Daily Digest

Daily Digest 5/22 - Gov't Borrows Against Pension Funds, Protests Continue Before Spanish Vote, Risk Remains As Floods Recede

Sunday, May 22, 2011, 9:51 AM
  • Government Reaches Debt Limit, Borrows Against Federal Pension Funds
  • Dear Congress, Your Credit Application Has Been Turned Down
  • Despite Ban, Protests Continue Before Spanish Vote
  • IMF Board Aims to Select New Leader by June 30
  • Warning Of Power Bills To Double Within Six Years
  • Searching For Evidence Of Population Decline During Periods Of Declining Petroleum Consumption
  • Record Snowpacks Could Threaten Western States
  • As Mississippi River Recedes, Risk Remains

Economy

Government Reaches Debt Limit, Borrows Against Federal Pension Funds (Kenneth S.)

The Federal Retirement Thrift Investment Board also Monday stressed that TSP investors will not be harmed. Under a 1987 law, the government is required to repay suspended G Fund investments, including interest, once the debt ceiling is raised and the government can resume borrowing. The board will keep track of what Treasury owes and how much interest the G Fund would have accumulated had the investments not been suspended.

"You have an IOU from the federal government for the G Fund," board chairman Andrew Saul said. "It's not going to affect them [TSP investors], period."

Dear Congress, Your Credit Application Has Been Turned Down (phil)

Thank you for your interest in the American Public Trust's Gold Card credit program. Rest assured your application has been given thorough and careful consideration by the American people.

After reviewing the information provided in your application as well as your credit report, we regret to say that we are unable to extend you further credit at this time. The reasons for our decision are as follows:

Despite Ban, Protests Continue Before Spanish Vote (jdargis)

About 28,000 people, most of them young, spent Friday night in Puerta del Sol, a main square in downtown Madrid, the police said. They stayed even as the protest ban went into effect at midnight under rules that bring an official end to campaigning before the election in 13 of Spain’s 17 regions and in more than 8,000 municipalities.

Fueling the demonstrators’ anger is the perceived failure by politicians to alleviate the hardships imposed on a struggling population. The unemployment rate in Spain is 21 percent.

IMF Board Aims to Select New Leader by June 30 (jdargis)

The pledge of transparency came in response to calls by Brazil, China and other developing economies for an end to Europe’s 65-year lock on the top job in favor of a selection process that is based on qualifications alone. Among the requirements for the job cited by the board is an understanding of “challenges facing the fund’s diverse global membership.”

Energy

Warning Of Power Bills To Double Within Six Years (TG)

Electricity regulator Australian Energy Market Operator (AEMO) had forecast shortages of baseload power for Queensland in 2013 and 2014, with Victoria and NSW experiencing shortages in 2015 and 2016, he said.

"Given the timeframe for building new power stations, we're concerned that we need that certainty today so we can build power stations to meet that coming gap in the market," Mr McIndoe said.

Searching For Evidence Of Population Decline During Periods Of Declining Petroleum Consumption (Crash_Watcher)

In part 7, I examined the correlation between global population and petroleum consumption and presented the merits of two possible scenarios for population change in light of declining petroleum production. The first scenario (Figure 25, Part 7) posited a continued increase in population even in the face of the predicted decline in petroleum production decline, with a subsequent population decline, perhaps after the mid-century. The second scenario (Figure 28, Part 7) posited a decline in population, “a die-off,” starting now in direct step with the predicted decline in petroleum production.

Here in part 8, I present the evidence that caused me to reject the second scenario.

Environment

Record Snowpacks Could Threaten Western States (jdargis)

Fear of a sudden thaw, releasing millions of gallons of water through river channels and narrow canyons, has disaster experts on edge.

As Mississippi River Recedes, Risk Remains (jdargis)

So far, this year’s floods have killed at least three people and affected millions of acres of farmland in the Mississippi Delta. The enormous amounts of water shooting downstream have created dangerous currents, especially in parts of Louisiana. Economists and farmers estimate that damages could add up to hundreds of millions of dollars.

Most of the Mississippi River had crested by Saturday, according the National Weather Service, but officials there said they expected water levels to remain relatively static for the next week or two. Rain in the forecast for parts of Arkansas, the Ohio River Valley and the Central and Upper Mississippi Valleys will keep the river swollen.

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

17 Comments

that1guy's picture
that1guy
Status: Gold Member (Offline)
Joined: Jan 11 2009
Posts: 333
Its an amazing thought to me

Its an amazing thought to me that I still have some people at work that think im a 'doom and gloomer.' I was telling people as recent as last week that we will not only not have social security, but we will also loose our government pensions. I even referenced a bunch of articles, including one in last weeks air force times.......I got told things like, "the government cant take away military pensions......they will never do that....."   man, im so irritated, i need to get out, and try and transistion, but am worried now i may not even have the time for that......

 

ok, im done rambline, i think im gonna go buy some solar panels to have ready to go...

Nate's picture
Nate
Status: Platinum Member (Offline)
Joined: May 5 2009
Posts: 573
that1guy wrote: Its an
that1guy wrote:

Its an amazing thought to me that I still have some people at work that think im a 'doom and gloomer.' I was telling people as recent as last week that we will not only not have social security, but we will also loose our government pensions. I even referenced a bunch of articles, including one in last weeks air force times.......I got told things like, "the government cant take away military pensions......they will never do that....."   man, im so irritated, i need to get out, and try and transistion, but am worried now i may not even have the time for that......

 

I've made nearly the same comments in some of my posts.  What I have discovered is that there are several individuals I work with that understand the mess we are in.  I currently have both Crash Course and Endgame loaned out to coworkers who get it.  One is ready to move to the midwest (he has roots there).  My latest concern is violence in our area.  We are just not that special (in the USA).

Nate

string's picture
string
Status: Member (Offline)
Joined: Sep 24 2010
Posts: 11
It's a process.

 

Slow down. Start working thru the 'What should I do" section. There's a great deal of excellent info there about building resillience before you need to go spend a ton of cash on PV solar. 

Personally, I spend zero time now trying to convince anyone of  anything w.r.t. our economic/energy/enviro situation. If anyone wants to know, I will spend as much time as it takes to answer their questions - or find the answers together.

I'm in a mode now of just working hard on my own preps for what I see as a rapidly changing context in which we live.

Trust yourself. You will then be in a mindset to take care of yourself and those around you as time goes on.

-str

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Jim Rogers

Jim Rogers

Niall Ferguson

Doug's picture
Doug
Status: Diamond Member (Online)
Joined: Oct 1 2008
Posts: 3125
Federal pension funds

Can someone explain this to me:

Quote:

In a letter to congressional leaders Monday, Treasury Secretary Timothy Geithner said he is suspending new investments in both the Civil Service Retirement and Disability Fund (CSRDF) and the Thrift Savings Plan G Fund, which is invested in federal securities. In addition, the department will redeem some of the investments held by the CSRDF, Geithner wrote.

They are stopping purchases of gov't securities to have money to spend.  Isn't that the point of the gov't securities to begin with?  Those securities are essentially loans to the gov't that they can then spend while the pension funds hold the IOUs.

Now the gov't securities normally bought for the funds are "special-issue Treasury bonds", but I fail to see how that is different than normal Treasury bonds.  We are stopping loans to the Federal gov't in order to make loans to the Federal gov't.  Did I miss something?

This sounds like a scam to me.

Doug

doorwarrior's picture
doorwarrior
Status: Silver Member (Offline)
Joined: Oct 13 2009
Posts: 166
The Processs

I too have given up trrying to explain to the mainstream people. They don't want to get it or even hear about it. I think this is because deep down they know there is at least some truth to what we are saying and that scares the hell out of them. I use a trial balloon on people I just meet to see where they are at, this could be anything from any part of the the Three E's but it is usually about monetary policy. Sometime I will talk politically to see how they feel about Dems or Repubs (if they are hardcore either way I can never get them to understand anything, they already know it all). I  use the trial balloon to see what type of thinker, or mentality I am talking to, are they openminded and willing to educate themselves.  For most of the people I quickly change the subject to something trivial, make a joke and they forget all about anything I just said,  which is they the way they want to live. Sometimes I meet someone that is starting/wanting to understand the problems we face and I just point out a few places where they can check out the info on their own. These are the bright spots for me, people that want to understand whats happening and maybe even do something about it. I have made several friends this way that have completely changed their lives. These are some of the people that I will be relying on in the future for mutual support.

Never give up trying to help people understand and prepare. Always try to be the shepard to those less informed.

Rich

ken325's picture
ken325
Status: Member (Offline)
Joined: Dec 29 2009
Posts: 18
re:Can someone explain this to me:

This is not a pension.  The TSP fund is the equivilent of a 401K.  This is money deducted from federal workers paycheck and put into a personal account that can grow tax free.  Federal employees have limited choices becasue of concern that you could be influenced by your personal interist in a stock.  For example if you own Exxon you could favor them in deciding who gets a drilling permit.  So the government came up wiht the TSP fund system where you invest in one of 5 funds.  C= S&P 500, I = international, F= federal treasuries, G= state and local bonds, S= small caps.  The G and F funds are run by the government.  This says interist From the G&F fund is being 'borrowed" till the debt limit is raised.  I think they can "borrow" all money in these funds if needed.  Here is anouther article that explains this.

http://www.federaltimes.com/article/20110405/BENEFITS02/104050306/1047/B...

To me this is very alarming because I am afraid that we could see confiscation of accounts controled by the government.  This is the first example that I have seen where this is happening.  

Look at the last paragraph in the article that I just posted. 

Geithner said borrowing money from the federal retirement programs and other "extraordinary measures" available to the government would stave off the need to raise the debt ceiling until around July 8. Once those measures are exhausted, the government "will be limited in its ability to make payments across the government," Geithner said.

In that case, retirees' pensions could be affected. Adcock said that, if that were to happen, any impact on retirement payouts would be "the least of their problems because we'll face a worldwide economic collapse".

So, I guess we shouldn't worry about our retirment accounts becasue if we have a collapse we are screwed anyway! 

  I heard an excelent talk by Nichol Foss on the Financial sense Newshour.   She was explaining how she thought we would see deflation as paper assets disappear and people stop honnoring debts.  She said you do not want to count on any assets that are simulatiounsly anouther persons liability, as they are likely to default.  This is a great example of that.  If Walmart took money from employee 401k retirment accounts someone would go to jail.  But it is OK in this example as it is the government and they are supposed to be good for the debt.  I'm starting to worry about assets that are controled by other people and governments.

Doug's picture
Doug
Status: Diamond Member (Online)
Joined: Oct 1 2008
Posts: 3125
Quote:This is not a
Quote:

This is not a pension.  The TSP fund is the equivilent of a 401K.  This is money deducted from federal workers paycheck and put into a personal account that can grow tax free.  Federal employees have limited choices becasue of concern that you could be influenced by your personal interist in a stock.  For example if you own Exxon you could favor them in deciding who gets a drilling permit.

Not quite.  TSP is essentially a 401K, but Gov't matches up to 5% (with various proportions below that).  In addition, they are also taking money from the CSRDF fund, a traditional pension plan.

Quote:

In a letter to congressional leaders Monday, Treasury Secretary Timothy Geithner said he is suspending new investments in both the Civil Service Retirement and Disability Fund (CSRDF) and the Thrift Savings Plan G Fund, which is invested in federal securities.

As I stated above, I'm not too clear on what exactly is being done. But, I'm not confident that the loans will be good if they can't agree on a debt ceiling.

Doug

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Made in the CIA LOL....

Made in the CIA LOL....

Doug's picture
Doug
Status: Diamond Member (Online)
Joined: Oct 1 2008
Posts: 3125
Climate change?
Sequoia wrote:

Remamber when the global warmers told us that snow would be a rare and wonderful sight that our children would only know through virtual snow?

 

My fear isn't that the record snows in the world not just the western USA melt, it is that they don't.  This is how you start new glaciation having more snow than can melt before the next winter,  Will this be the year I doubt it but consider the albedo effect of this much snow sticking around a lot longer than normal in the presence of a weak solar cycle.

 

Global warming is real it is also miniscule roughly .3C and we might get another .2C out of it if we can double the C02 in the air.  See the effects of C02 are logarithmic and the first 20 ppm does more than the next 1000.  Roughly each 100ppm increase the temperature of the earth by .1C .  Are we at record levels of C02 I seriously doubt it aas most of the plants on this planet evolved in an atmosphere much higher in C02 than today.  How do we know this because if you give a plant more C02 it grows much faster and uses less water doing it. 

 

Sources

David Archibald.

Breadandbutterscience.com

Watts up with that.

Layman's sunspot count.

 

References

 

Little Ice Age.

Spoorer, Wolfe, Maunder and Dalton minimums.

Don't know why you felt compelled to post this here without any supportive links, but climate change is mostly restricted to here:

http://www.peakprosperity.com/forum/global-climate-change-it-worth-brushing/5895

It's kind of a forum rule.

Doug

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2237
Goldman Aligns Itself Against US, UK & Europe, Alongside China

Things are getting interesting.  ZH has a new article, "Goldman Aligns Itself Against US, UK, And Europe, Alongside China In Choice For Next IMF Head", Per http://www.zerohedge.com/article/goldman-aligns-itself-against-us-uk-and-europe-alongside-china-choice-next-imf-head:

Christine Lagarde's chances of heading the IMF just took a another step back. Why? Because the firm whose alumni are about to be or already are in key posts at the Fed, the ECB and the BOC, has said (through its moutpiece Jim O'Neill who "can't see how the EUR should be above 1.40" even as Thomas Stolper et al see it going to 1.55 in a year) that it is not too crazy about having a European replacement for DSK, and that "it might be better if some leadership and authority came from outside of Europe with a fresh set of independent eyes" (supposedly the fact that Lagarde has had no formaly economic academic brainwashing is not a factor). In other words, Goldman has aligned itself with China, which has made it clear that it may be wise if the next IMF leadership "reflected the New World Order." As such, the largely symbolic IMF conclave just became very interesting: while the IMF is largely a figurehead with the real backstop organization always being the Federal Reserve, Goldman appears to have just voted alongside China... and thus against Europe and the US.

Things that make you go "hmmm...."

Woodman's picture
Woodman
Status: Diamond Member (Offline)
Joined: Sep 26 2008
Posts: 1028
This message at the TSP site


This message at the TSP site explains all they're doing is keeping your new contributions to the G Fund, which is supposed to invest in US Treasuries, in cash instead of selling you more Treasuries, to avoid bumping up government debt past the limit. The government is promissing to pay you the interest you would have earned in treasuries, which seems easy given the current low interest rates!

https://www.tsp.gov/whatsnew/messages/specialMessage.shtml

So which would you really rather own right now, cash or Treasuries!?

ken325's picture
ken325
Status: Member (Offline)
Joined: Dec 29 2009
Posts: 18
Anouther article on

Anouther article on this.

 http://www.federaltimes.com/article/20110521/BENEFITS02/105210301/

 

It is confusing when it states "the government is trimming holdings". What the heck does that mean?

To Woodman- Of course I would prefer cash, but it is cash in someone else’s bank account, and they are not that trustworthy. If the debt limit is not extended then this money could be lost. There is no cash option in TSP. The closest thing is this G fund.

Private retirement accounts should be off limits. This money was paid in, and no one should be able to borrow against it without the owner’s consent.  This sets a bad precident in my opinion.  Is your 401k going to be "borrowed"?

guardia's picture
guardia
Status: Platinum Member (Offline)
Joined: Jul 26 2009
Posts: 592
It's all gone!
ken325 wrote:

Anouther article on this.

 http://www.federaltimes.com/article/20110521/BENEFITS02/105210301/

 

It is confusing when it states "the government is trimming holdings". What the heck does that mean?

To Woodman- Of course I would prefer cash, but it is cash in someone else’s bank account, and they are not that trustworthy. If the debt limit is not extended then this money could be lost. There is no cash option in TSP. The closest thing is this G fund.

Private retirement accounts should be off limits. This money was paid in, and no one should be able to borrow against it without the owner’s consent.  This sets a bad precident in my opinion.  Is your 401k going to be "borrowed"?

Forget it, it's all gone! Take what you still can while you still can...

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2237
Thanks for the heads-up to

Thanks for the heads-up to the Niall Ferguson videos, idoctor.  He's pretty interesting to listen to, especially with his knowledge and perspective on Economics history.

that1guy's picture
that1guy
Status: Gold Member (Offline)
Joined: Jan 11 2009
Posts: 333
still crap
Woodman wrote:

This message at the TSP site explains all they're doing is keeping your new contributions to the G Fund, which is supposed to invest in US Treasuries, in cash instead of selling you more Treasuries, to avoid bumping up government debt past the limit. The government is promissing to pay you the interest you would have earned in treasuries, which seems easy given the current low interest rates! https://www.tsp.gov/whatsnew/messages/specialMessage.shtml So which would you really rather own right now, cash or Treasuries!?

 

Well. blnt answer, none. They aren't just holding the money and thats it, they are using said  money to fund government spending through 2 August. How they do itis besides the point to me, the fact is they are doing it.....from what i have researched, to the tune of 8billion per day. The idea we are supposed to feel good about it because some law was passed in 1986 is absolutly insane. As we all know, the rules will simply be changed to suit them until we implode........

To the others, I do trust myself, its the circumstance I am currently in I dont trust. I do appreciate all the kind words though =)

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments