- USA Plunges To 114th 'Most-Peaceful' Nation On Earth
The 2017 Global Peace Index was released last week and it found that the world has actually become a slightly safer place during the past year. However, as Statista's Niall McCarthy notes, the divisive presidential election in the United States and its fallout has resulted in peace levels in North America deteriorating.
161 countries were analyzed in the index and the U.S. actually experienced the greatest decline in peace out of all them, plummeting 11 places to 114th most-peaceful country.
You will find more statistics at Statista
Iceland was named the world's most peaceful country with New Zealand and Portugal coming second and third respectively. Unsurprisingly, Syria is has the lowest peace rating worldwide.
Afghanistan, Iraq, South Sudan and Yemen also find themselves at the very bottom of the peace list.
According to the index, global violence in 2016 came to $14.3 trillion in purchasing power parity terms, equivalent to 12.6 percent of the world's GDP or $1,953 for every person.
- EuRoPeaN VaCaTioN 2017
- British Think Tank Warns Hackers Could Access Nuclear Subs, Fears "Catastrophic Exchange Of Warheads"
Authored by Mac Slavo via SHTFplan.com,
Cyber security has become a preeminent issue in the modern world. That’s because so much of our standard of living is now reliant on computers that can often be easily hacked. Computers may make our lives easier, but they’ve given our civilization a whole new vulnerability to worry about. Our privacy, our infrastructure, and our financial systems are now at the mercy of hackers.
But those threats pale in comparison the vulnerability of our nuclear arsenals. Yes, you read that correctly. You’d think that the nuclear arsenals fielded by Western governments would have levels of security that are so tight, that they’d be virtually impossible to hack, but that’s not the case. According to the British American Security Information Council think tank, the UK’s Trident nuclear submarines are certainly vulnerable to hackers, contrary to the claims of the government.
“Submarines on patrol are clearly air-gapped, not being connected to the internet or other networks, except when receiving (very simple) data from outside. As a consequence, it has sometimes been claimed by officials that Trident is safe from hacking. But this is patently false and complacent,” they say in the report.
Even if it were true that a submarine at sea could not be attacked digitally, the report points out that the vessels are only at sea part of the time and are vulnerable to the introduction of malware at other points, such as during maintenance while docked at the Faslane naval base in Scotland.
The report says: “Trident’s sensitive cyber systems are not connected to the internet or any other civilian network. Nevertheless, the vessel, missiles, warheads and all the various support systems rely on networked computers, devices and software, and each of these have to be designed and programmed. All of them incorporate unique data and must be regularly upgraded, reconfigured and patched.”
Fortunately, this kind of cyber attack couldn’t be committed by just any old yahoo with a computer. It would require the resources that governments typically have access to. Still, this threat is sobering when you consider that these submarines apparently utilize the same Windows software that is used by Britain’s National Health Service, which was thoroughly infiltrated by the WannaCry malware last month.
So if someone did manage to hack these missiles, what could they do with them? Let’s just say that what could be done with these missiles will keep you up at night.
Hackers could take control of Britain’s atomic weapons and use them to start a “catastrophic” global nuclear war, tech experts have warned.
In a report published today, the British American Security Information Council (BASIC) said that cyber-spies could commandeer the systems which power the nation’s Trident submarines and then launch devastating attacks.
“A successful attack could neutralise operations, lead to loss of life, defeat or perhaps even the catastrophic exchange of nuclear warheads,” the report warned.
Back in the Cold War, people used to worry about the wrong people having access to “the red button.” But now nuclear war appears to be “just a click away.”
- Drug Overdoses Now The Leading Killer Of American Adults Under 50
The opioid crisis that is ravaging urban and suburban communities across the US claimed an unprecedented 59,000 lives last year, according to preliminary data gathered by the New York Times. If accurate, that’s equivalent to a roughly 19% increase over the approximately 52,000 overdose deaths recorded in 2015, the NYT reported last year.
Overdoses, made increasingly common by the introduction of fentanyl and other powerful synthetic opioids into the heroin supply, are now the leading cause of death for Americans under 50. And all evidence suggests the problem has continued to worsen in 2017. One coroner in Western Pennsylvania told a local newspaper that his office is literally running out of room to store the bodies, and that it was recently forced to buy a larger freezer.
The initial data points to large increases in these types of deaths in states along the East Coast, particularly Maryland, Florida, Pennsylvania and Maine. In Ohio, which filed a lawsuit last week accusing five drug companies of abetting the opioid epidemic, the Times estimated that overdose deaths increased by more than 25 percent in 2016.
In some Ohio counties, deaths from heroin have virtually disappeared. Instead, the primary culprit is fentanyl or one of its many analogues. In Montgomery County, home to Dayton, of the 100 drug overdose deaths recorded in January and February, only three people tested positive for heroin; 97 tested positive for fentanyl or another analogue.
In some states in the western half of the US, data suggest deaths may have leveled off for the time being – or even begun to decline. Experts believe that the heroin supply west of the Mississippi River, traditionally dominated by a variant of the drug known as black tar which is smuggled over the border from Mexico, isn't as easily adulterated with lethal analogues as the powder that's common on the East Coast.
First responders are finding that, with fentanyl, carfentanil and the other analogues, overdoses can be so severe that multiple shots of naloxone – the anti-overdose medication that often goes by the brand name Narcan – are needed to revive people. One EMT in Warren County, Ohio told the Times that sometimes as many as 14 doses of Narcan are needed to revive a patient.
“It’s like a squirt gun in a house fire,” the EMT said.
But, as Robert Anderson, chief of the Mortality Statistics Branch of the National Center for Health Statistics at the CDC explains, toxicology results, which are necessary to assign a cause of death, can take three to six months or longer.
“It’s frustrating, because we really do want to track this stuff,” he said.
While the process in each state varies slightly, death certificates are usually first filled out by a coroner, medical examiner or attending physician. These death certificates are then collected by state health departments and sent to the N.C.H.S., which assigns what’s called an ICD-10 code to each death. This code specifies the underlying cause of death, and it’s what determines whether a death is classified as a drug overdose, the NYT reported.
We can say with confidence that drug deaths rose a great deal in 2016, but it is hard to say precisely how many died or in which places drug deaths rose most steeply. Because of the delay associated with toxicology reports and inconsistencies in the reported data, our estimate could vary from the true number by several thousand.
- Alan Dershowitz Schools CNN Panel: ‘It Simply Is Not A Crime For the President to Exercise His Constitutional Authority’
Content originally published at iBankCoin.com
Constitutional expert and famed Harvard law Professor, Alan Dershowitz, took on Jeffrey Toobin to discuss the ongoing Trump-Comey saga, saying in no uncertain terms that “this is not obstruction of justice.”
He explains, “That is his constitutional power. He has the right to say, ‘You will not investigate Flynn.’ The best proof of that is he could have simply said to Comey, ‘Stop the investigation, I’ve just pardoned Flynn.’”
To back up his assertions, Dershowitz reminded viewers of when Bush I pardoned Casper Weinberger the night before trial. After doing so, no one cried ‘obstruction’ because it was within the rights of the President of the United States to do so.
“That’s what President Bush did,” Dershowitz said, citing the case of Caspar Weinberger. “You cannot have obstruction of justice when the president exercises his constitutional authority to pardon, his constitutional authority to fire the director of the FBI, or his constitutional authority to tell the director of the FBI who to prosecute and who not to prosecute.”
He made the point that impeachment and obstruction are two entirely different things, which reduced Jeffrey Toobin to look like an 11th grade history student learning the constitution for the first time. The President can be impeached for all manners of things, but not for firing Comey and/or asking him to stop investigating Flynn — because it is his right to do so.
“You can impeach him if you don’t like what he did,” he said. “But you cannot say it’s a crime. It’s simply not a crime for the president to exercise his constitutional authority to pardon or to direct the FBI.”
He concludes, “If you and I were expert witnesses in an impeachment trial of President Trump, and we were asked the question, ‘has President Trump committed an obstruction of justice by pardoning Flynn or by firing Comey, or by telling Comey not to investigate Flynn?’, my answer, as an expert on the constitution would be ‘absolutely not, he didn’t commit an obstruction of justice […] it simply isn’t a crime for the President to exercise his constitutional authority.’“Watch.
- Operation Temperer – U.K. Will Likely Institute Martial Law Measures Within A Year
Authored by Brandon Smith via Alt-Market.com,
After the Manchester suicide bombing only two weeks ago I warned my readers that the repetition of terror attacks is breeding complacency within the public, in Europe most acutely. It is not uncommon now for attacks killing dozens to be forgotten within a week of the event. The news feeds are awash in distraction, and of course, sometimes these events themselves act as distractions.
In a recent newscast of MSNBC's “Morning Joe”, BBC anchor Katty Kay stated:
“Europe is getting used to attacks like this, Mika. They have to, because we are never going to be able to totally wipe this out…”
To me, this attitude is rather indicative of the European victim-culture mindset. Many in Europe (not all, but many) seem to enjoy a steady routine of self-flagellation. Countless centuries of the feudal serf system will do that to a society. The British still pay taxes to maintain a royal family, after all. I also think that the results of the Brexit vote in the UK might mislead those of us in America into thinking that the the British are turning over a new leaf in terms of liberty and conservative-like values. While I do think there is a fierce underlying drive to protect sovereignty of the British nation, the British individual has all but abandoned any hope of their own personal sovereignty and self determination.
In mainland Europe the self-loathing natural born citizen has become a bit of a mainstay and has been exploited quite successfully by the globalist establishment. In particular, the great fear among predominantly liberal Europeans is a return to the nationalist fervor that they believe spawned the rise of Nazism and the Third Reich (I have written numerous articles outlining the involvement of the corporate and banking elite in funding and supplying vital technology to the Nazis before and during WWII). It is this “guilt” of association with the Nazi legacy that has left Europe vulnerable to manipulation from the other end of the political spectrum – the socialist/Marxist end.
It is also this mindset that allowed globalists to forcefully inject millions of Muslim immigrants through open border policies and refugee policies into EU nations without proper vetting procedures. The majority of Europeans that saw the policy as irrational and dangerous were afraid to say anything for fear that they would be labeled “fascists”.
The greatest threat is not only the conditioning of the population to accept cultural invasion without assimilation. Nor is the greatest threat the pacification of the populace in the face of rampant terror attacks. No, the pinnacle threat is what will inevitably come next – the apathy of a nation in the wake of incremental martial law and the death of personal liberty.
This past week, a team of three Muslim men struck pedestrians with a white van, then emerged wielding hunting knives in a rampage through a crowded London night spot. This is only one attack in a steady stream that have plagued Europe ever since the Cloward-Piven program of Muslim relocation allowed millions of “refugees” into the EU's borders. The vaporous ISIS terror group has since claimed responsibility.
In response, Prime Minister Theresa May has declared “enough is enough”, and demanded a review of the UK's counter-terrorism strategy. London police have been asked to adjust to new tactical conditions, patrolling streets heavily armed and utilizing surveillance helicopters with the aid of special forces units.
NOTE – After finishing this article on Sunday, I find this quote from Theresa May on Tuesday:
“We should do even more to restrict the freedom and the movements of terrorist suspects when we have enough evidence to know they present a threat, but not enough evidence to prosecute them in full in court."
"And if human rights laws get in the way of doing these things, we will change those laws to make sure we can do them…"
The deployment of over 5000 British troops at strategic locations by Theresa May is all part of a plan established in 2015 called “Operation Temperer”. The plan calls for the deployment of troops within the UK border in response to “major terrorist threats”. Essentially, it is a martial law program that acts incrementally, rather than overtly. Once implemented, Temperer would be difficult to reverse. As UK military chiefs warned when the operation was publicly exposed, troops would likely not be pulled back after commitment unless the terror threat was “reduced”, leaving the definition of the “threat level” open for rather broad interpretation.
Operation Temperer is now in full swing as police departments ask for military aid. The prime minister has obliged, replacing officers in numerous locations with military units on patrol. So, is this “martial law”? Perhaps not quite, but it is damn close to the line, and this is how tyranny is commonly implemented; not all at once, but a stepping stone at a time.
First, I would point out that May introduced Temperer measures after the Manchester bombing, and they do not seem to have done much to disrupt the latest attack in London. Second, I would also point out that the UK general elections for parliament are only a today, and it is highly likely that the latest attacks will solidify Theresa May and her Brexit base.
The timing is rather interesting…
Many in the Liberty Movement would say that this is a good thing; that finally the British will be able to reverse the forced cultural invasion of an incompatible Muslim mass. I would say that this is all part of the plan.
As I have argued since before the Brexit vote last year, we are witnessing perhaps the largest 4th Gen psy-op in history. The globalists have deliberately engineered conditions by which European nations in particular will either be enveloped by an alien ideology with no protection from their own governments, or, they will have to respond with overarching countermeasures. Meaning, Europeans have been given a false choice between the ideological cult of multiculturalism, or, martial law conditions.
In my view, the UK has been slated for the latter measure, and this makes perfect sense if you understand the game plan of the globalists.
Brexit and by extension the rise of Donald Trump in the US has been ALLOWED to happen. Despite the delusions of some in the liberty movement, the so-called “deep state” is perfectly positioned to take advantage of both events. They are not opposed in the slightest. Why? Because this is about destroying the name of sovereign nationalism and conservative principles. This is about the long game.
The UK appears to be first in the line-up. Terror attacks are mounting, May has already initiated Operation Temperer, and the attacks have continued anyway. The solution they will present will be MORE militarization, not less. It is my prediction that after a year of incrementalism and continued attacks, the entire UK will be in the midst of what many would define as full spectrum martial law. The UK government might not openly call it that, but that is what it will be.
While I personally find Muslim based societies to be abhorrent in their attitude towards individual liberty, I do see a disturbing trend developing on the other side of the coin. Western nations like the UK and the US have every right to defend their borders, to deny immigration from ANYWHERE for any reason, and to deport illegal immigrants and immigrants with provable ties to terror groups. However, the line that should not be crossed but probably will be crossed is the persecution or deportation of people merely for holding particular ideological views.
Even if the majority of citizens don't necessarily support an outright broad brush response towards all people that hold Muslim views as potential terrorists, the temptation will be overwhelming, and our respective governments will oblige it. Once we step into the world of thought crime, there is no turning back.
And, what this does is paint conservative/nationalist movements as monstrous in the eyes of future generations. They will be taught that the globalists “warned the world” about the dangerous “racist” populists and alt-right groups, and look what happened when they came to power; they vaporized the economy (see my previous articles on the Trump scapegoat narrative) and rounded up innocent people because of their belief system even though they committed no specific crimes. My fear is that what is happening here is that conservative movements are going to be driven to such madness in the name of security that we will actually make the globalists look like “good guys” by comparison.
So, what is the solution? Well, look at the choices the British people have been given: Accept multicultural sublimation without question, or, initiate complete military oversight and sacrifice personal liberty. Are there no other options available?
What about this: The UK citizenry DEMANDS the return of their right to self defense and the legalization of firearms ownership for those without a criminal background? The real solution is for UK citizens to begin providing their own security, not handing over their country to militarization because they are all disarmed and afraid.
Will this happen? I seriously doubt it. But, I do want to point out that there is clearly another path far superior to the two being offered.
Again, I believe the UK will be under martial law in a year's time. Unless the people of the UK do something NOW to assert their right to determine their own security, they will fall to a complete totalitarian framework. And, in the long run, they will only be helping the very globalists the Brexit movement in particular sought to fight against. They will do this by trampling the image of nationalism and sovereignty with the jackbooted philosophy of externalized security and government dependency, making globalism, the offered antithesis, look pleasant and tolerable in retrospect.
- China Trade Data Beats As Crude Demand Surges (Ahead Of Maintenance)
Thanks to a 13% surge in crude imports (as refiners prepare for maintenance season), China’s trade surplus hit its highest since Jan (though -4% YoY). Imports (+14.8% YoY) and Exports (+8.7% YoY) both beat expectations.
China’s overseas shipments accelerated in May from a year earlier, as Bloomberg suggests global demand shows signs of picking up.
Exports rose 8.7 percent in May in dollar terms, the customs administration said Thursday. Imports increased 14.8 percent, leaving a trade surplus of $40.81 billion dollars. (In yuan terms, exports rose 15.5 percent and imports surged 22.1 percent, bringing the trade balance to 281.6 billion yuan.)
A brighter international outlook may provide support to the world’s largest trading nation, with the World Trade Organization saying it expects trade to “expand moderately” in the second quarter.
Still, after a robust start to the year, the domestic economy is displaying some signs of weakening momentum. The official factory gauge held up in May, but a private gauge signaled contraction for the first time in 11 months.
China and the U.S. announced a deal in May to promote Chinese access for U.S. natural gas, financial services and beef as an “early harvest” of a 100-day review of the bilateral trade relationship that’s due to wrap up in July. China also vowed it will import $2 trillion from neighbors participating in its Belt and Road Initiative in the coming five years.
China’s crude imports increased as refiners snatched up cargoes to prepare for the end of seasonal maintenance.
Buying by China, which Bloomberg notes has overtaken the U.S. this year as the world’s biggest importer, averaged about 8.8 million barrels a day in May, up 4.8 percent from the previous month, according to Bloomberg calculations using General Administration of Customs data released Thursday. Net exports of oil products jumped 50 percent from April to 1.51 million tons.
Crude demand by the world’s biggest energy user has marched higher on growing need for transportation fuels and strategic stockpiling. Meanwhile, domestic output has stagnated as producers shut high-cost wells that can’t survive with prices struggling to stay above $50 a barrel. The nation’s oil processing is expected to pick up this month after the annual maintenance season ended in May, according to ICIS China, a Shanghai-based commodity researcher.
“Crude imports may have risen because of higher oil processing in months going forward,” Jean Zou, an analyst with ICIS China, said before the data were released.
On a monthly basis, China imported 37.2 million tons of crude, Thursday’s data showed. Inbound shipments are up 13 percent during the first five months of the year to 176.3 million tons, or about 8.56 million barrels a day. The U.S. imported about 8.17 million barrels a day during that period, Bloomberg calculations using weekly data show.
There was barely any reaction in markets around the world to this data.
- The New Gold Rush… For Gold Vaults
Negative interest rates and the populist uprising that spurred the UK to vote for Brexit and Americans to elect Trump has helped reignite a rush into physical safe haven assets like gold and silver, which however has led to a shortage of safe venues where to store the precious metals (unlike bitcoin, gold actually has a physical dimension). And now companies that operate storage facilities for precious metals and other valuables are ramping up their capacity to help cash in on the soaring demand for storage facilities.
Two firms told Bloomberg they’re planning to open vaults in Europe capable of holding more than 100 million euros ($112 million) in gold, offering customers lower costs than exchange-traded products and protection from rising prices.
As we reported last year, demand for vaults and other safe storage spaces among Swiss, German and Japanese buyers surged when one after another central adopted negative interest rates. Many older investors, worried their deposits might soon be taxed, opted to hoard money under the mattress – exactly what central bankers like Kuroda hoped wouldn’t happen.
“I was just dealing with a customer here in Germany who got charged negative interest rates on his bank account,” Daniel Marburger, the CEO of CoinInvest.com, said by email from Frankfurt. The client decided to buy gold and silver with some of his cash.
“That is definitely a driving factor and will lead to more sales and also more storage clients.”
In addition to deflation, investors are also worried about, you guessed it, runaway inflation, which would crush the value of fixed income portfolios.
“Inflation is a key concern for many of our clients,” said Ross Norman, chief executive officer of bullion dealer Sharps Pixley Ltd., which operates a gold vault within walking distance of Buckingham Palace. “A safe-haven asset isn’t just about what you buy—it’s also about where you keep it.”
One such European gold dealer, CoinInvest, is in negotiations over the construction of a 100 square-meter (1,076 square-foot) vault that would hold more than 100 million euros of the precious metal. The safe will weigh 82 metric tons, with the door alone tipping the scales at 1.5 tons. Users of the largest online platform for physical gold trading, BullionVault.com, added about 3 tons of the metal in the 12 months through May, bringing their combined holdings to almost 38 tons, worth $1.5 billion at current prices. The company holds the gold in vaults in Zurich, London, New York, Singapore and Toronto, said Paul Tustain, one of the company’s founders, Bloomberg reported.
Meanwhile, gold in storage at the Bank of England which operates one of the largest commercial vaults, climbed about 6% since the start of 2016 to 5,067 tons in February. The central bank holds gold for the UK Treasury, other central banks and private firms. One company seeking to capitalize on this boom is INTL FCStone, which started a platform to allow investors with gold in vaults to trade with one another, i.e. a gold barter service. Since starting in February, it linked 1,500 locations with more than a hundred customers active in the $170 billion professional gold market. More than 10 tons of gold has traded.
“I’ve been in the gold market 30 years, and suddenly, I’ve got people asking to be on the platform I’ve never even heard of,” said Barry Canham, who heads the company’s precious metals division, in an interview from London.
“They’re coming out of the woodwork.”
- The Demographic Divide: A Police State Of Mind
Authored by Danielle DiMartino Booth,
Fake news is so old.
How else did, “I am prepared to veto any bill that has as its purpose a federal bailout of New York City to prevent a default,” become, “DROP DEAD” way back in October, 1975? Oh, those hellbent headline writers. Whatever will they think of next? Besides, the Daily News headline worked wonders, if infuriating die hard New Yorkers was the objective.
The insult so unhinged one William Martin Joel that he soon found himself saying goodbye to Hollywood and headed back to his native New York by way of a Greyhound bus on the Hudson River Line. Had the songwriter and singer we’ve all come to know and love as Billy Joel not been on that bus, he’d have never been inspired to pen the classic New York State of Mind, an anthem to the City only Sinatra himself can claim to have bested in his time.
So thank you, President Ford for refusing to treat the “insidious disease.” At least that’s how he characterized New York’s profligate spending ways. Without the media’s dramatization of Ford’s ire, the world would have been robbed of some of the most poetic lyrics ever written. And, by the way, a feasible blueprint for the years to come as some budget-strapped cities run their tills dry.
In the unique case of New York City in the late 1970s, federal assistance accompanied fiscal reforms. The details of the détente should thus be de rigueur study materials for the judicial and legislative arms of so many at-risk municipalities nationwide.
At the risk of feigning any pretense of legal expertise, municipal bankruptcies come down to the limitations of the federal government’s power to provide relief to ‘units of states,’ whether they be cities, counties, taxing authorities, municipal utilities or school districts.
Though a variety of other state-led interventions have been successfully deployed, many of us are most familiar with voluntary Chapter 9 bankruptcy filings, permitted by half the states and employing the powers of the judiciary in conjunction with creditor workouts. Jefferson County, Alabama and Stockton, California may ring mental bells. But it is 2013’s record $18 billion Detroit, Michigan Ch. 9 filing that reset precedent on how engaged the bankruptcy courts can be.
Suffice it to say, default via the court system is a lengthy process and most lucrative for the lawyers retained. In relative terms, New York City’s effective default occurred in a New York Minute. After the banks cut off New York City in the spring of 1975, the State created an emergency financial control board and a borrowing entity to provide immediate relief to the city. Rather than “default,” the city declared a “moratorium” on $1.6 billion in obligations, a hotly debated designation. A thorny rose it nevertheless was.
In December 1975, with the financial management wrested out of the city’s control, Congress passed and Ford signed into law legislation allowing the Treasury to extend loans to the city to keep it up and running. Future New York state and city revenues were promised to repay the loans and spending reforms that had been intractable were implemented by force.
Looking back at the 40th anniversary of the extraordinary federal-led intervention, American Enterprise Institute’s Alex Pollock applauded Ford’s staunch stance: “That’s what happens when you run out of money and the music stops. Intensely needed reforms of the city’s spending and financial controls actually did follow.”
Why raise the specter of federal assistance if it’s patently apparent other means can be deployed in today’s modern municipal era? The crush of retiring Baby Boomers will keep Uncle Sam up at night for years as he struggles to keep federal entitlements solvent. Why even consider federal involvement in municipal pensions that are at least backed by some semblance of assets? The answer comes down to demographics.
Forty years ago, Baby Boomer were entering their prime earning years. Opportunity in the land of America was expanding at a rapid clip. The level of education was rising among those entering the workforce vis-à-vis their older counterparts at the same time women were growing the overall workforce (just under half of women worked then; today it’s 70 percent). In the simplest terms, the size of the pie was growing.
Today, roughly 10,000 Boomers exit the workforce every day, which should present an opportunity in and of itself for Millennials to backfill the depleting workforce. Census data tell a different story. In 2016, median personal income for workers aged 24 to 34 was $35,000. In modern dollar terms, that same age cohort was earning $37,000 in 1975.
It’s difficult to square lower earnings with the educational makeup of the labor force. In 1975, 23 percent of young workers had earned a bachelor’s degree. Forty years on, 37 percent have achieved the same. Shouldn’t that improvement have lifted per capita earnings?
It comes down to comparative advantage. Back then, it was easy enough for a younger, better-educated worker to displace an older, less-educated and therefore less-qualified older worker. Today’s workforce is largely educated and intent on working longer; it’s stickier and less tractable. At the same time, the double governors of technological innovation and globalization have reduced the aggregate demand for warm bodies.
At the risk of getting buried in the weeds, there are more workers exiting the workforce than there are those joining it. Those making way for the exits are otherwise known as ‘retirees.’ It is at this critical juncture that municipal finance re-enters the picture.
As has been written on these pages, over the past few years, public pensions have been reducing the stated returns they anticipate their portfolios generating on investments. These reduced expectations necessarily trigger the need for higher contributions on the part of state and local governments.
That’s exactly what took place last year. The Census’ 2016 Annual Survey of Public Pensions found that state and local government contributions rose by 6.5 percent to $191.6 billion from 2015’s $179.7 billion. By contrast, earnings on investments, which include both realized and unrealized gains, tumbled 67.9 percent to $49.9 billion from $155.5 billion in 2015.
Meanwhile, the number of pensioners collecting checks marched upwards to 10.3 million people, up 3.3 percent over 2015. The benefits they received last year rose even more, by 5.4 percent to $282.9 billion from $268.5 billion in 2015. And finally, total pension assets fell 1.6 percent to $3.7 trillion from $3.8 trillion the prior year.
In the event you sense you’ve been felled by death by numbers, back out to the big picture. Paid benefits exceeded contributions to the tune of $40 billion in 2016 against the relentless backdrop of an increasing number of Boomers retiring (in 2014, there were 9.9 million receiving benefits).
Microcosm this demographic dynamic to the extreme example of Chicago. In 2015, the latest year for which we have full data, some $999 million was paid out to 29,296 recipients. That compares to the $90 million in investment income generated by the two employee pension funds that year. Back out the timeline a decade – in 2006, these two pensions held a combined $8.5 billion in assets. Since then the two funds have generated $3.1 billion in investment returns but paid out $8.511 billion to retirees.
Chicago Mayor Rahm Emanuel recently proposed raising new city employees’ contribution to help fill the gulf of underfunding but Illinois’ Governor quickly vetoed the measure declaring Emanuel was, “trying to fix a drought with a drop of rain.”
Projections suggest that one of the two funds will be cash flow negative by 2023; the other will run short by 2025. If all else remains the same, a big IF with risky asset prices trading at frothy high valuations, property taxes would need to be doubled to cover the coming shortfalls.
Many Cook County taxpayers are forsaking a wait-and-see approach. Chicago was the only large city in America to lose population last year, its resident count dropped at nearly double the rate of 2015.
As convenient as it might seem to excoriate the Windy City, there are plenty of other major cities deep in hock. According to a Moody’s report, though Chicago does indeed top the list, Dallas is the second-most underfunded city followed by Phoenix, two magnets for nomads in search of lower costs of living. Rounding out the top ten list are Houston, Los Angeles, Jacksonville, Detroit, Columbus, Austin and Philadelphia.
In other words, running and hiding in lower tax haven hamlets will be even more challenging in coming years. According to a Milliman report, 2015 marked the first time retirees outnumbered active employees in the nation’s 100 largest public pensions; there were 12.6 million retirees covered by the toils of 12.5 million workers.
Look back no further than 2012 to appreciate how the trend has accelerated; in that year retirees numbered 10.5 million vs. 12.3 million active employees. Absent a surge in state and local payrolls, further fiscal deterioration is poised to persist.
To take the case of the case of the country’s largest pension, the California Public Employees’ Retirement System, in 20 years’ time, retirees supported by the plan will be roughly double the number of active workers. CalPERS won’t be alone in this predicament.
Again, it comes down to the demographic divide that’s opened up since President Ford was in office. In the 1970s, the typical public pension’s active employees outnumbered retirees by a factor of four-to-five times; today that ratio is 1.5-to-1 and continues to fall as Boomers retire in droves and Millennials fail to fill the yawning gap.
After a grisly year that ended with a tally of 4,000 homicides, Chicago has begun to coordinate with federal authorities to control a crime wave driven by gangs’ unencumbered access to firearms. The last thing the city can withstand is further cuts to public service funding. By the same token, taxpayers have already begun to vote with their feet as rising taxes and foundering pensions promise to beget more tax hikes to come.
It’s plain that the last thing any of us want to see is a Police State of any kind. But the growing risk is that the next recession and deflating asset prices could well alter the rules of engagement between federal and state authorities on more levels than any of us care to envision.
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