Consider public pensions. The money that firefighters and police and government workers will use in retirement. Two facts: 1) Wall Street is stealing this money, and 2) We are letting them, like suckers.
When I saw "we" are letting them, in this case I mean that we are standing idly by while the people empowered to prudently watch over these valuable public resources sit around withI am guessing heretheir thumbs up their asses and allow rapacious Wall Street investment gurus to drain the public treasury. I believe this to be true in a broad and national sense. I know it to be true in the specific case of the New York City's pension funds, because Scott Stringer, the city comptroller, has just found as much, and released a report on it, and the New York Times has written a story on his report. Though both the report and the news story are fairly straightforward recitations of mathematical fact, they may cause you to feel nauseous, faint, or apoplectic, should you consider the larger implications.
Keep in mind: this is public pension money intended for the retirement use of solidly middle-class public servants; and, New York City comptroller Scott Stringer, who issued this report, is also the man charged with overseeing the investment of this money. With those facts in mind, consider this, from the New York Times:
The analysis concluded that, over the past 10 years, the five pension funds have paid more than $2 billion in fees to money managers and have received virtually nothing in return, Comptroller Scott M. Stringer said in an interview on Wednesday.
We asked a simple question: Are we getting value for the fees were paying to Wall Street? Mr. Stringer said. The answer, based on this 10-year analysis, is no.
The public's pension money has grown by billions of dollars. How much of that will benefit the employees whose money it is? None! It all goes to the money managers! It's as if it never happened!
Now, consider this:
Until now, Mr. Stringer said, the pension funds have reported the performance of many of their investments before taking the fees paid to money managers into account. After factoring in those fees, his staff found that they had dragged the overall returns $2.5 billion below expectations over the last 10 years.
When you do the math on what we pay Wall Street to actively manage our funds, its shocking to realize that fees have not only wiped out any benefit to the funds, but have in fact cost taxpayers billions of dollars in lost returns, Mr. Stringer said.
Allow me to repeat this sentence: "Until now, Mr. Stringer said, the pension funds have reported the performance of many of their investments before taking the fees paid to money managers into account." Hmm well... why in the world have they been doing that??? This is akin to you calculating your household budget without accounting for expenses. "Well I made $50K this year, so I have $50K to spend! Party!" But you forgot to take into account rent and food and taxes. You are dumb. The professional pension fund managers who made a practice of reporting returns without deducting fees were either dumb, or trying to make their performance sound better than it really was. The most basic retail investor would never make such an obvious misstatement.
If I had my retirement money being managed by these people I would be very, very, very upset. You people are being robbed.
Then we wouldn't take away their jobs! Or something.
