Hawaii ERS gambled on market calm – and lost

“Harvard, Hawaii Gambled on Market Calm-Then Everything Changed” was a sobering Wall Street Journal headline article on 2/14. This detailed how Harvard and Hawaii pension systems had engaged in selling put options against the VIX (volatility index), resulting in significant losses.

On 2/15, Pacific Business News reported that Hawaii ERS Chief Investment Officer Vijoy Chattergy was fired. How could this happen to the pension fund so many in Hawaii are counting on? In a nutshell, ERS was enamored with the allure of “easy money” generated by selling put options – insurance/hedges that market volatility would remain in a stable range. Complacency and years of low volatility were a ticking time bomb.

During the recent market sell-off, volatility exploded, with an ensuing “acceleration event” that decimated billions in investments on the wrong side of the trade. Hawaii ERS was one of those losers. The Honolulu Advertiser reported that ERS lost 6 percent during the rapid downturn. The market has bounced back somewhat since then, but those dangerous volatility puts are indelible, unrecoverable losses.

Hawaii has a major pension liability and is deeply underfunded. They have made several key changes to avert a true crisis, but this latest options fiasco still falls on leadership failure.

I am not a Hawaii ERS member, but I know many who are. I believe members should be questioning the leadership and review the selection process for advisors and strategies.

Along these lines, the contrived “revitalization” of Kaanapali project should be tabled, and capabilities, qualifications and motives of those recommending it be subjected to a similar review process as the former chief investment officer.

The legal costs, liabilities, environmental effects and community discord are as poorly understood by ERS as their woeful volatility strategy. ERS should stand for fiscal and community responsibility – not another “Big Short” gone awry.

DR. GARY WEISS, Lahaina

——————

Let’s hear it for common sense!

Congratulations to the Maui County Council for recognizing that the mayor’s inability to seek middle ground to resolve the situation he created with Water Department Director Dave Taylor is not deserving of taxpayer funds to defend those actions.

In the business world, if you expect to have your employer’s insurance defend your actions in the legal arena, the insurer will require that those actions have been taken in “good faith.” Otherwise, the insurer will declare the actions were not “covered” under the policy. While the mayor may believe he is infallible, County Council and most informed Maui residents beg to differ.

In my memory, the mayor has never admitted being wrong about anything (well, maybe he did allow as how he could have handled the post office demolition better, but there was never an acknowledgement that he did anything wrong).

It is my firm hope that there are other, better candidates waiting to file papers for the Kahului Council seat being vacated by Don Guzman.

And while we’re talking about taxpayer funds, it’s time for the mayor and the Maui County Council to bite the bullet and accept the court ruling requiring the county to stop using the West Maui injection wells. Enough already – put the money into making the required changes to the wastewater system!

And thank you, West Maui Preservation Association, for your public service radio ads encouraging everyone to convey those sentiments to the mayor and council!

NELL WOODS, Lahaina

——————

Bypass a bad joke

Traveling to Wailuku the other day, I was enjoying MY LAST look towards the ocean from the present highway.

No more whale watching from beach level (especially by Cut Mountain). No more checking out the water at beach level to go fishing-diving-swimming. No more beach level scenic views… then I was also looking up towards the bypass. Surprise, surprise! I see booms lifting stoplights where intersections are to be, where you go up or down from the bypass.

So now the state DOT is FORCING us to take Keawe Street; stop and go at these traffic lights, endangering our kids at Lahainaluna High School and Lahaina Intermediate School when school lets in and out; follow these chugging buses, tractor trailers, heavy equipment and trucks going uphill (wasting gas!); and to restart at every light.

Imagine how the traffic flow is going to be. Hey, Ed Sniffin, not listening to the community input or concerns? You may say you listened, with all YOUR input, data and analysis. We should make YOU commute out of West Maui every day! But you sit in Honolulu and make these GENIUS decisions!

NAME WITHHELD BY REQUEST

——————

Is there a Trump-Russia conspiracy?

Now that Russia’s interference in U.S. politics since at least 2014 is “official” with Robert Mueller’s indictments – the evidence is “incontrovertible,” H. R. McMaster, the national security special assistant says – we need to refocus on the bigger question: why does the president of the United States persist in ignoring, excusing and covering up Vladimir Putin’s obvious strategy to undermine our political system and our alliances?

Putin must have extremely damaging information on Trump – so damaging, in fact, that if revealed, Trump’s presidency would be fatally undermined and impeachment would be a foregone conclusion. The information would have to involve collusion of the highest order.

The Steele dossier suggests all kinds of indecent behavior by Trump in Moscow, but we can see from other tales of Trump’s sexual escapades that indecent behavior doesn’t damage him at all, except possibly in his marriage.

So what is he hiding? I’m prepared to believe the answer amounts to a conspiracy as legally defined and punishable, with Donald Trump at its center. Republicans in Congress simply will not go there. We have to hope Mueller’s investigation will discover, convincingly, whether or not a conspiracy against the United States has indeed taken place.

MEL GURTOV, PeaceVoice