Gambling With Taxpayer Money
University of California Loses Millions in Wall Street Casino
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  • Dan


  • qet

    But they needed all those shiny new facilities in order to be “competitive”!

  • Andrew Allison

    Pick a font size please!

  • Boritz

    …public services, especially those funded by taxpayer money, should invest their cash as conservatively as possible -TAI

    This is California. There are numerous aspects of existence they should conduct more conservatively. Thanks to the discipline of accounting it is possible to mathematically expose their folly in this instance. In many other matters they manage to maintain deniability.

  • free_agent

    You write, “Even more troubling, there are some unsavory connections between UC
    bigwigs and bankers at Lehman Brothers, which was responsible for many
    of these deals.”

    I was going to ask, Who suckered UC into those crappy deals?, but you answered the question.

  • Yisroel Markov

    Looks like the university opted for a fairly low fixed interest rate. That’s prudent hedging, I think, and a defensible tactic. (Whether the debt strategy is sound is a different question.) So these aren’t losses the way we normally think of investment losses. It’s more like opting for a higher fixed-rate mortgage loan instead of a currently lower variable-rate one, and then being unable for some reason to refinance to an even lower fixed-rate one. Which is unpleasant, but doesn’t mean the old loan was a bad deal.

  • Kavanna

    Root of many of these problems, including pensions: a decade-plus of artificially low interest rates. Thank the Fed for much of this — artificially inflated stock returns for three bubble cycles now, wrongly extrapolated into the future; ultralow rates making it impossible to earn decent returns on fixed income investments.

    Sometimes individual savers are called out for attention in how they’ve been robbed, and the large banks and other bailout beneficiaries have been roundabout subsidized, by these nutty policies. What is less often called out for attention is how institutional guardians of collective savings (pension funds, endowments, insurance companies) are also being robbed of safe returns.

    Much of the “pension crisis” is just the result.

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