I wrote the post "Hedge Funds Kiss Our Assets Goodbye" back in 2007. I was reacting in terror to the fact that then-NYC Comptroller William Thompson was shifting to "alternative" assets such as hedge funds and private equity. In an effort, I believe, to hide or deny the fact that the retroactive pension enhancements his union supporters got in deals up an Albany would wreck public services, by somehow getting the fantasy 8.0% rate of return.
Well now the New York Times has found those pension funds that shifted to alternative investments ended up paying higher fees to Wall Street while getting lower returns. Which is just what anyone who wasn't being paid to say otherwise would have predicted. I'm hardly a financial whiz, but the ripoff was clear to me. The Times article talks about what happened to public employee pension funds in Georgia, Pennsylvania, Oklahoma, California and Austin Texas — but not New York — over the past five years. So can someone tell me…how screwed are we? The ongoing spiral of tax increases and service cuts to pay for those deals is bad enough as it is, without Wall Street ripping us off more.