'Madoff Whistleblower' Harry Markopolos Has Uncovered A New Fraud

'Madoff Whistleblower' Harry Markopolos Has Uncovered A New Fraud
Harry Markopolos, the investigator who exposed the Bernie Madoff Ponzi scheme, has uncovered a new fraud. The unfunded status of the pension fund of the Boston Transit Authority (the “MBTA”) is $500 million bigger than previously thought, according to Markopolos. This will have a significant impact on the municipal bond market, especially if it turns out that the MBTA’s problems are endemic among similar pension funds.
http://www.zerohedge.com/news/2017-...wer-harry-markopolous-has-uncovered-new-fraud

 

He should have shorted the bonds first. After all he just did due diligence...

 

How is this a fraud?

$500 million is a rounding error for public pension funds.

Multiple states have $100 Billion plus shortfalls in their public pension plans.

 

1.purposely incorrect report may be a fraud.
plus other effects
2. this may be a tipping point for the municipal bond market, particularly for boston mta bond holders, like with puerto rico bond holders and detriot bond holders.
2' they may find it impossible to refinance.
3, it may prove to be infectious to the entire municipal bond market resulting in higher costs
for bond issuing entities
_________
"$500 million is a rounding error for public pension funds."

Multiple states have $100 Billion plus shortfalls in their public pension plans.

you are comparing one issuing entity, boston mta, to a state issuing entity. it is comparing apples to orange.

 

All the big pensions are in peril - caused by the Fed leaving interest rates to low. This is the toxic effect of having anemic interest for 9 years now.

https://www.fxstreet.com/analysis/i...he-pension-side-martin-armstrong-201611071919

 

Has very little to do with fed policy. Those pension funds were underfunded in high and low interest environments. What it has to do with are stupid regulations that allow corporations to handle their employees pension provisions as if it was a toy. Strange accounting principles also added to mistreatment of corporations handling of pensions. Same applies to public pension schemes. In America greed always came first and underfunded pensions are just one of the many results of that.

 

Here's some real fraud: reported GNP includes public sector spending. When we see a country's sovereign debt in relation to it's GNP it's grossly underreported.

 

There is no doubt many pension plans were under funded in the U.S.. The central banks keeping interest at or near 5,000 year lows is not exactly helping. Pension funds & insurers world wide, even the best funded plans are all in a lot of pain.

http://www.marketwatch.com/story/low-rates-threaten-solvency-of-pension-funds-insurers-2015-06-24

 

With all due respect, this is nonsense and spurious correlation. Those same funds were underfunded in high rate environments long before 2008 as well. Since when should an employee's and future pensioner's future be entirely in the hands of a fed chairman/woman? That pension funds are way too heavily weighted on fixed income instruments has been a sin for decades. This is the one single account type that really can benefit from a long term planning perspective and yet still most pension funds are hugely underweight equity.

 

Ever think this "abnormally" low rate environment might be normal if it weren't for all the debt being floated instead of just a dollar in/a dollar out pay as you go.