Posts Tagged ‘Public Pension Funds’

Florida – Much Worse Problems Than the Oil Spill

Florida – Much Worse Problems Than the Oil Spill

tch2_1201 - Tricolored heron at Wakodahatchee Wetlands, Florida.

By Doug Hornig, Senior Editor, Casey Research

Media coverage of the oil spill’s effect on the Gulf focusing on tourist income lost by the waterfront towns – with footage of empty beaches, restaurants and T-shirt shops – dominates the news. Interviews with devastated business owners are heart rending. But they always end with references to somehow hanging on until “things get back to normal.”

Trouble is, things are not going to “normalize.” Not for the Panhandle of Florida, and probably not for the rest of the state, either.

Projections suggest that Florida can expect oil all along its west coast, and possibly throughout the Keys and up the east coast as well. Yet even before BP’s well began spewing crude, pressures within the state’s economy were building. It was an explosive situation awaiting a match.

Oily beaches and dying wildlife are likely that match.

Take unemployment. Statewide, it ballooned from 3% in 2006 to a peak of 12.3% in February 2010. Though it’s backed off, it remains in double-digit territory at 11.2%. ”Officially” – though official numbers understate the problem. Illegal immigrants, some 4.5% of Florida’s population, aren’t counted; the long-term unemployed and aging workers are regularly purged, even if they’re still looking for work.

This in a state already confronted with the worst of the coming healthcare/taxation crunch. It has the second oldest population in the nation, and as its citizens retire, their earnings fall off, causing tax revenues to drop. At the same time, healthcare bills rise, stressing social service budgets.

Florida is ground zero for Baby Boomer demographics. With 600 seniors for every 1,000 workers now, and the number trending inexorably higher, soon every employed person in the state will essentially have to adopt one senior to care for out of his or her paycheck.

Housing? Naturally, rising unemployment amplifies the difficulties of maintaining homeownership. With further negative effects from the oil, we can only expect the situation to worsen. A tsunami of defaults and foreclosures – and bank failures – would not be a surprise.

Florida is mortgaged to the hilt. It ranks second only to California in total securitized non-agency mortgage loans, 10% of the national total. Of those, half are 60 days or more…
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Inside the Dire Financial State of the States

Inside the Dire Financial State of the States

By David von Drehle, courtesy of TIME 

Ellen Weinstein for TIME 

In New Jersey, taxes are high, the budget’s a mess, government is inefficiently organized, and the public pension fund is blown to kingdom come. Which makes New Jersey a lot like most other states in 2010. What makes the state unusual is its rookie governor, a human bulldozer named Chris Christie, who vowed to lead like a one-termer and is keeping his promise with brio. He has proposed chopping $11 billion from the state’s budget — more than a quarter of the total — for fiscal year 2011 (which starts July 1). He’s backing a constitutional cap on property taxes in hopes of pushing the state’s myriad villages and townships to merge into more efficient units. He’s locked in an ultimate cage match with the New Jersey teachers’ union. It may be the bitterest political fight in the country — and that’s saying something this year. A union official recently circulated a humorous prayer with a punch line asking God to kill Christie. You know, New Jersey humor. And in an interview with the Wall Street Journal, Christie didn’t talk about the possibility that his fiscal initiatives might be compromised or defeated; he pictured himself "lying dead on State Street in Trenton," the state capital. Presumably that was a figure of speech.

The tone of the New Jersey budget battle may be distinctive, but many of the same notes can be heard in state capitals across the country. From Hartford to Honolulu, once sturdy state governments are approaching the brink of fiscal calamity, as the crash of 2008 and its persistent aftermath have led to the reckoning of 2010. Squeezed by the end of federal stimulus money on one hand and desperate local governments on the other, states are facing the third straight year of staggering budget deficits, and the necessary cuts will cost jobs, limit services and touch the lives of millions of Americans. Government workers have been laid off in half the states plus Puerto Rico. Twenty-two states have instituted unpaid furloughs. At least 28 states have ordered across-the-board budget cuts,…
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How The Public Pension Funds Avoid The Truth

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How The Public Pension Funds Avoid The Truth

Courtesy of Tom Lindmark of BUT THEN WHAT

There’s been much discussion, in fact so much as to cause overload, about the pension time bomb among monkeys, governmentstate and local governments that I hate to add to it. Nevertheless, I would like to direct you to a short and easy to read editorial in the WSJ today.

The point of the article is that the states continue to cook the books when it comes to pension accounting and a fair representation of the liability to which their taxpayers are subject. It illustrates just how far some states are going to pull the wool over everyone’s eyes:

Public employee pension plans are plagued by overgenerous benefits, chronic underfunding, and now trillion dollar stock-market losses. Based on their preferred accounting methods — which discount future liabilities based on high but uncertain returns projected for investments — these plans are underfunded nationally by around $310 billion.

The numbers are worse using market valuation methods (the methods private-sector plans must use), which discount benefit liabilities at lower interest rates to reflect the chance that the expected returns won’t be realized. Using that method, University of Chicago economists Robert Novy-Marx and Joshua Rauh calculate that, even prior to the market collapse, public pensions were actually short by nearly $2 trillion. That’s nearly $87,000 per plan participant. With employee benefits guaranteed by law and sometimes even by state constitutions, it’s likely these gargantuan shortfalls will have to be borne by unsuspecting taxpayers.

Some public pension administrators have a strategy, though: Keep taxpayers unsuspecting. The Montana Public Employees’ Retirement Board and the Montana Teachers’ Retirement System declare in a recent solicitation for actuarial services that “If the Primary Actuary or the Actuarial Firm supports [market valuation] for public pension plans, their proposal may be disqualified from further consideration.”

Scott Miller, legal counsel of the Montana Public Employees Board, was more straightforward: “The point is we aren’t interested in bringing in an actuary to pressure the board to adopt market value of liabilities theory.”

At least they aren’t shy about what they’re up to. I guess the rationalization is that so long as no one knows about a problem there


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Phil's Favorites

Why do people believe con artists?

 

Why do people believe con artists?

Would you buy medicine from this man? Carol M. Highsmith/Wikimedia Commons

Courtesy of Barry M. Mitnick, University of Pittsburgh

What is real can seem pretty arbitrary. It’s easy to be fooled by misinformation disguised as news and deepfake videos showing people doing things they never did or said. Inaccurate information – even deliberately wrong informatio...



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Members' Corner

Why do people believe con artists?

 

Why do people believe con artists?

Would you buy medicine from this man? Carol M. Highsmith/Wikimedia Commons

Courtesy of Barry M. Mitnick, University of Pittsburgh

What is real can seem pretty arbitrary. It’s easy to be fooled by misinformation disguised as news and deepfake videos showing people doing things they never did or said. Inaccurate information – even deliberately wrong informatio...



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Zero Hedge

Easily Overlooked Issues Regarding COVID-19

Courtesy of ZeroHedge View original post here.

Authored by Gail Tverberg via Our Finite World,

We read a lot in the news about the new Wuhan coronavirus and the illness it causes (COVID-19), but some important points often get left out.

[1] COVID-19 is incredibly contagious.

COVID-19 transmits extremely easily from person to person. Interpersonal contact doesn’t need to be...



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The Technical Traders

Gold Rallies As Fear Take Center Stage

Courtesy of Technical Traders

Gold has rallied extensively from the lows near $1560 over the past 2 weeks.  At first, this rally didn’t catch too much attention with traders, but now the rally has reached new highs above $1613 and may attempt a move above $1750 as metals continue to reflect the fear in the global markets.

We’ve been warning our friends and followers of the real potential in precious metals for many months – actually since early 2018.  Our predictive modeling system suggests Gold will rally above $1650 very quickly, then possibly stall a bit before continuing higher to target the $1750 range.

The one thing all skilled traders must consider is the longer-term fear that is build...



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Kimble Charting Solutions

Precious Metals Eyeing Breakout Despite US Dollar Strength

Courtesy of Chris Kimble

Gold and silver prices have been on the rise in early 2020 as investors turn to precious metals as geopolitical concerns and news of coronavirus hit the airwaves.

The rally in gold has been impressive, with prices surging past $1600 this week (note silver is nearing $18.50).

What’s been particularly impressive about the Gold rally is that it has unfolded despite strength in the US Dollar.

In today’s chart, we look at the ratio of Gold to the US Dollar Index. As you can see, this ratio has traded in a rising channel over the past 4 years.

The Gold/US Dollar ratio is currently attempting a breakout of this rising channel at (1).

This would come on further ...



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Insider Scoop

68 Stocks Moving In Friday's Mid-Day Session

Courtesy of Benzinga

Gainers
  • Trans World Entertainment Corporation (NASDAQ: TWMC) shares climbed 120.5% to $7.72 after the company disclosed that its subsidiary etailz entered into a deal with Encina for $25 million 3-year secured revolving credit facility.
  • Celldex Therapeutics, Inc. (NASDAQ: CLDX) fell 39.8% to $3.1744. Cantor Fitzgerald initiated coverage on Celldex Therapeutics with an Overweight rating and a $8 price target.
  • TSR, Inc. (NASDAQ: TSRI) gained 36.2% to $8.17.
  • ...


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Biotech & Health

Deep learning AI discovers surprising new antibiotics

 

Deep learning AI discovers surprising new antibiotics

A colored electron microscope image of MRSA. NIH - NIAID/flickr, CC BY

Courtesy of Sriram Chandrasekaran, University of Michigan

Imagine you’re a fossil hunter. You spend months in the heat of Arizona digging up bones only to find that what you’ve uncovered is from a previously discovered dinosaur.

That’s how the search for antibiotics has panned out recently. The relatively few antibiotic hunters out there ...



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Digital Currencies

Altcoin season 2.0: why bitcoin has been outgunned by crypto rivals since new year

 

Altcoin season 2.0: why bitcoin has been outgunned by crypto rivals since new year

‘We have you surrounded!’ Wit Olszewski

Courtesy of Gavin Brown, Manchester Metropolitan University and Richard Whittle, Manchester Metropolitan University

When bitcoin was trading at the dizzying heights of almost US$2...



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ValueWalk

What US companies are saying about coronavirus impact

By Aman Jain. Originally published at ValueWalk.

With the coronavirus outbreak coinciding with the U.S. earnings seasons, it is only normal to expect companies to talk about this deadly virus in their earnings conference calls. In fact, many major U.S. companies not only talked about coronavirus, but also warned about its potential impact on their financial numbers.

Q4 2019 hedge fund letters, conferences and more

Coronavirus impact: many US companies unclear

According to ...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Tuesday, 01 October 2019, 02:18:22 AM

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Comment: Wall of worry, or cliff of despair!



Date Found: Tuesday, 01 October 2019, 06:54:30 AM

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Comment: Interesting.. Hitler good for the German DAX when he was winning! They believed .. until th...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

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Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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