To the Editor:
I just finished reading “Flash Boys” – a must-read for those who believe the stock market is safe and well regulated.
Then it struck me. What are public pension funds doing in the markets?
This Illinois pension mess has only come to the forefront in the past five years. Coincidence? I think not. The hedge funds lost a good share of their value – as did everyone – from 2007 until 2010.
Granted, employer contributions were being fudged, but shouldn’t these pension funds be in guaranteed accounts?
Here’s a little nugget from macro-economist Dean Baker: If public pension investments were in 30-year Treasury notes from 2007 until 2010, as opposed to the stock market, there would be $850 billion more in pension funds nationally.
But these are the games people play when they’re not gambling their own money.
Hedge fund managers promise 7 percent to 10 percent returns and make a killing win or lose. Pension boards become starry-eyed, certain they’ve satisfied fiduciary responsibility.
Neither have skin in the game, and this, friends, is the finger in the eye. The pensions are guaranteed by the taxpayers, who have no stake in the game other than playing the rich uncle everybody prays is out there.