(BN) Calpers Investment Chief Says 7.75% Return May Be Tough to Meet

Bloomberg News, sent from my Android phone

Sept. 29 (Bloomberg) -- The California Public Employees' Retirement System, with half its money in equities, will be hard-pressed to return 7.75 percent this year as the weak U.S. recovery and deepening debt crisis in Europe weigh on global stocks, its investment chief said.

Calpers, the largest U.S. public pension fund, assumes it will earn an average of 7.75 percent annually to meet its obligations. It spreads losses and gains over 15 years to blunt the impact that annual swings may have on the amount of money the fund charges taxpayers to finance retirement benefits for government workers.

"That's going to be tough this year and maybe for the next few years," Calpers Chief Investment Officer Joe Dear said in a Bloomberg Television interview yesterday. "This low-return environment is structurally driven, and there's not a lot of policy to move it."

The fund earned 20.7 percent in the 12 months ended June 30, its best result in 14 years, led by gains in stocks and private equity. Since then, Calpers's value has dropped by $20 billion to $218.6 billion as of Sept. 26, as global stocks declined 18 percent.

Even with the fiscal 2011 gains, the pension fund has earned 3.41 percent annually on average in the past five years, 5.36 percent in the last 10 and 6.97 percent in the last 15. It has only beaten its assumed rate of return with a 20-year average of 8.38 percent annually.

Nationwide, state pensions will achieve a median annual return of 6.5 percent in the next 15 years, according to a February study by Wilshire Associates, the Santa Monica, California, investment adviser.

'Absolutely Confident'

"Do I think its achievable over the long term, the 15 to 20 year horizon? I'm absolutely confident about that," Dear said yesterday in a follow-up telephone interview.

The fund's governing board in March decided against a recommendation by its actuaries to reduce its assumed rate of return on the expectation that markets would trail the historical average. The fund lost almost a quarter of its value in 2009 as the global recession dragged down stock prices and real-estate values.

"Once you look at a significant length of time, the cycles smooth out and a portfolio with a patient, disciplined approach will produce a return that matches our expectation of 7.75 percent," Dear said.

70% Funded

Calpers in January said it had only about 70 percent of the money it needs to cover benefits promised to government workers when they retire. The pension was fully funded when the recession began in December 2007.

Dear said the fund will look beyond stocks to its other asset classes, such as private equity, hedge funds and infrastructure, to help boost returns.

Calpers has about 14 percent, or $33.6 billion as of June 30, invested in private-equity funds, which returned 25.3 percent through the end of that month.

"We are in a low-return environment with a lot of downside risk right now," Dear said. "You need to be realistic about the prospects and you need to ask what are the alternatives that might produce a better return than a classic stock-bond portfolio."

To contact the reporters on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net ; Scarlet Fu in New York at scarfu@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

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Particles found to break speed of light

 

great discovery of breaking light speed...if only those 750 super geeks in underground labs in italy could just put some time solving europe's debt crisis, instead of incurring more costs smashing anti matter into each other, the world would be more thankful i think!

UPDATE 1-Particles found to break speed of light

GENEVA, Sept 22 (Reuters) - An international team of scientists said on Thursday they had recorded sub-atomic particles travelling faster than light -- a finding that could overturn one of Einstein's long-accepted fundamental laws of the universe.
Antonio Ereditato, spokesman for the researchers, told Reuters that measurements taken over three years showed neutrinos pumped from CERN near Geneva to Gran Sasso in Italy had arrived 60 nanoseconds quicker than light would have done.
"We have high confidence in our results. We have checked and rechecked for anything that could have distorted our measurements but we found nothing," he said. "We now want colleagues to check them independently."
If confirmed, the discovery would undermine Albert Einstein's 1905 theory of special relativity, which says that the speed of light is a "cosmic constant" and that nothing in the universe can travel faster.
That assertion, which has withstood over a century of testing, is one of the key elements of the so-called Standard Model of physics, which attempts to describe the way the universe and everything in it works.
The totally unexpected finding emerged from research by a physicists working on an experiment dubbed OPERA run jointly by the CERN particle research centre near Geneva and the Gran Sasso Laboratory in central Italy.
A total of 15,000 beams of neutrinos -- tiny particles that pervade the cosmos -- were fired over a period of 3 years from CERN towards Gran Sasso 730 (500 miles) km away, where they were picked up by giant detectors.
Light would have covered the distance in around 2.4 thousandths of a second, but the neutrinos took 60 nanoseconds -- or 60 billionths of a second -- less than light beams would have taken.
"It is a tiny difference," said Ereditato, who also works at Berne University in Switzerland, "but conceptually it is incredibly important. The finding is so startling that, for the moment, everybody should be very prudent."
Ereditato declined to speculate on what it might mean if other physicists, who will be officially informed of the discovery at a meeting in CERN on Friday, found that OPERA's measurements were correct.
"I just don't want to think of the implications," he told Reuters. "We are scientists and work with what we know."
Much science-fiction literature is based on the idea that, if the light-speed barrier can be overcome, time travel might theoretically become possible.
The existence of the neutrino, an elementary sub-atomic particle with a tiny amount of mass created in radioactive decay or in nuclear reactions such as those in the Sun, was first confirmed in 1934, but it still mystifies researchers.
It can pass through most matter undetected, even over long distances, and without being affected. Millions pass through the human body every day, scientists say.
To reach Gran Sasso, the neutrinos pushed out from a special installation at CERN -- also home to the Large Hadron Collider probing the origins of the universe -- have to pass through water, air and rock.
The underground Italian laboratory, some 120 km (75 miles) to the south of Rome, is the largest of its type in the world for particle physics and cosmic research.
Around 750 scientists from 22 different countries work there, attracted by the possibility of staging experiments in its three massive halls, protected from cosmic rays by some 1,400 metres (4,200 feet) of rock overhead.

Grübel letter to UBS staff

The ship is sinking, the passengers want to rid of the captain.


September 24, 2011 3:55 pm
Grübel letter to UBS staff

The following is a letter sent to UBS staff from Oswald Grübel, former chief executive, on Saturday after the Swiss bank said he was stepping down

Dear colleagues,
I have handed in my resignation as CEO to the Board of Directors today. That it was possible for one of our traders in London to inflict a multi-billion loss on our bank through unauthorized trading shocked me, as it did everyone else, deeply. This incident has worldwide repercussions, including political ones. I did not take the step of resigning lightly. I am convinced that it is in the best interests of UBS to approach the future with a new leader at the top.
The precise circumstances that led to the loss are being investigated by an independent body. Many questions remain open, and it is vital that they are cleared up in a comprehensive way. What is certain is that, as CEO, I bear full responsibility for what occurs at UBS. From my first day on the job I placed the reputation of the bank above all else. That is why I want to and must act according to my convictions. I hope my resignation makes it possible for our clients, our investors and the public to return their attention more quickly to the quality and strengths of our bank.
We achieved a great deal together in the past two-and-a-half years. The bank’s core businesses are well positioned in every important market, and we enjoy strong relationships with our clients. The loss represents a significant setback in our efforts to rebuild trust in our bank. However, you should have no doubt about the fundamental strengths of UBS. Because of you, the bank has made sustainable progress, which is something you can take pride in.
As I’ve always emphasized, a lot of work remains to be done here. So don’t let recent events distract you from your work. Continue giving your all and keep your focus on your clients. I am certain that UBS can carve out a strong place for itself within the fundamentally changing financial industry.
I want to extend you my sincere thanks for your strong commitment and support during my tenure. It was a privilege to be your CEO. I wish you and UBS only the best in the future.
Yours,
Oswald J. Grübel

(BN) Goldman Sachs to Shut Global Alpha Hedge Fund as Clients Withdraw Money

Bloomberg News, sent from my iPad.

Goldman Sachs Shuts Global Alpha Fund as Clients Withdraw Money

Sept. 16 (Bloomberg) -- Goldman Sachs Group Inc., the fifth-biggest U.S. bank by assets, will shut its Global Alpha fund after clients pulled money from the quantitative trading pool that was once the firm's largest hedge fund.

Global Alpha will stop charging fees at the end of this month and aims to finish liquidating most assets by mid-October, according to a letter that Goldman Sachs Asset Management sent to clients Sept. 14. The fund, which managed $11 billion of assets in 2007, had less than $1.7 billion at the end of June, according to a person familiar with the matter who spoke on condition of anonymity because the numbers aren't public.

Goldman Sachs, led by Chairman and Chief Executive Officer Lloyd C. Blankfein, 56, has been shrinking Global Alpha since 2007 when it lost 40 percent because of bad bets on currencies, equities and bonds worldwide. The fund's co-managers Mark Carhart and Raymond Iwanowski quit in March 2009, and Katinka Domotorffy took charge of the quantitative investment strategies unit, which uses computers to pick securities and oversees $56 billion.

Reuters reported yesterday that the Global Alpha fund was down 12 percent through the end of August, and the Wall Street Journal reported that it was being shut. Ed Canaday, a spokesman for the New York-based bank, confirmed the letter's contents and said he couldn't comment on the performance.

Lehman Claims

Domotorffy is leaving at year-end and being replaced by new managers, including Armen Avanessians, a partner who has served on the securities division's executive committee since 2003, according to a separate letter to investors Sept. 14. Ron Hua, who oversaw $12 billion of equity assets at PanAgora Asset Management Inc., was hired as chief investment officer and head of the quantitative equity alpha business.

Goldman Sachs wrote in the letter that it aims to distribute 85 percent to 90 percent of the total proceeds from the fund's assets to clients by the end of October. The fund's claims against Lehman Brothers Holdings Inc., which declared bankruptcy three years ago, may take longer and the fund may have liabilities to Lehman as well, according to the letter.

"We have extensively reviewed the fund's claims against, and potential liabilities to, Lehman Brothers and intend to vigorously pursue a resolution with Lehman Brothers that is in the best interests of investors in the fund," Goldman Sachs wrote. "We cannot predict when the fund will be able to make final distributions, if any, to investors in the fund."

Goldman Sachs is aiming to build the fund-management unit and improve its performance. The overall business had $844 billion under management at the end of June and generated 13 percent of the firm's revenue in this year's first six months.

Asset Management Moves

Avanessians, who joined Goldman Sachs in 1985 and became a partner in 1994, is the latest executive to move into asset management from other parts of the bank. Jim O'Neill, the chief economist, was appointed chairman of asset management last year. The investment unit's co-heads, Timothy J. O'Neill and Edward C. Forst, came from other divisions.

Bill Fallon, who became chief investment officer and head of alpha strategies when Domotorffy took over, will cede the equity business to Hua and focus on quantitative macro funds, according to the letter. Don Mulvihill will remain chief investment officer and head of customized beta strategies, Goldman Sachs said. Both will report to Avanessians, who will be based in New York. He will report to O'Neill and Forst, who signed the letter.

Domotorffy joined Goldman Sachs in 1998 as a portfolio manager and researcher with the quantitative global macro and fixed-income teams, according to the letter. She became head of strategy for the quantitative investment strategies group in 2007 before taking the leadership role two years later.

Carhart is now running Kepos Capital Management LP, which has $150 million under management and has made a 9 percent return so far this year, before fees, according to a person familiar with the matter.

To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net .

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Greek default preferable to quitting the euro

Rubbish this article. Its too late. Greece will default AND be kicked
out of the euro. Its rough, but its justice. Payback time for a
country and culture that works 6 hours a day and alcohol during lunch.
Goodbye and may their Greek Gods and Titans help them.

BREAKINGVIEWS
Greek default preferable to quitting the euro
HUGO DIXON
Reuters Breakingviews
Published Monday, Sep. 12, 2011 5:28PM EDT

A Greek default is not the same as quitting the euro. A common
misconception links the two together. But a default is both likely and
desirable, provided it is orderly. Bringing back the drachma is
neither. Not only would it be bad for Greece, it would be the
culmination of a major row within the euro zone and trigger a more
virulent phase of the crisis.

Athens' debt load will be unsupportable even after the half-hearted
default agreed in late July. Greece keeps veering off the plan that it
has agreed with its saviours, the euro zone and the International
Monetary Fund. Tension is rising at home, international relations are
being soured and markets' nerves are perpetually frayed. Cutting the
debt substantially would help put Greece on the road to recovery. Even
Germany, once dead set against any euro zone default before 2013,
seems to be coming around to the idea.

It is vital that such a default should be orderly. That means it
should be part of a new agreed program, which would continue to
provide cash to Greece in return for commitments to stick with its
reforms. It also means that Germany, France and others might have to
pump money into their own banks to deal with the fallout. But forcing
the banks to own up to their foolish lending would be a good thing.

But default doesn't mean abandoning the euro. Although Greece should
never have joined the single currency, kicking it out would create
havoc. There's no provision for an exit, much less for an ouster,
meaning that it could only happen as a result of an almighty
diplomatic row. The default would then be a disorderly one, leading to
a collapse of the Greek banking system. That wouldn't just hammer the
economy at home; the contagion throughout the rest of the euro zone
would be severe, with the danger of domino collapses of other banking
systems.

A properly planned default would be cathartic. Exit from the euro
would be the opposite.

Singapore's success worthy of emulation

Its a great lesson for developing countries, and a model that perhaps
will no longer work in today's world where the those who know, those
who don't have the same 1 vote.

03 SEPTEMBER, 2011 20:53
KUSENI DLAMINI
BUSINESS TIMES
Singapore's success worthy of emulation
The South African government, business and civil society need to craft
and execute a compelling vision of the future to make the country a
first-world nation.

Image: Picture: GALLO IMAGES
A view of Singapore financial district. The country has managed to
move from third-world status to first- class economy in just two
generations
" The island state has an unemployment rate of about 3%
We need to talk about strategies to reach full employment, 100%
literacy, total eradication of abject poverty, housing for all, a
decent healthcare system, a crime-free society, massive investment in
research and development, promoting a savings culture, a world-class
knowledge economy underpinned by global centres of excellence in
mining, financial services, manufacturing and innovation.

This is the strategic conversation that we should be having. But what
does it take to move from third world to first world, or in our case,
from developing to developed status within a generation?

Singapore! That's the answer.

As I write this in the lovely and very clean green garden city state
of Singapore, I'm compelled to say it takes very strong, bold and
visionary leadership that Singapore has had since its independence.

When the British left Singapore in 1965, it was in more or less the
same state and level of development as other African countries such as
Ghana and Zambia.

Now Singapore has a GDP of $285-billion, a GDP per capita of $37600
and an unemployment rate of about 3% and a mature financial services
sector dominated by the big names in global finance.

It has the ninth highest GDP per head in purchasing power parity terms
and an impressive human development index of 94.4% which is higher
than the Brics and countries such as Portugal and Greece.

Singapore is a living example that the shackles of poverty and
underdevelopment in former colonial states can be overcome. Lee Kuan
Yew, a great visionary and statesman, took over and started the
journey of modernising and developing his country. The Singapore model
of development is common sense but requires disciplined and sustained
execution to implement.

Lee Kuan Yew instilled confidence and discipline among his people.
This is a critical success factor for any nation or organisation. More
importantly, Singaporeans have a very strong work ethic worthy of
emulation.

Singapore is now a magnet for 10million tourists each year who come to
enjoy what most can only dream of in their home countries.

Their number of tourists per year is double their population.

The central plank of Lee Kuan Yew's strategy was to unleash the full
potential of Singaporeans by harnessing their skills, talent and sense
of patriotism.

Singapore has no natural resources and only 1% of its land is arable.
Agriculture as an industry is non-existent and yet Singapore has more
than enough food to feed its entire nation. It's a failure of
leadership that some countries have abundant arable land in Africa and
yet their people die of hunger and starvation.

The country's 94.5% literacy rate is a vindication of its sound and
prudent policies. If we can focus on developing and leveraging the
skills and professional passions of our people there is a lot that we
can achieve in making South Africa a first-world country within a
generation.

There are many shining examples of global excellence that need scaling
up to make South African leadership in global and local business to be
the norm.

In the ultimate analysis countries are as good as their leaders in
both commerce and government.

Dlamini is the CEO of Old Mutual Emerging Markets.

Wanted - a Lee Kuan Yew

Wanted - a Lee Kuan Yew
Published: September 4, 2011
S. Tariq
There comes a time in the life of nations that one yearns to see a
leader who can, through personal example and ruthless enforcement of
law and justice, lead the country out of the morass of corruption,
ineptitude and poverty. Great misfortune befell us when Muhammad Ali
Jinnah - the one person, who could do this - left this world just a
year after our independence.
Professors and pundits of political science bear the view that
autocracy and not democracy is an ideal form of good government. They,
however, hasten to qualify this statement with the words, "…but where
does one find a benign autocrat?" There are, however, examples in
history where such autocrats did emerge and lead their countries to
greatness and prosperity. Singapore and its first Prime Minister Dr
Lee Kuan Yew is one such case.
Born on September 16, 1923, Lee remained Prime Minister for three
decades before he voluntarily stepped down to enable a stable
leadership renewal. He led his People's Action Party (PAP) to eight
victories from 1959 to 1990, oversaw the separation of Singapore from
Malaysia in 1965, and its subsequent transformation from a relatively
underdeveloped colony with no natural resources into an Asian Tiger.
Such was the respect commanded by Dr Lee that the country's second
Prime Minister, Goh Chok Tong, appointed him as Senior Minister in
1990. In 2004, Singapore's founding father was given the advisory
portfolio of Minister Mentor by his son, Lee Hsien Loong, when the
latter became the nation's third Prime Minister in August 2004. On May
14, 2011, Lee announced his retirement from the Cabinet to make way
for new leadership.
On assuming his first office, Lee realised that Singapore did not have
a national culture that could be assimilated by immigrants. He,
therefore, embarked on creating a Singaporean Identity that heavily
recognised racial individuality within the ambit of multiculturalism.
He stressed the importance of maintaining religious tolerance and
racial harmony, and used the law to counter any threat leading to
ethnic and religious violence.
Like Pakistan, Lee Kuan Yew had three issues confronting him -
national security, economy and social degradation. He came to grips
with the first one by quickly declaring a policy of non-alignment,
while building up his armed forces. He took on political corruption by
empowering the Corrupt Practices Investigation Bureau (something what
our own NAB should have been) to arrest, search, summon witnesses,
investigate bank accounts and income tax returns of suspected persons
and their families.
Dr Lee believed that if the ministers were well paid, they would stay
away from corrupt practices. To that end, he brought the salaries of
ministers, judges and senior civil servants at par with top
professionals in the private sector. He argued that by doing this he
would be able to recruit and retain talent to serve in the public
sector.
Concerned about Singapore's growing population and the resultant
overburdening of economy, Lee implemented a 'stop at two' family
planning campaign, which encouraged couples to undergo sterilisation
after two offspring. Children born after the first two were given
lower priorities in education and their parents fewer economic
rebates. The result was a sharp fall in birth rate and a rise in per
capita income to the extent that by the late 1990s, the scheme was
discontinued.
In another revolutionary move, Lee promulgated a law that encouraged
Singapore males to choose highly educated wives. He introduced a
Graduate Mother's Scheme that offered incentives such as tax rebates,
schooling and housing priorities for graduate mothers.
One of Dr Lee's abiding beliefs had been the effectiveness of corporal
punishment in the form of caning. Singapore had inherited judicial
corporal punishment for personal violence from the days of colonial
rule, but the country's founding father expanded its scope to a wide
range of crimes, including vandalism.
This then is the story of what is now a leading, happy and prosperous
nation in the world. It is so because an autocrat, with a dream, ruled
it without fear of domestic and international criticism with only one
aim in mind - to root out corruption, inculcate discipline and put
into place a system of good government that could deliver to the
people.
What Pakistan needs is just such a person. Perhaps, he is hidden away
somewhere in the obscure ranks of some political party - if he is
there then let him come forward and lead this nation to glory.
The writer is a freelance columnist.