Monday, September 13, 2010


Michael Lewis in a lengthy Vanity Fair piece on Greece

"As it turned out, what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was turn their government into a piƱata stuffed with fantastic sums and give as many citizens as possible a whack at it."

Orin Kramer NYT Op-Ed:  How to Cheat a Retirement Fund

Via MISH comes this video of NJ Governor Chris Christie responding to a question from a teacher:



mrwiizrd said...

that video is greatness

wcw said...

The Greece article is loads of fun. It's less about Greece than about what really is the Greatest Trade Ever -- a worthless piece of paper in an attic turned into roughly a billion Euros. Great story. Also, I am extremely jealous. I have numerous worthless pieces of paper in the garage myself. Though I grant that I probably lack the particular skills to have arranged something like this.

At the op-ed, though, I turn up my nose. Companies can have pension issues that render an apparently profitable businesses fundamentally uneconomic. States can't, since they are not businesses but taxing authorities. On the larger scale, pension problems are uniformly distributional: who pays is the interesting issue.

Kid Dynamite said...

WCW - can you elaborate on your pension point?

the point to me is that we still have a massive way to go in terms of pension reform and what we're promising even current employees who are contributing more toward their eventual pension. The return assumptions are still way too high.

scharfy said...

Micheal Lewis is getting better and better...

Regarding Christie, Its rare to see a politician who actually has a fundamental understanding of the issues. He actually knows what money went where, and when, and by who.

He's not just regurgitating talking points - he knows the material.

I mean it really stands out. (Sad state i suppose)

Too bad he can't run in 2012. Romney/Christie would have been a brutally tough ticket

wcw said...

KD, if you're digging through the footnotes of your friendly neighborhood 10-K and something looks off in a big way, rough it out. You might have a nice keep-an-eye-out short opportunity. But for a state, you don't. At that scale (or at something like the PBGC level), retirees always get paid out of current production, so the interesting questions are distributional: who (including retirees-to-be whose promised bennies get cut) bears the burden. Pension accounting here is interesting mostly as it affects the politics of that distribution. Scare stories naturally serve mostly political ends as well. As I am old enough to know what my politics are, I turn my nose up at them.

hey.randoms said...

check his math. "lost" 1 bn, only cut $820m, which means spent additional $280m?? ha... just saying.

hey.randoms said...

I'm going to try to take his figures on faith despite the dose of his salt from his faulty arithmetic. While he's a charismatic speaker, in that he knows well how to brow beat and control his stage, his line of argument is somewhat misleading.
What's most blatantly problematic is that he refers to the rate of inflation over one year and suggests it should be used to determine the negotiations of a long-term employment contract whose scope is typically within the range of 3-5 yrs. Further, he's used the short-term (god willing) inflation #s as an avenue to introduce innovative conditions within the contract negotiations-- whose covenants tend to set entrenched precedents for future negotations (and are therefore actively contended when "innovative" measures are introduced, despite their professions of being mere hardship measures).
There's a lot more that's technically wrong with his argument, and mildly objectionable rhetorical issues abound (even though in our contemporary political climate their mildness makes him a relative marvel).
But whatever. I like him for his money. And for that hottie brunette sitting onstage front-row. not even kidding.

Kid Dynamite said...

wcw - I hear you - and yes, absolutely: "who pays" is a huge question. I don't think it's just a political ploy - i think it's important for everyone to know that the assumptions are wrong. that, to me, makes it much more reasonable that a first solution is to reform the assumptions. reform expectations for future benefit receivers.

Anonymous said...

Wow! this guy is great! We need him in NY.. Hell we need him in the Capital!