CalPERS = Naughty, Still Gets Presents

According to CalPERS:

The California Public Employees’ Retirement System (CalPERS) today reported a 20.7 percent return on investments in preliminary estimates for the one-year period that ended June 30, 2011.

And the details:

As of June 30, 2011, the market value of CalPERS assets stood at approximately $237.5 billion. A year earlier, the fiscal year ended with $200.5 billion. Investment returns are based on compounded daily earnings over the year, including continuing member contributions and benefit payments, and don’t precisely correspond to one-year changes in market value.

And now for the fun part:
CalPERS’ value is down from its all-time peak of $247.7 billion on June 30, 2007 to $225.4 billion as of Sept. 8, 2011. That’s a decline of $22.3 billion, or 9 percent, in four years and three months. That includes employee contributions and state back-filling.

California Default Watch II

March 8 (Bloomberg) -- California Treasurer Bill Lockyer’s bid to sell $2 billion of bonds this week, his first issue since November, may benefit from a falling risk premium after lawmakers at his urging passed a bill to prevent the most- populous U.S. state from running out of cash.
A special session of the Legislature approved measures to chip away at a $20 billion budget deficit and give state officials powers to put off as much as $5 billion in spending. The delays are intended to sidestep cash shortfalls like those last year that forced the state to issue IOUs to pay bills and triggered cuts to its credit rating.
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And an excellent blogger I haven't mentioned in a long time, Of Two Minds:

Why California Is Doomed (March 9, 2010)

California is doomed for two simple but profound reasons: the cost structure is too high for most businesses to survive, and a boom-dependent economy.

The dysfunctions crippling California would easily fill a volume: a dysfunctional Legislature that has been gerrymandered to protect virtually every seat; a dysfunctional proposition system which enables special interests to craft Protected Fiefdoms via the ballot box; recalcitrant public unions who don't see anything wrong with public servants getting 90% of top-pay in pensions while still earning big bucks as "contract employees," an enormous population of undocumented workers who pay only sales taxes, and whose employers pay no payroll taxes, either-- and that just scratches the surface.
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The CalPERS Crush Part 1

The CalPERS financial bomb has gone off. The blast wave hasn't arrived to knock us all down is all. Revenues are falling further, unemployment is out of control. The UE fund is projecting a $23.7b deficit.

Employers, who support the fund through a tax on each worker, are expected to contribute $4.3 billion this year but that is nowhere near the $12.5 billion that is projected to be paid out in benefits. After eking out a $326.2 million surplus in 2008, the trust fund is expected to be $7.4 billion in the red by the end of this year.

Hey, no big deal. Nothing a one time $1500 surcharge for every remaining worker wouldn't cover. Right? The big news however is all the rotting fish at CalPERS. The consulting fee scandal. The ignored overpaying for financial services report. The failure to pursue specific performance clauses. CalPERS now even has a special blog to refute the lies being told about it.

CalPERS "stuff" following is intended to be backgrounder for those interested in saying "I saw all this coming." It's like decoding the Japanese diplomatic transmissions in Nov '41. We know lots of things but it all isn't in one place. THe insolvency crisis is long term. Let's talk liquidity. Because of muni pressures and the rats leaving the ship and a demographic bulge and recent "flexibility" granted end of career calculations a lot more people are retiring than was planned. That on top of a contributor (State, munis, districts) cash crunch that has them not making full contributions. Indeed some are reacting like the US at the United Nations. Years behind full dues. This was okay as long as the CalPERS was raking in cash. Those same years also made the watchmen lax in making sure they could met future promises.
Then the cash squeeze arrives. Lots of the crap on their books is so complex it can't be unwound. The people who set it up are gone and the counterprties are out of business. Trying to sell a large complex security in this market and they honestly won't get fair value. At least they have that part right.

List of $100,000 retirees:
California Pension Reform's 'The CalPERS 100K Club'
Plug in you favorite city/district and read the list. Shocking.

CalPERS resorts to counter propoganda:
CalPERS tweets back at 'misinformation' - Los Angeles Business from bizjournals:
The propoganda itself:
CalPERS Responds
Funny relations:
CalPERS reviewing tie with Apollo Management after steep losses -- latimes.com
More funny business:
He earned $53 million opening doors to CalPERS money -- latimes.com
CalPERS discloses more fees paid to Alfred Villalobos -- latimes.com
Calpers Knew of Foreign-Exchange Trading Hits - WSJ.com

I'm still working on evidence of massive overpaying to retirees and the instances of outrageous double dipping.