On top of stubbornly high murder rates and city fiscal woes, Chicago's new mayor will inherit another problem: a Chicago Park District budget that could implode as soon as 2020, due to pension costs.
What happens when an alarm goes off and everyone ignores the sound for years? Look to the pension funds for state and school workers of Pennsylvania: The cost for both funds have been of concern for years. Those pension payments have increased from $1.2 billion in 2014 to $3.2 billion just four years later. That's why lawmakers should pay attention to an upcoming report on pension reform.
This $1.35 billion contribution is a low-ball estimate because it is based on the overly optimistic target rate of 7.25%. If the target rate is lowered to a more reasonable rate of 6.25%, the unfunded pension liability jumps $6 billion. This would require an additional contribution of at least $500 million, if not more, chewing up close to 30% of General Fund revenues.
Speaking in Vienna on Tuesday, Governing Council member Ewald Nowotny noted that the central bank, under the ECB’s guidance, is the largest buyer of the country’s debt. He said that raises the question of who will purchase the roughly 275 billion euros ($310 billion) of government securities Italy is expected to issue next year.
“The economy is facing a growing number of headwinds, including the lagged effects of previous interest rate rises and dollar strength, the uncertainty of trade protectionism at a time when external demand is slowing, and a sense that the support from the fiscal stimulus will gradually fade,” said James Knightley, chief international economist at ING.
The BOJ introduced negative rates in 2016. It now guides short-term rates at minus 0.1 percent and long-term rates around zero percent to achieve its elusive 2 percent inflation target.
Unthinkable! (GE Christenson)
Hyper-inflation destroys more than savings, businesses, retirements and hope. People abandon morality and look for strong leaders or dictators. Governments adapt to survive. They increase taxes, forfeitures, surveillance and police state tactics. Hyper-inflation has occurred many times in the past hundred years in Europe, Asia, Africa and South America. Hyper-inflation creates ugly consequences for the bottom 99%!
It couldn’t be determined whether government officials are solely investigating activity that occurred on Bitfinex or if exchange executives are suspected of illegal behavior. Neither the Justice Department nor the CFTC has accused anyone of wrongdoing, and authorities may ultimately conclude that nothing illicit occurred.
Stablecoins – cryptocurrencies that are designed to remain at the same price – continued to make news this week. Binance, the second-largest crypto exchange in the world by 24-hour trade volume, recently announced that it was listing Circle’s USD-pegged stablecoin, USD Coin (USDC), starting on Nov. 15, 2018. Carbon announced last Friday that its USD-pegged stablecoin, which has been on Ethereum for two months, is the first to operate on the EOS platform. In South Korea, the popular messaging app KakaoTalk has partnered with Terra, a stablecoin project funded by four major crypto exchanges, to create a blockchain-based payment system using Kakao’s blockchain platform Klaytn.
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