Daily Digest

Image by USFWS Endangered Species, Flickr Creative Commons

Daily Digest 4/25 - The Financial Black Hole, Rethinking Extinction

Saturday, April 25, 2015, 10:44 AM

Economy

The Private Equity Firm That Grew Too Fast (jdargis)

Just a decade ago, Providence was one of Wall Street’s hottest firms. Mr. Nelson started it in 1989 and was later joined by Glenn M. Creamer and Paul J. Salem, all three graduates of Brown University and Harvard Business School. The firm reveled in its Rhode Island roots and “stealth mogul” status far from Wall Street and its brand-name rivals.

Negative Interest Rates: The Financial Black Hole (Taki T.)

If everyone takes measures against deflation you get a mass migration to cash and government bonds, however, which are the assets that perform the best in a deflationary environment. Take a look at Japan: the yen had been on the rise for years up until the Japanese central bank took exceptionally aggressive monetary measures to fight the trend (at which they succeeded). Japanese investors historically also like its country’s government bonds, however, ever since deflation tormented the country in the ‘90s. At one point you got a 5% yield on a 10-year Japanese government bond, today you get 0.3% per year for the next 10 years.

Wired Is Right And You Damn Well Ought To Raise Hell (Don R.)

What happens when this sort of software is embedded in your furance, for example? If you think this is a fantasy you're wrong; this sort of software, protected by so-called "digital locks", is showing up in everything. How long will it be before this is abused to lock you out of your own home or prevent you from heating it because of some alleged "violation" that the manufacturer conjures up, and how does that meet with the premise that you bought and paid for said object?

A mega-Comcast could have squashed online competition, government says (jdargis)

Comcast is still a huge gateway to consumers, one that streaming providers cannot ignore. Even without Time Warner Cable, Comcast already has a majority of the nation's "broadband" subscribers, counting only those connections of at least 25Mbps downstream and 3Mbps upstream. The FCC changed the definition of broadband earlier this year, essentially cutting DSL off the list of technologies that can be considered advanced telecommunications.

War For Hire (jdargis)

As conflict escalated, the ranks of the U.S. military contingent became populated by many combatants motivated more by profit than by patriotism: servants not of the American people, but of a host of private military companies contracted to the US Department of Defence.

Their duties—and even the length of time they spent in the field—were determined not necessarily by any ideological agreement with America’s mission, but by commercial considerations.

The downside of “Drill, baby, drill!”—degraded North American ecosystems (jdargis)

The data paints a clear picture of the current and future consequences of the continued increase in oil and gas activity. Most land-use decision making is too focused to result in a truly comprehensive assessment of ecological trade-offs and economic benefit. It is now more important than ever that key decision-makers and scientists team up to ensure the most accurate information is used to shape the policies dealing with delicate water/energy/food balances.

California orders no water diversions despite legal rights (Nate)

The order applies only to those who obtained water licenses after 1914, holding so-called junior water rights. The Modesto, Turlock, Oakdale and South San Joaquin irrigation districts enjoy pre-1914 rights, but such senior right-holders were warned that they are likely to face cutbacks in California’s fourth year of drought as well, the board’s letter warned.

Rethinking extinction (jdargis)

The range of dates in that statement reflects profound uncertainty about the current rate of extinction. Estimates vary a hundred-fold – from 0.01 per cent to 1 per cent of species being lost per decade. The phrase ‘all currently threatened species’ comes from the indispensable IUCN (International Union for Conservation of Nature), which maintains the Red List of endangered species. Its most recent report shows that of the 1.5 million identified species, and 76,199 studied by IUCN scientists, some 23,214 are deemed threatened with extinction. So, if all of those went extinct in the next few centuries, and the rate of extinction that killed them kept right on for hundreds or thousands of years more, then we might be at the beginning of a human-caused Sixth Mass Extinction.

Gold & Silver

Click to read the PM Daily Market Commentary: 4/24/15

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."

8 Comments

thc0655's picture
thc0655
Status: Diamond Member (Offline)
Joined: Apr 27 2010
Posts: 1617
Mayoral candidates ignore Philadelphia's biggest issue(pensions)

http://www.philly.com/philly/news/politics/mayor/20150426_Candidates_ignore_city_s_biggest_issue__Pensions.html

With less than a month before the May 19 primary, the six Democrats running for mayor have yet to talk about the $5.7 billion dark cloud that threatens to snuff out their campaign promises of universal prekindergarten, cuts in the wage tax, and other costly pledges.

That cloud looming over the candidates' plans, the city's unfunded pension liability, has been there for decades, and it grows with every passing year.

"The municipal pension crisis - and it is a crisis - is the No. 1 issue for the future of the city," said Comcast executive vice president David L. Cohen, who served as chief of staff to Ed Rendell when Rendell was mayor.

Pension costs currently consume 15 percent of the city's $3.9 billion general fund budget - that's $577 million off the top before any of the city's other obligations are considered. The pension fund also takes in $110 million from other city sources, including airport and water fees, for a total of $687 million.

 

In 2010, the fund took $557.2 million. In 2020, when the mayor elected this fall will be finishing his or her first term, the fund's take will be $770 million...

If Philadelphia's pension fund were healthy, it would have $10.5 billion available. That factors in the city's 30,000 beneficiaries, the 27,000 current employees in the pipeline to receive a pension, and how long they will live after retiring.

But the fund has only $4.8 billion, leaving a $5.7 billion hole that gives Philadelphia the second-worst-funded pension system among large cities, according to a Pennsylvania Intergovernmental Cooperation Authority report published Jan. 20. Only Chicago's system is worse, said PICA, the agency that oversees the city's finances...

Phil Goldsmith, a managing director under Mayor John F. Street, said that the candidates are not talking about pensions because the voters, especially the millennials, are not demanding it.

Millennials, Goldsmith said, "who have more skin in the game . . . it's the farthest thing from their mind because they aren't thinking about retiring."

 

 

 

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1447
Re: Negative Interest Rates

The article makes it seem as if the crazy lending just started.   The crazy lending started in the 1970's.  The end game is now here because what do you do at zero bound to keep system going?  Go negative.   The black swan event could appear at any moment.  And this one will light the whole globe on fire.  

robie robinson's picture
robie robinson
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Joined: Aug 25 2009
Posts: 1182
waiting on the Vet. to Preg check

the mare. i hope she is settled

pinecarr's picture
pinecarr
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Joined: Apr 13 2008
Posts: 2245
Dang, Robie!

Just how many mare's do you have to get settled?!:)

HughK's picture
HughK
Status: Platinum Member (Offline)
Joined: Mar 6 2012
Posts: 761
Expasion and collapse in pictures

A montage of images some students and I did on the request of the director of our school's production of Urinetown, a tragicomic musical about a world where the limits to growth have been reached.  The music is the overture of the show.  It's one minute fifteen seconds long.

Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 3159
Well done Hugh

Your students seem to be receiving an education, unlike most in the US.

robie robinson's picture
robie robinson
Status: Diamond Member (Offline)
Joined: Aug 25 2009
Posts: 1182
Pinecarr, its just one

She is, however a metaphor for,"gotta be sure and get all ready for the collapse," what needs to be done before the "Long Emergency." Am collecting Drafts since OOG was here for a visit. J.H.Kunstler says my kids will appreciate the horse power while a world made by hands is being restored.

 

robie :-)

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2245
Robie, I wondered if that was the case!

 It's a fine metaphor; I smile every time I read it. 

There are some folks nearby with a pair of draft horses, and they are magnificent to look at.  Their size and strength gave me a new appreciation of the meaning of "horsepower".   -A very thoughtful investment in your kids' future!

 

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