What's Wrong With Expecting a 28,000,000 Dow?

Listen, it's not THAT unrealistic, look at the Dow from March 2009 to now! It's a miracle!

Schwarzenegger economic adviser David Crane writes about the bizarre situation in WSJ saying in 1999, then governor Gray Davis signed into law a bill that made looting California legal and gave state pensioners quite a boost in income based on completely unrealistic projections of fund performance (you know, the sort of stuff prospectuses warn about).

WC Varones shares a bit of CalPERS math (via WSJ):
What Calpers failed to disclose, however, was that (1) the state budget was on the hook for shortfalls should actual investment returns fall short of assumed investment returns, (2) those assumed investment returns implicitly projected the Dow Jones would reach roughly 25,000 by 2009 and 28,000,000 by 2099, unrealistic to say the least (3) shortfalls could turn out to be hundreds of billions of dollars, (4) Calpers's own employees would benefit from the pension increases and (5) members of Calpers's board had received contributions from the public employee unions who would benefit from the legislation. Had such a flagrant case of non-disclosure occurred in the private sector, even a sleepy SEC and US Attorney would have noticed.

Hahahahahahahahaha a 28,000,000 Dow by 2099! Now that's funny.

Actually if a 12000 Dow in the midst of double-digit unemployment is possible, who's to say 28 mil is unrealistic? The nerve of some people.

Fuck schools, fuck roads, fuck social services, as long as our state employees are taken care of, what the hell do we need the rest of that shit for?!

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


Banker said...


Anonymous said...

I do want to rock n roll all night and I do want to party every day.

John said...

8.25% annual growth. Unrealistic in a long era of low inflation, but not beyond the bounds of what those selling investments often ask us to consider credible.

What's unrealistic about a 28 million Dow? Along with $50,000 cups of coffee and $75 million cars!


Anonymous said...

probably the tip of the iceberg

I suspect that Blago the Indicted wasn't alone in this kind of pension fund dealing. Your pals at Goldman (and other "investment banks" of the same stripe) probably had a few fingers in clusterfuck pies such as this as well. The environment was/is corrupt and people elected corrupt participants. Not the end of the world but A + B usually equals C.


and yes, I do still want to rock n roll all night and I do want to party every day.

Anonymous said...

p.s. Destroyer - very cool album cover. my pal Dan and I used to get drunk on mouthwash and smuggled in hooch and rock out to Detroit Rock City on that album. he's now an electrical engineer with 6 or 7 kids who are entering those wonderful teen years now - they're probably putting him through hell.