The New York Post reports:
The city's cash-bleeding pension funds have begun investing in risky "distressed" bonds sold by companies in financial trouble.
Four of the city's five retirement systems have sunk a total of $388 million into a vulture-like investment fund called "disco," short for distressed companies, which aims to profit off the carcasses of failing businesses.
City Comptroller Bill Thompson's office has paid $1.4 million in taxpayer-backed fees to investment firm PIMCO to manage the fund.
So, these funds are being run by the much "conflicted"
Bill Gross, America's large bond fund manager. Here's what the
Wall Street Journal said about Bill Gross in September of 2007:
The co-chief investment officer of the bond giant Gross bet that his Fannie and Freddie bonds would be saved by Federal intervention, and he was right. He tripled his bet on mortgages in May so that they comprised as much as 61% of his fund. Then he boldly plumped for Treasury to use its own balance sheet in a bailout, preferably buying Fannie’s and Freddie’s preferred shares. Gross wasn’t above talking smack: He provocatively ended his last investor letter with the taunt, “Booyah Hank?”–poking at Paulson’s insistence that shareholders suffer “moral hazard.” Anyone “aspiring for a perfect 800 on the Wall Street policy exam would conclude that the tab will be less if paid up front, than if swept under a rug of moral umbrage intent on seeking retribution for any and all of those responsible,” Gross nudged.
As the U.S. gets more in debt, Bill Gross has more leverage over the United States federal budget.
