Daily Digest

Image by blmurch, Flickr Creative Commons

Daily Digest 7/29 - Venezuela Won’t Escape Default in ’16, Currencies Feel Pain Of Global Stress

Wednesday, July 29, 2015, 9:53 AM

Economy

As Chicagoans Die, Police Pension Burden Hobbles City’s Response

With the second-largest number of sworn officers in the U.S., Chicago is struggling to pay an extra $550 million in pension obligations owed to public-safety workers. That leaves the city with little financial flexibility as homicides have risen more than 18 percent from last year and shootings 17 percent.

Australians must work longer, for good of economy, says FSC

In order to balance Australia’s budget deficit and the cost of the age pension, Australians will need to work past the traditional retirement age of 60, says the Financial Services Council (FSC).

In Brazil, Household Monthly Purchasing Power Plunges by R$ 16 Billion

A study by Tendências consultancy, obtained by Folha, shows that households' purchasing power was R$ 240 billion (US$ 71.3 billion) in the monthly average from January to May -6.2% lower than in the same period in 2014 (R$ 256 billion, or US$76 billion). "After years of increasing consumption, it is difficult to admit to the empoverishment of Brazilians, but that's exactly what's happening," said Rodrigo Baggi, an economist at Tendências.

Harvard Professor Now Says Venezuela Won’t Escape Default in ’16

Venezuela and its state oil company have about $5.6 billion in bond payments due in the last three months of this year and about $10 billion in 2016, according to Bank of America Corp. estimates. Trading in credit-default swaps show an implied probability of default of 96 percent over the next five years, the highest in the world, CMA data show.

Malaysia PM shuffles cabinet as corruption allegations mount

Meanwhile, 1MDB is reeling under a $11 billion debt burden, blamed largely on a much-questioned drive to acquire power-industry assets. Fears that it may require a massive bailout have contributed to a slide in the ringgit currency to 17-year lows.

Puerto Rico seeking alternative to $3 billion bond deal: governor's office

Puerto Rico is seeking to raise $400 million to $500 million via a financing deal which is backed by petroleum products revenues, as there is no longer a market to raise the around $3 billion originally contemplated, the governor's chief of staff Victor Suarez said on Monday.

Japan approves increase in Fukushima compensation to $57 billion

The increase, agreed after a request by Tepco, adds to the bill for taxpayers for the disaster in March 2011, when three reactors melted down after an earthquake and tsunami, in the worst nuclear crisis since Chernobyl in 1986, destroying businesses and livelihoods.

Global Downgrades Surpass Upgrades as geopolitical, economic risks Increase

Standard & Poor’s Ratings Services downgraded 244 issuers worth $1.2 trillion in rated debt and upgraded 125 issuers with $621 billion in rated debt in the second quarter of 2015. Downgrades eclipsed upgrades around the world as geopolitical and economic risks rose, including Greece’s potential exit from the eurozone (the “Grexit”), a slowdown in economic growth in China, and the credit effect from interest rate normalization on part of the Federal Reserve System in the U.S.

Emerging currencies feel pain of global stress

The sell-off in emerging market Asia has pushed the Thai baht to a six-year low of Bt34.9 a dollar while currencies in Malaysia and Indonesia have fallen to levels unseen for nearly two decades.

No cost-of-living adjustment for Social Security in 2016?

Lost in the news surrounding the release of the 2015 Social Security Trustees report is the likelihood that Social Security beneficiaries won't see a cost-of-living adjustment increase, or COLA, in 2016. According to the Trustees, Social Security beneficiaries can expect to receive a COLA increase of 0.0 percent. That's right ... a goose egg.

French unemployed number creeps up to new record

Unemployment has continued to rise throughout the presidency of Francois Hollande despite a recent uptick in economic growth and a host of initiatives including state-sponsored jobs and tax breaks to spur recruitment in the private sector.

Eased mortgage rules extended to July 2016 (Korea)

An FSS official admitted the critical problem of the nation’s rising household debt, which is estimated to have reached 1.2 quadrillion won ($1 trillion). He, however, clarified the deregulations still help normalize the housing market and contribute to the overall economy.

Italy needs 20 years to tackle jobless rate: IMF

The dismal IMF forecast comes a few weeks after Italy’s central bank said the country’s public debt level had hit a new record of €2.2 trillion in May, up by €23.4 billion in a month. Italy’s public debt of more than 130 percent of GDP is second only to Greece in the eurozone.

Putin Countering Sanctions Drags Pension Funds to Company Bonds

One problem with the corporate-bond market, say pension-fund managers, is that the best quality companies aren’t issuing. Most of the 323 billion rubles of bonds sold in May and June were from companies with junk credit ratings below the minimum required level for pension funds of BB-. About half of the bonds were issued by banks, according to Denis Poryvay, an analyst at AO Raiffeisenbank in Moscow.

China credit card transactions hit 15.2 trillion yuan in 2014

The report also highlighted rising risks in the industry. In 2014, credit card repayments delayed by more than half a year were up 42 percent year on year to 35.76 billion yuan in 2014, according to the report.

Chinese Regulators Probe Monday’s Stocks Selloff as Rout Deepens

The probe is the latest effort by the government to crack down on reports of market manipulation after a recent equities rout wiped out nearly $4 trillion.

Warning Lights Flash for Africa Borrowers After Zambia Debt Sale

“The countries that have yet to launch a U.S. dollar sovereign bond have missed their opportunity to lock in the ultra-low yields available during the past few years,” Ashbourne said. “The period of almost unquestioned optimism towards African sovereign debt is coming to an end.”

Analysts see worsening economic picture in Brazil

Analysts expect Brazil's economy to contract by 1.76 percent this year, marking its worst performance since 1990, with the inflation rate hitting 9.23 percent, the Central Bank said Monday.

Covered California sets 4 percent hike in 2016 healthcare premiums

Statewide, Covered California officials trumpeted an average 2016 weighted premium increase of 4 percent, compared with 4.2 percent this year. The rates are preliminary, pending review by state regulators. On average, Northern Californians will see a 7 percent increase in 2016 premiums, compared with a 1.8 percent increase in the state’s southern half.

Gold & Silver

Click to read the PM Daily Market Commentary: 7/28/15

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
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4145
Rising global debt increasing the risk of another financial cris

"It's not just Greece, Puerto Rico and China. Debt is piling up around the world — stifling global economic growth and heightening the risk of more defaults and market turmoil.

World leaders are caught in a trap: More debt in the form of government and private spending is needed to stimulate today's sluggish economies. Yet the higher the debt, the greater the danger that a pullback by creditors will trigger another financial crisis like the one in 2008.

"The post-crisis world is a world of high debt, and it doesn't take much. "

The epicenter of California’s drought crisis is in the Central Valley, where there are growing fears the drought could wipe entire towns off of the map.

Wells are going dry, jobs are harder to come by and families are already moving, either to different states or even Mexico in search of work.

"Health care expenditures surged in 2014, fueled by expanded coverage and soaring prescription drug costs, according to government research released Tuesday."

 

"This highlights the risk Beijing faces in sustaining a market turnaround. Every time the government succeeds in pushing up share prices, an army of retail investors jump in to sell at their break even point, immediately knocking back market confidence.

Given that retail investors conduct an estimated 80 percent of trades, that means the government could face a long, hard grind before it can stabilise markets."

"“Chinese demand declined by 50 percent in the first quarter,” Yasuhiro Inagaki, senior executive officer of Komatsu, said on a conference call. “Unlike in the past, demand didn’t increase much after the Lunar New Year” in February, a peak demand season in China.

Equipment makers are also seeing declines in sales of larger diggers and dump trucks used by mining companies amid a deepening slump in prices for copper, iron ore and coal."

"AUTOMAKERS may sell fewer vehicles in China this year for the first time since at least 1998 as demand slows in the world’s largest market, according to the low end of Ford Motor Co.’s revised projection."

"The report, commissioned by hedge funds holding several billion dollars of Puerto Rico’s bonds, highlights the island’s rising education expenditures against the backdrop of countless school closings and waves of poor families fleeing to mainland America."

 

robie robinson's picture
robie robinson
Status: Diamond Member (Offline)
Joined: Aug 25 2009
Posts: 1182
saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4145
Health Spending to Gobble Up More of U.S. Economy in Next Decade

"Spending on health care will take up an increasing proportion of the U.S. economy over the next decade as the population ages and more people gain insurance coverage under Obamacare, a government report said.

Payments for hospitals, doctors, drugs and insurance will rise by about 5.8 percent a year through 2024, 1.1 percentage points faster than overall economic growth, actuaries at the Centers for Medicare and Medicaid Services said Tuesday in an annual study. Health spending will account for 19.6 percent of gross domestic product in 2024, up from 17.7 percent last year."

"The Conference Board of Canada has downgraded its forecast for the Canadian economy’s performance this year.

On Wednesday, the board predicted the economy will grow by 1.6 per cent this year, Canada’s worst showing since 2009. In May, the board had forecast growth of 1.9 per cent. Last year, the Canadian economy grew by 2.4 per cent."

"At the same time, Tsipras is under pressure from Greece's creditors to go beyond the two packages of so-called prior actions passed by parliament and include unpopular steps to curb early retirement and tax breaks for farmers, EU sources say.

"I know well the framework of the deal we signed at the euro zone summit on July 12," he told Sto Kokkino radio. "We will implement these commitments, irrespective of whether we agree with it or not. Nothing beyond that.""

Uncletommy's picture
Uncletommy
Status: Platinum Member (Offline)
Joined: May 4 2014
Posts: 570
Economic slowdown probably the best solution

When you consider that roughly 70% of the heat generated for thermally generated electric power, whether it be coal, natural gas or nuclear is disposed into the environment through water used as a cooling medium, is it any wonder we find ourselves in this pickle? Warming of the Columbia  and Fraser river appear to be affecting temperatures that affect spawning salmon. Couple that with record forest fires in western Canada that are destroying the biomass in those regions and perhaps the the solution is obvious. Turn off your air conditioners, microwaves, computers and other none essentials and stop buying useless shit is an active step towards a fix. As Al Gore pointed out, global warming is "An Inconvenient Truth". That's the rub: it's inconvenient! Go out and plant a tree.convenience-of-lifestyle.gif

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4145
Chicago City Council coming to grips with big tax hike

 

"Amid a torrent of bad financial news, many members of the Chicago City Council recognize that a property tax hike is needed to help fix the city's pension problem, perhaps $250 million or more.

That would be a 32.3 percent increase over the $774.4 million property tax levy in 2014, which is being collected this year, according to figures compiled by the Cook County clerk's office, which tracks property taxes."

"The turbulence is expected to increase once the US Federal Reserve chooses finally to increase interest rates from near-zero levels, a move which will probably have a chilling effect on developing markets. "

"He wants Congress to approve loaning about $1 trillion to states, including more than $50 billion for New Jersey."

"As noted in the report, the county shortfall in pension funding was $2.6 billion, which included $1.26 billion in unfunded pension liability, a nearly $800 million deficit in promised retiree health benefits, $276 million in pension obligation bonds and $280 million in ConFire pension liability. If that bill came due today in the form of a property tax on all county parcels, each homeowner would be liable for more than $7,200."

Mark Cochrane's picture
Mark Cochrane
Status: Diamond Member (Offline)
Joined: May 24 2011
Posts: 1222
Reality check?

Payments for hospitals, doctors, drugs and insurance will rise by about 5.8 percent a year through 2024, 1.1 percentage points faster than overall economic growth, actuaries at the Centers for Medicare and Medicaid Services said Tuesday in an annual study. Health spending will account for 19.6 percent of gross domestic product in 2024, up from 17.7 percent last year."

Somebody sure is optimistic. These estimates assume that the US will have an average economic growth rate of 4.7% (5.8-1.1 = 4.7) each year out to 2024! Anybody got odds on that happening? We'll be spending well over 20% of GDP on health care by 2024 (if there is a system by then), only 17.7% now(!), while Canada spends 10% of GDP on care and Germany 11%. Our inability to learn from any other country is truly astounding.

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4145
Apocalypse Venezuela......Falling Currency and No Beer!!

"This means the bolivar's value on the black market is now less than a hundredth of the main government rate of 6.3 bolivares to the dollar - and underscores the growing inability of Nicolas Maduro, Venezuela's president, to stabilise the country's fast deteriorating economy."

 

  1. Venezuela facing imminent beer shortage - AOL.com

    AOL News-6 hours ago
    According to reports, local producers could stop producing beer by next month due to their inability to import necessary inputs like barley and ...
  2. Story image for venezuela shortage beer from WLRN

    Venezuela's Out Of Beer? Looming Cerveza Shortage A Reminder ...

    WLRN-21 hours ago
    Those hit Venezuelans where they live. Now there's a looming shortage that hits Venezuelans where they relax: Cerveza. Beer. This is bad ...
    Venezuela Is About to Run Out of Beer
    Smithsonian-Jul 28, 2015
    Explore in depth (3 more articles)
  3. Story image for venezuela shortage beer from Fusion

    Venezuela could run out of beer by next month

    Fusion-Jul 24, 2015
    Beer shortages will essentially force our sector to go broke; beer accounts for 70 percent of our sales,” Fray Roa, a spokesman for Venezuela's ...
  4. Recent Signs of the Apocalypse Include Shortages of Olive Oil, Beer ...

    Eater-1 hour ago
    (A shortage would also presumably affect other areas that source ... While the impending beer crisis in Venezuela and America's current egg ...

 

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4145
robie robinson's picture
robie robinson
Status: Diamond Member (Offline)
Joined: Aug 25 2009
Posts: 1182
better than beer

shameless advertising for an event sure to please those PP'rs in VT.

 

http://us6.campaign-archive2.com/?u=7a0908a5a6b3a018d2b9e0551&id=8409daf...

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1447
Mark Cochrane wrote: Payments
Mark Cochrane wrote:

Payments for hospitals, doctors, drugs and insurance will rise by about 5.8 percent a year through 2024, 1.1 percentage points faster than overall economic growth, actuaries at the Centers for Medicare and Medicaid Services said Tuesday in an annual study. Health spending will account for 19.6 percent of gross domestic product in 2024, up from 17.7 percent last year."

Somebody sure is optimistic. These estimates assume that the US will have an average economic growth rate of 4.7% (5.8-1.1 = 4.7) each year out to 2024! Anybody got odds on that happening? We'll be spending well over 20% of GDP on health care by 2024 (if there is a system by then), only 17.7% now(!), while Canada spends 10% of GDP on care and Germany 11%. Our inability to learn from any other country is truly astounding.

I find it interesting that with US generic drugs the monthly cost is always about $12 no matter the drug/ingredients.   The generic pill cost for 30 days for all is probably under $2.  The HIC is skimming massive profits from main street; just look at all those cathedrals we used call hospitals.

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