Correcting the Treasurer


While dropping off a child’s forgotten lunch box, this morning, I heard John DePetro replaying a segment of this weekend’s Newsmakers program interviewing Rhode Island General Treasurer Seth Magaziner.  Responding to observations that the state pension fund’s investments are treading water or even losing money, Magaziner repeatedly insisted that the proper time frame over which to consider investments of this sort is the “long term,” and in that regard, the fund is on the right track.

This is not true, and journalists shouldn’t let him get away with the lie anymore.  As I’ve written before, if you define “long term” as any time longer than five years and shorter than 30 (which is far back as I’ve seen data), the fund is not on the right track.  The reality is that Magaziner, like Gina Raimondo before him, has a small window during which a “long term” view of about five years makes it look like the pension fund is viable.

Starting the measurement at the bottom of the housing bubble crash and carrying it through a few years during which the federal government and Federal Reserve were inflating stock values makes it look like the pension fund could actually earn 7.5% returns every year, on average.  The idea that such returns could be maintained for decades is so inconceivable that politicians like Magaziner must be relying entirely on the reluctance of people to investigate their claims.

  • Max

    Well they let him get away with a lie to get into office so why not let him get away with this one. The next lie they’ll let him get away with is how he saved the fund when he runs for Congress.

  • Winter Solstice

    Max, just as Raimondo proclaims in national media that she “fixed” the pension fund ! The present state ARC (annual required contribution) payment is $ 424 million dollars. Mr. Magaziner said that the actuaries will determine how much more the state (taxpayers) will have to pay. Given the poor returns, it is a sure bet that payment will be significantly greater.

  • Rhett Hardwick

    Two stock market maxims:
    “Past performance is not an indicator of future performance”
    “The dice don’t have a memory”

  • Mike678

    Assessment and accountability/responsible are not often valued by the left. Seth reminds me of a truck driver I knew. The driver told me he lost money on each trip but he’d make it up in volume.