess.
And yes, many if not most funds unfortunately seem to have lost about a third of their value in the last six months. STRS is not alone in that regard, if that is indeed the case with them.
Admittedly, I know little about his fathers' plan, but I do have a strong empathy for anyone who lost a good part, or all of their pension.
This whole argument tangentally moves in the direction of what, exactly is a good investment? Remember that there have been several times in Ohio history when public fund management has been called into question, whether in one case, as I recall, had to do with the state acquiring collectables, and in the other, purchasing stocks for another fund that went kerfluey....
In either case, when times were good, I don't think too many questioned the investments, but when things start to tank, the Monday morning quarterbacking begins in earnest.
Any business person worth their savvy understands that a fund taking no risks generally gets low rewards. HOW MUCH risk to take is the question. I do not think that too many foresaw our present debacle coming.
This might sidestep the bailout question, but the fact remains that teachers HAD to contribute to STRS in lieu of Social Security. That virtually implies that their pensions were intended to be government supported; good times or bad.
Not directing my frustration to anyone on this thread, but it scalds me to no end how much people love to go after teachers and whatever money and retirement benefits they are able to attain, after a lifetime of ridiculously low salaries.
With all due respect Tim, I think that retired teachers do indeed have the moral high ground here.