How quickly the world changes
My guess is that when Hank Paulson went to Washington, he hoped to be the one who would really open up China’s largely closed domestic financial market to investment from private US financial firms. Paulson always seemed more passionate about financial liberalization than exchange rate appreciation. It now seems more likely that by the end of Paulson's tenure as Treasury Secretary, China’s government will have increased the scale of its minority stakes in large US banks and broker dealers while private US firms will still not have majority stakes in large Chinese banks.
Beijing needs places to invest, not more inflows. Chinese banks do not need another round of cash from Goldman or anyone else, and wouldn’t sell at anything like the same price. The Chinese state banks — and as well as their ultimate owner, the CIC – all have plenty of cash to invest in troubled US banks. They are exceptionally liquid.
The Bush Administration has clearly opted to focus on the need to keep the US market open to foreign investment of all kinds, including investment from large government funds — not on the risks of "state control" and the associated challenge to the logic of market capitalism. That opens up space for China's government and large Chinese state banks to buy into the US financial system.
Naked Capitalism (happy blog birthday!) has an interesting discussion of the trade that got Morgan Stanley into trouble. I am not sure I fully understand the details (“long $14B super senior, short $2B mezz “), but it seems like Morgan effectively held seven times as many higher-quality mortgage backed securities (super-senior tranches of CDOs constructed from mortgage backed securities) as it had sold short lower-quality securities (mezzanine tranches of similar CDOs), with the bigger position in the higher quality securities offsetting the interest cost of shorting the lower quality securities.
If you cut through the correlation analysis — from the comments at Naked Capitalism: “I heard that they had a correlation delta neutral position of Longer super senior/short junior mezz which would tally with the 14long/2short position you report. Sadly for them in a crisis correlation tends to 1 and they were long correlation on the 2/short on the 14" — it seems like Morgan Stanley bet that the subprime crisis would be bad (making it worthwhile to be short the lower-quality stuff) but not too bad (in which case the long position on the higher quality stuff would bite).
Oops.
Better call China.
It is a little ironic that some of the banks who were advising US companies that they had too much equity, too much cash and too little debt on their balance sheets for a low volatility world turned out to have too little equity, too little cash and too much debt on their own balance sheets to manage a bit of volatility in the housing market.
NOTE: POST EDITED AN HOUR AFTER POSTING TO INCLUDE THE BUSH NEWS CONFERENCE.
UPDATE: Maybe I should have said, better call China, the Gulf or Singapore. It looks like Singapore's Temasek may take a stake in Merrill. Pretty soon every major sovereign fund will have its own in house bank or broker dealer. THow quickly the world changes. In 1997, the US government helped bail out out cash strapped Asian economies; in 2007, Asian government investment funds seem intent on helping to bail out cash strapped American banks and broker-dealers.
If the US has an exorbitant privilege with respect to the dollar, China has an exorbitant privilege with respect to value at risk. China has a Trojan horse (metaphor eruption!) in the form of $ 1.4 trillion of near risk free investment profile - positioned perfectly for cleaning up the remnants of a redlining Wall Street. A risk manager taking a walking tour of the Chinese FX reserve portfolios might lecture the money managers to get out and take some. Talk about being in the driver’s seat!
http://www.reuters.com/article/businessNews/idUST13111720071217?sp=true
This is an interesting piece. Especially at the last,
“What did America do when we had our non-performing loan problem? They just pushed us into the corner. European banks also ran away. Why should Japan now shoulder this burden?” said the megabank executive. “But this is a decision made at a high political level and could end up defying logic.”
It is clear to me that where the idea about the CIC’s injection to MS comes from. It will be interesting to watch Japanese banks’ final decision. You can bet that it will not be short of the conspiracy theory.
Wow!¨ If that is a somewhat accurate account of events, “right…, sorry, I meant left” type of human error, whoever made it has all my sympathy. I mean, I have actually squirted shaving cream onto my toothbrush (plus a few things more embarrassing than that). The chilling part is that it wasn’t picked up on and dealt with as a matter of routine. Try brushing your teeth with shaving cream, and you know what I mean.
It’s too wild to be true, innit?
methinks the risk manager would give a sterner lecture to Japan’s reserve managers …
China in some sense has a very high risk investment profile — with tons of currency risk associated with its rmb/ $ and rmb/ euro and rmb/ pound exposure. now you can argue that the reserve managers shouldn’t worry about this b/c the decision to accumulate foreign exchange was made prior to any decision about the composition of their fx portfolio. All the reserve manager should worry about is the relative valuations among different reserves or quasi-reserve assets — and even there he/she likely faces some very real constraints on currency composition.
Nonetheless, the PboC has a huge fx mismatch on its balance sheet, and near certain losses (the “carry” is only positive — even if you ignore the fx costs — now b/c of the heavy use of reserve requirements to lower the PBoC’s funding costs as domestic rates have increased).
One question that I have never really been able to answer even theoretically is whether this implies that you should take more risk or less non-fx risk. I think the intellectually right answer is that it shouldn’t change your tolerance for credit risk, as that is a function of something other than the fx risk that you are taking. But I am not sure that works politically — you can argue that it should lead to more caution, as the last thing any reserve manager wants is to add to a large loss, or that it should lead to more risk seeking to try to eke out a profit. Concretely i think it has generally meant holding fewer yen to get more carry …
in any case, for reserve management, the operative question is really “political value at risk” — namely, how tolerant is the political system to losses (even short-term losses) in the fx reserve portfolio. The usual answer is not very — which means very little money can be put at risk. It also historically has reinforced the preference for $. If you hold $ treasuries and report in $, your reserves never go down in $ terms –
of course, if you report in rmb (or — more importantly right now in baht) it is a little different story ..
I think PBOC has significant polical risk related to TX reserve mismatch on its balance sheet. Who can explain the economic results of the paper loss of FX reserve due to RMB appreciation.
Regard to political risk, the result of loss due to officials’ bold investment will be much more severe than the results of passively taking loss due to changing exchange rate.
bws - quite right on the FX risk - I was thinking in terms of being in the silo of a preordained dollar portfolio - so much so that I completely forgot about the FX risk until after I posted! This risk manager is then lecturing in the context of ‘constrained optimization’ - given that this dollar ‘inheritance’ is beyond their control (i.e. at the level of the risk manager and portfolio managers), how do they behave in the management of the money and the taking of risk from there? Even then, I was assuming a given dollar allocation among other currencies, and I was assuming the dollar allocation remained the largest - which it is both currently and prospectively. So the crux of the point was being adrift in a sea of dollars that were effectively invested currently at the ‘risk-free’ rate. But one question at that point is whether the risk strategy for a particular currency should be dynamically integrated with the asset allocation strategy at the currency allocation level. In a sense, the avoidance of yen accumulation already does this if the basis is the lower carry on yen - since that is a judgment call that essentially questions the attractiveness of the risk free rate on yen as part of the currency allocation - rather than yen diversification for more fundamental reasons.
From there, your second question is very interesting, and I don’t have an answer right now. My instinct is that an over-allocation into the ‘risk-free’ rate category (granted 10 or even 2 year duration is not risk free in terms of marked to market) is a fundamentally risky allocation (like somebody putting their entire pension into bank CDs (not CDOs)). What is risk free at the micro level is not so risk free at the macro portfolio level in terms of opportunity cost at least. It strikes me that the decision to accumulate such massive reserves is only compounded in terms of risk concentration when one ploughs the entire amount into a single investment category - including the so-called risk free category. So my instinct is pretty much what the Chinese are doing - gradual evolution into broader categories of risk but motivated (I suspect) by some broader concept of conservative asset allocation over time.
BTW - my interpretation of the effect of the global savings glut on interest rates is that it’s had an awful lot to do with the concentration of massive reserve investment in the ‘risk-free’ rate category of treasuries and the effect that that particular concentration has on interest rates generally - as opposed to a more general notion of that liquidity coming back into the market. I.e. the savings glut effect on interest rates is very much connected to the concentrated asset allocation into treasuries (and agencies). I think this must be true at the trading level as well (e.g. macro man type observations). So broader asset allocation, while criticized for other reasons, is a constructive response in fact to this narrower complaint.
I think you left out a word “open” between “market” and “to.”
in a perfect market, for everyone brushing their teeth with shaving cream, there is someone else trying to shave their chin with toothpaste.
the rising tide raises all boats, but in the overall global picture, the rising tide is a clear indication that the tide must be going out somewhere else.
if the dollar goes down, you buy those things that go down further than the dollar and which have good prospect of recovery. or is that too simple ?
“…Shinsei Bank, which was acquired by Ripplewood, the US private equity group, before being listed, said its first-half net profits fell 40%… Aozora Bank, which is 37% owned by Cerberus, the US private equity group, said operating profits fell 31% in the first-half and net profits declined 20%…” - ‘US subprime fallout hits Japanese banks’
http://www.ft.com/cms/s/0/cb5c7ce2-9285-11dc-b9e6-0000779fd2ac.html
“Christopher Flowers is seeking to buy almost a third of Shinsei, the bank he helped rescue seven years ago…” http://www.ft.com/cms/s/0/d015cff0-970c-11dc-b2da-0000779fd2ac.html
One way of looking at the fx risk is: Are the objectives are worth the loss? China’s meteoric rise has included a sizable number of acquisitions—and real influence. It did not adopt the Korean or the Japanese model. It parlayed what it had—people—into real power.
A year ago, most saw China as merely the world’s new factory. Now how do they see it?
While its per capita GDP puts it 100th (?) in the world and while it expects to have an average salary of maybe $3000/year (today’s dollars) by 2030, its influence is now being felt in many boardrooms.
bsetser- political value at risk
But could the case be made that as long as the losses aren’t gargantuan, they could be justified by explaining it as shoring up your biggest customer and thereby keeping the ceiling from crashing down on you?
Wouldn’t dismiss the Chinese penchant for gambling which is what they are doing in todays markets . It’s that penchant that makes people average a losing investment by buying more of a declining asset, in the hope that it lowers the average cost of the whole lot and that when that bouncenback materialises, they’ll recive the big payback.They’re probably working on projections for the recovery of the US$, the question is whether the Chinese can see that happen before their own crisis hits.
bsetser,
I also did not understand the long AAA, buying BBB protection hedge but a poster named Steve gave a simple and concise answer. I have reposted below without permission and hope Steve has no objection.
“Buying protection on a tranche you do not own is the short. While you’re sitting waiting for the tranche to meet its maker, you are making periodic payments to the protection writer. If you expect that higher rated tranches will be winners, then the net cashflow from a long position in the higher tranches can cover the cost of the credit protection and a portion of your bonus besides. The problem is the ratio: 7 long to 1 short, ugly when the long side blows up.”
I should add that the origonal post I reposted above comes from the Naked Capitalism blog which Brad linked to in the body of this blog.
“…China’s National Bureau of Statistics declined Thursday to comment on the World Bank calculations. But the government has contended for years that China is poorer and economically weaker than many Western analysts have suggested…” http://www.nytimes.com/2007/12/21/business/21yuan.html?pagewanted=2&ref=business
“…one of the reasons corporate chiefs love sovereign funds. Unlike Mr Buffett, a stickler for corporate governance, they offer the prospect of receiving cash without giving up any power…” http://ftalphaville.ft.com/blog/2007/12/21/9807/pity-the-sage-swfs-snap-up-the-christmas-bootie/
“…The investment is understood to be the result of a long relationship between the private banking arm of UBS for the Middle East, headed by Michel Adjadj, and the Saudi royal family. The investor’s insistence on anonymity was among concerns raised by UBS shareholders on Thursday. One influential Swiss institutional investor urged shareholders to reject the proposal to raise SFr13bn from sovereign wealth funds. A second demanded a special audit of the bank’s losses. The danger of a revolt at the UBS special shareholders’ meeting in February to approve the measures prompted the Swiss National Bank to take the unusual step of recommending the recapitalisation.”
http://ftalphaville.ft.com/blog/2007/12/21/9804/ubs-threatened-with-revolt-over-funds-infusion/
Thanks for the FT alphaville links - I was wondering who was investing alongside the GIC … interesting that the Swiss shareholders are insisting on a bit of transparency. Now maybe the US and UK (With the support of financial institutions based in their financial centers, including those with investment from untransparent SWFs) will start insisting that large funds seeking to take large stakes in their companies disclose enough material to allow independent observers to assess how they are influencing markets … right now we have to take their assertions that they are a stabilizing force on faith (generally, I think it has been the case — but tis hard to know)
anonymous1 — interesting comments (indeed, I have quite enjoyed the high quality of the comments on the last two posts).
I standby my argument that the true analogue to a pensioner with all their money in CDs (my grandma, if you want a precise example — though she didn’t have a huge sum and also had a small farm) is Japan. the MOF is overwhelmingly holding treasuries, and only now buying Agencies. China by contrast seems to have built an in-house capacity to manage Agency MBS — something few central banks have done.
That said, your fundamental point that China is massively overweight Treasuries and Agencies and underweight other things (tho the state banks by now likely have around $300b of corp debt) is right, and there are risks in that concentrated position (a major change in the Agencies governance is one). And the other point you made — namely that China’s huge flow into a narrow part of the market has distorted that part of the market, and one solution is to spread China’s impact around — seems right to me. Ending the distortions associated with “too much demand for Treasuries and Agencies” is the strongest argument I have heard for why the US and Europe should truly welcome SWF diversification (Mohammed El-Erian made this point forcefully at the Peterson institute China conference).
And there are indeed a number of models for how a sovereign can take equity risk without while minimizing the concerns associated with a sovereign as an investor. Norway is one — but I also like the model of the Swiss National Bank. They have 10–15% of their portfolio in equities. But it is all in index funds (or index funds minus any banks they regulate) or derivatives that track the major indexes. And they are transparent about their investment strategy, investment allocation and performance — we can confirm that their portfolio tracks their strategy. They also have to report to a democratic parliament.
If China had adopted a similar approach, its sheer size would still raise some concerns, but far far fewer. 10% of China’s stock is probably $170b (counting reserves shifted to the banks) if not $180b. And on a flow basis, 10% is $50-60b — or roughly as much as the Saudis (via SAMA), the other Gulf states and Norway are likely now buying. For my presentation at the Peterson institute I assumed roughly 20% of a $600b future flow would go to equities — and the resulting (assuming a high $ share) flows to US equities (around $100b a year) were significantly larger than the combined total of the other sovereign investors (my best guess that is)/ any other individual fund. The flow was roughly comparable in size to average net private inflows from the rest of the world over the last five years.
That strikes me as a bit big not to have some impact on the market — but hey, anything china touches it will move.
that said, it seems to me that China has taken a bunch of decisions that have added to the potential difficulties associated with a modest reallocation toward equities:
1/ They have indicated that they will follow global norms for sov funds on things like transparency, and given that ADIA And the GIC don’t even disclose their size, that isn’t saying much. They could have said we will follow the standard set my the most transparent funds, and the PBoC will start reporting its reserves using the SDDS template on a timely basis — Ted Truman and I would be thrilled.
2/ They have opted for large stakes in a few companies rather than just trying to match the index.
3/ They created a governance structure that ties the CIC very tightly to the State Council rather than insulating the CIC from the top leadership. The politburo likely is making investment decisions. It is as if the US used some of the soc sec trust fund to buy foreign equities — and decided that rather than buying indexes with a technocratic committee selecting the right index funds, this money would be invested in a small set of foreign firms hand picked by the National Economic Council (which would now be chaired by the V-P for good measure)
4/ The same investment authority will be managing a politically sensitive domestic portfolio (china’s stakes in the big banks), trying to support Chinese firms going forth (and there is a lot of such pressure) and making theoretically non-political purely commercial investments abroad …
I had hoped that China would reconsider its approach after Blackstone, but it doesn’t seem to have changed - and I had hoped that the US would make it clear that there are ways of taking equity stakes that are consistent with best sovereign practice and there are ways that are not …
but China seems to have modeled itself on sovereign funds that often seem more like family funds of the world’s really really rich rather than the more transparent funds in europe …
The US incidentally, hasn’t, to my knowledge, invested its very modest reserves in foreign equities.
re: “bail out cash strapped American banks and broker-dealers”
“…”There is not a shortage of cash. The large banks are now awash with cash. The issue is not whether they have enough cash, it is whether they are inclined to lend…” http://www.guardian.co.uk/business/2007/dec/19/northernrock.bankofenglandgovernor
Brad,
Can you offer perspective on how China might change its Forex mix? Specifically, what if China wanted to get rid of $1T of $$Forex. Where could they find that magnitude of alternatives? Assume away the difficulties of selling that much $$ and what it would do to the value of their $$ investment. I’m curious at how real any other options are, both short and long term. If you’ve posted on this before, I apologize but would still love a link. Thx!!!
Intuition tells me that the SWF phenomenon is perhaps best explained as the central banker’s reaction to their worst case scenario, the scariest “what if”; namely what if we were to see USD hyper-inflation for a few seasons in the near future?
I think that kind of angst is very real, and whispered orders might be to “take this money and invest it in something that won’t necessarily loose its value, in case real inflation hits the US economy. Pssst, try not to seem to be panicking, but do it NOW”
Jeff h — I don’t know, maybe they could convince the ECB to buy a trillion dollars and sell them a trillion euros (the ECB needs $ to lend to a bunch of European banks, doesn’t it?)
realistically, China cannot sell — the math doesn’t work. A $ 1 trillion capital outflow from a country that needs a $750b inflow to finance its current account deficit would guarantee total disaster. The only market able to potentially absorb that kind of inflow is europe, and even europe’s capacity has limits.
Going from net purchases of $400b a year to a net sale of $1 trillion is a $1.4 trillion swing — that’s huge. The more realistic risk is that cHina stops buying any new $ and just puts all its reserves into europe. but europe asked china to stop buying euros recently, and any move that puts downward pressure on the $ puts downward pressure on the rmb so long as china maintains its link to the $. and right now, I don’t think the PBOC wants an even weaker RMB …
Brad,
Why should US invest its reserve? It can just print as much reserve as it wants. It makes more sense to buy more printers in this case(or just click your keyboard to enter a larger number in the computer). You got another thing wrong about the CIC’s influence over Chinese state banks. According to my knowledge about the corporate governance in China, the CIC officials probably have virtually little power to demand the state banks to do something. One simple reason, the CIC officials’ ranks might even be lower than the bank officials.
You just cannot compare apple to orange
Jin — i have the ownership structure right: the CIC now owns the state commercial banks. Whether than means they can exercise control or not is a different question — both in some sense may respond to higher forces, i.e. whoever selects the heads of the big banks and the head of CIC. one thing tho is very, very clear — the banks have been forced to buy sterilization bills at below market prices when necessary, and the bonds funding the CIC now on the PBoC’s balance sheet will have to be placed on the balance sheet of the banks in a non-market operation (their coupon is too low to make them an attractive asset in the environment where the banks raise rates).
I am a bit suspicious of the argument that the banks lending is now driven entirely by commercial motivations — my sense is that there are still often close ties between the bank branch, the local government and local businesses (some of which no doubt are very commercially viable). how it all works in practice is a mystery to me ….
bsetser: 2/ They have opted for large stakes in a few companies rather than just trying to match the index.
3/ They created a governance structure that ties the CIC very tightly to the State Council rather than insulating the CIC from the top leadership. The politburo likely is making investment decisions
I somewhat disagree with 2, and strongly disagree with 3. So far, we’ve seen CIC take minority stakes with small fractions of their cash. Also, CIC is as insulated from top level decisions as much as is possible with the Chinese system. The Politburo simply does not have the time to make investment decisions, which means that if investment decisions are being made outside of CIC, someone else has to make them, and there isn’t any group within the Party secretariat or the State Council that can make those decisions.
bsetser: - the banks have been forced to buy sterilization bills at below market prices when necessary, and the bonds funding the CIC now on the PBoC’s balance sheet will have to be placed on the balance sheet of the banks in a non-market operation
The orders for the banks to buy sterilization bills come through the PBC not CIC, so even if CIC were to privatize the banks, the PBC would still have the legal authority to force the banks to buy sterilization bills.
Also the bonds used to fund CIC are state treasury bonds, and there is no reason that I can think of why the PBC would force the bonds back on the banks rather than just have the PBC hold on to them. The PBC probably still has the authority to force the banks to buy treasuries, but that authority hasn’t been used since 1998, in large part because banks found all sorts of clever ways to circumvent it.
I do think that once the initialize set of purchases are done that CIC will start selling minority interests in the banks that they have.
the initial idea behind the bonds was to give the PBoC and additional sterilization instrument — rather than issuing new PBoC bills to sterilize reserve growth, it would sell off the minfin bonds. if it is forced to hold the bonds as an asset, it in effect has to issue more bills/ raise reserve requirements more — as it will have traded one domestic asset (huijin) for another (minfin bonds).
and i see no evidence that the CIC is at all “insulated” from political pressure — and a fair amount of indirect evidence that the politburo has taken an interest in the CIC’s external investments. I am sure the blackstone deal was discussed at very senior levels, and the morgan stanley carries with it signs of top-level support. Certainly it seems a bit strange to me that the only major external investments the CIC has made are these two big stakes; as far as I know the rest of its funds are still being managed by SAFE while the CIC selects outside managers/ builds up in house capacity. It seems a bit strange to me that very controversial and potentially risky deals have been made before the CIC felt ready to pick outside managers …
but here i am reading the tea leaves of a culture i don’t fully understand (w/o knowing the language), which creates more than a usual margin of error.
but based on what i have been able to gather, the CIC isn’t operating in a structure that is divorced from politics …
bsetser: the initial idea behind the bonds was to give the PBoC and additional sterilization instrument
I don’t think that was the main reason that this transfer occurred. The main reason that the transfer occurred was to make sure that the books balanced. Huijin is a listed corporation and to move that corporation from the MOF to CIC required a payment to MOF.
bsetser: and i see no evidence that the CIC is at all “insulated” from political pressure — and a fair amount of indirect evidence that the politburo has taken an interest in the CIC’s external investments
Certainly the Politburo is interested in CIC, but the Politburo simply does not have the time and staff to issue detailed instructions to CIC. There are about a thousand things that the Politburo has to worry about, and to approve every single investment that CIC makes would create an absurd amount of micromanagement. This is why central planning tends to not work.
bsetser: I am sure the blackstone deal was discussed at very senior levels, and the morgan stanley carries with it signs of top-level support.
The board of CIC is sufficiently senior to make these sorts of decisions. I’m sure that the Politburo isn’t opposed to these deals, and tacit approval and rubber stamp was necessary, but just from management theory, I find it implausible that the Politburo could micromanage CIC. If the Politburo has an hour meeting to talk about CIC, that means that they don’t have that hour to talk about Taiwan, inflation, Darfur, rural unrest, the UN, etc. etc.
bsetser: Certainly it seems a bit strange to me that the only major external investments the CIC has made are these two big stakes;
CIC made an investment in the China Railway IPO, but that didn’t get news. Also, it’s not that strange. Both MS and Blackstone were time-sensitive opportunities. If CIC waited three months for either, then they would have lost the chance.
There is one major difference between China’s situation and the Soviet Union or Japan’s situation and that is large number of people within the Chinese bureaucracy which have American MBA’s and experience with US investment banks, and the desire of the Chinese government to find those people. One thing that makes China very different from Japan or the Soviet Union in the 1980’s is that no one, including the Chinese government, thinks that the Chinese economic or political system is superior in any general and universal way or even that it can’t be improved in China. The logic is that “socialism with Chinese characteristics” reflects China’s unique historical circumstances, but there isn’t any belief that china needs to export socialism, or that it can’t learn from other systems.
This makes it very different from the Soviet Union or even Japan in the 1980’s.
This also points out the real reason I think CIC made an investment in Blackstone and Morgan Stanley. One theme that one finds in conference discussions about CIC is that it is clear that the Chinese leadership believes that it just doesn’t have the necessary experience to manage a large equity fund, and the accquisitions in MS and Blackstone see to be ways of getting that experience. Commentators who talk about running CIC as an index fund miss that you just can’t passively invest $200 billion as a passive index fund. Just too big.
CIC probably bought into MS and Blackstone before it got its staff in place, because MS and Blackstone are going to make up a large fraction of said staff.
The big danger to “American capitalism” isn’t that the Chinese government will issue orders to Morgan Stanley. It’s more likely that the Chinese government will take instructions from Morgan Stanley rather than give them. The big danger is that Morgan Stanley will fail in some extremely high profile manner. There’s already been a small public backlash over Blackstone, and I can imagine a huge and ugly backlash if MS gives investment advice to CIC that turns out to be faulty.
The big danger to “American capitalism” isn’t that the Chinese government will issue orders to Morgan Stanley. It’s more likely that the Chinese government will take instructions from Morgan Stanley rather than give them. The big danger is that Morgan Stanley will fail in some extremely high profile manner.
Written by Twofish on 2007-12-24 11:02:46
There may be some truth in that, Actually, that phenomenon seems asia-wide in the sense that the big banks treat much of their asia offices as backwater retreats where they send “questionable” personnel on a retiree trajectory. Good luck!