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New York City taxpayers are helping to pay $850 million in Wall Street investment fees -- even as these financial gurus have produced only meager results for strapped city and state pension funds.

City Comptroller John Liu this week released a comprehensive analysis of NYC pension costs over the past decade, revealing why they have risen from $1.2 billion to $7.7 billion.

Liu said one of the major factors in the shortfall was higher than expected investment and administrative fees, which were $71 million in 2005, and have risen more than four-fold to $313 million.

Nearly all of the increase was due to the pension funds shifting asset allocation in favor of private equity and real estate -- chasing bigger returns -- but which also have higher investment fees, he wrote.

The state pension fund, which made a similar shift, saw its expenses rise in five years from $277 million to $433 million. Add in the teacher pension fund, and total fees in 2010 reached $848 million.

These higher fees aren't paying off. The City pensions (which cover teachers, cops, firefighters and other municipal employees) saw annual returns for the last five years of a meager 2.8 percent, but even that is better than its 10-year 2.5 percent record.

But, with the target return at 8 percent -- which is more a political than fiscal decision -- taxpayers are forced to make up the shortfall.

But pension beneficiaries are protected by the state constitution's impairment clause, which does not allow for diminished benefits, even for budgetary needs.

The pensions have a guaranteed return of either 7.5 or 8 percent a year, and any shortfall must be made up by taxpayers.

Taxpayers' share of city pension costs have exploded 900 percent in the last decade from $703 million in 2000 to $6.5 billion in the 2010 fiscal year, according to the City Comptroller's office.

The City now spends 11 percent of its expenses on the pensions, up from six percent five years ago.

Harry Wilson, the Republican who lost the 2010 election for state comptroller, believes pensions are swinging for the fences by making risky investments to hit unrealistic targets. "My thought process is you have a promise to certain people, and therefore you want to have a low-risk asset mix to meet those obligations."

The State pension, by moving to riskier investments, has had similar results: a 4.28 percent five-year average that is better than the 3.7 percent 10-year, but well short of its 7.5 percent target.

At the same time, the New York State Teachers fund, which has also ramped up its private equity investments, has actually seen its returns fall to a 2.28 percent five-year return from a 2.7 percent 10-year mark.

Had any of the funds simply invested in an S&P index fund, their return over 10 years would have been 18.1 percent.

Wilson said the higher fees "highlight that public pensions are paying more for active management and getting below-market performance."

The State has 13.9 percent of its investments in private equity and real estate, State Teachers more than 8 and the City Pensions 7.7 percent.

Private equity mostly means buyout funds run by firms like KKR that make money by buying companies on leverage and then reselling them within five years.

HEC Business School Professor Oliver Gottschalg, in a comprehensive August 2010 report, found that private-equity funds in existence for at least seven years perform broadly in line, after fees, with public market investments.

At the same time, he found funds with returns that are among the top 25 percent for any given year have a substantially higher performance compared to public equities. That is the appeal.

The New York State Teachers fund in its annual report said its goal was for its private-equity investments to outperform public equities by five percent.

Wilson, previously a principal at private-equity giant the Blackstone Group, said when pensions invest roughly $10 billion in PE funds, they do not have the luxury of picking the best performers, and not likely to get good results.

City Pension Chief Investment Officer Larry Schloss believes that since he was the former head of PE firm DLJ Merchant Banking Partners he can find the best funds, and better the average.

Schloss, though, is fighting back against private-equity fees. "We're telling any manager that comes to us that you need to cut fees."

Schloss said he is pushing firms to charge management fees only on invested money, and not on what they raise, which takes years to invest.

Lowering management fees from 1.5 percent to 1.25 percent is another goal. Still, he has not had a firm agree to these terms.

"The private-equity industry is changing, slowly," Schloss said.

Read more: http://www.nypost.com/p/news/business/it_on_our_tWJLw3C710wXwE4kSDqeiJ#ixzz1JP697xVk
 

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You act like this is the investment company's fault. If you put billions of dollars into an investment fund, you had better 1) give some guidelines and limits on the investment parameters and 2) have a watchdog who constantly makes sure those guidelines are being followed. You don't just turn billions over and say "Have fun!". These politicians are now reporting on investment costs that go back several years. Where were they during that time? The article fingers the wrong culprit. :crazy:
 

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Discussion Starter #3
You act like this is the investment company's fault. If you put billions of dollars into an investment fund, you had better 1) give some guidelines and limits on the investment parameters and 2) have a watchdog who constantly makes sure those guidelines are being followed. You don't just turn billions over and say "Have fun!". These politicians are now reporting on investment costs that go back several years. Where were they during that time? The article fingers the wrong culprit. :crazy:
So, anytime anyone fingers the banksters and their minions, it's your position that they are innocent? :laughing:

In your mind, is there ever a time when they are "fingered" justifiably?


And answer me this one Tex.. if people make bad decision and then have to live with them, why did the banksters and wall street get a bail out? I mean, wasn't their gambling the root cause of their failure? Or was that us also?
 

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So, anytime anyone fingers the banksters and their minions, it's your position that they are innocent? :laughing:

In your mind, is there ever a time when they are "fingered" justifiably?


And answer me this one Tex.. if people make bad decision and then have to live with them, why did the banksters and wall street get a bail out? I mean, wasn't their gambling the root cause of their failure? Or was that us also?
I know I sound like an apologist for the bankers. I'm not. I simply believe that we need to follow our system of laws and justice when accusing people. If these guys broke the law, charge them. If what they did was not against the law, but SHOULD have been, change the law and get them next time. But I am against crucifying people for playing within the rules and profiting.
 

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I know I sound like an apologist for the bankers. I'm not.
:lookinup:

I simply believe that we need to follow our system of laws and justice when accusing people.
Even when they manipulate the law to make their criminal activity "legal" and strip the wealth of the country? :lookinup:

If these guys broke the law, charge them. If what they did was not against the law, but SHOULD have been, change the law and get them next time. But I am against crucifying people for playing within the rules and profiting.
:laughing: :lookinup: Sounds to me like, your saying "fine gut the law, change it as needed to make your criminal activity legal, just let me think I am middle class".
 

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:lookinup:



Even when they manipulate the law to make their criminal activity "legal" and strip the wealth of the country? :lookinup:
Laws that can be manipulated are written poorly. They can always be amended to close the loopholes. I know, they will just find new loopholes. But, again, how are you going to change the system we have without killing business and entrepreneurship that benefit us all? It's one thing to point out the flaws, as you do regularly. But it's quite another thing to have a solution that will solve the problem without killing the goose that lays the golden egg.
 

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Discussion Starter #7
Laws that can be manipulated are written poorly. They can always be amended to close the loopholes. I know, they will just find new loopholes. But, again, how are you going to change the system we have without killing business and entrepreneurship that benefit us all? It's one thing to point out the flaws, as you do regularly. But it's quite another thing to have a solution that will solve the problem without killing the goose that lays the golden egg.
:laughing: Your so busy apologizing for the criminals who are out to destroy your life/livelihood that you forget to read the suggestions on a solution. I post them as well, at least once a week, I did it yesterday.
 

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:laughing: Your so busy apologizing for the criminals who are out to destroy your life/livelihood that you forget to read the suggestions on a solution. I post them as well, at least once a week, I did it yesterday.
Which thread? I'll be happy to read it if I missed it.

As for them destroying my life, I'm not worried. I haven't accumulated much, so you can't lose what you don't have. I plan to work until I die and enjoy life with whatever I have. Every year I live, I want less and less, and it's a good thing because there is no lavish retirement waiting for me out there. I don't even envy my friends who have accumulated a lot. They spend more time worrying about their stuff than they do enjoying life.
 

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Which thread? I'll be happy to read it if I missed it.
I don't remember, but part of it was posted yesterday. Pretty basic.

Make political corruption punishable by death. End the FED and return monetary power to the treasury. Repeal the 16th amendment. Pass a balanced budget amendment with the stipulation that the government can only spend 80% of revenue to create a rainy-day fund. Reduce the federal government to the confines of the 18 enumerated powers. Cut the pentagon's budget by 50%. Eliminate any department that is not explicitly authorized in the constitution. That is a good start.. I don't see it happening, I just hope when they are done there is something left to rebuild.

"The last official act of any government, is to raid the treasury" - George Washington

As for them destroying my life, I'm not worried. I haven't accumulated much, so you can't lose what you don't have. I plan to work until I die and enjoy life with whatever I have. Every year I live, I want less and less, and it's a good thing because there is no lavish retirement waiting for me out there. I don't even envy my friends who have accumulated a lot. They spend more time worrying about their stuff than they do enjoying life.
Their stuff? :laughing: Now that is a good one... you ever wonder why the work week is 5 days? It keeps your nose to the grindstone, while they empty your pockets.
 

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I don't remember, but part of it was posted yesterday. Pretty basic.

Make political corruption punishable by death. End the FED and return monetary power to the treasury. Repeal the 16th amendment. Pass a balanced budget amendment with the stipulation that the government can only spend 80% of revenue to create a rainy-day fund. Reduce the federal government to the confines of the 18 enumerated powers. Cut the pentagon's budget by 50%. Eliminate any department that is not explicitly authorized in the constitution. That is a good start.. I don't see it happening, I just hope when they are done there is something left to rebuild.

"The last official act of any government, is to raid the treasury" - George Washington



Their stuff? :laughing: Now that is a good one... you ever wonder why the work week is 5 days? It keeps your nose to the grindstone, while they empty your pockets.

A lot of good stuff in those solutions, but none of them affect "banksters". Those are solutions to the problems with government. That's the easy part. The hard part is fixing the economic system without killing everything else. :thumbsup:
 

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Discussion Starter #11
A lot of good stuff in those solutions, but none of them affect "banksters".
Well, it does if you understand who the real government is.. if they were required to wear sponsor patches like nascar drivers it would be much easier. It really doesn't take many bad apples to completely corrupt the system. Hell, you and others hear call Obama a socialist, but for the life of you, you can't name anything he has done that is socialist. Most of the replies are about Obamacare, and if that is socialism, I am Grape Ape.

Those are solutions to the problems with government. That's the easy part. The hard part is fixing the economic system without killing everything else. :thumbsup:
What's left to kill? Housing? Gone.. Jobs? Gone.. Currency value? Gone.. Energy production? Gone.. Retirement savings? Gone.. Stock Market? Well, QE2 is ending, and without QE3 the stock market will correct back into the 6500 range.. the government has us $14 trillion (admitted amount) in debt and what that means is there is nothing left.

Think of it in relative terms, you have a house worth $180k, you owe $240k, your income no longer supports the payments/taxes/insurance, your insolvent because the best you can hope for is to keep throwing good money after bad until you can't anymore, then you go under a bridge. The government just keeps throwing money at bad money and will default. I think everyone knows that is a given.

And your average bankers are not the problem, most are straight up, ethical people. But, when you combine massive wealth and massive power, you create massive evil, and an addiction to the power/money that cannot be satisfied. There is a very good reason why so many smart people in history, decry the central bankers Tex..

:cheers:
 

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Most of the replies are about Obamacare, and if that is socialism, I am Grape Ape.
Any time we are forced to turn over more of our money for the government to manage a segment of our life for us, it is a step to Socialism. Obamacare fits.

What's left to kill? Housing? Gone.. Jobs? Gone.. Currency value? Gone.. Energy production? Gone.. Retirement savings? Gone.. Stock Market? Well, QE2 is ending, and without QE3 the stock market will correct back into the 6500 range.. the government has us $14 trillion (admitted amount) in debt and what that means is there is nothing left.

Think of it in relative terms, you have a house worth $180k, you owe $240k, your income no longer supports the payments/taxes/insurance, your insolvent because the best you can hope for is to keep throwing good money after bad until you can't anymore, then you go under a bridge. The government just keeps throwing money at bad money and will default. I think everyone knows that is a given.
Ponch is right - half full, half empty. We have 90% employment now as opposed to the 95% we call full employment. It's not great, but most people are manageing to keep their heads above water.

And your average bankers are not the problem, most are straight up, ethical people. But, when you combine massive wealth and massive power, you create massive evil, and an addiction to the power/money that cannot be satisfied. There is a very good reason why so many smart people in history, decry the central bankers Tex..

:cheers:
What about all of the other people besides bankers who have wealth and power? There are thousands of very wealthy, very powerful people that somehow escape the "evil" moniker. Bill Gates, Warren Buffett - evil? No, basically people have hated bankers since the beginning of time. In the beginning it was a natural resentment toward anyone we owe money to. Human nature makes us dislike them. Now because of the actions of a few people, we have a crisis. I say ferret out the actual villains and treat them accordingly. But I see no reason to assume every banker is one of those villains.
 

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Discussion Starter #16
Any time we are forced to turn over more of our money for the government to manage a segment of our life for us, it is a step to Socialism. Obamacare fits.
No, the NHS fits, Canadian Healthcare fits, Obamacare is a far cry from socialized medicine. Socialized medicine is single payer, this is not single payer, by a damn sight.

Ponch is right - half full, half empty. We have 90% employment now as opposed to the 95% we call full employment. It's not great, but most people are manageing to keep their heads above water.
Most people in your gated community.. :laughing: As for 90% unemployment, that's only if you believe the gov's stats.. try 22% unemployment on for size.

What about all of the other people besides bankers who have wealth and power? There are thousands of very wealthy, very powerful people that somehow escape the "evil" moniker. Bill Gates, Warren Buffett - evil? No, basically people have hated bankers since the beginning of time. In the beginning it was a natural resentment toward anyone we owe money to. Human nature makes us dislike them. Now because of the actions of a few people, we have a crisis. I say ferret out the actual villains and treat them accordingly. But I see no reason to assume every banker is one of those villains.
I have already said, multiple times, it's not bankers, it's banksters. Big difference.. If you want to know who the banksters are, find out who the owners of the Federal Reserve & CBUK are. They also own the IMF..

Even if their activities are unethical?
Exactly.. just because you create a system you can cheat and game, don't make it ethical or even legal.
 

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Even if their activities are unethical?
As I said on the other thread, they do have a responsibility to be ethical and moral in their actions. Unfortunately, you can't send people to prison for being unethical or immoral unless it also happens to be against the law. :cheers:
 

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No, the NHS fits, Canadian Healthcare fits, Obamacare is a far cry from socialized medicine. Socialized medicine is single payer, this is not single payer, by a damn sight.

But Obama knows that Obamacare cannot work in the long run. But once it is near failure, the old system will be gone and there will be nowhere to turn but single payer. He would have done it up front, but it wouldn't fly politically. Yes, this is a back door to Socialized medicine.

Most people in your gated community.. :laughing: As for 90% unemployment, that's only if you believe the gov's stats.. try 22% unemployment on for size.

OK, Ill give you that. But don't compare the 22% to the 95% number in good times. I don't know what the number of unemployed plus underemployed is during those times, but I'll bet it is in the 15% range.

I have already said, multiple times, it's not bankers, it's banksters. Big difference.. If you want to know who the banksters are, find out who the owners of the Federal Reserve & CBUK are. They also own the IMF..

OK, find 'em and shoot 'em.:laughing:
:D
 

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Discussion Starter #19
As I said on the other thread, they do have a responsibility to be ethical and moral in their actions. Unfortunately, you can't send people to prison for being unethical or immoral unless it also happens to be against the law. :cheers:
Ok, so as long as I can get a law passed that allows the public shoot-on-sight of dentists in Texas.. you would back me up? :rolleyes:
 

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Ok, so as long as I can get a law passed that allows the public shoot-on-sight of dentists in Texas.. you would back me up? :rolleyes:
It'll never happen. The dentist lobby is too powerful. :laughing:
 
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