Classic Times FIRE Duck & Cover - the Wisconsin School's Caper

[flintlock]

Re: Classic Times FIRE Duck & Cover - the Wisconsin School's Caper

Don I think that at some point the people that are hired to act responsibly with others money need to do so, regardless of all the bad finance people out there. A reasonable level of skepticism is called for regardless of who you are dealing with. Sounds like there is plenty of blame to go around on all accounts.

[Master Shake]

Re: Classic Times FIRE Duck & Cover - the Wisconsin School's Caper

I was fairly certain if this was included in the post it would be hijacked into an anti-pension rant. No surprise there, deed done. 98% of the article is about how these dimwits were manipulated by finance. Nice misdirection response. Ever consider working for the paper?

Upset because the response didn't jibe with your (predictable) Manichean narrative?

[Thailandnotes]

Re: Classic Times FIRE Duck & Cover - the Wisconsin School's Caper

No kidding! A school system borrowing money to invest? I'm surprise this was even legal.

I am too. Many pension funds are restricted to triple A stuff. It reminds me of a friend who used his credit card to buy shares of Cisco during the dot com bubble. (You did what!?)

But, it wouldn't surprise me if the laws or charter were changed in order to make this investment deal possible.

[Thailandnotes]

Re: Classic Times FIRE Duck & Cover - the Wisconsin School's Caper

It will be intereting to see if Stifel is convicted or if they settle with the school district.

I'd say it looks like they will be tossed overbaord.

Unlike the big banks that perpetrated the mortgage fraud...

Naked Capitalism…on pressuring N.Y. attorney general to back down...

“They wanted to be released from everything, including original sin…”

“Wall Street is our Main Street,” said Wylde…

“institutionalized profiteering…”

“It is high time to describe the Obama Administration by its proper name: corrupt….”

http://www.nakedcapitalism.com/2011/...whitewash.html

[lektrode]

Re: Classic Times FIRE Duck & Cover - the Wisconsin School's Caper

“institutionalized profiteering…”

“It is high time to describe the Obama Administration by its proper name: corrupt….”

http://www.nakedcapitalism.com/2011/...whitewash.html

+1
this bunch of MORONS will make the prev bunch look like HERO'S!

[GRG55]

Re: Classic Times FIRE Duck & Cover - the Wisconsin School's Caper

GRG55, here are the answers to your questions:

Short answer: you are a Monday morning quarterback of the worst kind. Blame the victim for not being smart enough to see the fraud!

...

You haven't answered anything...short or long version.

Far from being a Monday morning quarterback [of the worst kind, no less :-) ], what I have tried to do is point out that the corrupting of personal values in America runs pretty deep now. THAT was the reference to "parents" btw.

Have fun pursuing the frausters. But don't expect things to change much in the way the School Board Trustees behave with other people's money, even if you get every last banker jailed...

[Ghent12]

Re: Classic Times FIRE Duck & Cover - the Wisconsin School's Caper

No kidding! A school system borrowing money to invest? I'm surprise this was even legal. Doesn't anyone believe in EARNING their income anymore? "Psst, buddy. Have I got a deal for you." Ridiculous. Where have all the grown ups gone?

Excellent question.

[flintlock]

Re: Classic Times FIRE Duck & Cover - the Wisconsin School's Caper

Upset because the response didn't jibe with your (predictable) Manichean narrative?

I had to look that one up!

[flintlock]

Re: Classic Times FIRE Duck & Cover - the Wisconsin School's Caper

My old stockbroker uncle( still working at 81) talked my dad( his brother) into borrowing against his paid for house and investing the difference. Dad made next to nothing, paid off the note and learned a good lesson. He did it because he knew he could afford to take the risk, even though this was against his every instinct. The idea that people take risks with pensions is kind of scary. But like others have said, this had become "normal" apparently. Even my conservative old school uncle had bought into it.

I think people are reading too much into GRGs comments. I don't see anything anti-pension in his response. Now if there is a history I don't know about, then I can't speak to that. But I think we all need to give the benefit of the doubt.

[shiny!]

Re: Classic Times FIRE Duck & Cover - the Wisconsin School's Caper

If you're talking about the average person not knowing anything about finance, I would agree with you. However, for the school officials who were entrusted to properly manage millions of dollars, is it asking too much that someone know something about investing, financial instruments, risk management, and leverage? If anything, the trustees should have at least known that such massive leverage is not suitable for funds where capital preservation is probably the most important goal.

- and -

The prospectus wasn't delivered until weeks after the deal was inked. (legal?) ...

... No one could have read or understood it anyway...

... The deal was loaded with hidden fees...

Even I, who have never signed a mortgage or bought a car on credit, who have never made a trade at a brokerage and couldn't calculate interest if you held a gun to my head... even I know that you don't sign anything unless you have read and understand what you are signing!

They signed papers without even having read the prospectus?! "Hidden fees"? Were they actually omitted from the contract or did these guys just not know how to use a calculator? Good Lord! Where was their due diligence?

Now, I avoid complicated financial transactions precisely because I know my limitations and don't want to get taken to the cleaners. The kind of investment they made is too complicated for most laypeople to understand. So... they just decided to believe the sales pitch?

It's one thing to be fully informed and make a bad investment because you misjudge the market. But it seems these clowns didn't even bother to become fully informed. I'll have to go back and read, but does it mention anywhere what their professional backgrounds were? Were any of them CPAs or attorneys with experience in contracts?

[flintlock]

Re: Classic Times FIRE Duck & Cover - the Wisconsin School's Caper

Were any of them CPAs or attorneys with experience in contracts?

That's part of the problem. The Peter Principle in full effect.

Short of reform( or better enforcement) in regards to the financial industry, we must seek out wiser people in positions of responsibility. Instead we get those most adept at office politics.

[Master Shake]

Re: Classic Times FIRE Duck & Cover - the Wisconsin School's Caper

I had to look that one up!

I have no love for FIRE, but the truth is closer to "We have met the enemy, and he is us."

[charliebrown]

Re: Classic Times FIRE Duck & Cover - the Wisconsin School's Caper

First and foremost the fraudsters who sold this crap paper to a school district, ought to be put in the public stocks. They are stealing from children. Then they ought to have all of their personal assets seized, and be forced to live in a small studio apartment and do honest work, all their profits going to pay back the board. That would be a good start.

Second, the guardians of the public trust need to be fired. I just bet that the accompanying literature was chock full of lawyer talk, (meaning obtuse and vague). Isn't one of the best investments a 90 - 10, 80 -20 AAA bond / stock portfolio? Invested in indexed funds, and rebalanced yearly. It has very low price volatility, can be easily understood, has low fees, there would be no conflict of interest, etc. etc. When I first joined my church they had their savings invested in some crazy esoteric mutual funds. This money is not meant to grow. It is meant for God's work. Capital preservation is the number one requirement.

Finally a lot of the pension benefit models are based upon an 8% return on the money invested. This is unrealistic, so when the pension trustee's see zero returns for that last decade and that the fund is running out of money, this forces them to look for non-conventional options, thus the pitch by the Fire-con men; absolutely safe, high returns. What's not to like. The pension benefit levels need to be reset to what can be realistically be gained on the pension trust fund. I'm not trying to be punitive, just realistic.

[Thailandnotes]

Re: Classic Times FIRE Duck & Cover - the Wisconsin School's Caper

Not much hope for justice, but it ain't over yet...

AMY GOODMAN: Let me ask you about our headline today about Obama administration reportedly putting increasing pressure on New York Attorney General Eric Schneiderman to agree to a broad state settlement with banks over questionable foreclosure tactics. The federal settlement has been widely criticized because it would insulate the nation’s largest banks, including Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, from all criminal investigations in exchange for civil fines. Schneiderman and others have opposed the settlement because they say it would restrict their ability to investigate and prosecute wrongdoing in a variety of areas, including the bundling of loans in mortgage securities. Matt Taibbi?

MATT TAIBBI: Yeah, no. This whole issue of securitization was central to the cause of the financial crisis. All of the banks—not just a few of them, all of them—were engaged in this wide-scale fraud scheme to take worthless and/or extremely risky subprime mortgages and sell them as AAA-rated investments to unsuspecting investors all over the world, including, you know, pension funds here in the United States and foreigners in Scandinavia, China, Saudi Arabia. Basically, this was a fraud scheme where you’re selling garbage as gold. And they were all engaged in this fraud scheme. They all knew that they were selling extremely risky stuff as AAA-rated investments.

And the Schneiderman investigation is targeting this whole—the root of this process, the securitization process, where they took the subprime mortgages and chopped them up and then waved their magic pixie dust on it to turn it into AAA-rated investments. The national deal is seeking to cover this up and try to insulate all the banks from liability, especially civil liability, for what they did. If they do that, then they’re going to get away with this, and we’re not really going to fix the problem. And I think Schneiderman is really the only law enforcement official out there right now who is seriously trying to uncover this mess.

[Thailandnotes]

Re: Classic Times FIRE Duck & Cover - the Wisconsin School's Caper

whoops!

"New York Attorney General Kicked Off Government Group Leading Foreclosure Probe"

http://www.commondreams.org/headline/2011/08/23-13