As chief investment officer of the nearly $400 billion California Public Employees' Retirement System (CalPERS), which provides benefits for 2 million current and future retirees, Bienvenue must earn an annual return of at least 7%.
That's not easy when the safe investments that pension funds usually rely on are paying less than 1%, a consequence of low interest rates.
So Calpers has to deviate into shadow banking a bit, hedge funds that can handle the unsafe rate. Calpers is the one most harmed, it is restricted to safe investments, and is always subject to the Fed siegniorage tax. Pensions are the first to fall when the banking crisis gets worse. We are full fledged Doom Loop.
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