pension fund assets: cheese and whiskey

[jk]

Re: pension fund assets: cheese and whiskey

i think the whiskey is a case [thousands of cases, actually] of duration matching. as the drink matures its value rises, and when pensions are due they can if necessary be paid in kind.

seriously, however, diageo could have taken on debt collateralized by its whiskey inventory, and used the proceeds to contribute to the pension fund. it would then have been saddled with interest payments and also with the risk that its inventory ultimately might not be marketable at its predicted future value. instead it can assign a present value to the inventory, transfer the risk to the pension fund and avoid the interest payments. if you're a diageo stockholder, what's not to like?

[GRG55]

Re: pension fund assets: cheese and whiskey

i think the whiskey is a case [thousands of cases, actually] of duration matching. as the drink matures its value rises, and when pensions are due they can if necessary be paid in kind.

seriously, however, diageo could have taken on debt collateralized by its whiskey inventory, and used the proceeds to contribute to the pension fund. it would then have been saddled with interest payments and also with the risk that its inventory ultimately might not be marketable at its predicted future value. instead it can assign a present value to the inventory, transfer the risk to the pension fund and avoid the interest payments. if you're a diageo stockholder, what's not to like?

One more advantage...shareholders can see without ambiguity what percentage of the productive output of current workers is needed to support current and future retired workers. Hopefully there's still some profits to drink...

[ProdigyofZen]

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 . . . .

Oh no not Martin Sibileau......

[*T*]

Re: pension fund assets: cheese and whiskey

The problem with cheese or whiskey is that they are not liquid or fungible (well, maybe whiskey is A liquid... but you get my point).

And I am amazed at the regular protestations of the collapse of bitcoin and / or gold: bitcoin collapsed to a low back to where it was... 4 weeks ago!? and is now above its 3-week old all time high. And gold is up a factor of 3 or so in 5 years. Really, what a ridiculous premise for an article.

[GRG55]

Re: pension fund assets: cheese and whiskey

The problem with cheese or whiskey is that they are not liquid or fungible (well, maybe whiskey is A liquid... but you get my point).

And I am amazed at the regular protestations of the collapse of bitcoin and / or gold: bitcoin collapsed to a low back to where it was... 4 weeks ago!? and is now above its 3-week old all time high. And gold is up a factor of 3 or so in 5 years. Really, what a ridiculous premise for an article.

Judging by what I am paying for good single-malt and Canadian rye these days, whiskey (and whisky!) may have handily outperformed all other typical pension fund assets since 2000. As I get older I will confess that a Balvenie beats a bitcoin any day...





As for fungi-ble...well maybe pension funds should get some exposure to this sector:

Truffle prices double as hot summer hits harvest

Highly prized fungi fails to flourish due to lack of rain in Italy

...Even seasoned fungi-seekers have seen nothing like it, with some parts of Tuscany going 61 days without rain. For British consumers, this is bad news. The volume being imported into the UK is down 50% on last year, according to those in the trade.

"For the first time we can remember we are pricing truffles on a daily rather than a weekly basis because we cannot guarantee supply, they are that elusive," said Nadia Howell, a director of L'Aquila, a fine foods company which runs whitetruffleauction.com.

The price of the most highly prized white truffle has more than doubled...

[c1ue]

Re: pension fund assets: cheese and whiskey

And I am amazed at the regular protestations of the collapse of bitcoin and / or gold: bitcoin collapsed to a low back to where it was... 4 weeks ago!? and is now above its 3-week old all time high. And gold is up a factor of 3 or so in 5 years. Really, what a ridiculous premise for an article.

I'd say that the real test isn't the price volatility bitcoin has exhibited to date.

The real test is how bitcoin performs when the first 'this terrorist act was funded through bitcoin' story pops out, or 'Al Qaeda is using bitcoin to transfer funds' story pops out. Up until now, all the negative references were for the little bad guys - drug dealers.