On Mr. Murphy’s pension plan

You know the one. Everyone’s pension should be put into nice safe bonds to build lovely green infrastructure n’stuff? After all, what could go wrong?

The fact that they weren’t successful is, according to Rodbertus, the fault of the company’s investors, who backed the firm to the tune of €1.4 billion ($1.9 billion). Currently, many of them are demanding the returns that they were once promised: at least 6 percent interest per year or a refund of their principle if they wished to back out. Last week, the mounting claims led Prokon to declare bankruptcy — 75,000 stakeholders could be left out in the cold.

Oh, you mean there is no such thing as a risk free return?

Much of the concern is focused on the large number of projects that are financed by the investment model known as closed-end funds. As a rule, they run for a 20-year period and are open to a limited number of investors. They promise annual dividend payments.

But newly released numbers, collected and analyzed over a several-year period, show what disappointed investors have long surmised: Around half of these commercial wind park enterprises are doing so poorly that investors can count themselves lucky if they even get their initial investment back after the 20 year duration.

Perhaps it will all work in the Curajus State though.

Or perhaps it won’t. There is, after all, a reason why we like to have a mix of equity and debt in a financing package.

12 thoughts on “On Mr. Murphy’s pension plan”

  1. There may be more to a certain troubled green energy company than meets the eye. Advertising funds retail, on buses and such. Retail customers were offered considerably more than 6%.

    We all know the one about the one born every minute, and the fool and his money. We also know about what to do when the price is too good to be true. And it’s not that long ago that the Icelandic banks went famously belly-up, with their too-good-to-be-true returns on supposedly safe investments.

    But that said, all foolishness on the part of investors aside, the extent to which the peddlers of certain investments knew that such a combination of return and security was, er preordained to be “too good to be true” is currently what is sometimes referred to as an “active line of inquiry”.

  2. I do like the comment that blames it all on the evils of capitalism. And, most humorously, thinks that managing to pay a dividend of over 2% at least one year in 10 is somehow a mark of success.

  3. The Germans overestimated the output that they would get while the turbines were actually turning and didn’t expect any breakdowns. That is typical of the green propagandists and is true in the UK as well, with a horrifying percentage of windmills not turning while the wind is blowing.
    So Murphy would have all members of private-sector funded pension schemes impoverished by their funds’ investment in failed infrastructure projects while he and his wife luxuriates in retirement on her final salary NHS pension – which will reflect her full-time salary after the kids grow up despite her paying in only a %age of part-time earnings while they are young.

  4. @john77

    Good grief, powerful stuff!

    I can see you like and respect the fat turd and his GP wife as much as I do. I have never had any contact with his Mrs, but given that she is married to him I kind of know in my waters that I dislike her.

  5. Simple – the Courageous State would courageously steal other people’s pensions/savings and ‘redistribute’ it to those impoverished by the Green disaster.

    All in the name of equality and fairness, of course.

  6. Maybe I’m missing a trick here, but how exactly does one lose money putting up wind turbines?

    I mean, they aren’t particularly complex, they’ve been around for a while now. We should know what it costs to put one up and look after it, and roughly how much electricity it will make in a given location. The government helpfully gives out massive subsidies, so it’s pretty much fixed how much we get pet unit of electric we make.

    Running a business on this basis, how exactly does one go wrong?

  7. Larry Niven, the great science fiction author, dabbled in stories of magic. They were good stories, mainly because Niven is a good writer, but also because he was rigorous in ensuring that his stories were internally consistent. That is, no matter how wild the fantasy, it was bound by the laws of its creation.

    Dick would be a really crap writer.

  8. Running a business on this basis, how exactly does one go wrong?

    This bit:

    The government helpfully gives out massive subsidies

  9. Bloke in Costa Rica

    I bet the stupid fat bastard couldn’t tell you what a closed-end fund was with a gun to his head. They’re not ‘open to a limited number of investors’ except in the vacuous sense that so is any entity that issues a fixed number of shares. And he can’t spell ‘principal’.

  10. @ the Prole
    “We should know what it costs to put one up and look after it, and roughly how much electricity it will make in a given location. The government helpfully gives out massive subsidies, so it’s pretty much fixed how much we get pet unit of electric we make.”
    The key word is “should”. Firstly they hadn’t been around long enough for the manufacturers, let alone the investors, to know the breakage rate for components; secondly the German greenies suckered in a lot of investors on optimistic estimates of how much electricity they would generate when they working. So, even with massive subsidies, Prokon is insolvent.

  11. So the market corrects for the problems – people lose money, company goes under, more are unwilling to risk so much money in such schemes until they prove themselves capable of making money….. whats not to like?

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