It’s not your pension

“Smartest Guys in the Room” is a documentary film where Enron traders are cackling about rigging energy prices on ‘Grandma Millie’ and jamming electricity rates “right up her ass” for fucking $250 a megawatt hour. San Jose Mayor Chuck Reed has teamed up with John Arnold a former Enron commodities trader to eliminate public employee pensions.

Fraud on Wall Street caused the problem

Ted Hunt

Submitted by Ted Hunt: jtedhunt@gmail.com

The hype over pension problems is very complex. Most large pension systems have been effective for approximately 100 years. Slight adjustments and modifications have occurred over the years but the history is one of tremendous success and sustainability.

Why then all of sudden are your pensions being blamed for the economic collapse which began in 2008?
What follows is my summary from an article by Matt Taibbi in Rolling Stone Magazine, published October 10, 2013. Taibbi gives us insight into what caused the so-called “unfunded” pension liabilities.
I strongly recommend you read it: http://www.rollingstone.com/politics/news/looting-the-pension-funds-20130926

There was “an epidemic of fraud and thievery in the financial-services industry [which] triggered the collapse of our economy.” As housing prices plummeted so did property taxes which are critical income for state and local governments. Reduced taxes; reduced general fund.

At the same time state and local government retirement portfolios suffered massive losses primarily on those “fraud-riddled mortgage-backed securities” that cause the economic collapse.
Also a problems is that over the years some governments failed to pay the Annual Required Contribution (ARC). Since there are minimal penalties non-compliance the ACR law has become a mere suggestion.

When government officials don’t pay the “Required” ACR Contribution, some may call that stealing others may call it borrowing.

Mayor Reed of San Jose, California has teamed up with John Arnold a former Enron commodities trader. Taibbi refers to the film “The Smartest Guys in the Room” where “Enron traders were cackling about rigging energy prices on ‘Grandma Millie’ and jamming electricity rates ‘right up her ass for fucking $250 a megawatt hour.’” Middle class Americans suffered these crooks laughed.

Taibbi continued, “As Enron was imploding, Arnold helped himself to an $8 million bonus while the company’s pension fund was vaporizing.” Middle class Americans lost their livelihood and savings.
In 2010, Arnold started the Arnold Foundation (AF). It was not long until AF announced its study on pensions.

The study “admitted that many states had been undercontributing to their pension funds for years.” But AF’s disconnected solution was not that states pay their Annual Required Contribution but rather “to stop promising a [defined] benefit” pensions.

Another specific problem has been private hedge funds which charge the pension fund “two percent fee just for showing up, then gets 20 percent of any profits it earns with your money.”
But hedge funds don’t necessarily do all that well. In 2008, Warren Buffett “bet” $1 million “with the heads of . . . Protégé Partners” a hedge fund, “that the S&P 500 index fund . . . would outperform a portfolio of five hedge funds hand-picked by the geniuses at Protégé.” Score after five years: Buffett: up 8.69%; Protégé’s up 0.13%.

In sum, Taibbi says that the so-called “unfunded liability” crisis is probably “fictional but “certainly exaggerated to an outrageous degree.” He continues, “the idea that these benefit packages are causing the fiscal crises in our states is almost entirely a fabrication crafted by the very people who actually caused the problem.”

We have an “unfunded-pension-liability problem because we’ve been ripping retirees off for decades – but the solution being offered is to rip them off even more.” Telling peace officer, firefighters and teachers they are to blame for this crisis is ridiculous. He advised to look to the reckless politicians “and thieves on Wall Street . . .”