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Daily Digest 10/7 - 'Abenomics' On The Rocks; Let Us Pay You to Borrow, America

Wednesday, October 7, 2015, 10:47 AM

Economy

98-Day Illinois Budget Impasse Could Delay 911 Calls

The impasse has racked up more than $6 billion in unpaid bills and week-by-week, state services are struggling to find funding. Among other services, the state has halted free STD testing public, the Illinois State Museum in Springfield closed to the public indefinitely for the first time in its 138-year history, and local 911 call systems are in jeopardy after it was announced that they would stop receiving state revenue from cell phone taxes.

S&P 1500 pension funding fall to year-end 2014 levels — Mercer

The estimated aggregate funding ratio of pension plans sponsored by S&P 1500 companies declined two percentage points to 79% in September, the same level as of Dec. 31, said a Mercer report.

Brazil's Petrobras cuts spending plan for 2nd time in 3 months

The company is being battered by a whirlwind of bad news. In the last year, oil prices dropped nearly 50 percent and Brazil's currency, the real, slipped by a third against the U.S. dollar, causing revenue to fall and debt to soar. Meanwhile, the downgrade of its debt rating to junk status has raised the cost of borrowing, and a giant corruption scandal has tarnished its reputation with investors.

African Reliance on Foreign Debt is ‘Madness,’ Warns Credit Suisse CEO Tidjane Thiam

“I did a lot of infrastructure development in my life,” Mr. Thiam said in a dinner speech at Claridge’s hotel in London on Monday evening. “To fund them with foreign currency is madness. OK? Madness.”

Skyrocketing funeral costs leave bereaved families saddled with debt (UK)

The research has revealed that one in seven people (13 percent) struggle to pay for a loved one’s funeral, taking out an average of £1,318 in loans.

Puerto Rico Willingness to Pay Test Coming Sooner Than Expected

Puerto Rico is only eight weeks away from letting investors know whether the commonwealth will live up to its pledge to use all legally available resources to pay off bonds as the Caribbean island’s cash dwindles.

Business confidence drops to four-year low as economic outlook worries firms (New Zealand)

New Zealand business confidence extended its decline in the third quarter, plunging to its lowest level in more than four years, with local firms now expecting conditions to deteriorate in a tougher economic climate.

Indian services growth slowed in September - PMI

"The sluggish increase in private sector output mirrored softer demand conditions across the country, while growth of global demand for Indian goods also moderated," said Pollyanna De Lima, economist at Markit.

Please, America, Let Us Pay You to Borrow: Lisa Abramowicz

For the first time, investors demanded no payment at all to lend to the U.S. government for three months. That’s right, the Treasury sold $21 billion of three-month bills with a zero percent coupon Monday.

South East Asia economic woes test reserves, defenses built after 1997/98 crisis

Chua Hak Bin of Bank of America Merrill Lynch said he draws "little comfort" from comparisons with 1997. While in many ways Malaysia's economy is stronger now, for example by having a current account surplus, its external debt is 70 percent of gross domestic product, compared with 44 percent in 1997, and there's "significant downside risk even after the sharp ringgit correction".

Japan's 'Abenomics' experiment is on the rocks

The program, however, has faltered. Wage growth is lackluster, and inflation remains far below the central bank's 2% target. Gross domestic product shrank at an annualized pace of 1.2% in the second quarter, and there's evidence that the economy may have fallen back into recession in the third quarter.

Bank of America cuts S&P 500 year-end target again as uncertainty grows

Bank of America Merrill Lynch lowered its year-end target for the S&P 500 for the second time since early September and warned that a lack of companies providing outlooks this earnings season could provide a headwind to the broader market.

European Stocks Advance as Weak Data Spur Stimulus Speculation

While the European Central Bank has pledged to spend an average of 60 billion euros a month on bonds through September 2016 to revive euro-area inflation, some economists have warned it’ll need to increase the size of the program.

Poland Keeps Main Rate at Record Low, Weighs GDP and Deflation

Record-low borrowing costs have failed so far to spur consumer prices, and deflation deepened in September, extending the bout of negative prices to 15 months.

Mexican Central Bankers Cite Weak Economy in Keeping Rates Unchanged

The five-member board of the Bank of Mexico voted Sept. 21 to keep interest rates at a record low of 3%, with most members saying the slow economy will likely keep annual inflation below the bank's target in 2015 and 2016.

Bank of England Won't Raise Rates Until 2017, Markets Show

Traders now don’t see a rate increase by the BOE until 2017 and while the central bank might not wait as long as that, it is understandable why markets are positioned that way, said Jason Simpson, a London-based fixed-income strategist at Societe Generale SA.

IMF urges BOJ to stand ready to ease if inflation cools further (Japan)

The Bank of Japan should be ready to ease monetary policy further if needed to accelerate inflation toward its 2 percent target, preferably by buying government bonds with longer maturity, the International Monetary Fund said on Tuesday.

World stocks up on central bank hopes

Japan led world stock markets higher Tuesday on hopes for new stimulus from its central bank while investors were also buoyed by the prospect that the Federal Reserve will wait until next year to raise interest rates.

U.S. exports fall in August to three-year low

Large U.S. manufacturers, energy producers and other internationally oriented firms have borne the brunt of a strong dollar. Barely any manufacturing jobs have been created in 2015, and energy producers have cut 120,000 jobs since December.

IMF trims global forecast, as Brazil, Canada outlooks deteriorate

The International Monetary Fund has grown more pessimistic over the last three months over global growth, as declining commodity prices and increasing financial market volatility take their toll, particularly on emerging markets.

Gold & Silver

Click to read the PM Daily Market Commentary: 10/6/15

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."

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robie robinson's picture
robie robinson
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saxplayer00o1's picture
saxplayer00o1
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Posts: 4149
Repost Of Today's News

Once the Biggest Buyer, China Starts Dumping US Government Debt

Wall Street Journal-9 hours ago
Central banks around the world are selling U.S. government bonds at the fastest pace on record, the most dramatic shift in the $12.8 trillion Treasury market ...

China's Foreign Exchange Reserves Drop $43.26 Billion in September

Wall Street Journal-8 hours ago
An analysis by consultancy McKinsey & Co. shows that China's debt load has increased to 282% of its GDP last year from 158% in 2007. But in recent months, ...

$3 trillion corporate credit crunch looms as debtors face day of ...

Telegraph.co.uk-25 minutes ago
Although governments in the developing world had taken the right policy actions to strengthen their public finances and reduce external debt, leveraged banks ...

UPDATE 1-Taiwan throws in towel on 2015 global export recovery ...

Reuters-4 hours ago
Exports sank last month for the eighth month in a row and at the second-fastest pace in over two years, reinforcing the rationale behind the central bank's ...

The Case for the World Economy's Defense as Recession Fears Rise

Bloomberg-6 hours ago
What about contemporary risks such as the slump in emerging markets in a world they hold greater sway, or a lack of room for central banks to inject more ...

Bond Selloff Wanes Amid Signs Europe Infected by Economic Slump

Bloomberg-1 hour ago
... earlier on Wednesday as the government prepared to auction debt securities ... Germany alloted 3.253 billion euros of 1 percent bonds maturing in 2025 at an ...

61064 Failing Bridges Must Wait as Cities Borrow at Decade Low

Bloomberg-21 hours ago
States and cities rely on the $3.7 trillion U.S. municipal-bond market to pay for roads, ... About $14.8 billion of municipal debt has been sold this year for highway, ...

Even top juniors are running out of money

MINING.com-20 hours ago
The drying up of equity and debt markets coupled with new lows in cash ... Market capitalization dropped significantly from $7.9 billion to $4.8 billion as of June, ...

Spain's Finance Minister Slams EU's Deficit Target 'Fixation'

Wall Street Journal-5 minutes ago
Spain's central government collected €175 billion in tax revenue last year, up from €161.8 billion in 2011. The deficit has dropped from 8.9% of GDP since Mr.

PSERS: Billions in Pa., local school pension dollars still not enough

Philly.com (blog)-1 hour ago
The total will be closer to $2.5 billion this fiscal year and is scheduled to rise ... last year to help fund PSERS and keep its multibillion-dollar deficit from growing.

PSERS misses earnings assumption, cuts investment expenses

Central Penn Business Journal-33 minutes ago
If low returns continue, they could lead to higher pension contributions from the ... As of the fiscal year that ended in June 2014, the system's unfunded liability ...

Norway to Start Withdrawals From Oil Fund to Plug Deficits

Bloomberg-6 hours ago
Norway predicts it will for the first time need to withdraw cash from its $820 billion sovereign wealth fund as western Europe's biggest oil exporter uses a record ...

Canada not prepared for 'demographic bomb,' Mulcair says as he ...

Vancouver Sun-14 hours ago
“By adopting Stephen Harper's budget and rushing to eliminate the deficit in just ... Mulcair also criticized Prime Minister Stephen Harper's announced $1 billion ...

 

thc0655's picture
thc0655
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Incentives for state legislators

Chris is big on designing incentives for people to do the right thing.  I liked one of his latest: take lawsuit payouts against corrupt cops from the cops' pension fund.  (Though to be fair, the payouts should also come from the Mayor's pension fund and the city attorney's pension fund, because it happens very often that cities agree to payout in lawsuits against police for political reasons and because the payout would be cheaper than the cost of lawyers to fight and win the case.)  But I digress.

I follow the shenanigans in Illinois and Chicago (made easier by Saxplayer in his daily links - thanks!) because Pennsylvania is very much like Illinois and my Philadelphia is very much like Chicago.  Watching IL and Chicago helps me anticipate what will happen here on my home turf (not that it's not all pretty obvious anyway - just look at Detroit).  Chicago is sprinting toward becoming the next Detroit, and Philadelphia is right behind.  (Lately, Houston has been making some effort to pass Philly on the back stretch but that's a topic for another day.)

So, anyway, both Illinois and Pennsylvania are in dire financial straits and state legislators did not pass  budgets by July 1 as "required" by state law.  That "requirement" has no teeth in it (no sanctions for not passing a budget) so in both states it is routinely violated.  I say it's high time we amended the state laws and constitutions to include sanctions for not passing a balanced budget by the deadline.  Here's my modest proposal:

1. All elected state legislators and their staffs (including the governor, attorney general and cabinet heads) quit being paid their salaries the day the deadline is violated and their salaries do not resume until a balanced budget is signed into law.  (The only exception to this is the elected and appointed staff who run the statewide election process.  See #2 below.)

2. The day the budget deadline is violated a snap election for ALL state offices from the governor on down is announced for the traditional election day in November regardless of the terms of office of those currently serving.  For instance, even if the governor still has 3 years left on his/her term and the Speaker of the House still has one, both must stand for election in November along with EVERY OTHER elected state representative.  If a balanced budget is signed into law by Sept. 1 the election is called off, except for those whose terms are expiring and were scheduled to stand for election anyway.  If a budget is signed into law between Sept. 1 and the election day, everyone still stands for election.

In Pennsylvania I'd send the maximum allowable political contribution to my state representatives just for proposing these changes or co-signing such a law.

There.  That ought to fix it.

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thc0655
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"If you like your freedom of speech, you can keep

your freedom of speech."

Michael Krieger on the TPP:

http://libertyblitzkrieg.com/2015/10/07/how-the-tpp-could-lead-to-worldwide-internet-censorship/

The more I learn about the TPP, the more horrified I become. In case you need to get up to speed, check out the following:

U.S. State Department Upgrades Serial Human Rights Abuser Malaysia to Include it in the TPP

Julian Assange on the TPP – “Deal Isn’t About Trade, It’s About Corporate Control”

Trade Expert and TPP Whistleblower – “We Should Be Very Concerned about What’s Hidden in This Trade Deal”

As the Senate Prepares to Vote on “Fast Track,” Here’s a Quick Primer on the Dangers of the TPP

If that wasn’t enough to concern you, here’s the latest revelation.

From Common Dreams:

 

The “disastrous” pro-corporate trade deal finalized Monday could kill the Internet as we know it, campaigners are warning, as they vow to keep up the fight against the Trans Pacific Partnership (TPP) agreement between the U.S. and 11 Pacific Rim nations.

“Internet users around the world should be very concerned about this ultra-secret pact,” said OpenMedia’s digital rights specialist Meghan Sali. “What we’re talking about here is global Internet censorship. It will criminalize our online activities, censor the Web, and cost everyday users money. This deal would never pass with the whole world watching—that’s why they’ve negotiated it in total secrecy.”

If that part isn’t obvious by now, I don’t know what is.

TPP opponents have claimed that under the agreement, “Internet Service Providers could be required to ‘police’ user activity (i.e. police YOU), take down Internet content, and cut people off from Internet access for common user-generated content.”

Electronic Frontier Foundation’s (EFF) Maira Sutton wrote on Monday, “We have no reason to believe that the TPP has improved much at all from the last leaked version released in August, and we won’t know until the U.S. Trade Representative releases the text. So as long as it contains a retroactive 20-year copyright term extensionbans on circumventing DRMmassively disproportionate punishments for copyright infringement, and rules that criminalize investigative journalists and whistleblowers, we have to do everything we can to stop this agreement from getting signed, ratified, and put into force.”

Furthermore, “The fact that close to 800 million Internet users’ rights to free expression, privacy, and access to knowledge online hinged upon the outcome of squabbles over trade rules on cars and milk is precisely why digital policy consideration[s] do not belong in trade agreements,” Sutton added, referring to the auto and dairy tariff provisions that reportedly held up the talks.

 
I say we DON'T TRUST our government or our corporations to make a secret agreement!  What say you?

 

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saxplayer00o1
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Teamsters union pension fund for more than 400000 workers facing

Teamsters union pension fund for more than 400000 workers facing major cuts

WDRB - ‎6 hours ago‎
Today, only one person pays into the fund for every five people who collect from it -- and there's a $2 billion shortfall every year. If nothing changes projections show the pension will be broke by 2026. "Anybody who thinks we took pleasure in doing ...
 

Union pension fund for more than 400000 workers facing major cuts

WDRB - ‎6 hours ago‎
... recessions and an aging population created a perfect storm. Today, only one person pays into the fund for every five people who collect from it -- and there's a $2 billion shortfall every year. If nothing changes projects show the pension will be ...
 

Central States Pension Fund Plans To Slash More Than 400000 Retirees' Pensions ...

The Inquisitr - ‎6 hours ago‎
Essentially, Central States Pension Fund pays out $3.46 for every dollar it collects. Hence each year, the fund pays out $2 billion more in benefits than what it collects through employer contributions. Apart from the rapidly increasing shortfall, the ...
 

Large pension fund files plan to cut retiree benefits under new law

Washington Post - ‎Oct 6, 2015‎
Nearly 300,000 former truckers and their families would suffer significant losses under a proposal that uses a controversial new law to cut once sacrosanct pension benefits. The huge Central States Pension Fund, which administers retirement benefits ...
Arthur Robey's picture
Arthur Robey
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Posts: 3936
The TPP displeases me. I have

The TPP displeases me.
I have a counter proposal.  
We shred all Company Law and Institute Distributism. 

https://en.m.wikipedia.org/wiki/Distributism

Where the workers own the means of production. Where sweat equity means equity. Very simple. 

Michael_Rudmin's picture
Michael_Rudmin
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Posts: 835
Yeah, ITT had an answer for that

ITT's answer to Allende: murder for economic dominance. And the US Embassy's CIA answer to Americans: murder for economic dominance. And the US School for the America's answer to the Catholic Church: murder for economic dominance. And the Chiquita Banana answer to Brazil: murder for economic dominance. And the Hawaiian statehood: murder for economic dominance. And the (Col. Chivington) Denver answer to the Cheyenne men, women, and children who flew a US flag: murder for economic dominance.

This TPP vs. Doctors without borders issue:

Even the fact of the coincidence, I have a problem with.

Michael_Rudmin's picture
Michael_Rudmin
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Posts: 835
Okay 655: that should fix things. How do we get there from here?

Or in other words, when you have evil people who are determined to do evil, how do you put the bell on the cat?

Either your answer WON'T fix things, or it will be bypassed, or it won't be permitted, or there will be retribution followed by a return to the normative corruption.

MY answer is this: I never vote for the winners, and categorically deny that their evil has any part with me, much less authorization by me.

Arthur Robey's picture
Arthur Robey
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Posts: 3936
Procrastination

I think I'll read this later. 

Why do we procrastinate? Are we built to operate this way at some times? Or is there something wrong with the way we’re approaching work?

http://www.sbs.com.au/news/article/2015/10/07/comment-psychological-orig...

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saxplayer00o1
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Posts: 4149
Global US dollar recession creates ill wind for emerging markets

 

Global US dollar recession creates ill wind for emerging markets

Financial Times-6 hours ago
Dragged down by weak performances in some large emerging markets and in Europe, the global economy is this year set to post its deepest US dollar ...

Bank of Japan Cuts Production Forecast as Slack Grows in Economy

Wall Street Journal-3 hours ago
In its monthly report, the central bank clearly acknowledged for the first time that industrial output may have fallen for a second straight quarter in the three ...

Japan machinery orders fall in August, undermine BOJ optimism

Yahoo News UK-7 hours ago
Kuroda citied these figures as one reason inflation will pick up after the central bank left policy on hold on Wednesday, but the slide in machinery orders ...

Bad loans spiral in India's 'broken' banking system

Financial Times-4 hours ago
Asking for a solution to the problems of the state banks that dominate India's financial ... Indian Overseas Bank — the first time in three years the central bank has ...

ECB''s Knot: Inflation Won''t Return to 2% Anytime Soon

Nasdaq-6 hours ago
AMSTERDAM—The European Central Bank will likely need more time to reach its inflation rate target of just below 2%, ECB governing council member Klaas ...

German Exports Slump Most Since 2009 Recession as Risks Rise

Bloomberg-6 hours ago
Any further stimulus by the European Central Bank could also prove a boon if it pushes down the euro, making German products more competitive.

Russia Considering Pension System Alternatives as Deficit Widens

Bloomberg-11 hours ago
The central bank may announce the alternative to the current pension savings system within a month, Sergey Shvetsov, first deputy central bank governor, told ...

Former IMF chief economist backs 'people's QE'

Reuters-13 hours ago
Quantitative easing, where central banks buy assets such as government bonds from banks in exchange for newly created money, has been used in the euro ...

Lew rules out letting Congress extract 'unacceptable' policies to lift ...

Reuters-2 hours ago
The federal government is currently scraping just under its $18 trillion legal debt cap, with political wrangling over fiscal policy putting Washington at risk of not ...

Concern Grows That the IMF May Be Overstretched

New York Times-5 hours ago
Driving these global concerns is the fear that the dollar-based debt in large ... that corporate debt levels had soared to $18 trillion from $4 trillion 10 years ago.

Saudi Arabia Said to Order Spending Curbs Amid Oil Price Slump

Bloomberg-2 hours ago
While public debt is among the world's lowest, with a gross debt-to-GDP ratio of ... The kingdom's net foreign assets fell for a seventh month to $654.5 billion in ...

Analysts say major U.S. banks on hook to Glencore

CNBC-15 hours ago
And the company is now undertaking a debt-reduction program that aims to trim net debt from roughly $30 billion as of late June to $24 billion by the end of the ...

IMF: Greece Might Need More Measures to Cover Primary Deficit

Greek Reporter-6 hours ago
IMF: Greece Might Need More Measures to Cover Primary Deficit ... 1.35 billion euros to cover the difference between the 0.5 percent primary deficit for 2015 and ...

Chicago Motor Fuel Bonds Cut to BBB+ by S&P on State Impasse

Bloomberg-24 minutes ago
The credit rating of Chicago's motor fuel tax bonds was slashed six levels by Standard & Poor's to BBB+, three steps above junk, as the Illinois budget impasse ...

European Central Bank Moves Closer to Boosting or Extending ...

TheStreet.com-13 minutes ago
Although the bond-buying program has nearly a year left, there are growing signs that the ECB may do another round of stimulus -- and that it could be bigger ...

Wyoming Budget In Trouble

KGWN - ‎14 hours ago‎
Wyoming could be facing a deficit of up to two hundred million dollars. "We're going to have to tighten our belts, and tighten our belts a lot," said Governor Mead. A discussion has begun but what will be cut first is still unclear. "What programs can ...

 

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