Bush Deficit Widens to Record as Treasuries Deter U.S. Pensions

[Purveyor]

Source: Bloomberg News

March 3 (Bloomberg) -- Philadelphia's $4 billion pension deficit is causing the city's retirement-fund manager to shun Treasuries at a time when the Bush administration needs him most.

Yields on 30-year U.S. bonds that fell to a record low of 4.10 percent this year are forcing pension funds to favor equities, corporate debt and commodities in an attempt to cover unfunded liabilities and meet return objectives of about 8 percent. Even the federal government's own Pension Benefit Guaranty Corp. said on Feb. 19 that it plans to shift $15 billion to stocks from debt.

``The reality is there's not a lot we can do'' other than buy high-risk securities to close a pension shortfall in a short period, said Chris McDonough, chief investment officer of the Philadelphia Pensions Department. The sixth-largest U.S. city will probably also issue debt, he said.

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Philadelphia's predicament couldn't come at a worse time for George W. Bush, whose administration forecasts a $410 billion budget deficit for this fiscal year ending Sept. 30, approaching the record of $413 billion set in 2004. The figure may eventually reach as much as $800 billion, according to Bill Gross, manager of the world's biggest bond fund at Pacific Investment Management Co. in Newport Beach, California.

Supply Swamp

The budget shortfall will force the Treasury Department to increase its borrowing by 145 percent from $163 billion, according to UBS Securities LLC, swamping the market just as longer-maturity debt turns into a money-loser for investors.


Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=a6fTHIHgTnqs&refer=home

[Donkeykick]

1. Yeah, George Bush, you're right.

The country isn't heading toward a recession. :eyes:

[rasputin1952]

5. It's not, we're skipping recession and headed straight to

depression...why mess w/the middle man?

Harding, Coolidge, Hoover and bush...all setting the stage for disaster.

[RUMMYisFROSTED]

2. It's a success for Chimp.

Real mission accomplished.

[fascisthunter]

3. Just What Bush and His Fascist Party Wanted

and the dems gave it to him on a fucking platter.

No... I'm not mad. I'm fucking pissed!

[Winterblues]

10. Land around the USA will be bought up at bargain basement prices by the robber barons.

The ultra wealthy will become even more wealthy because of Republican rule..America's common man will become endentured servant.Republicans will laugh all the way to their private banks..

[Xipe Totec]

4. Submersion accomplished

[Zorra]

6. How much can something "widen" before it bursts?

We need to get rid of that fascist asshole now, before he kills us all.

[trusty elf]

7. Obviously, the solution is more wars and more tax cuts!

[DeepModem Mom]

8. K&R

[Supersedeas]

9. Nothing to see here -- the complete news blackout to 'cover' primaries is a bi-annual diversion