This is bad news: Last year, the Pension Benefit Guaranty Corporation -- the federal agency that guarantees private pensions -- decided to take its $64 billion and move it from bonds to stocks. Better returns that way. And then, of course, the market bottomed out. No one is quite sure what the total losses are, but this sort of thing was predicted. Peter Orszag, then director of the Congressional Budget Office, warned that the PBGC was "investing a greater share of its assets in risky securities," which would make it "more likely to experience a decline in the value of its portfolio during an economic downturn the point at which it is most likely to have to assume responsibility for a larger number of underfunded pension plans." This is that time, and thus this is the nightmare scenario. As far as I can tell, Paul Krugman is wrong to say that this could cost taxpayers hundreds of billions -- the maximum would seem to be tens of billions -- but the Corporation's total liabilities if giants like Chrysler or GM go down could quickly swell into the hundreds of billions. And it was, as Krugman said, proof of the crazy faith we had in the eternal advance of the stock market that we rested a countercyclical agency on a decidedly cyclical investment. Also, Peter Orszag is a prophet. On a related note, I'm surprised that no progressive think tank has yet run the numbers on one of the Social Security privatization schemes to estimate what would have happened to pensions if the plan had been fully implemented by last year. Seems like an easy point to score. Not, of course, that I support engaging in such behavior.