he seems pretty eager to criticize Governor Patrick and the legislature right now….almost as if he’s up on a high horse. If he’s in charge of the state’s debt and pension funds, shouldn’t he be concerned about these losses and protecting the funds from further losses in the uncertain economy given that it may take years to earn back the $8B? http://www.boston.com/news/loc…
Maybe a “we’re all in this together to sure up the state’s finances” attitude would make sense from our public officials?
According to State House News-
“…Treasurer Timothy Cahill said Tuesday that Patrick is not moving swiftly enough to rein in spending.
“I’d like to see him move quicker,” Cahill said in response to a question about whether the governor’s spending curbs had been sufficient. “Whether it’s enough, I don’t know. I don’t know what the revenue numbers ultimately will be.
…Asked by the reporter whether the economic climate had provided him a platform to elevate his profile, Cahill replied, “I’m only reacting to what I’m dealing with in the market, and specifically because my job is cash and debt, and that’s where the problems are now. I would like to see both the governor and the Legislature slow spending down…”
Guess not.
YD pension funds are invested in a market which commonly have short-term fluctuations in value but which over the long term rise in value.
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p>Take a look for yourself.
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p>There isn’t much that Cahill can do to protect the funds from short-term (albeit drastic) losses in a falling market that wouldn’t have negative effects in the long term health of the fund.
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p>Cahill called for restrictions in spending because the state just had to sell a $750M bond to keep the state solvent through this fiscal year. To put it in more simple terms — we are using next year’s money to pay for this year’s expenses.
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p>And this covers only covers us through November.
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p>I know that when you don’t understand things fully that it may seem like Cahill is up on a high horse. But, by calling on the state to reign in spending, he actually is doing something proactive to protect the state’s ability to meet its current and future obligations to pensioners.
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p>There isn’t as much discretionary money in the budget as there once was. It will come back. It will just take some time.
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p>Now, maybe you’re simply worried that Cahill is dissing your governor. Maybe you’re right. But, consider this:
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p>The state treasurer is not appointed by the governor. The state treasurer is elected by the people of Massachusetts. If the actions or inaction of Governor or the Legislature are harming the fiscal health of the state, the State Treasure should call it out. His responsibility is to the people, not the administration.
I used them because the poster did. I was concerned this younger generation might skip over everything else. đŸ™‚
but I think this is unfair.
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p>Absent a crystal ball, invested pension funds will lose value in broad downturns. Unless they are never in the market at all, in which case they will fail to grow in real terms and will require much greater support from tax revenues.
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p>What’s missing from this analysis is a comparison of the fund’s performance with others and with the market as a whole. If you have that information and it shows Cahill has screwed up, I will join your criticism.
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p>His criticism of Patrick seems gratuitous.
I agree that this is a bit unfair, but I think it is important to note that Cahill very aggressively pursued a strategy of investing MA pension dollars in hedge funds and other higher-risk investments. link
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p>He also has been a strong supporter of Michael Travaglini’s management of the pension system, including supporting significant increases in his compensation and performance bonuses, even in down years. link
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p>This was at pretty much the same time that they were firing several investment managers whose returns were down.
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p>Now, there might be good reasons to do all of these things, but the appearance isn’t the best. If I were Cahill, I probably would tell Travaglini that he wasn’t getting any bonus this year and to tough it out on the $300k he’s pulling down.