The Mayor of Milwaukee, Cavalier (Corvair--unsafe at any speed) Johnson, is looking at reports like this and--presumably--is very frightened, indeed.
...So far, American pension funds and insurers haven’t faced the same kind of margin calls [as have happened in Europe], but they stand to suffer painful losses. As interest rates fell, they shifted to real income-earning assets like commercial real estate. The value of commercial real estate investment companies on the US stock market has fallen by 35%, about the same amount as the Nasdaq.
If that’s any indication, the $20 trillion value of the commercial real estate market has lost about $7 trillion this year, in addition to losses of nearly 20% on corporate bond and stock portfolios. Stocks and bonds, the largest components of pension portfolios, are down about 20% during 2022. All in – depending on which survey of pension fund asset allocation you believe – the average US pension has probably lost more than 20% of its asset value this year....
The City's pensions are "hard-number" payouts; that is, the pensioner gets $XXX.XX/month no matter what. So if the pension fund is short about 20% due to market valuations, the City must make up the difference. Not all at once, of course; but over the next several years to three or four decades out.
Since the City cannot afford the obligations it is scheduled to pay NEXT year to make the fund "fully funded," this is a giant bowl of Not Good.
Expect Corvair and whatever allies he has to be living in the Capitol, begging Vos & Co. for a whole LOT of State taxpayer money. After all, you people in Eagle River owe Milwaukee a lot, don'cha??
Well, don'cha??
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