In a frenzied bid for higher profits in the decade following the 2008 financial crisis, Wall Street pension fund managers have siphoned as much as $624 billion from Americans’ retirement savings — and, as a direct result, taxpayer coffers — through a vicious combination of high fees and foolish investment strategies, according to an analysis published Thursday by Yahoo Finance.
The steepest costs to taxpayers have stemmed from Wall Street pension managers’ commitment to so-called alternative funds, which invest in private equity and hedge funds rather than traditional stocks and bonds.
“The total amount pension funds could have saved by simply investing in index funds could be more than $1 trillion,” notes Yahoo Finance reporter Dion Rabouin. “Because pensions are guaranteed, the underperformance has hit taxpayers in the form of budget cuts for schools, hospitals, and libraries and decreased spending on infrastructure, healthcare, and other public projects.”
Responding to Yahoo’s analysis in a series of tweets on Thursday, Capital & Main journalist David Sirota observed that in five years of reporting on Wall Street’s investment tactics, he has found that “most people (including policymakers) still have no idea that skimming fees off public employees’ retirement savings has become one of the largest sources of profits for Wall Street moguls.”
Wall Street executives have sucked $600 billion out of public employees’ retirement savings in the last decade — and yet the political conversation over public pension shortfalls basically blames ripped-off public employees for being greedy. https://t.co/npxkzos9Ti
— David Sirota (@davidsirota) July 12, 2018
Despite their continued underperformance, “public pension fund managers have thrown increasingly more money at these complex and pricey alternative funds” in pursuit of “higher gains,” Yahoo notes.
Because these gains haven’t materialized, public pensions have lost hundreds of billions of dollars over the past decade, and taxpayers have been left to pick up the tab.
“The sales pitch of the alternatives community is, ‘We’ve got some kind of secret sauce. Our returns are going to be higher than stocks and bonds,'” Jeff Hooke, a lecturer at Johns Hopkins University who has authored several studies on public pensions, said in an interview with Yahoo Finance. “The only problem with the sales pitch is it doesn’t work.”
The Intercept’s Briahna Joy Gray concluded on Thursday that Wall Street’s continued abuse of public pensions in an effort to boost profits is a clear demonstration that “obscene wealth doesn’t come out of the blue, but that it’s a direct consequence of exploitation.”
Regular people are realizing more and more that obscene wealth doesn’t come out of the blue, but that it’s a direct consequence of exploitation.
Exiting times. https://t.co/ZgjWuNzNjX
— Briahna “Intersectionality Includes Class” Gray (@briebriejoy) July 12, 2018
Truthout Is Preparing to Meet Trump’s Agenda With Resistance at Every Turn
Dear Truthout Community,
If you feel rage, despondency, confusion and deep fear today, you are not alone. We’re feeling it too. We are heartsick. Facing down Trump’s fascist agenda, we are desperately worried about the most vulnerable people among us, including our loved ones and everyone in the Truthout community, and our minds are racing a million miles a minute to try to map out all that needs to be done.
We must give ourselves space to grieve and feel our fear, feel our rage, and keep in the forefront of our mind the stark truth that millions of real human lives are on the line. And simultaneously, we’ve got to get to work, take stock of our resources, and prepare to throw ourselves full force into the movement.
Journalism is a linchpin of that movement. Even as we are reeling, we’re summoning up all the energy we can to face down what’s coming, because we know that one of the sharpest weapons against fascism is publishing the truth.
There are many terrifying planks to the Trump agenda, and we plan to devote ourselves to reporting thoroughly on each one and, crucially, covering the movements resisting them. We also recognize that Trump is a dire threat to journalism itself, and that we must take this seriously from the outset.
After the election, the four of us sat down to have some hard but necessary conversations about Truthout under a Trump presidency. How would we defend our publication from an avalanche of far right lawsuits that seek to bankrupt us? How would we keep our reporters safe if they need to cover outbreaks of political violence, or if they are targeted by authorities? How will we urgently produce the practical analysis, tools and movement coverage that you need right now — breaking through our normal routines to meet a terrifying moment in ways that best serve you?
It will be a tough, scary four years to produce social justice-driven journalism. We need to deliver news, strategy, liberatory ideas, tools and movement-sparking solutions with a force that we never have had to before. And at the same time, we desperately need to protect our ability to do so.
We know this is such a painful moment and donations may understandably be the last thing on your mind. But we must ask for your support, which is needed in a new and urgent way.
We promise we will kick into an even higher gear to give you truthful news that cuts against the disinformation and vitriol and hate and violence. We promise to publish analyses that will serve the needs of the movements we all rely on to survive the next four years, and even build for the future. We promise to be responsive, to recognize you as members of our community with a vital stake and voice in this work.
Please dig deep if you can, but a donation of any amount will be a truly meaningful and tangible action in this cataclysmic historical moment. We’re presently working to find 1500 new monthly donors to Truthout before the end of the year.
We’re with you. Let’s do all we can to move forward together.
With love, rage, and solidarity,
Maya, Negin, Saima, and Ziggy