CalPERS’ Earnings Flop Means Taxpayer Belt Tightening: New at Reason

The California Public Employees’ Retirement System isn’t doing well even though the markets are.

Steven Greenhut writes:

On July 18, the largest state investment fund announced a piddling 0.61 percent rate of return in its latest 12-month period. The system is significantly underfunded. CalPERS blames a bad year in the markets. Defenders of the status quo suggest all is well–the rebounding market will correct itself and fix the mess.

State Sen. John Moorlach (R-Costa Mesa) notes that the Dow Jones, the fixed-income market and the real estate market have been at all-time highs: “Now we’re in Peter Pan territory. ‘You’ve just got to believe’… the stock market will rise more than 7.5 percent per year. You’ve just got to believe that interest rates will stay at zero indefinitely. You’ve just got to believe that real estate prices will continue to rise.”

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from Hit & Run

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