Budgets & Soche Security

Ohio's budget woes could soon receive a new setback as Russian Oil Company, Yukos, has declared bankruptcy. The Ohio Public Pension fund has lost $2.7 milllion dollars and U.S. investor losses are in the billions of dollars. The article in the Feb 22 Columbus Dispatch from Mark Niquette on page B12 states

Ohio public-pension systems have lost money in the embattled Russian oil company Yukos, an officer in the financial holding company now running the energy firm testified at a U.S. Senate hearing last week.
Tim Osborne, a board member for Group Menatep, did not provide details during his testimony before the Senate Foreign Relations Committee and could not be reached afterward.
But Osborne told senators that there are "U.S. minority shareholders in Yukos, including state pension funds such as that of Ohio." Losses to U.S. shareholders are "estimated in the billions of dollars," he said.
The State Teachers Retirement System of Ohio has lost about $2.7 million in Yukos stock through time but sold all of its holdings in the company as of December 2004, spokeswoman Laura Ecklar said.
The Ohio Public Employees Retirement System has been invested in Yukos indirectly through some index funds its external managers handle, spokesman Rich Baker said.
He said a preliminary review shows that Yukos holdings once were part of eight such portfolios but now are only in one. Financial performance of those holdings wasn't immediately available, he said.

This loss of money helps Blackwell because it shines some light on the need for spending restraint in Ohio, just in case the pension fund needs some bailout money.
But this bankruptcy could also harm Blackwell and conservatives because it shines a negative light on Bush's plan to privatize Social Security. This demonstrates the risks of the Stock Market.
The reply is that only in America can a pension fund have 2.7 million to invest and only because of capitalism can a retirement account lose 2.7 million and still be financially solvable.

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