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Showing posts from April, 2018

The Fed's Quadruple Mandate

The Fed's Quadruple Mandate:

1) price stability
2) full employment
3) facilitating large deficits by suppressing interest rates and/or monetizing debt
4) supporting asset prices

CalPERS has been a net seller of stocks - but that will change

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Despite CalPERS, like most government pension plans, being vastly underfunded, they're actually still paying out more money to beneficiaries than they're taking in as contributions from municipal employees and employers.

CalPERS 2016-17 financial report:


Look at the numbers circled in green. That's what they're putting into investments. The numbers circled in red are what they're taking out each year.

The green numbers were even lower in recent years. CalPERS has been putting far less into the market than it's been taking out every year. They're belatedly starting to increase contributions, and the net contributions (green minus red) should turn positive fairly soon.

To the extent CalPERS is representative of public pensions overall (and it generally is), turning from net seller to net buyer will be a tailwind for stocks. And should stocks decline over a few years, it makes pensions even more underfunded and thus requires them to buy even more. Call it the Cal…

What did I tell you people about incentives?

ABC News:
Dart then instituted a program that rewarded "serial masturbators" with pizza if they went 30 days without a sexual assault or masturbating incident, according to the lawsuit.

Since detainees who had never exposed themselves were not eligible to receive pizza as a reward, the program had a reverse effect, leading to an "increase in exposure incidents" since the detainees without prior incidents "were now incentivized to commit indecent exposure and masturbation in order to qualify for a pizza reward," court documents state. HT: Charlie McDanger

Debt outlook so bad the CBO stops publishing it

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The Congressional Budget Office regularly posts 10-year budget outlooks.

Here is the most recent:


It shows a deficit of 3.6% of GDP in 2017, 2.8% of GDP in 2018, and worsening to 5.2% of GDP by 2027. But that projection was from June 2017, long before the Trump tax cuts or the Omnibus which busted the spending caps.

Outside analysts are now projecting deficits well over a trillion dollars in 2019, or more than 5% of GDP. So what does the CBO say? They don't say.

You can see that over the last several years, the CBO has updated its projections 2 or 3 times per year. But now, with the massive tax cuts and budget-busting Omnibus, suddenly the CBO goes radio silent for 9 months!



Is the fiscal trajectory simply too horrifying for publication?

UPDATE: Whoomp! There it is!