econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 01 October 2016

The Dallas Pension System Embraces Risk With Alternative Assets

from Elliott Wave International

The alarm over U.S. public pension shortfalls grows louder, which brings to mind this prescient comment from Robert Prechter's 2002 book, Conquer the Crash:

If you have a pension, you are almost surely dependent upon [securitized loans]. ... In a major economic downturn, this credit structure will implode.

*********

The alarm over U.S. public pension shortfalls grows louder, which brings to mind this prescient comment from Robert Prechter's 2002 book, Conquer the Crash:

And that's exactly what happened during the 2007-2009 "mortgage-meltdown." Large banks had taken out home loans made by retail banks and mortgage brokers and resold them to others. As we know, too many of those loans were bad, and the result was the worst financial crisis since the Great Depression.

Many public pension funds have yet to recover, even after a prolonged stock market uptrend.

Our July Elliott Wave Financial Forecast said:

Many pension fund assets are far more precariously positioned today than they were before the 2007-2009 bear market. Losses are already mounting.

The publication mentions that the funding gap for public pensions in 2012 was $1.83 trillion. Today, it's an astounding $3.4 trillion, almost twice as large.

A big part of the public pension problem is low yields.

The September Financial Forecast elaborates on how one pension system has ramped up risk to compensate:

The Dallas pension system now has more than half of its assets in alternate investments such as homes in Hawaii, a Napa Valley vineyard, an apartment tower in Dallas and a stake in the American Idol production company. In 2010, Money Management Letter cited the Dallas plan as "one of the best-diversified funds in the U.S." Six years later, Idol is off the air and the Dallas pension system is the prime exemplar of the danger of diversification in search of higher returns.

Less than a month after the September Financial Forecast published, we learn that financial fear is running rampant among Dallas pensioners.

On Sept. 27, Bloomberg showed this chart and said:

Dallas's police and firefighters are quitting in droves, wagering that financial-market losses are about to render their promised pensions too good to be true.

With the city considering benefit cuts to help close a retirement-fund shortfall that grew by $1.2 billion last year, more than 200 workers have decided to retire or leave, about double the normal rate. ...

The public-safety system has just 45 percent of the assets it needs to cover benefits, down from 64 percent at the end of 2014 and half what it was a decade ago.

Other public pension funds are also in trouble, including the nation's largest.

The California Public Employees' Retirement System (Calpers) returned only 0.6% on its investments through the year ended June 30. It was the worst performance since the bear market ended in 2009. This is far below the 7½% that Calpers needs to meet its existing obligations.

One can only imagine the pension fund scenario when financial markets go into another full retreat.

This valuable free resource includes 8 lessons on topics critical to your financial survival, from Bob Prechter's New York Times best-selling book. You'll learn what to do with your pension plan, what to do if you run a business, how to handle calling in loans, paying off debt and so much more. Learn more and get your free 8 lessons here.


Get Your 8-Lesson "Conquer the Crash" Collection Now

This valuable free resource includes 8 lessons on topics critical to your financial survival, from Bob Prechter's New York Times best-selling book. You'll learn what to do with your pension plan, what to do if you run a business, how to handle calling in loans, paying off debt and so much more.

Download Your 8 FREE Lessons Now.

This article was syndicated by Elliott Wave International and was originally published under the headline Why Nervous Pensioners Are Running for the Exit.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



You can also comment using Facebook directly using he comment block below.





Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Proud to Be a Nihilist: Bill Mitchell on Econometrics and Numerical Prediction
Fixing Obamacare - Why It Won’t Be Easy
News Blog
Why Your Phone Battery Gets Worse With Time
25 November 2016: ECRI's WLI Growth Index Improves
November 2016 BLS Jobs Growth Continues To Be OK, Just Not Great
Rail Week Ending 26 November 2016: Another Positive Week
It Will Take More Than A Wall To Solve Border Crime
Infographic Of The Day: How The Power Grid Actually Works
Early Headlines: Asia Stocks Down, Oil Eases, More Trump Noms, May Rebuked At Polls, Italy's 5 Star Movmt, Assad's Treachery, India's Currency Mess, Canada's Housing Bubble Popping? And More
30 Years Of American - German Trade Relations
How To Measure Audience Engagement Online
Chinese Smartphones On The Rise
Why Journalistic 'Balance' Is Failing The Public
75,000 Children In Nigeria At Risk Of Starving To Death
What We Read Today 01 December 2016
Investing Blog
Anticipating The Trend Change Makes For The Lowest Risk
It's Early Winter - Watch Out For Thin Ice
Opinion Blog
What Would It Take For Inflation To Surge - Or Even Just Emerge?
How Can China's Renminbi Deal With The Rising Dollar Risk?
Precious Metals Blog
Silver Prices Rebounded Today: Where They Are Headed
Live Markets
02Dec2016 Market Close: WTI Crude Climbed Back Up To Previous 51 Handle, US Dollar Index Trading At The100 Level, Oil Rig Count At 10-Month High
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government



Crowdfunding ....






























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved