Author Archives: Yves Smith

Garrisoning the Globe, How U.S. Military Bases Abroad Undermine National Security and Harm Us All

How military bases cement US power.

CalPERS Board Members Defend Poor Performance by Staff, Capture by Private Equity

“It’s shocking to see how many of the CalPERS investment committee are utterly ignorant. Aren’t these people supposed to know something? “

Bill Black: Now the Justice Department Admits They Got it Wrong

By issuing its new memorandum the Justice Department is tacitly admitting that its experiment in refusing to prosecute the senior bankers that led the fraud epidemics that caused our economic crisis failed.

How CalPERS’ Consultant, Pension Consulting Alliance, Promotes Intellectual Capture by Private Equity

One of the not-well-recognized channels by which private equity orthodoxy, meaning general-partner-favoring party line, is propagated and defended is via private equity consultants. CalPERS’ consultant, Pension Consulting Alliance (PCA), performed this role during the most recent Investment Committee meeting.

California Readers: Catch on KPFA This Friday at 7:30 AM PDT Discussing CalPERS and CalSTRS (Update: Or Listen to the Stream)

If you are in Northern California, I hope you’ll tune in to KPFA this Friday!

Nomi Prins: Mexico, Federal Reserve Policy and Danger Ahead for Emerging Markets

Mexico’s problems could again ripple through Latin America where eroding confidence, volatility, and US dollar strength are already hurting economies and markets.

CalPERS’ Senior Investment Officer Flouts Fiduciary Duty by Refusing to Answer Private Equity Questions

In the last CalPERS Investment Committee meeting, one of the most revealing incidents took place when Investment Director Christine Gogan repeatedly refused to answer a simple, direct question about a widely-used private equity tax abuse, management fee waivers.

CalPERS’ Chief Investment Officer Invokes False “Superior Returns” Excuse to Justify Fealty to Private Equity

In the last Investment Committee meeting, CalPERS’ chief investment officer Ted Eilopoulos invoked the One Excuse That Rules Them All for investing in private equity. It happens to be bogus.

CalPERS, an Anatomy of Capture by Private Equity

One of the strongest, most consistent reactions of experts who watched the video of the last meeting of CalPERS’ Investment Committee was that the staff and the Investment Committee members, save JJ Jelincic, were completely captured by the private equity industry.

Announcing Site Policy Change on Comments

We have decided provisionally to reopen comments on all post. Welcome back, but please behave!

Fortune’s Dan Primack Takes Up CalPERS’ Private Equity Scandal, Calls Head of Private Equity “Factually Wrong”

Dan Primack of Fortune has weighed in on what he calls the private equity “mess” at CalPERS, in an important new story, “CalPERS still can’t get out of its own way on private equity.”

Why Tax Havens Will Be at the Heart of the Next Financial Crisis

Examining an excellent in-depth investigation by Reuters into global financial stability issues, and the role of tax havens in this giant game of pain and plunder.

CalPERS Chief Investment Officer Defends Tax Abuse as Investor Benefit

CalPERS Chief Investment Officer made statements to the Investment Committee that are demonstrably false. As a video of the August Investment Committee meeting shows, Eliopoulos apparently does not grasp how a common tax avoidance scheme by general partners is not beneficial to limited partners. Even worse, he failed to mention that the IRS has recently proposed rules to end this tax abuse.

CalPERS Staff Demonstrates Repeatedly That They Don’t Understand How Private Equity Fees Work

The oversimplifications, mistakes, and refusals to answer basic questions by CalPERS staff members at the last Investment Committee meeting of its board suggest that CalPERS has so little understanding of private equity that it cannot responsibly invest in that strategy at all. These errors related to concepts that are fundamental to understanding the economics of a private equity investments and hence to negotiating them.

Senior Private Equity Officers at CalPERS Do Not Understand How They Guarantee That Private Equity General Partners Get Rich

Over the course of the last Investment Committee meeting of the CalPERS Board of Directors, many of the statements made by senior members of CalPERS’ investment staff showed a lack of understanding of basic issues, such as the industry’s economics and how widely-used contract terms operate.