San Francisco Awards $190,000 To Illegal Immigrant Over “Sanctuary City Violation”

The tax payers of San Francisco, courtesy of a plea deal negotiated by the City Attorney’s Office, will soon be handing over $190,000 to an illegal immigrant, who had a warrant out for his arrest mind you, after he filed a lawsuit alleging that city police violated ‘sanctuary city ordinances’ by handing him over to immigration officials.  No, you’ve not lost your mind, this is real life.

The incident all started when Pedro Figueroa-Zarceno visited a San Francisco police station to report that his car had been stolen.  In the process of filing the complaint, officers discovered there was a warrant out for Figueroa’s arrest but apparently they were unable to track down further details.  Figueroa was eventually allowed to leave the police station through a side exit where immigration officials were conveniently waiting for him.

Here is more from the San Francisco Examiner:

A man who San Francisco police turned over to immigration authorities in violation of The City’s sanctuary ordinance is set to be awarded $190,000 in a settlement agreement reached with the City Attorney’s Office, which his lawyer hopes will push police to obey such laws.

 

Pedro Figueroa-Zarceno, 33, sued The City on Jan. 17 for violating its sanctuary city laws when officers at Southern Station allegedly cooperated with immigration officials. Figueroa-Zarceno, an undocumented immigrant and native of El Salvador, went to the station at 1251 3rd Street in Mission Bay in December 2015 to report a stolen car.

 

But instead of helping him find his car, officers called immigration authorities, who took him into custody outside of the station.

 

Police reports and case documents previously obtained by the Examiner showed that officers at the station detained Figueroa-Zarceno after they ran his name and found a warrant for his arrest. But they were unable to find details on the warrant, so Figueroa-Zarceno was released from a side door, where he was then arrested by immigration officials. Those officials had been notified by San Francisco police.

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All that said, Attorney Saira Hussain wants you to know that it’s “really important” that San Francisco’s sanctuary city laws are protected…other laws, not so much.

“It’s really important for San Francisco to remain a sanctuary city not in name only but also in practice,” said Saira Hussain, a staff attorney at the Asian Law Caucus, who represented Zarceno.

 

City law, the Due Process for All Ordinance, bars law enforcement from cooperating with Immigration and Customs Enforcement, among other federal immigration officials, except in a few exceptions when violent criminals are involved. Part of the law’s purpose was to encourage immigrants to report crimes they may otherwise not report because they fear law enforcement will turn them over to immigration authorities.

Of course, none of this is particularly surprising given that, as we recently noted, the city of San Francisco launched a whole new group in the Public Defender’s office specifically dedicated to representing illegal immigrants.  As an NBC affiliate in the Bay Area noted, the new office is expected to handle just 50 clients per year of the 1,500 detained immigrants that currently have scheduled court dates.  

Unlike in criminal court, immigrants are not automatically entitled to legal representation in deportation proceedings. However, studies have shown that detained immigrants with attorneys are six times more likely to win their cases.

 

While San Francisco also provides funding to nonprofits specializing in legal aid to immigrants, the public defender’s office is intended to serve those already in detention, a demographic the nonprofits generally don’t serve.

 

The unit’s attorneys are each expected to handle around 50 clients per year — a small portion of the estimated 1,500 detained immigrants who currently have court dates in San Francisco, around 85 percent of whom do not have attorneys.

If cities get to randomly pick and choose which laws they’re going to enforce, can we kindly request that someone create a ‘sanctuary’ for those wanted for grand theft auto?  Some of us are in the market for a couple really nice Lambo’s but are somewhat ‘economically challenged’ at the moment…frankly, it’s just not fair and we’re feeling ‘triggered’.

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The World Is Now $217,000,000,000,000 In Debt And The Global Elite Like It That Way

Authored by Michael Snyder via The Economic Collapse blog,

The borrower is the servant of the lender, and through the mechanism of government debt virtually the entire planet has become the servants of the global money changers.  Politicians love to borrow money, but over time government debt slowly but surely impoverishes a nation.  As the elite get governments around the globe in increasing amounts of debt, those governments must raise taxes in order to keep servicing those debts.  In the end, it is all about taking money from us and transferring it into government pockets, and then taking money from government pockets and transferring it into the hands of the elite.  It is a game that has been going on for generations, and it is time for humanity to say that enough is enough.

According to the Institute of International Finance, global debt has now reached a new all-time record high of 217 trillion dollars

Global debt levels have surged to a record $217 trillion in the first quarter of the year. This is 327 percent of the world’s annual economic output (GDP), reports the Institute of International Finance (IIF).

 

The surging debt was driven by emerging economies, which have increased borrowing by $3 trillion to $56 trillion. This amounts to 218 percent of their combined economic output, five percentage points greater year on year.

Never before in human history has our world been so saturated with debt.

And what all of this debt does is that it funnels wealth to the very top of the global wealth pyramid.  In other words, it makes global wealth inequality far worse because this system is designed to make the rich even richer and the poor even poorer.

Every year the gap between the wealthy and the poor grows, and it has gotten to the point that eight men have as much wealth as the poorest 3.6 billion people on this planet combined

Eight men own the same wealth as the 3.6 billion people who make up the poorest half of humanity, according to a new report published by Oxfam today to mark the annual meeting of political and business leaders in Davos.

This didn’t happen by accident.  Sadly, most people don’t even understand that this is literally what our system was designed to do.

Today, more than 99 percent of the population of the planet lives in a country that has a central bank.  And debt-based central banking is designed to get national governments trapped in endless debt spirals from which they can never possibly escape.

For example, just consider the Federal Reserve.  During the four decades before the Federal Reserve was created, our country enjoyed the best period of economic growth in U.S. history.  But since the Fed was established in 1913, the value of the U.S. dollar has fallen by approximately 98 percent and the size of our national debt has gotten more than 5000 times larger.

It isn’t an accident that we are 20 trillion dollars in debt.  The truth is that the debt-based Federal Reserve is doing exactly what it was originally designed to do.  And no matter what politicians will tell you, we will never have a permanent solution to our debt problem until we get rid of the Federal Reserve.

In 2017, interest on the national debt will be nearly half a trillion dollars.

That means that close to 500 billion of our tax dollars will go out the door before our government spends a single penny on the military, on roads, on health care or on anything else.

And we continue to pile up debt at a rate of more than 100 million dollars an hour.  According to the Congressional Budget Office, the federal government will add more than a trillion dollars to the national debt once again in 2018…

Unless current laws are changed, federal individual income tax collections will increase by 9.5 percent in fiscal 2018, which begins on Oct. 1, according to data released today by the Congressional Budget Office.

 

At the same time, however, the federal debt will increase by more than $1 trillion.

We shouldn’t be doing this, but we just can’t seem to stop.

Let me try to put this into perspective.  If you could somehow borrow a million dollars today and obligate your children to pay it off for you, would you do it?

Maybe if you really hate your children you would, but most loving parents would never do such a thing.

But that is precisely what we are doing on a national level.

Thomas Jefferson was strongly against government debt because he believed that it was a way for one generation to steal from another generation.  And he actually wished that he could have added another amendment to the U.S. Constitution which would have banned government borrowing…

“I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.”

And the really big secret that none of us are supposed to know is that governments don’t actually have to borrow money.

But if we start saying that too loudly the people that are making trillions of dollars from the current system are going to get very, very upset with us.

Today, we are living in the terminal phase of the biggest debt bubble in the history of the planet.  Every debt bubble eventually ends tragically, and this one will too.

Bill Gross recently noted that “our highly levered financial system is like a truckload of nitro glycerin on a bumpy road”.  One wrong move and the whole thing could blow sky high.

When everything comes crashing down and a great crisis happens, we are going to have a choice.

We could try to rebuild the fundamentally flawed old system, or we could scrap it and start over with something much better.

My hope is that we will finally learn our lesson and discard the debt-based central banking model for good.

The reason why I am writing about this so much ahead of time is so that people will actually understand why the coming crisis is happening as it unfolds.

If we can get everyone to understand how we are being systematically robbed and cheated, perhaps people will finally get mad enough to do something about it.

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Hedge Fund Traders Return To Banking As Trump Promises To ‘Make Prop Trading Great Again’

The hedge fund industry is finding itself in increasingly dire straits as persistently weak returns and the advent of low-cost investing have forced more and more funds to shut down. So, it's unsurprising that, amid this steadily worsening backdrop, more traders are heading for the exits. But where are the heading? Increasingly, more traders are moving back from where they came – i.e. the big banks, which expect to see a boost in trading revenue as President Donald Trump has vowed to dial back postcrisis regulations that forced banks to wind down their prop desks.

In recent months, a number of high-profile hedge fund names have made the leap back to banking, according to Bloomberg.

“This month, Barclays Plc hired Chris Leonard, a founder of two hedge funds in the decade since he left JPMorgan Chase & Co., to turn around U.S. rates trading. At the end of last year, ex-bankers Roberto Hoornweg and Chris Rivelli, both of Brevan Howard Asset Management, left that London hedge fund for banks.

 

Recruiters say these moves and others aren’t just the usual attrition: banks in New York and London are interesting employers again a decade after the financial crisis, and may get involved in more proprietary trading if President Trump eases regulatory burdens. There’s also another factor: many macro funds just don’t make money anymore.

 

One recruiter says he expects defections to increase over the next nine months.

 

“In the last quarter of the year or first quarter of 2018, you will find more people leaving the hedge funds to join banks to run proprietary money,” said Jason Kennedy, chief executive officer of the Kennedy Group in London, which hires for banks and hedge funds. “The banks will become more attractive in terms of jobs and pay.”

The Trump administration has struggled to pass elements of its agenda – most notable its plan to repeal and replace Obamacare. And it only recently scored a partial victory on its immigration ban. Yet financial deregulation is one area where the Trump agenda is moving inexorably forward. On June 13, Treasury Secretary Steven Mnuchin issued a report – the first in a series that will detail how the administration plans to proceed with paring back post-crisis regulations.  Some of the more notable proposals in the highly-anticipated report include: adjusting the annual stress tests, easing trading rules (i.e., gutting the Volcker Rule), and paring back the power of the watchdogs – like the Consumer Financial Protection Bureau. Unlike the administration’s health-care plans, these measures enjoy broad support among Republicans.

Meanwhile, hedge funds are finding it increasingly difficult to compete for top talent.

"…the bar within the hedge-fund world has increased dramatically over the last year,” Kennedy said.

 

Hedge funds, stung by years of underperformance and revolts from investors, are increasingly under pressure to dump their traditional 2 percent management and 20 percent performance-fee model, curtailing their ability to hire and retain talent. Louis Bacon’s Moore Capital Management, Tudor Investment Corp., Och-Ziff Capital Management Group LLC, Canyon Capital Advisors and Brevan Howard were among money managers who cut fees last year. More hedge funds shuttered last year than started, a trend that continued in the first quarter of 2017, according to data from Hedge Fund Research Inc.

 

“It is not surprising that traders are looking for a safe haven, and if banks have more room to operate these moves could make sense,” said John Purcell of Purcell & Co., a London-based executive recruitment firm."

The unprecedented easy money policies adopted by the world's largest central banks in the aftermath of the crisis have hurt macro funds' profits by suppressing two-way volatility.

“Tim Sharp made the move back to the sell side even earlier, and says banks now have attractive niche trading businesses and many are nearly done downsizing. He joined Credit Suisse Group AG in July 2015 after less than a year running money at BlueCrest Capital Management LLP, the firm led by Michael Platt. At the end of that year, Platt’s firm, once among Europe’s largest hedge funds, announced it would return about $7 billion of the $8 billion it managed.

 

“It’s very difficult for macro funds," Sharp said in an interview. “Central bank policies have crushed volatility and reduced opportunities, and also it’s survival of the fittest.”

 

Sharp, who is now a director at Credit Suisse, left BlueCrest a few months after the Swiss central bank’s shock decision to remove its currency cap, which caused losses at several firms.

 

"Macro as an overall strategy has recently experienced a prolonged phase of lackluster returns, triggering a number of unwinds at big shops," said Nicolas Roth, co-head of alternative assets at Geneva-based Reyl & Cie.”

As Bloomberg explains, the flow of traders back into banking is a reversal of a trend that began in 2008, when banks, reelingfrom the crisis, saw an exodus of traders move to the buy side as many hoped to cash in on the postcrisis recovery. The advent of the Volcker rule forced banks to wind down their prop trading desks, spurring even more defections. Another factor: the rising cost of regulatory compliance is making it increasingly expensive to start a hedge fund.

"Hedge funds were booming. In 2009, hedge funds gained almost 20 percent, their best yearly performance since 1999, according to the HFRI Fund Weighted Composite Index; a year later, they returned 10.3 percent.

 

While macro strategies raised $13.8 billion in the first five months of this year, the most of any trading strategy tracked by eVestment, investors are disappointed by their returns. Traders wagering on currencies and rates continue to struggle, even as peers are showing signs of recovering from their multi-year funk.

 

Andrew Law’s Caxton Associates lost 8 percent this year through May and told clients that it’s slashing performance and management fees. Paul Brewer’s hedge fund Rubicon Global Fund plunged about 27 percent this year, hurt by wrong-way currency wagers, people said earlier this month.

 

It’s also more expensive to start a hedge fund than it was, because of the difficult capital raising environment and rising cost of regulatory compliance.

 

“Some macro traders are returning to the sell side, maybe in a hope that a Dodd-Frank rollback will re-open proprietary trading activity,” Roth said."

Here’s a breakdown of other personnel moves, courtesy of Bloomberg.

  • Anthony Kemp returned to Morgan Stanley at the beginning of May from Stone Milliner Asset Management, which he joined in summer 2015
  • Alex Silverman left Citadel to join Morgan Stanley in New York at the end of March 2017
  • Dipak Shah joined Citigroup Inc. as director in October 2016 from Capula Investment Services after previously working at Goldman Sachs Group Inc.
     

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Grant Williams: Get Out of Equities Before Boomers Are Forced To Sell Them

Authored by Stephen McBride via MauldinEconomics.com,

Last year, the first baby boomers turned 70 and that spells trouble for investors.

Speaking at the Mauldin Economics Strategic Investment Conference, Grant Williams, Co-Founder of RealVision TV, warned investors about the wave of forced selling by millions of retirees and the impact it will have on their portfolios.

Equities Make Up 70% of Boomers’ Portfolios

“Boomers are the largest generation in history to retire, and they’re doing so right now.”

In fact, according to Pew Research, 1.5 million Americans turned 70 last year and will do so every year for the next 15 years.

“When Boomers are retiring in their millions, they have 70% of their portfolios in equities… at a point in time when we are due a recession,” pointed out Grant Williams.

 

“And in recession, bad things happen… the average stock market drawdown in recession since 1980 is 37%.”

Just $136,000 Saved for Retirement

While boomers have their biggest allocation to equities they’ve ever had, Williams says the numbers don’t look good for them: “The reality is they don’t have enough money to retire.”

“According to BlackRock, the average Boomer has only $136,000 saved for retirement. Even with return assumptions fixed at 7%, when they’re more like 2%, you are talking an income of $9,000 a year… that’s $36,000 shy of the ideal retirement income,” adds Williams.

As such, boomers will be forced to look for income elsewhere. In the not-so-distant past, that has come from bonds.

As the below chart shows, once you hit the age of 65, you go through the most profound asset class shift since your 30s. You trim your equity positions and raise your bond exposure to lower the risk.

Source: Haver Analytics, Gluskin Sheff

However, with today’s yields, bonds won’t provide the needed income.

Even if boomers decide to stick to equities for higher yields, there’s another reason they will be forced to divest their equity holdings—one they have little choice in.

Forced to Sell 5% of Their Portfolios Every Year

Due to IRS mandatory minimum drawdown laws for retirement plans like IRAs and 401(k)s, when you turn 70 ½, you are forced to withdraw at least 5% of the value of the plan each year.

Williams thinks it will have profound implications: “Boomers started turning 70 ½ in April, this is a real problem and people don’t understand the ramifications of it.”

This forced selling will flood the market with billions worth of equities, which will push down prices.

Given that 15 million retirees will be forced to divest their equity holdings over the next decade, Grant has some thoughts on what investors like you and me should be doing today:

“Get out of equities. You might think you’re a wealthy guy… but if you have 70% of your portfolio in equities and you take a 40% haircut, you’re not a wealthy guy anymore.”

What Does This Mean for the US Economy?

For Grant’s thoughts on what the retirement crisis means for the US economy, big demographic trends, and more—watch the full interview below.

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Andrew Cuomo Refuses Federal Data Request Related To Trump’s “Voter Fraud Myth”

Shortly after moving into the White House, President Trump promised a “major investigation into VOTER FRAUD” and vowed that any evidence of wrongdoing would be used to strengthen voting procedures.  The following tweets undoubtedly ‘triggered’ millions of liberals across the country as visions of ‘racist’ voter ID laws danced in their heads.


 

Then, just last month, that “major investigation” came in the form of an Executive Order entitled: “Presidential Executive Order on the Establishment of Presidential Advisory Commission on Election Integrity.”  The Commission was to be chaired by Vice President Mike Pence and it’s mission was defined as follows:

The Commission shall, consistent with applicable law, study the registration and voting processes used in Federal elections.  The Commission shall be solely advisory and shall submit a report to the President that identifies the following:

 

(a)  those laws, rules, policies, activities, strategies, and practices that enhance the American people’s confidence in the integrity of the voting processes used in Federal elections;

 

(b)  those laws, rules, policies, activities, strategies, and practices that undermine the American people’s confidence in the integrity of the voting processes used in Federal elections; and

 

(c)  those vulnerabilities in voting systems and practices used for Federal elections that could lead to improper voter registrations and improper voting, including fraudulent voter registrations and fraudulent voting.

 

And, since no one would possibly argue in favor of more voter fraud rather than less, you might assume this particular Executive Order enjoyed overwhelming bipartisan support across the country…of course, you could think that, but you would be incredibly wrong.

Enter New York Governor Andrew Cuomo.  Apparently Mr. Cuomo is so certain that voter fraud is nothing more than a right-wing “myth” that’s he unwilling to even comply with a data request to make sure.  We’re sure he’s just trying to save Vice President Pence from wasting his time.

 

Of course, Cuomo’s position is somewhat curious in light of the fact that New York City’s own Commissioner of the Board of Elections, Alan Schulkin (Democrat), was caught on a secret video by Project Veritas openly admitting that “there is a lot of voter fraud.  At one point, Schulkin even admits that campaign officials bus minorities from “poll site to poll site” so they can vote multiple times.

“He gave out ID cards, de Blasio. That’s in lieu of a driver’s license, but you can use it for anything.  But they didn’t vet people to see who they really are. Anybody can go in there and say, ‘I am Joe Smith, I want an ID card.

 

“It’s absurd. There is a lot of fraud. Not just voter fraud, all kinds of fraud . . . This is why I get more conservative as I get older.”

 

“Voters? Yeah, they should ask for your ID. I think there is a lot of voter fraud.  You know, I don’t think it’s too much to ask somebody to show some kind of an ID . . . You go into a building, you have to show them your ID.”

 

“They bus people around to vote . . . They put them in a bus and go poll site to poll site.”  Asked which neighborhoods, Schulkin said, “I don’t want to say.”  When the undercover mentions black and Hispanic neighborhoods, Schulkin responded, “Yeah . . . and Chinese, too.”

 

Alas, we assume that video is also just a ‘myth’…

Of course, New York wasn’t the only snowflake state to opt out of Trump’s voter fraud data request. Apparently California is also quite confident that all of their illegal immigrants are voting legally…or something like that.

 

As The Hill notes, a total of 5 states have refused to turn over any voter data whatsoever while another 9 have said they’ll only hand over publicly available data.

As of Friday afternoon, officials in New York, California, Massachusetts, Kentucky and Virginia had said they would not turn over any of their voter data to the voter fraud commission.

 

Other officials in Connecticut, Minnesota, Oklahoma, Rhode Island, Vermont, Utah, North Carolina, Indiana and Iowa said they would only turn over public information on voter rolls, but wouldn’t share private information.

 

Wisconsin announced it would turn over public information but would charge the commission $12,500 to buy the voter roll data.

Of course, at the end of the day, you only really need to examine a couple of critical swing states to get a sense for how rampant voter fraud might be.  And, since we don’t see Florida or Ohio on the lists above, we very much look forward to the data from those two states.

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“We’re All A ‘Walking Illinois’ Now”

Authored by James Howard Kunstler via Kunstler.com,

Who needs Russia when the Tweety-Bird-in-Chief is hacking his own presidency into a global joke? Or at least it might be a joke if the USA weren’t such a menace to international order, and to itself, by the way. Interestingly, the 25th amendment allows for the removal of a president from office on account of incompetence or disability, but not for being an embarrassment to the nation.

They may come after him anyway with the 25th, especially as the financial system unravels later this year, because this time, unlike 2008-9, central bank interventions will not avail to rescue the faltering money system from nine years of previous central bank interventions. All it takes is for the “liquidity” flows to seize up and before you know it, there’s no food in the supermarkets because everything in our just-in-time economy is exquisitely calibrated to the sure expectation of getting paid, and when that goes, it all goes.

Then the question arises: well, can’t you just re-start the liquidity flows? Not when the process requires another abracadabra magic act of summoning X-trillions of dollars out of absolutely nothing when the previous X-trillions created out of absolutely nothing are rushing at warp speed into the black hole of deleveraging because it has been discovered that the “loans” they were based on can never be paid back, not in this universe or any number of universes like it. In a word, they’re worthless.

Deleveraging is the polite term economists give to your net worth rapidly evaporating. Liquidity is the polite term for cash money and things denominated in them that can readily be converted into cash money. The problem with the kind of liquidity-creation solution to deleveraging is that it rapidly leads to money itself becoming worthless.

The preview of coming attractions is currently playing out in Illinois — soon to be joined by Connecticut, California, Kentucky, and many other bankrupt states. Illinois is dead broke. It can’t pay the contractors who fix things like roads and storm drains, and supply food to its prisons. It’s over $200-billion deep in pension obligations that will never be honored. Its Medicaid system is a shambles. It doesn’t even have the cash-on-hand to pay lottery winners (what happened to all the cash paid into the lottery by the suckers who didn’t win, which is supposed to pay off the winners?). The state legislature hasn’t passed a budget in three years.

The governor and the mayor of Chicago and everybody else nominally in charge have no idea what they’re going to do about it. Think the federal government is going to just step in and save the day there? They’d have to bail out every other foundering state and that’s just not going to happen, especially with that same federal government about to run out of cash money itself, with no resolution of the debt ceiling controversy that might allow it to even pretend to borrow more money by issuing treasury bonds that are instantly bought by the Federal Reserve — which, of course, is not an official government agency but a private banking consortium contracted to manage the nation’s money.

Do you begin to see the outlines of the clusterfuck rising like a bad moon over the harvest season of 2017? The American people, by and large, have no more idea how false and fragile the financial arrangements of the nation are than the average eight-year-old has about why the re-po squad is towing away Daddy’s Ford-F150. We’re just doing what we always do: gittin’ our summer on. Breaking out the potato salad and the Bud Lites — at least those who have enough mojo left in their MasterCards to charge the party supplies.

An awful lot of Americans must be maxed out, though, people who actually used to work at things and get paid for it. Each one of them is a walking Illinois now, facing each dawning day with a bigger load of problems, more things they can’t pay for, and moving closer to the dreadful day when everything is gone, every chattel, every knickknack, the very roof over their head, and most particularly the belief that they live in a fair and decent society.

So, I wonder what we’re going to do with a Tweety-Bird-in-Chief in the White House when this deal goes down. Stresses and tensions are out there a’buildin’ and the time for being a nation of feckless idiots is drawing to a close. The sad thing is: it wasn’t even fun while it lasted.

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When Gutting A Tax Board Is Actually Bad For Taxpayers: New at Reason

Efforts to get rid of the California Board of Equalization are bad news for taxpayers.

Steven Greenhut writes:

When I first learned about the existence of something called the California Board of Equalization (BOE), it sounded like something that might have existed in the novel, “Animal Farm.” All animals are equal, but some are more equal than others. Few things sound more totalitarian than a government agency in charge of equalizing things.

But California’s BOE, founded in 1879, simply is a banal tax board that oversees collection of the state’s sales and excise taxes. It also handles appeals of the state’s income and corporate taxes. The “equalization” has nothing to do with equalizing Californians’ financial status, but making sure “that county property tax assessment practices were equal and uniform throughout the state,” according to the agency’s own description.

Currently, it’s the only state tax bureau in the nation run by elected officials. The board has four elected members who represent large districts, plus the state controller. It has a staff of more than 4,000 people and offices across the state. There have been multiple efforts to eliminate the agency over the years, and in the wake of a series of recent problems, it looks like the agency finally is having its powers drastically reduced.

View this article.

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Pensions Timebomb In America – “Global Crisis” Cometh

Pensions Timebomb – Pensions “Are Going To Be A National Crisis”

– America’s underfunded pension system is “not a distant concern but a system already in crisis”…

– Tax may explode as governments seek to bail out insolvent pension plans

– Illinois, California, New Jersey, Connecticut, Massachusetts, Kentucky and eight other states vulnerable

– The simple mathematical mismatch at the heart of the pension crisis

– Why the pension crisis really is “America’s silent crisis”…

– Pensions timebomb confronts Ireland, UK and most EU countries


By Brian Maher, Managing editor, The Daily Reckoning

“This is going to be a national crisis…

“This” being America’s woefully underfunded pension liabilities, according to Karen Friedman. She’s the executive vice president of the Pension Rights Center.

(A place called the Pension Rights Center does in fact exist. We checked.)

MarketWatch columnist Jeff Reeves howls in confirmation that “collapsing pensions will fuel America’s next financial crisis.”

“This is not a distant concern,” warns he, “but a system already in crisis.”

According to data supplied by the Federal Reserve, pensions — public and private combined — were roughly 27% underfunded at the end of last year.

By some estimates, America’s public pensions alone are sunk in a $6 trillion abyss.

The issue, approached from any direction, is an impossible knot… a tar pit… a minotaur’s maze of blind alleys and dead ends.

How has the American pension come to such an estate?

Most public pension systems were built upon the sunny assumption that their investments will yield a handsome 7.5% annual return.

But consider…

The average public pension plan returned just 1.5% last year.

Last year marked the second consecutive year that plans undershot the 7.5% return rate, according to Governing magazine.

The same plans worked an average gain of 2–4% in 2015.

A highly technical term describes the foregoing if it goes on long enough… and we apologize if it sends you to the dictionary:

Insolvency.

Briefly turn your attention to the Golden State, for example. California.

State pensions are only in funds to meet 65% of their promised benefits.

And California pins its hopes on that golden annual 7.5% return to make the shortage good.

But it’s in a devil of a fine fix if the average public pension plan only returns 1.5%.

The math is the math.

California essentially depends on returns 400% above the norm, according to financial analyst Larry Edelson.

But California is by no means alone.

We won’t run the entire roll call of shame.

But the great state of Illinois, for one, risks sinking into a $130 billion “death spiral” from its unfunded pension liabilities, as Ted Dabrowski of the Illinois Policy Institute described it.

S&P Global Ratings has even threatened to downgrade the state’s credit score to “junk” status.

New Jersey, Connecticut, Massachusetts and Kentucky are also among the worst deadbeats.

But the problems run from ocean to ocean and south to north.

A report from Moody’s reads thus:

For many states and municipalities, exposure to unfunded pension liabilities is already at or near all-time highs. Since cost burdens are already expected to further increase, pension fund investment performance is critical for the credit quality of many governments.

Not even a “best case” cumulative 25% investment return on public pension plans would stanch the blood flow, according to Moody’s.

They say that best-case 25% would merely reduce pension liabilities a slender 1% through 2019 due to weak contributions and poor past investment returns.

“But I don’t have a pension,” comes your response. “This doesn’t concern me.”

Ah, but have another guess — at least if you swear off your taxes in these United States.

Is it your belief that governments will let their prized public pension plans flop?

There are votes to consider, after all.

Jilted pensioners are capable of generating a good deal of hullabaloo, hullabaloo to which the official ear is exquisitely attuned.

Besides, do you think kind Uncle Samuel will turn the politically strategic states of California and Illinois out on their ears?

As our resident income specialist Zach Scheidt argues:

Your tax bill could explode as governments around the country seek to bail out insolvent pension plans. And you know how much politicians like to use your tax money to bail out some constituent. They like to prove their “compassion” with your money!

“Expect to pay higher state and local taxes for fewer services in the years to come,” adds Larry Edelson, before mentioned.

And:

“Don’t be surprised if authorities of all shapes and sizes — from local governments to national agencies — up the ante to get ahold of your assets any way they can.”

We would have to agree. You shouldn’t be surprised in the least.

And we can scarcely imagine the holy hell that would follow another financial crisis.

Illinois Gov. Bruce Rauner warns the state’s pension crisis is driving his beloved Land of Lincoln into “banana republic” territory.

But we suspect the good governor’s mouth ran away with him here…

Can you imagine comparing the venerable, eminently worthy banana republic… to Illinois?

The pension crisis is truly “America’s silent crisis” and indeed the world’s silent crisis.

From The Daily Reckoning newsletter


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News and Commentary

Gold steady on easing dollar, stocks amid hawkish central banks (Reuters)

Technology Shares Lead Stock Rebound; Oil Gains: Markets Wrap (Bloomberg)

Nikkei dives under 20,000 as Asian markets sharply pull back (Marketwatch)

Tech Spoils Bank Party as Stocks, Dollar Slide: Markets Wrap (Bloomberg)

The Yellowstone Supervolcano Has Just Seen 878 Earthquakes in Two Weeks (Science Alert)

Source: Cape Shiller via ZeroHedge

Source: Cape Shiller via ZeroHedge

Robert Shiller: “The Index I Invented Is At Levels Last Seen In 1929 And 2000” (Zerohedge)

How owning a home in Britain became a luxury (Moneyweek)

Petrodollar wars – Gold in your custody cannot be hacked, erased, or frozen (Zerohedge)

Should you own bitcoin or gold?  That’s easy (SCH)

Lessons from ten of the greatest trades of all time (Moneyweek)

Gold Prices (LBMA AM)

30 Jun: USD 1,243.25, GBP 957.43 & EUR 1,090.83 per ounce
29 Jun: USD 1,246.60, GBP 959.88 & EUR 1,093.14 per ounce
28 Jun: USD 1,251.60, GBP 976.25 & EUR 1,101.91 per ounce
27 Jun: USD 1,250.40, GBP 980.31 & EUR 1,111.36 per ounce
26 Jun: USD 1,240.85, GBP 975.56 & EUR 1,109.32 per ounce
23 Jun: USD 1,256.30, GBP 987.70 & EUR 1,125.27 per ounce
22 Jun: USD 1,251.40, GBP 988.36 & EUR 1,120.13 per ounce

Silver Prices (LBMA)

Silver Prices (LBMA)

30 Jun: USD 16.47, GBP 12.69 & EUR 14.44 per ounce
29 Jun: USD 16.83, GBP 12.98 & EUR 14.76 per ounce
28 Jun: USD 16.78, GBP 13.08 & EUR 14.78 per ounce
27 Jun: USD 16.66, GBP 13.07 & EUR 14.79 per ounce
26 Jun: USD 16.53, GBP 12.98 & EUR 14.79 per ounce
23 Jun: USD 16.71, GBP 13.12 & EUR 14.97 per ounce
22 Jun: USD 16.58, GBP 13.09 & EUR 14.85 per ounce


Recent Market Updates

– London Property Bubble Bursting? UK In Unchartered Territory On Brexit and Election Mess
– Shrinkflation – Real Inflation Much Higher Than Reported
– Goldman, Citi Turn Positive On Gold – Despite “Mysterious” Flash Crash
– Worst Crash In Our Lifetime Coming – Jim Rogers
– Go for Gold – Win a beautiful Gold Sovereign coin
– Only Gold Lasts Forever
– Your Future Wealth Depends on what You Decide to Keep and Invest in Now
– Inflation is no longer in stealth mode
– James Rickards: Gold Will Start Heading Higher On “Dwindling” Supply
– Billionaires Invest In Gold
– Brexit and UK election impact UK housing
– In Gold we Trust: Must See Gold Charts and Research
– Pension Funds, Sovereign Wealth Funds, Central Banks “Stock Up” on Gold “Amid Uncertainty”

Important Guides

For your perusal, below are our most popular guides in 2017:

Essential Guide To Storing Gold In Switzerland

Essential Guide To Storing Gold In Singapore

Essential Guide to Tax Free Gold Sovereigns (UK)

Please share our research with family, friends and colleagues who you think would benefit from being informed by it.

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Bizarre Tanker Cooperation Prompts Questions If Qatar, Saudi Feud Is Staged

Either the blockade of Qatar by Saudi Arabia and its allies (recall the Saudi ultimatum expires on July 3) and the whole Qatar “crisis” is the most staged and produced diplomatic stunt since last summer’s Turkish “coup”, or for some unknown reason, the worse the diplomatic relations between Qatar and Saudi Arabia get, the more they cooperate in the only industry that matters for Saudi Arabia.

According to a Bloomberg report, even as Saudi Arabia leads three other Arab nations in accusing Qatar of links to terror groups and being too close to Iran, one thing has become increasingly clear in the oil market: tensions have yet to reach a point where the world’s biggest crude exporter is disrupting its tiny neighbor’s shipments. Specifically, despite the sudden feud, Qatar has maintained longstanding practice of loading crude onto tankers with Saudi Arabia and U.A.E. tracking of tankers compiled by Bloomberg shows.

The number of tankers that are filling with Qatari crude along with that of Saudi Arabia or the United Arab Emirates has actually increased since tensions escalated on June 5, according to Bloomberg calculations. The three countries’ joint loadings of crude remain largely unaffected since the dispute that broke out June 5. Since then, 17 tankers have loaded crude in Qatar and either Saudi Arabia or the U.A.E., or both. There were 16 over an equal period before June 5.

The full details:

  • Co- loadings where a tanker collects barrels from Qatar as well as Saudi Arabia and/or the U.A.E. have actually risen slightly since June 5, when the diplomatic dispute escalated
  • 17 tankers co-loaded in the 25 days since then
  • 16 tankers co-loaded in the 25 days prior
  • Percentage of vessels that co-loaded in Qatar and only Saudi Arabia rose, from 50% before dispute began to 59% since
  • Percentage of vessels that co-loaded in Qatar and only U.A.E. slipped from 25% before dispute to 23.5% after

The full table of co-loadings is shown below, courtesy of Bloomberg data:

As Bloomberg adds, since the June 5 diplomatic crisis, vessels including the Apollo Dream, DHT Redwood and Maran Carina have co-loaded in Qatar and both Saudi Arabia and the U.A.E. Others, like the DHT Falcon, have loaded in only Saudi Arabia and Qatar, while tankers including the Takamine, have taken on crude in U.A.E. and Qatar.

While relations between Qatar and its nearest Persian Gulf neighbors have frayed, shared oil trade with Kuwait, which isn’t part of the dispute, has actually intensified. In the 25 days leading up to the dispute, four tankers co-loaded in Qatar and Kuwait. Since June 5, that number has more than doubled, to nine.

One explanation, proposed by Bloomberg, is that this is simply “pragmatism”:

The ability to cooperate in the tanker market despite diplomatic ties being cut shows how pragmatism often wins out over politics when it comes to the energy market. Were Saudi Arabia to block shared loadings, the kingdom would have created a logistical challenge for its own clients, forcing them to reorganize dozens of cargoes. Such disruptions can also reduce vessel supply and drive up freight costs.

Of course, the flip side is that by not halting co-loadings it makes the Qatari blockade appear like just another paper tiger.

While relations between Qatar and its nearest Persian Gulf neighbors have frayed, shared oil trade with Kuwait, which isn’t part of the dispute, has actually intensified. In the 25 days leading up to the dispute, four tankers co-loaded in Qatar and Kuwait. Since June 5, that number has more than doubled, to nine.

“We’ve seen an easing of the initial uncertainty in the market about the scale of the disruption that would be felt on co-loadings,” Richard Mallinson, a geopolitical analyst at Energy Aspects Ltd. in London, said by phone. Saudi Arabia and U.A.E. may be hesitant to take any steps that could harm their reputations in the eyes of international buyers, he said.

Alternatively, if the Qatar “crisis” is nothing more than just one global spectacle for media and popular consumption meant to scapegoat Qatar for “funding terrorism”, something Saudi Arabia is far more guilty of, expect to see co-loading collapse now that Saudi Arabia discovers that its “bizarre” cooperation has been exposed, prompting its allies to ask just what is going on.

via http://ift.tt/2svpqIf Tyler Durden

Oregon Happy Hours Get a Little More Free, Trump’s Infrastructure Plan is Delayed Yet Again, and Solar Companies Beg for More Tariffs: P.M. Links

  • SolarWorldThe Oregon Liquor Control Commission has abolished a rule that prevented Oregon bars from advertising their happy hour prices. The price mechanism can now freely guide consumers looking to get hammered on a budget.
  • In a typical showing from the constantly behind-schedule administration, Sen. John Thune, chairman of the Commerce, Science and Transportation Committee, announced that work on Trump’s yet to be submitted infrastructure proposal “might spill into next year.” Trump had promised to release a more detailed infrastructure proposal in May, but is now projecting a Fall-time unveiling. Don’t hold your breath.
  • Solar companies file yet another anti-dumping case with the US International Trade Commission. Check out Reason‘s coverage of how even with tariffs, solar is still a bad bet.
  • Speaking of tariffs, Trump says that trade deficits with South Korea can’t be allowed to continue.
  • Education Sec. Betsy DeVos begins rewriting many of Obama’s higher education rules and regulations.

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