- Paul Craig Roberts Warns "As the Coup Against Trump Fails, the Threat Against His Life Rises"
Authored by Paul Craig Roberts,
The use of the presstitute media to deny Trump the Republican presidential nomination failed.
The use of the presstitute media to deny Trump victory in the presidential election failed.
The vote recount failed.
The effort to sway the Electoral College failed.
But the effort continues.
The CIA report on Russia’s alleged interference in the US presidential election ordered by Obama is in process. Faked evidence is a hallmark of CIA operations.
In their determination to seal Trump’s ears against environmental concerns, a group of environmentalists plan to disrupt the inauguration. This in itself is of little consequence, but chaos presents opportunity for assassination.
Trump himself seems to think he is in danger. According to MSNBC, Trump intends to supplement his Secret Service protection with private security. As there is evidence of CIA complicity in the assassination of President John F. Kennedy (film shows Secret Service agents ordered away from JFK’s limo immediately prior to his assassination), Trump, who is clearly seen as a threat by the military/security complex, is not being paranoid. MSNBC implies that Trump’s private security is to suppress protesters, as if government security forces have shown any compunction about suppressing protesters.
This provides an indication of the threat that the CIA sees in Trump:
John F. Kennedy famously threatened to "smash the CIA into a thousand pieces." But ultimately, the 35th president lost his solitary battle to completely break the power of the deep state.
Though I respect Kennedy, I believe Donald Trump is a much more serious proposition.
Donald Trump is Michael Corleone. He will keep his friends close, and his enemies closer (including the likes of John Bolton). But those he doesn't keep closer, he will ruthlessly "screw against the wall" for targeting him.
The no-nonsense Mike Pompeo, Trump's nominee for CIA director, will be the hatchet man for this merciless house cleaning operation.
Come January 20th, the reckoning begins.
Global Research’s Michel Chossudovsky has explained that Trump’s peaceful approach to Russia aligns him with oligarchs, whose wealth benefits from business deals with Russia, and puts Trump at odds with the military/security oligarchs, who benefit from the one trillion dollar annual military/security budget. The latter group have been in control since President Eisenhower warned us about them and can muster deep state forces against a Trump presidency.
To take on a group like this requires a tough SOB. Anything less than Trump wouldn’t have a chance. Indeed, if Douglas Valentine’s just published book, The CIA As Organized Crime (Clarity Press, 2017) is even half true, Trump’s life is certainly at risk.
Donald Trump is clearly no saint. Given what we are up against—dangerous tensions between nuclear powers and the military/security complex’s stake in these tensions—a saint is not what the situation calls for.
The military/security complex has been entrenched since NATO’s formation on April 4, 1949, a provocation that preceded by six years the formation of the Warsaw Pact on May 14, 1955. Any president willing to confront this entrenched deep state superpower deserves the support of all of us.
- San Fran Billionaire Luanches Plan To House Homeless In Shipping Containers
Last year we noted, via the Liberty Blitzkrieg blog, that rents in San Francisco and surrounding areas had grown so out of control that even Ivy Leaguers, like 31 year old Luke Iseman of The Wharton School, were having a hard time making ends meet. After growing tired of renting a run down, tiny apartment for $4,200 per month, Iseman decided to take a novel approach to housing. So he rented out a warehouse space and filled it with 11 steel shipping containers that he now rents out as makeshift apartments for $1,000 per month. We learn more from Bloomberg:
Luke Iseman has figured out how to afford the San Francisco Bay area. He lives in a shipping container.
The Wharton School graduate’s 160-square-foot box has a camp stove and a shower made of old boat hulls. It’s one of 11 miniature residences inside a warehouse he leases across the Bay Bridge from the city, where his tenants share communal toilets and a sense of adventure. Legal? No, but he’s eluded code enforcers who rousted what he calls cargotopia from two other sites. If all goes according to plan, he’ll get a startup out of his response to the most expensive U.S. housing market.
Iseman collects $1,000 a month for each of the 11 structures parked in the 17,000-square-foot warehouse he rents for $9,100. Tenants include a Facebook Inc. engineer, a SolarCity Corp. programmer and a bicycle messenger.
Now, billionaire California real estate developer John Sobrato is looking to implement a similar plan in Santa Clara to house a portion of the city’s 6,500 homeless. The plan calls for converting 200 steel shipping containers into a mix of 160 and 240 square foot micro apartments that could then be rented out homeless and low-income families.
Sobrato, who has spent much of his career building office space for many of Silicon Valley’s technology giants, asked the Santa Clara City Council for exclusive negotiating rights to lease a 2.5-acre plot of city-owned land, three miles south of the San Francisco 49ers football stadium and currently leased to a Hyundai dealership. His plan for the lot calls for a mix of 160- and 240-square-foot units, large enough for a kitchenette and bathroom with shower, which he said could be fashioned out of re-purposed shipping containers.
Under the plan, the developer asked for a 57-year lease at the cost of $1 a year. In return, the Sobrato Organization, based in Cupertino, would build and own the apartments, then lease them back to Santa Clara County, which would hire property management and homeless service providers. The project, called Innovation Place, could open as soon as 2018, with half the units rented to homeless and half offered to renters earning between 50 and 80 percent of the area’s median income.
Mock ups of the proposed housing complex were presented at the Santa Clara city counsel meeting:
Of course, not everyone is supportive of Sobrato’s efforts. Nearby neighbors, who are undoubtedly paying $1,000’s of dollars per month for their shoe boxes, have already started an online petition to shut down the project.
What has not been stated in this proposal, is how the nearby neighborhood is already being negatively affected by the mismanaged apartment complexes to the north of this potential landing spot for the homeless. Nearly 5 blocks of mismanaged, high density, low-income housing already exists across the street. Due to these apartments and the high density living that accompanies these apartments, nearby neighborhoods are experiencing a spike in crime, drug use, alcohol use, litter and lack of available parking. The nearby neighborhood streets, which at one time were quiet are now being used as a main thoroughfare for vehicles and pedestrians. Cars are being broken into and keyed and houses are being burglarized. There have been multiple hit-and-runs associated with the extra foot and vehicle traffic and the police have been called out multiple times for “suspicious” individuals either loitering around the neighborhood or sleeping in their cars.
Isn’t it so interesting how the liberal elites of San Francisco are always the most vocal supporters of any number of federal subsidy programs for low-income families…but we guess that only applies to the extent those low-income families stay far away from their posh, suburban, “safe places.”
- Mass Deception
Submitted by 720Global's Michael Lebowitz via RealInvestmentAdvice.com,
Janet Yellen
At the December 14, 2016 FOMC press conference, Federal Reserve Chairwoman Janet Yellen responded to a reporter’s question about equity valuations and the possibility that equities are in a bubble by stating the following: “I believe it’s fair to say that they (valuations) remain within normal ranges”. She further justified her statement, by comparing equity valuations to historically low interest rates.
On May 5, 2015, Janet Yellen stated the following: “I would highlight that equity-market valuations at this point generally are quite high,” Ms. Yellen said. “Not so high when you compare returns on equity to returns on safe assets like bonds, which are also very low, but there are potential dangers there.”
In both instances, she hedged her comments on equity valuations by comparing them with the interest rate environment. In May of 2015, Yellen said equity-market valuations “are quite high” and today she claims they are “within normal ranges”? The data shown in the table below clearly argues otherwise.
Interestingly, not only are equity valuations currently higher than in May of 2015 but so too are interest rates.
Further concerning, how does one define “normal”? Does a price-to-earnings ratio that has only been experienced twice in over hundred years represent normal? Do interest rates near historical lows with the unemployment rate approaching 40-year lows represent normal? Is there anything normal about a zero-interest rate monetary policy and quadrupling of the Fed’s balance sheet?
Does the Federal Reserve, more so than the collective wisdom of millions of market participants, now think that it not only knows where interest rates should be but also what equity valuations are “normal”?
One should expect that the person in the seat of Chair of the Federal Reserve would have the decency to present facts in an honest, consistent and coherent manner. It is not only her job but her duty and obligation.
Homebuilders
On December 15, 2016, CNBC reported the following: “The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) rose to 70, the highest level since July 2005. Fifty is the line between positive and negative sentiment. The index has not jumped by this much in one month in 20 years.”
The graph below shows how much house one can afford at various interest rates assuming a $3,000 mortgage payment.
Over the past two months U.S. mortgage rates increased almost a full percent from 3.50% to 4.375%. Given such an increase, a prospective homeowner determined to limit their mortgage payment to $3,000 a month would need to seek a 10% reduction in the price of a house. In the current interest rate environment, this equates to drop from $668,000 to $601,000 in order to achieve a $3,000 a month mortgage payment. One would expect that homebuilders temper their optimism, given that a key determinant of housing demand and ultimately their companies’ bottom lines is facing a sturdy headwind.
Advice/Summary
The point in highlighting these examples is to remind you that people’s opinions, especially those with a vested interest in a certain outcome, may not always be trustworthy. We simply urge you to examine the facts and data before blindly relying on others.
We leave you with historical insight from a few so-called experts:
- “We will not have any more crashes in our time.”: John Maynard Keynes 1927
- “There is no cause to worry. The high tide of prosperity will continue” : Andrew Mellon 1929
- “Stock prices are likely to moderate in the coming year but that doesn’t mean the party is coming to an end.” : Phil Dow 1999
- “The Federal Reserve is not currently forecasting a recession.” : Ben Bernanke 2008
- Goldman Warns "China Remains A Key Risk", Sees Yuan Downside Accelerating
With Bitcoin at 3 year highs, China’s renewed efforts to curb declines in its currency are doing little to stop yuan bears who have sent forward devaluation expectations to record highs and options positioning to six-month lows. And judging by Goldman Sachs' outlook – a potential resurgence in Chinese growth fears early next year, but more broadly, a continued bumpy deceleration – things are not getting better anytime soon.
As Bloomberg notes, traders have turned increasingly negative amid tighter liquidity, sending bets for further losses soaring. The gap between forward contracts wagering on the offshore yuan a year from now versus its current level is heading for a record monthly jump…
Just as the extra cost for options to sell the currency against the dollar hit a six-month high relative to prices for contracts to buy.
The currency is facing a triple whammy of accelerating capital outflows, faster U.S. interest-rate increases and concerns over domestic financial markets as liquidity tightens. Strategists say its weakening, set to be the biggest this year in more than two decades, may accelerate as the government restores the annual quota for citizens to convert yuan holdings into foreign exchange. And Goldman Sachs warns, China remains a key risk to watch…
Where we stand now:
Broader concerns about China risk derailing global growth and markets proved somewhat short-lived. After the S&P 500 hit its low for the year on February 11, two days after we published, better economic data and a sense that the Fed would react to global concerns—confirmed by the dovish March FOMC meeting—helped improve market sentiment. Political events in the western hemisphere have since broadly taken center stage in global markets, leaving China concerns in the background. But the reality is that growth—on some level—did take a hit; for example, US GDP growth came in at an anemic 1.1% annualized in 1H2016, owing in part to weakness in the industrial sector and energy-related activity but largely due to tighter financial conditions primarily in the wake of China concerns. China growth itself also remained relatively weak in 1H as measured by the GS China Current Activity Indicator, which declined towards 4% in 1Q and began to climb slowly thereafter.
Stabilizing growth in China has helped push China to the background of investor concerns. In order to stabilize growth and meet official GDP targets, China’s policymakers continued to pursue an ambitious stimulus plan begun in early 2015 that entailed pausing fiscal reforms, sharply cutting interest rates, loosening housing policies, and increasing credit growth. The result: GDP growth looks set to meet the target of 6.5%-7% for 2016, and producer prices are rising after years of deflation.
But policies that re-ignited growth in the short-term just increase concern about the future, especially in terms of credit. We estimate that total credit growth adjusted for muni bond issuance accelerated from 13% yoy in 1Q15 to 17% yoy as of 2Q16, and to 20% yoy when including shadow lending not captured in official statistics. In short, the potential credit problems in China have not receded, and indeed have likely grown given the very fast pace of credit expansion.
Policymakers have taken note of these potentially destabilizing dynamics and have refocused on risk management; indeed, China’s recent Central Economic Work Conference to plan for next year’s economic policy included strong statements on controlling financial risks. Risk management measures employed in recent months include increasing short-term repo rates, reining in off-balance sheet exposures such as wealth management products, and rolling out measures to try to curb home price appreciation. Fiscal policy also seems likely to tighten at least slightly in coming months. But any tightening will likely prove short-lived given that meeting growth targets will remain critical in 2017—a year of leadership transition.
Our RMB view has also become more negative, presenting risk to the US dollar and S&P 500. When we published at the height of market anxiety around China, we were relatively constructive on the RMB, arguing that a large, one-off devaluation was unlikely and envisioning only a “mild” trade-weighted depreciation (against the CFETS basket, the CNY has depreciated 4.5% since then). But capital outflow pressures have remained, particularly in the context of US dollar strength. Despite the government’s official focus on a trade-weighted currency basket, higher $/CNY fixings are still a powerful signal that can easily re-ignite capital flight, as households and firms anticipate a faster pace of depreciation.
Indeed, the PBOC’s FX reserves fell US$69bn to US$3,052bn in November, the largest decline since January. The US election has reinforced these dynamics given the strengthening dollar and potential for trade frictions, motivating tighter restrictions on capital flows. Global markets have so far taken these developments in stride, but the risk of a repeat of related equity market volatility remains, which could impact the pace of Fed tightening and dollar strength.
What to look for in 2017 (and beyond):
A potential resurgence in Chinese growth fears early next year, but more broadly, a continued bumpy deceleration. We expect sequential GDP growth to decelerate into 1Q17 to c.5.5% annualized on recent tightening measures. But we expect a rapid pivot back to stimulus should the growth target look at risk, especially given next year’s leadership transition.
Continued concerns about China credit growth. Although policymakers have introduced tightening measures to reduce the risk of asset price bubbles, China’s reliance on credit growth, which undermines financial stability, remains a key risk.
RMB downside, posing potential risk to the stronger US dollar and global stock markets. We forecast a $/CNY fix of 7.00, 7.15 and 7.30 in 3, 6 and 12 months, respectively, and long $/CNY is one of our 2016 Top Trades. The pace of capital outflows and the evolution of the fix warrant monitoring; in our view, as long as the fix simply offsets dollar strength and capital outflows are contained, global risk appetite should hold up.
China remains a key risk to watch.
- College Student Earns 4.0 GPA, Then Drops Out: "You Are Being Scammed!"
Submitted by Lance Schuttler via TheMindUnleashed.com,
Billy Williams just finished his first college semester and did so with the all-impressive 4.0 GPA. Instead of celebrating his accomplishments with friends and family, he decided to drop out of college entirely.
Billy made a facebook post that is now going viral in which he explains his reasoning for dropping out:
“Now that I’ve finished my first semester I think it’s safe to say… FUCK COLLEGE. Now before all you of you go batshit crazy… I have a few points to make.
1. Yes I have dropped out after finishing my first semester (with a 4.0 GPA). And it’s one of the best choices I’ve ever made. Not because I am averse to learning, but actually the exact opposite.
2. YOU ARE BEING SCAMMED. You may not see it today or tomorrow, but you will see it some day. Heck you may have already seen it if you’ve been through college. You are being put thousands into debt to learn things you will never even use. Wasting 4 years of your life to be stuck at a paycheck that grows slower than the rate of inflation. Paying $200 for a $6 textbook. Being taught by teacher’s who have never done what they’re teaching. Average income has increased 5x over the last 40 years while cost of college has increased 18x. You’re spending thousands of dollars to learn information you won’t ever even use just to get a piece of paper. I once even had an engineer tell me “I learned more in my first 30 days working than in my 5 years of college.” What does that tell you about this system? There are about a million more ways you’re being scammed into this.. just watch the video i’m gonna comment if you want to see more.
3. Colleges are REQUIRING people to spend money taking gen. ed. courses to learn about the quadratic formula (and other shit they will never use) when they could be giving classes on MARRIAGE and HOW TO DO YOUR TAXES.
4. Gosh there are so many more reasons I could add, but just comment if you disagree or have reasons to add. I’d love to add to the discussion. TAG a friend in college, Tag your parents, share this if you agree, disagree. Let’s just talk about it. Heck post a picture of yourself flipping off something you think is unjust in our society.”
Billy is right too that the price of college continues to soar.
Ray Franke, a professor of Education at the University of Massachusetts, Boston said:
“If you look at the long-term trend of college tuition, it has been rising almost six percent above the rate of inflation. That’s brought immense pressure from the media and general public, asking whether college is still worth it.”
In 2015, Harvard’s annual tuition and fees (not including room and board) would cost a person $45,278, which is more than 17 times the 1971-72 cost. If annual increases of tuition had simply tracked the inflation rate since 1971, 2016’s tuition would be just $15,189.
According to CNBC, college enrollment peaked in 2011, and has been decreasing ever since. This is no doubt in part to a family’s ability to pay the tuition, room and board and other related expenses. For example, in order to pay for a year of college at Harvard today would take the median household income nearly one year of paychecks. Back in 1971, it would have taken about 13 weeks of paychecks per the household median income.
Today the student debt is over $1.26 trillion dollars with over 44 million Americans in debt from student loans. 2016’s graduates on average are over $36,000 dollars in debt, which is up 6% from just one year ago.
What can be done to alleviate this situation? Why do banks get bailed out (2008 Lehman crisis) for cheating the world, while students must continue to pay a debt? Why is a private institution (The Federal Reserve) in charge of this nation’s money and finances? How will students continue to be able to go to college when the price continues to skyrocket as the federal minimum wage stays stuck at $7.25 an hour? At some point soon, the masses won’t take it anymore from the banking cartel. The education system is in for some major changes very soon.
- Mysterious Military Flyover Above Manhattan Was A Trump "Emergency Relocation Drill"
One week ago, New Yorkers were captivated, and unnerved, by a 40-minute long military exercise in which one USAF C-130 and several HH-60 Pave Hawk helicopters could be seen circling at very low altitudes above Manhattan. While the US military kept silent about the overflight, U.S. Air Force Col. Nicholas Broccoli, the vice commander of the Air National Guard’s 106th Rescue Wing, said the aircraft were conducting “standard military training.” However, one look at the flight pattern of the plane shows there was seemingly little that was “standard” about a C-130 making dozens of circles over midtown Manhattan.
Seeing multiple reports of a USAF C-130 and several Black Hawk helicopters circling low (3,000 feet) over Manhattan.
No, that is not normal pic.twitter.com/DaFByrAX3O
— Jason Rabinowitz (@AirlineFlyer) December 13, 2016
A video of the plane that's been circling Manhattan pic.twitter.com/Bsj5ANEeW1
— Alp Ozcelik (@alplicable) December 13, 2016
Today we learn that the overflights were far more than simply “standard military training.” According to DNAinfo, the military airplane and two helicopters doing loops over Midtown last week were conducting an “emergency relocation” planning mission in case they needed to extract President-elect Donald Trump during an emergency or attack.
Citing sources, DNAInfo said that the flyovers were part of an “emergency relocation drill” designed to identify locations, primarily in Central Park, where a chopper could touch down near Trump’s home inside Trump Tower on Fifth Avenue and 56th Street, and safely evacuate Trump and others from the city.
“It was the military doing their homework,” one source said. “They were making plans how to remove him, mapping plans and strategizing,” added a second source.
In the event of an emergency, the president would be whisked by the Secret Service north to the park, and then flown in a helicopter to the nation’s capital or a secret government site in Virginia or West Virginia, sources said. The aircraft models spotted during the exercise can fly long distances without refueling and can also refuel in mid-air if necessary, sources said.
Surprisingly, the NYPD was given only short notice about the flyovers, and were never informed that the military would be using a plane as large a C-130 with its 130-foot wing span. “They should have told people they were doing recon, and going to fly at low altitudes, instead of keeping it a secret,” a law enforcement source said. “People were scared, and rightly so.”
“Trump is the president and people would understand that they are doing a recon mission for an emergency,” the source continued.
One day after the flyover, NYPD Commissioner James O’Neill told reporters that the city was working on improving notification procedures. “Usually when there is a flyover, we get something through our Operations unit. It’s sent out to everybody,” O’Neill said last Wednesday at an unrelated press conference. “That notification is supposed to go out through OEM [the Office of Emergency Management], so I know OEM is working with the military to make sure the proper notifications are made. [OEM Commissioner] Joe Esposito is going to have to make sure he stays in contact with the military for future notifications.”
“The public should know about that. What’s transpired in New York City over the last 15 years, we need to know that,” O’Neill added.
DNAinfo further adds that according to a federal agent who witnessed the circling aircraft, and who spent most of his career protecting presidents, “the park is the closest place to land, even if they keep a Marine 1 helicopter up here in the city, or in base in New Jersey.” The ex-agent said last week’s aircraft basically conducted a dozen loops from 42 Street west to Riverside Park, then headed to the East River and south back to 42nd Street.
“I have never seen a military training maneuver in the city,” the agent observed. “That type of rescue work is usually done by the NYPD, the FDNY, or the Coast Guard, not the military.”
The C-130 which was the airplane confuicting the drills, travels up to 300 mph, is fundamentally a cargo transport plane that can be filled with everything from armed personnel to armored vehicles, including presidential limousines. The plane can also land on short runways.
Meanwhile, the military continued to deny the purpose of the exercise: a spokesman for the New York State Division of Military and Naval Affairs said last week only that the maneuver was part of a “routine training mission” that originated from the 106th Rescue Wing at the Francis S. Gabreski Airport in Westhampton Beach on Long Island. He reiterated the same today. A spokesman for the US Secret Service in Washington did not immediately respond to a call seeking comment. As a matter of policy, however, the agency routinely says it does not discuss specifics of Presidential security.
- Baby Boomers Increasingly Having Social Security Checks Garnished To Cover Student Loan Payments
According to a new report from the Government Accountability Office, the federal government is increasingly garnishing Social Security benefits to help cover student loans payments owed by baby boomers. According the Wall Street Journal, a total of $1.1 billion has been garnished since 2001 with $171 million being collected in 2015 alone.
The government has collected about $1.1 billion from Social Security recipients of all ages to go toward unpaid student loans since 2001, including $171 million last year, the Government Accountability Office said Tuesday. Most affected recipients in fiscal year 2015—114,000—were age 50 or older and receiving disability benefits, with the typical borrower losing about $140 a month. About 38,000 were above age 64.
The report highlights the sharp growth in baby boomers entering retirement with student debt, most of it borrowed years ago to cover their own educations but some used to pay for their children’s schooling. Overall, about seven million Americans age 50 and older owed about $205 billion in federal student debt last year. About 1 in 3 were in default, raising the likelihood that garnishments will increase as more boomers retire.
“I believe this is the tip of the iceberg of what may be to come if we don’t work harder on this problem,” said Sen. Claire McCaskill of Missouri, the top Democrat on the Senate Special Committee on Aging.
Of course, the mere suggestion that people should be responsible for repaying debt they’ve incurred was enough to throw Elizabeth Warren into a tailspin as she described the idea of garnishing social security benefits as “predatory.”
The report showed garnishments left thousands with Social Security checks below the poverty line, prompting Sen. Elizabeth Warren (D., Mass.) to call the practice “predatory.” Both lawmakers said they will push legislation to ban it.
But consumer advocates and some congressional Democrats say the government’s tactics have become too aggressive, targeting many borrowers who are destitute and have no hope of repaying. Most Social Security recipients rely on their checks as their primary source of income, other research shows.
Meanwhile, the WSJ points out that Obama’s “income-driven repayment” (IDR) plans only serve to make the student loan problem worse. Since the payment plans only cover a portion of monthly interest payments, debt balances continue to grow over time leaving borrowers with even larger debt balances as they reach retirement age.
Daniel Pianko, a managing director of University Ventures, which invests in for-profit and nonprofit schools, says the government may be worsening the troubles of older borrowers by promoting programs that set monthly payments as a share of borrowers’ earnings. Payments under “income-driven repayment” programs frequently cover only part of the interest and not the principal, allowing balances to grow.
In that sense, the income-driven repayment programs have the same effect as payday lenders, trapping poor borrowers in a growing amount of debt.
“Every month and every year the loan balances go up, which means by definition this problem will only get worse,” Mr. Pianko said.
We just wrote about another Government Accountability Office report that blasted the Education Department’s understanding of basic mathematics and accounting concepts after finding the department drastically underestimated the costs of Obama’s student loan forgiveness programs. The 100-page report entitled “Federal Student Loans: Education Needs to Improve Its Income Driven Repayment Plan Budget Estimates” found that taxpayers could be on the hook for $137BN of student loans to be forgiven over the coming years as a result of Obama’s executive actions on IDR plans.
Oh well, what’s another $50 billion or so…we hear a lot of baby boomers vote so better give them what they want.
- CalPERS Board Votes To Maintain Ponzi Scheme With Only 50bps Reduction Of Discount Rate
A few weeks ago we asked whether CalPERS would rely on sound financial judgement and math to set their rate of return expectations going forward or whether they would cave to political pressure to maintain artificially high return hurdles that they'll never meet but help to maintain their ponzi scheme a little longer (see "CalPERS Weighs Pros/Cons Of Setting Reasonable Return Targets Vs. Maintaining Ponzi Scheme"). The decision faced by CALPERS was whether their long-term assumed rate of return on assets should be lowered from the current 7.5% down to a more reasonable 6%. Well, we now have our answer and it seems the board erred on the side of maintaining the ponzi with a decision to reduce the fund's discount rate by only 50 bps, to 7%, to be phased in over 3 years.
Of course, this decision should come as little surprise to our readers as we concluded our previous post with the following prediction:
We've seen this battle between math/logic and politicians played out numerous times in states all across the country. Somehow we suspect that "math/logic" will continue to lose…better to bury your head in the sand for a couple of more years and pretend there is no problem.
Per The Sacramento Bee, the CalPERS board approved the discount rate adjustment with a vote of 6-1 and the reduction will be phased in over 3 years starting next July.
CalPERS moved to slash its official investment forecast Tuesday, a dramatic step that will translate into billions of dollars in higher annual pension contributions from the state, local governments and school districts.
Employees hired after January 2013, when a statewide pension reform law took effect, will also have to kick in more money. Older employees could see higher contributions, too, although that would be subject to contract bargaining.
CalPERS’ Finance and Administration Committee voted 6-1 to lower the forecast from 7.5 percent to 7 percent in phases over three years, starting next July. Although the committee’s vote must be ratified by the entire board Wednesday, most other board members indicated they support the move as well.
It would be the first adjustment to the forecast in four years.
The move is a recognition that investment returns are falling and that the California Public Employees’ Retirement System, which is just 68 percent funded, needs higher contributions from government agencies to solve its long-term problems.
“We’re in a low-growth (investment) environment, and it’s expected to remain that way the next five to 10 years,” board member Henry Jones said.
While a 50bps decrease to a 7% discount rate will still trigger roughly $1 billion in incremental annual contributions from various California government entities according to Eric Stern of the California Department of Finance, it is still a long way from the fund's estimated returns of just 6.2% over the next decade which happens to match exactly their returns from the past decade.
Of course, mathematical realities have to be weighed against the risk of disrupting the ponzi scheme and forcing several California cities to the brink of bankruptcy.
But a CalPERS return reduction would just move the burden to other government units. Groups representing municipal governments in California warn that some cities could be forced to make layoffs and major cuts in city services as well as face the risk of bankruptcy if they have to absorb the decline through higher contributions to CalPERS.
“This is big for us,” Dane Hutchings, a lobbyist with the League of California Cities, said in an interview. “We've got cities out there with half their general fund obligated to pension liabilities. How do you run a city with half a budget?”
CalPERS documents show that some governmental units could see their contributions more than double if the rate of return was lowered to 6%. Mr. Hutchings said bankruptcies might occur if cities had a major hike without it being phased in over a period of years. CalPERS' annual report in September on funding levels and risks also warned of potential bankruptcies by governmental units if the rate of return was decreased.
Meanwhile, Richard Costigan, chairman of the CalPERS finance committee, who vowed that "this is just a start," more or less admits that the decision was politically motivated to allow "municipalities and other government agencies some breathing room before they absorb the impact."
Board members, however, defended the action as a compromise; it will help stabilize the fund while giving municipalities and other government agencies some breathing room before they absorb the impact. Richard Costigan, chairman of the finance committee, said CalPERS officials will continue to look at the fund’s investment strategies over the next year.
“This is just a start,” Costigan said.
Now all eyes will turn to the 37.6% funded Illinois pension fund, as well as many others, to see if they follow suit.
- Nearly 3,000 US Communities Have Lead Levels Higher Than Flint
Submitted by Nadia Prupis via TheAntiMedia.org,
A Reuters investigation this week uncovered nearly 3,000 different communities across the U.S. with lead levels higher than those found in Flint, Michigan, which has been the center of an ongoing water contamination crisis since 2014.
click image for link to interactive map…
The investigation found that many of the hot-spots are receiving little attention or funding. Local healthcare advocates said they hope the reporting will spur action from influential community leaders.
All of the communities Reuters investigated had lead levels at least two times higher than Flint’s; more than 1,000 were four times higher. In most cases, the local data covered a 5- to 10-year period through 2015, the analysis states.
Areas affected by lead poisoning populate the map from Texas to Pennsylvania, reported Reuters‘ M.B. Pell and Joshua Schneyer. The available data charts 21 states that are home to about 61 percent of the U.S. population.
Despite the massive drop in lead poisoning rates since the 1970s—when heavy metals were phased out of paint and gasoline—many communities throughout the country are still at risk.
“The national mean doesn’t mean anything for a kid who lives in a place where the risks are much higher,” said Dr. Helen Egger, chair of Child and Adolescent Psychiatry at NYU Langone Medical Center’s Child Study Center.
Like Flint, many of the communities are mired in “legacy lead,” Reuters reported—old industrial waste, crumbling paint, or corrosive pipes. But few have received help or attention.
Contamination in children can cause cognitive difficulties, which in turn can lead to low school performance, few job opportunities, and trouble with the law. That cycle was examined last year when 25-year-old Baltimore resident Freddie Gray died after his spine was severed in police custody. Amid protests against brutality and racism, many noted that Gray experienced lead poisoning as a child while living in an area with persistently high exposure levels.
But the problem is nationwide and affects a vast spectrum of communities, Reuters writes. Milwaukee, Wisconsin still has “135,000 prewar dwellings with lead paint, and 70,000 with lead water service lines,” and $50 million has already been spent to protect the city’s children. Many families do not have the funds to make the repairs themselves, and laws requiring owners to remove lead from their properties are not consistent state by state.
“Reporters visited several of the trouble spots: a neighborhood with many rundown homes in South Bend, Indiana; a rural mining town in Missouri’s Lead Belt; the economically depressed North Side of Milwaukee,” Pell and Schneyer write. “In each location, it was easy to find people whose lives have been impacted by lead exposure. While poverty remains a potent predictor of lead poisoning, the victims span the American spectrum—poor and rich, rural and urban, black and white.”
In St. Joseph, Missouri, one of the most contaminated neighborhoods included in the study, even a local pediatrician’s children had lead poisoning.
Earlier this month, the U.S. Senate approved a $170 million aid package to repair Flint’s corrosive pipes and fund recovery efforts. But that is 10 times the budget the U.S. Centers for Disease Control and Prevention (CDC) allotted for lead poisoning assistance this year, Reuters notes.
“I hope this data spurs questions from the public to community leaders who can make changes,” epidemiologist Robert Walker, co-chair of the CDC’s Lead Content Work Group, told Reuters. “I would think that it would turn some heads.”
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