Month: March 2021

What’s Ahead in the Second Year of COVID-19?

Mary Pat Campbell

Link: https://knowledge.wharton.upenn.edu/article/whats-ahead-second-year-covid-19/?utm_source=kw_newsletter&utm_medium=email&utm_campaign=2021-03-09

Excerpt:

Last summer, I saw a dramatic expansion of Federal Reserve liquidity, government support, and the money supply. I said then, ‘This liquidity is going to go into the stock market, and then it’s going to go into the economy once people feel comfortable with beginning their normal activities again’ — and that is exactly what is happening.

I think this year is going to be a great year for the economy, a much bigger expansion than a lot of people believe. I think it’s also going to be a year of inflation. Not dramatic inflation, but a lot more than what we have been used to — 3%, 4%, perhaps even 5%. This is going to be good for the stock market because I do not think that the Federal Reserve is going to tighten credit into 2022, maybe not into 2023. We’re going to keep low short-term interest rates and a hot economy, so inflation will begin to increase, and the stock market will be pushed ahead because corporate profits are going to be very strong.

The loser is going to be the bondholder because interest rates on the long-term bond are going to rise. We’re going to see the 10-year bond rise to 2% by the end of the year, maybe even 3% by the end of 2022.

Publication Date: 8 March 2021

Publication Site: Knowledge @ Wharton

Where Americans Are Moving — and Why They Really Are Doing It

Mary Pat Campbell

Link: https://www.governing.com/assessments/Where-Americans-Are-Moving-and-Why-They-Really-Are-Doing-It.html

Graphic:

Excerpt:

Recent research also tells us something about just who the urban emigrants have been. They haven’t been middle-aged people with families. For the most part, they haven’t had middle-class incomes. They have been young people, unattached and economically stressed. Among Americans age 18-29, Pew reported, 11 percent said they had moved in 2020 for virus-related reasons. Within the low-income population cohort, the figure was 9 percent — roughly twice as high as the overall U.S. number.

But even these figures are misleading. Very few of these movers were uprooting themselves and striking out for new locales. Many of them were college students whose campuses had closed down due to virus concerns and who were moving back in with their parents on a temporary basis. In June, a full 61 percent of those who had relocated for pandemic reasons had moved in with one or more family members. In November, the number was 42 percent.

Author(s): ALAN EHRENHALT, SENIOR EDITOR

Publication Date: 10 March 2021

Publication Site: Governing

Citi Blocks Firms With Errant Revlon Payout From Debt Deals

Mary Pat Campbell

Link: https://www.bloomberg.com/news/articles/2021-03-09/citi-blocks-firms-that-kept-errant-revlon-payout-from-debt-deals

Excerpt:

Citigroup Inc. is punishing investment firms that kept payments the bank accidentally sent to Revlon Inc. lenders by blocking them from certain new debt offerings led by the bank, according to people with knowledge of the matter.

The bank is choosing to not invite these money managers, who hung on to over $500 million, to its new-issue debt deals, the people said, asking not to be identified discussing a private matter. Firms targeted include Brigade Capital Management, HPS Investment Partners and Symphony Asset Management, the people said.

These firms and others tangled in a lawsuit with Citigroup can still participate if an issuer specifically requests for them to be able to join their offering, one of the people added.

Author(s): Katherine Doherty, Paula Seligson, Jennifer Surane

Publication Date: 10 March 2021

Publication Site: Bloomberg

Geeking Out: Florence Nightingale, Data Visualization Pioneer – and Redoing Her Famous Graph

Mary Pat Campbell

Link: https://marypatcampbell.substack.com/p/geeking-out-florence-nightingale

Graphic:

Excerpt:

There is a problem with the table, which a fellow actuary pointed out to me. I will explain that after I fix the graph.

Let’s start with the simplest graph: total deaths by type (zymotic disease, wounds, and battle fatalities)

I switched up the order of items and changed my presentation for the stacked column graph version:

Author(s): Mary Pat Campbell

Publication Date: 10 March 2021

Publication Site: STUMP on Substack

Puerto Rico debt restructure plan threatens public pensions

Mary Pat Campbell

Link: https://thehill.com/homenews/state-watch/542318-puerto-rico-debt-restructure-plan-threatens-public-pensions

Excerpt:

A federal control board created by Congress to address Puerto Rico’s debt on Monday filed a restructure plan that threatens a 10-percent cut to public pensions without any deal with retirees.

The board presented a 233-page plan that would reshuffle at least $35 billion in public debt and more than $50 billion in public pension liabilities, The Associated Press reported.  

The proposal, which was filed in U.S. court, includes an up to 8.5 percent cut to monthly pensions of at least $1,500 to help the territory deal with the biggest U.S. municipal bankruptcy filing in history. The board said it received “substantial” support for the plan from creditors, specifically those who have more than $13 billion worth of bonds.

Author(s): Justine Coleman

Publication Date: 9 March 2021

Publication Site: The Hill

Puerto Rico Gov Rejects Pension Cuts in POA

Mary Pat Campbell

Link: https://www.theweeklyjournal.com/politics/puerto-rico-gov-rejects-pension-cuts-in-poa/article_e661e724-80f7-11eb-ace6-7b42750d090c.html

Excerpt:

Puerto Rico Gov. Pedro Pierluisi reiterated his stance against the pension cuts outlined in the government’s Plan of Adjustment (POA), presented last night by the Financial Oversight and Management Board (FOMB) before the Title III Court.

“My administration has been emphatic that this cut to pensions is not reasonable and it is not necessary to confirm the Adjustment Plan, so we will leave it established in the confirmation process before the Title III Court,” Pierluisi said in written statements.

The POA is based on the agreements previously reached by FOMB with the Official Committee of Retirees (ORC) and other unions, for which it envisions a reduction of 8.5 percent in the pensions of government retirees who earn more than $1,500 per month, as stipulated by the past POA. This represents between 26 percent and 27 percent of all pensioners.

Publication Date: 9 March 2021

Publication Site: The Weekly Journal

Despite Its Much Stricter COVID-19 Policies, California’s Per Capita Death Rate Is Only Slightly Lower Than Florida’s

Mary Pat Campbell
Despite Its Much Stricter COVID-19 Policies, California’s Per Capita Death Rate Is Only Slightly Lower Than Florida’s

Excerpt:

According to estimates from the Centers for Disease Control and Prevention, the infection fatality rate for Americans who are 70 or older is something like 5.4 percent, compared to 0.5 percent for 50-to-69-year-olds, 0.02 percent for 20-to-49-year-olds, and 0.003 percent for people younger than 20. In other words, the risk for the oldest age group is 11 times the risk for the next oldest, 270 times the risk for 20-to-49-year-olds, and 1,800 times the risk for the youngest cohort.

Yet Los Angeles Times reporters Soumya Karlamanga and Rong-Gong Lin II, citing University of Florida epidemiologist Cindy Prins, write that “Florida’s older population might have, perhaps counterintuitively, prevented the virus from spreading as quickly as it did in California.” How so? “Young adults who socialize and mingle, either at work or in social settings, tend to spread the virus the most while older people are more cautious and stay home.”

Florida, of course, is a mecca for college students on spring break, whose socializing and mingling provided ammunition for critics of DeSantis’ alleged recklessness. And despite the relative timidity of elderly Americans, they account for more than four-fifths of COVID-19 deaths in the United States. Nursing homes alone account for more than a quarter of the total death toll.

Author(s): Jacob Sullum

Publication Date: 10 March 2021

Publication Site: Reason

Federal COVID-19 Bailout Prohibits States From Cutting Taxes

Mary Pat Campbell
Federal COVID-19 Bailout Prohibits States From Cutting Taxes

Excerpt:

Since the federal government is giving states money that they don’t need, there are two things state lawmakers can do: Use the federal money to grow government spending or pass that extra cash along to taxpayers by lowering their tax burdens.

However, the Senate inserted language in the American Rescue Plan expressly telling states that they “shall not use the funds provided…to either directly or indirectly offset a reduction in the net tax revenue,” or do anything that “reduces any tax (by providing for a reduction in a rate, a rebate, a deduction, a credit, or otherwise) or delays the imposition of any tax or tax increase.”

That same section of the bill also bans states from depositing the federal bailout into their public pension funds. That’s probably a good idea, but it’s pretty ironic considering that the American Rescue Plan also contains a completely indefensible bailout of some private-sector pension funds run by labor unions.

Author(s): Eric Boehm

Publication Date: 10 March 2021

Publication Site: Reason

Biden, Congress about to rain cash on NY state, local governments

Mary Pat Campbell
Biden, Congress about to rain cash on NY state, local governments

Excerpt:

As Governor Cuomo already has pointed out on the state level, the federal stimulus aid amounts to “the ultimate one shot . . . a sugar high.” The highest priority of state and local officials should be to avoid plowing the federal money into recurring spending commitments that will create bigger budget deficits in the future.

In an ideal world, New York pols will embark on a careful, painstaking assessment of needs, weighing short-term relief against recurring long-term benefits. Since most upstate cities are very old, with crumbling physical infrastructures, they would be well advised to invest the bulk of their “Biden bucks” into streets, sidewalks, water and sewer systems. This will save money on maintenance costs—which are high in many of these places. It also will help these cities retain and attract business activity they cannot afford to lose—and were already losing before the pandemic.

Local governments could also consider ways to help small local retail businesses and their landlords, especially restaurants and entertainment venues, which were crushed by the pandemic. One way of doing this might be a property tax holiday, or a long-overdue assessment and equalization update, whose transitional costs could be covered by the federal money.

Author(s): E. J. McMahon

Publication Date: 10 March 2021

Publication Site: Empire Center

Multiemployer Pension Relief Expected by March 14

Mary Pat Campbell

Link: https://www.morganlewis.com/blogs/mlbenebits/2021/03/multiemployer-pension-relief-expected-by-march-14

Excerpt:

EPPRA takes a far more direct approach to the problem than prior proposals. Under EPPRA, eligible plans can receive financial assistance from a new Treasury-backed PBGC fund. The available financial assistance will be sufficient for eligible plans to pay all benefits for 30 years. This includes any benefits previously suspended under the Multiemployer Pension Reform Act of 2014 (MPRA), which must be restored by plans that apply for assistance under EPPRA. EPPRA’s special financial assistance will not, however, cover adjustable benefits that have been cut under a rehabilitation plan.

The assistance is payable in a single lump sum without any repayment obligation. To qualify for assistance, a multiemployer pension plan must meet one of four conditions:

1. Be in critical and declining status

2. Have previously imposed a benefit suspension under MPRA

3. Be in critical status, have a modified funded percentage of less than 40% on a current liability basis, and have a ratio of active to inactive participants of less than 2 to 3

4. Be insolvent

The PBGC may prioritize plans that are insolvent, that require more than $1 billion of assistance, or that have suspended benefits under MPRA.

Author(s): Timothy P. Lynch, Daniel R. Salemi, Benjamin T. Kelly

Publication Date: 9 March 2021

Publication Site: Morgan Lewis

Bailed Out Multiemployer Plans

Mary Pat Campbell
Bailed Out Multiemployer Plans

Excerpt:

According to PBGC, 61 plans filed notices for 2020 that they were in Critical and Declining status.

There have been 32 plans that filed for benefit cuts under MPRA and it may pay off for every other multiemployer plan to rustle up a submission package prior to enactment.

Then we come to other plans who might be (or could make themselves) eligible. Of 1,220 plans who filed Schedule MBs for 2018 there were:

118 in Critical and Declining status

638 with more retired than active participants

1202 with unfunded liabilities

$685 billion in net unfunded liabilities

Author(s): John Bury

Publication Date: 9 March 2021

Publication Site: Burypensions

Exposing Corporate Climate Denial

Mary Pat Campbell

Link: https://www.dailyposter.com/p/exposing-corporate-climate-denial

Excerpt:

Meanwhile, investor efforts to require political spending disclosures at individual companies were halted on many occasions by large asset managers like BlackRock and Vanguard, which have regularly used their immense shareholder voting power to shield companies from transparency.

Now with a new SEC chairman, transparency advocates see an opportunity for progress. 

“People want to know who companies are bankrolling,” said U.S. Rep. Andy Levin (D-Mich.). H.R. 1, the democracy reform package passed by House Democrats earlier this month, includes a bill from Levin to repeal the Republican measure blocking the SEC from requiring companies to disclose their political spending. 

Author(s): Julia Rock

Publication Date: 10 March 2021

Publication Site: Daily Poster