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61% Underfunded Illinois Teachers Pension Fund Goes For Broke, Becomes Next AIG-In-Waiting By Selling Billions In CDS

Tyler Durden's picture




 

“If you were to have faxed me this balance sheet and asked me to guess who it belonged to, I would have guessed, Citadel, Magnetar or even a proprietary trading desk at a bank.” So begins a story by Alexandra Harris of the Medill Journalism school at Northwestern, which, however, does not focus on some exotic product-specialized hedge fund, or some discount window (taxpayer capital) backed prop desk (hedge fund) at a TBTF bank, but instead at the 61% underfunded, $33.7 billion Illinois Teachers Retirement System (TRS), which just happened to lose $4.4 billion in 2009 (a year when, courtesy of America's conversion from capitalism to socialism, the market rose 60%), and 5% in2008. Yet underperformance can be explained. What can not, is that the TRS has now become a shadow AIG. As Harris notes "TRS is largely on the risky side of the contracts, selling and writing OTC derivatives, including credit default swaps, insurance-like contracts that guarantee payment in the event of a default, that were blamed in part for the 2008 collapse of Lehman Bros. and bailout of insurance giant American International Group Inc., or AIG." Demonstrating just how far the fund is willing to go in the "for broke" category, knowing full well that if it repeats AIG's implosion, the government will likely bail it out, is the disclosure that a stunning 81.5% of the fund's investments are considered risky - this means it is the fourth-riskiest investment portfolio for a pension fund in the U.S! All it will take is another Flash Crash-like event, or a liquidity crunch, and the 355,000 "full-time, part-time and substitute public school teachers and administrators working outside the city of Chicago" will likely end up with a big, fat donut in their retirement portfolios courtesy of some deranged lunatic, portfolio manager, situated externally at a bank like Goldman Sachs, who in taking a page straight out of Obama's bailout nation, has decided there is no such thing as risk. And to those naive enough to think the TRS is the only such fund which has now gone all-in on "no risk and infinite return", wait until such stories start emerging about every single massively underfunded pension and fully insolvent fund in the US.

From Harris' report:

Frank Partnoy, a law and finance professor at the University of San Diego who worked on Wall Street as a derivatives structurer in the mid-1990s, said TRS’s portfolio is an indication that investing is not about what is smart but what will generate the highest returns.

“It’s an epic illustration of how we’ve really gotten lost in financial complexities,” he said, after studying the Illinois Auditor General's 2009 audit of TRS and the fund's March 31 derivatives positions.

TRS said it uses over-the-counter, or privately negotiated, derivatives to maximize the performance of its portfolio and only allows money managers to invest in derivatives if they “have the appropriate expertise and knowledge and employ sophisticated risk management systems,” said David Urbanek, public information officer, in an e-mail.

The fact that TRS trustees and investment advisors approved the use of OTC derivatives isn’t, in itself, alarming. The financial instruments are not explicitly prohibited in the Illinois pension code, and many derivatives contracts provide protection against losses on other investments.

In the balance sheet provided to Medill News Service, TRS’s OTC derivatives portfolio showed that in addition to writing CDSs, the pension fund was selling swaptions and shorting international-based interest rate swaps. For each contract written or sold, TRS received a premium.

 

And as always happens when one collects pennies before a rollercoaster, the spectacular blow up always eventually catches up with you:

Unfortunately for TRS, its OTC positions soured in late April when Greece’s debt woes worsened, Standard & Poor’s downgraded Spain’s debt to AA and the euro dropped to its lowest levels since the currency’s inception. The International Monetary Fund and European Central Bank orchestrated a $1 trillion bailout to ensure that Greece and the other PIIGS—Portugal, Ireland, Italy and Spain—would not default on their debts.

“As the European debt crisis worsens, TRS’ positions are going to bleed money,” the trader said.

Where it gets even scarier, is that TRS may be fraudulently misrepresenting its massively underwater portfolio:

But the Illinois Teachers’ Retirement System said if it unwound the OTC trades held in its pension fund today, the positions would have a market value of $5 million and a notional value of $1.1 billion. Notional value is the total value of a leveraged financial instrument’s assets.

It isn’t clear how TRS is valuing its OTC derivatives and market experts, among them Rosenthal, who estimated a loss of $515 million as of March 31, were skeptical the OTC positions could have been showing a net positive notional value.

TRS projects it will have logged a $158 million gain from its derivatives portfolio by the June 30 end of fiscal 2010— with $5 million derived from its swaptions, CDS and interest rate swaps positions—and just a fraction of its projected $627 million total return.

A significant portion of TRS’s OTC derivatives are linked to interest rate swaps and those are tied to either the London Interbank Offering Rate or Euro Interbank Offering Rate. Interest rate swaps stipulate for every basis point tick upward in the LIBOR or EURIBOR, the fund is forced to pay out an interest rate that is two basis points higher. This is why the notional value of TRS’s U.S. dollar- and international-based interest rate swaps were in the red by $361.4 million at the end of March.

TRS’ portfolio also includes a large number of swaptions—or the right at a future time to enter into a swap position—which showed a loss of $14 million as of March 31. In addition, the fund sold approximately $154 million worth of CDSs guaranteeing the debt of dozens of companies, countries and states, among them American International Group Inc., GMAC, Panama, Mexico and California. (See graphic).

A large part of TRS’s international-based interest rate swaps positions are linked to the Brazilian Interbank Deposit Rate and Euribor in a bet that inflation would stay low in Europe but rise in emerging markets.

Rosenthal, who said TRS appears to be betting that long-term Treasury yields will greatly increase, is incredulous that the fund even has this view. “Their job is not to play the [Treasury] yield curve,” Rosenthal said. “It’s not their job to have that view.”

Swaptions, Euribor exposure, curve trades? What the hell happened to buy and hold. Does TRS really expect to survive this, when there are sharks like Goldman who know every single trade the TRS has on, and one day, sooner rather than later, will destroy it, but not before margin calling it to death in the process.

The logical question of who the hell is supervising this slow motion train crash surprisingly has no answer:

Section 1-109.1. of the Illinois Pension Code states it is the duty of the board of trustees of a retirement system or pension fund to appoint fiduciaries to manage its assets—including the power to acquire and dispose of any assets—as well as assign others as fiduciaries to oversee activities other than asset management.

TRS said it makes day-to-day operational decisions concerning strategic asset allocation, portfolio structure and manager selection, but cedes all of its investment decisions, within TRS parameters, to professional money managers, a list some 60 names long that includes Goldman Sachs Asset Management, JPMorgan Investment Management, Northern Trust Co. and State Street Global Advisors.

When asked which managers were responsible for the pension fund’s derivatives portfolio, Urbanek, the Illinois TRS spokesman, said OTC derivatives positions are scattered across each asset class because they are “complementary positions” within each portfolio.

According to its investment policy, TRS encourages diversification of assets and “prudent” risk taking because these strategies align with its long-term investing goals. “Increasing risk is rewarded with compensating returns over time.”

“They’re not maintaining effective internal controls,” Partnoy said. “Is it prudent risk-taking to write CDSs on Brazil?”

At the end of the day, it appears the fund is doing nothing illegal by essentially offloading front-office duties to Goldman, which of course is happily trading in advance of the fund, to whose books it likely has full exposure, to benefit its own prop trading desk, and reward its own shareholders first and foremost: 63 out of 63 profitable trading days anyone?

The bottom line, experts say, is that there is no language in the Illinois pension code that prohibits pension funds and retirement systems from buying or selling OTC derivatives as an investment method. In the event of catastrophic losses, lawsuits would be filed against the fiduciaries, but ultimately taxpayers would be left holding the bag. 

And here we see where the next layer of catastrophic systemic collapse will come from: the multi-trillion pension system, which is now invested in the riskiest imaginable products, and whose existence is contingent on a market and economy, both priced to perfection. The Fed is surely aware of this, and will do everything in its power to prevent a catastrophic collapse. Yet the Fed always loses the battle at the end of the day. And if Americans were angry the last time they had to bail out bankers, just wait until it becomes obvious that these very banks blew up the pensions of tens of millions of Americans only so that the very same banks could enjoy at least one more year of record bonuses. It is not obvious where the next crash will happen. And it is certain that nothing will be done, as facing the problem would mean recognizing the massive losses already facing the pension system. And that would be the dominoes that forces yet another round of inevitable mark-to-market, and bank implosions. The timebomb is now ticking and there are merely seconds left before it goes off. We have been warned, and will do nothing to stop it.

 

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Mon, 06/14/2010 - 15:56 | 413183 binky
binky's picture

Cut the red wire.  

Tue, 06/15/2010 - 12:58 | 414918 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

+1

Mon, 06/14/2010 - 16:00 | 413189 stickyfingers
stickyfingers's picture

"have the appropriate expertise and knowledge and employ sophisticated risk management systems,” said David Urbanek, public information officer, in an e-mail.

Don't we all have that?

P.S. Thank a teacher if you can read this.

 

Mon, 06/14/2010 - 15:58 | 413191 JohnKing
JohnKing's picture

Should be renamed to Illinois Teachers Patsy Fund. Where is the State Attorney General?

Mon, 06/14/2010 - 17:44 | 413445 Edmon Plume
Edmon Plume's picture

All that would do is ensure the taxpayer is on the hook for the bailout more quickly.  Please no more!

Although, BB can print that amount of money in a flash; so maybe there is nothing to worry about after all.

Mon, 06/14/2010 - 17:47 | 413446 Translational Lift
Translational Lift's picture

"Where is the State Attorney General?"  He's in the hot tub with all the other aholes.  Not to worry, when the Illinois Teachers Fund goes belly-up the Crook-in-Chief will have his Chi-Town boyz make them whole....

Mon, 06/14/2010 - 20:34 | 413800 StychoKiller
StychoKiller's picture

How so?  By handing them a fresh stack of FRNs?!

Mon, 06/14/2010 - 23:36 | 414041 brown_hornet
brown_hornet's picture

State AG is a she.  And her father is the most powerful man in Illinois legislature.

Tue, 06/15/2010 - 13:00 | 414920 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Another remarkably talented family...

Mon, 06/14/2010 - 16:00 | 413195 AR15AU
AR15AU's picture

This is what used to be known as fraud.

I guess in a fiat money system its just considered fun and games, like playing something from Parker Brothers. 

Mon, 06/14/2010 - 16:28 | 413276 DosZap
DosZap's picture

AR,

"I guess in a fiat money system its just considered fun and games, like playing something from Parker Brothers."

It is when your USING other folks money..............these funds are not underfunded because of a lack of employee payroll deductions...............this is what will not be LET go. 

Mon, 06/14/2010 - 16:36 | 413289 downwiththebanks
downwiththebanks's picture

The money is being looted from the teachers, fire-fighters, librarians, and other public-sector workers.

And given to the banks, by the government, under the auspices of 'austerity'.

Same story, different suckers.

Mon, 06/14/2010 - 17:49 | 413461 Edmon Plume
Edmon Plume's picture

Errrr, the public sector is the government.  It's the private sector that is getting looted.

Mon, 06/14/2010 - 18:00 | 413485 downwiththebanks
downwiththebanks's picture

Did you read the article?

Private sector workers have squat for savings, already.  McDonalds don't have much of a pension program.  Uncle Sam's little consumer economy is a hollowed-out shell.  The masses are in hock to their eyeballs because wages have been stagnant for 40 years.  

This piece deals with the contractually agreed upon money owed to public sector workers, by the government, that HAS ALREADY BEEN STOLEN.  

Now it's a matter of the thieves (i.e., banks) and those who enable the thieves (i.e., government) giving the masses a long, slowly-extended middle finger in lieu of payment.

Mon, 06/14/2010 - 18:03 | 413502 -Michelle-
-Michelle-'s picture

"McDonalds don't have much of a pension program."

http://www.msnbc.msn.com/id/28472710/ns/business-personal_finance/

"To stanch the bleeding of valuable talent, McDonald's in 2004 began offering a rich retirement savings perk. Employees who put 5 percent of their salary in the company 401(k) receive a company match of as much as 11 percent, turbocharging their savings right off the bat. To make sure employees take advantage of the program, McDonald's has made enrollment automatic. And to ease the pain of automatically deferring 1 percent of pay, the company gave managers a one-time, 1 percent salary increase."

Mon, 06/14/2010 - 18:21 | 413543 QQQBall
QQQBall's picture

And to ease the pain of automatically deferring 1 percent of pay, the company gave managers a one-time, 1 percent salary increase."

 

Who knew?

Mon, 06/14/2010 - 18:30 | 413555 downwiththebanks
downwiththebanks's picture

While I'm sure the workers appreciated the 1% pay cut, one would really have to look at how much these workers have 'gained' from this 'rich' plan to issue it as some sort of proof, right?

How much disposable income should someone making $8/hr. have to invest in synthetic CDOs and long-term T-bills?

Mon, 06/14/2010 - 19:30 | 413685 Al Gorerhythm
Al Gorerhythm's picture

Another head of the Hydra-Ponzi. Watch the purchasing power of your savings depriciate over time as you place your labor-linked credits into the hands of the grinding machine. Your yeild in interest can't keep up with the exponential creation. It is a simple gaming algorerhythmic outcome. You can't fight the maths.

Mon, 06/14/2010 - 18:33 | 413568 Edmon Plume
Edmon Plume's picture

Did you read it?  "...but ultimately taxpayers would be left holding the bag. "  I don't know about you, but to me that sounds an awful lot like taxpayers will be left holding the bag.  But wait... it gets better!

When government workers are paid, they get taxpayer - private sector - dollars, ergo 0% real GDP growth, and a hit on the opportunity cost of the private sector.  This often comes at the bargain price of 3 to 10 times what the actual "service" costs, and about 100x what it's worth.  Then they take part of that money and invest it into the public and private sectors, and even internationally.  The pension tanks, and taxpayers are then on the hook for bailing them out.

Let me help you here:  "...the government,..." is paid for by taxpayers, notwithstanding the fact that it has borrowing powers and printing powers that still come back to hurt the private sector in real terms: payback of debt down to multiple generations, and inflation, respectively.

The masses are not in hock due to wages being stagnant, at least not entirely.  They are in hock because they overconsume.  Just like the government - it is the only "sector" growing right now, even as everything else falls off.  Inflation has eaten into the value of the dollar in a big way.

Rest assured, they will be paid in full, but unfortunately it won't happen until inflation makes us all trillionaires, at which point a tenth of a federal bank note will pay off most of their pension.

There's theft all right.

Mon, 06/14/2010 - 19:03 | 413622 downwiththebanks
downwiththebanks's picture

I'm not worried about what MIGHT happen.  I focus on what has happened.  The banks have stolen a bunch of money owed to the workers, with the government facilitating the theft because they're owned by the banks.

The rest, how 'unproductive' workers are and such, is just window dressing meant to cover-up the crime.

Tue, 06/15/2010 - 01:14 | 414113 JLee2027
JLee2027's picture

What money owed to the workers?  What are you talking about? They made bad loans and invented financial tools that self-destruct after they make billions, thus requiring bailouts.

You sound like a commie.

Mon, 06/14/2010 - 16:57 | 413337 AR15AU
AR15AU's picture

True that. I guess I just believe that if the money were in the form of gold coin, there would be a lot more scrutiny on where it was going. With paper / electronic money, seems all too easy to just move it into derivatives and other electronic crap without much cause for alarm. If you moved a hoard of gold into something synthetic, pensioners might be like "what did you do with all of the gold" a lot sooner... 

Mon, 06/14/2010 - 19:36 | 413693 Al Gorerhythm
Al Gorerhythm's picture

Yup. It (gold) would make it a lot more difficult for the bureaucrats (and banker facilitator/owners) to paper over their inevitable sins. Pick one.

Mon, 06/14/2010 - 16:01 | 413197 SignsAndWonders
SignsAndWonders's picture

Who should I contact about getting some synthetic exposure to this mess?  

Mon, 06/14/2010 - 16:07 | 413215 Internet Tough Guy
Internet Tough Guy's picture

You get exposure through your tax bill. No upside for you, though.

Mon, 06/14/2010 - 16:02 | 413201 EscapeKey
EscapeKey's picture

Look, can Bernanke just start the printing presses already? We all know it'll happen at some point, anyway.

Mon, 06/14/2010 - 19:45 | 413710 RichardENixon
RichardENixon's picture

They're already on. Have been for a while now.

Tue, 06/15/2010 - 13:07 | 414930 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

If you're really quiet you can actually hear the presses churning away. 

And when they briefly stop the presses to put up a fresh roll of paper -- you can even hear the OHs and ONEs dropping into the electronic-bit-bucket like so much hail...

Mon, 06/14/2010 - 16:03 | 413203 Thisson
Thisson's picture

This is good news because when these things finally blow up, those of us who were prudent and saved capital wisely will be able to demand great returns when we are asked to recapitalize the insolvent.

 

One can only hope that the incompetence accellerates so the inevitable blow-up comes sooner, hastening the days of our lucre.

Mon, 06/14/2010 - 16:08 | 413218 Internet Tough Guy
Internet Tough Guy's picture

Asked? Did anyone ask you what rate of return you wanted to recapitalize the Squid? They will take your money at IRS-point.

Mon, 06/14/2010 - 16:08 | 413220 -Michelle-
-Michelle-'s picture

You're assuming we'll be asked.

Mon, 06/14/2010 - 16:11 | 413228 SteveNYC
SteveNYC's picture

I'm with you on that. I think I'll set a low benchmark, oh, say 20%, first lien, fully secured lending, with payments weekly.

This is a complete fucking joke, pension funds gambling, speculating wildly with supposed "pension" cash. No more bailouts, not this time, not ever.

Ben "Moral Hazard" Bernanke is going to feel the wrath of "unintended consequences". I just hope they rope that fucker Alan "The Put" Greenspan and all the other co-conspirators back in for one big jail-fest when it all goes down.

Mon, 06/14/2010 - 16:46 | 413319 darkpool2
darkpool2's picture

LOL.....not saying I disapprove of your financial rectitutude, but seriously, you expect to get some fat return later on for `bailing these sesspools out.  Your funny money wont buy much at that time, even if it is making 1000% pa !!!

 

 

 

Mon, 06/14/2010 - 16:04 | 413204 Clayton Bigsby
Clayton Bigsby's picture

holy. fuck.

Mon, 06/14/2010 - 16:20 | 413254 buzzsaw99
buzzsaw99's picture

+1

Mon, 06/14/2010 - 16:06 | 413211 WorldBeta
WorldBeta's picture

They expect an 8.5% return.  Discount at T-bonds/bills and they are 80%+ UNDERfunded, ie broke.

Mon, 06/14/2010 - 16:10 | 413226 Gordon Freeman
Gordon Freeman's picture

They be fuckin' broke, alright...

Mon, 06/14/2010 - 16:13 | 413239 Cursive
Cursive's picture

LOL.  Evel Knieval was closer at Snake Canyon then these guys are to being funded.

Mon, 06/14/2010 - 17:27 | 413394 Fred Hayek
Fred Hayek's picture

And he had a smoother landing that time in London with the buses than all the rest of us will have.

Mon, 06/14/2010 - 16:06 | 413212 SimpleSimon
SimpleSimon's picture

Ooops. Obama needs to raise that $50 billion another-stimulus request to cover for his home state.

Mon, 06/14/2010 - 16:08 | 413217 Yikes
Yikes's picture

All I feel is rage.

Mon, 06/14/2010 - 16:09 | 413223 Internet Tough Guy
Internet Tough Guy's picture

You are jack's sense of impotent fury.

Mon, 06/14/2010 - 20:14 | 413763 New_Meat
New_Meat's picture

g? I think you mis-typed for "p" - Ned

Mon, 06/14/2010 - 16:08 | 413219 Caviar Emptor
Caviar Emptor's picture

Pensions, municipalities and large state budgets: the blackest holes in the economy right now. The question is: will THEY be, somehow, NOT too big to fail? 

Mu guess is that the Administration, in consultation with Wall Street bosses, will not have the zeal to bail them out that they did for the banks in 2008-9. Yep, teachers, cops, firemen and hospital workers will be hung out to dry. My guess is they'll have to accept huge "adjustments" that will come in steps like empty promises: increased barriers and requirements, decreased compensation. 

Of course the cuts in services are coming. Big ones. Jails will have to disgorge some prisoners (they'll keep it quiet), law enforcement will get downsized, garbage will sit a bit longer, courts will have fewer workers and judges will be culled. And hospitals. They're already closing them at a fast pace in states like NY. Look for that to continue as well as fewer nurses, technicians and maintenance. 

 

Mon, 06/14/2010 - 16:38 | 413298 downwiththebanks
downwiththebanks's picture

Exactly right:

It's called theft.  Theft, by the corporations, of the people, using the biggest weapon capital has:  the law.

Same as it ever was.

Mon, 06/14/2010 - 16:11 | 413230 Cursive
Cursive's picture

You wanna see some pissed off people?  Get the members of AFT and NEA mad.  This is a hornet's nest. If this goes down in Illinois, every teacher in the country is going to know about.  There will be violence.

Mon, 06/14/2010 - 16:31 | 413283 Jean Valjean
Jean Valjean's picture

I'm with you on this.  Teachers, in general, believe their own bs more than any other profession.  Blankfein saying he's doing "God's work" pales in comparison with a teacher's feeling of self importance.

Mon, 06/14/2010 - 16:36 | 413291 mikla
mikla's picture

+1

Mon, 06/14/2010 - 16:40 | 413308 downwiththebanks
downwiththebanks's picture

Teachers teach.  Firefighters fight fires. 

And Blankfein rapes your mother.

That you equate them to one another says much more about you than them, Jean.

You should really change your pseudonym.

Mon, 06/14/2010 - 17:11 | 413364 Jean Valjean
Jean Valjean's picture

I didn't equate them.  I used them as a comparison in an attitude of self-importance which I will stand by "in general".  Perhaps you are a good and humble teacher or perhaps you are a teacher who rapes childrens minds.  I can't tell.

At least I didn't compare the gulf oil spill with 9-11.  Now that would have been asinine.

Mon, 06/14/2010 - 17:29 | 413395 downwiththebanks
downwiththebanks's picture

Your education system does exactly what it's supposed to do:  create good, disciplined, obedient capitalist workers.

And criminals, and drug users, and soldiers . . . because that's where the profit is.

Mon, 06/14/2010 - 17:47 | 413456 Jean Valjean
Jean Valjean's picture

Thanks, I can tell which kind of teacher you are now.

Mon, 06/14/2010 - 17:34 | 413406 Cursive
Cursive's picture

@Jean Valjean,

Well, earlier in this thread someone posted something to the effect that if you can read this, then you can thank a teacher.  Really?  When did teachers become the sole keepers of learning and wisdom?  How the hell did our Founding Fathers know anything before the Dept. of Education was created; before the teacher's unions were established?  Go on campus and spend some time with the Education majors.  Scary.  Very, very scary.   But not half a scary as the Education establishment.

Mon, 06/14/2010 - 17:45 | 413443 downwiththebanks
downwiththebanks's picture

... and then, when you're done, take a run around a Wall St. firm . . . doesn't even matter who:  Is it possible to encounter a higher volume of overprivileged, ignorant bigots anywhere on earth?

Mon, 06/14/2010 - 17:51 | 413466 Jean Valjean
Jean Valjean's picture

Volume, no, you're right.  Percentage?  Yes, a local school board meeting.

Tue, 06/15/2010 - 13:19 | 414940 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

A fine observation.  A very-fine observation.  (re: volume)

Mon, 06/14/2010 - 17:59 | 413489 Cursive
Cursive's picture

@downwiththebanks

Totally with you.  I want the send the banksters up river too.  Check out the link:

http://www.swarmusa.com/vb4/

Mon, 06/14/2010 - 18:03 | 413500 puckles
puckles's picture

Yes, practically anywhere in DC.

Tue, 06/15/2010 - 01:25 | 414124 Apostate
Apostate's picture

Hahahha, actually, Wall Street is stuffed to the gills with people who believe earnestly in the mission of the Department of Education. They gave you your brilliant president. And they market the bonds that keep you in crack cocaine. 

Wall Street is the only thing that keeps this piece of shit government afloat. It's a symbiotic relationship. 

Mon, 06/14/2010 - 17:46 | 413452 -Michelle-
-Michelle-'s picture

I started out as an education major.  When I realized the professors actually believed the swill they were teaching, I withdrew.

We're homeschooling.

Mon, 06/14/2010 - 21:49 | 413895 uraniuman
uraniuman's picture

I concur - 90% of them lean to the left - no sympathy here for those who would pollute young minds with socialist garbage.

Mon, 06/14/2010 - 22:09 | 413924 Renfield
Renfield's picture

Michelle

I wasted years in public so-called 'school'. Thank God for my parents' dedication to learning/education in its true sense. (Alas, not about finance though.) My parents were the best teachers I ever saw. I feel real sorrow for those many many children whose parents choose to trust (or of economic necessity or mental inability, must trust) schoolteachers.

Miss Cleo's crystal ball tells me:

a) Your kids might not be very grateful now or for awhile.

b) When they grow up they will bless you for your dedication to their future.

I hope more parents will follow your good example and if not homeschool, at least ensure that THEY are their kids' primary teachers.

Tue, 06/15/2010 - 12:51 | 414898 WaterWings
WaterWings's picture

LOL

Good for you. It's the way to go.

Mon, 06/14/2010 - 17:47 | 413455 DoChenRollingBearing
DoChenRollingBearing's picture

When I took Linear Algebra (sophomore level math after a year of Caculus), Education majors who wanted to teach math had to take that class.

They were the slowest students... 

OK Linear Algebra is abstract and hard, but it is perfectly OK for the state to require competency in that before unleashing future math teachers into the world.

I can only imagine Education majors who do NOT want to be math teachers...

Mon, 06/14/2010 - 18:10 | 413517 Edmon Plume
Edmon Plume's picture

They have "math for [insert name of non-science major here] majors" courses, that miraculously satisfy the math requirement.  May as well not require anything at all.  I've never seen a less rigorous curriculum with more fluffy bunny requirements than education and other liberal arts rubbish.

On the other hand, there are some excellent and bright teachers out there, but they tend to lose their appetite for teaching when they realize it's a lot of silly CYA paperwork, and they have to deal with irate parents who are upset that their precious do-no-wrong kiddo is being poorly raised by a teacher.

Therefore, I don't think it's all a problem with dumb teachers (though I've seen my share of them), I just think that the word is out that the intelligent need not apply lest they be bored forever, and be spending a lot of time raising kids instead of teaching them the three R's (which they don't seem to do anymore).

Mon, 06/14/2010 - 18:24 | 413546 velobabe
velobabe's picture

i am a pretty good example of incompetent educators.

i received a colorado professional K-12 with an endorsement in art.

skirted around, n e v e r  had to take one math class.

gotta love it†

Mon, 06/14/2010 - 19:00 | 413618 DoChenRollingBearing
DoChenRollingBearing's picture

velo, I meant that future teachers of MATH had to take Linear Algebra.

And THOSE Ed majors were the slow ones.

Tue, 06/15/2010 - 07:05 | 414279 Al Gorerhythm
Al Gorerhythm's picture

Good call on your self assessment, vb (having winced at your grammatical errors in your posts). 

Your mistakes are usually when you use contractions, or by miss-use of homonyms, such as: there for their or they're; your for you're; then for than; a lack of capitals when using proper nouns or at the start of sentences.

It is little wonder that (a) there, (b) their, (c) they're  (circle the correct answer) are problems with the teachers fund, when you consider that maths teachers teach their, there, they're (ditto) charges, that compounding interest payments, when calculated annually, add "value" to a savings account as they accrue.

The head of the maths department (whom I raised this (value) issue with), of a well respected school, wasn't aware of the declining purchasing power of each dollar, as the nominal figure (supply) grew. He believed that we were all getting richer!

He was well aware of supply and demand theory and how prices fluctuated as supply varied. However, he couldn't apply the same formula to the increasing supply of money. He couldn't account for where the new dollars in interest came from, either. He thought they came into existence as GDP grew!

(Un)believable (the mess we are in), no?!  

 

Tue, 06/15/2010 - 12:00 | 414729 velobabe
velobabe's picture

ok rhythm (that was my method), if you have only found 5 - 10 mistakes so far, i don't think you have read all my work.

 

i am pretty sure i wasn't put on earth for my brains†

 

Mon, 06/14/2010 - 19:49 | 413713 Hulk
Hulk's picture

DCRB, abstract alg is abstract, linear alg is well, linear!

I had my two teenage kids ask their algebra teachers a simple question (due to my suspecting that both these teachers were clueless) as follows:

A brick weighs 10lbs + half a brick.How much does a brick weigh?

Neither teacher could answer the question. Neither teacher should have been teaching algebra, they are ruining kids for life, as far as math is concerned...

Mon, 06/14/2010 - 21:54 | 413898 John_Coltrane
John_Coltrane's picture

You mean:  B = 1/2*B + 10 or B=20? (I'm not a teacher)

The real problem in life is that everyone likes a 'free lunch".  Free is always the favored price.  So, pensions set goals of 8.5% returns so that their pensioners don't have to contribute the appropiate amount of real present earnings or save for their future expenses when they retire.  Thus, they turn to gambling vs saving.  Might as well buy lottery tickets which I've always considered a great way to  tax stupidity without having to administer a test. 

Mon, 06/14/2010 - 23:00 | 413991 Hulk
Hulk's picture

Thats it, it is that simple...

Tue, 06/15/2010 - 01:22 | 414121 WaterWings
WaterWings's picture

Free is always the favored price.

Which is why I can't understand Katie Couric.

Mon, 06/14/2010 - 20:18 | 413773 New_Meat
New_Meat's picture

matrix requires calc???--gotta be a pretty skosh calc thang, like a year to get over the idea of "slope" and "area under the curve"?

- Ned

Mon, 06/14/2010 - 23:11 | 414004 DoChenRollingBearing
DoChenRollingBearing's picture

Hi Ned, and hi to you too big guy Hulk!

Ned, my class was more than matrices.  Calculus 102 (whatever) was prereqisite because we did things like Inner Product Spaces, Orthonormal Sets and other very ugly things that required knowledge of integration.

Hulk!  Good to see you again.  LOL your kids asking the algebra teacher a question that s/he should have been able to solve "by inspection" (not having to actually do the algebra).  I don't know if that really is funny though...  Never made it to Abstract Algebra, although I did inspect the textbook...  I would not have survived Abstract Algebra.  I used the term "abstarct" above because Linear Algebra is more abstract than Calculus ever was for me.

Mon, 06/14/2010 - 19:12 | 413644 Kali
Kali's picture

My great grandmother taught me to read at 2 (Dr Seuss).  I knew basic math by the time I entered kindie garten. Grew up reading my mother and father's med books.  I was so bored in school it was disgusting.  I got in trouble in English class in high school cuz I was so bored with prepositions I was reading Steppenwolf.  Not paying attention you see.

Mon, 06/14/2010 - 19:20 | 413662 velobabe
velobabe's picture

ditto:    I got in trouble in English class in high school.

sounds like you got all the fairy brain dust, no fair.

man i had a blast, cheerleader here†

Mon, 06/14/2010 - 19:27 | 413675 Kali
Kali's picture

NO, I was lucky enough to have relatives who cared about my education, I don't think Im more "naturally" intelligent or gifted than anyone else.  School has nothing to do with that, even back in the stone ages when I went.  : ) 

PS- us American kids in the family were considered the dummies.  My cousins in SA knew 3 languages and college level mathmatics (by US standards) by the time they graduated HS.

Mon, 06/14/2010 - 20:25 | 413785 New_Meat
New_Meat's picture

Kali, I've been reading your posts.  I used to do honest work as a control engineer, now off with other ventures.  Tougher to build business to find work for the kids and all of us.  I'm responding to the "dummies" comment.  Not my experience at all--US kids are almost good, except for my bad (and long-term) experience with bringing Ivy-League "engineers" into the real world.

- Ned

Mon, 06/14/2010 - 20:49 | 413819 velobabe
velobabe's picture

shh!

f e m a l e s     a r e    t a k i n g

O V E R

silently†

Mon, 06/14/2010 - 19:14 | 413650 Geoff-UK
Geoff-UK's picture

If you can read this, thank a teacher by bailing out her pension fund via your tax payment.

Mon, 06/14/2010 - 19:42 | 413702 Cursive
Cursive's picture

Maybe it's that I've had an evening drink, but I did laugh out loud when I read that.  Just for giggles, what percentage of U.S. education majors would know to pronounce "Geoff" as "Jeff" and "gaol" as "jail"?

Mon, 06/14/2010 - 20:43 | 413810 StychoKiller
StychoKiller's picture

"If Congress can employ money indefinitely to the general welfare, and are
the sole and supreme judges of the general welfare, they may take the care of
religion into their own hands; they may appoint teachers in every State, county
and parish and pay them out of their public treasury; they may take into their
own hands
the education of children, establishing in like manner schools throughout
the Union;
they may assume the provision of the poor; they may undertake the
regulation of all roads other than post-roads; in short, every thing, from the
highest object of state legislation down to the most minute object of police,
would be thrown under the power of Congress... Were the power of Congress to be
established in the latitude contended for, it would subvert the very foundations,
and transmute the very nature of the limited Government established by the
people of America." - James Madison

 

We were warned.  Somehow, the stupid/greedy were placed in positions of Power.  Mistakes were made, etc.

Tue, 06/15/2010 - 09:06 | 414377 hedgeless_horseman
hedgeless_horseman's picture

You see the problem.  Can you predict the solution?

Mon, 06/14/2010 - 21:49 | 413894 stickyfingers
stickyfingers's picture

Cursive,

Sorry, that was sarcasm. I thought on ZH I wouldn't have to be obvious.

Tue, 06/15/2010 - 03:17 | 414175 BumpSkool
BumpSkool's picture

... I know which one will kill more people ... 

Mon, 06/14/2010 - 17:30 | 413400 Fred Hayek
Fred Hayek's picture

+1,000,000

And the flip side of it is that they're simultaneously the most focused on their compensation. 

Mon, 06/14/2010 - 17:47 | 413454 downwiththebanks
downwiththebanks's picture

As 'focused' as baby rapers like Blankfein?

Mon, 06/14/2010 - 18:10 | 413518 Fred Hayek
Fred Hayek's picture

Ah, an exception to every rule.

Mon, 06/14/2010 - 18:32 | 413566 downwiththebanks
downwiththebanks's picture

Yeah - he's unique on Wall St.  Sure.

Mon, 06/14/2010 - 21:59 | 413910 John_Coltrane
John_Coltrane's picture

Hey, Blankfein is a hard nosed trader who grew up in the slums.  He never pretended to be anything else.  Trading is all about taking other people's capital-its a zero sum game. 

Mon, 06/14/2010 - 16:42 | 413310 DosZap
DosZap's picture

Cursive,

This is in Illinois.

NO WAY the Bamster allows this to go down,no way.

He's already blaming the GOP for Dr's Medicare shortfalls.

Sometimes, I cannot believe how stupid the sheeple are, I mean come on.

Mon, 06/14/2010 - 17:21 | 413386 Cursive
Cursive's picture

Bwhahaha!  I remember people (like Leo the solar equity pimp) telling me no way the June NFP report wasn't going to singe the hair off my gonads because Obama wouldn't let that happen.  You can fool all of the people some of the time and some of the people all othe time, but you can't fool all of the people all of the time.  And again, teachers are some badass muther######s.  This will be frightening to watch.  You are going to see people who never worried about "the Market" realize that they have no retirement funds.  Hell hath no fury like a sheeple scorned.

Mon, 06/14/2010 - 20:27 | 413790 New_Meat
New_Meat's picture

fool all of the people ... Lincoln

Mon, 06/14/2010 - 17:40 | 413369 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Asking for pensions and health care is about to be self serving.  When the SHTF, crum snatchers they will be.  We will not have justice until we free ourselves from the monie itself.  This is why the Tea Party is stalling (Sarah Palin?).  People's interests seem self serving; they may not be, but they appear to be.  I agree we do not want more taxes, but why do we not want more taxes....Not because we need more money, but because the tax system is unconstitutional in the first place.  Do Tea Partyers want to end the Federal Income tax?  Do they know why?  I understand some do, but is that what the party is based on?  Is their mandate-'End the Fed because the Federal Income Tax is unconstitutional?'  I think not; at least, that is not what is getting across.  What is getting across is 'I want what is mine'.  And that is fair!  But life is not fair.  Not until we make it fair.  And the way we make it fair is by instituting a sound monie policy.

The party should be based on the fact that the IRS and Fed are running an illegal and unconstitutional racket.  If the Tea Party used this as their guillotine, you would see change.  Unfortunately the Tea Party appears to be self serving; they appear to want money, or not have to give more of their monie to the government.  But it is that monie that is unconstitutional in the first place.  Thats like deserving a unicorn.  I will say again, I know it is not this way for many of its members, many do understand that the system is a false paradgm, I am merely analyzing the organization's manifesto, as I do not hear the members speaking truth to power  righteously at this level.  End the Fed, yes.  But no new taxes?  NO FEDERAL TAXES PERIOD!  Let me put it this way:  The feelings you are having is that the system doesn't work because it never worked.  We need a new system, plain and simple.

Mon, 06/14/2010 - 17:55 | 413476 DoChenRollingBearing
DoChenRollingBearing's picture

I'm with you all the way Mr Lennon re Federal Income Taxes.  For many reasons, privacy, unconstitutional, others.

Tea Party would get a lot stronger support from the wealthy (maybe not the MEGA-wealthy though) if they push banning the Fed and the IRS.

Ain't gonna happen though.  Not until several million of us get MORE PISSED OFF!

Oh, and don't bailout the Illinois TRS.  They were adult participants in screwing themselves.  Besides, I don't like public sector unions anyway.

Mon, 06/14/2010 - 18:12 | 413524 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Unfortunately I agree (if there was a need for bailouts, it should have been for the people instead of the banks), no bailouts for nobody. All adults here, except for the Fed- they sit at the kids table and we should treat them as such!

Mon, 06/14/2010 - 18:42 | 413584 JB
JB's picture

the Tea Party was hijacked almost from its onset...

Mon, 06/14/2010 - 19:54 | 413719 DosZap
DosZap's picture

JB,

By who?.

You think the GOP?.Evidently you haven't been following the winners in the primaries.

Top GOP front runners,have been getting their ass handed to them.(guess who by?).

 

Mon, 06/14/2010 - 20:35 | 413801 New_Meat
New_Meat's picture

negats

Mon, 06/14/2010 - 19:24 | 413672 Geoff-UK
Geoff-UK's picture

Man do I hate to bear bad news--but the 16th amendment of the U.S. Constutition makes income taxes, de facto, Constitutional.  The 16th is, of course, the second most unfortunate amendment (after the 19th).

 

Income tax is immoral, but it's definitely Constitutional.

Mon, 06/14/2010 - 20:47 | 413817 StychoKiller
StychoKiller's picture

You should do some research on HOW the 16th Amendment was passed (hint:  Illegally!)

Mon, 06/14/2010 - 20:40 | 413808 New_Meat
New_Meat's picture

I'm with your Hendrix side, nay Lennon

I agree we do not want more taxes, but why do we not want more taxes....

-- because they are pissing the money away. (in the small picture).  And they are pissing THE MONEY AWAY in the big picture.

Don'tcha know.

So even the Keynesian "justification" is bogus.

- Ned

 

Mon, 06/14/2010 - 17:52 | 413469 Thoreau
Thoreau's picture

There will be bailouts

Coming to a theatre near you.

Tue, 06/15/2010 - 03:34 | 414187 Sudden Debt
Sudden Debt's picture

Sequels are never as good as the original :)

Mon, 06/14/2010 - 16:12 | 413233 -Michelle-
-Michelle-'s picture

Here comes the "Retirement USA Initiative!" 

http://moneynews.com/StreetTalk/unions-401k-pensions/2009/03/17/id/328862

And I wondered why Andy Stern left SEIU and was appointed to Obama's National Commission on Fiscal Responsibility and Reform...

Mon, 06/14/2010 - 16:38 | 413295 DosZap
DosZap's picture

Michelle,

This is exactly why anyone here, with a brain, has closed out of their 401k's, and will be closing IRA's, if they haven't already....take the tax hit, and invest the rest in PM's........Agri,Commodities.

The US Gv't, and for damned sure SEIU, is not going to get one more dime from MY lifetime savings....anyone stupid enough to not see what's coming, deserves what they get..........NOTHING.

 

Mon, 06/14/2010 - 17:57 | 413482 DoChenRollingBearing
DoChenRollingBearing's picture

Closed mine in 2008, paid the tax and penalties, but now the money is mine.

Some of that money is nice and safe invested in gold.

+ 100 DosZap

Mon, 06/14/2010 - 18:49 | 413599 Edmon Plume
Edmon Plume's picture

Closed mine out in 2010 :) except for a couple of small ones that aren't worth the paperwork.

I expect that paying the piper now will be much cheaper than paying the piper when I withdraw it.  By that time, taxes will be much higher than the penalties I'm paying this year, and now I have liquid assets at my disposal.

Mon, 06/14/2010 - 19:14 | 413649 Kali
Kali's picture

Closed mine 2007, PMs baby.

Mon, 06/14/2010 - 22:19 | 413939 ColonelCooper
ColonelCooper's picture

Don't know how SEIU works, but I sure as Hell can't TOUCH my money in either my LIUNA or my IUOE pensions.  If I could, the money would be out of there so fast you'd hear a thunderclap and smell ozone.

Mon, 06/14/2010 - 19:55 | 413723 DosZap
DosZap's picture

DoChen,
Knew you were a smart cookie...........hehehehehehe

Mon, 06/14/2010 - 22:53 | 413979 Village Idiot
Village Idiot's picture

I thought you said that gold fell off a boat? In deep water.

Mon, 06/14/2010 - 23:21 | 414017 DoChenRollingBearing
DoChenRollingBearing's picture

No.  Not yet.  I said to posters who claimed that it happened to themselves (they lost their gold in a boating accident and similar).

What I said is that I will have to be VERY CAREFUL next time I take my gold and guns out boating with me.  Very Careful!

Mon, 06/14/2010 - 18:10 | 413520 Caviar Emptor
Caviar Emptor's picture

Here here. 401k's will become widowmakers as the rules for redemption get tougher, the tax liability increases and the investment opportunities narrow. Also beware defaulting plans once the redemption avalanche starts. There's more than a passing chance that the government will impose a redemption freeze if too many people close out accounts. Good luck after that. 

Mon, 06/14/2010 - 19:06 | 413631 DoChenRollingBearing
DoChenRollingBearing's picture

+ 100   ^-- Edmon and Caviar.

When I closed my IRA, I did not even think that taxes would be going up.

This is the year.  Maybe we (all of you actually) can bring the system down by selling out the 401(k)s and IRAs.  That would be supreme irony, markets crater because people want their pension money...

Mon, 06/14/2010 - 20:04 | 413743 DosZap
DosZap's picture

DoChen,

You got it bro.............the window is already half shut, and the Bush tax cuts are gone Jan1st.

If you have a half brain, get it while you can..........and MOVE it into something tangible.

Hide and watch, the Euro, is going to kick the shit out of the dollar....News of it's death, has been greatly exagerated...............dollar's,need to be dumped.............

QE to Infinity, is here, until, there are NO MORE suck, er' buyers.......next 5-1 Trillion bailout, will be it.................33 states are DOA now, they just don't know it.

 

Mon, 06/14/2010 - 16:13 | 413234 ZackAttack
ZackAttack's picture

Everyone be sure to bookmark this link when Illinois comes calling for the Feds to bail them out. 

Not going to happen.

Mon, 06/14/2010 - 16:13 | 413237 Chemba
Chemba's picture

This is no big deal.  When it blows up, the Socialist Obama will simply provide a rescue so as to "save the pensions of hard working Illinois teachers", bringing the liabilities onto the Federal ledger.  Covering those liabilities is no problem as Banana Ben can simply type [$100,000,000,000] [Enter] one more time.  Not a problem, guys.

Mon, 06/14/2010 - 16:18 | 413250 Magua
Magua's picture

Exactly - they are gamblin with house money. There are two words you need to know, "Chicago" and "teachers", which let's you know O will bail them out in a heartbeat. Dig deep taxpayers..

Mon, 06/14/2010 - 17:47 | 413453 IBelieveInMagic
IBelieveInMagic's picture

What taxpayer? Over 50% pay no taxes and the rest, negligible amounts. No one is asked to pay for this -- as long as the rest of the world continues to accept USD in exchange for real stuff, we can get away with it... Enjoy till then! Free lunch defined...

Mon, 06/14/2010 - 17:59 | 413490 DoChenRollingBearing
DoChenRollingBearing's picture

That's yet another problem with the Income Tax.  Once less than 50% have to pay, hey why not raise taxes on the rich?  No problemo!

Free lunch indeed.

Maybe I should go 50% into gold and have most of the rest of my money OUTSIDE the USA.

Mon, 06/14/2010 - 20:08 | 413749 DosZap
DosZap's picture

DoChen,

Sounds like a plan,(one I have been contemplating) except, out of here, and into what?.

We have had the good fortune to get this rally in the USD Index, it's not going to last much longer..........

Can't be paper,(anyones) all of it is going to be butt wipe, ALL.

 

Mon, 06/14/2010 - 16:27 | 413267 tizzleofdoom
tizzleofdoom's picture

that is a lot of zeros. 

Mon, 06/14/2010 - 16:44 | 413315 Implicit simplicit
Implicit simplicit's picture

Freddie and fannie for RE nationalised debt with SallieMae soon to join the dysfunctional  debt family for school loans and  teachers' pensions.

Mon, 06/14/2010 - 16:44 | 413316 downwiththebanks
downwiththebanks's picture

BS:  Obama is a socialist when it comes to giving money to failed capitalists and zombie banks.

To the people - the garbage collectors and bus drivers - Barry Sotoero offers only his middle finger.

That's why he's a capitalist.

Mon, 06/14/2010 - 17:13 | 413367 faustian bargain
faustian bargain's picture

incorrect. stop redefining capitalism to suit your ideology. you're looking for lots of 'junks'.

Mon, 06/14/2010 - 17:35 | 413403 downwiththebanks
downwiththebanks's picture

You're the one reducing capitalism to make-believe.

I care about how money is 'made', how power is attained, how stuff is produced.  And, importantly, who accumulates it.

That's what makes capitalism capitalism.

Mon, 06/14/2010 - 17:48 | 413458 faustian bargain
faustian bargain's picture

The use of force and fraud are not part of capitalism. An economy that depends on force and fraud to attain its power, produce stuff, and 'make money', is fascist or socialist. But you know this.

You are looking at the history of the US economy and labeling it 'capitalism'. You are doing your own mind a disservice, if you believe this. And to continue to misconstrue capitalism in discussion is an attempt at deception.

Here's a suggestion: just describe what you're critiquing without using the word 'capitalism' and I'm sure you'll get a lot more people agreeing with you. You're not going to lever people into believing that capitalism is the Big Bad just because you're misapplying the word.

Mon, 06/14/2010 - 18:01 | 413495 Thoreau
Thoreau's picture

"An economy that depends on force and fraud to attain its power, produce stuff, and 'make money', is fascist or socialist."

Right. So America/US has been capitalist-based since... never. Thanks for clarifying the obvious.

Mon, 06/14/2010 - 18:11 | 413521 faustian bargain
faustian bargain's picture

One would think it would be obvious, eh.

Mon, 06/14/2010 - 18:27 | 413557 puckles
puckles's picture

Incorrect.  Washington's Farewell Address specifically counseled against any immoral activity, specifically with respect to international commerce and international relations in general.  It is a classic isolationist piece, and appeals to the common sense of the people to avoid foreign entanglements, essentially, because that might ruin their free competition, by obligating the State to assist other nations in direct contravention of the State's own natural interests.  This classical liberal philosophy in no way recommends either force or fraud--indeed, quite the opposite.  America was supposed to be the enlightened City on a Hill, the Columbian beacon to the rest of the sullied world...How far we have fallen from that ideal of exceptionalism...

Tue, 06/15/2010 - 09:14 | 414389 hedgeless_horseman
hedgeless_horseman's picture

Exceptionalism is so unfair, undemocratic. 

[sarcasm_off]

Mon, 06/14/2010 - 18:08 | 413512 downwiththebanks
downwiththebanks's picture

You call 'misapplication' the examination of "capital" in the real world.  That's fine.  But I know, and so do you, that "Capital" is the engine that drives our society.  Understanding how it drives, rather than pretending it doesn't, seems sort of important. 

So you can hypothesize about utopias all you want:  I'll stick to looking at how Potosi came to be or how Liverpool was built.

Mon, 06/14/2010 - 18:13 | 413527 faustian bargain
faustian bargain's picture

The engine that currently drives our society is credit, not capital. And the only reason that has happened is fraud on a massive scale.

Mon, 06/14/2010 - 19:11 | 413640 downwiththebanks
downwiththebanks's picture

The credit doesn't exist for its own sake.  The credit - i.e., debt - is required to keep buying the tanks and cocaine, sneakers with lights in them, and iPads.  

It exists to buy crap vomited out by an economy that has overproduced itself to stagnation.

Furthermore, the iPad bought with a credit card still requires coltan, no matter how its bought.  And getting coltan requires the murder and rape of Congolese peasants.

Mon, 06/14/2010 - 23:16 | 414011 Circumspice
Circumspice's picture

So do computers. You're using one. Sure, it's probably not Congolese coltan, but hell, by buying one you're contributing to international demand in the same way. Is this a smear of your ideology? Does it, in fact, smear all non-Luddite ideologies, as they all demand computers and mined products, generally?

Tue, 06/15/2010 - 04:39 | 414223 Insert witty title
Insert witty title's picture

Incorrect, production drives the economy. Capital is surplus production that originates in what you might know as savings. Savings can take the form of wheat in a barn, or gold coins, or fiat currency, but its easier to loan out as some form of money. The people who generate surplus productivity take a risk when they give it to someone else, they are compensated for this risk via interest. Interest, or the price of capital also regulates its use through time as the supply of excess production ebbs and flows, and the demand for capital ebbs and flows.

 

So to try and educate you a little bit, although i don't have nearly the patience with you as faustian has, production drives the economy. Not capital.

 

I recommend you read Say, then get stuck into the Austrian school. Even if you are philosophically oppossed you have a responsibility to learn the other side of the argument.

Mon, 06/14/2010 - 18:43 | 413585 kingwallop
kingwallop's picture

Real Capitalism was over the minute the Central Bank went in.

Mon, 06/14/2010 - 19:07 | 413632 downwiththebanks
downwiththebanks's picture

So the days of chattel slavery were idyllic?

Mon, 06/14/2010 - 20:11 | 413755 kingwallop
kingwallop's picture

What does that have to do with anything? You prefer the economic slavery of today? Every world power has had, and still have slaves. 

Mon, 06/14/2010 - 20:11 | 413756 DosZap
DosZap's picture

downwith,

 

You mean their gone?,,,,,,,,,,,

Tue, 06/15/2010 - 02:24 | 414148 John_Coltrane
John_Coltrane's picture

Let me repete this simple notion one more time:  capitalism is private control of the means of  production-nothing more, nothing less.  Why does this work better than any other system?  Simple, it depends on independant participants choosing how to deploy their labor and other capital.  How does every other system work?  Central planning by "experts".  But there are no real "experts" only those who seek power and control over others.  In these totalitarian systems the end justifies the means, which is state coercion.  For a libertarian capitalist the means determine the end!  Think hard about this fundamental difference.  In planned societies experts attempt to fix prices and wages via subsidies, tax breaks etc. but only free markets (independent participanats working in their own self-interest) can determine the "price" of anything from a gallon of milk, to the cost of a medical procedure.  The governments only legitimate role:  enforcement of the rule of law to prevent abuse by the various participants.  If you seek to understand anything please read "the road to serfdom" by F. Hayak so you can make intelligent contributions to this forum. 

Mon, 06/14/2010 - 18:17 | 413536 Caviar Emptor
Caviar Emptor's picture

Don't you see? Obama and his bosses on Wall Street won't find it in their hearts to bail out teachers or any retirees like they did with the banks in 08-09. Somehow they'll enforce a big haircut and extend redemption times. They'll also change the rules to restrict payments. 

This will be a big prelude to similar restrictions and changes to social security, medicare and other retirement benefits. All private 401Ks and 403Bs will follow suit so they don't go broke.

Mon, 06/14/2010 - 18:25 | 413550 QQQBall
QQQBall's picture

Da gots to do it for da' kids.  Chemba nailed it - for hardworking teachers who are building a future by teaching our children.

 

 

Mon, 06/14/2010 - 20:13 | 413761 DosZap
DosZap's picture

Caviar,

I disagree, why?...their Unions.

Mon, 06/14/2010 - 22:01 | 413915 Caviar Emptor
Caviar Emptor's picture

Cause of the politics. Big money boyz don't wana use money for teachers that they can use for banks

Tue, 06/15/2010 - 09:47 | 414458 The Merchant of...
The Merchant of Venice's picture

Illinois taxpayers are the first ones on the hook.  Illinois has an income tax rate that is a flat 3%.  About 25% of pols support raising the rate.  The people overwhelmingly oppose raising it.  The folks know they're paying a lot more than that in excise taxes, property taxes, sales taxes, and fees for everything.

The State has ways to raise funds, but the people are never going to endorse saving a system that will pay almost 1 billion dollars in retirement pension to just 100 educational bureaucrats.  They will demand haircuts.

Mon, 06/14/2010 - 16:21 | 413255 Careless Whisper
Careless Whisper's picture

The fact that TRS trustees and investment advisors approved the use of OTC derivatives isn’t, in itself, alarming.

Oh really.

 

Mon, 06/14/2010 - 16:22 | 413259 buzzsaw99
buzzsaw99's picture

Sure, wtf, take your last $30B and put it all on 17 black.

Do NOT follow this link or you will be banned from the site!