Apr 172014
 

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The New American: “Among the many problems facing the city, the most serious are those concerning its three pension plans: for fire and police, for its workers, and for those working for the Department of Water and Power (DWP). One of those plans earned 14 percent on its invested assets last year (half of what the S&P 500 Index made but twice the plan’s assumptions), and yet that plan remains a staggering $5 billion underfunded. Altogether the three retirement plans have less than 10 percent of the funds necessary to pay their benefits. Said the commission:

Los Angeles is sinking into a future in which it no longer can provide the public services to which our people’s taxes entitle them and where the promises made to public employees about a decent and secure retirement simply cannot be kept.

  • The only conceivable way LA can meet its pension obligations is to reduce them
  • Given that unions will not negotiate, the only conceivable way to reduce them is bankruptcy

Opinion: A recent Pew report shows the list of American cities facing pension defaults is growing.

Here are the top 10 cities with the lowest percentage of funding for pension:

  • Charleston, W. Va. – $270 million – 24% funded
  • Omaha, Neb.- $1.43 billion – 43% funded
  • Portland, Ore. – $5.46 billion – 50% funded
  • Chicago, Ill. – 24.97 billion – 52% funded
  • Little Rock, Ark. – $498 million – 59% funded
  • Wilmington, Del. – $364 million – 59% funded
  • Boston, Mass. – $2.54  billion – 60% funded
  • Atlanta, Ga. – $3.17 billion – 60 % funded
  • Manchester, N.H. – $436 million – 60% funded
  • New Orleans, La.$1.99 billion – 61% funded

Unfunded pension debt is a time bomb of Detroit-style proportions.

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Apr 152014
 

government-budget-handouts-reutersBreitbart: “New figures by the Congressional Budget Office released on Monday reveal that over the next 10 years the U.S. debt-to-GDP ratio will double to 78%.

Over the last four decades America’s average debt-to-GDP ratio was 39%. At the end of 2007, federal debt was just 35% of GDP.

The CBO report says gross federal debt will soar from $17.7 trillion to $27 trillion over the next ten years. CBO warned of the dire consequences the nation’s debt will have if gone unchecked.”

Opinion: Definition of Congressional Budget Office: A nonpartisan federal agency within the legislative branch of the United States government that provides economic data to Congress.

The CBO is mostly reliable as opposed to the smoke and mirrors (metaphor for a deceptive, fraudulent or insubstantial explanation or description) of the Federal Reserve Bank.

When was the last time you heard any government official talk about fiscal restraint? This is why:

On May 13, 2013 President Obama declared that there was no debt crisis, “We don’t have an immediate crisis in terms of debt,” President Obama said in an exclusive interview with George Stephanopoulos for Good Morning America. “In fact, for the next 10 years, it’s gonna be in a sustainable place.”

The mainstream press dutifully stopped reporting on the national debt/deficit.

There, feel better now?

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Apr 122014
 

Zero Hedge: “I think it’s very likely that we’re seeing, in the next 12 months, an ’87-type of crash,” warns a somewhat excited sounding Marc Faber, adding that he thinks “it will be worse.” The pain is just getting started as Faber notes that “the market is slowly waking up to the fact that the Federal Reserve is a clueless organization.” Internet and Biotech sectors (growth stocks) are “highly vulnerable because they’re in cuckoo land in terms of valuations,” and fully expects the selling to spread as The Fed “have no idea what they’re doing. And so the confidence level of investors is diminishing,” and that means we will see a major decline.”

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Opinion: Truth is - no one knows when it will come. I study the market daily and have done so for a long time, but things have changed. QE, quantitative easing, is new. It began in 2009 as a means to hold interest rates down and stimulate the economy.

Let’s make this simple:

When institutions buy massive amounts of bonds, the price goes up but the rate of interest that the bond pays goes down. The Federal Reserve became the biggest bond buyer in history and it has held interest rates down for 6 years creating a boon in stocks, bonds and real estate.

It is not good. If you hold a balloon under water and suddenly let go, it pops to the surface. That is what will happen to interest rates when the Fed stops buying. But that’s not the worst part.

The Fed doesn’t really have all that money. The Fed has been creating money electronically for years, essentially causing existing dollars to depreciate. When the dollar goes down, it takes more of them to buy everything.

The poor and middle class are hit hardest.

No one knows exactly how much the Fed has created but estimates are at 3 trillion. An almost inconceivable amount of money.

Someday that debt will have to be paid back. That someday could be now or it could go on for a while longer.

So what do we do? Buy freeze-dried food? Stockpile currency in the mattress? Worry?

Here’s a better idea. “Do not store up for yourselves treasures on earth, where moths and vermin destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moths and vermin do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also” Mathew 6:19-21.

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Apr 112014
 
It's On: Gazprom Prepares "Symbolic" Bond Issue In Chinese Yuan

  Zero Hedge: “Curious what the fate of the petrodollar is? Look no farther than this Interfax update blasted (yesterday) by Bloomberg: “Gazprom Considers ‘Symbolic’ Yuan Bond Issue, Interfax Says.” Opinion:  Definitions: Petrodollar: A US dollar earned through the sale of its petroleum (oil) to another country Gazprom: The Russian oil company is the largest extractor of

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Apr 082014
 
Supreme Court Won't Hear Christian Photographer's Case

Breitbart: “The Supreme Court’s decision Monday to decline a First Amendment case on conscience rights is the latest in a trend that should be of profound concern to pro-business Republicans, libertarians, and anyone else who wants ordinary people to be economically self-sufficient and live according to their beliefs. The court declined without comment to grant

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Apr 072014
 
Government Confiscation And Lifting The Veil On "The 401(k) Scheme"

Zero Hedge: From Presidential edicts of ‘MyRA’ being for your own good and “will never go down in value” to Poland’s ‘precedent-setting’ confiscation of public pensions funds for the good of the nation’s debt load; and from the IMF’s “one-off” wealth tax ‘idea’ to Europe’s recent consideration of ‘wholesale savings confiscations and enforced redistribution’, it

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Apr 072014
 

Institute For Political Economy: “The US, once a land of opportunity, has been transformed into an aristocratic economy in which income and wealth are concentrated at the very top.  The highly skewed concentration at the top is the result of jobs offshoring, which transformed Americans’ salaries and wages into bonuses for executives and capital gains

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