Smoothing without mark to market

LA WATCHDOG--According to the opaque actuarial report for the Los Angeles City Employees’ Retirement System (“LACERS”), 2016 was a good year.  The return on its investment portfolio was 7%, the unfunded pension liability of $5.5 billion was $200 million lower than the previous year, the funded ratio “improved” to 72.6% from 70.7%, and the City’s 2017-18 Annual Required Contribution (“ARC”) to LACERS may be lower than this year’s payment.
But a more realistic analysis reveals that the City is “cooking the books,” relying on a set of false assumptions and policies that cover up the severity of the pension crisis.
In the real world, the return on investment was breakeven, the unfunded pension liability increased to almost $9 billion, the funded ratio decreased to a unhealthy 61%, and the ARC is understated by at least $300 million.
There are two policies adopted by the City that allows it to pull the wool over our eyes: “smoothing” where gains and losses compared to the targeted rate of return of 7.5% are amortized over a seven year period and two, the reliance on an overly optimistic investment rate assumption of 7.5%.
Smoothing was designed to even out the City’s pension contributions so they would not bounce around in an unpredictable manner based on the ups and downs of the stock market.  But this has resulted in an understatement of the unfunded pension liability of $750 million as the cooked up actuarial value of its assets exceeds their market value by the same $750 million. 

You violated Ito, the bets were not compressed, so time is not a valid integrating variable.  There are flow gaps, empty spaces, where elasticity goes flat,  a violation. The Ethereum bots are on their way now, demanding a referendum, a mark to market, the tax bots are flittering around looking for payers.
Here is an inventory gap:

Houston: Many of the officers eligible for retirement work within the various investigative divisions at Houston Police Department.
“We have cases right now that if you don't have solvability factors they are suspended, the investigation is not going to take place. This could mean even with some solvability factors some of the crimes might not get investigated,” Ray Hunt, president of the Houston Police Officer’s Union, said.
A source told KPRC that more than 30 officers, including several members of HPD’s command staff, have filed the paperwork to retire since the beginning of November. During a typical year, about 225 officers might retire from the force.
Hunt fears that number could jump to as high as 400 with changes to the pension system.
“As a resident here in Houston it makes me feel very uncomfortable for myself and my family and friends,” Lopez said.
Houston Mayor Sylvester Turner calls any suggested increase in retirements pure speculation. In a statement to KPRC, 

 The government graph was price fixed, that caused a hard police forking between new recruits and retiring. Gaps look like expensive cycles to us.  The bets have to have disorder spread evenly, when  here is a price fix, the graph stays unbalanced, and attracts the arbitrage.