Momentum for bonds over cuts to shore up state pensions

[Panich52]

New York Times

“Interest in so-called pension obligation bonds is expected to intensify in the wake of a recent Illinois Supreme Court decision that rejected the state’s attempt to overhaul its severely depleted pension system … The government will issue the bonds; the pension system will invest the proceeds; and the investments will earn more, on average, than the interest rate on the bonds … [But] it does not take risk into account.”

http://mobile.nytimes.com/2015/05/28/business/dealbook/borrowing-to-replenish-depleted-pensions.html?referrer=

[el_bryanto]

1. Problematic

That last phrase particularly. I do favor investment of public monies, but you have to account for risk in your model or it's going to be a big problem. What if we have another 2008? And frankly given the Obama administrations inability to pass meaningful Wall Street Regulation, it seems at least possible that we will see another crisis.

Bryant