2009 Year in Review

Leo Kolivakis's picture

Submitted by Leo Kolivakis, publisher of Pension Pulse.

Aaron Task posted a good review of 2009 on Yahoo tech ticker. If 2008 was a year of fear, 2009 was a year of greed:

fortunes were made in 2009 by investors like Warren Buffett and
Appaloosa's David Tepper, who took the Fed and Treasury at their word
when they said they wouldn't let certain (big) banks fail. Many others
won big simply by being long as the unwinding of the "Armageddon trade"
of late 2008/early 2009 gave a boost to the vast majority of stocks and


The year revived a lot of portfolios battered in 2008
and left egg on the face of many skeptics; yes, myself included. My
concern earlier this year was banks weren't forced to write-down their
toxic assets, and I'm still concerned there will be a related
comeuppance. But I underestimated how much the Fed and Treasury could
do to help the banks without addressing the core of the problem, as
well as the animal spirits of speculators flush with easy money. I
wasn't alone in this regard and a day of reckoning
for the government's largess may yet lie ahead; but the market's
momentum shows few signs of abating as 2010 beckons.

of going over 2009 in great detail, I decided to post links to some of
my favorite commentaries below. You'll also notice a couple of pics of Pension
Pulse's Men of the Year above, Bernie Madoff and Harry Markopolos. Why
Mr. Madoff? Because he represents the essence of what is wrong with our
corrupt financial system. He's a despicable individual who scammed his
fellow Jews and lots of other innocent investors as he criminally
profited from one of the largest Ponzi schemes ever.

And Harry
Markopolos represents what the system needs, namely, more competent and
courageous people who are not afraid to speak up and tell the truth.
His warnings were ignored as he vividly recounted in his testimony to
the Senate. I applaud him for what he stands for and consider him a
humble hero.

So let me get to some of my favorite posts over the past year:


Outlook 2009: Post Deleveraging Blues?

Pension Pandemic Part I and Part II

Here Comes the BARF?


Broken Pension Model?

Harry Markopolos's Regulatory Revolution?

It's All About Benchmarks, Stupid!

Why Can't We Properly Compare Pension Funds?

Age of Deflation?

And the Oscar Goes to Scumbag Billionaires!

The Model That's Killing Pension Funds?


D-process Changing Pension Rules?

Have Pensions Succumbed to Casino Capitalism?

Pension Fiasco: Another Trillion Dollar Bailout?

Death of Highly Leveraged Illiquid Strategies?

Jon Stewart & Bill Maher Are Simply Brilliant!

Rosy Projections of Pensions' Investment Earnings?

What Do Pensions Have in Common with AIG?

Mother of All Stealth Scams?

HOOPPLA! The Beauty of Bonds?

A Giant Experiment?


Checkmate for Pensions?

Pension Hearings at Parliament Hill

PSP's CFO in the Hot Seat

The Pension Killer?

Demystifying Pension Fund Benchmarks


Systemic Fraud at Public Pension Funds?

The "W" Recovery?

Is Inflation Inevitable?

Liquidity Drowning the Meaning of Inflation?

Why is Small Beautiful?


Big Money Suffering Performance Anxiety?

Will Liquidity Steamroll Over Pensions?

Pensions ‘Perfect Storm’ Looms?

A Convenient Untruth About Public Pensions?

The Meaning of Enough?

Pensions Apartheid?


Another Comment on Bonuses and Benchmarks

Paradise Found?

Good News for Hedge Funds?

Pension Poverty?

Wooing the Big One?


Will Commercial Real Estate Woes Sink Pensions?

Are Pensions Ignoring The Economic Rebound?

The Nuclear Option For Pensions?

Pensioners Taking a Back Seat to Bondholders?

A Private Equity Quagmire?

The End of a 30-Year Wealth Bubble?

On Blogging Brawls and Bragging Rights

Will Pensions Follow Harvard's Mea Culpa?

Ted Kennedy Jr. On Climbing Hills


Private Markets at a Breaking Point?

Recovery Will Mirror the Decline?

Private Equity on the Cusp of Golden Age?

Does Asset Allocation Still Work?

Are Hedge Funds Worth It?

Have Global Financial Risks Subsided?

More Bubble Trouble?


The Bullish Bear?

Another Bubble Sooner Than You Think?

Nortel Pensioners Take it to the Hill

The Death-Defying Dollar?

The Chinese Disconnect?

Soros on Alignment of Interests

Paranormal Activity to Another Black Monday?


Time to Get Serious on Pension Governance?

Fed Herding Investors to the Slaughter?

New Normal For Retirement Benefits?

Pension Tension on the Rise?


Santa Rally or Rally of a Lifetime?

The Great Unwinding?

Has Bubble Ben Shown His Hand?

Follow-Up on PSP's 2009 Annual Public Meeting

Mercer’s Little Alaska Problem?

Betting on a Big Rise in Yields?

A Crisis in the Making?

Oh Dear, CalPERSfornication Goes Global!

hope you enjoyed my postings throughout the year. I want to personally
thank all my readers and supporters, especially Diane Urquhart, Jack
Dean of Pension Tsunami, and the team at Zero Hedge.

I wish all of you a Happy and Healthy New Year and I will follow-up shortly with my outlook 2010. HAPPY NEW YEAR!!!

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Leo Kolivakis's picture

I added a couple of links to  comments on the Chinese disconnect and Soros on alignment of interests. Still writing my Outlook 2010, which is endless. Please be patient.

ZeroPower's picture


Last semester i took a class at McGill with prof Naylor.  I know you mentioned him in more than 1 post over at your blog. Can i ask, how do you guys know each other?

When i heard him speak in class many of his views reflected what you have up on the screen and thus im curious.

Leo Kolivakis's picture

Tom Naylor is a friend of mine and was one of my mentors at McGill. He taught me that economics is a fraudulent science and to always question what is really going on out in the real economy. His book, Hot Money and the Politics of Debt, is a classic. I also recommend reading Wages of Crime, another classic.

ZeroPower's picture

Truly amazing prof. Only class in college i wasnt required to buy a $150+ textbook for. He only suggested students buy his Wages of Crime book (for extra reading), and insisted we buy it used to save our poor student money instead of giving it to publishers (so i bought it from another student).

Indeed, his speech very first day of class was telling us firstly to question anything and everything that is taught to us (including what he says!) and secondly that economics is barely a science and at best a game of luck where the lucky one has more correct assumptions about X/Y than the other economist.  

Now that im ending my Bcom i only wish more profs in our management faculty were like him. Though Chris Ragan, a lot more conservative with his teachings, was great too.

Problem Is's picture

But Leo, don't you think Madoff was a sideshow bagatelle in comparison to Wall Street fraud, rigged markets and US government corruption?

You could have two blank pictures above Madoff:

1. One for Wall Street and financial reform... there was none.
2. One for criminal investigations of market manipulation and securities fraud... there was none.

The biggest story of 2009 was the sin of omission. When faced with financial crises, the US political class and intellectual elites were an abject failure in US society. They failed to do anything, reform anything, investigate anything. The looters won.

The US political class is probably the biggest collection of fuckups ever assembled on planet earth. They were positioned for the very reason that they can't do anything. Makes it pretty hard to rain in a corrupt oligarchy if you are a complete fuckup, even if you wanted to...

Leo Kolivakis's picture

Problem Is,

You are absolutely right, and reminded me of another entry which I added, Recovery Will Mirror the Decline? That pic of Timmy Geithner is priceless. Unfortunately, they did nothing on financial regulation...SQUAT! Poor Paul Volcker must be fuming watching the Obama administration pandering to Wall Street, just like all other previous administrations. Come to think of it, I should have added Volcker as one of the men of the year but his calls for reform fell on deaf ears.

Daedal's picture

Poor Paul Volcker must be fuming watching the Obama administration pandering to Wall Street, just like all other previous administrations.

I concur. Central Planning = Epic Fail.

Anonymous's picture

Say what you wish about the guy, but Bernie Madoff sure has a great head of hair. He would look great on the quintillion dollar bill.

Leo Kolivakis's picture

I added a few links to my posts on pension poverty, age of deflation and properly comparing pension funds.

Comrade de Chaos's picture

Leo, I appreciate your work. Thanks.


I think there are limits to how much the FED can inflate our "way out" (cut the branch of a tree we are sitting on). Deflation is hidden right now however it is still raging. Just look at all of those haircuts new employees have to take or the lack of inflation during the "spectacular" (sarc.) dollar collapse.

Leo Kolivakis's picture

Comrade de Chaos,

I agree, deflation remains the most pressing concern for the Fed. They will not come out and say it, but they know that structural forces at play here, including the demographic tidal wave and concerns of underfunded pension plans. They will try to keep liquidity in the system and hope that asset bubbles translate into consumption and economic inflation. I'm highly skeptical of this tactic because any wealth gains will just go to pay off debt burdens and prepare for retirement.

Winisk's picture

Leo, you have a knack for raising the ire of a number of people on this site, and yet you continue to post and respond.  I admire that determination.  Selfishly, I'm thirsty for some more Canadian content.  Thanks for your unselfish hard work! 

Leo Kolivakis's picture


Thanks, when I'm in the zone, nobody gets me down, including the ZH twits or pension bullies. There are many good people posting comments here, and they do not always agree with me, but I like the exchanges. As for those cyber parasites, no use in engaging them but sometimes I do it for fun. Cheers.

mberry8870's picture


The way I set it you have been correct in your calls and your warnings. I think the conflict arises when you "predict" an outcome that doesn't match with your naysayers view of what SHOULD happen. That is a huge difference and is generally where the difference lies between those who make money and those that don't. Good work.

Leo Kolivakis's picture

Thanks mberry8870, I try to deliver food for thought and realize nobody is 100% correct all the time. Cheers and all the best for 2010.

RobotTrader's picture

From Doug Noland



"Indeed, 2009 was a historic year of global, government-induced
synchronized reflation and speculation in virtually all markets, everywhere.

The Fed's zero interest-rate policy coerced U.S. savers out
of money funds, CDs and Treasuries and stoked a spectacular return to risk
markets. Stocks excelled and the riskiest stocks really excelled; junk excelled;
collateralized debt obligations excelled; leveraged loans excelled; virtually
everything excelled

Chinese equities (Shanghai Composite) ended the year with a gain of 80.0%.
While impressive, Chinese stocks finished last in the "bric" sweepstakes.

(RTS Index) stocks surged 128.6% in 2009

followed by Brazil's (Bovespa) 82.7%

India (Sensex) 81.0%


Thailand 63.3%

South Korea 49.7%

Indonesia 87.0%


Peru 99.0%

Chile 50.7%

Mexico 45%

Turkey 95.9%


Ukraine 90.1%

Hungary 73.4%

Bulgaria 61.7%

To an extent never before imagined, economies around the globe could partake
in aggressive fiscal and monetary stimulus, rapidly expand Credit, reflate
markets and economies - and have little worry about currency vulnerability
or an outflow of speculative finance"


RobotTrader's picture

2009 will go down as a "once in a lifetime" opportunity to make a vast fortune in stocks.

Some huge runs....


Leo Kolivakis's picture

Best trade of 2009, Trina Solar (TSL):

Cursive's picture

The irony of being able to recognize the Ponzi scheme of Bernie Madoff but not the Ponzi scheme of central bankers is not lost on me.  Sometimes, one must take a step back to see the forest for the trees.

Leo Kolivakis's picture


Here is a post from December 2008 you should read:

Pension Ponzi Scheme Dwarfs Madoff Scam

Central banks are doing what they do best, pumping liquidity into the system to try to get the debt supercycle going again. I don't call this a Ponzi scheme, but it feeds Casino Capitalism, making the banksters even richer.

Now, you've been after me ever since I started posting here. Makes me wonder who you really are and what your problem is. In any case, Happy New Year and try to ease up a little in 2010! Cheers.

Cursive's picture

Now, you've been after me ever since I started posting here. Makes me wonder who you really are and what your problem is. In any case, Happy New Year and try to ease up a little! Cheers.

Leo, I've been posting here since the site started.  I'm just engaging in the exchange of ideas on the ZH site.  I admit to loving your unwitting coinage of the Filth Gear, but I haven't engaged in any personal attacks.  It's amazing, but I generally find that your expressed thoughts are diametrically opposed to mine.  I could ignore your posts, but I enjoy the debate.  That's what this site is all about, right?  The zero hedge manifesto?

I read your linked article from December 21, 2008.  Isn't that a bit dated?  You talk of deflation in the article.  You are currently in the "reflation/inflation/Uncle Sugar/central-bankers-matter" camp now, n'est pas?

Leo Kolivakis's picture

I am currently in the liquidity camp but I am not convinced that asset inflation will translate into real economic inflation. Longer term, I fear the pension crisis will lead to mild deflation for a long time.

Nout Wellink's picture

Leo, just out of curiosity: where do you think this wall of liquidity will eventually bring us? A deflationary collapse? Hyperinflation? Or just another round of bubbles like 2002-2007 and the whole game repeats itself over and over again?

Leo Kolivakis's picture

Bubble Ben and the rest of the world's central bankers prefer to err on the side of inflation, this way they can inflate debt away and perpetuate the debt supercycle. The problem is that people are starting to wake up to reality, realizing the tyranny of debt, and facing the grim prospect of pension poverty. Liquifdity bubbles will make a few rich, but they will not bring hyperinflation. Deflation remains the big danger over the longer term, but the bubble mafia will try to prevent it with everything they got.

Grand Supercycle's picture


"...the market's momentum shows few signs of abating as 2010 beckons..."

Actually DOW and SP500 bearish warnings on the daily chart continue and recent market action is bearish.




El Hosel's picture

"The markets momentum" .... started showing signs of abating weeks ago,  a retracement ( and then some) beckons immediatly in 2010.

Market participants show few signs of recognizing how far removed stocks are from economic reality.

Ruth's picture

I love Mark I hope he contributes!

Reggie, as always, thanks for all you do!


exportbank's picture

Leo.. Thanks for your work and effort on the pension front. If any ZH reader can help me with a bit of info:

I'm trying to see where the 25 billion dollar deficit that Ontario had in 2009 placed it amongst all states and provinces in North America. The Christian Science Monitor just ran an item on the ten worse states for deficits and it seems that Ontario may carry "The largest deficit title".. Can anyone confirm?

A Healthy 2010 to all.

Anonymouse's picture

I'm a bit rusty on this, but I believe most if not all states are on a 6/30 FY end.  Point being, you won't get an apples to apples comparison (at least not an audited one)

Nout Wellink's picture

Leo, thanks for your postings and a happy New Year 2010 to you, too! Keep sharing your insights with us, I find them very interesting to read.

Anonymous's picture

Thank you for your efforts....the day of reckoning will arrive...sooner or later (with more thrust).

Case in point:

US Average Daily Unemployment borrowing from Nov 3rd to Dec 2nd - $69,596,132.41
US Average Daily Unemployment borrowing from Dec 2nd to Dec 30th - $140,423,929.95
Percentage Increase - 102%

California Average Daily Unemployment borrowing from Nov 3rd to Dec 2nd - $12,515,861.92
California Average Daily Unemployment borrowing from Dec 2nd to Dec 30th - $32,151,768.04
Percentage Increase - 157%


Happy New Year

Anonymous's picture

I don't get it Leo.

Madoff is just a crook and Harry just told the truth.

The scam of the past two decades is without a doubt AGW.

Perpetrated by Algore and Pachauri!

Richard North @EU Referendum is a hero for doing the heavy lifting and exposing Pachauri for the evil that he is.

The Noble committee awarded these two a prize for their evil plot. So I wasn't surprised when they gave the same prize to Obama on the very day he sent 30,000 more troops to Afganistan.

The real hero of 2009 is still unknown, but a hero none the less for leaking the CRU emails. Cheers

MarketTruth's picture

Scam of the decade? Guys, you may be right yet you miss the really big picture. The real scam is the entire Federal Reserve System. They are th ones that need to be fully eliminated. Anything less and no matter what else you may try will be futile because you are still based on a fraudulent system. This is something perhaps even guys like Karl Denninger seems to not truly fully comprehend.

Thomas Jefferson, 1791

 "I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a money aristocracy that has set the government at defiance. This issuing power should be taken from the banks and restored to the people to whom it properly belongs. If the American people ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered. I hope we shall crush in its birth the aristocracy of the moneyed corporations which already dare to challenge our Government to a trial of strength and bid defiance to the laws of our country"

Anonymous's picture

Please allow me to correct you THE FED IS THE SCAM OF THE CENTURY!!!!

Anonymouse's picture

Now, you are just trying to goad Leo.  Can't we all just get along?

Chopshop's picture

Thanks for all your time and effort put into your pension work, Leo.  do appreciate it.