A Simple Fix For Unfunded Municipal Pensions That Wall Street Will Hate

We read weekly stories of cities, counties and states preparing bond issues to more fully fund their pension plans for municipal employees. The theory at work here is that they can borrow at low rates of interest because of their tax exempt status and invest the proceeds in the stock and income markets where they expect to get a higher rate of return. It’s the municipal equivalent of playing at the carry trade which as we know is not for the unsophisticated, i.e. government bureaucrats. This is not a Democratic or Republican thing since governments in both camps are embracing the concept.