Intro
So, how to solve the problem of shortfalls in state and local public pension plans? Earn the money, quickly, with higher yields from high-cost, alternative investments led by Wall Street geniuses, such as former Enron billionaire John Arnold and Third Point billionaire Dan Loeb. Sound too good to be true?
It is. These high-cost alternative investments are being paid for by the workers' paycuts. It's a transfer of money from workers to Wall Street. Many of the alternative investments are hedge funds or PE (private equity) funds run by people who have lobbied against traditional union pension plans. Thus, union members are funding anti-union political movements in an effort to earn higher returns. My prediction: high returns will not be sustainable, bad ending for workers, massive profits for Wall Street, at least until the next financial crisis. ~ Ilene
Looting Public Pensions: A New Study
By Matt Taibbi | Rolling Stone
So we have a new feature out today, "Looting the Pension Funds," that looks at the blame game being played with state and municipal fiscal crises and the hiring of ultra-expensive "alternative investments" like hedge funds as a key trend in an evolving pension reform movement. The story looks at the role in the organized nationwide "pension reform" movement played by right-wing financiers like former Enron billionaire John Arnold and fee-hungry Wall Street honchos like Third Point billionaire Dan Loeb.
I was originally turned on to this story by old friend David Sirota, who wrote a massive report on the subject for a new progressive think tank, the Institute for America's Future. We talked about the subject a lot in the last months and timed it so that his report would also be released today. I urge everyone to read his report (you can find it here), which goes into far more detail than my piece did, especially about Arnold and his relationship with "centrist" organizations like Pew Charitable Trusts.
We both looked extensively at Rhode Island as a kind of test case for a lot of the issues we're talking about. For more in-depth coverage of the Rhode Island pension crisis, I strongly recommend that readers visit a site called GolocalProv.com, which has done outstanding work in trying to follow the math in their state's highly confusing pension mess. Former Providence Journal reporter Mike Stanton also extensively covered the issue –you can see an example of his work here…
Keep reading: Looting Public Pensions: A New Study | Matt Taibbi | Rolling Stone.
Picture by Banksy.
