Let’s start off with – I hate unions. More precisely, I hate public sector unions, because at least when the parasite of private sector unions gets out of control, they implode the host and everyone dies together. In the public sector, they just cook the books until everything looks good on paper in their magical Land of Oz.
So the CalPERS board agreed to reduce the anticipated rate of return on pension obligations in California from 7.5% to 7%. Of course this was met with much fanfare and hailed as a great achievement that will help stabilize the CalPERS system. For the rest of us on the other side of the looking glass, it’s just another example of ridiculous Government pay, pensions and benefits that will only end one of three ways; government agency bankruptcy, drastically reduced payouts to beneficiaries or massive hikes in taxation to cover the losses.
Not to mention the always present vulture of the Federal Government that can swoop in at any time and print whatever billions of dollars it takes to bail out anyone for any reason, as long as they stand to benefit by it in some way. If California were not already a deep blue ocean state, I could see the Feds offering financial assistance, as long as California accepts whatever new tyrannical and draconian regulations the Feds have in mind, perhaps a new version of Common Core, since most states fell all over themselves to sell their souls to The Feds for a pittance of cash in return (see my post States are Whores, Government is a Pimp).
So, the first thing I thought of was, “Well, how much of a return has CalPERS gotten in the past few years. I mean, what with our ‘strong’ Obama economy, he who hath saved us from the next Great Depression and restored America to its economic greatness and created billions of jobs and what all….the returns should be impressive!”
Two years of poor results — a 0.6% return for the fiscal year ended June 30 and a 2.4% return in fiscal 2015 — have contributed to a more negative view of what CalPERS can earn over the next decade.
I don’t see the problem. With a 0.6% return and a 2.4% return already booked, in this AWESOME OBAMA ECONOMY, then 7% is CLEARLY doable, right? Morons. Absolute rejects.
So how did anyone who knows 5th grade math come up with this? Oh, that’s easy for Government data manipulators, masters at torturing numbers.
Mr. Eliopoulos, in explaining how the investment staff came up with the 7% rate of return, said it was based on a longer-term 30-year forecast that shows better investment returns, not a 10-year horizon.
Ha! “Shows better investment returns.” OF COURSE IT DOES. It’s an assumption, and one so far in the future, they can make it SHOW anything they want.
All you have to do is triple your time horizon, because if you get far enough out, you can assume anything. You can assume 10% GDP growth. You can assume 1% unemployment. You can assume a 30% increase in tax revenues. You can assume 50% increased stock valuations. Because who can argue any of that? Any argument against an unattestable assumption is simply another unattestable assumption. They simply plucked numbers out of thin air over the next 30 years until a 7% average rate of return was produced. It’s magic.
And for their next trick, in five years when they are still recording abysmal rates of return, they will change their projection from 30 years to 50 years, or 100 years, whatever it takes to justify whatever ridiculous rate of return they need to show.
Lastly, as is typical of government, this rate of return reduction is not immediate. It’s stretched over the next three years, a little bit at a time.
I’ve never seen so many overpaid underachievers work so hard to absolutely F*^% the future. This bill will come due. They will all be dead. They don’t care. What they can’t make other people’s problems in the now, they will make unborn people’s problems in the future. As long as it never becomes THEIR problem.
We should start a non-profit and have a few hundred t-shirts made up that say F THE FUTURE and send them up to our Dear Leaders in Sacramento.
Categories: Government Failures