America's pensions can't beat Vanguard but they can close a hospital • Hacker News Board

Re: America's pensions can't beat Vanguard but they can close a hospital

#151

Post by lawstkawz » Tue, Feb 17, 2026, 4:50 PM UTC

epistasis wrote: post #24

> Larry Summers warned against “moral hazard lectures” and demanded SVB depositors be made whole immediately in 2023, months after calling student loan relief inflationary and unfair. Moral hazard for borrowers, bailouts for banks. Not lost on the public. I can't believe I'm about to say something that could be construed as a defense of Larry Summers, but here goes: bank depositors are not engaging in risky behavior,…

As someone who supports education loan forgiveness, I say we do as our elders have and just take from them without a whiff of concern for their grandstanding about morality.

What obligation to the generation that's been aware of physical evidence of climate change for decades and ignored it?

The old dying and the youth rewriting social and political custom and truism is a physical constant of the universe.

Physics is ageist; sorry/not sorry grandparents.

Re: America's pensions can't beat Vanguard but they can close a hospital

#152

Post by SpicyLemonZest » Tue, Feb 17, 2026, 4:51 PM UTC

munk-a wrote: post #90

YetAnotherNick wrote: post #81

Earlier quoted context omitted.

> SVB bailout There wasn't any bailout at all. This entire thread is so confusing. But yes they got 2 days or something of deposit freeze IIRC.

My apologies on the imprecise language - maybe "extension of FDIC account insurance beyond the standard 250k limit to depositors" is better terming? SVB came out of this broke - as they should for such mismanagement - but the concern is that depositors were made whole beyond the amount usually insured by the FDIC.

It's not a question of terminology. As you say, SVB came out of it broke, but their stuff didn't burn to the ground - their operations and assets were taken over by a bridge institution Silicon Valley Bridge Bank, which was then quickly acquired by First Citizens Bank. Where's the point where the depositors should have lost money? Would it have been fair for First Citizens to tell every customer who had over $250k in their account "sorry, we've taken the rest as an acquisition bonus"?

Re: America's pensions can't beat Vanguard but they can close a hospital

#153

Post by Ajedi32 » Tue, Feb 17, 2026, 4:52 PM UTC

nostromo95 wrote: post #101

Ajedi32 wrote: post #15

Earlier quoted context omitted.

If multiplying money is the goal why does the article say they're doing a worse job of that than just buying index funds? If that claim is true, then clearly there are other issues at play than just that.

Pension funds have a different time horizon / cash flow needs than individual investors (namely, they need to meet their liabilities every month) and so are going to have a more conservative asset mix (read: lower expected returns w/ lower volatility) than your average S&P500 index funds. For example, CaLPERS has ~45% of their assets under management in debt / real estate.

Is high volatility really such a concern when you're dealing with a large pool of funds over such a long timeframe? Sure, if you need to withdraw funds during a downturn that's bad, but over the long term isn't that statistically balanced out by other months where you get lucky and withdraw during a peak?

Re: America's pensions can't beat Vanguard but they can close a hospital

#154

Post by logicchains » Tue, Feb 17, 2026, 4:52 PM UTC

a_better_world wrote: post #142

jazz9k wrote: post #45

Earlier quoted context omitted.

I disagree about student loans. The entire system needs to be dismantled. Universities don't care if their majors will result in a job and the student loans are a source of risk-free money. They need to start taking on the risk of all student loan, not me, the tax payer.

if college education produces a public good (a more competent workforce), then it should be funded through public funds-- government should pay for education. If it does in fact lead to better outcomes, then the higher tax will cover the cost. running it through the private system builds in too many perverse incentives.

>if college education produces a public good (a more competent workforce)

It doesn't achieve this; the % of college graduates has vastly increased over the past few decades, but this hasn't contributed to any significant improvements in standardised measures of graduate knowledge or intelligence. From a business perspective the primarily usage of college is as a filter, a proxy for intelligence and willingness to follow instructions, but its usefulness as a filter has been steadily decreasing as it becomes easier and easier to attend and graduate from college.

Re: America's pensions can't beat Vanguard but they can close a hospital

#155

Post by happyopossum » Tue, Feb 17, 2026, 4:53 PM UTC

Someone1234 wrote: post #77

> student loan relief inflationary and unfair The problem with US student loans is usury . Student Loan interest rates in the US can be as high as 9-13%. The government can borrow at 3.36% which even if we assume a 20% overhead is 4.03% to the borrower. Other countries/governments do a scheme similar to this, and it makes repayment realistic . I'm certain someone will respond telling me the difference between Subsidi…

Your argument kinda falls apart with the observation that private loans often have waaaay lower interest rates than federal ones... Typical private loans start in the 3% range, vs 6.4 for the lowest Federal ones.

Re: America's pensions can't beat Vanguard but they can close a hospital

#156

Post by chasd00 » Tue, Feb 17, 2026, 4:53 PM UTC

drakythe wrote: post #124

codexb wrote: post #68

Earlier quoted context omitted.

Ok, but forgiving student loans doesn't do that. It signals to borrowers that they don't have to repay high loans if their career can't support it. It tells borrowers that they can make risky loans without a chance of default. It tells universities that they can keep charging exorbitant tuitions because kids can still get loans to pay them. The solution is to allow judges the discretion to default them in bankruptcy…

That's why it should be a one time event in conjunction with reworking the whole system. Why can I, as an 18 year old, sign for a loan that _cannot_ be forgiven, graduate into a crashed economy, and still be held accountable for choices that impact me when I only had a small part in them? The system needs reformed, and we need to do something for the people still on the hook of the old system (and I say this as someo…

As a parent of a 16 and almost 14 year old i'm effectively home schooling personal finance with them. My wife and I got none from our parents and were preyed upon constantly. I think I was 45 when i finally got my student loans paid off. My wife did many years in a dangerous, low-performing, HS as a teacher to get hers forgiven. Sending an 18 year old off to college without a solid understanding of finance is like throwing an 18 year old in the ocean while bleeding profusely and tasking them with swimming to shore, maybe a couple make it but the sharks will get the rest.

Re: America's pensions can't beat Vanguard but they can close a hospital

#157

Post by kasey_junk » Tue, Feb 17, 2026, 4:55 PM UTC

epistasis wrote: post #74

steveBK123 wrote: post #50

Earlier quoted context omitted.

> bank depositors are not engaging in risky behavior Supposedly intelligent investors leaving money in accounts above FDIC limits ($250k per holder per bank, so $500k for joint account) were engaging in risky laziness.

So what do you do when your payroll is more than $200k? The depositors were not treating SVB as investment, they were bank accounts for doing transactions.

Sweeps and obo accounts are the bone simple answer to this that every mainline treasury has used for this problem for at least 30 years.

Further the banking ecosystem in the US is predicated on the idea that depositors, especially large ones, are doing their own diligence on the health of the bank.

Re: America's pensions can't beat Vanguard but they can close a hospital

#158

Post by AnthonyMouse » Tue, Feb 17, 2026, 4:56 PM UTC

cj wrote: post #107

codexb wrote: post #68

Earlier quoted context omitted.

Ok, but forgiving student loans doesn't do that. It signals to borrowers that they don't have to repay high loans if their career can't support it. It tells borrowers that they can make risky loans without a chance of default. It tells universities that they can keep charging exorbitant tuitions because kids can still get loans to pay them. The solution is to allow judges the discretion to default them in bankruptcy…

Allowing student debt to be canceled during bankruptcy would be a good first step (possibly even better than canceling student debt across the board). To your point, making it easy to cancel debt teaches borrowers that debt isn’t a serious thing. Requiring someone go through bankruptcy (and all of the associated negatives on your credit score, etc) seems like a good tradeoff. Allows you to get out from under the debt…

Bankruptcy affects your credit score for 7-10 years. Someone who graduates from college in their early 20s with six figures in debt could file for bankruptcy immediately and have it be off their credit history by the time they've saved up a down payment and want to get a mortgage.

There is also the obvious drawback that if more people can discharge the debt, the interest rate goes up, and then everyone else has to pay for the people who took out loans they didn't pay back.

Re: America's pensions can't beat Vanguard but they can close a hospital

#159

Post by zeroonetwothree » Tue, Feb 17, 2026, 4:56 PM UTC

mschuster91 wrote: post #143

codexb wrote: post #68

Earlier quoted context omitted.

Ok, but forgiving student loans doesn't do that. It signals to borrowers that they don't have to repay high loans if their career can't support it. It tells borrowers that they can make risky loans without a chance of default. It tells universities that they can keep charging exorbitant tuitions because kids can still get loans to pay them. The solution is to allow judges the discretion to default them in bankruptcy…

That's not a solution at all, because it will price out way too many students. The solution is to do what Germany and most of the EU does - pay universities with tax money and do not charge students anything at all (or maybe a few hundred to thousand euros).

How many German universities are ranked top 40 globally? How many American?

Re: America's pensions can't beat Vanguard but they can close a hospital

#160

Post by zbentley » Tue, Feb 17, 2026, 4:56 PM UTC

Aurornis wrote: post #123

codexb wrote: post #68

Earlier quoted context omitted.

Ok, but forgiving student loans doesn't do that. It signals to borrowers that they don't have to repay high loans if their career can't support it. It tells borrowers that they can make risky loans without a chance of default. It tells universities that they can keep charging exorbitant tuitions because kids can still get loans to pay them. The solution is to allow judges the discretion to default them in bankruptcy…

I’m always surprised that student loan forgiveness appeals to anyone who should otherwise be able to think about all of the bad second order effects. The more we inject money into the education system, the higher prices go. Setting a precedent that the government will just pay off your loans if you don’t pay them off only encourages more people to take out loans without thinking about paying them back. There are so m…

Maybe, but that precedent has been set before for other types of loans, and in a limited way for student loans, and the sky didn’t fall. The upward price pressure on university prices is far more influenced by other factors (which should be fixed!). Loan forgiveness probably is a drop in the bucket, I suspect.