pension fund assets: cheese and whiskey

[jk]

For example, Dairy Crest, one of Britain’s biggest producers of dairy products, said Friday that it would add £60 million, or $92 million, worth of Cheddar cheese to its pension fund. That is about 20,000 tons of cheese, or 40 percent of its current maturing cheese inventory, the company said. (It will be constantly replaced as it ages.)

Diageo, the maker of Johnnie Walker whisky, moved two million barrels of maturing whisky at its distilleries in Scotland to its pension fund in 2010.

http://www.nytimes.com/2013/04/20/bu...th-cheese.html

[don]

Re: pension fund assets: cheese and whiskey

Let the bartering begin

[lakedaemonian]

Re: pension fund assets: cheese and whiskey

Very interesting.

I wonder if potential appreciating inventory related pension purchases will become more common.

[globaleconomicollaps]

Re: pension fund assets: cheese and whiskey

http://www.nytimes.com/2013/04/20/bu...th-cheese.html

So the cheese which was previously an asset is now a liability of the company? I.E. pledged to the retirees.
I read that in the GM bankruptcy, they had trouble arranging a DIP loan because all the assets of the company had been leveraged. Every building and machine was mortgaged. There was literally no value in the company.

[GRG55]

Re: pension fund assets: cheese and whiskey

So the cheese which was previously an asset is now a liability of the company? I.E. pledged to the retirees.
I read that in the GM bankruptcy, they had trouble arranging a DIP loan because all the assets of the company had been leveraged. Every building and machine was mortgaged. There was literally no value in the company.

There was value in the company...it was held by the creditors instead of the stockholders.

[cobben]

Re: pension fund assets: cheese and whiskey

Just good old fashioned creative bookkeeping?
Or how to "fix" your underfunded pension fund at no cost.

Or a sign of something more sinister brewing? (you haven't missed this one, have you?)


Modern Monetary Theory is the winner…at least for now

Martin Sibileau

. . .

Why did bitcoin and gold collapse? (And make no mistake, because gold did collapse). Because they are not redeemable. In the first case, it is easier to accept this. In the second, most will disagree with me. To those, I answer that as long as the US government can refuse (or get away with refusing) to deliver the physical gold to a central bank the sorts of the Bundesbank, one can safely say that regardless of the marginal bullion held by retail in safety boxes or bullion banks in vaults, for all practical purposes, gold shall be negated. I am deeply disappointed with myself, for not having understood this fact earlier, of course.

. . .

-Annihilating the last bastion of redeemable, alternative marketable value:

After April 13^th, the last bastion of redeemable and alternative market value is in agricultural commodities. Because these are perishable, they cannot be stored away and refused to deliver, like precious metals. Because they cannot be stored away, they cannot be exponentially securitized. And because they cannot be exponentially securitized, their price cannot be sustainably manipulated.

Furthermore, if redeemability was affected, these markets would segment, into one with capped prices (where nobody sells), and an underground one, where inflation expectations inevitably will be shaped. In addition, their production is not the monopoly of any particular country and the rise in its prices, always ends in social conflict (as my uncle Alberto Mario once told me: “Every revolution begins with a baker being hanged by the mob”). This will be a challenge, although not new. In the past, it has always been addressed with price controls . . . .

[GRG55]

Re: pension fund assets: cheese and whiskey

http://www.nytimes.com/2013/04/20/bu...th-cheese.html

One wonders if this is motivated more by a recession-induced temporary lack of demand for the products, a desire to keep employees working (by internally creating more demand than the open market) or a belief that the pension fund should "reinvest" in the company that sponsors it? Of course the ultimate scheme would be to have the pension fund invest directly in the stock and corporate bonds of the sponsoring company...thereby ensuring that the workers of the world own the means of production. The main problem is that this is exactly what the North American unions did not want to have happen...they did not want their members to have to take any capital risk.

[GRG55]

Re: pension fund assets: cheese and whiskey

Just good old fashioned creative bookkeeping?
Or how to "fix" your underfunded pension fund at no cost.

Or a sign of something more sinister brewing? (you haven't missed this one, have you?)


Modern Monetary Theory is the winner…at least for now

Martin Sibileau

. . .

Why did bitcoin and gold collapse? (And make no mistake, because gold did collapse). Because they are not redeemable. In the first case, it is easier to accept this. In the second, most will disagree with me. To those, I answer that as long as the US government can refuse (or get away with refusing) to deliver the physical gold to a central bank the sorts of the Bundesbank, one can safely say that regardless of the marginal bullion held by retail in safety boxes or bullion banks in vaults, for all practical purposes, gold shall be negated. I am deeply disappointed with myself, for not having understood this fact earlier, of course.

. . .

After April 13^th, the last bastion of redeemable and alternative market value is in agricultural commodities. Because these are perishable, they cannot be stored away and refused to deliver, like precious metals. Because they cannot be stored away, they cannot be exponentially securitized. And because they cannot be exponentially securitized, their price cannot be sustainably manipulated.

Furthermore, if redeemability was affected, these markets would segment, into one with capped prices (where nobody sells), and an underground one, where inflation expectations inevitably will be shaped. In addition, their production is not the monopoly of any particular country and the rise in its prices, always ends in social conflict (as my uncle Alberto Mario once told me: “Every revolution begins with a baker being hanged by the mob”). This will be a challenge, although not new. In the past, it has always been addressed with price controls . . . .

Why do you think that contributions in kind from the output of the company come "at no cost"? Do you really think that cheeze or whiskey was produced at zero cost, unlike the stuff the company sells on the open market?

Just as an aside, I have a couple of friends who have very significant amounts of their net worth invested in wine and whiskey inventories, respectively...the one with the whiskey believes it to ultimately be a better store of value than holding gold.

[c1ue]

Re: pension fund assets: cheese and whiskey

Not clear to me either that there is anything nefarious going on with cheese/wine as retirement collateral.

I can't speak for cheese - particularly the lifespan or aging process - but scotch, due to limited supply, continues to increase in cost. Moving large quantities of aging scotch into the retirement bucket thus aligns 'float' risk with future retirement obligations.

Of course, the risk there is a sea change in creation capability in chemical engineering...

The more real risk is the economy: the higher end liquors' values are highly correlated with economic prosperity. Of course the whole 1%/99% divide makes this seem less likely, but then again...

[cobben]

Re: pension fund assets: cheese and whiskey

Why do you think that contributions in kind from the output of the company come "at no cost"? Do you really think that cheeze or whiskey was produced at zero cost, unlike the stuff the company sells on the open market?

Just as an aside, I have a couple of friends who have very significant amounts of their net worth invested in wine and whiskey inventories, respectively...the one with the whiskey believes it to ultimately be a better store of value than holding gold.

Of course there is a cost, but not to current management - only in extremis - basically if/when the company goes into liquidation.


- What happened to your pension?

- Well, the rats ate part, and the exterminators drank up the rest during many a late night party while they were supposed to be exterminating the rats.

(sorry, I just had to.)

[cobben]

Re: pension fund assets: cheese and whiskey

One wonders if this is motivated more by a recession-induced temporary lack of demand for the products, a desire to keep employees working (by internally creating more demand than the open market) or a belief that the pension fund should "reinvest" in the company that sponsors it? Of course the ultimate scheme would be to have the pension fund invest directly in the stock and corporate bonds of the sponsoring company...thereby ensuring that the workers of the world own the means of production. The main problem is that this is exactly what the North American unions did not want to have happen...they did not want their members to have to take any capital risk.

I say old chap, as this is the UK, the land of infinite rehypothecation, perhaps this is the first step towards moving foodstuffs into the financial system so they, too, can be financialized to infinity? Assets being stockpiled for years can surely be pledged several times over at least, just ask the Chinese.

[GRG55]

Re: pension fund assets: cheese and whiskey

Of course there is a cost, but not to current management - only in extremis - basically if/when the company goes into liquidation.


- What happened to your pension?

- Well, the rats ate part, and the exterminators drank up the rest during many a late night party while they were supposed to be exterminating the rats.

(sorry, I just had to.)

Beats the hell out of investing the pension fund into complex derivative instruments dreamed up by a Goldman math whiz and marketed around the world from the Oz Outback to north of the Arctic Circle. At least this way the fund managers can have a good meal and a drink.

What happened to the pension fund? It was consumed in "management fees"...we ate it...

[don]

Re: pension fund assets: cheese and whiskey

there's a rumor going around that they're cutting our pension . ..



can they do that?

[GRG55]

Re: pension fund assets: cheese and whiskey

there's a rumor going around that they're cutting our pension . ..



can they do that?

Between mouthfuls of cheese one pension fund manager was overheard to say "Let them eat cake..."

[GRG55]

Re: pension fund assets: cheese and whiskey

Who sez cheese isn't a serious investment. I intend to send a letter recommending they have a "Best Portfolio Addition" category next year.





Alberta cheeses win top awards

Sylvan Star and Latin Foods were only Alberta cheese producers to be recognized.

CBC News
Posted: Apr 21, 2013 9:54 AM MT
Last Updated: Apr 21, 2013 7:45 AM MT

Two Alberta cheese factories made their mark among the top producers in Canada Friday night in Montreal.

The eighth edition of the Canadian Cheese Grand Prix saw 225 cheeses from across the country battle for top spot in 20 categories.

"This year's winners offer positive proof that Canada is producing world-class cheeses," says Phil Bélanger, jury chairman for the competition.

Red Deer's Sylvan Star won two prizes with its Old Grizzly Gouda. The cheese took home the award for "Best Gouda" as well as the award for "Best Farm House Cheese."

Old Grizzly Gouda is an aged gouda made with heat-treated milk.

Calgary's young Latin Foods won first prize in the category for "Fresh Cheese with Grilling Properties" with its Queso Fresco, a Venezuelan cheese.

Both the "Best Gouda" and "Fresh Cheese with Grilling Properties" categories are new to the competition this year.

Of the 20 categories, 15 of the winners were from either Quebec or Ontario. Prince Edward Island's Cows Creamery also took home two awards.

To decide on a winner, jury members tasted, touched and smelled each cheese to evaluate them for appearance, flavour, colour, texture, body and salt content.