Wednesday, January 6, 2010
First, U.S. public pension plans face unfunded liabilities of over $2 trillion, says Orin Kramer, chairman of New Jersey’s pension fund. Kramer is stealing the show in this morning’s FT with a new take on an old story. Sneaky accounting and laughably unrealistic expectations of future returns have led many econ-nerds, your editors included, to suggest pension funds are in a deep, dark hole… maybe as bad as a trillion bucks.
Well, Mr. Kramer, citing his own experience running Jersey’s fund, said today that it’s probably twice as bad. For every dollar the average public fund has promised, he says, it has only 60 cents on hand. In other words, 40% of people with public pensions technically have no money saved on their behalf.
We’ve rung this bell again and again , but hopefully, Mr. Kramer’s admission in this morning’s FT will elicit change — while there is still time. Of course, it probably won’t. Kramer is also a huge player for the Democratic Party. Thus, we suspect certain members of the Senate will reject any notion with his name at the top. Not to mention we’d love to see a campaign built around pension reform… in this land of ballot busting baby boomers, you’d get more votes on a Neo-Nazi ticket. (more)
Manhattan apartment prices fell for a third consecutive quarter as Wall Street job losses drained demand and the decline in co-op and condominium values reached 21 percent since the market peak.
The median price slid 10 percent to $810,000 in the fourth quarter from a year earlier, New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said today. The median price hit $1.03 million at the top of the market in 2008. The number of sales jumped 8.4 percent to 2,473 in the three months ended Dec. 31.
Values continued to fall across apartments of all sizes as New York City recorded 10 percent unemployment in November. Fallout from the recession and credit crisis that cost more than 184,000 finance jobs in the Americas is still hurting New York. The city lost 25,200 finance jobs in the 12 months ending Nov. 30, the state Labor Department said Dec. 17. (more)
Investors in U.S. debt lost 3.5 percent on average through Dec. 30, according to Bank of America Merrill Lynch indexes, the biggest annual slide since at least 1978. The 10-year Treasury yield reached its highest level in six months yesterday before a Labor Department report next week forecast to show payrolls were unchanged in December after the U.S. economy lost jobs in every month since January 2008.
“The financial system has survived,” said Ray Remy, head of fixed income in New York at Daiwa Securities America Inc., one of 18 primary dealers that trade directly with the Federal Reserve. “Now the market has to deal with other issues like deficit spending, tremendous issuance, the weakness in the dollar. How significant is this recovery, and what happens when you take away some of the government stimulus.” (more)
The initial purchaser was Susquehanna Capital Group, which is also the lead market maker, ETF Securities USA said in a filing with the U.S. Securities and Exchange Commission on Dec. 31.
The purchase took place Dec. 30 with delivery expected about Jan. 8, according to the filing. (more)
One reason that the nation has not made more progress toward an economic “recovery” is that the people in charge really don’t know what one would look like. The top economists in Washington don’t appear to have asked the obvious question, “Recovery of what—and for what?” Instead they have followed the old drill, tried to rekindle the old flame, and remained wedded to the old guideposts that leave them looking at yesterday and trying to see tomorrow.
Just recently, the president of France realized the stupidity. He has decided that his nation’s measures of economic health need to change to account for today’s challenges instead of yesterday’s. As Washington gears up to spend billions in more “stimulus,” it would help to ask exactly what it is trying to stimulate—and most importantly, exactly what would constitute success. (more)