[quote user="Santa Cruz"]link
Instead of high net worth billionaires, it's now Joe Public left holding this junk, thanks, of course, to his well-paid retirement fund managers. As late as May of this year, Jean Fleischhacker - a senior managing director at Bear Stearns - was telling fund managers gathered in a Vegas ballroom that they could generate 20% annual returns from unrated mortgage-backed credit derivatives. The Dallas Police and Fire Pension Fund bought its first CDO in early 2005. "We were beefing up our risk, and we were hoping for a greater return," said Richard Tettament, head of the $3.2 billion fund, to Bloomberg in March. He couldn't say what kind of collateral was actually backing the CDO, but he reckoned the returns were above 20% in 2006. The largest bank in the United States, Citigroup, recently sold $140 million in just this kind of unrated junk to the California Public Employees' Retirement System, too.
Members of the CalPERS scheme have just got to wonder, along with the rest of us: How much is that $140 million worth today? Because the "meaner rabble" really did climb on board this mega-geared bubble in liars' loans.
It's just that in this money bubble, most people had no idea they were even involved - let alone put at risk. It should offer small comfort, however. Giving control of your money to a financial "expert" might indeed prove the most foolish decision of all.
Originally posted in thread: 4545[/quote]
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