Monday, July 16, 2012

Calpocalypse Now

CalPERS earned 1% on its investments in the fiscal year ended June 30, 2012.

1%, as you may know, is considerably less than the 7.75% they promised and for which Encinitas taxpayers are legally liable.

But there's no problem as long as we keep making the minimum payments, right, Jerome?

22 comments:

  1. Employer contribution rates that use CalPERS 2011-12 fiscal year investment performance will be calculated based on audited figures and will be reflected in contribution levels for the State of California in FY 2013-14 and for contracting cities, counties and special districts in FY 2014-15.

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  2. Perhaps we can rename Encinitas to "Stockston"

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  3. The city, county, state and feds are bankrupt. Get your silver and gold while you can. 1,2,5 years from now it will be too late.
    Don't re-elect anyone.

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  4. Get your silver and gold while you can. 1,2,5 years from now it will be too late.
    The sky is falling! Good grief.

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    1. Rob,

      Didn't you say that when people who use data to make decisions said that their was a giant housing bubble?

      Pretty please with sugar on top, explain how the city, county and state can get out of this debt pretzel they have created.

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    2. No, I didn't say that when people said there was a housing bubble. I have no way to predict how debt will be handled, but rushing to buy gold & silver while suggesting the dollar will lose all value in 5 yrs is pure Chicken Little (or Glenn Beck -- choose whichever idiot you prefer).

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    3. rob,

      Before you dismiss the Chicken Littles, you might want to read up on our debt levels. We are so far into uncharted waters it's crazy.

      The only time we ever had similar federal debt to GDP levels was after WWII (link"), and it took both serious inflation and balanced budgets to get us out of it. Well, not even the most conservative Republicans are proposing balance budgets within decades, so that's not going to help.

      And all the other factors make the current situation much worse than post-WWII even ignoring the 8% GDP deficits we are running:

      - we were then an exporter, now we are a huge net importer

      - our consumers were then net savers, now our consumers are huge net debtors

      - the states and cities had no debt or pension problems then, now we have trillions in unfunded liabilities

      - we didn't have skyrocketing health care costs then, we do now (made worse under ObamaCare by the way)

      ZeroHedge has more.

      Take a look at the numbers and the complete impossibility of being able to pay this debt back or make good on the pensions and I think you'll find it makes some sense to diversify yourself away from the pure fiat dollar which is certain to be devalued in the future just as it has been consistently over the past 100 years.

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    4. I didn't intend to ask you to predict how the debt would be handled. I wanted to see if you could come up with a single plausible approach to handling the debt, hopefully without having to invoke blind optimism. If you can not do it, that's pretty good evidence that you should reconsider the sky if falling comment. Because, the fiscal sky is falling. How bad it will be depends on how long we stick our heads in the sand.

      Why do you say the sky isn't falling when all signs point to coming train wreck?

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    5. Rob...Opps, the city of Compton is the next domino to fall in the line of bankrupt cities. Still not to late to get that gold and silver, but a year from now ????

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    6. W.C., can you quote any prominent & respected economists that are going full Chicken Little?

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    7. Reinhart and Rogoff are among the most prominent and respected. Try them on for a start.

      Economists don't tend to be "Chicken Little" in style, even when their conclusions are clearly that the sky is falling.

      If you want prominent and respected economists with similar views but more theatrics, try Nouriel Roubini or Nassim Taleb.

      Virtually all economists I know of would agree that 8% GDP deficits with 2% growth are completely unsustainable. And virtually all economists I know of think state and local pension underfunding is a disaster of epic proportions. I would love to see someone try to argue the contrary.

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    8. Don't have too much faith in economists. Here are some quotes from their esteemed ringleader:

      "The Federal Reserve is not currently forecasting a recession."

      Ben Bernanke, Jan. 10, 2008

      "All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system. The vast majority of mortgages, including even subprime mortgages, continue to perform well. Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable."

      Ben Bernanke, May 17, 2007

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    9. Thanks, W.C. -- I'll continue to read up on those economists' views. Still rushing to silver & gold is rash & unwise, but I'm not trying to convince anyone.

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    10. Rob, may I suggest Encinitas coin or Carlsbad coin. Take physical possession and yes it's OK to bury it in your backyard. Liberty coin in Del mar is good also.
      You'll sleep better at night knowing your future is secure.

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    11. rob,

      I can now add top Wall Street strategist Stephanie Pomboy to that list.

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  5. Last year the fund earned 21%. Two year average - 10.5%. Go get your gold and guns and run for the hills!

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    1. Nice cherry-picking. Calpers has earned closer to 0% than 7.5% over five- and ten-year periods even with your one year of 21%, Jerome.

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  6. You pick your cherries and I'll pick mine. Together we will see who gets the pits. I'm not Jerome by the way nor do I support him.

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  7. Rob,
    Who said anything about rash or rushing? You are years late to precious metals. Even better is buying something tangible and productive, like farm land. Whoops, you missed that one too.

    "Good grief" you wrote. "The sky is falling you wrote". Is that not highly dismissive? I think that dismissive comment was rash and uninformed. You made those comments without being able to defend them, but I'm glad that you are now more openminded and will be doing a little research. Get back to us after you've done a little homework.

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    1. Better late than never.

      I would never advocate putting all your money in precious metals -- I've still got more stocks and real estate than PMs -- but it seems to me insane to not have at least 5% or 10% for simple portfolio diversification purposes.

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  8. Dump Revenue Bonds and Mayor Stocks, both liabilities for Encinitas

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