Friday, March 6, 2009

U-6 unemployment rate increases to 14.8%!

And now we have an 8.1% Unemployment rate in the official U-3 rate.

January job losses were increased from 598,000 to 655,000.
December job losses were increased to 681,000 from 577,000.

The market and the economy continue to melt.

Look at the problems in pensions. Let's use CALPERS as an example.

CALPERS had $237 billion in assets at June 30, 2008, and their pension plan assumes an annual return of 7.75% on their investments.

CALPERS had $41 billion in real estate, that had debt of $19 billion and they had unfunded real estate commitments of $17 billion and they had unfunded private equity commitments of $26 billion.

In January of 2008, CALPERS bought $1.6 billion of Timberland, and $1.4 billion in commodities to get some "inflation" exposure, we know they had "unrealized" losses exceeding 103% on housing and a billion plus on their $2.5 billion LandSource deal.

CALPERS, like State Street, and AIG, has a securities lending program, where they lend shares to shortsellers, and then use this money to invest in other short term securities. They do this with $37 billion of California's taxpayer money. Before the markets in these instruments completely blew up, CALPERS had lost $158 million.

So how much has CALPERS lost the past year? At a minimum it's $80 billion. And who is backing up their pensions when they blow up? The state of California!

Today, we see that the FDIC is looking for another $500 billion. If stocks keep getting crushed, how much will the PBGC be on the hook for?

We have heard that this economy has led to a resurgence in board games, led by Monopoly. Now you could use monopoly money to purchase stocks!

It's even affecting Mr. Monoploy himself, Warren Buffett.

Last week he gave his annual report, and it showed that as of December 31, 2008, he had an equity portfolio (excluding Moody's and BNI) valued at $49 billion with a $37 billion cost.

That unrealized gain is now gone.

Yesterday, the market finally starting getting to JP Morgan. Whenever JPM starts to breakdown with a downward spike, our Government seems to get concerned, and a rally seems to come out of the woodwork.

It could be the same today.

Otherwise we're all just going to be playing monopoly!

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