san diego has a gambling problem?

[mikew]

One of the biggest losers from Amaranth's bad bets is the public pension fund down in San Diego County. A couple of hours south of Los Angeles. The retirement fund for 33,000 county workers there lost an estimated $45 million from their Amaranth investment.

...DIANNE JACOB: Would you characterize the alpha portfolio and the activity within it as gambling?

San Diego County Supervisor Dianne Jacob.

JACOB: Like taking $1.4 billion to a casino and gambling taxpayer money?

...Pension funds may lack the expertise to really understand what they're getting into when they invest in hedge funds.

Borrus says hedge funds are increasingly attractive for pensions like San Diego County's, which is under pressure to pay for a 50-percent increase in benefits.

The pension's chief investment officer says the county should stay in the hedge game because the risk is worth it. One trustee agreed, quoting Harry Truman: "If you can't stand the heat, get out of the kitchen."

http://marketplace.publicradio.org/shows/2006/09/21/PM200609214.html

 

[brewer12345]

I would probably fault them for not doing adequate due diligence on Amaranth rather than just investing in hedge funds, per se.

 

[Nords]

I would probably fault them for not doing adequate due diligence on Amaranth rather than just investing in hedge funds, per se.

Why, for this to fail the whole county would have to go bankrupt!
-- Robert Citron, Orange County, 1994...

 

[kumquat]

What's the definition of lost? IIRC the fund lost abour 66% of assets.

These assets were up ~50 YTD when it all hit the fan. Was the $45M what was put in or the loss from max possible if they bailed at the right moment?