Sunday, February 1, 2009

Caisse de Depot's Giant Gamble Goes Bad

The Caisse de dépôt is the agency of the Quebec government that invests taxpayer money to fund our old age pensions. Their job is to invest it wisely, so that when it comes time for us to retire, the government has money to pay out our pensions. There is no doubt that the fund, along with every other similar fund took a hit in the recent financial meltdown, but the scope of the losses at the Caisse are colossal.
It was suggested by Mario Dumont, the then leader of the ADQ, that one of the reasons that Jean Charest called the December election was avoid facing the debacle over at the Caisse. The Caisse usually reports on it's activities in the Spring and the Premier refused to comment on the swirling rumours, deftly swatting aside inquiries as to the state of finances at the Caisse.
In an brilliant article in the Globe and Mail, KONRAD YAKABUSKI describes the sordid details. The article is long, but worth a read if you want a clear understanding of what happened.
The fund which was pegged at over 155 billion before the meltdown is said to have suffered losses up to 25 billion dollars. It seems that they bet heavily on the mortgage market in the United States.
Most Quebeckers don't seem perturbed about the loss. They should be. Demonstrators took to the streets when the Ottawa cut a paltry 40 million dollars from the artist's travel budget. The loss at the Caisse is over 600 times as high. Will the public react? I predict they won't.
Premier Charest correctly understood that Quebeckers were too uniformed to understand the depth of the problem. It's too bad.

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