At or near the peak of every stock market, things get crazier and crazier.

Toggle bonds where interest is paid, not in cash but with more bonds, have been running rampant. Corporate share buybacks went crazy.

Now, despite massive stock market overvaluation, with median Price/Revenue ratios at an all-time high, Alaska governor Bill Walker wants to borrow money from Asia at 4% to buy stocks, hoping for 8% returns to shore up Alaska pension funds.

The Pension Proposal Received a Negative Reaction, but the governor is like to go ahead anyway.

Alaska lawmakers took a skeptical look Thursday at a plan by the administration of Gov. Bill Walker to nibble at Alaska's pension debt.

One week ago, the three-member Pension Obligation Bond Corporation Board voted to borrow up to $3.5 billion from bond markets from Asia. Proceeds from that bond sale would be invested in global markets, and any difference between the interest earnings and the interest paid on the bonds would go toward the state's unfunded pension debt.

The board is assuming 8 percent average earnings, deputy commissioner of revenue Jerry Burnett told the Senate Finance Committee on Thursday afternoon.

It expects to be able to borrow money from Asian pension funds at 4 percent interest.

"It's a gamble," Sen. Mike Dunleavy, R-Wasilla, declared.

"It's a gamble to have an unfunded pension system and assume we'll have enough" money when payments come due, Burnett responded.

The state faces a gap of approximately $6 billion, invested at about 8 percent interest per year, to meet expected demand. The proposal approved by the bond corporation board would carve less than a third off the gap.

If the new money earns 7 percent interest instead of 8 percent, it would close the gap by only $1.1 billion, according to state figures.

While lawmakers also appeared skeptical, their ability to stop the plan seems limited. The bond corporation board was empowered by a 2008 law and has the authority to issue up to $5 billion in bonds without approaching the Legislature again.

As planned, the bonds will be marketed through October and sold in the final week of the month, with deals closing on Halloween.

Median Price/Revenue Hits Record High

Chart from John Hussman's October 3, post Sizing Up the Bubble.

Toggle Bond Flashbacks

• September 9, 2016: Red Hot Junk and Massive Bond-Market Dislocations; Equity Smash Coming Up?
• June 25, 2007: Toggle Bonds – Yet Another High Wire Act

Trick or Treat

Borrowing money at these share price valuations is yet another high wire act, but this is precisely the attitude fostered by the Fed.

It's fitting this deal will close on Halloween. Trick or treat, but don't expect any treats.