Apr 01

Today’s News 1st April 2017

  • Multiple Bubbles Are Going To Bring America To Its Knees: "The Warning Signs Are There"

    Authored by Daniel Lang via SHTFplan.com,

    If you’ve been paying attention to the ongoing degradation of the American economy since the last financial crisis, you’re probably flabbergasted by the fact that our economy has managed to make it this far without imploding. I know I am. I find myself shocked with every year that passes without incident.

    The warning signs are there for anyone willing to see, and they are flashing red. Even cursory research into the numbers underlying our system will tell you that we’re on an unsustainable financial path. It’s simple math. And yet the system has proven far more durable than most people thought.

    The only reasonable explanation I can think of, is that the system is being held up by wishful thinking and willful ignorance. If every single person knew how unsustainable our economy is, it would self-destruct within hours. People would pull their money out of the banks, the bonds, and the stock market, and buy whatever real assets they could while their money is still worth something. It would be the first of many dominoes to fall before the entire financial system collapses.

    But most people don’t want to think about that possibility. They want the relative peace and prosperity of the current system to continue, so they ignore the facts or try to avoid them as much as possible. They keep their money right where it is and cross their fingers instead. In other words, the only thing propping up the system is undeserved confidence.

    Unfortunately, confidence can’t keep an unsustainable system running forever. Nothing can. And our particular system is brimming with economic bubbles that aren’t going to stay inflated for much longer. Most recessions are associated with the bursting of at least one kind of bubble, but there are multiple sectors of our economy that may crash at roughly the same time in the near future. For instance:

    • Eric Rosengren, the president of the Federal Reserve Bank of Boston, recently made a startling tacit admission. We may be in the midst of yet another real estate bubble. Major financial institutions in this country are in possession of over $14 trillion worth of residential real estate loans. That’s well over $40,000 for every man woman and child in America.
    • Low interest rates have fueled a bubble in subprime auto loans, and that bubble appears to be reaching its limits. There are now over 1 million ordinary and subprime auto loans that are delinquent, a number that hasn’t been this high since 2009.
    • There is now well over a trillion dollars worth of student loan debt in this country; much of it owned by low income families. And there’s little hope that these students will ever see a return on their investment. That’s why at least 27% of student loans are in default. While more than one in four students are in default now, that number was one in nine a decade ago. And if current trends continue, there could be $3.3 trillion of student loan debt by the end of the next decade. Clearly, this isn’t going to go on for much longer.
    • And who could forget the stock market? Despite experiencing low GDP growth every year since the last recession, the stock market continues to break new records. Many of the companies on the stock market (especially tech companies), have a market cap that is between 20 and 100 times their sales or earnings numbers. Some are much higher, despite experiencing slow growth, or even no profits at all.

    Our economy is awash in cheap money and financial bubbles that threaten to wipe out tens of trillions of dollars worth of savings, investments, and assets. Everyone can close their eyes and hum while they hope that everything is going to be just fine, but it won’t be.

    I said before that if everyone knew how unsustainable this economy is, it would all come crashing down. But they’re going to find out one way or another when it comes crashing down anyway. Hope and confidence can only prop up a bubble-ridden economy for so long.

  • California Senator Forced To Pull Bill Banning "Fake News" After Realizing It's Idiotic

    California is known far and wide for it’s wacky regulations.  In fact, just last fall we wrote about SB 1383, a very significant piece of legislation signed into law by Jerry Brown which requires a 40% reduction in methane gas emissions from cow flatulence by 2030 (no, really…you can take a look here: “Here Are Some Of The Ridiculous New State Laws That Will Take Effect January 1st – Happy New Year!“)

    But a recent piece of legislation introduced by California Assemblyman Ed Chau (D-Monterey Park), “The California Political Cyberfraud Abatement Act or AB 1104 for short, gives the “cow fart” bill a run for its money in terms of its complete idiocy.  The bill, filed Wednesday in the Assembly’s Committee on Privacy and Consumer Affairs, would have effectively made it a crime to be wrong on the Internet.

    The text of the bill implicated anyone who writes, publishes or even shares news stories that could be false, if those news stories are later found to have had an impact on an election.  From the bill:

    This bill would modify the definition of the terms “political cyberfraud” and “political Web site” to include Internet Web sites that urge or appear to urge the support or opposition of candidates for public office. The bill would also make it unlawful for a person to knowingly and willingly make, publish or circulate on a Web site, or cause to be made, published, or circulated in any writing posted on a Web site, a false or deceptive statement designed to influence the vote on any issue submitted to voters at an election or on any candidate for election to public office.

    And even though author Ed Chau described AB 1104 as “an important step forward in the fight against ‘fake news’ and deceptive campaign tactics”, the Electronic Frontier Foundation (EFF), a digital-rights advocacy group, said the bill was “so obviously unconstitutional, we had to double check that it was real.”

    Memo to California Assemblymember Ed Chau: you can’t fight fake news with a bad law.

     

    On Tuesday, the California Assembly’s Committee on Privacy and Consumer Affairs, which Chau chairs, will consider A.B. 1104—a censorship bill so obviously unconstitutional, we had to double check that it was real.

     

    This bill will fuel a chaotic free-for-all of mudslinging with candidates and others being accused of crimes at the slightest hint of hyperbole, exaggeration, poetic license, or common error. While those accusations may not ultimately hold up, politically motivated prosecutions—or the threat of such—may harm democracy more than if the issue had just been left alone. Furthermore, A.B. 1104 makes no exception for satire and parody, leaving The Onion and Saturday Night Live open to accusations of illegal content. Nor does it exempt news organizations who quote deceptive statements made by politicians in their online reporting—even if their reporting is meant to debunk those claims. And what of everyday citizens who are duped by misleading materials: if 1,000 Californians retweet an incorrect statement by a presidential candidate, have they all broken the law?

     

    At a time when political leaders are promoting “alternative facts” and branding unflattering reporting as “fake news,” we don’t think it’s a good idea to give the government more power to punish speech.

    As of right now it looks as if the legislation has been pulled after Chau just cancelled a hearing originally scheduled for Monday.  Presumably Chau got a little pushback from mainstream media outlets after they realized his bill would effectively ban them, and their fake “Russian hacking” narratives from California.

    Here is the full text of the bill for your reading pleasure: 

  • Caught On Tape In Atlanta: "State Of Emergency, The Entire Bridge Is Compromised"

    Authored by Mac Slavo via SHTFplan.com,

    If you were looking for confirmation that the nation’s infrastructure needs a complete overhaul, a collapsing bridge in Atlanta may have provided it in stark imagery.

    Around 6:30 p.m. Thursday night, a fire broke out under a section of the highway bridge on busy I-85 in Atlanta, Georgia. Just thirty minutes later, a huge section of that bridge burst into flames and completely collapsed.

    Amazingly, no motorists were injured when this happened:

    “This is as serious a transportation crisis as we could have,” Mayor Kasim Reed said, noting that he had spoken with the FBI and terrorism was not suspected at this time.

    Authorities still don’t know what exactly caused the fire as the entire area is still too unsafe for crews to examine, but it is believed that PVC piping stored under the bridge (as shown on a screen capture from Google maps below) caught fire first.

    screen-shot-2017-03-31-at-5-01-06-am

    Georgia Governor Nathan Deal has declared a state of emergency, however, as authorities claim the entire transportation network in Atlanta has been significantly impacted, including five different public bus lines. In addition, DeKalb County Schools were canceled Friday, City of Atlanta government offices won’t open until 10 am, and all non-essential DeKalb County government workers will not be required to report in to work.

    City officials have no idea when the bridge in what is otherwise a heavy traffic area will be able to be fixed.

    In other words, traffic is going to be a bitch.

    Meanwhile, how’s that aging American infrastructure working out?

  • 'Russiagate' Is Failing And Its Supporters Are Getting Concerned

    Submitted by Alexander Mercouris of The Duran

    ‘Russiagate’ is failing and its supporters are getting worried

    Three weeks ago I wrote a piece for The Duran in which I suggested that the corner appeared to have been turned in the fake ‘Russiagate’ scandal.

    What was a tentative conclusion then can now be firmed up.

    Though the leaders of the US security services have denied the President’s allegation that they wire-tapped him – though they were careful not to deny that they mounted surveillance on him and his associates – the President’s claim that they did, in effect smoked them out.

    Thus former DNI James Clapper admitted that he had seen no evidence of collusion between the Trump campaign and the Russians up to the point of his retirement on 20th January 2017, and former Acting CIA Director Michael Morell more recently has publicly trashed the whole story of collusion between the Trump campaign and Russia.

    Possibly the single most important admission that no evidence of collusion between the Trump campaign and the Russians has been found came however from within the FBI itself, though it has gone almost completely unnoticed.

    This came in the form of information deriving from an anonymous leak which appeared in an article in The New York Times on 5th March 2017.  This leak almost certainly originated with FBI Director James Comey himself.  The relevant sentence in the article reads as follows

    In addition to being concerned about potential attacks on the bureau’s credibility, senior F.B.I. officials are said to be worried that the notion of a court-approved wiretap will raise the public’s expectations that the federal authorities have significant evidence implicating the Trump campaign in colluding with Russia’s efforts to disrupt the presidential election.

    (bold italics added)

    In my article of 6th March 2017 discussing this comment I said the following

    This is very twisted language which shows that The New York Times is not reporting this part of the story straightforwardly.  However the meaning is clear enough.  The FBI is worried that the more discussion of its investigation there is – extending all the way to discussions by no less a person than the President himself of court approved wiretaps – the more people will fall for the false ‘no smoke without fire’ argument, and will feel let down by the FBI when it eventually announces that its investigation has drawn a blank.

     

    This is an entirely valid concern, and is one of several reasons why such investigations are supposed to be confidential.

     

    This is the second confirmation within a few hours from people who have held posts within the national security bureaucracy that the endlessly repeated claims of collusion between the Trump campaign and Russia are not supported by evidence.  The first was made by Clapper (see above) and the second was made anonymously to The New York Times by officials of the FBI.

     

    These admissions follow a continuous pattern of admissions from officials within the national security bureaucracy now stretching back months that inquiries into claims of collusion by the Trump campaign and Russia are drawing a blank.

    A further sign that the ‘Russiagate’ scandal is flagging is the way its supporters are latching on to non issues in order to keep it going.

    Thus following the House Intelligence Committee hearing on Monday 20th March 2017 the militantly anti-Trump news media latched on to FBI Director Comey’s formal confirmation that an FBI investigation was looking into the allegation of collusion between the Trump campaign and Russia, as if this was news, and made it the big story, even though the existence of this investigation has been public knowledge and the topic of exhaustive discussion in the media for months.

    No doubt this was done in order to avoid mentioning the fact that the Committee on 20th March 2017 heard no evidence even slightly damaging to the President, but did hear evidence which appeared to confirm the truth of the President’s claim that he and his campaign team had been placed under surveillance during the most critical months of the Presidential election campaign.

    Then there was the way Representative Adam Schiff used in his opening statement at the Committee hearing the discredited ‘Trump Dossier‘ – shot through with obvious falsehoods, uncorroborated by the intelligence agencies, and trashed by no less a person than Michael Morell – as his frame story for his whole narrative of secret collusion between the Trump campaign and Russia.  This is desperate, and shows how evidence-less and fact-free the whole ‘Russiagate’ story actually is.

    Then there are the claims – almost certainly originating in Ukraine – about the supposedly nefarious activities of Donald Trump’s former campaign chair Paul Manafort.

    Not only have these claims been emphatically and authoritatively denied by the two people involved – Manafort and Deripaska – with Manafort asking to give evidence to the House Intelligence Committee to put the record straight and Deripaska threatening to sue anyone who repeats them, but since they involve alleged actions which took place years before Donald Trump launched his Presidential campaign, and have no connection to him, their relevance to the ‘Russiagate’ scandal is not obvious.

    Lastly, there is the wholly bogus non-scandal around House Intelligence Committee chair Devin Nunes, who is obviously being targeted by the Democrats because of his increasingly openly expressed and entirely justified skepticism about the whole ‘Russiagate’ story.

    To be clear, Nunes’s decision to share information about surveillance of the President and his team during the transition period with the White House before he shared it with his Committee colleagues was no doubt a mistake – and one which Nunes has apologised for – but it is hardly a serious one, or one which would justify removing him from his chairing of the Committee.

    To my mind what this episode shows is how sensitive the Democrats are about the raising of the whole surveillance issue.  This lends further strength to my opinion – which I note is coming to be increasingly widely shared – that it is the surveillance carried out during the election of Donald Trump and his campaign team which is the real scandal in this affair, and that the fake ‘Russiagate’ scandal is the smoke-screen concealing it.

    Having increasingly given up on the House Intelligence Committee, the proponents of the ‘Russiagate’ scandal now seem increasingly to be resting their hopes on the Senate Intelligence Committee.

    They will be equally disappointed there.  These attempts to use Congressional committees as investigative and prosecutorial instruments suffer from a basic misconception: these are oversight committees, not investigative or prosecutorial committees, and they cannot be used in that way.  They cannot magic up evidence of collusion between the Trump campaign and Russia that the actual investigation – the one carried out by the FBI – says is not there.

    The single most important fact about the last few weeks, and the clearest possible sign that the ‘Russiagate’ scandal is flagging, is that there have been no more leaks from within the intelligence and security agencies since the ones at the beginning of March about Jeff Sessions’s meetings with the Russian ambassador.

    That suggests that the former Obama administration officials, who I suspect were the people who were physically communicating the information in the leaks to the media, are no longer being fed  information about Donald Trump and his associates or about the progress of the FBI investigation by their sources within the intelligence and national security bureaucracy.

    That could be because people within the intelligence and national security bureaucracy are being deterred by the investigation into the leaking of classified material which the President has been calling for but which the House Intelligence Committee hearing on 20th March 2017 suggested FBI Director Comey is resisting (almost certainly because people within the FBI were involved in the leaks), or it could be because increasingly there is no damaging information to leak.

    Regardless of what the explanation is, in the absence of any more leaks there has been nothing over the last few weeks for the supporters of ‘Russiagate’ to work with.  The result is that in the absence of anything new the effort to keep the ‘Russiagate’ scandal going and in the public eye is flagging.

    My best guess is that it will collapse entirely by early summer.

  • American Jobs Once Again Flowing Into Mexico After Brief, Trump-Induced Pause

    After Ford scrapped plans for a new facility in Mexico and continues to flood the White House with press releases detailing normal course capital expenditures to be made on domestic plants, investments that would have been made irrespective of their outsourcing ambitions, it seems as though economics are making a comeback in  guiding the capital allocations of other companies as ‘outsourcing’ is once again picking up steam among American companies.

    //platform.twitter.com/widgets.js

     

    As Bloomberg points out today, after a brief pause, consultants who help American companies relocate to Mexico are once again finding themselves flush with business.

    But now the pace is picking back up. Illinois Tool Works Inc. will close an auto-parts plant in Mazon, Illinois, this month and head to Ciudad Juarez. Triumph Group Inc. is reducing the Spokane, Washington, workforce that makes fiber-composite parts for Boeing Co. aircraft and moving production to Zacatecas and Baja California. TE Connectivity Ltd. is shuttering a pressure-sensor plant in Pennsauken, New Jersey, in favor of a facility in Hermosillo.

     

    While Trump hasn’t stopped pounding his America First bully pulpit, and the future of Nafta remains uncertain, “there’s cautious optimism and a hopeful attitude that cooler heads will prevail in Washington,” said Ross Baldwin, chief executive officer of Tacna Services Inc., which facilitates relocations.

     

    Baldwin has seen the evidence: After business ground to a halt back in November, he’s now juggling two Mexico-bound clients. San Diego-based Tacna helps manage 4,500 workers in Mexico, where factory wages are about a fifth of those in the U.S. That may explain why Mexican manufacturing jobs rose 3.2 percent in January from a year ago as they dropped 0.3 percent in the U.S.

    In the end, of course, the massive wage divide between the U.S. and Mexico means that, even with a border tax, it’s still cheaper to manufacture certain products in Mexico.

    Mexico

     

    Moreover, we suspect that the renewed wave of outsourcing has been sparked, at lease in part, by Trump’s early failures to implement healthcare reform or impose his travel ban as companies grow increasingly comfortable that an import tariff will be harder to implement than the President once thought.

    Businesses haven’t dismissed a Nafta renegotiation or policies being considered in Washington that might prove costly. A plan by House Republicans to implement a 20 percent border adjustment tax has raised concerns, especially among retailers such as Wal-Mart Stores Inc. that import many of their wares. The tax would be applied to sales of imported goods to reduce the U.S. trade deficit, which reached $734 billion in 2016.

     

    Trump repeated to a joint session of Congress last month his refrain that that he will make it “much, much harder for companies to leave our country.” But his recent stumbles — travel bans blocked by courts and a health-care bill scuttled by his own party — underscore the limitations on presidential power and the difficulty he may have punishing companies or overhauling Nafta.

    While shocking, we suspect it’s simply never going to make sense to pay a UAW worker a fully-loaded wage $70 an hour to perform a low-skill task that someone else will do for less than $5 per hour.

  • Buchanan Asks "Is Putin The 'Preeminent Statesman' Of Our Times?"

    Authored by Patrick Buchanan via Buchanan.org,

    “If we were to use traditional measures for understanding leaders, which involve the defense of borders and national flourishing, Putin would count as the preeminent statesman of our time.

     

    “On the world stage, who could vie with him?”

    So asks Chris Caldwell of the Weekly Standard in a remarkable essay in Hillsdale College’s March issue of its magazine, Imprimis.

    What elevates Putin above all other 21st-century leaders?

    “When Putin took power in the winter of 1999-2000, his country was defenseless. It was bankrupt. It was being carved up by its new kleptocratic elites, in collusion with its old imperial rivals, the Americans. Putin changed that.

     

    “In the first decade of this century, he did what Kemal Ataturk had done in Turkey in the 1920s. Out of a crumbling empire, he resurrected a national-state, and gave it coherence and purpose. He disciplined his country’s plutocrats. He restored its military strength. And he refused, with ever blunter rhetoric, to accept for Russia a subservient role in an American-run world system drawn up by foreign politicians and business leaders. His voters credit him with having saved his country.”

    Putin’s approval rating, after 17 years in power, exceeds that of any rival Western leader. But while his impressive strides toward making Russia great again explain why he is revered at home and in the Russian diaspora, what explains Putin’s appeal in the West, despite a press that is every bit as savage as President Trump’s?

    Answer: Putin stands against the Western progressive vision of what mankind’s future ought to be. Years ago, he aligned himself with traditionalists, nationalists and populists of the West, and against what they had come to despise in their own decadent civilization.

    What they abhorred, Putin abhorred. He is a God-and-country Russian patriot. He rejects the New World Order established at the Cold War’s end by the United States. Putin puts Russia first.

    And in defying the Americans he speaks for those millions of Europeans who wish to restore their national identities and recapture their lost sovereignty from the supranational European Union. Putin also stands against the progressive moral relativism of a Western elite that has cut its Christian roots to embrace secularism and hedonism.

    The U.S. establishment loathes Putin because, they say, he is an aggressor, a tyrant, a “killer.” He invaded and occupies Ukraine. His old KGB comrades assassinate journalists, defectors and dissidents.

    Yet while politics under both czars and commissars has often been a blood sport in Russia, what has Putin done to his domestic enemies to rival what our Arab ally Gen. Abdel-Fattah el-Sissi has done to the Muslim Brotherhood he overthrew in a military coup in Egypt?

    What has Putin done to rival what our NATO ally President Erdogan has done in Turkey, jailing 40,000 people since last July’s coup — or our Philippine ally Rodrigo Duterte, who has presided over the extrajudicial killing of thousands of drug dealers?

    Does anyone think President Xi Jinping would have handled mass demonstrations against his regime in Tiananmen Square more gingerly than did President Putin this last week in Moscow?

    Much of the hostility toward Putin stems from the fact that he not only defies the West, when standing up for Russia’s interests, he often succeeds in his defiance and goes unpunished and unrepentant.

    He not only remains popular in his own country, but has admirers in nations whose political establishments are implacably hostile to him.

    In December, one poll found 37 percent of all Republicans had a favorable view of the Russian leader, but only 17 percent were positive on President Barack Obama.

    There is another reason Putin is viewed favorably. Millions of ethnonationalists who wish to see their nations secede from the EU see him as an ally. While Putin has openly welcomed many of these movements, America’s elite do not take even a neutral stance.

    Putin has read the new century better than his rivals. While the 20th century saw the world divided between a Communist East and a free and democratic West, new and different struggles define the 21st.

    The new dividing lines are between social conservatism and self-indulgent secularism, between tribalism and transnationalism, between the nation-state and the New World Order.

    On the new dividing lines, Putin is on the side of the insurgents. Those who envision de Gaulle’s Europe of Nations replacing the vision of One Europe, toward which the EU is heading, see Putin as an ally.

    So the old question arises: Who owns the future?

    In the new struggles of the new century, it is not impossible that Russia — as was America in the Cold War — may be on the winning side. Secessionist parties across Europe already look to Moscow rather than across the Atlantic.

    “Putin has become a symbol of national sovereignty in its battle with globalism,” writes Caldwell. “That turns out to be the big battle of our times. As our last election shows, that’s true even here.”

  • The Divergence Between 'Hard' & 'Soft' Data Explained (And Republican Bulls Won't Like It)

    Another dataset, another head-scratching disparity between ostensibly fulsome confidence and evidently sluggish activity.  While markets get whipsawed reacting to divergent hard and soft data points, the question that traders need to ask is whether this gap makes any sense.

    Bloomberg's Macro Strategist Cameron Crise may have the answer… If you're willing to believe that survey respondents allow their political beliefs to color their answers, then it very well might.

    I modeled U.S. economic growth since 1975 using the softest of the soft data releases: consumer confidence and the small business optimism survey. I omitted the ISM because it includes factual questions, i.e. are orders increasing?  The fit is actually pretty good for such a simple model, with an r-squared of 0.51.  As you can see, the model is now pretty upbeat.

     

     

    I then disaggregated the data and compared the model forecast to actual economic growth for each president since Gerald Ford. The results were fascinating.

    • Under Republican presidencies, average annual growth has been 2.7%…but the model has forecast it at 3%.
    • Under Democrats, growth has been a little higher, at 2.8%…but the model has forecast growth of just 2.3%.

     

     

    In fact, the model slightly underestimated growth during the Ford and Reagan years. Since George HW Bush, however, the trend is pretty pronounced: survey respondents have been optimistic relative to underlying growth for GOP presidents and pessimistic relative to growth for their Democratic counterparts.

     

    It seems likely that at least some of the recent boost to confidence is evidence of the same phenomenon manifesting itself.  That being said, the model currently projects growth of nearly 3.5%, so even if we were to knock off the usual half a percent for a post-Reagan GOP presidency that would still imply a marked uptick over the post-crisis run rate.

     

    Of course, achieving that growth will probably be contingent on the government enacting some of its more business-friendly campaign promises such as tax reform or deregulation. If they don't, then the "optimism gap" may close, and not in a way that the White House might like.

     

    Either way, traders will need to keep an eye on government policy and its implications. The efficacy of the Trump administration may not matter on a day-to-day basis for bond markets, but in the long run it probably will.

    A glance at the last 20 years or so of 'soft' and 'hard' data also helps confirm this over-confidence… it's the hope that pumps… then dumps… and never the reality that jumps…

  • Intel Official Behind "Unmasking" Of Trump Associates Is "Very Senior, Very Well Known"

    Day after day, various media outlets, well really mostly the NYT and WaPo, have delivered Trump-administration-incriminating, Russia-link-related tape bombs sourced via leaks (in the hope of keeping the narrative alive and "resisting."). It now turns out, according to FXN report, that the US official who "unmasked" the names of multiple private citizens affiliated with the Trump team is someone "very well known, very high up, very senior in the intelligence world."

    As Malia Zimmerman and Adam Housley report, intelligence and House sources with direct knowledge of the disclosure of classified names (yes, yet another "unnamed source") said that House Intelligence Committee Chairman Devin Nunes, now knows who is responsible – and that person is not in the FBI (i.e. it is not James Comey)

    Housley said his sources were motivated to come forward by a New York Times report yesterday which reportedly outed two people who helped Nunes access information during a meeting in the Old Executive Office Building. However, Housley’s sources claim the two people who helped Nunes "navigate" to the information were not his sources. In fact, Nunes had been aware of the information since January (long before Trump's 'wiretap' tweet) but had been unable to view the documents themselves because of "stonewalling" by the agencies in question.

    //platform.twitter.com/widgets.js

    //platform.twitter.com/widgets.js

    //platform.twitter.com/widgets.js

    //platform.twitter.com/widgets.js

    http://video.foxnews.com/v/embed.js?id=5380606763001&w=466&h=263

    Watch the latest video at video.foxnews.com

    For a private citizen to be “unmasked,” or named, in an intelligence report is extremely rare. Typically, the American is a suspect in a crime, is in danger or has to be named to explain the context of the report.

    “The main issue in this case, is not only the unmasking of these names of private citizens, but the spreading of these names for political purposes that have nothing to do with national security or an investigation into Russia’s interference in the U.S. election,” a congressional source close to the investigation told Fox News.

    The White House, meanwhile, is urging Nunes and his colleagues to keep pursuing what improper surveillance and leaks may have occurred before Trump took office. They’ve been emboldened in the wake of March 2 comments from former Obama administration official Evelyn Farkas, who on MSNBC suggested her former colleagues tried to gather material on Trump team contacts with Russia.

    White House Press Secretary Sean Spicer said Friday her comments and other reports raise “serious” concerns about whether there was an “organized and widespread effort by the Obama administration to use and leak highly sensitive intelligence information for political purposes.”

    “Dr. Farkas’ admissions alone are devastating,” he said.

    Clearly this confirms what Evelyn Farakas said, accidentally implicated the Obama White House in the surveillance of Trump's campaign staff:

    The Trump folks, if they found out how we knew what we knew about the Trump staff dealing with Russians, that they would try to compromise those sources and methods, meaning we would not longer have access to that intelligence.

    Furthermore, Farkas effectively corroborated a New York Times article from early March which cited "Former American officials" as their anonymous source regarding efforts to leak this surveillance on the Trump team to Democrats across Washington DC.

    * * *

    In addition, citizens affiliated with Trump’s team who were unmasked were not associated with any intelligence about Russia or other foreign intelligence, sources confirmed. The initial unmasking led to other surveillance, which led to other private citizens being wrongly unmasked, sources said.

    "Unmasking is not unprecedented, but unmasking for political purposes … specifically of Trump transition team members … is highly suspect and questionable,” according to an intelligence source. “Opposition by some in the intelligence agencies who were very connected to the Obama and Clinton teams was strong. After Trump was elected, they decided they were going to ruin his presidency by picking them off one by one."

    * * *

    So if the source isn't Comey, has anyone seen Jim Clapper recently? The answer should emerge soon, meanwhile the ridiculous game with very high stakes of spy vs spy, or in this case source vs source, continues.

    The report summarized below in video format:

    http://video.foxnews.com/v/embed.js?id=5380606763001&w=500&h=281

    Watch the latest video at video.foxnews.com

  • How Chicago's Largest Pension May Run Out Of Cash In As Little As 4 Years

    Chicago’s pension funds, along with several other large public pensions around the country, are in serious trouble (we recently discussed the destruction awaiting our financial markets here: “Are Collapsing Pensions “About To Bring Hell To America”?“). 

    The problem is that the pending doom surrounding these massive public pension obligations often get clouded over by complicated actuarial math with a plan’s funded status heavily influenced by discount rates applied to future liability streams. 

    Take Chicago’s largest pension fund, the Municipal Employees Annuity and Benefit Fund of Chicago (MEABF), as an example.  Most people focus on a funds ‘net funded status’, which for the MEABF is a paltry 20.3%.  But the problem with focusing on ‘funded status’ is that it can be easily manipulated by pension administrators who get to simply pick the rate at which they discount future liabilities out of thin air.

     

    So, rather than lend any credence to some made up pension math, we prefer to focus on actual pension cash flows which can’t be manipulated quite so easily. 

    And a quick look at MEABF’s cash flows quickly reveals the ponzi-ish nature of the fund.  In both 2015 and 2014, the fund didn’t even come close to generating enough cash flow from investment returns and contributions to cover it’s $800mm in annual benefit payments…which basically means they’re slowing liquidating assets to pay out liabilities.

     

    Of course, like all ponzi schemes, liquidating assets to pay current claims can only go on for so long before you simply run out of assets. 

    So we decided to take a look at when Chicago’s largest pension fund would likely run out of money.

    On the expense side, annual benefit payments are currently just over $800 million and are growing at a fairly consistent pace due to an increasing number of retirees and inflation adjustments guaranteed to workers.  Assuming payouts continue to grow at the same pace observed over the past 15 years, the fund will be making annual cash payments to retirees of around $1.3 billion by 2023.

     

    Investment returns, on the other hand, are much more volatile but have averaged 5.5% over the past 15 years.  That said, the fund took big hits in 2002 (-9.3%) and 2008 (-27.1%) following the dotcom and housing bubble crashes. 

    But, just to keep it simple, lets assume that today’s market is not a massive fed-induced bubble and that the MEABF is able to produce consistent 5.5% (their 15-year average) returns every year in perpetuity.  Even then, the fund will only generate roughly $500mm per year in income compared to benefit payments growing to $1.3 billion…see the problem?

     

    Which, of course, means that the fund has likely just entered a period of perpetual cash outflows which will not stop until either (i) the city decides to cut back retiree payments or (ii) the fund runs out of money.

     

    And, putting it all together, even if Chicago’s largest pension generates consistent positive returns for the foreseeable future, it will literally run out of cash in roughly 6 years.

     

    And while we hate to be pessimistic, lets just take a look at what happens if, by some small chance, today’s market gets exposed as a massive bubble and we have another big correction in 2018.

    Such a correction would force the fund to liquidate over $1.5 billion in assets in 2018 alone….

     

    ….and the system would run out of cash completely within 4 years.

     

    The risk associated with America’s pension ponzi schemes have largely been overlooked by investors to date because so long as they can meet annual benefit payments then plan administrators can just continue to ‘kick the can down the road’ and pretend that nothing is wrong.   

    Of course, that strategy ceases to work when the pensions actually run out of cash…which could happen sooner than you think…and when it does, America’s retirees will suddenly find themselves about $5 trillion poorer than they thought they were.

Digest powered by RSS Digest