We will use yesterday's articles to discuss individual public policy surrounding finance. LIBERALIZATION OF BANKING MARKETS-----is what Clinton started in 1990s and policy like Trans Pacific Trade Pact seek to eliminate ALL regulation and oversight so global 1% can do anything to earn profit especially creating illegal financial policies that will loot all wealth assets our 99% have invested these several decades being assured they were safe. What we saw in looking at international financial policy are nations tied to Foreign Economic Zones having their own sets of financial policy looking like our US policies that protected and regulated investments being slowly dismantled as here in US. The INSURANCE industry was WALLED OFF from investments and Wall Street by GLASS STEAGALL WALL. Through last century there was no expectation from INSURANCE CORPORATIONS of grand profits----they worked for PROTECTION FOR CONSUMERS AGAINST FINANCIAL LOSSES.
Consumers paid an insurance premium and when disaster struck-----they received FAIR MARKET VALUE for losses. That payment was made by the expanded consumer base paying premiums. Of course US citizens have these several decades paid far more in premiums then they use just as these LIBERALIZATIONS AND DEREGULATION are MOVING FORWARD.
'With each step toward liberalization, we are likely to see increasing numbers of insurers diversifying into more international and alternative investments'.
That quote states---our US insurance corporations are being made to feel FORCED to enter into Wall Street and global investments we all know are fraudulent and high-risk.
THE MOTTO IN US SURROUNDING BANKING AND INSURANCE WAS 'DULL AND BORING' BECAUSE IT WAS SEPARATE FROM GLOBAL INVESTMENT AND STOCKS.
Clinton-era opened the door to exposure of all insurance to global banking just as global banking turned most criminal. Sadly, for our global 99% of citizens in developing nations tied to FOREIGN ECONOMIC ZONES----they never had the chance to live under a RULE OF LAW where all 99% of WE THE PEOPLE are protected EQUALLY----as in US. These global citizens are being exposed immediately to the JONAS CHUZZLEWITS AND TIGGS.
'that they need to go “back to basics” and return to their fundamental mission of being “cautious and prudent” investors'.
Think this above statement mirrors US DODD FRANK AND FINANCIAL REFORMS that NEVER HAPPENED? Indeed, it is FAKE morals and ethics.
Remember Obama kept using the term PLAIN VANILLA WRAPPER as his US Treasury and US FED leaders unleashed the worst sovereign debt fraud in world history. Why is China just now in 2017 having the global 1% give its citizens the DODD FRANK FAKE FINANCIAL REFORM talk? Because China and other Foreign Economic Zone developing nations were needed to launder these several years of OBAMA's US Treasury bond and state municipal bond fraud before pretending to become HONEST.
May 28, 2017 11:17 PM FINANCE
Insurance Dull and Boring? Not in China
By Yang Qiaoling and Han Wei
(Beijing) – A 10-year ban on the billionaire head of one of China’s most aggressive insurance companies, a ban on sales of risky but lucrative short-term life insurance policies, misuse of billions of yuan of premium income, hostile takeovers and the downfall of the country’s top insurance regulator on corruption allegations.
Just some of the headline-grabbing events that have shaken the dull and boring business of insurance in China over the past year. And there may be more to come as the authorities intensify efforts to tame an industry that’s been on a wild ride over the last few years helped along by lax supervision, liberalization that’s opened the sector to aggressive competition and expansion, and a good dollop of corruption.
The China Insurance Regulatory Commission (CIRC) has put the industry on notice. Chen Wenhui, a vice chairman at the watchdog, told companies back in December that they need to go “back to basics” and return to their fundamental mission of being “cautious and prudent” investors. He is now running the commission after Xiang Junbo, a colorful character who led the organization for almost six years, was put under investigation by the Communist Party’s anti-graft watchdog in mid-April.
Since Xiang’s departure, the CIRC has intensified a crackdown that began last year as part of a wider campaign to rein in financial risks and leverage ordered by the Chinese leadership. The commission has issued five major policy documents to tighten oversight over all areas of insurance companies’ operations – from investment activity and risk control to marketing and the design of policies. The aim is to uncover and stop irregular, illegal and risky practices that could threaten the solvency of insurers and the industry as a whole.
Companies have been ordered to examine their existing products to ensure they comply with the new rules, and assess their financial health and all aspects of their business. Results of internal reviews on capital risks have to be submitted by June 15 and any problems identified with their life insurance products must be rectified by Oct. 1.
“We’re having to carry out exhaustive inspections to root out risks,” an executive with an insurance company, who declined to be identified, told Caixin.
In May alone, the commission issued two policy documents calling for stricter industry oversight, four guidelines or draft guidelines specifying new requirements on life insurance products and two directives of industry inspections.
Painful Ulcers
Market analysts said the slew of regulatory moves indicated regulators’ determination to clamp down on misconduct, but their impact will depend on how strictly they are implemented.
“These problems are like ulcers that will create more pain in the future if they aren’t fixed as soon as possible,” one analyst told Caixin.
The root of the industry’s current turmoil can be traced back to 2011 when Xiang, a former auditor and central banker, took the helm at the CIRC. He embarked on a strategy to open up the sector to competition and dismantle rules that had restricted where insurers could invest their premium income. The aim of the overhaul was well meaning – to improve companies’ competitiveness, help them boost returns to their policyholders, and channel money into investments that would support economic growth.
Dozens of new insurers appeared, many with opaque shareholding structures. At the end of 2010, there were 126 companies licensed to conduct life and general insurance business. From 2011 to February 2017, the CIRC issued 41 new business licenses. Among the companies spawned by the liberalization were Foresea Life Insurance and Evergrande Life Insurance, which have become poster children for the industry’s troubles.
The strategy breathed new life into the industry. Its assets nearly tripled from 6 trillion yuan ($870 billion) in 2011 to nearly 16 trillion yuan by February 2017, and average investment returns rose to 7.5% in 2015 from 5% in 2013, CIRC data show.
Total insurance premium income grew by an annual average 16.8% from 2011 to 2016 and jumped by 27.5% in 2016 to 3.1 trillion yuan. China overtook Japan as the world’s second-largest insurance market measured by premium income in 2016.
Assets under management surged to 14 trillion yuan by the end of March 2017, almost double the 7.7 trillion yuan at the end of 2013, and more of the money was pouring into higher-risk assets. The percentage invested in bank deposits and bonds fell to 49.2% from 72.8% at the end of 2013, while investment in securities rose to 12.7% of the total from 10.2%, and the proportion held in other investments rose to 37.5% from 16.9%.
Universal Life Force
The industry’s expansion was spurred by the launch of innovative but risky products as many of the smaller, more nimble insurers fought to gain market share and boost their assets and profits. They were helped by a loosening of regulations that abolished limits on the returns they were allowed to offer policyholders.
The most prolific growth came from universal life insurance policies, short-term policies with maturities ranging from a few months to three years that came with minimal life-insurance benefits but attracted policyholders with high yields and no-penalty early cancellations. The regulator gave the products a turbo boost in 2015 by abolishing the 2.5% cap on guaranteed returns, allow insurers to offer much higher yields.
Sales boomed. CIRC data show that premium income from universal insurance policies exceeded 1.18 trillion yuan in 2016, up from 392 billion yuan in 2014, and accounting for a third of the premium income of the entire industry. As of the end of last year, 70 of the country’s 76 life insurance companies were offering these policies. For 14 of them, such investment-linked policies accounted for more than 70% of their total premium income.
But to pay higher returns to policyholders, insurers had to invest in assets with higher risks, such as stocks and overseas property. These were less liquid and longer-term investments and left companies with liquidity risks that had the potential wipe out their capital if they were unable to raise new money to redeem maturing policies and unable to sell assets to fill the gap.
Ironically, the crackdown on the issuance and conditions of universal life policies over the past year has now precipitated the very liquidity crisis regulators were worried about. The regulator has stopped some companies, including Foresea Life from issuing new universal life policies. That’s sent their premium income crashing and left them struggling to meet redemptions without selling the underlying investments.
Life insurance premium income rose by 37.2% year on year in the first quarter to 1.32 trillion yuan, but sales of universal life policies slumped by 61.2% to just 231 billion yuan, according to CIRC data.
Foresea Life, one of the biggest players in the market, saw its premium income slump by 70% to 13.5 billion yuan in the first quarter, according to Caixin calculations based on regulatory data. A source close to the company said it swung to a net cash outflow from operating activities of 9 billion yuan from an inflow of 36.6 billion yuan a year earlier.
Default Warnings
The company has pleaded with the regulator to lift its ban on the sale of new products. In a letter in early March and again in late April, it raised fears that the liquidity squeeze could lead to mass defaults on redemptions and to social unrest as policyholders failed to to get their money back. But so far, the CIRC has held firm.
Foresea Life’s problems have heightened concerns about the liquidity conditions of other aggressive insurers. Calculations by Caixin found that in the first quarter of 2017, 17 life insurance companies report net cash outflows, up from eight in the same period last year, indicating they paid out more than they earned in income from their insurance premiums.
Several insurers, including Anbang Life Insurance, Forsea Life and Evergrande Life Insurance, saw their comprehensive solvency ratio, a key measurement of an insurer’s ability to pay back all its liabilities, fall to close to the regulatory red line of 100% in the first quarter, according to their financial reports.
The CIRC has played down these concerns. On May 23, it said that only five out of 170 insurers that it had inspected had comprehensive solvency ratios near the red line and that the overall ratio for the industry was at 238%. It said risks in the industry were generally “controllable.”
The success of universal life insurance products left many upstart private insurers with more money than they knew what to do with. Their controlling shareholders, often hidden behind opaque ownership structures, started to use the companies as their personal ATMs to fund aggressive investments including hostile takeover bids for listed companies in concert with other investors.
The most high-profile case involved Foresea Life which was controlled by property tycoon Yao Zhenhua through his financial and real-estate conglomerate Baoneng Group. In late 2015, Baoneng started secretly buying up shares in China Vanke, one of the country’s biggest real-estate developers and subsequently launched a hostile takeover that led to a bitter months-long battle for control that sucked in other property developers and insurance companies.
Corporate ‘Bandits’
Baoneng finally retreated but not before it emerged that the company had funded much of its investment in Vanke through borrowing, including the use of premium income Forsea Life had raised from selling universal life policies.
In a speech in December, Liu Shiyu, the head of the securities regulator, attacked corporate raiders as “bandits” whose actions displayed decayed humanity and ethics, although he didn’t name names.
In February this year, Yao was banned from the insurance industry for a decade after an investigation by the CIRC found that Forsea had violated the country’s insurance laws and misused insurance funds.
Business registration documents show that a number of insurance companies have a major shareholder controlling over 33% of company stake, including Foresea Life, Guohua Life Insurance, Evergrande Life Insurance and the Asia-Pacific Property & Casualty Insurance Co.
But some owners hide behind a complex network of affiliates and companies that obscure the ultimate controlling shareholder. Anbang Insurance Group, an acquisitive Chinese insurer which bought the Waldorf Astoria hotel in New York, appears to be evenly held by 39 shareholders, according to its business registration documents. But a Caixin investigation found that 37 of its non-state shareholders are linked to the company’s chairman Wu Xiaohui through dozens of subsidiaries and affiliated companies.
The ownership of Beijing-based Kunlun Health Insurance Co. has also come under scrutiny in the Chinese media, with reports citing business registration records as showing that at least four shareholders were linked to Guo Yingcheng, the chairman of property developer Kaisa Group, and his family, giving them control of the insurer.
Kunlun denied the reports but in late 2016 the CIRC asked the company to explain its ownership structure and asked it to submit documents by March 6. The commission has yet to make any public statement about its findings.
Closer Oversight
Several industry sources told Caixin that a lack of funding and personnel is hampering the commission’s ability to conduct investigations. Nevertheless, the CIRC is stepping up efforts to put insurance companies’ shareholders and their funding sources under closer oversight. It made an initial move at the end of 2016, issuing a draft policy with plans to reduce the cap of a single shareholder’s holding in an insurance firm from 50% to 33% to prevent absolute control.
In April, the CIRC further required insurance companies, whose majority shareholder owns over 50% stake, to adjust their voting policies to what’s known as a Cumulative Voting System, a mechanism designed to give minority shareholders greater voting power when the company’s majority stake is controlled by a single shareholder.
In a May 7 document, the regulator vowed to plug regulatory loopholes and strengthen its supervision of insurers’ ownership structure and the authenticity of their funds, and improve monitoring of their investment allocations.
The commission’s regulatory onslaught has also tackled looming liquidity risks from insurers’ investments in the highly volatile stock market, leveraged financial products and long-term equity investments.
In January, insurance companies were told they needed to obtain regulatory approval for equity investments and banned them from using client funds for the purpose.
In a document released on May 7, the commission again pledged more stringent supervision of insurers’ investments in highly leveraged, structured financial products and two days later ordered all insurance companies to launch internal reviews of their investment and capital flows.
The CIRC also said it would impose stricter control on "inappropriate" product innovation and continue its crackdown on the short-term, high-yield investment-linked products to control the liquidity risks stemming from the mismatch between the short-term nature of the policies and the long-term nature of the investments being made with the cash.
Back to Basics
Several analysts told Caixin that the tightening scrutiny of insurance products will hit many small insurers disproportionately hard as they were the ones who had relied heavily on sales of the investment-linked policies.
“The regulator is forcing insurance companies to return to traditional protection-style policies,” a source with an insurance company told Caixin. “This is bound to affect the growth of the industry but it’s too early to say just how bad it will get.”
Insurance companies are now under severe pressure as they struggle to restructure their business operations to cope with the new climate of caution another insurance executive said.
“The business model many insurance companies followed to grow rapidly was unsustainable,” he said. “The days of reckless growth are over.”
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When our US insurance corporations received premiums from consumers they were able to place that money in banks knowing the deposits were insured because they were not tied to INVESTMENTS----they were deemed SAVINGS. Those funds accumulated interest and that interest was the profit for insurers.
'What Types of Assets Are FDIC Insured?The FDIC only insures deposits, not investments. This means your checking, savings and money market deposit accounts are probably insured unless your financial institution has declined FDIC coverage, which is unlikely. The FDIC also insures certificates of deposit (CDs), money orders and cashiers' checks'.
The US bond market was always that safe low-risk place to put savings including our insurance and pensions. When insurance corporations were allowed to leave regular bank savings and start investing they used the BOND MARKET because it made its consumers feel that investment was safe.
While Clinton-era broke the banking and investment wall to stage these THEFTS----Obama era broke the US Treasury bond and municipal bond market safety by making them SUBPRIMED AND JUNK BONDS. They did this by allowing bonds be tied to deals known to be corrupt and high risk by the trillions of dollars and then selling them globally blowing our US Treasury bond and corporate bond market into JUNK BOND SUPER-HIGH RISK.
'This range of asset yields nearly covers the spectrum of fixed-income interest rates. High-yield bonds (so-called “junk” bonds) have significantly greater default risk; consequently, their yields are much closer to those of equities'.
Who is getting rich with these policies? Those shareholders of global investment firms and global insurance firms-----those corporate executives. Who is being fleeced and thrown under the bus yet again? The 99% of WE THE PEOPLE IN US AND GLOBAL 99% OF CITIZENS.
INVESTOPEDIA is a great resource in understanding financial instruments but it is tied to global 1% so do not go there for investment advice-----here we see a description of MUNI-BONDS in 2015 saying they are the safest of investments even today when we KNOW that market will crash and burn very soon.
Mutual Funds Are Not FDIC Insured: Here Is Why
By Claire Boyte-White | October 2, 2015 — 1:12 PM EDT
Share
Mutual funds, like investments in the stock market, are not insured by the Federal Deposit Insurance Corporation (FDIC) because they do not qualify as financial deposits.
What Is the FDIC?
The FDIC is an independent, government-established agency formed in 1933 in response to the widespread failure of America's banks in the 1920s and 1930s, which contributed to the Great Depression. The debilitating impact of the financial crisis prompted the government to develop strategies for preventing future economic collapse.
One way to prevent the kind of domino effect of the Great Depression is to isolate economic turmoil in one industry and prevent it from bleeding over into the rest of the economic structure. By monitoring potential threats to banking and thrift institutions, the FDIC seeks to minimize the impact of economic downturn on depositor funds and the rest of the economy.
The primary way the FDIC protects depositors from losing hard-earned dollars in the event of a financial collapse is by insuring deposits. As of 2015, the FDIC insures deposits up to $250,000 per depositor, per institution based on account type. If an insured bank becomes insolvent and fails, depositor funds are insured by the FDIC up to this maximum. While banks may fail, the FDIC protects individual Americans from needlessly suffering the same fate.
Though created by U.S. Congress, the FDIC does not receive any government funding. Instead, financial institutions pay a premium for deposit insurance, much as an individual pays a premium for homeowners' or auto insurance. In addition, the FDIC invests in government-issued Treasury bonds (T-bonds) that generate regular interest income.
What Types of Assets Are FDIC Insured?
The FDIC only insures deposits, not investments. This means your checking, savings and money market deposit accounts are probably insured unless your financial institution has declined FDIC coverage, which is unlikely. The FDIC also insures certificates of deposit (CDs), money orders and cashiers' checks.
What Is Not Insured?
Investment vehicles are typically not insured by the FDIC. In addition to mutual funds, this includes investments in stock and bond markets, annuities, life insurance policies and Treasury securities.
There is often some confusion when it comes to money market mutual funds, because money market deposit accounts are FDIC-insured. The difference between these two types of accounts lies in their respective risk levels. While it is technically possible, though unlikely, to lose your original investment in a money market mutual fund, money market deposit accounts generate interest but carry no risk to your deposited funds.
Individual retirement accounts (IRAs) are another common source of confusion. IRA savings can be invested in a number of different ways, some insured by the FDIC and some not. Basically, if a given type of account is FDIC-insured when it includes regular funds, then it is also insured when those funds are part of an IRA. IRA funds deposited in a standard savings account or money market deposit account, for example, are insured. Any IRA savings invested in mutual funds or stocks are not.
Why Are Mutual Funds Not Insured?
The goal of the FDIC is to ensure the citizenry is not bankrupted by another financial crisis. When banks failed during the Great Depression, individual depositors were unable to withdraw their funds because the banks did not actually have the cash to back up all their deposits. The result was that poor business practices on the part of the banking industry ended up costing millions of innocent Americans their life savings. Prior to 1933, there was no federal protection in place to prevent the injustice. The aim, therefore, of the U.S. government in creating the FDIC was not to protect Americans from ever losing money, but rather to protect them from losing money through no fault of their own.
Unlike checking or savings accounts, mutual funds and other securities carry a certain amount of risk. While some amount of risk may be necessary for big profits to be made, investors know going in that there is a chance they could lose everything. This is why the FDIC does not insure investments.
When all is said and done, investing is basically just high-tech gambling. While you expect an insurance company to reimburse you if your insured property is stolen from your home, you do not expect a casino to reimburse you if you lose money at the poker table. Every gambler knows the risk of loss as soon as he sets foot on the casino floor, and the same is true of investors.
Securities Investor Protection Corporation
Though there is no entity that insures you against investment loss due to market fluctuation, the Securities Investor Protection Corporation (SIPC) does protect investors from loss if their brokerage firms fail. Customers of SIPC-member institutions who lose money as a result of company liquidation are insured up to $500,000, with a $250,000 cash sublimit. In addition to mutual fund investments, the SIPC protects investments in stocks, bonds, options, Treasury securities and CDs.
How to Limit Mutual Fund Risk
Of course, not losing your capital in the first place is always better than any insurance policy. Luckily, there are ways to invest in mutual funds without incurring too much risk, all but eliminating the need for federal protection.
One of the chief benefits of mutual funds is their customizability. Most fund managers offer portfolio options that cater to a wide range of investing styles. While stock funds tend to be higher risk, they also carry a greater chance for big profits. However, if you are looking to minimize risk, stock funds are not your best bet.
On the other end of the spectrum are money market mutual funds, which invest only in short-term debt securities, such as government and municipal bonds. These types of investments do not generate huge returns but are backed by the reputation and credibility of the U.S. government, making them highly stable. Often referred to as cash equivalents, money market funds are a great alternative to standard savings accounts.
If you are slightly more risk-tolerant but not yet ready to take on the volatility of a stock fund, you can likely find a bond or balanced fund that meets your risk requirements. Bond funds include a variety of corporate and government bond investments. While they are slightly riskier than money market funds, most bond funds are generally considered safe, stable investments. Balanced funds are the most customizable of all because they include both stock and bond investments in a wide range of ratios. This means you can easily find a balanced fund that has just the right amount of risk for your investment style.
Though it is not the same as an FDIC safety net, a little research and some careful planning can enable you to invest in mutual funds with confidence, knowing you minimized risk while still putting your money to work.
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BERNANKE AND GEITHNER THEN LEW as US FED and US Treasury were the top players in subpriming our US bond market just as GREENSPAN AND GEITHNER were top in subpriming our mortgage loan market-----
After several years of Obama subpriming-----the 99% of WE THE PEOPLE are now being led to believe that they can navigate around all that junk-bonding holding all their retirement 401K, pensions, life insurance, and most recently a massive health industry insurance premium account-----by simply moving to yet more and more and more complex financial instruments global 1% are telling us will PROTECT OUR ASSETS AND WEALTH.
Now, we are hearing of BOND AND ANNUITY protections tied to global investments and WORLD BANK as the way to save our INVESTED WEALTH.
That is of course NEGATIVE INTEREST FINANCIAL INSTRUMENTS.
We cashed in all our 401K-pension assets in late 1990s as we saw the BREAKING OF GLASS STEAGALL by Clinton and right wing knowing the JONAS CHUZZLEWITS AND TIGGS were on the loose and remained free of them since. This is what each US citizen tied to pensions, 401K, bonds and annuities need to think about------there does not appear to be ANY INTENTION of not taking ALL OF 99% OF PEOPLE'S WEALTH in MOVING FORWARD------we are not financial experts but we do KNOW PUBLIC POLICY AND ITS HISTORY OF REPEATING ITSELF.
Now, those 5% to the 1% often those shareholders thinking they are insiders or BROTHERS because they are FREEMASONS AND GREEKS------they are the MR PINCHS' holding on to PECKSNIFF by the leg thinking him great because he pretends to protect PINCH. They are no more protected from these criminal market deals then any of those 99% of citizens.
Muni-Bond Vultures Rethink Risks Lurking in Market's Junk Yard
By
Kate Smith
and
Amanda Albright
May 30, 2017, 6:00 AM EDT
How Did Puerto Rico Go Bankrupt?
Puerto Rico’s bankruptcy has left distressed municipal-debt traders like Hector Negroni wondering if the old rules still apply -- not just in San Juan, but across the U.S.
The island’s effort to shred protections written into its constitution to determine which creditors get paid first has made Negroni reconsider the high-yield, high-risk corner of the $3.8 trillion muni-bond market. “They’re attempting to suspend the constitution,” said Negroni, a principal at New York-based hedge fund Fundamental Credit Opportunities and a member of the general-obligation ad hoc group pushing for full payback.
It’s true that no state has defaulted since Arkansas in 1933 -- Puerto Rico is a U.S. territory -- and that so far the island’s actions have had no evident effect on the broader muni bond market. But the reverberations could, eventually, reach highly indebted states like Illinois, New Jersey and Connecticut. Puerto Rico’s decision to renege on its constitutional commitment, the argument goes, may trigger a quicker deterioration in investor confidence in the next borrower that gets itself into real trouble.
As part of Puerto Rico’s bankruptcy, made possible by an act of the U.S. Congress last year, a judge will now decide how investors will split repayments of $74 billion in bond debt, and Negroni and others will likely have to take less money than they were promised.
“People are going to start pricing in an increased probability of laws changing” by demanding discounts when they buy distressed debt, Negroni said.
Raise Taxes
Distressed muni-debt traders usually buy when the credit rating of a bond is downgraded to junk status. That’s when institutions, such as mutual funds, are forced to sell or otherwise long-term retail investors get spooked.
“Next time around, you bet that they’re going to be asking for lower prices when mutual funds want to unload something like Illinois,” said Matt Fabian, a partner with Municipal Market Analytics Inc. in Concord, Massachusetts.
When faced with a swelling budget shortfall or a looming default, states are expected to do anything from raising taxes, cutting services or selling off assets to pay creditors. They don’t have access to bankruptcy protection. Neither did Puerto Rico until last year, when Congress voted to help the commonwealth restructure its unsustainable debt. Puerto Rico has said it can only cover about $8 billion of $33.4 billion in bond payments due through 2026.
Doubly Protected
The law change came as a shock to some general-obligation bondholders, such as Negroni, who believed they were doubly protected. Not only would there be no bankruptcy, but the commonwealth’s constitution said that repaying bondholders was a priority, even ahead of providing citizens with essential services. (That approach may not have thrilled those outside observers worried about worsening living conditions on the island, but it was the law.)
Although there’s been no decision yet on how bondholders will divvy up the money, hedge funds holding $1.4 billion of the general-obligation bonds, including Aurelius Capital Management and Monarch Alternative Capital, have already sued to receive overdue principal and interest payments.
Puerto Rico’s bankruptcy is the biggest in muni land. About half the states prohibit towns and cities from filing. Michigan isn’t one of them. In Detroit, which was the second-largest muni bankruptcy, bondholders didn’t do as well as they could have. Pensioners, despite not having first-paid status, were one of the least-impaired creditors, walking away with 82 cents on the dollar. General-obligation bondholders got 73 cents, and some water-and-sewer bondholders received as little as 1 cent on the dollar.
Bailout Packages
“You should know on the front end that laws can change, and that includes bailout packages as well,” said Jon Schotz, co-managing partner at Saybrook Fund Advisors, a $250 million private equity firm that invests in distressed and defaulted municipal securities, including Prepa, Puerto Rico’s public power utility.
Puerto Rico probably won’t be the last U.S. entity to change the rules to cut down on its debt, said Kjerstin Hatch, managing principal of Lapis Advisers, which has about $380 million in assets under management but no Puerto Rico.
“How the country will deal with municipal default is likely in its infancy,” Hatch said. “Ideas are forming, from a legislative and judicial standpoint, as to how we’ll handle large insolvent municipal entities.”
The flouting of constitutional rules may cause distressed muni-bond investors to insist on discounts, but it won’t scare them away from the market, Fabian said.
“The ending of this movie might disappoint them, but they’d buy the ticket to watch it again.”
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This is what changed during OBAMA-----bond holders before Obama were told they were DOUBLY PROTECTED so when global investment firms pushed all investments into BONDS consumers thought they were protected. Then here come the laws stating those protections are no longer there and bond investors are now scrambling to find other investments which will become those NEGATIVE INTEREST COMPLEX FINANCIAL INSTRUMENTS.
'The law change came as a shock to some general-obligation bondholders, such as Negroni, who believed they were doubly protected. Not only would there be no bankruptcy, but the commonwealth’s constitution said that repaying bondholders was a priority, even ahead of providing citizens with essential services'.
We always remind US citizens of this-------the financial policies put into place during CLINTON ERA were never legal. No politician came change financial contract terms in MID-STREAM no matter the economic conditions. Global Wall Street creates reasons for sound investments needing to take more risk----- then the duty of politicians is to create that financial condition to keep the terms of savings protections safe. That was very easily done with the creation of a NATIONAL AND STATE BANK at the time of 2008 economic crash from global Wall STreet looted assets.
THE LEGISLATIVE DUTY OF OUR US ELECTED OFFICIALS IS TO THE SAFETY AND WELFARE OF 99% OF WE THE PEOPLE. THEY DO NOT LEGALLY PASS LAWS INTENDED TO ENSNARE AND FLEECE PUBLIC ASSETS FROM EITHER INDIVIDUAL CITIZENS OR GOVERNMENT COFFERS.
The common refrain from our 5% to the 1% pols and players is this-----WE HAVE LOST-----THE GLOBAL 1% HAVE ALL THE MONEY AND WE HAVE NOTHING BUT DEBT----and that is absolutely NOT TRUE.
Whether pensions, bonds, or annuities-----our CLINTON/BUSH/OBAMA 5% POLS these few decades have deliberately tied all 99% wealth and government coffer assets to these COMPLEX FINANCIAL INSTRUMENTS -----being simply JONAH CHUZZLEWIT AND TIGGS money laundering schemes. We posted the Florida article showing how pensions were being looted by PENSION OBLIGATION BONDS as is true in Maryland , California et al.
We educate on what financial policy was bad in the past so we can be PROACTIVE when it MOVES FORWARD. Those bond policies were last few decades of fraud-----the coming frauds are tied to JUNK BONDED US TREASURIES AND NEGATIVE INTEREST financial instruments and we can bet our state 5% pols in Maryland Assembly and Baltimore City Council are already to sell this is GOOD.
Jan 5, 2016 @ 11:40 AM 2,172 The Little Black Book of Billionaire Secrets
Beware Of Pension Obligation Bonds
Intelligent Investing Ideas from Forbes Investor Team Opinions expressed by Forbes Contributors are their own.
Marilyn Cohen , Contributor
These three little letters—POB—can be a pox on your portfolio if you own them or were pressured into buying them. Pension Obligation Bonds do not belong in your portfolio. The reasons are simple. These taxable municipal bonds are issued by state or local governments for payment of obligation to their employee pension fund. Issuing such bonds allow the state or local government that cannot make its payments to the pension fund to borrow the money, then invest it in the stock, bond, private equity or real estate markets. A gamble if there ever was one.
What happens when, like in 2015, stocks and U.S. Treasurys have flat returns? Or, also as happened last year, when investment grade and high yield corporate bonds returned little or (gasp) suffered losses? It’s a disaster. Sometimes returns from the POB issuance are below the interest rate the issuer paid to borrow the money. Then, the pension shortfall is actually increased. POBs are a gambler’s substitute for not making the required pension contribution with current tax revenues. Sure, the returns can be smoothed out over time. But the biggest offenders have the largest unfunded liabilities.
Some of the most chronically underfunded state pensions are: Illinois, Connecticut, Kentucky, Kansas, Alaska, New Hampshire, Mississippi, Louisiana, Hawaii and Massachusetts.
Then there are city offenders like Chicago, whose pension liabilities are stacking up rapidly causing the city’s tax-free municipal bond rating to fall into the junk pile. Any way you look at unfunded pensions and their Pension Obligation Bonds, it’s a toxic situation.
If you are seeking taxable income and want to stay away from corporate bonds, here are two taxable munis with good credit metrics, no unfunded pension problems and decent liquidity.
Dignity Health is a health care provider in California. Its services include urgent care, surgery, home health, lab and wound healing care. Dignity Health is a well run not-for-profit corporation whose revenues have exceeded expenses in this most challenging ObamaCare environment. The 3.125% coupon bonds maturing November 1, 2022 at par yield 3.125% to maturity. Bonds are non-callable and rated A3 by Moody’s. Its CUSIP is 254010AA9 and bonds should be carefully shopped for.
Another taxable municipal that won’t cause pension angst is Virginia Housing Development Authority Rental Housing Bonds. The title is a mouthful but in short: The VHDA’s mission is to finance affordable housing for Virginia residents. Rated AA+ by Standard & Poor’s, this experienced management team has overseen $8 billion in assets, increased net income in 2014 by 48% from 2013 according to S&P, increased their return on assets and continues to be profitable.
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We educate on what financial policy was bad in the past so we can be PROACTIVE when it MOVES FORWARD. Those bond policies were last few decades of fraud-----the coming frauds are tied to JUNK BONDED US TREASURIES AND NEGATIVE INTEREST financial instruments and we can bet our state 5% pols in Maryland Assembly and Baltimore City Council are already to sell this is GOOD.
VIRGINIA is MARYLAND is global 1% ground zero------now, if anyone believes this financial instrument is good---we have swampland in Florida to sell---------all our PUBLIC HOUSING has been handed to GLOBAL INVESTMENT FIRMS as PARTNERS------WE KNOW these PARTNERS are staging to make profits from these deals------
'Another taxable municipal that won’t cause pension angst is Virginia Housing Development Authority Rental Housing Bonds'.
From the articles yesterday we gleaned that INFLATION AND INTEREST RATES are now what will deplete our 99% o savings and wealth with a US FED in place ready to raise interest rates and INFLATION SOARING because of massive US Treasury bond debt and deepening unemployment and impoverishment of US citizens once the CONSUMERS.
Who is passing the national and local economic policies leading to high inflation and interest rate concerns? MOVING FORWARD CLINTON/BUSH/OBAMA. As this quote states ----yet again, a TIERED PROTECTION of wealth is being created for only those able to afford to buy those products and that is the global 1% investment firms with everyone else as LOSERS.
'This protection against unanticipated inflation carries a price tag, since investors will bid up the price of inflation-protected securities, thus decreasing their effective yield compared to non-protected securities'.
What we learned from subprime mortgage loan frauds and how CLINTON/BUSH/OBAMA pols FIXED THE US ECONOMY was this-----whatever the reasons for bringing down the economy these rules and procedures tied to TIERED TRANCHES will always have the money moving to the top 1% and away from the 99%. That is why in 2009 the top 1% were BAILED OUT and the 99% were losers. These same conditions exist today as we head into this coming economic crash around BOND MARKET FRAUD.
REMEMBER---THE TERMS COMPLEX FINANCIAL INSTRUMENT MEANS WE ARE STEALING YOUR MONEY AND HIDING THE THEFT WITH LAUNDERING. TRANCHES ADD COMPLEXITY TO INVESTMENT DEALS.
Example
Risks
Risk, Return, Rating & Yield relate
Tranching poses the following risks:
These financial policies unfolded during Clinton era and expanded during Bush Obama ---and there is no way for 99% of WE THE PEOPLE to work the market fairly ----this is what people shout is RIGGING. So, global Wall Street 5% players tied to NYC banking can manipulate this anyway they want and that was what a GEITHNER WITH BUSH US TREASURER did in 2008----and it will be what a Trump-era US Treasury and NYC bank and US FED will do in this coming economic crash.
These financial policies unfolded during Clinton era and expanded during Bush Obama ---and there is no way for 99% of WE THE PEOPLE to work the market fairly ----this is what people shout is RIGGING. So, global Wall Street 5% players tied to NYC banking can manipulate this anyway they want and that was what a GEITHNER WITH BUSH US TREASURER did in 2008----and it will be what a Trump-era US Treasury and NYC bank and US FED will do in this coming economic crash.
Here is the TRUMP-ERA rigging scheme------THE NEGATIVE INTEREST RATE WORLD.
We will discuss in detail what negative interest rate means----but we simply want to remind folks who the global corporate players are in this MARCH TO TOTAL FLEECING OF 99% OF US WE THE PEOPLE.
PIMCO we discussed several years ago was that GLOBAL MUNI-BOND CORPORATION loading all US and global 99% of citizens' retirements, 401Ks, pensions, insurance and annuities into US TREASURY AND STATE MUNICIPAL BOND DEBT leading to the subpriming of our US bond market. PIMCO is that JUNK BONDED US TREASURY BOND MARKET and they did this as illegally and criminally as AIG --------under the guise that the bond market was safer than the stock market after 2008 crash.
The owner of PIMCO having juke bonded our US Treasury and state municipal bond market TOOK THE MONEY AND RAN -----selling it to the next crop of JONAS CHUZZLEWITS AND TIGGS....those global 2% players.
HERE THEY ARE READY TO SELL THAT NEGATIVE INTEREST RATE COMPLEX FINANCIAL INSTRUMENTS------COMMONLY KNOWN AS CRIMINAL MONEY LAUNDERING.
Investing in a Negative Interest Rate World
How do negative interest rates work?
December 2016
Central banks typically use monetary policy to manage interest rates and money supply in order to target levels of economic growth and inflation. Recently, however, the framework for monetary policy has become more complicated, with central banks in Europe and Japan imposing negative interest rates (see Figure 1)
Negative interest rates have affected bond investors around the world. Even in countries where rates remain positive, investors with broad fixed interest portfolios are not immune to the effects of negative interest rates. Central banks in nine developed countries have now set key rates below zero, and as a result, portions of the yield curves in these countries have dropped to negative levels.
Much has been written about the effectiveness of negative interest rate policy and whether it will prove counterproductive. It is perhaps too early to tell. What has become clear, however, is the importance of understanding the mechanics of negative interest rates and the implications for financial markets. Why are central banks imposing negative rates? How do they feed through to financial markets and the prices of assets? And what are the risks and implications for investing?
Do negative rates mean paying for deposits?
Yes. Although individuals are not paying banks to hold their money, negative interest rates imposed by a central bank effectively mean commercial banks are required to pay for holding excess reserves with the central bank. For example, if the deposit rate were ‒1%, for every $10 million held with the central bank, the commercial bank would have a balance of around $9.9 million at the end of a year.
The theory is that commercial banks will be dissuaded from maintaining large balances with the central bank and will instead lend money to businesses and consumers who will, in turn, spend the money. The increase in lending and spending is likely to boost economic activity, leading to growth and inflation. In this way, negative interest rate policy is considered by many to simply be an extension of traditional monetary policy.
THIS IS THE 'THEORY' GIVEN FOR ALL FINANCIAL POLICY SINCE CLINTON----MAKING BANKS LEND MONEY.
For Switzerland, Denmark and Sweden, the rationale for lowering policy rates below zero had more to do with their currencies and the associated exchange rates than credit creation. The objective was to put downward pressure on the currency in order to stimulate trade by making exports cheaper and imports more expensive.
How do negative interest rates flow through to markets?
Negative central bank rates push down short-term rates on other types of lending, which in turn influence business and consumer rates. Negative rates also spur banks and other investors seeking yield to buy short-term government debt, pushing up prices and lowering yields on these securities. And rates on corporate bonds are in turn linked to yields on government debt. Ultimately, because negative central bank rates affect bond market yields, they affect bond benchmarks.
Indeed, yields-to-maturity on many bonds have now moved into negative territory: At the end of September 2016, a staggering US$12 trillion in global investment grade bonds were trading with negative yields. At the same time, 15% of bonds within the Barclays Global Aggregate, one of the most widely used global bond benchmarks, were trading with negative yields-to-maturity. Of these, 74% were issued by Japan, Germany and France (see Figures 2 and 3).
However, this does not mean a positive return cannot be generated from a bond portfolio. Based on the experience in Japan over the last few decades, low and negative bond yields do not necessarily translate into negative returns in bond markets and across asset markets in general. In fact, if you invested ¥100 in the Japanese bond market in 1995 you would now have about ¥187, far outstripping the return in the equities market at only ¥105. How? Even though yields were low, the upward slope of Japan’s bond yield curve – like most yield curves today – offered the opportunity for capital gains through “roll-down,” which involves buying and holding a bond for a period of time and then realizing a price/capital gain as it gets closer to maturity.
What are the mechanics of negative rates?
To understand how negative interest rates are priced into the value of securities, consider commercial paper (CP). The mechanics for CP are very simple: CP is discounted paper with no coupon. The typical term is one to three months.
Investors usually buy CP at a price below par (100) and the value of the security moves back towards par over its term. With negative interest rates, however, investors buy at a price above par, and during the term, the price falls back down to par again. In other words, the negative interest rate erodes the value of the security from above par back to par at maturity.
For example, assume a company issues €20 million in three-month CP at a rate of ‒0.10%.
The purchase price would be 100.025, or a total cash amount of €20,005,001. If an investor held the security for the full term, the investor would get back €20,000,000 at maturity. Hence, the investor would make a “loss” of €5,001.25. This is the negative interest.
The mechanics are similar for bonds. If a bond is sold with a negative yield, at maturity the buyer does not receive back the total amount invested. The negative interest is built into the price paid for the bond upfront, as it is basically not possible to collect negative coupons.
What happens with floating-rate bonds, which have coupons that reset periodically? As the name suggests, the rate paid on a floating-rate note (FRN) is linked to an index, such as Euribor. With three-month Euribor currently at negative -0.31%, an FRN coupon formula with a spread below 31 basis points (bps) would deliver a negative coupon.
Because negative coupon “payments” are not feasible, FRN issuers have three options. The first is to add a very large spread and hope that rates don’t go down that far. This is not popular because the upfront payment would be large and FRN investors are used to buying around par. The second option is to issue “sinkable” FRNs such that negative coupons are netted with early maturity/redemption payments. Again, this is not a palatable option for most investors. The third option is to add a “floor” to the FRN, but like the first option, the FRN would get expensive as the investor would be required to pay for that protection. Not surprisingly, most governments and agencies have stopped issuing FRNs. Credit FRNs are still being issued, however, as the spreads are typically higher than those on government bonds and high enough to provide a comfortable buffer against negative rates.
Looking to the future
Negative rates are now well entrenched in the bond markets. Global growth is widely expected to remain slow compared to the past, and most central banks will likely continue to set policy rates well below those that prevailed before the financial crisis.
While the debate continues over the effectiveness of negative interest rates, we think it is prudent for investors to understand and adapt to them.
Navigating Negative Yields With Active Management
Earning attractive, positive returns can be challenging when yields on a significant portion of the bond market are negative. An active approach to portfolio management, in our opinion, can offer several advantages.
While passive investing typically involves constructing portfolio to mirror a bond index, an active manager selects specific securities based on their unique characteristics and how they may perform together; in this way, an active manager can aim to minimize the impact of negative yields and outperform the broader market. Even in a world with negative yields, there continue to be many ways to seek to add value to bond portfolios through active investment strategies that take advantage of relative value, tactical opportunities and the structural features inherent in bonds.
Diversification is important in navigating the negative rate environment. Investors can boost return potential by diversifying a fixed income portfolio across segments of the bond market that offer higher yields than government bonds, including corporate bonds, mortgage-backed securities and emerging markets. Investing across the approximately $100 trillion global bond market allows greater potential for defense, income and diversification.
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We want to remember who the global 2% players working for the global 1% are in MOVING FORWARD massive fleecing of US assets are-----here is PIMCO with a BILL GROSS being that player subpriming our US Treasury and state municipal bond market selling PIMCO and running ------
GOODNESS GRACIOUS-----THE GLOBAL CORPORATION KILLING ALL US 99% WEALTH HAS HIRED ROBBER-BARONS IN CHIEF ----BERNANKE AND GREENSPAN.
Below we see the transition all under the guise of protecting shareholders from a GROSS seen as acting weirdly after taking US bond market to JUNK BOND STATUS----being replaced by a ROMAN-----now pushing the next financial frauds----with NEGATIVE INTEREST PRODUCTS.
Of course the two people having created the conditions of deregulated massive and systemic fraud and corruption in our US economy through the US FED are on team PIMCO.
'In April 2015, PIMCO announced the hire of former Federal Reserve Chairman, Dr. Ben Bernanke as a Senior Advisor, following in the footsteps of predecessor Federal Reserve Chairman, Alan Greenspan'.
As with almost all of Wall Street financial frauds-----this corporation is in California------this one Greater San Diego US FOREIGN ECONOMIC ZONE while the subprime mortgage loan frauds were centered in SILICON VALLEY----each time it mirrors a CLINTON/BUSH/OBAMA far-right wing neo-conservative becomes neo-liberal.
PIMCO is the financial arm of global INSURANCE corporations like AIG------the frauds are securitized, tied to unwitting consumers, and insured in a selective tiering that protects the global 1% and their 2% taking down 99% of WE THE PEOPLE and our global 99% of citizens.
'Pimco names Roman as new CEO
Mike Snider, USA TODAY Published 9:15 a.m. ET July 20, 2016'
PIMCO
From Wikipedia, the free encyclopedia
Pacific Investment Management Company
TypeSubsidiary
IndustryFinancial Services
Founded1971[1]
FounderBill Gross[1]
Jim Muzzy
Bill Podlich
HeadquartersNewport Beach, California, U.S.
Key people
ProductsInvestment management
AUM$1.61 trillion, (30 June 2017)[2]
Number of employees2200+[2]
ParentAllianz
Websitewww.pimco.com
Pacific Investment Management Company, LLC (commonly called PIMCO), is an American investment management firm headquartered in Newport Beach, California, with over 2,000 employees working in 13 offices across 12 countries, and $1.51 trillion in assets under management as of 30 June 2016. The company provides mutual funds and other portfolio management and asset allocation solutions for millions of investors worldwide. PIMCO offers a broad list of investment strategies that encompass the entire risk spectrum and capital structure, including core bonds and credit, structured credit, alternatives, real assets, equities and currencies.
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PIMCO is the financial arm of global INSURANCE corporations like AIG------the frauds are securitized, tied to unwitting consumers, and insured in a selective tiering that protects the global 1% and their 2% taking down 99% of WE THE PEOPLE and our global 99% of citizens.
WOW-----THAT NAKED CAPITALIST NEO-LIBERAL HAVEN UNIVERSITY OF CHICAGO MEETS GOLDMAN SACHS-----------HOLD ON TO YOUR DENTURES--------
'Early life & Education
Roman grew up in Paris and earned a bachelor's degree in applied mathematics from the University of Paris IX Dauphine in 1985.[3] He later received an MBA in Finance and Econometrics from the University of Chicago.................Roman has over 30 years of experience in the investment industry. He joined Goldman Sachs, a global investment banking, securities and investment management firm, in 1987 where he spent the first 18 years of his career. From 1996 to 2000 he served as co-head of Worldwide Equity Derivatives and was promoted to co-head of Worldwide Global Securities Services in 2000'
The significance of a GLOBAL PIMCO is this--------it is the largest peddler of municipal bonds and US Treasury bond in the world-----it's corruption makes the entire US bond market corrupt and our local city hall and state financial 5% player officials are making sure all our public assets and government coffer revenue is tied to a PIMCO.
AND THESE 5% POLS AND PLAYERS INSIDE OUR US GOVERNMENT----NATIONAL, STATE, AND LOCAL KNOW THIS---AS DO OUR US JUSTICE AND STATE ATTORNEYS GENERAL.
This is how the US marched to being a sound, regulated, stable national economy to being A FAILED STATE CRONY AND CRIMINAL ECONOMY timed of course just when our baby boomers and US young adults have their wealth heavily invested by choice or force into these global investment markets.
Here is the MYTH-MAKING----GROSS BUILT AND GREW PIMCO INTO WORLD'S LARGEST BOND MARKET INVESTMENT FIRM....THEY KEEP RAKING IN MONEY
Pimco Income Expands to Largest Active Bond Mutual Fund
By
John Gittelsohn
April 4, 2017, 4:19 PM EDT Updated on April 4, 2017, 7:00 PM EDT
The fund, co-managed by Ivascyn and Alfred Murata, celebrates its 10th anniversary this week by becoming the largest actively managed fixed-income mutual fund with $79.1 billion, according to Pimco’s website Tuesday. Pimco Income passed Metropolitan West Total Return Bond Fund as investors added approximately $3 billion in March, a monthly record, according to estimates by Bloomberg.
“Our investment process and active management have produced significant gains for our clients and we believe the current environment will continue to present more opportunities for investors who actively pursue them,” Ivascyn, 47, said in an emailed statement.
Pimco Income is winning cash at a time when many investors are fleeing active funds because of higher fees and lower performance. Ivascyn’s main fund led actively run stock and bond funds in attracting deposits in 2016 and has outperformed 99 percent of its Bloomberg peers for the last three- and five-year periods.
The MetWest fund managed $78.9 billion as of April 3. A spokesman for the company declined to comment.
New Era
The Pimco fund is now the third-largest fixed-income fund, behind the passive Vanguard Total Bond Market Index Fund and Vanguard Total Bond Market II Index Fund. They had $143.8 billion and $121 billion in assets, respectively, as of Feb. 28, according to Bloomberg data.
Pimco Income’s growth represents the new era at Pacific Investment Management Co. since the September 2014 exit of Bill Gross, the Newport Beach, California-based firm’s co-founder whose acrimonious departure prompted a surge of outflows. Ivascyn replaced Gross as chief investment officer, and last year the company hired Emmanuel Roman from Man Group Plc as chief executive officer.
Pimco Income, which returned an average of 8.5 percent annually over the last five years, invests in a range of mortgage-backed securities, government and corporate debt and derivatives.
The fund has two parts, with higher-yielding securities to generate returns during strong growth periods balanced by better-quality securities that fuel returns at weaker times, according to a note Tuesday by Todd Rosenbluth, director of ETF and mutual fund research at CFRA, who gives Pimco Income a top rating and says its size doesn’t appear to be a problem.
“Despite the fund’s $100 billion in assets under management overall, including outside of the mutual fund structure, Ivascyn thinks the broad-based mandate and macro-driven approach enables his team to still have room to manage more assets without needing to close the fund to new investors,” Rosenbluth wrote.
Pimco Income in February surpassed the Pimco Total Return Fund, which Gross founded in 1987 and built to become the world’s largest mutual fund, with $293 billion at its peak in April 2013. Total Return has continued to face redemptions since Gross’s exit, falling to $73.6 billion as of March 31, even as its performance has recently improved.
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Our US elected officials cannot pretend they have the right to deliberately, willfully, and with malice tie our 99% of WE THE PEOPLE wealth to what is known globally as criminal cartel money laundering. US CLINTON/BUSH/OBAMA 5% POLS AND PLAYERS ARE INDEED GUILTY AS HELL as the protest song states.
Below we see the STATE OF MASSACHUSETTS with its global IVY LEAGUE university HARVARD now being that top GLOBAL HEDGE FUND driving locally the frauds needed to MOVE FORWARD this wealth transfer in US------but all US state offices tied to finance and revenue make these same pledges because that is THEIR DUTY ----THEY ARE OBLIGATED TO SERVE IN PUBLIC INTEREST ALL 99% OF WE THE PEOPLE.
'Who we serve
We serve all of you'.
Our state treasurers should be that check and balance against a corrupt US Treasury -----but of course they are team global 1%. Our US Justice Department and the many US Federal agencies tasked with oversight and accountability with our state Attorneys' General office is the check and balance ---but they are tied to global 1%. These 5% pols and players are serving THEY----NOT WE.
Office of State Treasurer and Receiver General Deborah B. Goldberg
Our mission at the Office of the State Treasurer and Receiver General of Massachusetts is to prudently manage and safeguard the state's public deposits and investments through sound business practices for the exclusive benefits of our citizens, and perform these duties with integrity, excellence, and leadership.
Address
Office of the State Treasurer
State House, Room 227, Boston, MA 02133
Who we serve
We serve all of you.
Since elected in 2014, I have applied commonsense business practices and innovative solutions to bring each area under my responsibility to the next level of performance. We seek to lead through creative and new approaches. Embracing cutting-edge technology, implementing practical business strategies, and developing public-private partnerships help us better serve all of the citizens of the Commonwealth.
Our sixteen departments, agencies, and initiatives have a wide range of services, including deferred compensation and retirement plans, Veteran's benefits, Unclaimed Property, the Clean Water Trust and more. Please also visit our Office of Economic Empowerment to learn about our work in empowering families and children through bridging the wage gap, increasing access to financial education, and our innovative college savings plans.
In every area of the Treasury, my team and I strive to ensure economic stability, economic security, and economic opportunity for every Massachusetts resident.
Thank you for visiting,
Deborah B. Goldberg, Treasurer and Receiver General of Massachusetts
Consumers paid an insurance premium and when disaster struck-----they received FAIR MARKET VALUE for losses. That payment was made by the expanded consumer base paying premiums. Of course US citizens have these several decades paid far more in premiums then they use just as these LIBERALIZATIONS AND DEREGULATION are MOVING FORWARD.
'With each step toward liberalization, we are likely to see increasing numbers of insurers diversifying into more international and alternative investments'.
That quote states---our US insurance corporations are being made to feel FORCED to enter into Wall Street and global investments we all know are fraudulent and high-risk.
THE MOTTO IN US SURROUNDING BANKING AND INSURANCE WAS 'DULL AND BORING' BECAUSE IT WAS SEPARATE FROM GLOBAL INVESTMENT AND STOCKS.
Clinton-era opened the door to exposure of all insurance to global banking just as global banking turned most criminal. Sadly, for our global 99% of citizens in developing nations tied to FOREIGN ECONOMIC ZONES----they never had the chance to live under a RULE OF LAW where all 99% of WE THE PEOPLE are protected EQUALLY----as in US. These global citizens are being exposed immediately to the JONAS CHUZZLEWITS AND TIGGS.
'that they need to go “back to basics” and return to their fundamental mission of being “cautious and prudent” investors'.
Think this above statement mirrors US DODD FRANK AND FINANCIAL REFORMS that NEVER HAPPENED? Indeed, it is FAKE morals and ethics.
Remember Obama kept using the term PLAIN VANILLA WRAPPER as his US Treasury and US FED leaders unleashed the worst sovereign debt fraud in world history. Why is China just now in 2017 having the global 1% give its citizens the DODD FRANK FAKE FINANCIAL REFORM talk? Because China and other Foreign Economic Zone developing nations were needed to launder these several years of OBAMA's US Treasury bond and state municipal bond fraud before pretending to become HONEST.
May 28, 2017 11:17 PM FINANCE
Insurance Dull and Boring? Not in China
By Yang Qiaoling and Han Wei
(Beijing) – A 10-year ban on the billionaire head of one of China’s most aggressive insurance companies, a ban on sales of risky but lucrative short-term life insurance policies, misuse of billions of yuan of premium income, hostile takeovers and the downfall of the country’s top insurance regulator on corruption allegations.
Just some of the headline-grabbing events that have shaken the dull and boring business of insurance in China over the past year. And there may be more to come as the authorities intensify efforts to tame an industry that’s been on a wild ride over the last few years helped along by lax supervision, liberalization that’s opened the sector to aggressive competition and expansion, and a good dollop of corruption.
The China Insurance Regulatory Commission (CIRC) has put the industry on notice. Chen Wenhui, a vice chairman at the watchdog, told companies back in December that they need to go “back to basics” and return to their fundamental mission of being “cautious and prudent” investors. He is now running the commission after Xiang Junbo, a colorful character who led the organization for almost six years, was put under investigation by the Communist Party’s anti-graft watchdog in mid-April.
Since Xiang’s departure, the CIRC has intensified a crackdown that began last year as part of a wider campaign to rein in financial risks and leverage ordered by the Chinese leadership. The commission has issued five major policy documents to tighten oversight over all areas of insurance companies’ operations – from investment activity and risk control to marketing and the design of policies. The aim is to uncover and stop irregular, illegal and risky practices that could threaten the solvency of insurers and the industry as a whole.
Companies have been ordered to examine their existing products to ensure they comply with the new rules, and assess their financial health and all aspects of their business. Results of internal reviews on capital risks have to be submitted by June 15 and any problems identified with their life insurance products must be rectified by Oct. 1.
“We’re having to carry out exhaustive inspections to root out risks,” an executive with an insurance company, who declined to be identified, told Caixin.
In May alone, the commission issued two policy documents calling for stricter industry oversight, four guidelines or draft guidelines specifying new requirements on life insurance products and two directives of industry inspections.
Painful Ulcers
Market analysts said the slew of regulatory moves indicated regulators’ determination to clamp down on misconduct, but their impact will depend on how strictly they are implemented.
“These problems are like ulcers that will create more pain in the future if they aren’t fixed as soon as possible,” one analyst told Caixin.
The root of the industry’s current turmoil can be traced back to 2011 when Xiang, a former auditor and central banker, took the helm at the CIRC. He embarked on a strategy to open up the sector to competition and dismantle rules that had restricted where insurers could invest their premium income. The aim of the overhaul was well meaning – to improve companies’ competitiveness, help them boost returns to their policyholders, and channel money into investments that would support economic growth.
Dozens of new insurers appeared, many with opaque shareholding structures. At the end of 2010, there were 126 companies licensed to conduct life and general insurance business. From 2011 to February 2017, the CIRC issued 41 new business licenses. Among the companies spawned by the liberalization were Foresea Life Insurance and Evergrande Life Insurance, which have become poster children for the industry’s troubles.
The strategy breathed new life into the industry. Its assets nearly tripled from 6 trillion yuan ($870 billion) in 2011 to nearly 16 trillion yuan by February 2017, and average investment returns rose to 7.5% in 2015 from 5% in 2013, CIRC data show.
Total insurance premium income grew by an annual average 16.8% from 2011 to 2016 and jumped by 27.5% in 2016 to 3.1 trillion yuan. China overtook Japan as the world’s second-largest insurance market measured by premium income in 2016.
Assets under management surged to 14 trillion yuan by the end of March 2017, almost double the 7.7 trillion yuan at the end of 2013, and more of the money was pouring into higher-risk assets. The percentage invested in bank deposits and bonds fell to 49.2% from 72.8% at the end of 2013, while investment in securities rose to 12.7% of the total from 10.2%, and the proportion held in other investments rose to 37.5% from 16.9%.
Universal Life Force
The industry’s expansion was spurred by the launch of innovative but risky products as many of the smaller, more nimble insurers fought to gain market share and boost their assets and profits. They were helped by a loosening of regulations that abolished limits on the returns they were allowed to offer policyholders.
The most prolific growth came from universal life insurance policies, short-term policies with maturities ranging from a few months to three years that came with minimal life-insurance benefits but attracted policyholders with high yields and no-penalty early cancellations. The regulator gave the products a turbo boost in 2015 by abolishing the 2.5% cap on guaranteed returns, allow insurers to offer much higher yields.
Sales boomed. CIRC data show that premium income from universal insurance policies exceeded 1.18 trillion yuan in 2016, up from 392 billion yuan in 2014, and accounting for a third of the premium income of the entire industry. As of the end of last year, 70 of the country’s 76 life insurance companies were offering these policies. For 14 of them, such investment-linked policies accounted for more than 70% of their total premium income.
But to pay higher returns to policyholders, insurers had to invest in assets with higher risks, such as stocks and overseas property. These were less liquid and longer-term investments and left companies with liquidity risks that had the potential wipe out their capital if they were unable to raise new money to redeem maturing policies and unable to sell assets to fill the gap.
Ironically, the crackdown on the issuance and conditions of universal life policies over the past year has now precipitated the very liquidity crisis regulators were worried about. The regulator has stopped some companies, including Foresea Life from issuing new universal life policies. That’s sent their premium income crashing and left them struggling to meet redemptions without selling the underlying investments.
Life insurance premium income rose by 37.2% year on year in the first quarter to 1.32 trillion yuan, but sales of universal life policies slumped by 61.2% to just 231 billion yuan, according to CIRC data.
Foresea Life, one of the biggest players in the market, saw its premium income slump by 70% to 13.5 billion yuan in the first quarter, according to Caixin calculations based on regulatory data. A source close to the company said it swung to a net cash outflow from operating activities of 9 billion yuan from an inflow of 36.6 billion yuan a year earlier.
Default Warnings
The company has pleaded with the regulator to lift its ban on the sale of new products. In a letter in early March and again in late April, it raised fears that the liquidity squeeze could lead to mass defaults on redemptions and to social unrest as policyholders failed to to get their money back. But so far, the CIRC has held firm.
Foresea Life’s problems have heightened concerns about the liquidity conditions of other aggressive insurers. Calculations by Caixin found that in the first quarter of 2017, 17 life insurance companies report net cash outflows, up from eight in the same period last year, indicating they paid out more than they earned in income from their insurance premiums.
Several insurers, including Anbang Life Insurance, Forsea Life and Evergrande Life Insurance, saw their comprehensive solvency ratio, a key measurement of an insurer’s ability to pay back all its liabilities, fall to close to the regulatory red line of 100% in the first quarter, according to their financial reports.
The CIRC has played down these concerns. On May 23, it said that only five out of 170 insurers that it had inspected had comprehensive solvency ratios near the red line and that the overall ratio for the industry was at 238%. It said risks in the industry were generally “controllable.”
The success of universal life insurance products left many upstart private insurers with more money than they knew what to do with. Their controlling shareholders, often hidden behind opaque ownership structures, started to use the companies as their personal ATMs to fund aggressive investments including hostile takeover bids for listed companies in concert with other investors.
The most high-profile case involved Foresea Life which was controlled by property tycoon Yao Zhenhua through his financial and real-estate conglomerate Baoneng Group. In late 2015, Baoneng started secretly buying up shares in China Vanke, one of the country’s biggest real-estate developers and subsequently launched a hostile takeover that led to a bitter months-long battle for control that sucked in other property developers and insurance companies.
Corporate ‘Bandits’
Baoneng finally retreated but not before it emerged that the company had funded much of its investment in Vanke through borrowing, including the use of premium income Forsea Life had raised from selling universal life policies.
In a speech in December, Liu Shiyu, the head of the securities regulator, attacked corporate raiders as “bandits” whose actions displayed decayed humanity and ethics, although he didn’t name names.
In February this year, Yao was banned from the insurance industry for a decade after an investigation by the CIRC found that Forsea had violated the country’s insurance laws and misused insurance funds.
Business registration documents show that a number of insurance companies have a major shareholder controlling over 33% of company stake, including Foresea Life, Guohua Life Insurance, Evergrande Life Insurance and the Asia-Pacific Property & Casualty Insurance Co.
But some owners hide behind a complex network of affiliates and companies that obscure the ultimate controlling shareholder. Anbang Insurance Group, an acquisitive Chinese insurer which bought the Waldorf Astoria hotel in New York, appears to be evenly held by 39 shareholders, according to its business registration documents. But a Caixin investigation found that 37 of its non-state shareholders are linked to the company’s chairman Wu Xiaohui through dozens of subsidiaries and affiliated companies.
The ownership of Beijing-based Kunlun Health Insurance Co. has also come under scrutiny in the Chinese media, with reports citing business registration records as showing that at least four shareholders were linked to Guo Yingcheng, the chairman of property developer Kaisa Group, and his family, giving them control of the insurer.
Kunlun denied the reports but in late 2016 the CIRC asked the company to explain its ownership structure and asked it to submit documents by March 6. The commission has yet to make any public statement about its findings.
Closer Oversight
Several industry sources told Caixin that a lack of funding and personnel is hampering the commission’s ability to conduct investigations. Nevertheless, the CIRC is stepping up efforts to put insurance companies’ shareholders and their funding sources under closer oversight. It made an initial move at the end of 2016, issuing a draft policy with plans to reduce the cap of a single shareholder’s holding in an insurance firm from 50% to 33% to prevent absolute control.
In April, the CIRC further required insurance companies, whose majority shareholder owns over 50% stake, to adjust their voting policies to what’s known as a Cumulative Voting System, a mechanism designed to give minority shareholders greater voting power when the company’s majority stake is controlled by a single shareholder.
In a May 7 document, the regulator vowed to plug regulatory loopholes and strengthen its supervision of insurers’ ownership structure and the authenticity of their funds, and improve monitoring of their investment allocations.
The commission’s regulatory onslaught has also tackled looming liquidity risks from insurers’ investments in the highly volatile stock market, leveraged financial products and long-term equity investments.
In January, insurance companies were told they needed to obtain regulatory approval for equity investments and banned them from using client funds for the purpose.
In a document released on May 7, the commission again pledged more stringent supervision of insurers’ investments in highly leveraged, structured financial products and two days later ordered all insurance companies to launch internal reviews of their investment and capital flows.
The CIRC also said it would impose stricter control on "inappropriate" product innovation and continue its crackdown on the short-term, high-yield investment-linked products to control the liquidity risks stemming from the mismatch between the short-term nature of the policies and the long-term nature of the investments being made with the cash.
Back to Basics
Several analysts told Caixin that the tightening scrutiny of insurance products will hit many small insurers disproportionately hard as they were the ones who had relied heavily on sales of the investment-linked policies.
“The regulator is forcing insurance companies to return to traditional protection-style policies,” a source with an insurance company told Caixin. “This is bound to affect the growth of the industry but it’s too early to say just how bad it will get.”
Insurance companies are now under severe pressure as they struggle to restructure their business operations to cope with the new climate of caution another insurance executive said.
“The business model many insurance companies followed to grow rapidly was unsustainable,” he said. “The days of reckless growth are over.”
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When our US insurance corporations received premiums from consumers they were able to place that money in banks knowing the deposits were insured because they were not tied to INVESTMENTS----they were deemed SAVINGS. Those funds accumulated interest and that interest was the profit for insurers.
'What Types of Assets Are FDIC Insured?The FDIC only insures deposits, not investments. This means your checking, savings and money market deposit accounts are probably insured unless your financial institution has declined FDIC coverage, which is unlikely. The FDIC also insures certificates of deposit (CDs), money orders and cashiers' checks'.
The US bond market was always that safe low-risk place to put savings including our insurance and pensions. When insurance corporations were allowed to leave regular bank savings and start investing they used the BOND MARKET because it made its consumers feel that investment was safe.
While Clinton-era broke the banking and investment wall to stage these THEFTS----Obama era broke the US Treasury bond and municipal bond market safety by making them SUBPRIMED AND JUNK BONDS. They did this by allowing bonds be tied to deals known to be corrupt and high risk by the trillions of dollars and then selling them globally blowing our US Treasury bond and corporate bond market into JUNK BOND SUPER-HIGH RISK.
'This range of asset yields nearly covers the spectrum of fixed-income interest rates. High-yield bonds (so-called “junk” bonds) have significantly greater default risk; consequently, their yields are much closer to those of equities'.
Who is getting rich with these policies? Those shareholders of global investment firms and global insurance firms-----those corporate executives. Who is being fleeced and thrown under the bus yet again? The 99% of WE THE PEOPLE IN US AND GLOBAL 99% OF CITIZENS.
INVESTOPEDIA is a great resource in understanding financial instruments but it is tied to global 1% so do not go there for investment advice-----here we see a description of MUNI-BONDS in 2015 saying they are the safest of investments even today when we KNOW that market will crash and burn very soon.
Mutual Funds Are Not FDIC Insured: Here Is Why
By Claire Boyte-White | October 2, 2015 — 1:12 PM EDT
Share
Mutual funds, like investments in the stock market, are not insured by the Federal Deposit Insurance Corporation (FDIC) because they do not qualify as financial deposits.
What Is the FDIC?
The FDIC is an independent, government-established agency formed in 1933 in response to the widespread failure of America's banks in the 1920s and 1930s, which contributed to the Great Depression. The debilitating impact of the financial crisis prompted the government to develop strategies for preventing future economic collapse.
One way to prevent the kind of domino effect of the Great Depression is to isolate economic turmoil in one industry and prevent it from bleeding over into the rest of the economic structure. By monitoring potential threats to banking and thrift institutions, the FDIC seeks to minimize the impact of economic downturn on depositor funds and the rest of the economy.
The primary way the FDIC protects depositors from losing hard-earned dollars in the event of a financial collapse is by insuring deposits. As of 2015, the FDIC insures deposits up to $250,000 per depositor, per institution based on account type. If an insured bank becomes insolvent and fails, depositor funds are insured by the FDIC up to this maximum. While banks may fail, the FDIC protects individual Americans from needlessly suffering the same fate.
Though created by U.S. Congress, the FDIC does not receive any government funding. Instead, financial institutions pay a premium for deposit insurance, much as an individual pays a premium for homeowners' or auto insurance. In addition, the FDIC invests in government-issued Treasury bonds (T-bonds) that generate regular interest income.
What Types of Assets Are FDIC Insured?
The FDIC only insures deposits, not investments. This means your checking, savings and money market deposit accounts are probably insured unless your financial institution has declined FDIC coverage, which is unlikely. The FDIC also insures certificates of deposit (CDs), money orders and cashiers' checks.
What Is Not Insured?
Investment vehicles are typically not insured by the FDIC. In addition to mutual funds, this includes investments in stock and bond markets, annuities, life insurance policies and Treasury securities.
There is often some confusion when it comes to money market mutual funds, because money market deposit accounts are FDIC-insured. The difference between these two types of accounts lies in their respective risk levels. While it is technically possible, though unlikely, to lose your original investment in a money market mutual fund, money market deposit accounts generate interest but carry no risk to your deposited funds.
Individual retirement accounts (IRAs) are another common source of confusion. IRA savings can be invested in a number of different ways, some insured by the FDIC and some not. Basically, if a given type of account is FDIC-insured when it includes regular funds, then it is also insured when those funds are part of an IRA. IRA funds deposited in a standard savings account or money market deposit account, for example, are insured. Any IRA savings invested in mutual funds or stocks are not.
Why Are Mutual Funds Not Insured?
The goal of the FDIC is to ensure the citizenry is not bankrupted by another financial crisis. When banks failed during the Great Depression, individual depositors were unable to withdraw their funds because the banks did not actually have the cash to back up all their deposits. The result was that poor business practices on the part of the banking industry ended up costing millions of innocent Americans their life savings. Prior to 1933, there was no federal protection in place to prevent the injustice. The aim, therefore, of the U.S. government in creating the FDIC was not to protect Americans from ever losing money, but rather to protect them from losing money through no fault of their own.
Unlike checking or savings accounts, mutual funds and other securities carry a certain amount of risk. While some amount of risk may be necessary for big profits to be made, investors know going in that there is a chance they could lose everything. This is why the FDIC does not insure investments.
When all is said and done, investing is basically just high-tech gambling. While you expect an insurance company to reimburse you if your insured property is stolen from your home, you do not expect a casino to reimburse you if you lose money at the poker table. Every gambler knows the risk of loss as soon as he sets foot on the casino floor, and the same is true of investors.
Securities Investor Protection Corporation
Though there is no entity that insures you against investment loss due to market fluctuation, the Securities Investor Protection Corporation (SIPC) does protect investors from loss if their brokerage firms fail. Customers of SIPC-member institutions who lose money as a result of company liquidation are insured up to $500,000, with a $250,000 cash sublimit. In addition to mutual fund investments, the SIPC protects investments in stocks, bonds, options, Treasury securities and CDs.
How to Limit Mutual Fund Risk
Of course, not losing your capital in the first place is always better than any insurance policy. Luckily, there are ways to invest in mutual funds without incurring too much risk, all but eliminating the need for federal protection.
One of the chief benefits of mutual funds is their customizability. Most fund managers offer portfolio options that cater to a wide range of investing styles. While stock funds tend to be higher risk, they also carry a greater chance for big profits. However, if you are looking to minimize risk, stock funds are not your best bet.
On the other end of the spectrum are money market mutual funds, which invest only in short-term debt securities, such as government and municipal bonds. These types of investments do not generate huge returns but are backed by the reputation and credibility of the U.S. government, making them highly stable. Often referred to as cash equivalents, money market funds are a great alternative to standard savings accounts.
If you are slightly more risk-tolerant but not yet ready to take on the volatility of a stock fund, you can likely find a bond or balanced fund that meets your risk requirements. Bond funds include a variety of corporate and government bond investments. While they are slightly riskier than money market funds, most bond funds are generally considered safe, stable investments. Balanced funds are the most customizable of all because they include both stock and bond investments in a wide range of ratios. This means you can easily find a balanced fund that has just the right amount of risk for your investment style.
Though it is not the same as an FDIC safety net, a little research and some careful planning can enable you to invest in mutual funds with confidence, knowing you minimized risk while still putting your money to work.
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BERNANKE AND GEITHNER THEN LEW as US FED and US Treasury were the top players in subpriming our US bond market just as GREENSPAN AND GEITHNER were top in subpriming our mortgage loan market-----
After several years of Obama subpriming-----the 99% of WE THE PEOPLE are now being led to believe that they can navigate around all that junk-bonding holding all their retirement 401K, pensions, life insurance, and most recently a massive health industry insurance premium account-----by simply moving to yet more and more and more complex financial instruments global 1% are telling us will PROTECT OUR ASSETS AND WEALTH.
Now, we are hearing of BOND AND ANNUITY protections tied to global investments and WORLD BANK as the way to save our INVESTED WEALTH.
That is of course NEGATIVE INTEREST FINANCIAL INSTRUMENTS.
We cashed in all our 401K-pension assets in late 1990s as we saw the BREAKING OF GLASS STEAGALL by Clinton and right wing knowing the JONAS CHUZZLEWITS AND TIGGS were on the loose and remained free of them since. This is what each US citizen tied to pensions, 401K, bonds and annuities need to think about------there does not appear to be ANY INTENTION of not taking ALL OF 99% OF PEOPLE'S WEALTH in MOVING FORWARD------we are not financial experts but we do KNOW PUBLIC POLICY AND ITS HISTORY OF REPEATING ITSELF.
Now, those 5% to the 1% often those shareholders thinking they are insiders or BROTHERS because they are FREEMASONS AND GREEKS------they are the MR PINCHS' holding on to PECKSNIFF by the leg thinking him great because he pretends to protect PINCH. They are no more protected from these criminal market deals then any of those 99% of citizens.
Muni-Bond Vultures Rethink Risks Lurking in Market's Junk Yard
By
Kate Smith
and
Amanda Albright
May 30, 2017, 6:00 AM EDT
- Puerto Rico bankruptcy rule changes surprised traders
- Distressed funds say they’ll demand discounts in the future
How Did Puerto Rico Go Bankrupt?
Puerto Rico’s bankruptcy has left distressed municipal-debt traders like Hector Negroni wondering if the old rules still apply -- not just in San Juan, but across the U.S.
The island’s effort to shred protections written into its constitution to determine which creditors get paid first has made Negroni reconsider the high-yield, high-risk corner of the $3.8 trillion muni-bond market. “They’re attempting to suspend the constitution,” said Negroni, a principal at New York-based hedge fund Fundamental Credit Opportunities and a member of the general-obligation ad hoc group pushing for full payback.
It’s true that no state has defaulted since Arkansas in 1933 -- Puerto Rico is a U.S. territory -- and that so far the island’s actions have had no evident effect on the broader muni bond market. But the reverberations could, eventually, reach highly indebted states like Illinois, New Jersey and Connecticut. Puerto Rico’s decision to renege on its constitutional commitment, the argument goes, may trigger a quicker deterioration in investor confidence in the next borrower that gets itself into real trouble.
As part of Puerto Rico’s bankruptcy, made possible by an act of the U.S. Congress last year, a judge will now decide how investors will split repayments of $74 billion in bond debt, and Negroni and others will likely have to take less money than they were promised.
“People are going to start pricing in an increased probability of laws changing” by demanding discounts when they buy distressed debt, Negroni said.
Raise Taxes
Distressed muni-debt traders usually buy when the credit rating of a bond is downgraded to junk status. That’s when institutions, such as mutual funds, are forced to sell or otherwise long-term retail investors get spooked.
“Next time around, you bet that they’re going to be asking for lower prices when mutual funds want to unload something like Illinois,” said Matt Fabian, a partner with Municipal Market Analytics Inc. in Concord, Massachusetts.
When faced with a swelling budget shortfall or a looming default, states are expected to do anything from raising taxes, cutting services or selling off assets to pay creditors. They don’t have access to bankruptcy protection. Neither did Puerto Rico until last year, when Congress voted to help the commonwealth restructure its unsustainable debt. Puerto Rico has said it can only cover about $8 billion of $33.4 billion in bond payments due through 2026.
Doubly Protected
The law change came as a shock to some general-obligation bondholders, such as Negroni, who believed they were doubly protected. Not only would there be no bankruptcy, but the commonwealth’s constitution said that repaying bondholders was a priority, even ahead of providing citizens with essential services. (That approach may not have thrilled those outside observers worried about worsening living conditions on the island, but it was the law.)
Although there’s been no decision yet on how bondholders will divvy up the money, hedge funds holding $1.4 billion of the general-obligation bonds, including Aurelius Capital Management and Monarch Alternative Capital, have already sued to receive overdue principal and interest payments.
Puerto Rico’s bankruptcy is the biggest in muni land. About half the states prohibit towns and cities from filing. Michigan isn’t one of them. In Detroit, which was the second-largest muni bankruptcy, bondholders didn’t do as well as they could have. Pensioners, despite not having first-paid status, were one of the least-impaired creditors, walking away with 82 cents on the dollar. General-obligation bondholders got 73 cents, and some water-and-sewer bondholders received as little as 1 cent on the dollar.
Bailout Packages
“You should know on the front end that laws can change, and that includes bailout packages as well,” said Jon Schotz, co-managing partner at Saybrook Fund Advisors, a $250 million private equity firm that invests in distressed and defaulted municipal securities, including Prepa, Puerto Rico’s public power utility.
Puerto Rico probably won’t be the last U.S. entity to change the rules to cut down on its debt, said Kjerstin Hatch, managing principal of Lapis Advisers, which has about $380 million in assets under management but no Puerto Rico.
“How the country will deal with municipal default is likely in its infancy,” Hatch said. “Ideas are forming, from a legislative and judicial standpoint, as to how we’ll handle large insolvent municipal entities.”
The flouting of constitutional rules may cause distressed muni-bond investors to insist on discounts, but it won’t scare them away from the market, Fabian said.
“The ending of this movie might disappoint them, but they’d buy the ticket to watch it again.”
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This is what changed during OBAMA-----bond holders before Obama were told they were DOUBLY PROTECTED so when global investment firms pushed all investments into BONDS consumers thought they were protected. Then here come the laws stating those protections are no longer there and bond investors are now scrambling to find other investments which will become those NEGATIVE INTEREST COMPLEX FINANCIAL INSTRUMENTS.
'The law change came as a shock to some general-obligation bondholders, such as Negroni, who believed they were doubly protected. Not only would there be no bankruptcy, but the commonwealth’s constitution said that repaying bondholders was a priority, even ahead of providing citizens with essential services'.
We always remind US citizens of this-------the financial policies put into place during CLINTON ERA were never legal. No politician came change financial contract terms in MID-STREAM no matter the economic conditions. Global Wall Street creates reasons for sound investments needing to take more risk----- then the duty of politicians is to create that financial condition to keep the terms of savings protections safe. That was very easily done with the creation of a NATIONAL AND STATE BANK at the time of 2008 economic crash from global Wall STreet looted assets.
THE LEGISLATIVE DUTY OF OUR US ELECTED OFFICIALS IS TO THE SAFETY AND WELFARE OF 99% OF WE THE PEOPLE. THEY DO NOT LEGALLY PASS LAWS INTENDED TO ENSNARE AND FLEECE PUBLIC ASSETS FROM EITHER INDIVIDUAL CITIZENS OR GOVERNMENT COFFERS.
The common refrain from our 5% to the 1% pols and players is this-----WE HAVE LOST-----THE GLOBAL 1% HAVE ALL THE MONEY AND WE HAVE NOTHING BUT DEBT----and that is absolutely NOT TRUE.
Whether pensions, bonds, or annuities-----our CLINTON/BUSH/OBAMA 5% POLS these few decades have deliberately tied all 99% wealth and government coffer assets to these COMPLEX FINANCIAL INSTRUMENTS -----being simply JONAH CHUZZLEWIT AND TIGGS money laundering schemes. We posted the Florida article showing how pensions were being looted by PENSION OBLIGATION BONDS as is true in Maryland , California et al.
We educate on what financial policy was bad in the past so we can be PROACTIVE when it MOVES FORWARD. Those bond policies were last few decades of fraud-----the coming frauds are tied to JUNK BONDED US TREASURIES AND NEGATIVE INTEREST financial instruments and we can bet our state 5% pols in Maryland Assembly and Baltimore City Council are already to sell this is GOOD.
Jan 5, 2016 @ 11:40 AM 2,172 The Little Black Book of Billionaire Secrets
Beware Of Pension Obligation Bonds
Intelligent Investing Ideas from Forbes Investor Team Opinions expressed by Forbes Contributors are their own.
Marilyn Cohen , Contributor
These three little letters—POB—can be a pox on your portfolio if you own them or were pressured into buying them. Pension Obligation Bonds do not belong in your portfolio. The reasons are simple. These taxable municipal bonds are issued by state or local governments for payment of obligation to their employee pension fund. Issuing such bonds allow the state or local government that cannot make its payments to the pension fund to borrow the money, then invest it in the stock, bond, private equity or real estate markets. A gamble if there ever was one.
What happens when, like in 2015, stocks and U.S. Treasurys have flat returns? Or, also as happened last year, when investment grade and high yield corporate bonds returned little or (gasp) suffered losses? It’s a disaster. Sometimes returns from the POB issuance are below the interest rate the issuer paid to borrow the money. Then, the pension shortfall is actually increased. POBs are a gambler’s substitute for not making the required pension contribution with current tax revenues. Sure, the returns can be smoothed out over time. But the biggest offenders have the largest unfunded liabilities.
Some of the most chronically underfunded state pensions are: Illinois, Connecticut, Kentucky, Kansas, Alaska, New Hampshire, Mississippi, Louisiana, Hawaii and Massachusetts.
Then there are city offenders like Chicago, whose pension liabilities are stacking up rapidly causing the city’s tax-free municipal bond rating to fall into the junk pile. Any way you look at unfunded pensions and their Pension Obligation Bonds, it’s a toxic situation.
If you are seeking taxable income and want to stay away from corporate bonds, here are two taxable munis with good credit metrics, no unfunded pension problems and decent liquidity.
Dignity Health is a health care provider in California. Its services include urgent care, surgery, home health, lab and wound healing care. Dignity Health is a well run not-for-profit corporation whose revenues have exceeded expenses in this most challenging ObamaCare environment. The 3.125% coupon bonds maturing November 1, 2022 at par yield 3.125% to maturity. Bonds are non-callable and rated A3 by Moody’s. Its CUSIP is 254010AA9 and bonds should be carefully shopped for.
Another taxable municipal that won’t cause pension angst is Virginia Housing Development Authority Rental Housing Bonds. The title is a mouthful but in short: The VHDA’s mission is to finance affordable housing for Virginia residents. Rated AA+ by Standard & Poor’s, this experienced management team has overseen $8 billion in assets, increased net income in 2014 by 48% from 2013 according to S&P, increased their return on assets and continues to be profitable.
_____________________________________
We educate on what financial policy was bad in the past so we can be PROACTIVE when it MOVES FORWARD. Those bond policies were last few decades of fraud-----the coming frauds are tied to JUNK BONDED US TREASURIES AND NEGATIVE INTEREST financial instruments and we can bet our state 5% pols in Maryland Assembly and Baltimore City Council are already to sell this is GOOD.
VIRGINIA is MARYLAND is global 1% ground zero------now, if anyone believes this financial instrument is good---we have swampland in Florida to sell---------all our PUBLIC HOUSING has been handed to GLOBAL INVESTMENT FIRMS as PARTNERS------WE KNOW these PARTNERS are staging to make profits from these deals------
'Another taxable municipal that won’t cause pension angst is Virginia Housing Development Authority Rental Housing Bonds'.
From the articles yesterday we gleaned that INFLATION AND INTEREST RATES are now what will deplete our 99% o savings and wealth with a US FED in place ready to raise interest rates and INFLATION SOARING because of massive US Treasury bond debt and deepening unemployment and impoverishment of US citizens once the CONSUMERS.
Who is passing the national and local economic policies leading to high inflation and interest rate concerns? MOVING FORWARD CLINTON/BUSH/OBAMA. As this quote states ----yet again, a TIERED PROTECTION of wealth is being created for only those able to afford to buy those products and that is the global 1% investment firms with everyone else as LOSERS.
'This protection against unanticipated inflation carries a price tag, since investors will bid up the price of inflation-protected securities, thus decreasing their effective yield compared to non-protected securities'.
What we learned from subprime mortgage loan frauds and how CLINTON/BUSH/OBAMA pols FIXED THE US ECONOMY was this-----whatever the reasons for bringing down the economy these rules and procedures tied to TIERED TRANCHES will always have the money moving to the top 1% and away from the 99%. That is why in 2009 the top 1% were BAILED OUT and the 99% were losers. These same conditions exist today as we head into this coming economic crash around BOND MARKET FRAUD.
REMEMBER---THE TERMS COMPLEX FINANCIAL INSTRUMENT MEANS WE ARE STEALING YOUR MONEY AND HIDING THE THEFT WITH LAUNDERING. TRANCHES ADD COMPLEXITY TO INVESTMENT DEALS.
Example
- A bank transfers risk in its loan portfolio by entering into a default swap with a ring-fenced special purpose vehicle (SPV).
- The SPV buys gilts (UK government bonds).
- The SPV sells 4 tranches of credit linked notes with a waterfall structure whereby:
- Tranche D absorbs the first 25% of losses on the portfolio, and is the most risky.
- Tranche C absorbs the next 25% of losses
- Tranche B the next 25%
- Tranche A the final 25%, is the least risky.
- Tranches A, B and C are sold to outside investors.
- Tranche D is bought by the bank itself.
Risks
Risk, Return, Rating & Yield relate
Tranching poses the following risks:
- Tranching can add complexity to deals. Beyond the challenges posed by estimation of the asset pool's loss distribution, tranching requires detailed, deal-specific documentation to ensure that the desired characteristics, such as the seniority ordering the various tranches, will be delivered under all plausible scenarios. In addition, complexity may be further increased by the need to account for the involvement of asset managers and other third parties, whose own incentives to act in the interest of some investor classes at the expense of others may need to be balanced.
These financial policies unfolded during Clinton era and expanded during Bush Obama ---and there is no way for 99% of WE THE PEOPLE to work the market fairly ----this is what people shout is RIGGING. So, global Wall Street 5% players tied to NYC banking can manipulate this anyway they want and that was what a GEITHNER WITH BUSH US TREASURER did in 2008----and it will be what a Trump-era US Treasury and NYC bank and US FED will do in this coming economic crash.
These financial policies unfolded during Clinton era and expanded during Bush Obama ---and there is no way for 99% of WE THE PEOPLE to work the market fairly ----this is what people shout is RIGGING. So, global Wall Street 5% players tied to NYC banking can manipulate this anyway they want and that was what a GEITHNER WITH BUSH US TREASURER did in 2008----and it will be what a Trump-era US Treasury and NYC bank and US FED will do in this coming economic crash.
Here is the TRUMP-ERA rigging scheme------THE NEGATIVE INTEREST RATE WORLD.
We will discuss in detail what negative interest rate means----but we simply want to remind folks who the global corporate players are in this MARCH TO TOTAL FLEECING OF 99% OF US WE THE PEOPLE.
PIMCO we discussed several years ago was that GLOBAL MUNI-BOND CORPORATION loading all US and global 99% of citizens' retirements, 401Ks, pensions, insurance and annuities into US TREASURY AND STATE MUNICIPAL BOND DEBT leading to the subpriming of our US bond market. PIMCO is that JUNK BONDED US TREASURY BOND MARKET and they did this as illegally and criminally as AIG --------under the guise that the bond market was safer than the stock market after 2008 crash.
The owner of PIMCO having juke bonded our US Treasury and state municipal bond market TOOK THE MONEY AND RAN -----selling it to the next crop of JONAS CHUZZLEWITS AND TIGGS....those global 2% players.
HERE THEY ARE READY TO SELL THAT NEGATIVE INTEREST RATE COMPLEX FINANCIAL INSTRUMENTS------COMMONLY KNOWN AS CRIMINAL MONEY LAUNDERING.
Investing in a Negative Interest Rate World
How do negative interest rates work?
December 2016
Central banks typically use monetary policy to manage interest rates and money supply in order to target levels of economic growth and inflation. Recently, however, the framework for monetary policy has become more complicated, with central banks in Europe and Japan imposing negative interest rates (see Figure 1)
Negative interest rates have affected bond investors around the world. Even in countries where rates remain positive, investors with broad fixed interest portfolios are not immune to the effects of negative interest rates. Central banks in nine developed countries have now set key rates below zero, and as a result, portions of the yield curves in these countries have dropped to negative levels.
Much has been written about the effectiveness of negative interest rate policy and whether it will prove counterproductive. It is perhaps too early to tell. What has become clear, however, is the importance of understanding the mechanics of negative interest rates and the implications for financial markets. Why are central banks imposing negative rates? How do they feed through to financial markets and the prices of assets? And what are the risks and implications for investing?
Do negative rates mean paying for deposits?
Yes. Although individuals are not paying banks to hold their money, negative interest rates imposed by a central bank effectively mean commercial banks are required to pay for holding excess reserves with the central bank. For example, if the deposit rate were ‒1%, for every $10 million held with the central bank, the commercial bank would have a balance of around $9.9 million at the end of a year.
The theory is that commercial banks will be dissuaded from maintaining large balances with the central bank and will instead lend money to businesses and consumers who will, in turn, spend the money. The increase in lending and spending is likely to boost economic activity, leading to growth and inflation. In this way, negative interest rate policy is considered by many to simply be an extension of traditional monetary policy.
THIS IS THE 'THEORY' GIVEN FOR ALL FINANCIAL POLICY SINCE CLINTON----MAKING BANKS LEND MONEY.
For Switzerland, Denmark and Sweden, the rationale for lowering policy rates below zero had more to do with their currencies and the associated exchange rates than credit creation. The objective was to put downward pressure on the currency in order to stimulate trade by making exports cheaper and imports more expensive.
How do negative interest rates flow through to markets?
Negative central bank rates push down short-term rates on other types of lending, which in turn influence business and consumer rates. Negative rates also spur banks and other investors seeking yield to buy short-term government debt, pushing up prices and lowering yields on these securities. And rates on corporate bonds are in turn linked to yields on government debt. Ultimately, because negative central bank rates affect bond market yields, they affect bond benchmarks.
Indeed, yields-to-maturity on many bonds have now moved into negative territory: At the end of September 2016, a staggering US$12 trillion in global investment grade bonds were trading with negative yields. At the same time, 15% of bonds within the Barclays Global Aggregate, one of the most widely used global bond benchmarks, were trading with negative yields-to-maturity. Of these, 74% were issued by Japan, Germany and France (see Figures 2 and 3).
However, this does not mean a positive return cannot be generated from a bond portfolio. Based on the experience in Japan over the last few decades, low and negative bond yields do not necessarily translate into negative returns in bond markets and across asset markets in general. In fact, if you invested ¥100 in the Japanese bond market in 1995 you would now have about ¥187, far outstripping the return in the equities market at only ¥105. How? Even though yields were low, the upward slope of Japan’s bond yield curve – like most yield curves today – offered the opportunity for capital gains through “roll-down,” which involves buying and holding a bond for a period of time and then realizing a price/capital gain as it gets closer to maturity.
What are the mechanics of negative rates?
To understand how negative interest rates are priced into the value of securities, consider commercial paper (CP). The mechanics for CP are very simple: CP is discounted paper with no coupon. The typical term is one to three months.
Investors usually buy CP at a price below par (100) and the value of the security moves back towards par over its term. With negative interest rates, however, investors buy at a price above par, and during the term, the price falls back down to par again. In other words, the negative interest rate erodes the value of the security from above par back to par at maturity.
For example, assume a company issues €20 million in three-month CP at a rate of ‒0.10%.
The purchase price would be 100.025, or a total cash amount of €20,005,001. If an investor held the security for the full term, the investor would get back €20,000,000 at maturity. Hence, the investor would make a “loss” of €5,001.25. This is the negative interest.
The mechanics are similar for bonds. If a bond is sold with a negative yield, at maturity the buyer does not receive back the total amount invested. The negative interest is built into the price paid for the bond upfront, as it is basically not possible to collect negative coupons.
What happens with floating-rate bonds, which have coupons that reset periodically? As the name suggests, the rate paid on a floating-rate note (FRN) is linked to an index, such as Euribor. With three-month Euribor currently at negative -0.31%, an FRN coupon formula with a spread below 31 basis points (bps) would deliver a negative coupon.
Because negative coupon “payments” are not feasible, FRN issuers have three options. The first is to add a very large spread and hope that rates don’t go down that far. This is not popular because the upfront payment would be large and FRN investors are used to buying around par. The second option is to issue “sinkable” FRNs such that negative coupons are netted with early maturity/redemption payments. Again, this is not a palatable option for most investors. The third option is to add a “floor” to the FRN, but like the first option, the FRN would get expensive as the investor would be required to pay for that protection. Not surprisingly, most governments and agencies have stopped issuing FRNs. Credit FRNs are still being issued, however, as the spreads are typically higher than those on government bonds and high enough to provide a comfortable buffer against negative rates.
Looking to the future
Negative rates are now well entrenched in the bond markets. Global growth is widely expected to remain slow compared to the past, and most central banks will likely continue to set policy rates well below those that prevailed before the financial crisis.
While the debate continues over the effectiveness of negative interest rates, we think it is prudent for investors to understand and adapt to them.
Navigating Negative Yields With Active Management
Earning attractive, positive returns can be challenging when yields on a significant portion of the bond market are negative. An active approach to portfolio management, in our opinion, can offer several advantages.
While passive investing typically involves constructing portfolio to mirror a bond index, an active manager selects specific securities based on their unique characteristics and how they may perform together; in this way, an active manager can aim to minimize the impact of negative yields and outperform the broader market. Even in a world with negative yields, there continue to be many ways to seek to add value to bond portfolios through active investment strategies that take advantage of relative value, tactical opportunities and the structural features inherent in bonds.
Diversification is important in navigating the negative rate environment. Investors can boost return potential by diversifying a fixed income portfolio across segments of the bond market that offer higher yields than government bonds, including corporate bonds, mortgage-backed securities and emerging markets. Investing across the approximately $100 trillion global bond market allows greater potential for defense, income and diversification.
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We want to remember who the global 2% players working for the global 1% are in MOVING FORWARD massive fleecing of US assets are-----here is PIMCO with a BILL GROSS being that player subpriming our US Treasury and state municipal bond market selling PIMCO and running ------
GOODNESS GRACIOUS-----THE GLOBAL CORPORATION KILLING ALL US 99% WEALTH HAS HIRED ROBBER-BARONS IN CHIEF ----BERNANKE AND GREENSPAN.
Below we see the transition all under the guise of protecting shareholders from a GROSS seen as acting weirdly after taking US bond market to JUNK BOND STATUS----being replaced by a ROMAN-----now pushing the next financial frauds----with NEGATIVE INTEREST PRODUCTS.
Of course the two people having created the conditions of deregulated massive and systemic fraud and corruption in our US economy through the US FED are on team PIMCO.
'In April 2015, PIMCO announced the hire of former Federal Reserve Chairman, Dr. Ben Bernanke as a Senior Advisor, following in the footsteps of predecessor Federal Reserve Chairman, Alan Greenspan'.
As with almost all of Wall Street financial frauds-----this corporation is in California------this one Greater San Diego US FOREIGN ECONOMIC ZONE while the subprime mortgage loan frauds were centered in SILICON VALLEY----each time it mirrors a CLINTON/BUSH/OBAMA far-right wing neo-conservative becomes neo-liberal.
PIMCO is the financial arm of global INSURANCE corporations like AIG------the frauds are securitized, tied to unwitting consumers, and insured in a selective tiering that protects the global 1% and their 2% taking down 99% of WE THE PEOPLE and our global 99% of citizens.
'Pimco names Roman as new CEO
Mike Snider, USA TODAY Published 9:15 a.m. ET July 20, 2016'
PIMCO
From Wikipedia, the free encyclopedia
Pacific Investment Management Company
TypeSubsidiary
IndustryFinancial Services
Founded1971[1]
FounderBill Gross[1]
Jim Muzzy
Bill Podlich
HeadquartersNewport Beach, California, U.S.
Key people
- Emmanuel Roman, CEO
- Jay Jacobs, President
- Dan Ivascyn, Group Chief Investment Officer
ProductsInvestment management
AUM$1.61 trillion, (30 June 2017)[2]
Number of employees2200+[2]
ParentAllianz
Websitewww.pimco.com
Pacific Investment Management Company, LLC (commonly called PIMCO), is an American investment management firm headquartered in Newport Beach, California, with over 2,000 employees working in 13 offices across 12 countries, and $1.51 trillion in assets under management as of 30 June 2016. The company provides mutual funds and other portfolio management and asset allocation solutions for millions of investors worldwide. PIMCO offers a broad list of investment strategies that encompass the entire risk spectrum and capital structure, including core bonds and credit, structured credit, alternatives, real assets, equities and currencies.
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PIMCO is the financial arm of global INSURANCE corporations like AIG------the frauds are securitized, tied to unwitting consumers, and insured in a selective tiering that protects the global 1% and their 2% taking down 99% of WE THE PEOPLE and our global 99% of citizens.
WOW-----THAT NAKED CAPITALIST NEO-LIBERAL HAVEN UNIVERSITY OF CHICAGO MEETS GOLDMAN SACHS-----------HOLD ON TO YOUR DENTURES--------
'Early life & Education
Roman grew up in Paris and earned a bachelor's degree in applied mathematics from the University of Paris IX Dauphine in 1985.[3] He later received an MBA in Finance and Econometrics from the University of Chicago.................Roman has over 30 years of experience in the investment industry. He joined Goldman Sachs, a global investment banking, securities and investment management firm, in 1987 where he spent the first 18 years of his career. From 1996 to 2000 he served as co-head of Worldwide Equity Derivatives and was promoted to co-head of Worldwide Global Securities Services in 2000'
The significance of a GLOBAL PIMCO is this--------it is the largest peddler of municipal bonds and US Treasury bond in the world-----it's corruption makes the entire US bond market corrupt and our local city hall and state financial 5% player officials are making sure all our public assets and government coffer revenue is tied to a PIMCO.
AND THESE 5% POLS AND PLAYERS INSIDE OUR US GOVERNMENT----NATIONAL, STATE, AND LOCAL KNOW THIS---AS DO OUR US JUSTICE AND STATE ATTORNEYS GENERAL.
This is how the US marched to being a sound, regulated, stable national economy to being A FAILED STATE CRONY AND CRIMINAL ECONOMY timed of course just when our baby boomers and US young adults have their wealth heavily invested by choice or force into these global investment markets.
Here is the MYTH-MAKING----GROSS BUILT AND GREW PIMCO INTO WORLD'S LARGEST BOND MARKET INVESTMENT FIRM....THEY KEEP RAKING IN MONEY
Pimco Income Expands to Largest Active Bond Mutual Fund
By
John Gittelsohn
April 4, 2017, 4:19 PM EDT Updated on April 4, 2017, 7:00 PM EDT
- Dan Ivascyn’s fund reached $79.1 billion as of March 31
- Pimco bond fund passes MetWest Total Return Bond Fund
The fund, co-managed by Ivascyn and Alfred Murata, celebrates its 10th anniversary this week by becoming the largest actively managed fixed-income mutual fund with $79.1 billion, according to Pimco’s website Tuesday. Pimco Income passed Metropolitan West Total Return Bond Fund as investors added approximately $3 billion in March, a monthly record, according to estimates by Bloomberg.
“Our investment process and active management have produced significant gains for our clients and we believe the current environment will continue to present more opportunities for investors who actively pursue them,” Ivascyn, 47, said in an emailed statement.
Pimco Income is winning cash at a time when many investors are fleeing active funds because of higher fees and lower performance. Ivascyn’s main fund led actively run stock and bond funds in attracting deposits in 2016 and has outperformed 99 percent of its Bloomberg peers for the last three- and five-year periods.
The MetWest fund managed $78.9 billion as of April 3. A spokesman for the company declined to comment.
New Era
The Pimco fund is now the third-largest fixed-income fund, behind the passive Vanguard Total Bond Market Index Fund and Vanguard Total Bond Market II Index Fund. They had $143.8 billion and $121 billion in assets, respectively, as of Feb. 28, according to Bloomberg data.
Pimco Income’s growth represents the new era at Pacific Investment Management Co. since the September 2014 exit of Bill Gross, the Newport Beach, California-based firm’s co-founder whose acrimonious departure prompted a surge of outflows. Ivascyn replaced Gross as chief investment officer, and last year the company hired Emmanuel Roman from Man Group Plc as chief executive officer.
Pimco Income, which returned an average of 8.5 percent annually over the last five years, invests in a range of mortgage-backed securities, government and corporate debt and derivatives.
The fund has two parts, with higher-yielding securities to generate returns during strong growth periods balanced by better-quality securities that fuel returns at weaker times, according to a note Tuesday by Todd Rosenbluth, director of ETF and mutual fund research at CFRA, who gives Pimco Income a top rating and says its size doesn’t appear to be a problem.
“Despite the fund’s $100 billion in assets under management overall, including outside of the mutual fund structure, Ivascyn thinks the broad-based mandate and macro-driven approach enables his team to still have room to manage more assets without needing to close the fund to new investors,” Rosenbluth wrote.
Pimco Income in February surpassed the Pimco Total Return Fund, which Gross founded in 1987 and built to become the world’s largest mutual fund, with $293 billion at its peak in April 2013. Total Return has continued to face redemptions since Gross’s exit, falling to $73.6 billion as of March 31, even as its performance has recently improved.
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Our US elected officials cannot pretend they have the right to deliberately, willfully, and with malice tie our 99% of WE THE PEOPLE wealth to what is known globally as criminal cartel money laundering. US CLINTON/BUSH/OBAMA 5% POLS AND PLAYERS ARE INDEED GUILTY AS HELL as the protest song states.
Below we see the STATE OF MASSACHUSETTS with its global IVY LEAGUE university HARVARD now being that top GLOBAL HEDGE FUND driving locally the frauds needed to MOVE FORWARD this wealth transfer in US------but all US state offices tied to finance and revenue make these same pledges because that is THEIR DUTY ----THEY ARE OBLIGATED TO SERVE IN PUBLIC INTEREST ALL 99% OF WE THE PEOPLE.
'Who we serve
We serve all of you'.
Our state treasurers should be that check and balance against a corrupt US Treasury -----but of course they are team global 1%. Our US Justice Department and the many US Federal agencies tasked with oversight and accountability with our state Attorneys' General office is the check and balance ---but they are tied to global 1%. These 5% pols and players are serving THEY----NOT WE.
Office of State Treasurer and Receiver General Deborah B. Goldberg
Our mission at the Office of the State Treasurer and Receiver General of Massachusetts is to prudently manage and safeguard the state's public deposits and investments through sound business practices for the exclusive benefits of our citizens, and perform these duties with integrity, excellence, and leadership.
Address
Office of the State Treasurer
State House, Room 227, Boston, MA 02133
Who we serve
We serve all of you.
Since elected in 2014, I have applied commonsense business practices and innovative solutions to bring each area under my responsibility to the next level of performance. We seek to lead through creative and new approaches. Embracing cutting-edge technology, implementing practical business strategies, and developing public-private partnerships help us better serve all of the citizens of the Commonwealth.
Our sixteen departments, agencies, and initiatives have a wide range of services, including deferred compensation and retirement plans, Veteran's benefits, Unclaimed Property, the Clean Water Trust and more. Please also visit our Office of Economic Empowerment to learn about our work in empowering families and children through bridging the wage gap, increasing access to financial education, and our innovative college savings plans.
In every area of the Treasury, my team and I strive to ensure economic stability, economic security, and economic opportunity for every Massachusetts resident.
Thank you for visiting,
Deborah B. Goldberg, Treasurer and Receiver General of Massachusetts
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