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Showing posts from July, 2014

U.S. Fracking EU Sovereignty?

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Katrina vanden Heuvel and Stephen F. Cohen of The Nation report, Why Is Washington Risking War With Russia?:
As The Nation has warned repeatedly, the unthinkable may now be rapidly unfolding in Ukraine: not just the new Cold War already under way but an actual war between US-led NATO and Russia. The epicenter is Ukraine’s eastern territory, known as the Donbass, a large industrial region heavily populated by Russian-speaking Ukrainian citizens and closely tied to its giant neighbor by decades of economic, political, cultural and family relations.

The shoot-down of Malaysian jetliner MH17 on July 17 should have compelled the US-backed government in Kiev to declare a prolonged cease-fire in its land and air attacks on nearby cities in order to honor the 298 victims, give international investigators safe access to the crash site, and begin peace talks. Instead, Kiev, with Washington’s backing, immediately intensified its attacks on those residential areas, vowing to “liberate” them fro…

Argentina's Last Debt Tango?

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Richard Lough of Reuters reports, Argentine debt talks go down to the wire to avert default:
Argentina faced a race against on time on Wednesday to avert its second default in 12 years, needing either to cut a deal by the end of the day with "holdout" investors suing it or to win more time from a U.S. court to reach a settlement.

Argentine Economy Minister Axel Kicillof hurried to New York on Tuesday to join last-ditch negotiations, holding the first face-to-face talks with the principals of New York hedge funds who demand full repayment on bonds they bought at a discounted rate after the country defaulted in 2002.

Kicillof emerged from talks late on Tuesday, saying only that they would resume on Wednesday, but mediator Daniel Pollack said issues dividing the parties "remain unresolved" and that the two sides had not decided whether to meet on Wednesday.

Argentina has until the end of Wednesday to break the deadlock. If it fails, U.S. District Judge Thomas Griesa w…

A Revolt Against Hedge Funds?

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Dan Fitzpatrick of the Wall Street Journal reports, Calpers Pulls Back From Hedge Funds:
Public pensions from California to Ohio are backing away from hedge funds because of concerns about high fees and lackluster returns.

Those having second thoughts include officials at the largest public pension fund in the U.S., the California Public Employees' Retirement System, or Calpers. Its hedge-fund investment is expected to drop this year by 40%, to $3 billion, amid a review of that part of the portfolio, said a person familiar with the changes. A spokesman declined to comment on the size of the reduction but said the fund is taking more of a "back-to-basics approach" with its holdings.

The retreat comes after many pension funds poured money into hedge funds in recent years in hopes of making up huge shortfalls.

The officials overseeing pensions for Los Angeles's fire and police employees decided last year to get out of hedge funds altogether after an investment of $500 m…

De Bever on The Next Frontier of Investing

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Rick Baert of Pensions & Investments reports, AIMCO’s de Bever points to ‘next frontier’ of investing:
Leo de Bever, CEO of the C$70 billion (US$65.2 billion) Alberta Investment Management Corp., Edmonton, told participants at a financial analysts conference Thursday that pension funds and other institutional investors need to get out of their comfort zones to take advantage of “the next frontier” of long-term investing — finding return “between the cracks” of asset silos.

Speaking at the CFA Institute conference in Chicago, Mr. de Bever talked about AIMCO’s “big themes” in long-term investments — energy, food, materials and robotic technologies — saying those industries are in a similar position to where infrastructure, timberland and commodities were to pension funds in the 1990s.

“What was new in the 1990s is conventional today,” Mr. de Bever said. “Extraordinary results are not possible using ordinary means.”

He pointed to the C$17.5 billion Alberta Heritage Savings Trust Fund,…

Is Israel Losing a War It's Winning?

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Jeffrey Goldberg wrote an op-ed in The Atlantic, Why Is Israel Losing a War It's Winning?:
Things change, of course—the only constant in the Middle East is sudden and dramatic change—but as I write it seems as if Israel is losing the war in Gaza, even as it wins the battle against Hamas’s rocket arsenal, and even as it destroys the tunnels meant to convey terrorists underground to Israel (and to carry Israeli hostages back to Gaza).

This is not the first time Israel has found itself losing on the battlefield of perception. Why is it happening again? Here are five possible reasons:

1. In a fight between a state actor and a non-state actor, the non-state actor can win merely by surviving. The party with tanks and planes is expected to win; the non-state group merely has to stay alive in order to declare victory. In a completely decontextualized, emotion-driven environment, Hamas can portray itself as the besieged upstart, even when it is the party that rejects ceasefires, and in pa…

Detroit's Latest Pension Disgrace?

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David Sirota of Salon reports, Detroit’s latest pension disgrace: A gaudy new arena at retirees’ expense (h/t, Suzanne Bishopric):
As states and cities grapple with budget shortfalls, many are betting big on an unproven formula: Slash public employee pension benefits and public services while diverting the savings into lucrative subsidies for professional sports teams.

Detroit this week became the most prominent example of this trend. Officials in the financially devastated city announced that their plan to slash public workers’ pension benefits will move forward. On the same day, the billionaire owners of the Detroit Red Wings, the Ilitch family, unveiled details of an already approved taxpayer-financed stadium for the professional hockey team.

Many Detroit retirees now face big cuts to their previously negotiated retirement benefits. At the same time, the public is on the hook for $283 million toward the new stadium.

The budget maneuvers in Michigan are part of a larger trend across…

Will Higher or Lower Rates Hurt Pensions?

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Randall W. Forsyth of Barron's reports, Pension Funds Should Take Care What They Wish for:
U.S. corporate pension funds are in the best shape they've been in since before the 2008 financial crisis as their shortfalls were cut nearly in half in 2013. Credit surely goes to the rising stock market, but last year's improvement in the funds' positions also owed much to the rise in bond yields.

Indeed, fully closing the gap between pension funds' assets and their future liabilities may depend more on higher interest rates than continued gains in the stock market.

Corporate pension plans among the Standard & Poor's 500 companies were last fully funded in 2007, before the financial near-meltdown of the following year. From 2009 to 2012, the plans' underfunding ranged between 16% and 23% -- with the worst shortfall in 2012, when S&P 500 index already had made a huge recovery from its recession lows.

These data cover the traditional, defined-benefit plans that…