This page has been archived and commenting is disabled.
TRS Responds to "Death Spiral" Comments
In response to my last comment on whether pensions are the next AIG,
Dave Urbanek, Public Information Officer at the Teachers’ Retirement
System of the State of Illinois (TRS), sent me this message:
Please remove your post of Tyler Durden’s inaccurate analysis of the Illinois Teachers’ Retirement System. It is not excellent. It is wrong.
TRS is not in a death spiral. We’ll still be operating and paying pensions for years to come.
We could potentially
sell $3 billion in assets if the Illinois General Assembly does not
come up with its annual contribution to TRS. The state owes us $2.35
billion. Two other state pension systems are also selling assets until
the state makes its payments to them. That is the only reason we are
selling assets.
We are not selling assets
because we are on the risky side of any investments, as Mr. Durden
claims. Here are the facts: We could potentially sell $3 billion in
assets. Last year our investment income totaled $4.6 billion – a 13
percent return. We did not lose money. We have $33 billion in total
assets. We will pay $4.1 billion in pensions and benefits during the
current fiscal year. Do the math. We are not in a death spiral.
What
Mr. Durden doesn’t say – and won’t because it ruins his story – is
that TRS sold $1.3 billion in assets last year for the same reason: The
General Assembly hadn’t yet come up with its annual contribution. The
state ultimately sold bonds and made the payment, and we not only got
our money back from the assets we sold but did not have to sell any
further assets.
Repeating Mr. Durden’s incorrect rants on your blog is highly irresponsible.
I
thank Mr. Urbanek for his response and I am glad TRS is not in a
"death spiral". I never claimed they were, just that they're forced to
liquidate stocks at the worst possible time and are taking riskier bets
to cover their shortfall. In particular, did TRS sell billions of
derivatives (mostly CDS) to bet on a rising market/ collapsing spreads
(aka the AIG trade) and are they still betting on a drop in Treasuries (rise in yields)?
What
remains to be seen is how TRS and other mature public pension plans
suffering from ever widening deficits will respond to long-term
structural issues plaguing the pension industry. Tough choices lie
ahead, and there are no simple solutions to the pension crisis.
I will update this comment if further information is provided by TRS. You can also click here to get more information on TRS's investments and click here to access their publications, including their latest comprehensive annual report.
»
- advertisements -
Technically, all he said was that they could liquidate assets to make payments. Um, uh ... yeah. That *is* in fact how it works.
Methinks he dost protesteth too much. Given the concern that we're flirting with the "eating the seed corn" problem, which admittedly can continue for an extended period (but is irreversible), I was anxiously awaiting his assertion that his funds are well capitalized, and/or had favorable market positions. He said neither.
Goldman MD Bagdad Rep Office
Assuming of course you can actually find someone to BUY all those 'assets', no doubt mostly real estate at wildly inflated bubble mark ups for their 'balance sheet'!
I know someone who will buy that stuff, no questions asked.
Ahhh Baghdad Bob , whatever happened to that chap? Is he working for Geithner?
"Everthing eees Okie Dokie and super cool, O.K. ?
Next question ?
Take a magic marker and draw a beard and you'll see the resemblance. Its all about fucking helicopters.
Exactly. Baghdad Bob changed his name to the much more American-sounding "Ben Bernanke" because he has the initials "B.B." monogrammed into everything and didn't want to have to change it.
"Ben Bernanke" because he has the initials "B.B."
Best laugh of my day, thank you ML.
+100 the photo is almost as pleasing as the team-assist-comedy...
B.B. (take your pick) is the evolution of Machiavelli from author to infomercial.
ha
its not proper asnwer to
...Please remove your post of Tyler Durden’s inaccurate analysis of the Illinois Teachers’ Retirement System. It is not excellent. It is wrong.
..
this is better .. #UCK YOU...
( see http://en.wikipedia.org/wiki/First_Amendment_to_the_United_States_Consti...
)
alex
On the 2007Q4 conference callAIG said the odds of the (ultimate) outcome were impossible.
Iceberg Bitchez!!!!
Hank "OSS" Greenberg was on a speaker phone while loading the private jet with cash, gold and bearer bonds from the AIG vault...
i'll take a hinden burger
with spiral death fries ..
Would you like a McClellan shake with that?
VERY nice. Ketchup?
Can we call it a deValue-Meal?
You want that in SUPERSIZE?
Have it your way
+1
Death spiral! Death spiral! Death spiral!
http://www.stltoday.com/business/columns/david-nicklaus/article_57d9c73c...
Even IF he's right, with these kind of anual payments versus assets, he can only dream nothing bad happens to the economy anymore.
I say it's a paper plane that caught fire and is now on a death spiral heading into a pool of gasoline!
First step to recovery, is to acknowledge the problem!
Because tools like this are involved with the pension system, guarantees the pensions are doomed.
The tool says, "We’ll still be operating and paying pensions for years to come."
What, so, 5-15 more years? - Awsome - good Job!
2010, 2011 "Years". Yup.
"some years"=2 or more, maybe
You mean Death Spiral, bitchez!
We Illinois residents have become accustomed to the insane lies emanating from Springfield aparatchiks like this clown. Tyler must be on to the truth or TRS never would have responded.
It seems relatively worse in Illinois since the average IQ is -3. (Thank heavens for NW or it would be even lower)
Master,
You have stated the truth. Illinois is a state full of gangsters who control the voters and virtually all of the politics. The Chicago style has made it to the White House and now this has become the accepted way of doing business in government. Lies, Damn Lies and Political Bullshit! The favorite technique is to protest loudly and indignantly while telling bold-faced lies to the voters!
This is the accepted way for a long time now, long before BarryO and the Chicago mob
+ 1 blago
Deeeeeeeeattttttthhhhhhh Spiraaaaaaaaaal!
http://2.bp.blogspot.com/_g20YFh58R6k/R0R2M2vk_XI/AAAAAAAAADs/J2lhRV2NpV...
UZUMAKI
http://williambanzai7.blogspot.com/2010/08/eco-uzumaki.html
Uzumaki Über Alles!
william... Can you fit Lloyd B. God's GS bald cue ball into that death spiral?