Dow 36,000 and your pension (Krugman)

[swag]

http://krugman.blogs.nytimes.com/2009/03/31/dow-36000-and-your-pension/

So in 2007 the Pension Benefit Guarantee Corporation — which stands behind corporate pensions — switched from bonds only to lots of stocks, buying in at, natch, the peak of the market. Oops. And this is big stuff: the Bush administration may have left us all a gratuitous loss of hundreds of billions.

Why did this happen? I’m sure we’ll find some nasty stuff, but at least part of the reason was that the Bush administration, like many conservatives, was under the spell of the following pseudo-syllogism:

1. The stock market captures the essential spirit of capitalism.

2. Capitalism roolz!

3. Therefore, stocks will go up.

. . .

[Warpy]

1. I think he's wrong about this

I think they threw it all into stocks as a desperate attempt to stop the market correction from happening before the election.

Hedge funds were experiencing a run and were starting to dump assets, sending stock and commodity future prices down. They were hoping to avert the kind of panic selling we saw in October.

It didn't work. It wasn't nearly enough.

Now they've bankrupted pensions along with bankrupting the treasury, all in an attempt to keep an overvalued stock market pumped up.

Are we all thrilled for what we got for our money?

[tularetom]

3. Ding ding we have a winner

They didn't want the bubble to burs on their watch.

That was more important to them than the financial security of millions of Americans.

Does that surprise you? They are entirely in character.

[glitch]

4. I agree, he is being far too generous in assuming they are just incompetent.

They are that lethal combination of incompetent and complicit. They are The Bushies.

[Gin]

7. the hedge funds getting out of oil brought down more than the price

of crude...(IMO)

[n2doc]

10. That, and I think it allowed the insiders to sell their stuff at inflated prices w/o causing a panic

I will bet that these assets were bought at higher than (then current) market prices. Lots of people could see the crash coming, especially last summer. So they got out and left us holding the bag.

[adamuu]

2. 1. buy stocks

1. buy stocks
2. ????
3. profit!!

[specimenfred1984]

9. It's like the underpants knomes on South Park

1. Collect underpants. 2.... 3. Profit!

[KamaAina]

5. There was a typo on the cover of that book

it was supposed to be Dow 6,000. :P

[natrat]

6. just providing liquidity for shorts for their buddies at goldman and merrill, its all fixed

[Kolesar]

8. It was a crony deal to help Bush's friends dump some garbage positions

At least that is my suspicion.