Archive: April, 2009
Some 37,000 Berkshire Hathaway shareholders are expected in Omaha this weekend for the company's annual meeting. This may not be the happy party past Berkshire meetings have been. The stock is down from $147 last September, to $90 today (low was $70 on 5 March).
UPDATE: Jeff Matthews, author of a Buffett book, asked readers for questions and forwarded them to NYT's Andrew Ross Sorkin in hopes he'll pick a couple to grill Buffett. Read them here.
More from U.S. Sen. Arlen Specter, newly D-Pa. - this from the White House reporting pool re his appearance with President Obama today:
“I was unwilling to subject my 29 year record in the United States Senate to the Pennsylvania Republican primary electorate. But I am pleased to run in the primary on the Democratic ticket. And I am ready, willing and anxious to take on all comers in the general election.” Specter told reporters has “not represented the Republican Party,” but “the people of Pennsylvania.”
“As I said yesterday, I will not be an automatic 60th vote" for the Democratic caucus. But he also told Obama, “You have projected an administration that I feel very comfortable with. … I think I can be of assistance to you, Mr. President, (with) my views of centrist government.”
1) Pennsylvania's Guaranteed Savings Program, for citizens who pre-pay their college tuition, is running a $300 million deficit. Savers paid in $1.3 billion, but under state management (and the stock market decline) it's only worth $1 billion. People will need that money as their kids start college in years to come.
To boost returns, McCord wants to invest more of the money in high-yield junk bonds -- and in federally-backed Term Asset-backed Loan Fund (TALF) securities, which include federal guarantees against large losses, modest face-value returns, and the prospect of "double-digit" returns as markets recover. (Pennsylvania's $500 million Section 529 college savings program, run by Vanguard Group, is also down, but that's savers' problem -- there's no state guarantee for 529.)
2) Treasury's check-payment and software system is "antiquated." McCord says he's had to ask for $30 million to prevent a collapse.
3) The State Employees' Retirement System (SERS) and Public School Employees' Retirement System (PSERS) still don't know whether the billions they pumped into "alternative assets" (the kind of stuff McCord managed in his previous profession) have lost more, or less, than stock investments. But SERS managers "erred" in leveraging past stock investments; at both funds, assets are down, and liabilities are surging as more teachers and workers retire at higher pay grades. Again, McCord wants to invest more in TALF. Still, "2009 is not going to be a good year at the pension funds."
This isn't why McCord ran for office -- he still has a long list of loan and education programs designed to benefit "Pennsylvanians who work hard but play by the rules" -- but crisis management is the priority for governments these days.
The giant 6.1% drop in U.S. Gross Domestic Product from the fourth quarter of 2008 to this year’s first quarter was driven partly by "a downturn in federal government spending."
How's that possible, with all the federal bailouts? My colleague Jeff Gelles asked economist Pamela Kelly, chief of the government division at the federal government’s Bureau of Economic Analysis.
First, said Kelly, the stimulus hasn't kicked in yet, Also, when BEA measures the GDP, it doesn't include the direct spending on unemployment compensation, Medicare, Medicaid, food stamps, TARP bank bailouts, or other payments which transfer money from taxpayers to other people or companies. Some of that eventually show up in GDP, as the unemployed spend their benefits, or TARP banks pay boss bonuses. But it doesn’t boost the economy, as BEA counts it.
Instead, BEA measures "real federal government consumption expenditures and gross investment” – including items like federal workers' pay, government purchases, buildings and software. That dropped 4 percent in the quarter that ended March 31. "Real state and local government" spending also dropped nearly 4 percent as California and other states laid off workers.
In total, real government spending dropped $21 billion during the quarter. That equaled less than 1 percentage point out of a total drop of about 6 percentage points, so the loss "wasn't a huge contributor" to the downturn, Kelly says. But it sure didn't help.
"Joe's still in the race" for Senate, said Mark Nevins, spokesman for Torsella. After all, the candidate added in a statement, the election's "still a full year away."