In Unprecedented Move, Dallas Pension System Suspends Withdrawals

 Election 2016, Finance, US Economy, US elections  Comments Off on In Unprecedented Move, Dallas Pension System Suspends Withdrawals
Dec 102016
 

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Zero Hedge: “The fund has about $729 million in liquid assets. It needs to keep about $600 million on hand, meaning the restrictions could have been coming at some point even without the mayor’s actions. The withdrawal requests this week alone would have meant the fund would dip below that level.

Perhaps future ponzi schemes pension systems will take note of Dallas’ current situation prior to guaranteeing 8% returns on retirees’ pension balances.  Who could have ever guessed that a decision like that could have backfired so badly?

Opinion: We did. In our post from May 28, 2015 titled “Kiss your Pension Plan Goodbye” (here) we quoted Martin Armstrong: ”

“The US Supreme Court ruled last week in the unanimous, 8-page decision in Tibble v. Edison holding that employers have a duty to protect workers in their 401(k) plans from mutual funds that are too expensive or perform poorly. That is simply astonishing since there is no constitutional requirement for even government to provide social benefits.”

Your mission, Mr. Phelps, should you decide to accept it: Make pension plans viable again despite the almost $2 trillion in bond losses since the election of Donald J. Trump.

The problem, Mr. Phelps, is that government and municipal pension plans were/are pegged to an 8% return. Since November 8, 2016 most plans are hemorrhaging from bond losses while pension managers are bound to strict asset allocation models as fiduciaries, and can’t sell the bond portion of the portfolios – even if they wanted to.

The plans are heading for disaster.

Making matters worse, many participants of the plans are poor savers since the overly generous incomes are guaranteed for life based on those 8% returns. If the Federal Reserve begins a massive interest rate tightening program, bond pension plan losses will only get worse.

The next Fed meeting on interest rates is Wednesday, December 14.

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Oct 222016
 

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The Telegraph: “The risk of a US recession next year is rising fast. The Federal Reserve has no margin for error.

Liquidity is suddenly drying up. Early warning indicators from US ‘flow of funds’ data point to an incipient squeeze, the long-feared capitulation after five successive quarters of declining corporate profits.”

Opinion: I can’t help but remember when people complained that the wait at the US Post Office was too long and the government’s solution was to eliminate clocks.

In the same way, when the Obama government decided that GDP (Gross Domestic Product) continued to show weak economic growth they decided to change how GDP is calculated.

That is exactly what happened in 2013 when the government added a bunch of dubious calculations to GDP to show healthy, but phony, economic growth.

Wham-o, things didn’t look as gloomy and President Obama crowed on endlessly about how his plan was working.

But even with the sleight of hand, the US economy is now growing at an anemic 1%, which is 2 percentage points below what is needed to provide jobs for new workers coming into the labor force.

The Federal Reserve’s main tool for stimulating the economy is to lower short-term interest rates. But since rates have been at zero or near zero for a decade that option has been off the table.

That is why the Fed wants to raise rates so badly. The problem is that when they raised by 1/4 point in December 2015 the markets went into a nose dive.

The Fed has experimented with dubious schemes like QE and Twist which are nothing more than creating counterfeit money, handing it to the big banks and letting them drive equity, bond, and real estate prices higher.

Once again, we can look to the word of God for guidance. In Genesis 41:28-30 Joseph interpreted the dreams of Pharaoh:

“ …. God has shown to Pharaoh what He is about to do. There will come seven years of great plenty throughout all the land of Egypt, but after them there will arise seven years of famine, and all the plenty will be forgotten in the land of Egypt. “

The last recession ended in 2009.

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What is Wrong with Deutsche Bank?

 End Times, EU, Finance, GLOBAL ECONOMY, New World Order  Comments Off on What is Wrong with Deutsche Bank?
Sep 302016
 

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CNBC: “German officials could be about to find themselves in an uncomfortable position: Being called on to show they’re ready to rescue a bank in a part of the world where such operations are considered taboo.

 Deutsche Bank came under intensified market fire Thursday, the latest salvo being a Bloomberg report that a small number of hedge funds are trimming their sails at the German bank.

In a broad perspective, the move would represent a minor dent in Deutsche’s derivatives clearing business. But at a time when investors are fearing what the future holds for the highly leveraged institution, such news is enough to cause ripples.”

Opinion: European banks, reflecting the weak European (Socialist) economy, have had financial troubles since 2008. But until now, Germany has been the bright spot, even being the lender to Greece to avoid that nation from exiting the EU.

Deutsche, the third largest bank in the EU, posted its first full-year loss since 2008 in January, due to a variety of problems including a €5.2bn (euro) provision for fines and lawsuits, sending its shares lower and pushing its new bonds into a tailspin.

And Deutsche Bank has a problem with derivatives.

Here is the textbook definition: A derivative is a contract that derives its value from the performance of an underlying entity. This underlying entity can be an asset, index, or interest rate, and is often called the “underlying.”

Derivatives can be used for a number of purposes – including insuring against price movements (hedging), increasing exposure to price movements for speculation, or getting access to otherwise hard to trade assets or markets.

If that made no sense – don’t worry – you’re in good company. After a career in the financial industry, I don’t understand it either and any one who tells you they do is either lying or a computer.

There are 6 main classes of investments: stocks, bonds, commodities, real estate, collectibles and cash. A derivative is a play on one of those asset classes with an almost infinite amount of what ifs.

They are invented by financial whiz-kids using computer programs and sold to institutions and unsuspecting retail investors as safe and predictable. They are neither.

Deutsche Bank has $65 trillion in derivative exposure, an almost inconceivable amount of money.

When a hedge fund trades in these instruments they have to put up cash. Yesterday 11 of 200 institutional customers pulled their cash as a show of no confidence in the bank’s reserves.

Unlike the US, the EU frowns on bank bailouts, and yesterday’s drop reflected the fear that another Lehman collapse may be around the corner.

If I had to pick out only 1 cause of the financial collapse described by the Apostle John in Revelation 6:5-6 it would no doubt be a derivative meltdown.

For context, it is estimated by financial experts that there are $1.2 quadrillion in derivatives in existence.

But since I don’t really understand it, and will not be here to see it, there is not much point in worrying about it.

 

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Sep 102016
 
Fed Spooks Markets: Biggest Stock Slump In 7 Months

Forbes: “Stocks sold off hard on Friday after the Fed’s Rosengren, who’s been dovish, changed his stance and made the case for a rate hike at the September meeting. It’s not just the Fed that spooked markets but nearly every other major central bank in the world has disappointed investors since the Fed’s Jackson Hole

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Sep 022016
 
Jackson Hole’s Gangsters and Banksters: What Are They Planning?

The New American: “As we have noted in our past reports on the Jackson Hole events of the Fed, (see, for instance, Jackson Hole Conclave: Central Bankers Plan Global Theft, Massive Pain) these yearly jamborees bring together the capi de tutti capi (the “bosses of all the bosses”) of the Money Mafia to decide how much

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Aug 292016
 
Global Central Bankers Stuck At Zero

Zero Hedge: “As Reuters’ Howard Schneider summarized in his Jackson Hole post-mortem,  “mired in a world of low growth, low inflation and low interest rates, officials from the Federal Reserve, Bank of Japan and the European Central Bank said their efforts to bolster the economy through monetary policy may falter unless elected leaders stepped forward

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Yellen suggests letting the Fed buy more kinds of assets

 Finance, GLOBAL ECONOMY, ObamaCare, QE, US Economy  Comments Off on Yellen suggests letting the Fed buy more kinds of assets
Aug 272016
 
Yellen suggests letting the Fed buy more kinds of assets

Washington Examiner: “Federal Reserve Chairwoman Janet Yellen suggested that the central bank might buy more kinds of assets in a future crisis during a speech Friday on the tools available to the Fed to manage the money supply. In an address prepared for an appearance at an annual conference in Jackson Hole, Wyo., Yellen said

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