Don't want to spoil your week-end

and I said I wouldn't say I told you so but this article caught my eye.

Here's the first couple of paragraphs..."Will your pension take part of the $1 trillion hit from the subprime meltdown?
Posted Nov 29th 2007 8:49PM by Peter Cohan

The Associated Press reports that local Florida governments have been withdrawing assets from its state pension fund at an astonishingly rapid clip. Specifically, in the last two weeks local Florida governments have withdrawn 40% -- or nearly $10 billion -- from the state pension pool. At this rate, the fund would have been 100% depleted by the end of 2007. So The State Board of Administration held an emergency meeting to halt further withdrawals.

If you think about this for a minute, you'll realize that this is pretty much the same thing that happened during the Great Depression when people withdrew their money from banks because they were afraid of losing their savings. In response, the government declared bank holidays. That is, the government told them that they could not get their hands on their money.

What -- you might ask -- is the reason that Florida local governments were so eager to get their hands on that pension money? Florida invested in some mortgage-backed securities (MBSs) -- which were downgraded by credit rating agencies to the point where they were below the standards permitted for a pension fund. Specifically, $700 million in asset-backed commercial paper was downgraded below "purchase credit rating guidelines."
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So the state pension fund has to sell $700 million worth of this junk. What do you think they'll get? Maybe twenty-five cents back on the dollar? Does that mean three quarter of the retirees dont get their pensions, or every one gets a quarter of what they were planning on? On the bright side the $700 million was only a small fraction of their total holdings. On the not so bright side, the rest of the stuff they're holding is probably just as bad. Remember, people are just starting to default on their mortgages.

And we still have funds holding all those corporate junk bonds which financed all those overpriced buy-outs of the last 10 years. That money's not going to be paid back.

And just like anybody could borrow money to buy a house, even dogs and kids could get credit cards. Car loans? Didn't we talk about how everybody is upside down on their car loans. Consumer debt default will sky-rocket in the next couple years. And, yes, the bankers, credit card companies and car loan companies were bundling those loans up to and selling them to the pension funds and insurance companies just like the mortgages.

And of course the sad part is that the schemers will take their billions and retire somewhere they don't have to deal with the unpleasant consequences of the fraud they perpetrated. I would say it's the innocent who will pay the price, but they weren't innocent of being stupid, and people who elect Clintons and Bushes aren't stupid by accident, they work at it. Think they'll be able to sue? Not a chance, Bush's "conservative" Supreme Court isn't conservative when it comes to overturning Roe v Wade, or protectiong constitutional civil liberties, but they're damn conservative about letting poor people sue rich people. I'm not making it up - check it out.


There's more there if you want to read about it.