“We’re With You” – Hillary Clinton Backs San Juan Mayor As Trump Trashes “Politically Motivated Ingrates”

President Donald Trump’s Twitter rampage defending the federal disaster-recovery effort in Puerto Rico has entered its second day, with the president accusing his critics of being “Fake News or politically motivated ingrates…” in a series of early-morning tweets.

Underscoring the notion that Trump’s enemies and former rivals are using images from devastated Puerto Rico to score cheap political points, Hillary Clinton took a moment out from her "What Happened" book tour to tweet her “support” to San Juan Mayor Carmen Yulin Cruz, promising “we are with you and Puerto Rico.”

Trump engaged in several widely covered twitter battles in September, from his feud with the NFL, to his tweets labeling North Korean Leader Kim Jong Un “rocket man” and promising that the North “won’t be around much longer” if the country continues to provoke the US.

Meanwhile, as we reported yesterday, the US Navy has been steadily ratcheting up the response effort as details about the situation on the ground grew increasingly dire. Hurricanes Maria and Irma completely devastated the island’s communication system, so it was difficult for military personnel and FEMA to gauge how much help was needed. Furthermore, hundreds of thousands of pounds of food, water and other necessities have piled up in Puerto Rican ports, but devastated roads and a shortage of qualified drivers have made distribution difficult.

If yesterday's twitter activity is any indication, we imagine we’ll be hearing more from President Trump later in the day…
 

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What Housing Bubble? Most Australians Couldn’t Afford $100 Mortgage-Payment Hike

Authored by Mike Shedlock via MishTalk.com

A new study shows 57% of Australia mortgage holders could not handle a $100 increase in their loan repayment.

Stress has turned up in even the wealthiest cities.

But who is truly wealthy? Paper profits on homes with enormous mortgages does not constitute wealth.

Please consider $100 Tipping Point for 57% of Mortgage Holders.

A staggering 57% of mortgage holders could not handle a $100 increase in their loan repayments, according to new research by Finder.com.au.

 

This additional $100 is equivalent to an interest rate rise of just 0.45% based on the national average mortgage of $360,600. This means the average standard variable rate of 4.83% would only have to rise to 5.28% to put more than half of mortgage holders in stress.

 

“The typical mortgage holder will begin to struggle once interest rates reach around 5.28% – that’s a pretty small window before borrowing costs start to hurt,” she said.

 

With the research also showing that 39% of all mortgages are interest-only, this highlights why the Reserve Bank of Australia (RBA) and the Australian Prudential Regulation Authority (APRA) have shown some concern, she added.

 

Comparing genders, 63% of women and 50% of men would struggle to repay their mortgages with an increase of less than $100 per month.

 

Across the states, South Australian borrowers were the worst placed with 70% saying they could not handle an increase of less than $100 per month. This figure was lower in New South Wales, Tasmania and Western Australia at 59% and further dropped to 51% in Victoria.

Stress in Wealthiest Areas

Also consider Severe mortgage stress is cropping up in some of Australia’s richest suburbs.

Severe mortgage stress is cropping up in some of Australia’s richest suburbs, revealing that wealthy Australians have been guzzling at the debt fountain. Thousands of households in suburbs like Mosman, Brighton and Nedlands are in mortgage stress, with some at risk of mortgage default in the next 12 months, according to new data from Digital Financial Analytics.

 

Wealth is impossible to see if the person doesn’t want to flaunt it, and easy enough to fake. You can mortgage yourself to buy a grand home and the car to match, and have the trappings of wealth while actually being so far in debt you’re in financial hell.

 

Looking rich and being rich are not the same thing at all, but when times are good, it’s difficult to tell the difference. As the saying goes, ‘When the tide goes out, you see who’s not wearing any swimmers’.

Financial Hell Coming

When top finally blows off the Australian housing bubble, the results will be devastating.

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8 Really Bad Laws That Went Into Effect Today

Every year, thousands of new laws go into effect across the country on October 1. States use the start of the fiscal year to begin enforcing these laws. A sobering number of these laws will turn out to be bad.

Federal agencies and even some foreign countries revel in imposing all new manner of unnecessary authority today. On this day, for example, the United Arab Emirates started levying a 100 percent excise tax on products like tobacco and energy drinks and 50 percent for soda today.

There are much worse laws than that. Here are eight of the worst going into effect today around the country and around the world!

Touching your phone in Oregon

From this day forward, Oregon drivers are prohibited from touching their cellphones while operating their vehicles, except to make a single swipe intended to turn a phone off. While lawmakers passed the prohibition to make it easier for cops to enforce cellphone while driving laws, the “single swipe” exception is sure to muddy that.

The law will apply to cellphones, tablets, and GPS devices, but not for police officers, of course.

“You don’t want to hurt anybody else just to answer a simple text,” Officer Jeremy Shaw told KOBI 5.

Gummy bear-ijuana ban in Colorado

As of today, gummy bears, chocolate bunnies, and other playfully-shaped marijuana edibles are banned in Colorado, where recreational marijuana has been legal since 2014.

Despite a steep drop in teenage marijuana use after legalization, the state Assembly continues to harbor misguided idea that it needs to ban adult products to protect children.

There is no evidence children hunger for marijuana edibles—nevertheless the new law is specific and wide-ranging in its ban on “edible marijuana-infused products in the shape of a human, animal or fruit… including shapes that resemble or contain characteristics of a realistic or fictional human, animal, or fruit, including artistic, caricature, or cartoon renderings.”

You’ll still be able to purchase plain-looking edibles, the law clarifying that edibles in “geometric shapes and simply fruit flavored are not considered fruit and are permissible.”

Cellphone tracking in Connecticut

Among the 140 laws going into effect in Connecticut today is one that aims to regulate cellphone tracking by police agencies. Unfortunately, the law gives cops too much discretion to use the cell site simulator devices that make phone tracking possible.

Specifically, the law permits police to use such devices for 48 hours without a court order during “exigent circumstances” (despite it not taking nearly that long to obtain a warrant even in an “exigent” circumstance) and for two weeks under an “ex parte court order,” which means police don’t have to notify anyone about the tracking.

Legislators also brought in use of cell site simulators to intercept communications under the state’s wiretap laws, allowing prosecutors to ask a three-judge panel to issue ex parte wiretap orders for them.

Enhanced sentencing for crimes against first responders

In Nevada, enhanced penalties kick in today for hate crimes committed against first responders, including police and firefighters, because they are first responders. Criminals convicted of such crimes can face between 1 and 20 years in prison on top of the sentence for the crime. The enhancement, at least, can’t exceed the length of the original sentence.

Critics of hate crime laws have been warning since the 1990s that hate crimes, which rely on the speech of a suspect for proof, would end up being used by those in power to punish speech offensive to them. Last year, Louisiana became the first state to make killing a cop a hate crime. Momentum, meanwhile, is growing for a federal version of such a “blue lives matter” law.

Fracking ban in Maryland

After a two year moratorium, Maryland this year passed a complete ban on fracking, which goes into effect today. The law is not based on sound science but on rank fearmongering.

A 2015 study from Yale found that fracking does not contaminate drinking water, a popular bugaboo for fracking opponents. The Obama Environmental Protection Agency also found fracking had a negligible effect on drinking water.

Other lies about fracking have also helped to motivate opposition to fracking—fracking does not make it possible to light your drinking water on fire. Fracking fluid can’t seep into groundwater and poison your tap, Fracking doesn’t increase air pollution. It doesn’t cause cancer. And the natural gas freed by fracking is decidedly better than coal.

Unfortunately, Maryland is the latest but unlikely the last place where hysteria has won out over science.

Continuing education for cosmetologists

The Maryland General Assembly should take a collective bow for making it twice on this list. A new law in effect today gives the State Board of Cosmetologists (yes, there is such a thing for the people who do make-up professionally) the authority to require most cosmetologists to complete continuing education classes to be renew their licenses.

At least 33 states and the District of Columbia require cosmetologists to be licensed, often requiring more than 1,000 hours of training to qualify. Maryland requires 1,500 hours or a two-year apprenticeship, which requires a license of its own.

Remove your electronics and prepare for pat-down

Starting today, the Transportation Safety Administration (TSA) will require all passengers going through security screening to remove any electronics larger than a cellphone from their bags and place them in separate bins.

Homeland Security Secretary John Kelly announced the new regulations in June, prompted by reports that terrorists were now capable of hiding bombs in large electronics. Finally, our wait is over.

A four-month delay in implementation seems excessive if the threat was as dire as the DHS suggested. On the other hand, four months of passengers getting through security checkpoints without taking out their electronics without incident suggests the threat might be less dire than DHS suggested.

Most of what the TSA does at airports is kabuki security theater. The agency has wasted billions of dollars, while perfecting the fine art of harassing travelers.

Bitcoin surveillance

Japan legalized cryptocurrencies like Bitcoin in April, and today all cryptocurrency exchanges must be registered with the country’s Financial Services Agency (FSA).

The agency will monitor the exchanges’ internal system and, according to the Japan Times, conduct on-site inspections as necessary. In preparation, the FSA assembled a 30-person “surveillance team” to oversee the exchanges.

Japan is separately considering a plan to create its own digital currency to completely eliminate cash, and the anonymity that comes with it, by 2020.

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“This Is Fascism”: Shocking Footage Of Spanish Police Firing Rubber Bullets, Brutally Beating Peaceful Voters

In scenes one would expect to see in Turkey, or some token third-world dictatorship, on Sunday morning Spanish riot police violently cracked down on the scheduled Catalan independence referendum, smashing their way into polling stations in Catalonia in a dramatic quest to shut down the banned Catalan independence referendum, as they fired rubber bullets and brutally beat peaceful people trying to vote for or against independence from a Spanish government, which many commentators this morning have called “fascist.”

Police fired rubber bullets in central Barcelona, El Periodico newspaper reported, at the intersection of two streets as violence erupted during the vote which has thrown Spain into its worst constitutional crisis for decades.

According to Reuters, Catalan emergency services said at least 38 people were hurt as a result of police action, although as the footage below shows the final number will likely be orders of magnitude greater. 

As Conflicts creator Gissur Simonarson said, “Looking at the footage from Spain. It’s clear the policy got an order to break this up by any means. They are tossing ppl like rag dolls” adding that “The Spanish government has managed to turn me from indifferent/against #CatalanReferendum to a supporter.”

Police burst into the polling station in a town in Girona province minutes before Catalan leader Carles Puigdemont was due to vote there. They smashed glass panels to force open the door as voters, fists in the air, sang the Catalan anthem.

Officers with riot shields jostled with hundreds of voters outside one station at a school in Barcelona as the crowd chanted “We are people of peace!” Armored vans and an ambulance were parked nearby.

The referendum has been declared illegal by Spain’s central government in Madrid, which says the constitution states the country is indivisible and has drafted in thousands of police from around Spain into Catalonia to prevent the vote.

The Catalan regional government had scheduled voting to open at 9 a.m. (0700 GMT) at around 2,300 stations, but Madrid said on Saturday it had shut more than half of them.  Voting started at some sites in the region of 7.5 million people, which has its own language and culture and is an industrial hub with an economy larger than that of Portugal. Leader Puigdemont changed plans and voted at a different station after the police action, the regional government said.

As Reuters adds, people had occupied some stations with the aim of preventing police from locking them down. Organizers smuggled in ballot boxes before dawn and urged voters to use passive resistance against police. In a school used as a polling station in Barcelona, police in riot gear carried out ballot boxes while would-be voters chanted “out with the occupying forces!” and “we will vote!”.

The Catalan government said voters could print out ballot papers at home and lodge them at any polling station not closed down by police.

“I have got up early because my country needs me,” said Eulalia Espinal, 65, a pensioner who started queuing with around 100 others outside one polling station, a Barcelona school, in rain at about 5 a.m. “We don’t know what’s going to happen but we have to be here,” she said.

A minority of around 40 percent of Catalans support independence, polls show, although a majority want to hold a referendum on the issue. A “yes” result is likely in the referendum, given most of those who support independence are expected to cast ballots while most of those against it are not. 

Furthermore, the ballot will have no legal status as it has been blocked by Spain’s Constitutional Court and Madrid has the ultimate power under its 1978 charter to suspend the regional government’s authority to rule if it declares independence. In other words, Madrid could have led the referendum pass, declared it illegal, and soon most would forget. Instead, as Simonarson adds, “I’m shocked and disgusted by how Spain has dealt with #CatalanReferendum. If there isn’t a violent response to this, I’ll be shocked.”

Organizers had asked voters to turn out before dawn, hoping for large crowds to be the world’s first image of voting day.

“This is a great opportunity. I’ve waited 80 years for this,” said 92-year-old Ramon Jordana, a former taxi driver waiting to vote in Sant Pere de Torello, a town in the foothills of the Pyrenees and a pro-independence bastion. He had wrapped his wrists in Catalan flags, among 100-150 people who gathered at a local school that had been listed as a polling station, ready to block any police from entering. A tractor also stood guard, though no police had yet arrived.

As reported before, leading up to the referendum Spanish police arrested Catalan officials, seized campaigning leaflets and occupied the Catalan government’s communications hub. But Catalan leaders urged voters to turn out in a peaceful expression of democracy. Families have occupied scores of schools earmarked as voting centers, sleeping overnight in an attempt to prevent police from sealing them off.

“If I can’t vote, I want to turn out in the streets and say sincerely that we want to vote,” said independence supporter Jose Miro, a 60-year-old schools inspector. Only the Catalan police, or Mossos d‘Esquadra, had so far been monitoring polling stations. They are held in affection by Catalans, especially after they hunted down Islamists accused of staging deadly attacks in the region in August.

 

But national police, who have been drafted into Catalonia in their thousands, stepped in to grab ballot boxes and close stations on Sunday once it became clear the regional police was not clearing sites.

Pro-independence Puigdemont originally said that if the “yes” vote won, the Catalan government would declare independence within 48 hours, but regional leaders have since acknowledged Madrid’s crackdown has undermined the vote.

Perhaps now it is time for the liberal press to explain how sometimes democracy also dies in broad daylight. And while we await to see how this dramatic crackdown against democracy ends, here are some more shocking videos of Spain’s brutal crackdown on democracy.

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“This Is A Crisis Greater Than Any Government Can Handle”: The $400 Trillion Global Retirement Gap

Submitted by John Mauldin of Mauldin Economics

Today we’ll continue to size up the bull market in governmental promises. As we do so, keep an old trader’s slogan in mind: “That which cannot go on forever, won’t.” Or we could say it differently: An unsustainable trend must eventually stop.

Lately I have focused on the trend in US public pension funds, many of which are woefully underfunded and will never be able to pay workers the promised benefits, at least without dumping a huge and unwelcome bill on taxpayers. And since taxpayers are generally voters, it’s not at all clear they will pay that bill.

Readers outside the US might have felt smug and safe reading those stories. There go those Americans again, spending wildly beyond their means. You are correct that, generally speaking, we are not exactly the thriftiest people on Earth. However, if you live outside the US, your country may be more like ours than you think. Today we’ll look at some data that will show you what I mean. This week the spotlight will be on Europe.

First, let me suggest that you read my last letter, “Build Your Economic Storm Shelter Now,” if you missed it. It has some important background for today’s discussiion.

Global Shortfall

I wrote a letter last June titled “Can You Afford to Reach 100?” Your answer may well be “Yes;” but, if so, you are one of the few. The World Economic Forum study I cited in that letter looked at six developed countries (the US, UK, Netherlands, Japan, Australia, and Canada) and two emerging markets (China and India) and found that by 2050 these countries will face a total savings shortfall of $400 trillion. That’s how much more is needed to ensure that future retirees will receive 70% of their working income. This staggering figure doesn’t even include most of Europe.

This problem exists in large part because of the projected enormous increase in median life expectancies. Reaching age 100 is already less remarkable than it used to be. That trend will continue. Better yet, I think we will also be healthier at advanced ages than people are now. Could 80 be the new 50? We’d better hope so, because the math is pretty bleak if we assume people will stop working at age 65–70 and then live another quarter-century or more.

That said, I think we’ll see a great deal of national variation in these trends. The $400 trillion gap is the shortfall in government, employer, and individual savings. The proportions among the three vary a great deal. Some countries have robust government-provided retirement plans; others depend more on employer and individual contributions. In the aggregate, though, the money just isn’t there. Nor will it magically appear just when it’s needed.

WEF reaches the same conclusion I did long ago: The idea that we’ll enjoy decades of leisure before our final decline simply can’t work. Our attempt to live out long and leisurely retirements is quickly reaching its limits. Most of us will work well past 65 whether we want to or not, and many of us will not have our promised retirement benefits to help us through our final decades.

What about the millions who are already retired or close to retirement? That’s a big problem, particularly for the US public-sector workers I wrote about in my last two letters. We should also note that we’re all public-sector workers in a way, since we must pay into Social Security and can only hope Washington gives us something back someday.

Let’s look at a few other countries that are not much better off.

UK Time Bomb

The WEF study shows that the United Kingdom presently has a $4 trillion retirement savings shortfall, which is projected to rise 4% a year and reach $33 trillion by 2050. This in a country whose total GDP is $3 trillion. That means the shortfall is already bigger than the entire economy, and even if inflation is modest, the situation is going to get worse. Further, these figures are based mostly on calculations made before the UK decided to leave the European Union. Brexit is a major economic realignment that could certainly change the retirement outlook. Whether it would change it for better or worse, we don’t yet know.

A 2015 OECD study (mentioned here) found that across the developed world, workers could, on average, expect governmental programs to replace 63% of their working-age incomes. Not so bad. But in the UK that figure is only 38%, the lowest in all OECD countries. This means UK workers must either build larger personal savings or severely tighten their belts when they retire. Working past retirement age is another choice, but it has broader economic effects – freezing younger workers out of the job market, for instance.

UK employer-based savings plans aren’t on particularly sound footing, either. According to the government’s Pension Protection Fund, some 72.2% of the country’s private-sector defined-benefit plans are in deficit, and the shortfalls total £257.9 billion. Government liabilities for pensions went from being well-funded in 2007 to having a shortfall 10 years later of £384 billion (~$500 billion). Of course, that figure is now out of date because, just a few months later, it’s now £408 billion – that’s how fast these unfunded liabilities are growing. Again, that’s a rather tidy sum for a $3 trillion economy to handle.

UK retirees have had a kind of safety valve: the ability to retire in EU countries with lower living costs. Depending how Brexit negotiations go, that option could disappear.

Turning next to the Green Isle, 80% of the Irish who have pensions don’t think they will have sufficient income in retirement, and 47% don’t even have pensions. I think you would find similar statistics throughout much of Europe.

A report this summer from the International Longevity Centre suggested that younger workers in the UK need to save 18% of their annual earnings in order to have an “adequate” retirement income – which it defines as less than today’s retirees enjoy. But no such thing will happen, so the UK is heading toward a retirement implosion that could be at least as damaging as the US’s.

Swiss Cheese Retirement

Americans often have romanticized views of Switzerland. They think it’s the land of fiscal discipline, among other things. To some extent that’s true, but Switzerland has its share of problems, too. The national pension plan there has been running deficits as the population grows older.

Earlier this month, Swiss voters rejected a pension reform plan that would have strengthened the system by raising women’s retirement age from 64 to 65 and raising taxes and required worker contributions. From what I can see, these were fairly minor changes, but the plan still went down in flames as 52.7% of voters said no.

Voters around the globe generally want to have their cake and eat it, too. We demand generous benefits but don’t like the price tags that come with them. The Swiss, despite their fiscally prudent reputation, appear to be not so different from the rest of us. Consider this from the Financial Times:

Alain Berset, interior minister, said the No vote was “not easy to interpret” but was “not so far from a majority” and work would begin soon on revised reform proposals.

Bern had sought to spread the burden of changes to the pension system, said Daniel Kalt, chief economist for UBS in Switzerland. “But it’s difficult to find a compromise to which everyone can say Yes.” The pressure for reform was “not yet high enough,” he argued. “Awareness that something has to be done will now increase.”

That description captures the attitude of the entire developed world. Compromise is always difficult. Both politicians and voters ignore the long-term problems they know are coming and think no further ahead than the next election. The remark that “Awareness that something has to be done will now increase” may be true, but there’s a big gap between awareness and motivation – in Switzerland and everywhere else.

Switzerland and the UK have mandatory retirement pre-funding with private management and modest public safety nets, as do Denmark, the Netherlands, Sweden, Poland, and Hungary. Not that all of these countries don’t have problems, but even with their problems, these European nations are far better off than some others.

(Sidebar: low or negative rates in those countries make it almost impossible for their private pension funds to come anywhere close to meeting their mandates. And many of the funds are by law are required to invest in government bonds, which pay either negligible or negative returns.)

Pay-As-You-Go Woes

Pay-As-You-Go WoesThe European nations noted above have nowhere near the crisis potential that the next group does: France, Belgium, Germany, Austria, and Spain are all pay-as-you-go countries (PAYG). That means they have nothing saved in the public coffers for future pension obligations, and the money has to come out of the general budget each year. The crisis for these countries is quite predictable, because the number of retirees is growing even as the number of workers paying into the national coffers is falling. There is a sad shortfall of babies being born in these countries, making the demographic reality even more difficult. Let’s look at some details.

Spain was hit hard in the financial crisis but has bounced back more vigorously than some of its Mediterranean peers did, such as Greece. That’s also true of its national pension plan, which actually had a surplus until recently. Unfortunately, the government chose to “borrow” some of that surplus for other purposes, and it will soon turn into a sizable deficit.

Just as in the US, Spain’s program is called Social Security, but in fact it is neither social nor secure. Both the US and Spanish governments have raided supposedly sacrosanct retirement schemes, and both allow their governments to use those savings for whatever the political winds favor.

The Spanish reserve fund at one time had €66 billion and is now estimated to be completely depleted by the end of this year or early in 2018. The cause? There are 1.1 million more pensioners than there were just 10 years ago. And as the Baby Boom generation retires, there will be even more pensioners and fewer workers to support them. A 25% unemployment rate among younger workers doesn’t help contributions to the system, either.

A similar dynamic may actually work for the US, because we control our own currency and can debase it as necessary to keep the government afloat. Social Security checks will always clear, but they may not buy as much. Spain’s version of Social Security doesn’t have that advantage as long as the country stays tied to the euro. That’s one reason we must recognize the potential for the Eurozone to eventually spin apart. (More on that below.)

On the whole, public pension plans in the pay-as-you-go countries would now replace about 60% of retirees’ salaries. Further, several of these countries let people retire at less than 60 years old. In most countries, fewer than 25% of workers contribute to pension plans. That rate would have to double in the next 30 years to make programs sustainable. Sell that to younger workers.

The Wall Street Journal recently did a rather bleak report on public pension funds in Europe. Quoting:

Europe’s population of pensioners, already the largest in the world, continues to grow. Looking at Europeans 65 or older who aren’t working, there are 42 for every 100 workers, and this will rise to 65 per 100 by 2060, the European Union’s data agency says. By comparison, the U.S. has 24 nonworking people 65 or over per 100 workers, says the Bureau of Labor Statistics, which doesn’t have a projection for 2060. (WSJ)

While the WSJ story focuses on Poland and the difficulties facing retirees there, the graphs and data in the story make clear the increasingly tenuous situation across much of Europe. And unlike most European financial problems, this isn’t a north-south issue. Austria and Slovenia face the most difficult demographic challenges, right along with Greece. Greece, like Poland, has seen a lot of its young people leave for other parts of the world. This next chart compares the share of Europe’s population that 65 years and older to the rest of the regions of the world and then to the share of population of workers between 20 and 64. These are ugly numbers.


Source: WSJ

The WSJ continues:

Across Europe, the birthrate has fallen 40% since the 1960s to around 1.5 children per woman, according to the United Nations. In that time, life expectancies have risen to roughly 80 from 69.

In Poland birthrates are even lower, and here the demographic disconnect is compounded by emigration. Taking advantage of the EU’s freedom of movement, many Polish youth of working age flock to the West, especially London, in search of higher pay. A paper published by the country’s central bank forecasts that by 2030, a quarter of Polish women and a fifth of Polish men will be 70 or older.

 
Source: WSJ

Next week we will look at the unfunded liabilities of the US government. It will not surprise anyone to learn that the situation is ugly, and there is no way – zero chance, zippo – that the US government will be able to fund those liabilities without massive debt and monetization.

Now, what I am telling you is that every bit of analysis about the pay-as-you-go countries in Europe suggests that they are in a far worse position than the United States is. Plus, the economies of those countries are more or less stagnant, and they are already taxing their citizens at close to 50% of GDP.

The chart below shows the percentage of GDP needed to cover government pension payments in 2015 and 2050. But consider that the percentage of tax revenues required will be much higher. For instance, in Belgium the percentage of GDP going to pensions will be 18% in about 30 years, but that’s 40–50% of total tax revenues. That hunk doesn’t leave much for other budgetary items. Greece, Italy, Spain? Not far behind.

And there is other research that makes the above numbers seem optimistic by comparison. The problem that the European economies have is that for the most part they are already massively in debt and have high tax rates. And they can’t print their own currencies.

Many of Europe’s private pension companies and corporations are also in seriously deep kimchee. Low and negative interest rates have devastated the ability of pension funds to grow their assets. Combined with public pension liabilities, the total cost of meeting the income and healthcare needs of retirees is going to increase dramatically all across Europe.

Macron, the new French president, really is trying to shake up the old order, to his credit; and this week he came out and began to lay the foundation for the mutualization of all European debt, which I assume would end up on the balance sheet of the ECB. However, that plan still doesn’t deal with the unfunded liabilities. Do countries just run up more debt? It seems like the plan is to kick the can down the road just a little further, something Europe is becoming really good at.

In this next chart, note the line running through each of the countries, showing their debt as a percentage of GDP. Italy’s is already over 150%. And this is a chart based mostly on 2006 and earlier data. A newer chart would be much uglier.

I could go on reviewing the retirement problems in other countries, but I hope you begin to see the big picture. This crisis isn’t purely a result of faulty politics – though that’s a big contributor – it’s a problem that is far bigger than even the most disciplined, future-focused governments and businesses can easily handle.

Look what we’re trying to do. We think people can spend 35–40 years working and saving, then stop working and go on for another 20–30–40 years at the same comfort level – but with a growing percentage of retirees and a shrinking number of workers paying into the system. I’m sorry, but that’s magical thinking. And it’s not what the original retirement schemes envisioned at all. Their goal was to provide for a relatively small number of elderly people who were unable to work. Life expectancies were such that most workers would not reach that point, or would at least live just a few years beyond retirement.

As I have pointed out in past letters, when Franklin Roosevelt created Social Security for people over 65 years old, US life expectancy was about 56 years. If the retirement age had kept up with the increase in life expectancy, the retirement age in the US would now be 82. Try and sell that to voters.

Worse, generations of politicians have convinced the public that not only is a magical outcome possible, it is guaranteed. Many politicians actually believe it themselves. They aren’t lying so much as just ignoring reality. They’ve made promises they aren’t able to keep and are letting others arrange their lives based on the assumption that the impossible will happen. It won’t.

How do we get out of this jam? We’re all going to make big adjustments. If the longevity breakthroughs I expect happen soon (as in the next 10–15 years), we may be able to adjust with minimal pain. We’ll work longer years, and retirement will be shorter, but it will be better because we’ll be healthier.

That’s the best-case outcome, and I think we have a fair chance of seeing it, but not without a lot of social and political travail. How we get through that process may be the most important question we face.

I haven’t even thrown in the complications that are going to arise because of changes in the nature of employment and the future of work that will be caused by technological change in the next 10–20 years. That will mean even fewer workers for each retiree. Facebook’s Zuckerberg talks about a basic minimum income. I think that is the wrong thing to do. It is the nature of human beings to need to do things that contribute meaningfully to the lives of their family and society. But the reality is that increasing numbers of people are already having trouble finding that sort of work.

Maybe we should think about basic minimum employment. FDR put a generation of people to work building public projects that helped get us through the Great Depression. Our world is going to change in ways that we don’t yet understand and that we are not prepared for, psychologically, socially, politically, or economically.

In the US and much of Europe we have developed social echo chambers in which we talk just to ourselves and those who are like-minded, ignoring or demonizing the other side. We have lost the ability to disagree rationally and productively. When the children’s books written by Dr. Seuss are considered by some to have been written by a white racist and are therefore deemed unacceptable to be in a public library, you know the quality of civil discourse has spiraled downward.

I do not like that, Sam I am.

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Wheels And Deals: Trouble Is Brewing In The House Of Saud

Authored by Pepe Escobar via The Asia Times,

Saudi women being allowed to drive is a smokescreen – Salafi-jihadism is alive and well inside the Kingdom. What's more, another coup may be along shortly

Suddenly, the ideological matrix of all strands of Salafi-jihadism is being hailed by the West as a model of progress – because Saudi women will finally be allowed to drive. Only next year. Only some women. And still subject to many restrictions.

What’s certain is that the timing of the announcement – which comes after years of liberal American pressure – was calculated with precision, arriving only a few days before House of Saud capo King Salman drops in for a chat at Trump’s White House. The soft power move was coordinated by the 32-year-old Crown Prince Muhammad bin Salman, a.k.a. MBS, the Destroyer of Yemen; the king merely added his signature.

The diversionary tactic masks serious trouble in the court. A Gulf business source with intimate knowledge of the House of Saud, having held a number of personal meetings with members, told Asia Times that “the Fahd, Nayef, and Abdullah families, the descendants of King Abdulaziz al Saud and his wife Hassa bin Ahmed al-Sudairi, are forming an alliance against the ascendancy to the Kingship of the Crown Prince.”

No wonder, considering that the ousted Crown Prince Mohammed bin Nayef – highly regarded in the Beltway, especially Langley – is under house arrest. His massive web of agents at the Interior Ministry has largely been “relieved of their authority”. The new Interior Minister is Abdulaziz bin Saud bin Nayef, 34, the eldest son of the governor of the country’s largely Shi’ite Eastern Province, where all the oil is. Curiously, the father is now reporting to his son. MBS is surrounded by inexperienced thirty-something princes, and alienating just about everyone else.

Former King Abdulaziz set up his Saudi succession based on the seniority of his sons; in theory, if each one lived to the same age all would have a shot at the throne, thus avoiding the bloodletting historically common in Arabian clans over lines of succession.

Now, says the source, “a bloodbath is predicted to be imminent.” Especially because “the CIA is outraged that the compromise worked out in April, 2014 has been abrogated wherein the greatest anti-terrorist factor in the Middle East, Mohammed bin Nayef, was arrested.” That may prompt “vigorous action taken against MBS possibly in early October.” And it might even coincide with the Salman-Trump get together.

ISIS playing by the (Saudi) book

Asia Times’ Gulf business source stresses how “the Saudi economy is under extreme strain based on their oil price war against Russia, and they are behind their bills in paying just about all their contractors. That could lead to the bankruptcy of some of the major enterprises in Saudi Arabia. The Saudi Arabia of MBS features the Crown Prince buying a US$600 million yacht and his father spending US$100 million on his summer vacation, highlighted on the front pages of the New York Times while the Kingdom strangles under their leadership.”

MBS’s pet project, the spun-to-death Vision 2030, in theory aims to diversify from mere oil profits and dependency on the US to a more modern economy (and a more independent foreign policy).
That’s completely misguided, according to the source, because “the problem in Saudi Arabia is that their companies cannot function with their local population and [are] reliant on expatriates for about 70% or more of their staff. Aramco cannot run without expatriates. Therefore, selling 5% of Aramco to diversify does not solve the problem. If he wants a more productive society, and less handouts and meaningless government jobs, he has to first train and employ his own people.”

The similarly lauded Aramco IPO, arguably the largest share sale in history and originally scheduled for next year, has once again been postponed – “possibly” to the second half of 2019, according to officials in Riyadh. And still no one knows where shares will be sold; the NYSE is far from a done deal.

In parallel, MBS’s war on Yemen, and the Saudi drive for regime change in Syria and to reshape the Greater Middle East, have turned out to be spectacular disasters. Egypt and Pakistan have refused to send troops to Yemen, where relentless Saudi air bombing – with US and UK weapons – has accelerated malnutrition, famine and cholera, and configured a massive humanitarian crisis.

The Islamic State project was conceived as the ideal tool to force Iraq to implode. It’s now public domain that the organization’s funding came mostly from Saudi Arabia. Even the former imam of Mecca has publicly admitted ISIS’ leadership “draw their ideas from what is written in our own books, our own principles.”

Which brings us to the ultimate Saudi contradiction. Salafi-jihadism is more than alive inside the Kingdom even as MBS tries to spin a (fake) liberal trend (the “baby you can drive my car” stunt). The problem is Riyadh congenitally cannot deliver on any liberal promise; the only legitimacy for the House of Saud lies in those religious “books” and “principles.”

In Syria, besides the fact that an absolute majority of the country’s population does not wish to live in a Takfiristan, Saudi Arabia supported ISIS while Qatar supported al-Qaeda (Jabhat al-Nusra). That ended up in a crossfire bloodbath, with all those non-existent US-supported “moderate rebels” reduced to road kill.

And then there’s the economic blockade against Qatar – another brilliant MBS plot. That has only served to improve Doha’s relations with both Ankara and Tehran. Qatari Emir Tamim bin Hamad Al Thani was not regime-changed, whether or not Trump really dissuaded Riyadh and Abu Dhabi from taking “military action.” There was no economic strangulation: Total, for instance, is about to invest US$2 billion to expand production of Qatari natural gas. And Qatar, via its sovereign fund, counterpunched with the ultimate soft power move – it bought global footballing brand Neymar for PSG, and the “blockade” sank without a trace.

“Robbing their people blind”

In Enemy of the State, the latest Mitch Rapp thriller written by Kyle Mills, President Alexander, sitting at the White House, blurts, “the Middle East is imploding because those Saudi sons of bitches have been pumping up religious fundamentalism to hide the fact that they’re robbing their people blind.” That’s a fair assessment.

No dissent whatsoever is allowed in Saudi Arabia. Even the economic analyst Isam Az-Zamil, very close to the top, has been arrested during the current repression campaign. So opposition to MBS does not come only from the royal family or some top clerics – although the official spin rules that only those supporting Muslim Brotherhood, Turkey, Iran and Qatari “terrorism” are being targeted.

In terms of what Washington wants, the CIA is not fond of MBS, to say the least. They want “their” man Nayef back. As for the Trump administration, rumors swirl it is “desperate for Saudi money, especially infrastructure investments in the Rust Belt.”

It will be immensely enlightening to compare what Trump gets from Salman with what Putin gets from Salman: the ailing King will visit Moscow in late October. Rosneft is interested in buying shares of Aramco when the IPO takes place. Riyadh and Moscow are considering an OPEC deal extension as well as an OPEC-non-OPEC cooperation platform incorporating the Gas Exporting Countries Forum (GECF).

Riyadh has read the writing on the new wall: Moscow’s rising political / strategic capital all across the board, from Iran, Syria and Qatar to Turkey and Yemen.

That does not sit well with the US deep state.

Even if Trump gets some Rust Belt deals, the burning question is whether the CIA and its friends can live with MBS on the House of Saud throne.

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To Increase America’s Productivity, Ban This…

Aside from short-lived booms in the 1990s and 2000s, US productivity growth has averaged just 1.2% from 1975 up to today after peaking above 3% in 1972.

As we detailed previously, adjusting for the WWII anomaly (which tells us that GDP is not a good measure of a country’s prosperity) US productivity growth peaked in 1972 – incidentally the year after Nixon took the US off gold.

The productivity decline witnessed ever since is unprecedented. Despite the short lived boom of the 1990s US productivity growth only average 1.2 per cent from 1975 up to today.

If we isolate the last 15 years US productivity growth is on par with what an agrarian slave economy was able to achieve 200 years ago.

As we reported last year, users spent 51% of their total internet time on mobile devices, for a total of 5.6 hours per day snapchatting, face-booking, insta-graming and taking selfies.

It's an everyday sight – people using their phones while sitting on the train, waiting for a bus, or even having a meal with their partner.

What exactly are they doing the whole time though?

When it comes to social networks, Verto Analytics may have the answer. The most time spent in the U.S. on a 'mainstream' app is the 899 minutes per month of the average Facebook user.

The social network whose users invest the most time though is a networking app for gay, bi, and curious men – Grindr. WIth a huge 1,040 minutes on average, that's over 17 hours every month.

In third place, Growlr is also a networking/dating app for homosexual men. The average user here spends 665 minutes per month.

In eighth, Twitter's struggles are again highlighted, with only 176 minutes in Q3 2017.

Figures refer to usage across all platforms, not just mobile.

Infographic: The Most Time Consuming Social Networks | Statista

You will find more statistics at Statista

So, maybe in their next wide-ranging study, economists could include a test group of workers who leave their phones in a locker at the beginning of the work day, and try to measure how much their “productivity” improves. So, while every effort can be made by Ivory Tower academics to solve the problem of American worker productivity, perhaps it can be summed up simply as "Put The Smart-Phone Down!"

 

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The Truth About Nuclear Proliferation And North Korea

The U.S. is communicating with North Korea about its nuclear program and testing Pyongyang’s appetite for negotiations, Secretary of State Rex Tillerson said in the first public acknowledgment by a senior administration official of direct contact on the matter. As Bloomberg reports,Tillerson, speaking to reporters on Saturday after meeting Chinese officials in Beijing, insisted that the U.S. would never accept a nuclear-armed North Korea.

His remarks offered the clearest glimpse so far into U.S. strategy, and suggested a willingness to get to the negotiating table with Kim Jong Un’s regime — even after President Donald Trump tweeted in August that “talking is not the answer!”

“We are probing, so stay tuned,” Tillerson said.

 

“We can talk to them, we do talk to them directly, through our own channels,” adding that the U.S. has “a couple, three channels open to Pyongyang.”

All of which was 'good' news in a time when we need some. However, a few hours later, the State Department commented that…

"North Korean officials have shown no indication that they are interested in or are ready for talks regarding denuclearization."

And that, as Jim Rickards warns below, is why war is coming…

Authored by James Rickards via The Daily Reckoning,

I’ve been arguing for months that we are headed for war with North Korea because of its nuclear program.

This brings us to the topic of nuclear proliferation.

Nuclear proliferation of the kind we are seeing in North Korea is nothing new. The U.S., Soviet Union (now Russia), U.K. and France all had nuclear weapons by 1960. China joined the club in the mid-1960s.

India and Pakistan started becoming nuclear powers in the 1970s. Israel has never officially announced it has nuclear weapons, but it is well-known that Israel possesses them. At various times, South Africa, Brazil, Iran, Syria, Iraq and Libya have pursued nuclear weapons development.

The Iranian program is the only one of those that is still active.

Critics of any effort to attack North Korea to stop its nuclear weapons program point to this extensive proliferation over 60 years as a reason not to risk war.

According to these critics, the world has learned to live with eight nuclear powers. One more won’t matter. Deterrence works.

North Korea knows that if it uses nuclear weapons, it will be subject to a nuclear attack by the U.S., and therefore it won’t use them.

But this analysis is wrong on a number of levels.

The U.S. began its nuclear program to end World War II. The U.K., French, Russian and Chinese nuclear programs were part of a Great Power dynamic in the Cold War that does not apply to lesser powers like North Korea.

For the Great Powers, deterrence does work.

Israel’s program is a response to an existential threat from the Arabs (four large wars and many smaller ones in less than 70 years) and Israel’s lack of strategic depth. India and Pakistan are mutually hostile and their weapons are aimed at each other, not at the west.

North Korea is different because it continually threatens to use nuclear weapons on the U.S. and its allies, like Japan.

Deterrence does not work on Kim Jong Un. The North Korean leader will be safe in his nuclear bombproof bunker. He does not care about his people.

Kim’s threats involve actual nuclear missiles striking cities and a potential electromagnetic pulse weapon (EMP) detonated in the high atmosphere that produces a power surge that would destroy the U.S. power grid.

All communications, cellphones, computers, bank ATMs, debit and credit cards, gas station pumps and lights would be disabled. U.S. civilization would last about three days before food and water were depleted and society descended into rival gangs of looters and vigilantes.

That may sound paranoid or alarmist, but it’s not. It’s a legitimate possibility.

This is why North Korea will not be allowed to have nuclear weapons.

This is why war is coming.

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TEPCO Admits Contaminated Water Leaked Into Fukushima Groundwater “Due To Erroneous Gauges”

In a revelation that, for some, will dredge up memories of TEPCO’s stunning admission back in 2013 that nearly 300 tonnes of radioactive material had leaked from the ruins of the Fukushima Daiichi nuclear-power plant into the water outside, contaminating virtually the entire Pacific Ocean, officials at the Japanese power company told the Associated Press that contaminated water may have leaked into the soil surrounding the plant after human error caused safety mechanisms to fail.

TEPCO officials said the settings on six of the dozens of wells surrounding the plant’s ruined reactors were accidentally set 70 centimeters below the required levels, briefly causing groundwater at one well to sink below the contaminated water inside in May, possibly allowing radioactive water to leak into the soil.

Fortunately, groundwater samples have shown no abnormal increase in radioactivity and leaks to the outside are unlikely, according to TEPCO spokesman Shinichi Nakakuki.

The problem with the wells – most of which were drilled in April to help pump groundwater, reducing the possibility that it would be exposed to contamination –  was discovered earlier this week while the company was preparing to drill another well. While Tepco maintained several wells around the plant before the disaster, many more have been drilled since to try and stanch the flow of radioactive materials from the plant.

It has been six-and-a-half years since a massive earthquake and tsunami critically damaged the Fukushima-Daiichi nuclear-power plant, located about 200 miles away from Tokyo, triggering the worst nuclear accident since Chernobyl – and the Japanese people are still uncovering new evidence of TEPCO's dishonesty and incompetence demonstrated during the aftermath of the disaster.

Of course, while the coverup was happening, few in the media dared to entertain suspicions that the company might be acting in bad faith – after all, what serious organization would so brazenly defy the public’s trust, not to mention local laws?

But five years later, those conspiracy theories were transformed into conspiracy facts when TEPCO’s then-President Naomi Hirose admitted last year on NHK that his company intentionally concealed the reactor meltdowns at the Fukushima plant immediately after the storm. The power company didn't officially admit the meltdowns until more than 2 months after the accident.

"I would say it was a cover-up," Hirose said during a news conference. "It's extremely regrettable."  

Earlier this year, TEPCO ignited a public controversy after sharing its plans to start pumping radioactive water contaminated with tritium into the Pacific Ocean – a tactic that has met with vociferous opposition from Japan’s fishing industry.

Tepco has claimed that the radioactive water, pumped from inside the three reactors that melted down following the tsunami, would quickly disperse and not pose a threat to marine life. With the cleanup effort expected to take decades (although we imagine that President Shino Abe would like to accomplish as much as possible before the 2020 Olympics, which will be held in Tokyo), TEPCO has this year dispatched robots into the reactors to try and find the damaged nuclear core material, to mixed results.

Back in February, TEPCO revealed that it had discovered a hole at least one square meter in size beneath the pressure vessel in the plant’s damaged No. 2 reactor, potentially exposing the surrounding area to record-high radiation. Back in 2011, radiation levels of 530 Sieverts per hour had been detected inside the reactor (8 Sieverts is enough to kill a human).

These reports should be particularly dismaying for the thousands of Japanese who’ve begun returning to their homes inside the exclusion zone after the Japanese government ended its subsidy payments to disaster victims earlier this year, effectively forcing many of them to choose between financial hardship or living in a home they believe to be unsafe.

Meanwhile, photos taken earlier this year by journalists who traveled inside the Fukushima exclusion zone – a 20 kilometer perimeter around the plant – depicted a “nuclear nightmare” consisting of eerie ghost villages populated by radioactive wild boars…

 

…not exactly the kind of place we’d want to raise our kids.
 

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Welcome To The Hunger Games: Trump’s Tax Plan To Unleash Battle Royal Among D.C. Lobbyists

Authored by Michael Snyder via The Economic Collapse blog,

Are you ready for mass chaos in Washington?

There are lobbyists for just about every cause that you can possibly imagine, and they are always working hard to influence members of Congress on their particular issues.  But when you are talking about a major tax reform bill, that is something that virtually every single lobbyist in the entire city will want to be involved in.  Our tax code is over two million words long, and the regulations are over seven million words long, and any changes to our immensely complex system could have absolutely enormous implications.  There will be winners and there will be losers with any piece of legislation, and lobbyists will zealously fight to defend the turf belonging to their particular clients.  Often lobbyists from different sides will literally be pitted directly against one another, and it won’t be pretty. 

In fact, one analyst that works for Cowen Washington Research Group says that we could soon be watching “the corporate hunger games”

Almost every industry, special interest, and consumer group has an interest in the tax code, especially if the package ends up being as ambitious as Trump and Republican leaders want it to be. Chris Krueger, an analyst at Cowen Washington Research Group, told Business Insider that the battle over which loopholes to keep and which to throw out could get nasty.

 

“Welcome tribunes to the corporate hunger games!” Kruger said in an email.

 

“Only one-sixth of lobbyists were involved with health care (give or take — assuming it is one-sixth of economy). Six-sixths of lobbyists are involved in taxes.”

There is so much at stake, and if the Republicans are able to get something passed it probably won’t look much like the plan that Trump originally proposed.  But it is so important to do something, because today Americans spend more on taxes than they will on food, clothing, and housing combined.  That is morally wrong, and we desperately need tax relief.

Trump’s tax plan would nearly double the standard deduction, and that would be a wonderful thing.  It would provide instant tax relief to working class Americans, and that is something that I would greatly applaud.

Trump’s tax plan would also great reduce the tax rate for corporations.  Our big corporations certainly don’t need the help, but we do want to get our rate more in line with the rest of the planet.  Because our corporate tax rate is one of the highest in the world, it actually encourages companies to set up shop some place else.  Being more competitive with the rest of the world would likely mean more jobs for the American people.

Trump’s tax plan would also reduce the number of tax brackets for individuals.  Instead of seven, now there would just be three tax brackets of 12 percent, 25 percent and 35 percent.  To me, those rates are way too high, but of course I would like to eliminate the individual income tax entirely.

Many are criticizing Trump’s plan for proposing to raise at least a trillion dollars over the next decade by getting rid of the deduction for state and local income taxes.  For those that live in very high tax states such as California, that deduction is a really big deal

High-income Californians, for instance, pay as much as 13.3 per cent of their income to the state in addition to their federal taxes. New Yorkers can pay up to 8.82 per cent.

 

Just seven U.S. states have no personal income taxes, including Texas, Florida and Nevada.

Hopefully the Republicans can pass some sort of tax reform in the short-term, because the status quo is definitely not acceptable.

When the income tax was first introduced in 1913, the vast majority of taxpayers were being taxed at a rate of just one percent.  The following comes from Politifact

The 1913 law imposed a tax of 1 percent on income up to $20,000, for both individual and joint filers. However, exemptions from the tax — the first $3,000 of income for individuals and the first $4,000 for joint filers — meant “virtually all middle-class Americans” were excused from paying, according to W. Elliot Brownlee’s book, Federal Taxation in America.

 

The law also put in place a graduated surtax on incomes above $20,000; the highest rate paid, 7 percent, applied to Americans making more than $500,000 (about $11.4 million in 2011 dollars).

Today, Americans are being taxed into oblivion.  It has been reported that we spend more than 6 billion hours a year on our taxes, and I once wrote an article detailing 97 different ways that various levels of government extract revenue from all of us.

Every year government just gets bigger and bigger on the federal, state and local levels.  And the bigger government gets, the more oppressive it tends to become.

Personally, I would love to start starving the beast that the left has created, and a great way to do that would be to completely eliminate the federal income tax.

A lot of people could not even imagine a world without a federal income tax.  But the truth is that our country once thrived under such a system.  In fact, the greatest period of economic growth in U.S. history was between 1872 and 1913 when there was no income tax at all.

And we could do it again.  Today, the individual income tax only accounts for about 46 percent of all federal revenue, and if we reduced the federal government to a size that our founders would have wanted, we would be more than okay.

But even if we can’t greatly reduce the size of the federal government in the short-term, we can at least go to a very basic flat tax or a fair tax, and both of those systems would be far superior to what we have today.

If we can’t get a flat tax or a fair tax right now, we should at least try to dramatically reduce tax rates and simplify the tax code as much as humanly possible.

But if we do get a short-term victory, the battle is definitely not over.  In the long-term, we need to be very clear that our goal should be to abolish the income tax, the IRS and the Federal Reserve entirely.  Anything short of that is not good enough.

*  *  *

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

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