providing no real public good, but rather re-routing cash flow to elite bankers while engaging in voodoo economics. The latest incarnation of Wall Street's duplicity and fleecing of Main Street workers is through the recent nationwide trend of moving pension fund deposits into the hands of hedge fund financiers, all the while casting dispersions on workers and pension funds as the "cause" of crisis-like budget conditions in states the nation over.
Matt Taibbi, in his latest exposé, describes the looting of pension funds across the country by Wall Street bankers and hedge fund executives providing no real value, but collecting hundreds of millions of dollars in fees. In "Looting the Pension Funds," Taibbi describes that astonishing audacity of Wall Street in refusing to accept any blame for the financial crisis of 2008 as the leading reason that state's across the country have been plunged into budget crises, and instead fingering pension fund existence and funding as the reason for state shortfalls while lobbying states to turn the investment dollars in pension funds over to Wall Street, through hedge fund investment and the collection of billions of dollars of fees, simultaneously exposing pension funds to the inordinate risk associated with hedge funds, rarely the type of risk that pension funds should assume.
Per Taibbi: "This is the third act in an improbable triple-f***ing of ordinary people that Wall Street is seeking to pull off as a shocker epilogue to the crisis era. Five years ago this fall, an epidemic of fraud and thievery in the financial-services industry triggered the collapse of our economy. The resultant loss of tax revenue plunged states everywhere into spiraling fiscal crises, and local governments suffered huge losses in their retirement portfolios - remember, these public pension funds were some of the most frequently targeted suckers upon whom Wall Street dumped its fraud-riddled mortgage-backed securities in the pre-crash years.
Today, the same Wall Street crowd that caused the crash is not merely rolling in money again but aggressively counterattacking on the public-relations front. The battle increasingly centers around public funds like state and municipal pensions. This war isn't just about money. Crucially, in ways invisible to most Americans, it's also about blame. In state after state, politicians are following the Rhode Island playbook, using scare tactics and lavishly funded PR campaigns to cast teachers, firefighters and cops - not bankers - as the budget-devouring boogeymen responsible for the mounting fiscal problems of America's states and cities.
Not only did these middle-class workers already lose huge chunks of retirement money to huckster financiers in the crash, and not only are they now being asked to take the long-term hit for those years of greed and speculative excess, but in many cases they're also being forced to sit by and watch helplessly as Gordon Gekko wanna-be's like Loeb or scorched-earth takeover artists like Bain Capital are put in charge of their retirement savings.
It's a scam of almost unmatchable balls and cruelty, accomplished with the aid of some singularly spineless politicians. And it hasn't happened overnight. This has been in the works for decades, and the fighting has been dirty all the way."
And why select hedge funds to oversee investment of pension fund deposits? Surely it cannot be about performance. Again, from Taibbi: "On Wall Street, people are beginning to clue in to the fact - spikes notwithstanding - that over time, hedge funds basically suck. In 2008, Warren Buffett famously placed a million-dollar bet with the heads of a New York hedge fund called Protégé Partners that the S&P 500 index fund - a neutral bet on the entire stock market, in other words - would outperform a portfolio of five hedge funds hand-picked by the geniuses at Protégé.
Five years later, Buffett's zero-effort, pin-the-tail-on-the-stock-market portfolio is up 8.69 percent total. Protégé's numbers are comical in comparison; all those superminds came up with a 0.13 percent increase over five long years, meaning Buffett is beating the hedgies by nearly nine points without lifting a finger."
Can it be that the only real reason that pension deposits are being redirected to hedge funds and Wall Street, is so that Wall Street cronies can bilk investors out of millions of dollars of fees while cozying up to the politicians that direct the pension investments their way? Seems so.