Daily Digest

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Daily Digest 9/7 - Negative Rates Here To Stay, BOJ Errors Threaten Lasting Scar For Central Banks

Wednesday, September 7, 2016, 9:28 AM

Economy

California Court Case Opens Door for Pension Benefit Reductions

State and local pensions across the U.S. have $1.8 trillion less than needed to cover all the benefits owed in the decades ahead, according to Federal Reserve Board data. The need to make up for such shortfalls has contributed to credit-rating cuts to Illinois, New Jersey and Chicago. Such financial pressure has also been acute in California, where it helped bankrupt the cities of Stockton, San Bernardino and Vallejo.

China's pension funds under pressure with rising payments: Xinhua

Many Chinese pension funds are under renewed pressure to break even as local governments race to increase pension payments to meet central government requirements, state news agency Xinhua said in a commentary on Tuesday.

SC Treasurer: Taxpayers could pay state pension debt if lawmakers don't act

Employees pay into the state pension plan and expect a return once they retire. However, the money owed that the state does not have grows by billions each year. Right now, there’s about $20 billion that legislators must figure out how to pay.

Saudi Arabia Said to Weigh Canceling $20 Billion of Projects

The world’s biggest oil exporter is taking unprecedented steps to rein in a budget shortfall that ballooned to 16 percent of gross domestic product last year, curtailing fuel and utility subsidies as well as cutting billions of dollars in spending. The International Monetary Fund expects the shortfall to drop to below 10 percent of GDP in 2017.

Study: Mich. tuition hikes, aid cuts boost student debt

The Michigan League for Public Policy said tuition has more than doubled at most of the state’s 15 public universities since 2003. Increases in the cost of a four-year degree range from 91 percent at the University of Michigan-Ann Arbor to 158 percent at Michigan Technological University.

Companies Getting Paid to Borrow in Europe as Bond Binge Resumes

Sanofi and Henkel AG are poised to become the first non-financial private companies to sell debt that yields below zero as the busiest year for investment-grade corporate bond issuance resumes.

Chinese banks' shadow loans grow despite regulatory glower

Shadow loans had already reached 12.6 trillion yuan at the end of last year, according to calculations by UBS, about a fifth of China's entire annual economic output. And credit rating agency Fitch said in July that around a third of system credit resides outside bank loan books, undermining asset quality data.

Shocking Spiral of Unpaid Debt: Another 800 Million Euros Added to the Bill (Greece)

Tax Office data shows that unpaid tax obligations are expected to reach 7.618 billion euros from January to July. Each month, foreclosures increase while more tax payers are crushing under the burden as they enter the state’s “black” list.

Cash Piles at American Companies Are Shrinking

Pressured by a year-and-a-half of weakening profits and splurges on buybacks and dividends, the once-towering piles of money at American companies have started to topple. Cash and equivalents slipped to a median $860 million at S&P 500 Index members last quarter, touching levels not seen for three years, according to data compiled by Bloomberg.

Ministries’ budget requests for fiscal 2017 top ¥100 trillion third straight year (Japan)

The requests for the general account budget for the year that will start next April 1 were bigger than the initial budget for fiscal 2016 of ¥96.72 trillion, with social security costs soaring due to the aging population.

Draghi Nears His QE3 as ECB Seen Relying on More Stimulus

With euro-area inflation stuck near zero for almost two years and Brexit now threatening to undercut the region’s recovery, economists see European Central Bank President Mario Draghi as highly likely to lengthen quantitative easing for a second time. That would take the asset-buying program beyond its current end-date of March 2017 and above the target of 1.7 trillion euros ($1.9 trillion).

Bank of Japan’s errors threaten lasting scar for central banks

There is a growing conviction in the markets that for the world’s hardest pressed central banks there is no alternative to a helicopter money drop.

Negative rates will stay for another five years, JPMorgan warns

Equity valuations between Japanese and European banks will converge with quantitative easing (QE) programs and negative interest rate policies set to continue for the long term, according to a team at JPMorgan.

Bernanke sees good reasons for Fed to keep large balance sheet

“Maybe this one of those cases where you can’t go home again,” Bernanke said in his latest blog post.

Gold & Silver

Click to read the PM Daily Market Commentary: 9/6/16

Provided daily by the Peak Prosperity Gold & Silver Group

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."

20 Comments

saxplayer00o1's picture
saxplayer00o1
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A one finger salute for Harvard's Kenneth Rogoff

Cash in a Box Catches On as Swiss Negative Rates Bite

Bloomberg - ‎Sep 6, 2016‎
It's a sign the world is getting used to negative interest rates when what once seemed bizarre starts looking like the norm. Consider Switzerland, where more and more companies are taking out insurance policies to protect their cash hoards from theft ...

This Harvard Economist Is Trying to Kill Cash

Bloomberg - ‎5 hours ago‎
Savers won't tolerate negative interest rates on their savings as long as cash is an alternative. Why not simply withdraw stacks of $100 bills and keep the cash in a mattress or a safe? Rogoff says he doesn't want to get rid of cash all at once. First ...

German 10-Year Auction Yield at Fresh Record Low

Economic Calendar-6 hours ago
Overall demand for German 10-year paper has remained generally strong given the negative interest rate structure across the curve with around 85% of German ...

ECB is set to extend QE well into next year as it struggles to kickstart inflation

CNBC - ‎10 hours ago‎
The European Central Bank is expected to extend its trillion-euro bond-buying program beyond March 2017 and announce to expand the universe of eligibile bonds as part of its seemingly never-ending struggle to kickstart the euro zone's economy.

Goldman Sachs: China signaling further stimulus on the way

CNBC - ‎12 hours ago‎
Goldman expected fresh stimulus would have a "significant" impact as the measures target the two most important barriers to speeding up FAI growth, which were the willingness and ability to invest. "As for willingness to invest, the inspection teams ...

BoE's Cunliffe sees another rate cut if economy evolves as forecast

Reuters-3 hours ago
"If demand slows more significantly than expected, and the output gap is correspondingly larger, I would be willing to vote for further monetary stimulus.".

US car loan debt hits $1.027 trillion as subprime loans increase

RT-13 hours ago
Total debt from car loans has surpassed the $1 trillion mark as loan delinquency rates continue to steadily climb. Some believe the heavy presence of subprime ...

Canadian farmers' debt seen hitting fresh record high: lender

Yahoo Sports - ‎5 hours ago‎
The U.S. Department of Agriculture last month forecast U.S. net farm incomes to decline in 2016 to $71.5 billion, the lowest since 2009. Strong income levels and rising farmland values have kept Canadian farmers in sound shape, FCC reported, in an ...

Illinois Pension Crisis Builds as Market Turmoil Deals a Setback

Bloomberg-3 hours ago
Because states count on such earnings to cover benefits checks, Moody's Investors Service said the change added $7.4 billion to Illinois's debt to the fund, a tab ...

Report: County's $1B in unpaid debt impedes ability to serve

WHIO-9 hours ago
Cleveland — A report says a northeast Ohio county has $1 billion in outstanding debt that is hindering its ability to support and serve its residents. The Center for ...

Tens of Thousands of Jobs Go as China's Biggest Banks Cut Costs

Bloomberg-15 hours ago
While Chinese banks have avoided the multi-billion dollar fines for .... student debt they incurred for their education if they decide against transferring their credits ...

BOJ says bought 73.3 bln yen in ETFs on Wednesday

Reuters-7 hours ago
... purchases the central bank made in August, each of 70.7 billion yen of ETFs. ... which combines negative interest rates with government debt purchases and ...

Italy's Target 2 liabilities hit new record at 327 bln euros

Reuters-7 hours ago
... banks rose to a new record high of 326.95 billion euros ($367.5 billion) in August, above levels seen four years ago at the height of the euro zone's debt crisis.

There's a Big, Bank-led Change Sweeping Asian Debt Markets

Bloomberg-5 hours ago
Those relationships have helped the region enjoy a structurally low corporate default rate, with defaults averaging just 0.65 percent in the Asia-Pacific region ...

State bill backlog expected to hit $14B (Illinois)

The Rock River Times-56 minutes ago
... has projected the stopgap budget will push the state's general fund deficit to a ... unfunded pension liability, a structural budget deficit, and political gridlock.

Pension Tension among workers

KARE-5 hours ago
Estimated Public Pension Unfunded Liabilities Approaching $1 Trillion – As of 2014 (most recent complete data available) Aggregate pension fund liabilities are ...

Retiree fund for teachers down $572M

Arkansas Online-8 hours ago
... of the pack of returns for large public pension plans in the U.S," Hopkins said. ... On June 30, 2015, the system's unfunded liabilities totaled $3.7 billion with a ...

Venezuela Pets Go Hungry as Economic Crisis Deepens

ABC News - ‎13 hours ago‎
In this July 21, 2016 photo, an abandoned dog pokes his head out from under a door at the private shelter Funasissi, in the working-class Caracas neighborhood of El Junquito, Venezuela. As the country's economic crisis deepens, food shortages and ...
Edwardelinski's picture
Edwardelinski
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Well said saxplayer!

The Curse of Cash.blood pressure a tad elevated.Who knows maybe that will bring the people to the streets!

reflector's picture
reflector
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Posts: 267
RE: This Harvard Economist Is Trying to Kill Cash

ken rogoff, keynesian apologist extraordinaire, has just come out with a book in support of banning cash.

youtube blogger maneco64 just put out a very nice discussion of the issue:

i went to amazon to see what people are saying about the book, and i was very pleased to see that 56% of people have given it a 1-star rating

let's keep up the pressure on the liars, thieves and killers in central banking and the government (yes, killers - america's imperial wars of aggression are only possible because of central banking and debt).

 

reflector's picture
reflector
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The Mother Of All Bubbles, When The Debt Bubble Pops It Will Be

x22 report just put up an interview with chris:

The Mother Of All Bubbles, When The Debt Bubble Pops It Will Be Sudden And Rapid:Chris Martenson

Edwardelinski's picture
Edwardelinski
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Posts: 309
Rogoffs argument:

He wrote a piece for projectsyndicate.org dated sept 5 for anyone interested.A primer for the book...

Tim Ladson's picture
Tim Ladson
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Posts: 78
Rogoff's Argument ?

Thanks, but no thanks !

I would refer you to reflector's video in comment #3

Tim

Edwardelinski's picture
Edwardelinski
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Posts: 309
Rogoff:

In the Project Syndicate piece he argues that cash is facilitating growth mainly in the underground economy,(in my opinion not a bad thing)He is not advocating a complety cashless society,but a less cashless society.He believes it facilitates crime and tax evasion to the tune of 700 bilion in the U.S alone.(I would rather take my chances on the drug gangs than have the Fed and Wall street get there hands on it.)It is ironic considering the greatest generational theft the world has ever known is courtesy of The fed and wall street.The you tube video guy passed commentary without researching the facts...

Time2help's picture
Time2help
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Posts: 2770
Speak

Bankers Slave's picture
Bankers Slave
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Quote of the week...so far

from CM and it went something like this. "Money in the bank is like loaning cash to your drunk uncle who just got out of prison"

That is one of the best reports I have ever heard regarding the financial systems current situation. Should be mainstream news.

 

Tim Ladson's picture
Tim Ladson
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Posts: 78
A More Fact Based Rebuttal to Rogoff

Nicole Foss's extensive 4 part series "Negative Interest Rates and the War on Cash" on the Automatic Earth .com gives a more thorough rebuttal to the status quo apologist Rogoff's arguments.

Tim. 

robie robinson's picture
robie robinson
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TAE?

where is part 4?

Tim Ladson's picture
Tim Ladson
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Posts: 78
Part 4

Robie,

Part 4 has yet to be published.

My point is that Foss's piece answers Rogoff's spurious statements regarding cash's supposed negative aspects, depending on one's point of view. IMO cash's main benefit is the freedom to conduct one's affairs without oversight from the predatory, confiscatory, official criminals operating increasingly without restraint. With the full faith, credit and force of the government there is precious little standing between those of us who prefer to have the freedom to determine what our savings, (hoardings) are used for and what our betters regard as proper. I don't recall any part of that obsolete document, the US Constitution giving that power to unelected bureaucrats.

Tim.          

robie robinson's picture
robie robinson
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Posts: 1148
Thanks Tim

I am in agreement with you and have been waiting for the 4th as the 3rd just came out labor day, or so I thought.

sand_puppy's picture
sand_puppy
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Terrorism is Awesome!

This simple and effective concept, terrorism, is the Swiss Army Knife of centralizing control.  It is magnificently non-specific.  And when combined with the term "suspected," it is even more nebulous as it requires no proof.   Absolutely anybody can be suspected of terrorism.

Gardeners growing illegal front yard vegetables, capturing rain water, people photographing factory farming, protesting political rallies or pipelines, people saying that kerosene doesn't melt steel, buying gold and storing food--all of them: Terrorists.

"Terrorists" live on all sides of all national boundaries making attacks across sovereign national boundaries to "fight terrorism" necessary.  Terrorists have no membership lists, wear no uniforms. Fire a missile into a school picnic killing a targeted enemy there and the 14 people around him die also.  Are they collateral damage?  No.  Just explain that they were all terrorists.  All 15 of them.  And the dog?  The dog was a terrorist, too.

The label is utterly unverifiable, unfalsefiable and requires no supporting evidence.  Just throw the label at anyone you want to imprison or kill.  Suspicion of terrorism.  There is nothing that can show that a person should NOT be suspected of terrorism. 

Of course, not only is it flexible, but the term powerfully activates the limbic system -- like a mallet striking a gong.  Terrorist.  Rapist. Drug addict.  Escaped convict.  Child abuser.  Killer.  Just hear the world and you immediately are repelled.  Nothing more needs to be said.  Disgusting people like that deserves to be put away without trial or, even better, shot while "resisting arrest."  The world is better off without that kind of person.

My hat is off to the brilliant Machiavellian strategists who conceived and sold this utterly meaningless, non-specific, flexible and powerfully concept for taking down any who oppose TPTB.

 

 

 

 

robie robinson's picture
robie robinson
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SP

all you just typed, rather thought, put you on the list.

Bankers Slave's picture
Bankers Slave
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Posts: 520
"On the list"

Wear it like a badge of honour. yes

Tim Ladson's picture
Tim Ladson
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Posts: 78
The List

Robie, SP, Bankers Slave,

As The Saker says, "disrespectful of social dogmas and norms, oppositional and defiant of authority", that would probably describe several of us PPers.    

BTW, part 4 of Foss's piece is now posted on TAE.

Tim

AKGrannyWGrit's picture
AKGrannyWGrit
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Posts: 433
Been Here Before

Great post Sand a Puppy!  

I remember reading about a period in history where people were accused of being a "witch" or "possessed".  Heard of the Salem Witch Trials.  In sales we learned about "FUD" Fear, Uncertainty and Doubt, a sales tool which can be very effective.  The tools of manipulation have gone high tech, no doubt there are people whose jobs are to create and implement coercive ways to control the masses.  They are effective.

Time2help's picture
Time2help
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Posts: 2770
Re: The List

If you aren't on a list by now perhaps you should try harder.

robie robinson's picture
robie robinson
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Joined: Aug 25 2009
Posts: 1148
Tim

Part 4 is up!

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