- Mass Exodus: 1 Million People Have Ditched New York Since 2010
The folks of New York City seem to be slowly waking up to the fact that there are a whole lot of places to live in between America’s two shores that cost a lot less money, enjoy much better weather and don’t tax their citizens to death. According to the latest data from the United States Census Bureau, the New York area has lost a total of nearly 1 million residents to domestic migration in just the past 6 years alone.
Of course, if you listen to the Empire Center for Public Policy research, the mass exodus isn’t related to the Big Apple’s excessive cost of living or ridiculous tax structure but rather is just a symptom of the improving economy. Per the New York Post:
The number of people leaving the region — which includes parts of New Jersey, Connecticut, the lower Hudson Valley and Long Island — in one year swelled from 187,034 in 2015 to 223,423 in 2016, while the number of international immigrants settling in the tristate area dwindled from 181,551 to 160,324 over the same period, records show.
The nation’s economy is improving, there are more jobs in cheaper places to live, and retirees are choosing to move to warmer climates, experts say.
“The historical trend is that out-migration grows when the economy is getting better,” said Empire Center for Public Policy research director E.J. McMahon.
“As the economy gets better, there are more jobs outside the region and by the same token . . . more people to buy your house if you’re a baby boomer looking to move to Boca Raton or Myrtle Beach.”
Not surprisingly, Chicago saw the 2nd highest outflow of people followed closely by Los Angeles.
Moreover, in another ‘complete shock’, the people ditching NYC, Chicago and LA in record numbers are flocking to Texas and Arizona where they can enjoy sunshine 350 days a year, cheap housing and substantially lower tax rates.
And while San Francisco hasn’t shown up on the ‘biggest loser’ list just yet, as we reported last week, a growing number of snowflake millennials are saying they can no longer stand to live in the preeminent American ‘safe space’ because the “rent is too damn high”, the traffic is too damn congested and, well, President Trump. According to a new poll conducted by the Bay Area Council, 40% of all people living in San Francisco say they’re ready to ditch the city for greener pastures while the number is even higher among millennials at 46%.
A growing number of Bay Area residents, led by millennials (18-39), are looking to greener (or less expensive) pastures as the region’s housing and traffic crises combined with an astronomical cost of living take their toll, according to results of the 2017 Bay Area Council Poll released today. The poll found that 40 percent of respondents are considering leaving the Bay Area in the next few years, with millennials leading the way at 46 percent, along with those who spend the biggest share of their income on housing.
“Losing our youth is a very bad economic and social strategy,” said Jim Wunderman, President and CEO of the Bay Area Council. “But until we get serious about building the housing we need we’re going to continue seeing our region drained of the young and diverse talent that has helped make the Bay Area an economic powerhouse. We know what the solutions are – streamline local approval and reduce fees and regulatory costs – we just need the political will here and in Sacramento to make them happen. It can be done, it must be done and we’re working now to get it done.”
Meanwhile, the number of people saying they’re looking to ditch the city jumped 6 points versus 2016.
Of course, housing and traffic were the most cited reasons that people were looking leave San Fran. But, in a rather surprising new addition to the list of complaints, President Trump also showed up as a key threat to life in the Bay Area. Perhaps, the snowflakes of California’s northern shores aren’t aware that even if they move elsewhere in the country that President Trump would still be their president?
Guess spending $1.2 million on those 600 square foot studio apartments gets old after a while…
- China Starts 2017 With Highest Number Of Corporate Defaults In History
Back in October 2015, roughly around the bottom of the recent commodity cycle, we reported a stunning statistic: more than half of Chinese companies did not generate enough cash flow to even cover the interest on their cash flow, and as we concluded “it is safe to assume that up to two-third of Chinese commodity companies are now at imminent danger of default, as they can’t even generate the cash to pay down the interest on their debt, let alone fund repayments.“
While commodity prices have staged a powerful bounce over the past 18 months, and despite the government’s powerful drive to avoid major defaults over concerns about resulting mass unemployment, the inevitable default wave has finally arrived, and as Bloomberg reports overnight, “China’s deleveraging push has racked up the most defaults on corporate bonds ever for a first quarter, and the identity of the debtors is pretty revealing.”
Seven companies have defaulted on a total of nine bonds onshore so far in 2017, versus 29 for all of last year, according to data compiled by Bloomberg. In a sign of the struggles facing China’s old economic model, most of them depend on heavy industry and construction. While it’s still far from a crisis point, the defaults shows how policy makers’ efforts to reduce the liquidity that had propelled the bond market until late last year is exacting casualties.
Cited by Bloomberg, Liu Dongliang, a senior analyst at China Merchants Bank Co. in Shenzhen said that “weak companies can’t sell bonds, which adds to the pressure on their cash flow.” As a result, “the pace of defaults will continue. It will be even more difficult for weak companies to sell bonds because corporate bond yields may rise further — the current yield premium doesn’t provide enough protection against credit risks.”
As discussed in recent months, the Chinese central bank has been curbing leverage in money markets leading to a spike in borrowing costs…
… which has also hit issuance: making rolling over of existing debt prohibitive for many. Firms rated AA, generally considered junk in China, sold 33 billion yuan ($4.8 billion) of bonds in the first quarter, the least since 2011, Bloomberg data show. Chinese companies have scrapped 129 billion yuan of bond sales since Dec. 31, a jump of more than 50 percent from the same period a year before.
Continuing the deleveraging push, and further tightening financial conditions, over the weekend, the PBOC boosted rates on loans aimed at small- and medium-sized financial institutions while as reported last weekend, smaller and mid-size banks have been caught in the cross hairs of shadow banking deleveraging, with some said to have missed debt payments in March.
Not surprisingly, Bloomberg reports that four of this year’s nine defaulted bonds were issued by companies based in the northeast rust-belt province of Liaoning, which has been among the areas hit hardest by China’s focus on reducing capacity in industries such as steel and coal. Another key Chinese commodity producing province, Hebei, which is the nexus of China’s steel-production has so far been spared as a result of lying about its production cuts, however recent revelations have prompted Beijing to crack down on local factories, resulting in the recent decline in iron-ore prices, which will likely have adverse impacts on Chinese upstream steel suppliers, and result in even more defaults in the coming months.
Courtesy of Bloomberg, here is a summary of the companies that have defaulted so far in 2017:
1. Dalian Machine Tool Group Corp.
The top perpetrator, this Liaoning manufacturer defaulted on three bonds this year, after issuing new securities as recently as October. The tool making industry has a large number of players, and is ripe for consolidation, according to Bloomberg Intelligence. Dalian Machine is also based in a province that tumbled into an outright recession last year. The securities involved include a note due in May 2017, one due in July and another due in January 2019.
2. Dongbei Special Steel Group Co.
This steelmaker based in Dalian, a port city on the Yellow Sea, is a good example of Liaoning’s troubles. The company, partially state owned, was already bailed out in the early 2000s before it had to grapple with the challenges of China’s economy decelerating from around 10 percent growth to sub-7 percent. It’s now defaulted on its sixth bond since its latest financial difficulties began a year ago. The company is in bankruptcy proceedings. The note defaulted on was originally issued in 2013 and is due in January 2018.
3. Inner Mongolia Berun Group Co.
This investment company is based in the heart of the northern province of Inner Mongolia, which saw a surge in construction during the record credit boom unleashed during the global financial crisis. Berun Group’s home city, Ordos, was dubbed China’s biggest “ghost town,” for all the vacant buildings that went up during the stimulus period. This was the second default within two months for the company, which invests in chemicals and logistics. The defaulted security was a note issued last year that was due in January.
4. China Shanshui Cement Group Ltd.
While this company is based in Shandong, a province southeast of Beijing that’s better off than its neighbor across the Yellow Sea, Liaoning, cement has become a tougher industry since regulators took steps to rein in China’s property sector. China Shanshui Cement Group has defaulted on several bonds since November 2015 after a boardroom fracas stymied financing. Its Hong Kong-traded shares are suspended. The bond in question was three-year note issued in February 2014.
5. China City Construction Holding Group Co.
This builder is based in the national capital, but Beijing’s ongoing property boom wasn’t enough to prevent it from missing interest payments. A change in the contractor’s ownership last April triggered early redemption of a Dim Sum bond, and then China City faced difficulties transferring funds offshore to repay the debt. The shifting shareholder structure has had a “serious” negative impact on the company’s ongoing ability to secure funding, according to China Lianhe Credit Rating Co. The company defaulted again early last month. The security was a bond due in March 2021.
6. Huasheng Jiangquan Group Co.
Another Shandong-based company, this steelmaker suffered “huge losses” after its subsidiary cut manufacturing of the alloy, according to Dongxing Securities Co., the lead underwriter on the defaulted bond. Premier Li Keqiang said in his address to the National People’s Congress last month that China wants to reduce steel capacity by about 50 million tons. Huasheng Jiangquan repaid the overdue amount on the debt March 22. The 800 million-yuan bond that was defaulted on was due in March 2019.
7. Zhuhai Zhongfu Enterprise Co.
A bottle maker for Coca-Cola Co., this company sticks out because it hails from Guangdong, China’s powerhouse exporter province. Zhuhai Zhongfu said in a statement last week that it’s running at a loss amid competition in the industry and weak demand. The company’s controlling shareholder says Zhuhai Zhongfu is planning to make an overdue payment by April 26 on the bond that it defaulted on March 28. The firm defaulted on a separate bond in 2015 and repaid the debt five months later.
- Are 401K Holders About To Feel A Savers Pain?
There’s an old truism people forget all too often. It has many variations and is attributed to even more, its core meaning goes something like this:
“If the government can give it to you, than it can also take it away.”
Some of you might be wondering if I’m talking about the current “tax” advantages that have made these vehicles so popular over the years. To that I’ll say no, not at this current time. But I feel that will be the least of worries coming down the pike in the not so distant future.
No, what I’m directly addressing is what is now emanating from the one and only non-government, privately held institution, directed by a consortium of non-elected, Ivory Towered, policy wonks: The Federal Reserve.
And those emanations are anything but 401K holder friendly. Let me explain…
I know many are wondering how a government inspired quote, a private institution, their retirement account, or savings account fits under one banner, or are some how all connected. Well, that’s easy:
The Federal Reserve has been the sole entity that dictates what any of them are currently worth. And if you don’t like their choices or decisions? Tough. There’s nothing you can do about it. Period.
Maybe that’s not quite correct: It’s not that there’s “nothing you can do.” The problem is – there’s nothing you’ll want to do. Hence where the real issues lie.
The following is for those who know of no other “investing” world (or 401K holder) other than after the financial crisis of 2007/08. Or put differently – if you’ve been working and saving only for the last decade or so. i.e., in the 35ish – 40-year-old bracket and younger.
Back in ancient history before algorithmic HFT parasites roamed the trading world (circa 2008 A.D.) One could retire comfortably with a modest sum of money and find relatively safe places to hold their assets receiving some form of interest payment for its usage. CD’s (certificates of deposit) bonds (such as U.S. Treasuries) and others were some of the most popular.
That was until the Fed. decided interest rates and everything that was connected to them was secondary (and even expendable) as to subjugate the financial markets and bring them into such a reflexive corollary that even if a Fed. official whispered- the effect on Wall Street was a realtime example of that other adage “When a butterfly flaps its wings…”
That’s what pumping (and printing) $4+TRILLION dollars via differing iterations of QE, Twist and a relentless death grip for years at the Zero-bound will buy you.
For those who don’t remember, it used to be when understanding investing prowess people used to say (or was advertised) things like, “When E.F. Hutton speaks – people listen.” Now it’s: “When The Federal Reserve whispers – Wall Street jumps!”
That’s what the greatest expression for capital formation the world has ever known has now become. i.e., Nothing more than a trained jumping flea circus. And again – all in less than 10 years.
Does a “Mission Accomplished” banner come with that? But I digress.
One of the reasons I can attest to much of what has been thrust upon (or taken from) retirees and others is that I actually am one, became one right at the beginning of the financial crisis. I was fortunate enough (via hard work and forethought) as to retire at the age of 45. A “dream” or ‘brass ring” many find elusive if not near impossible back in 2005.
It was a dream come true. However – it was also smack-dab right before, and squarely into the teeth of the “out of the blue” financial shock and market melt down for the ages that would transform everything. And I do mean: everything!
Suddenly the idea of diversifying one’s financial assets into relative safety was gone – and I do mean just that – gone. Which is, by-the-way, why I detest and so adamantly stand against all this over-simplified drivel once again appearing from so-called financial “expert” landscape. It’s going to hurt far more people than it’ll ever help.
The Federal Reserve decided in its infinite “wisdom” that interest rates were now to be considered a “poison” to the economy and not only cut – but slashed them, and held them at the Zero-bound for years. What this meant was one could no longer expect to receive any interest bearing accounts to live. i.e., Eat, pay bills, et cetera. And I won’t even get into what it has done to pensions and insurance companies.
But no one has cared – especially the Fed. Let me use the following for demonstration purposes…
Let’s say you were an entrepreneur and sold your business, or were able to some how via thrift or shrewd business acumen, and were able to amass a nest egg of let’s say $3Million dollars for the entrepreneur, and $1Million for the shrewd. Both scenarios are quite feasible for the prudent minded.
Just 10 years ago it was also not only feasible, but rather probable, one could safely allocate their resources finding returns of 5% (and higher, depending) in such mundane vehicles as CD’s, Treasuries, and more.
So, using nothing more than napkin math, one could easily calculate using the $1MM example that money would generate approximately $50,000.00 per year without touching the principal for one to live on. This was also a relatively accurate proposition because there was precedent going back decades. Sure, $50K ain’t what it used to be, but it’s sure a hell of a lot more than Zero – which is precisely what interest rates have been now going on years. And on $3MM? It’s the same. i.e. Zero, as in zip, zero, nada.
“But wait! There’s more!!!” as they say, but it’s not a bonus anyone wants to hear about. What is that you say? Glad you asked…
Not only does having a $Million dollars get you nothing at a bank (correct, not even a lousy toaster) if you are one of the fortunate (or unfortunate depending on perspective) who wants to put that hard-earned money safely under “lock and key” via the auspices of some bank – it’s going to cost you! And in some instances – they might not even want your deposit at all. Why?
Why else – it’ll cost them, and that’s a no-no in banking. Costs are something you pay – not them. And if enough profits can’t be made on legitimate transactions? See Wells Fargo™ for clues.
So what was the flip side? Here’s my opinion…
Welcome to the “markets” (or should I say casino) of today. Where 401K holders, and corporate buy-backs supported via the Fed’s balance sheet accrual, and zero interest rate financing meet the front running, algorithmic, headline reading HFT parasites which enabled the BTFD phenom to appear time, after time, after time, after time. Which, by its very nature and existence has allowed “investing” to be the equivalent of nothing more than following the strategy of a chimp hurling darts at ETF symbols backed by a central banks “bulls-eye.”
Ah, but what a difference an election does make, no? For that was then – and this is now. And “now” seems to be that the Federal Reserve is hell-bent as to raise interest rates regardless of what the “markets” desire.
Can you say, “Oh-oh?”
For years the cries of savers, pension plans, insurance companies and more have fallen on deaf ears. Actuary tables that prove these bedrocks of society can not sustain or endure under a Fed. policy such as what has been thrust upon them was relegated to the, “Who cares the “markets” up – deal with it!” status.
Now – That all seems to have changed.
Suddenly (as in the last few months) interest rates not only need to go up. They need to go up stat!
The Fed. via its differing speakers in public comments are signaling that not only is the raising of rates further, and quicker on the table, but so too is the balance sheet as to begin down sizing it.
If the above is to be taken at face value (and why shouldn’t it, after all, isn’t this why the Fed. makes public comments to begin with?) with signaling (via the Dot Plot and more) now stating 3 rate hikes for 2017 and some Fed. speakers signaling the possibility of even 4. Along with the abrupt metamorphosis of doves turning into hawks (using Ms. Yellen, and Ms. Brainard as examples) the “markets” are going to find fuel to propel them higher using what precisely?
The only fuel that has enabled the “markets” to propel this high has been all Fed. funded. And now this same Fed. is in no uncertain terms professing they’re out of the “hopium” business. Or at least – want to appear that way.
If this is true, taking them not just at their words, but rather via their actions – we now have 2 rate increases in 90 days with near shouting (as compared to prior discussions) that the Fed. is far more interested in raising further, and faster, than previously discussed. All while remembering it was only a few short weeks prior the Fed. Chair herself was touting the need for running a “high pressure economy” and has now flipped to jettison anything of the such – and is now the undisputed leader of “hawks are us.”
The issue here is – the “markets” have been levitated via the “wings of doves.” Suddenly – those “doves” have all but vanished. And if that’s true? What’s vanished with it may just be the BTFD genius along with it. And that will turn into a very big problem indeed if correct.
When savers were (and still are) getting crushed, no one cared, not even the Fed. The problem?
It seems just as the Fed. turned its back on savers pain all these years – they might be signaling how they’re going to feel about any 401K holders losses that may appear via their new-found policy stance. To Wit:
ZeroHedge: “What is the biggest S&P drop the Fed will accept before intervening?”
Minneapolis Fed. president Neel Kashkari: “Don’t care about stock market fall itself. Care abt potential financial instability. Stock market drop unlikely to trigger crisis.”
And with that, only one last saying comes to my mind:
Dear 401K holders – welcome to a savers world. Oh yeah, and buckle up. For things might get a little “bumpy” as that other saying goes.
- "Hot Money": Hong Kong Businessman Pays $2.5 Million For 18-Year-Old Romanian Model's Virginity
There is so much excess liquidity in China that an 18-year-old Romanian model has agreed to sell her virginity to a “very friendly” – and generous – Hong Kong businessman for the “life-changing” sum of $2.45 million (€ 2.3 million).
In late 2016, Romanian Alexandra Kefren ignited a firestorm of outrage after it was reported that she had put her first sexual experience up for auction for a minimum of $1 million on Cinderella Escorts, a Germany-based agency which specializes in teens looking to sell their virginity online. According to the Shanghaiist, Kefren says she got the idea from watching Indecent Proposal when she was 15 years old.
After the news made headlines around the world, Kefren’s parents nearly disowned her. She later went on a British daytime television show to explain her decision. The teen said that she was selling her virginity so that she could pay for a good life for her parents, as well as a home and education for herself.
With the YouTube clip alone getting nearly 2 million views (unclear if it ran Coke ads), the surge in media attention caused the bids to skyrocket. Finally, an anonymous Hong Kong businessman offered $2.45 million for the privilege of lifting her, well, offer. It was an amount she could not say no to.
On Cinderella Escorts, Kefren explained her decision last month, asking “How many would possibly forgo their first time in retrospect if they could have 2.3 million euros instead?”
I am glad to have decided to sell my virginity throught Cinderella Escorts, I would never have dreamed that the bid would go so high and we would reach € 2.3 million. This is really a dream come true.
We had commandments from all over the world and there was a long process. I was criticized in the press.
It was felt as a taboo that I can do with my body what I want.
But I have kept to it that I wanted to sell my virginity with Cinderella Escorts rather than giving it to a future friend who might have left me anyway. And I think many other girls have the same attitude.
How many would possibly forgo their first time in retrospect if they could have 2.3 million euros instead? Everyone has to ask himself this question. Of course, there will be different opinions, but everyone should be able to represent and live their own.
Now everything has to be organized. The hotel is booked. Cinderella Escorts accompanies me to the meeting and stays nearby as security if problems arise. I have the possibility to terminate the meeting at any time, but I am quite confident. I could talk with the buyer before and we are very friendly.
But while Kefren may have hit the jackpot, if only once, the biggest recurring winner in the arrangement appears to be the agency, Cinderella Escorts, which will profit on this deal, taking a 20% commission from the transaction. Additionally, Kefren’s story appears to have inspired more girls to follow in her footsteps. The agency claims that they have received requests from 300 girls from around the country wanting to sell their virginity on the site as well.
As for Hong Kong and Chinese bidders, we are confident that they will soon figure out a novel way of converting this scheme into the latest and greatest way to funnel hot money out of China’s closed financial system and into more mature market. Curious where to “park” several million in “hot money”? Then head on over to the money laundering, pardon, virginity auction website.
- Tucker Carlson: 'Our Laws Provide No Serious Protection From Being Spied Upon for Political Reasons'
Tucker Carlson tackled the subject of Susan Rice and privacy this evening — drawing a red line in the sand — proclaiming that ‘our laws provided no serious protections from being spied on for political reasons.’
Can anyone make an argument proving this to be a false statement?
All too often, lazy thinkers conclude that it is the right of government to spy on its citizens. Perhaps that is the case in Saudi Arabia or Canada, but it’s not supposed to be that way here. Either the promotional propaganda that lauds America’s democracy as being the ideal for representative forms of government are true or they aren’t. Providing the latter prevails, as it is now, no one will ever believe in the dream that was democracy — thanks to a cadre of corrupt mountebanks who’ve abused the goodwill of the American people and its systems for purposes of self-aggrandizement and a prevailing bias that wantonly eschews the liberty of its citizens — superseded only by a craven and insatiable appetite for power.
Content originally published at iBankCoin.com
- Trump & The Candlemakers' Petition
Authored by Jeff Thomas via InterernationalMan.com,
French economist Frédéric Bastiat was a man far ahead of his time. He was a “classical liberal,” which today would identify him as a libertarian. He expanded upon the free-market argument set forth by Adam Smith in 1776.
In 1845, the French government levied protective tariffs on scores of items, from sewing needles to locomotives. The intent was to protect French industries from companies outside France that could produce the goods more cheaply.
The reaction from Mister Bastiat was to publish “The Candlemakers’ Petition,” a satirical proposal to the government that was intended to help them see the nonsense of protective tariffs.
The petition was presented as having been sent by “the Manufacturers of Candles, Tapers, Lanterns, Sticks, Street Lamps, Snuffers, and Extinguishers, and from Producers of Tallow, Oil, Resin, Alcohol, and Generally of Everything Connected with Lighting.”
Their plea to the Chamber of Deputies was that the government pass a law “requiring the closing of all windows, dormers, skylights, inside and outside shutters, curtains, casements, bull’s-eyes, deadlights, and blinds—in short, all openings, holes, chinks, and fissures through which the light of the sun is wont to enter houses.”
Mister Bastiat’s satirical petition did an exemplary job of exposing the tendency of governments to pander to special interest groups to the detriment of everyone else.
Throughout the ages, protective tariffs have been created for this purpose and, historically, they work only briefly, if at all.
In 1930, the US introduced the Smoot-Hawley Tariff Act, which raised tariffs on over 20,000 imported goods. Not surprisingly, the source countries for those goods retaliated by passing their own tariffs against the importation of American goods.
The net effect, in addition to the new laws cancelling each other out, was that free trade took a major hit. Consumers in all countries affected had less access to a variety of goods, and the GDP of each nation suffered as overseas orders dried up.
Of course, the justification for Smoot-Hawley was that the US had suffered a stock market crash and the demand to protect surviving businesses was considerable. It’s not surprising, then, that whenever a given country finds itself in an economic squeeze, industry leaders shout “foul!” and governments appease them with tariffs.
Again, not surprisingly, we observe the tariff question rearing its ugly head today, most visibly in the US, where new President Donald Trump has vowed to place tariffs on a number of countries, most notably on Mexico (20%) and China (a whopping 45%).
As is always the case when a government declares it will create a dramatic tariff, those who impose it look no further than the immediate effect—that of limiting importing goods to protect domestic industry. The immediate secondary effect is that goods from those countries suddenly become far more expensive, and domestic industry is either unable to produce the goods at all, or at best, it must do so at a much higher price.
At present, Chinese goods amount to 19% of American imports and Mexican goods amount to 12%. With nearly a third of all goods purchased by Americans during a difficult economic period increasing dramatically in price, the impact to the cost of living can be expected to be substantial. If the tariffs are extended to other jurisdictions, as in 1930, a few domestic industries would enjoy a brief period of benefit, but the population (and eventually all industry, through knock-on effects) would be heavily impacted.
So, why on earth are political leaders so quick to impose tariffs? Well, don’t forget: Tariffs are paid to the government. Any government that’s facing revenue problems will be tempted to go for a quick injection of revenue, even if it will ultimately be destructive. Regardless of how much damage tariffs do to the people of a country, tariff revenue is like manna from heaven for governments.
Of course, the revenue source tends to dry up before long as, ultimately, tariffs are destructive to free trade. Most tariffs are either abolished or at least lowered at some point. In the meantime, they’re like plaque in a body’s arteries, creating a sclerotic effect on the economy. Invariably, they’re a heavy price for a country to pay for a brief period of additional revenue that political leaders may squander.
But, understandably, the temptation is great for any government and, since memories tend to be short, governments can serially con the public into another round of protectionism every generation or so.
Returning once again to Mister Bastiat’s satirical petition, his final paragraph stated,
Make your choice, but be logical; for as long as you ban, as you do, foreign coal, iron, wheat, and textiles, in proportion as their price approaches zero, how inconsistent it would be to admit the light of the sun, whose price is zero all day long!
On the surface, tariffs sound like a good idea, but in reality, they’re veritable icebergs of economic destruction. Two principles should always be considered when musing on a tariff:
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Tariffs (protectionism) never benefit a nation. They do, however, often increase the revenue received by the imposing government.
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The more a people pay for products, the lower their standard of living.
It’s hard to overstate how much US consumers rely on cheap goods from countries like China and Mexico. But even without the Trump tariffs, many can already feel their once nice standard of living slipping away.
That’s because the US is on the cusp of an unprecedented economic storm—and we’re already feeling the raindrops.
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New York Times best-selling author Doug Casey and his team put together this groundbreaking video showing you how to build a financial shelter to protect yourself and your family. Click here to watch it now.
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- Dallas Mayor Pulls Support For "Massive Taxpayer Bailout" Of Police Pension
Dallas Mayor Mike Rawlings has finally reached his maximum willingness to throw taxpayer dollars at the Dallas Police and Fire Pension (DPFP) system and has pulled is support for a bill that, if it passes, will undoubtedly prove to be yet another futile effort to save the system from insolvency. Despite support for the original legislation introduced by Dan Flynn, chair of the pensions committee in the Texas House of Representatives, Rawlings apparently took issue with a last minute addition to the bill that would have taxpayers fund the pensions of “phantom employees” based on a target Dallas police force of 3 officers per 1,000 residents. Per ABC:
The clause sets a baseline number of officers and firefighters. In the case of police, that’s three officers per thousand. The clause would also automatically assume that a certain level of raises given.
“Basically you’re paying on phantom employees, not real employees,” Rawlings said. “We just can’t enter into an agreement with that degree of commitment for the city. No business would do it this way. We cannot find another pension fund in American where someone pays into a fund based on future employees. It’s just not done and it should not start here in the State of Texas.”
“This is the most taxpayer unfriendly poison pill that I’ve seen in this bill,” he said. “I’m not going to swallow this pill.”
Frankly, not wanting to spend taxpayer dollars to fund the pensions of officers that don’t even exist just seems selfish, Mike!
As we reported previously (see “Dallas Police Pension Board Approves Benefit Cuts; Asks For More Taxpayer Money To Avoid Collapse“), legislation to save the DPFP was introduced a couple of months ago by Dan Flynn. Flynn’s bill called for Dallas taxpayers to contribute 34.5% of police and firefighter salaries each year into the failing pension system, up from 27% in 2015, plus an incremental $11 million per year. In total, the adopted plan was expected to cost Dallas taxpayers an extra $22 million per year.
That said, the plan also called for pensioners to grant concessions, including the following:
- Increase in retirement age to 58 from 55
- Increase in employee contributions to 13.5% of payroll from 8.5%
- Elimination of COLAs in the near term
- Elimination of exorbitant interest payments made on employees DROP accounts
Of course, Flynn was appalled by Rawling’s opposition to funding the pensions of fake employees and took to twitter to blast his decision.
“I am deeply disappointed that the Mayor is not in support of the Legislation that will save the Dallas Police and Fire Pension. Dallas’s own website says how much they are committed to provide and now they back out over a provision that has always been in the bill since the day it was filed and want to hurt families more. I simply won’t allow it. 10,000 Police and Fire retirees and active members and their extended families will be damaged by this stance and we hope the Mayor thinks better of it.”
On the eve of public hearing, Dallas Mayor has changed his mind on support of bill to bring about Actuarial Soundness, to maintain plan.
— Danfromvan (@Dan_Flynn) April 2, 2017
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Meanwhile, Rawlings also expressed opposition to the current governance set out in the bill as it gives 50% control to the city and 50% to public safety workers.
“The thing that’s really concerning to me is that retirees say Dallas promised us this money, ‘give it to us,’” he said. “Dallas didn’t promise the money and if you want us to own the problem,… Dallas needs to have the right governance to do that.”
He noted that when he first became mayor in 2011, he sought to have the pension fund audited in the face of questions about the financial stability of the fund.
“They said you have no legal authority to do that,” he said.
The mayor and the city’s position is that police and firefighters voted themselves excessively generous benefits, and that the fund’s leadership hid the extent of the fund’s troubles from the membership for years.
But don’t worry dear pensioners, we’re sure you’ll end up getting your taxpayer funded bailout…after all, there is no problem too large for taxpayers to solve.
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For those who aren’t familiar with the DPFP fiasco, here is some background on how it ended up in its current predicament.
Just over a month ago we wrote that the Dallas Police and Fire Pension Fund was on the verge of collapse after a series of shady real estate investments resulted in massive markdowns of pension assets, the ouster of the fund’s CIO and an FBI raid of the fund’s largest real estate investment manager (see “Dallas Cops’ Pension Fund Nears Insolvency In Wake Of Shady Real Estate Deals, FBI Raid“). We summed up the fund’s dilemma as follows:
The Dallas Police & Fire Pension (DPFP), which covers nearly 10,000 police and firefighters, is on the verge of collapse as its board and the City of Dallas struggle to pitch benefit cuts to save the plan from complete failure. According the the National Real Estate Investor, DPFP was once applauded for it’s “diverse investment portfolio” but turns out it may have all been a fraud as the pension’s former real estate investment manager, CDK Realy Advisors, was raided by the FBI in April 2016 and the fund was subsequently forced to mark down their entire real estate book by 32%. Guess it’s pretty easy to generate good returns if you manage a book of illiquid assets that can be marked at your “discretion”.
The rampant fraud at the DPFP left the fund over $3BN underfunded and its board of directors with no other option but to seek a $600mm infusion from taxpayers to keep the fund afloat. Even worse, a review of the pension’s financials revealed $2.11 of annual benefit payments to members for every $1.00 contributed to the plan by members and taxpayers (mostly taxpayers)…the typical pension ponzi whereby plan administrators borrow from assets reserved to cover future liabilities (which are likely impaired) to cover current claims in full.
Well, it seems as though Dallas police officers are catching on to the ponzi and rushing to withdraw retirement funds as quickly as possible before the whole system goes bust. As reported by a local ABC affiliate, Dallas police officers are retiring at a record rate and opting for full cash withdrawals of their pension benefits as opposed to equal monthly distributions for life (apparently they don’t think the fund will be around long enough to pay them for very long).
But the pension fund is in trouble and in danger of going bankrupt. That’s causing some officers and retirees to begin withdrawing their retirement funds and rolling it into their 401Ks.
News 8 has learned a that one assistant chief recently withdrew more than $1 million, and sources say nearly $300 million has been withdrawn throughout the department.
“We are in a serious situation and I think everyone needs to be concerned right now about where we are and where we need to go to get out of this.”
DPFP board chairman, Sam Friar, was apparently worried enough about the “run on the bank” exposing the pension for the ponzi scheme that it is, that he decided to send a letter to members urging them to “not act rashly and without full information.” The pension board also voted to stop allowing current police officers to withdraw the cash value of their pensions and are considering further measures that would also restrict withdrawals by retirees.
The panic that has set in forced the chairman of the pension board Sam Friar to issue a letter to members.
“I would strongly urge all members not to act rashly and without full information,” he wrote. “You may make decisions that, after all the changes are made, are not in your best interest.”
The board was so concerned it voted to stop current officers from withdrawing any money from their pensions, and sources say the board will soon vote to no longer allow retirees to take their money out.
“This may be the only way the pension can limit the cash outflow because we are in a bad situation that right now the existence of system is at stake.”
Alas, the threats to restrict withdrawals of retirees probably didn’t work out the way Friar expected as it has set off a wave of early retirements. According to NBC, for the first two weeks of September, 21 Dallas police officers retired when only 14 retirements were expected for all of August and September.
Through the first two weeks of September, there have been 21 Dallas police officers who retired.
Multiple sources told NBC 5 that commanders are bracing for many more retirements over the next two weeks as well.
The Dallas Police Department did not foresee the volume of retirements this month.
In early August, Deputy Chiefs told city council members in a presentation that they projected 14 retirements between Aug. 9 and Oct. 1.
Alas, while Dallas police and fire fighters may endure some short-term pain, as their pension ponzi is revealed for all to see, we suspect that the real losers, as per the usual, will be taxpayers who will ultimately be forced to pony up whatever amount of money is required to keep the whole farce going just a little longer.
- Rand Paul: Rice Should Testify Under Oath If Obama Ordered Her To "Unmask" Trump Team
After it emerged courtesy of Mike Cernovich that former National Security Advisor Susan Rice had made numerous requests to “unmask” the identities of Americans associated with President Trump in intelligence reports, senator Rand Paul who in recent days has been on increasingly better terms with the president and even went golfing with him this weekend, said Rice should testify under oath about her involvment in a potentially illegal scandal that she herself denied she had any knowledge of as recently as 2 weeks ago.
The Kentucky senator called the unmasking an “enormous deal” and indicated that it should be illegal.
“If it is allowed, we shouldn’t be allowing it, but I don’t think should just discount how big a deal it is that Susan Rice was looking at these and she needs to be asked, ‘Did President Obama ask her to do this? Was this a directive from President Obama? I think she should testify under oath on this.” Paul told reporters.
“I think she should be asked under oath, did she reveal it to The Washington Post. I think they were illegally basically using an espionage tool to eavesdrop or wiretap — if you want to use the word generally — on the Trump campaign,” Paul said.
The report about Rice is linked to Devin Nunes’s claim that the Trump transition team was “accidentally surveilled” and associated information was widely disseminated in intelligence community reports.
Nunes made the claim nearly two weeks ago, infuriating his Democratic colleagues by briefing the media and Trump on the information before revealing it to his committee. Nunes said he was particularly concerned with the possibility that Trump associates were “unmasked” in the intelligence reports. Nunes revealed the information weeks after Trump accused Obama of having his “wires tapped” at Trump Tower ahead of the presidential election.
Paul used Monday’s development to renew his push for reform of a controversial provision of the Foreign Intelligence Surveillance Act (FISA) that allows the U.S. intelligence community to target non-Americans outside the United States without a warrant. The provision, Section 702, is up for renewal later this year. Paul also signaled that he sees Nunes — who has long been an advocate for the foreign intelligence law — as a potential ally for reform.
Nunes previously took issue with the fact that Michael Flynn, Trump’s former national security adviser, had his communications monitored by the intelligence community, which were later the subject of media reports.
“I have been very impressed with Devin Nunes,” Paul said. “All of the intelligence hawks don’t like him because he appears to have found something and he’s willing to talk about it with the president.”
“I think it is inappropriate and it should be illegal,” Paul said of “incidental collection” on Americans without a warrant, i.e. spying by the NSA first revealed by Edward Snowden.
“I don’t think you should be allowed to listen to Americans’ conversations without a warrant. They are doing it without a warrant. They are targeting a foreigner, and because they are targeting a foreigner they are gathering all of this information on Americans.”
“Is there a possibility that Susan Rice was politically motivated? Let’s ask her why she was opening up all of the conversations with Trump transition figures.”
Last Friday, in a rare public compliment of a political figure, Matt Drudge said that “Rand Paul is America’s best senator.”
- Cernovich Explains How He Learned About Susan Rice
Ever since Mike Cernovich dropped the bombshell report over the weekend outing Obama’s National Security Advisor, Susan Rice, as the person behind the unmasking of the identity of various members of Trump’s team who were ‘incidentally’ surveilled during the 2016 campaign (see “Confirmed: Susan Rice “Unmasked” Trump Team“), a report which was subsequently confirmed by Eli Lake of Bloomberg earlier this morning, everyone has been wondering who within the Trump White House or the intelligence community supplied him with such a massive scoop.
But, as it turns out, Cernovich didn’t need a ‘deep throat’ within the NSA or CIA for his blockbuster scoop, all he needed was some well-placed sources inside of a couple of America’s corrupt mainstream media outlets. As Cernovich explains below, his sources for the Susan Rice story were actually folks working at Bloomberg and the New York Times who revealed that both Eli Lake (Bloomberg) and Maggie Haberman (NYT) were sitting on the Susan Rice story in order to protect the Obama administration.
“Maggie Haberman had it. She will not run any articles that are critical of the Obama administration.”
“Eli Lake had it. He didn’t want to run it and Bloomberg didn’t want to run it because it vindicates Trump’s claim that he had been spied upon. And Eli Lake is a ‘never Trumper.’ Bloomberg was a ‘never Trump’ publication.”
“I’m showing you the politics of ‘real journalism’. ‘Real journalism’ is that Bloomberg had it and the New York Times had it but they wouldn’t run it because they don’t want to run any stories that would make Obama look bad or that will vindicate Trump. They only want to run stories that make Trump look bad so that’s why they sat on it.”
“So where did I get the story? I didn’t get it from the intelligence community. Everybody’s trying to figure out where I got it from. I got it from somebody who works in one of those media companies. I have spies in every media organization. I got people in news rooms. I got it from a source within the news room who said ‘Cernovich, they’re sitting on this story, they’re not going to run it, so you can run it’.”
“If you’re at Bloomberg, I have people in there. If you’re at the New York Times, I have people in there. LA Times, Washington Post, you name it, I have my people in there. I got IT people in every major news room in this country. The IT people see every email so that’s how I knew it.”
And while this could certainly be interpreted as a clever ploy to protect his real sources, Cernovich’s video comments seem to be validated by both his tweet from yesterday afternoon…
Obama may be the first POTUS brought down by a scandal after he left office. Every major outlet had this scoop, none would run it. https://t.co/LvPEGqJxtk
— Mike Cernovich ???????? (@Cernovich) April 2, 2017
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…and the fact that Eli Lake of Bloomberg was able to conveniently confirm Cernovich’s story with his own article this morning.
All of which just begs the question of what other stories the mainstream media is sitting on in an effort to protect their chosen candidates.
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