ANOTHER outstanding interview done by Mike ! I believe he has multiple objectives in these interviews..present the problem,discuss and identify the facts and explore the possible solutions. Regarding some of the comments below..suggesting that government should be more accountable,transparent and responsible to the citizens is not some political or pie in the sky set of ideas. Streamlining access to information,proposing a more business like structure to manage the financial and human resources of government are real solutions and I applaud John for proposing them! Mike feels strongly that these issues should be explored and solutions found for the general welfare. Maybe there needs to be fewer cynics and more adult conversations like the one found in this interview.

Moved to Sonoma county, CA in 2010. Amazingly the county supervisors in 2012 retroactively increased pensions for county employees. Taxes and bond issuance disproportionate(/ridiculous per square footage) and concluded would lead to financial ex-sanguination if we stayed there in retirement. Sold in 2018 and now live in a low tax county not far from bay area. I can not imagine that in the next housing downturn this will not impact property owners disproportionately. If reflexivity is a valid concept then you do not need 2008 type scenario to have a similar outcome.

Good interview by both people. I think Michael Green in particular is exceptional. I remember having U.S. investment banks like Morgan Stanley, CSFB etc pushing (I mean giving it the real sales push - i.e. there were huge commissions to be earned) "YES" swaps to me in a large corporate here in NZ back in 1993 (YES = Yield Enhanced Swaps). These were the same instruments that Robert Citron loaded up on - levered directional interest rate plays. These IB's were pushing 3 x levered positions to us at a time 3 month US rates were 3.25%. I worked out that we'd be underwater if yields rose to 3.5%. I'd only been in the market a couple of years (in my mid-20s) but even I knew rates weren't going much lower at that time and likely rising within a year. They bottomed at 3% and were rising 6 months later. I told these IB's that you'd have to be a fool to buy these (in 1993). You just heard what happened. 25+ years later I approach CalPERS with unique investment strategies that are uncorrelated, lower risk & significantly better performing than US equities AND I will align my fee to performance. They give me a generic flick to go see a gatekeeper database manager (essentially a warehouse to be shelved). They prefer to deal with the large brand asset managers (asset gathers who are seeking [& getting] AUM based fees & not delivering on investment performance relative to passive - just like the IB's in '93). It really is a perverse system we operate in. Those in authority go with the best sales pitch - everyone likes a good story - because you can turn and repeat that same story to those to whom you report. As John said right at the beginning of the interview re: Bob Citron at O.C., nobody really understands (or seemingly wants to) and in the absence of understanding, a good story plus a recognizable brand is all you need to do a deal.

CA, be ready to reap what you have sown. That state is so screwed up it defies logic.

Great to have Mike Green at RV. His interviews are excellent. I don't deny that pensions are a problem, but in my view the problem is completely mischaracterized. Discussion of IRRs, excessively generous benefits, etc. are academically interesting, but they completely miss the big picture. The real problem is that there is way too much government. Huge swaths of it are completely unnecessary. If we shrink the government, the pension problem will resolve itself. The door prize is the added prosperity Americans would enjoy from less government interference in our lives. We did much better when we had far less government.

How many retail clerks and Uber drivers want to support state retirees who retire in their mode 50’s to six-figure pensions? How many boomers want to support this bloat? How many millennials? When this goes belly up and taxpayers get hit up yet again, perhaps they’ll finally figure out being a one-party State was not such a swift idea.

Ugh. A whole interview of political speak. If only other people were as smart as you.

What an absolute shame these unions, state and local governments are not to renegotiate their pension agreements! The private sector is paying for these city, state and teacher pensions. They retire on 60 to 70% (or more) of their salary. I don't see the local dry cleaner, restaurateur, jeweler, or any local business person (who's sweating it out) getting a pension. I married a teacher and my spouse even admits it's disgusting. No wonder people are leaving in droves from California and Illinois. Abraham Lincoln is rolling over in his grave...what a tragedy! It literally makes me weep.

On homelessness, the "California homeless problem" is a USA homeless problem. I was homeless as a teen, and left my home state and went to CA because it was warm and friendly to people who were down on their luck. I wasn’t born in CA, but as a homeless person, CA was nicer than winters in the Midwest. They talked about how much David Tepper meant to New Jersey, but not about how much Prop 13 (in percentage terms) meant to California, the subject. Prop 13 is effectively a form of "rent control" for an entire state of the rich and upper middle class, and many of California's fiscal issues over the last decades go back to it.

CEOs, CFOs, etc. in the private sector often assume no responsibility either. In fact, they are often just very aggressively gorging themselves on the long-term built-up American capital to which they've been entrusted.

Fascinating interview... and Mike, whatever the weight loss programme you’re on, keep it going - it’s working!

yet again a slightly leftfield interview choice that turns out to be tremendously insightful and valuable. only on RV.

What a great interviewer in Mike Green. He made the interview itself much better. Mike's questions are all apposite, stated clearly and in the shortest of words. They were all the questions I would like to have asked. I wish I could get as much out of all interviews on Real Vision, but I suppose that isn't possible unless Mike becomes your lead interviewer. All too often the questions are longer than the answers, but not on this interview. Mike clearly has no interest in showing how much he knows. HM

John Moorlach you are an absolutely incredible public servant. If only there were more of your kind in California. Thank you and Michael Green for the interview!

I think there is somewhat of a flaw in the union structure itself being that retired members have the same vote as working members, this impacts who is voted on to be union leaders, the retires or members who are going to retire soon have much more weight, and therefore union leaders will always have a bias for the current retirement setup. I have seen it when the union is in negotiations, they will always give up more for the new hires than the existing members. Not sure how to fix this, but I believe this is what keeps pushing the existing retirement system to a eventual fallout among union members & public and private backers of the plans.

Just a heads up at 17:30 you say we have not restructured the pensions. That is false. Pepra employees (Public employee pension reform act) get less benefits and pay more into the system.

Wow. Why do we councils if they can't do much at all.

A Time bomb - sooner or later it will trigger - a crisis and fingers pointing everywhere. This has been going on for 30+ years

California is lucky to have Senator Moorlach. It must be incredibly frustrating to work in such a dysfunctional and one-sided political regime.

Top drawer video as usual from Mike and his guest. Some scary data on the fragile state of US state pension funding which as the Senator suggested is a train wreck waiting to happen. The irony probably is that although I was amazed to hear John confirm CALPERS has now gone 100% passive, that decision and that of similar major institutional investors is probably what is keeping the stock and bond markets climbing to ever crazier highs as their ETF models keep applying their blind momentum strategy of buying more and more of the winners regardless of valuations, until of course as Mike frighteningly identified in his brilliant video with Raoul a few months ago, the next downturn eventually occurs and there are no bids at any price because passive has killed the active manager whom ordinarily would have provided the liquidity! Surreal and very worrying!

Great interview. Mike , almost as good an interviewer as an interviewee :)