Wednesday, April 1, 2009

Charles Millard says ...

Ask me in 20 years. The question is whether policymakers will have the fortitude to stick with it.
Yes, the head of the Pension Benefit Guaranty Corporation (PBGC), the government agency that guarantees worker's pension benefits in the case of a bankruptcy, decided to invest in the stock and real estate market literally months before the crash. Boston University finance professor Zvi Bodie, an advisor to the PBGC, did not like the strategy. Here's what the news article said about Professor Bodie's dissent ...
Bodie, the BU professor who advised the agency, questioned why a government entity that is supposed to be insuring pension funds should be investing in stocks and real estate at all. Bodie once likened the agency's strategy to a company that insures against hurricane damage and then invests the premiums in beachfront property.
Source - Hullabaloo

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