Daily Digest

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Daily Digest 4/15 - House Takes Step to Patch Pension Fund Hole, Banks May Pay Borrowers In Europe

Wednesday, April 15, 2015, 11:07 AM

Economy

Higher water rates on tap as utilities cover losses from drought (California)

Water departments across California, including dozens in the Bay Area, are now looking to raise rates — in many cases by double digits — to shore up revenues as customers use less water during dry times and water sales plummet. Some agencies, including the East Bay Municipal Utility District, are also considering hitting their biggest water users with fines.

An unexpected after-death side effect of Obamacare

The estate recovery law allows states to recover Medicaid costs for patients who are older than 55 when they die, although some limits apply, such as exceptions for the disabled and hardship exemptions for survivors. The law is taking some newly enrolled Medicaid patients by surprise, but it's also prompting a few states to push back on the practice, according to The Wall Street Journal.

Retirees who didn’t work for the police or fire departments can now expect to see a 4.5 percent pension cut and the elimination of annual cost-of-living payments under the agreement.

Detroit Taxpayers Could Be Given Option To Support City Retirees

Report: S. Korea could be headed for Japan-style long-term economic downturn

The decline in the populations of South Korea (left) and Japan (right). The blue line represents total population and the red line represents the productive population. Source: “Examining the Possibility of a Japanese-Style Long-Term Downturn for the South Korean Economy,” by Kang Doo-yong, a senior researcher at the Korea Institute for Industrial Economics and Trade

House Takes Step to Patch Pension Fund Hole (Texas)

The fund is about $7.2 billion short — a deficit that is expected to grow by about half a billion dollars every year if left unaddressed. The fund has not been fully funded in 19 of the past 20 years.

Christie Urges Benefit Cuts as New Jersey Retiree Rush Strains Pension

Christie has used town halls to push his plan to fix the fiscal stress that led to eight New Jersey credit-rating downgrades during his tenure. Even as he makes record pension payments, the fund’s gap is growing as he shortchanges contributions for a sixth year. Absent adjustments, pension and benefit costs will consume one-fourth of next year’s budget.

Treasury Officials Increase Efforts With Finances of Puerto Rico

The Treasury Department is quietly stepping up its involvement in Puerto Rico, indicating that the island’s financial problems, which have been simmering for years, are reaching a critical point. High-ranking officials have been shuttling between Washington and Puerto Rico, advising commonwealth officials as they try to stabilize the island’s finances.

Detroit, Stockton bankruptcies may flag wider problems: Fed's Dudley

Unfunded pension liabilities are estimated to be as high as several trillion dollars, Dudley said. "At a certain point, the debt service burden clashes with maintaining a sufficient ongoing provision of services to forestall people from voting with their feet," he said.

Prescription drug spending jumps 13% to record $374 billion in 2014

Driven by innovative but pricey new drugs for hepatitis C, U.S. spending on prescription drugs jumped 13% last year to a record $374 billion, according to an industry report.

IMF Calls On Bank of Japan To Crank Up Stimulus Steps

The International Monetary Fund said Tuesday that the Bank of Japan should buy more private assets to achieve its inflation target, a suggestion that could add fuel to speculation about further action by the bank later this year.

China Junk Bonds Pose Most Risk Since ’04 on Credit-Quality Dips

Leverage for speculative-grade Chinese companies is at its highest since at least 2004, whether measured by earnings relative to interest expense or total debt to a measure of cash-flow, according to data compiled by Bloomberg using a Bank of America Merrill Lynch index. Borrowers have also piled on the most debt relative to their assets since 2007.

Dutch five-year DSLs sell at negative yields for first time

The negative yield, which in effect means lenders are paying the Dutch state to hold their money, comes as Dutch central bank warned that low interest rates in Europe posed a risk to insurers' solvency and financial stability as a whole.

Negative rates in Europe: banks may pay borrowers

The novel problem is just one of many challenges caused by negative interest rates. All over Europe, banks are being forced to rebuild computer programs, update legal documents and redo spreadsheets to account for negative rates. Banks, hoping to avoid the expense of having to pay their borrowers, are turning to central banks for guidance. But what they are hearing is less than comforting.

IMF says slowing emerging-market growth is sapping global economy

Emerging markets are on course for the sixth consecutive year of falling growth rates, led by a faster-than-expected slowdown in China, a steep contraction in Russia and recession in Brazil, the IMF said in its flagship World Economic Outlook released ahead of its semiannual meetings.

IMF cuts its U.S. growth estimate for 2015 by a half point

The International Monetary Fund on Tuesday lowered its outlook for U.S. economic growth by a half percentage point this year, to 3.1%, and cut its 2016 estimate by two-tenths, also to 3.1%.

Gold & Silver

Click to read the PM Daily Market Commentary: 4/13/15

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."

10 Comments

saxplayer00o1's picture
saxplayer00o1
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Time2help's picture
Time2help
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Today's ECB Press Conference Highlights...

...with Mario Draghi.

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Tall
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US imports corn and soy

A growing demand for organics, and the near-total reliance by U.S. farmers on genetically modified corn and soybeans, is driving a surge in imports from other nations where crops largely are free of bioengineering.

Imports such as corn from Romania and soybeans from India are booming, according to an analysis of U.S. trade data released Wednesday by the Organic Trade Association and Pennsylvania State University.

http://www.bloomberg.com/news/articles/2015-04-15/romanian-corn-imports-to-u-s-surge-as-shoppers-demand-organic

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Arthur Robey
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China's growth DOWN to 7%?

I don't get it. China's economy is expected to double in the next ten years? And this is seen as a downturn?

To me 7% growth is pathological. Like a cancer.

saxplayer00o1's picture
saxplayer00o1
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Rubin sees ‘realistic possibility’ there are bubbles in U.S.

 

"The former Washington and Wall Street honcho also said yields on the sovereign debt of the troubled European countries are “relatively inexplicable on a risk-adjusted basis.”

If there are excesses, the prices of these assets will eventually topple at an unpredictable time, he warned."

thc0655's picture
thc0655
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Kitty Genovese

Am I losing my mind, or is someone else losing theirs?  

http://Rubin sees ‘realistic possibility’ there are bubbles in U.S. markets

http://IMF tells regulators to brace for global 'liquidity shock'

http://Gov. Rauner 'afraid' CPS is heading toward bankruptcy

I'm sensing the warnings of our approach to the Event Horizon are rising to a crescendo, but what amazes me is hearing/reading so many people who are responsible for what's coming also raising their own warnings.  Rubin thinks there might be bubbles in US markets? Ya think?!  The IMF warns us to brace for a global liquidity shock? Geez, what could have caused that?  And can anything be done about these disasters before they happen?  Or are we all just going to pull up lawn chairs and watch the train wreck happen?

I feel like I'm standing around with a bunch of New Yorkers in 1964 listening and watching as Kitty Genovese gets raped, robbed and stabbed to death over the course of 60 minutes.  Everybody thinks "somebody" should call the cops.  But no one lifts a finger, to call or go to her aid.  http://en.wikipedia.org/wiki/Murder_of_Kitty_Genovese

This is insanity.

Time2help's picture
Time2help
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Ripples
thc0655 wrote:

Am I losing my mind, or is someone else losing theirs?  

...This is insanity.

Yes, it's clearly insane. But also logical. They control the media, so they get to "set the stage".  This is nothing more than an attempt to set the narrative for the crash. "It wasn't our fault, see...we tried to warn you..." 

You are looking at a ripple in a pond created by a stones drop from a very sick "mind".

thc0655's picture
thc0655
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Fed to Chicago

http://www.reuters.com/article/2015/04/14/us-usa-fed-disaster-idUSKBN0N528G20150414

The New York branch of the U.S. Federal Reserve, wary that a natural disaster or other eventuality could shut down its market operations as it approaches an interest rate hike, has added staff and bulked up its satellite office in Chicago.

Some market technicians have transferred from New York and others were hired at the office housed in the Chicago Fed, according to several people familiar with the build-out that began about two years ago, after Hurricane Sandy struck Manhattan.

Officials believe the Chicago staffers can now handle all of the market operations that are done daily out of the New York Fed, which is the U.S. central bank's main conduit to Wall Street. 

The satellite office in the Midwest readies the New York Fed for perhaps the most delicate U.S. interest-rate hike ever. With rates having been near zero for more than six years, and markets flooded with reserves, the Fed will rely on an array of new tools to help it tighten policy, likely later this year.

Maybe it's nothing, but that seems a little ominous to me.  Sort of like the owner of the World Trade Center taking out a huge, new insurance policy right before the Towers were attacked.  Maybe they're firming up their plans for the false flag, and it's going to effect NYC, or maybe the Right Coast in general...

Should I be on medication for my paranoia?

Time2help's picture
Time2help
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If you are...
thc0655 wrote:

Should I be on medication for my paranoia?

If you are heading down to the pharmacy later to pick that up, mind picking up some for me as well?

As an aside, the 9/11 "awakening" seems to be picking up some steam.  Lots of new people seem to have taken the red pill.

KennethPollinger's picture
KennethPollinger
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More on Rickards: ONLY $1,500

Jim's gone BIG TIME!  BUY his Currency War Trader's Handbook for ONLY $1,500.

April 16, 2015  

Jim Rickards -- slandered?

 

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Managing editor, The Daily Reckoning

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