Even at a time of low interest rates and rising wages, Americans simply can’t afford a home in more than 70% of the country, according to CBS. Out of 473 US counties that were analyzed in a recent report, 335 listed median home prices were more than what average wage earners could afford. According to the report from ATTOM Data Solutions, these counties included Los Angeles and San Diego in California, as well as places like Maricopa County in Arizona.
New York City claimed the largest share of a person’s income to purchase a home. While on average, earners nationwide needed to spend only about 33% of their income on a home, residents in Brooklyn and Manhattan need to shell out more than 115% of their income. In San Francisco this number is about 103%. Homes were found to be affordable in places like Chicago, Houston and Philadelphia.
This news is stunning because homes are considerably more affordable today than they were a year ago. Although prices are rising in many areas, they are also falling in places like Manhattan. Unaffordability in the market has been the result of slower home building and owners staying in their homes longer. Both have reduced the supply of homes in the market.
And the market may continue to create better conditions for buyers. Affordability could improve because of the fact that homes are out of reach for so many seekers, according to Todd Teta, chief product officer at ATTOM Data Solutions. Today’s market is also more affordable than it was a decade ago, before the crisis. Home prices were about the same prior to the crisis, even though income adjusted for inflation was lower.
“What kept the market going was looser lending standards, so that was compensating for affordability issues,” Teta said. Since then, standards have toughened (for now, at least).
We recently wrote about residents of New York City who simply claimed they couldn’t afford to live there.
More than a third of New York residents complained that they “can’t afford to live there” anymore (and yet they do). On top of that, many believe that economic hardships are going to force them to leave the city in five years or less, according to a Quinnipiac poll published a couple weeks ago. The poll surveyed 1,216 voters between March 13 and 18.
In total, 41% of New York residents said they couldn’t cope with the city’s high cost of living. They believe they will be forced to go somewhere where the “economic climate is more welcoming”, according to the report.
Ari Buitron, a 49-year-old paralegal from Queens said:
“They are making this city a city for the wealthy, and they are really choking out the middle class. A lot of my friends have had to move to Florida, Texas, Oregon. You go to your local shop, and it’s $5 for a gallon of milk and $13 for shampoo. Do you know how much a one-bedroom, one-bathroom apartment is? $1700! What’s wrong with this picture?”
via ZeroHedge News https://ift.tt/2WBMx3g Tyler Durden
A Russian Tu-154M-ON (NATO reporting name: “Careless”) reconnaissance plane has conducted a surveillance flight over US military facilities located on the west coast of the country, The Drive online magazine reported.
Russia TU-154M planes are certified to conduct “Open Skies” flights, via Flickr
The plane reportedly took off from Great Falls and flew over the Edwards Air Force Base, United States Air Force Plant 42, which is used to modernize and assemble various military aircraft, including strategic bombers, Vandenberg Air Force Base, as well as the Nellis Test and Training Range — also known as Area 51.
The reconnaissance flight was carried out according to Treaty on Open Skies provisions that allow for mutual aerial inspections of the signatories for the sake of verifying the fulfillment of disarmament treaties.
The mid-day flight on March 28th, 2019 appears to have originated out of Travis AFB, located near San Francisco, and continued on something of a highlights tour of American military installations in California and Nevada. It flew south over central California, passing near bases like Naval Air Station Lemoore and headed out over the Channel Islands.
It then headed directly over Edwards AFB before meandering around Fort Irwin and on to Naval Air Weapons Station China Lake before hooking a right and heading toward Creech AFB in Nevada. It then headed north, directly into the NTTR — the most secure airspace in the United States along with Washington, D.C. — The Drive
The US threatened to suspend its participation in the treaty in 2018, claiming that Russia was not adhering to it, but the State Department later stated that Washington would not follow through on the threats.
Via The Drive/FlightRadar24: This is the medium alitidue imaging portion of the flight by the Tu-154M.
The Tu-154M-ON is a modification of the Russian Tu-154M LK-1, which is used in cosmonaut training programs, is specifically fitted for conducting aerial inspections.
via ZeroHedge News https://ift.tt/2UqJRYU Tyler Durden
The Trump administration has cut off all foreign aid to the Central American nations of Guatemala, El Salvador and Honduras – known as the Northern Triangle countries.
“At the Secretary’s instruction, we are carrying out the President’s direction and ending FY 2017 and FY 2018 foreign assistance programs for the Northern Triangle,” reads a statement toThe Hill from a State Department spokesperson.
The sudden move comes after a Friday statement by Homeland Security Secretary Kirstjen Nielsen – who said she signed a “historic” regional compact last week with the Northern Triangle to “combat human smuggling and trafficking, crack down on transnational criminals fueling the crisis, and strengthen border security to prevent irregular migration.”
Later Friday, President Trump said that said countries “set up” migrant caravans, per CNN.
“We were paying them tremendous amounts of money. And we’re not paying them anymore. Because they haven’t done a thing for us. They set up these caravans,” Trump reportedly said.
“At the Secretary’s instruction, we are carrying out the President’s direction and ending FY 2017 and FY 2018 foreign assistance programs for the Northern Triangle,” said a State Department spokesperson. “We will be engaging Congress as part of this process.”
The move comes after disputed reports of the “mother of all caravans” assembling in Honduras. On Wednesday Mexico’s Interior Secretary Olga Sánchez Cordero warned “We have information that a new caravan is forming in Honduras, that they’re calling ‘the mother of all caravans,’ and they are thinking it could have more than 20,000 people.”
Trump, meanwhile, did not mince words on Friday – threatening to close the border with Mexico if they don’t stop the latest caravans.
“Mexico could stop it so easily,” Trump said of “big caravans” he claimed are now coming from Central America.
He said he stopped foreign aid to Honduras, Guatemala and El Salvador because “they set up these caravans” and threatened to close the border “for a long time” pic.twitter.com/UqxcBSgOwM
In December, Trump threatened to cut off aid to countries from which the caravans originate, and are “doing nothing for the United States but taking our money.”
Trump cuts off foreign aid to El Salvador, Guatemala and Honduras. I’m happy to hear he is putting America First.
While Trump’s supporters have praised the move, others have suggested that cutting foreign aid will further destabilize the region and cause larger problems – including more migration.
Cutting foreign aid to our Central American neighbors will be broadly destabilizing & will exacerbate the problems that are leading to migration from these countries. Migration will likely increase, which the White House will then use as a cudgel in the 2020 election. #Cynical?
Sen. Bob Menendez (D-NJ) – ranking Democrat on the Senate Foreign Relations Committee, denounced the move.
“If carried out, President Trump’s irresponsible decision to cut off our assistance to El Salvador, Guatemala, and Honduras would undermine American interests and put our national security at risk,” he said.
“U.S. foreign assistance is not charity; it advances our strategic interests and funds initiatives that protect American citizens. This latest reported move shows the Administration still does not understand that the United States cuts foreign aid to Central America at our own peril.”
via ZeroHedge News https://ift.tt/2JPOcAA Tyler Durden
It’s time to face this country’s looming retirement crisis…
The United States is in the early stages of a crippling retirement crisis. Nearly half of all private-sector employees in the country—some 58 million people—had no company-sponsored retirement plan in 2018. As recently as 1999, only 39 percent of retiring workers were in this predicament. The retirement situation in the United States isn’t just bad; it’s getting worse with each passing year.
The crisis engulfs all kinds of workers: blue-collar teamsters, high-skilled professionals working for profitable corporations like Verizon and United Airlines, and public-sector civil servants in cities plagued by budget crises (read: Detroit). Many have lost their health insurance and pension benefits—and in some places, they’ve even been ordered to return payments that were miscalculated by pension authorities years in the past. An increasing number of people now work at jobs that never offered pension plans in the first place.
Pensions are regarded by most workers as among the most binding of all promises—a compact between themselves and their employers, sealed by years of labor. Americans assign to government the responsibility for protecting this sacred compact from any temptation by companies to raid retirement accounts for their own purposes. Increasingly, though, this once-unbreakable promise has become discretionary: Employers can abandon it when the stock market falters, when a firm goes through financial reorganization, or simply when shareholders demand higher profits. Insecurity is becoming the standard of older age in this country.
Across the spectrum, workers have responded to the crisis by planning to work many more years than they had expected, only to find that they cannot hold onto the jobs they had in their 50s. Aching backs make physical labor too difficult, while companies are often looking for ways to ease out older, more expensive workers. Those who do find employment past the age of 65 are likely to be relegated to positions that are far below the status—and salary—of the jobs they once held.
Yet this problem is not universal. In late 2015, the Institute for Policy Studies and the Center for Effective Government co-published a report, entitled “A Tale of Two Retirements,” that substantiates what many have long suspected: While companies are defaulting on pensions and benefits for workers, up in the C-suite, the weather is fine. Not only are CEOs socking away millions of dollars in executive retirement plans, they are also enjoying such benefits on a tax-deferred basis. In 2014, Fortune 500 chief executives put $197 million more into their retirement accounts than they would have been able to if they’d been ordinary workers, saving $78 million on their tax bills in the process. They won’t start paying a dime in taxes on those funds until they retire, thus depriving the country—at least for now—of critical resources needed to fund schools, hospitals, and other public institutions.
Retirement insecurity is an increasingly serious manifestation of the vast inequality that is eating away at the social fabric of America. The same forces eroding pension rights are also leading to historic wage disparities, the uneven distribution of wealth, a hollowing-out of the middle class, and the exacerbation of historic racial inequities. Roaring stock markets deepen inequality by driving increases of wealth at the top. Middle-class equity is tied up in the housing market, which has gyrated in ways that have placed serious downward pressure on retirement savings for the majority.
We can get a sense of how profoundly inequality affects retirement when we look at communities that experience retirement in very different ways.
Opelousas, Louisiana, a city of about 16,000, has one of the highest elder-poverty rates in the United States. Seventy-seven percent African-American and Creole, Opelousas is home to men and women who have worked all their lives, but mostly in jobs that provided no benefits at all—retirement or otherwise. In 2017, per capita income in Opelousas was only $15,266 a year, and 45.3 percent of its population was living in poverty.
Few residents were entitled to sick leave or health-care coverage while they were working, and virtually none can count on a pension to support them when they reach retirement age. A lifetime of poverty never translates into what the rest of the country defines as true retirement. Instead, the working poor stay on the job until they are ready to drop.
The story of 71-year-old Valerie Miller offers a raw glimpse into this reality. Miller grew up in extreme hardship. As an adult, she cleaned houses while her husband, Martin, worked as a carpenter, until eventually their bodies broke down in their 60s. He is now in a nursing home with Parkinson’s, and she survives in their house on her own with a $960-per-month Social Security check and $50 in food stamps. Hardened by years in poverty, Miller is girding herself for more of the same.
“A lot of people sometimes wonder how you’re making it, but you manage,” she says.
In contrast, Ogden, Utah, has had an easier time taking care of its retirees. A small city nestled at the base of the Wasatch Mountains, Ogden has earned the notable distinction of having the narrowest wealth gap among US metropolitan statistical areas with 500,000 people or more. Ogden residents are much more likely than Opelousas residents to live a good life in their working years and to be able to retire comfortably.
Some local observers have been quick to credit the powerful influence of the Church of Jesus Christ of Latter-Day Saints, also known as the Mormon Church, and its moral code. And there is some truth to the assumption, as the faith is justly known for its blend of self-reliance and care for others. Support for the aged of all faiths in Ogden is largely organized through private means and based on strong social bonds, a powerful culture of service, and a desire to help the poor, whether they’re Mormon or not.
But the underlying economic stability of Ogden owes much more to the presence of the federal government—more specifically, federal agencies and installations, which provide steady jobs with good benefits, including generous retirement plans. The US Air Force has a large base nearby. The Internal Revenue Service office in Ogden employs thousands of the city’s residents. Before the federal government’s arrival, Ogden was a bustling railroad hub, and this too provided steady access to well-paying jobs. These stable sources of middle-class employment have ensured that Ogden’s workers and retirees flourish in a way that their counterparts in Opelousas never have.
Ogden retirees like Louise and Randy Nathanson have benefitted from both church and state. Randy worked at the local Air Force base, while Louise raised their children and then became a schoolteacher. “We weren’t rich before,” she remarks, “and we’re not rich now”—but, she adds, they are comfortable and secure. Given the area’s affordability and the Nathansons’ modest mortgage, they didn’t need to dip into Randy’s 401(k) until they retired.
Ogden is similar to Opelousas in that both cities have religious underpinnings and active volunteer groups that seek to serve the broader community. But in Opelousas, there is a limit to the effectiveness of the faith-based charity model. In spite of the valiant efforts of committed volunteers, systemic racism coupled with hard economic realities—and the notable absence of stable employers like the federal government—make it difficult to sustain a decent retirement. In Ogden, the combined economic power of the Mormon Church and the federal government protect residents from the vagaries of inequality and amplify the efficacy of volunteer organizations.
In the United States, economic security in old age was seen, for a long time, as both a social issue and a national obligation. From the birth of Social Security to the end of the 20th century, the common assumption has been that we have a shared responsibility to secure a decent retirement for our citizens. Yet that notion is weakening rapidly. Instead, we have started to hear echoes of the mantra of self-reliance that characterized welfare “reform” in the 1990s: You alone are in charge of your retirement; if you wind up in poverty in your old age, you have only your own inability to plan, save, and invest to blame.
This is an unacceptable conclusion. To reverse it, we must ensure that workers who have spent decades saving for retirement through pension contributions—based on promises made to them by their employers—can rely on those commitments. Companies that go bankrupt should not be able to put their shareholders first and their employees last when debts are settled. The fiduciary responsibilities of banks and brokerage houses that supervise the investment portfolios of pension funds must be elevated, and the supervision over them by federal regulators made more robust.
At the same time, the rules governing 401(k) plans need to be tightened so that retirement money becomes an investment that cannot be touched until retirement. In times of economic hardship, many workers feel they have no choice but to tap into these savings early. If we had more substantial and generous unemployment insurance, invested more in retraining, and provided more generously for medical needs, it would be much more feasible to create retirement funds that wouldn’t need to be raided early by families in distress.
Finally, we must shore up the Pension Benefit Guaranty Corporation, the federal agency charged with insuring private retirement plans, since it is the only backstop for those that go bankrupt and will soon be out of business if we don’t. Even though the PBGC provides only partial coverage for benefits, it remains a vital means of protecting at least some of the pension money that workers depend on. If it goes belly up, there will be nothing for them to fall back on.
Beyond these protections for private retirement accounts, the most universal of retirement plans, Social Security, needs to be more robustly funded. Eliminating the earnings cap and requiring high-income employees to pay a Social Security tax on all of their earnings is a vital first step, and it may well be the only one needed to ensure that this basic support system can function well into the future. Needless to say, the wealthy would hardly feel it if they were required to pay the same tax on their earnings that people with far less income routinely pay now.
What we cannot do, however, is ignore these issues or assume they are merely problems for the current generation of retirees. Younger workers will not be able to escape this vortex; indeed, they may face futures even more precarious than today’s seniors do. Younger workers have far less generous retirement benefits; are expected to work for many more years than prior age cohorts did; were punished more in the housing market when the 2008 financial crash reduced the availability of credit; and have faced, in general, more uncertain conditions in the labor market.
For them, the very concept of retirement is fading away, replaced by a work life that does not end at the traditional age of 65. As private pensions, Social Security, and Medicare become increasingly inadequate for meeting basic needs, the working life simply has to go on. That may not be a problem for those who are well-educated and work in rewarding, well-paying professions that do not tax the body. But it is not a solution for people who can no longer stand for hours, lift heavy objects, move at a rapid pace, or master new technologies that require an education they don’t have. For these people, the obligation to work longer and longer is a recipe for stress and downward mobility. The fact that the fastest-growing sector of American labor consists of full-time workers over the age of 65 tells us how bad the problem of retirement insecurity has gotten.
We have to start looking in the right direction for solutions. And we must ensure that we do not rob other deserving populations – especially children, in whom we invest a paltry sum relative to other advanced postindustrial societies – to solve the inequalities that beset the retirement “system” in the wealthiest country in the world.
via ZeroHedge News https://ift.tt/2V8MStE Tyler Durden
The Federal Communications Commission has been fighting what seems like a never-ending battle against robocallers for the last several years. Of the $208 million in fines that they have levied against illegal automated callers, they have only collected about $6,790, according to the Wall Street Journal.
Since 2015, the FCC has ordered those who’ve violated the Telephone Consumer Protection Act to pay fines of $208.4 million, including forfeiture orders in cases that involve robocalling, Do Not Call registry and telephone solicitation violations. The $6,790 collected represents an extraordinarily paltry sum, 0.003% percent of what has been fined.
The total sum secured by the FTC through court judgments in cases involving civil penalties for robocalls or Do Not Call registry violations, plus the sum requested for consumer redress in fraud related cases, has been $1.5 billion since 2004. It has collected on $121 million of that total. This marks about 8%, a number the agency is proud of.
Ian Barlow, coordinator of the agency’s Do Not Call program, said:
“That number stands on its own. We’re proud of it; we think our enforcement program is pretty strong.”
A spokesman for the FCC said that his agency doesn’t have the authority to enforce forfeiture orders that it issues, but the Justice Department does. Many of the people that the FCC tries to fine are individuals and small operations, which makes it difficult for them to pay the penalties.
“Fines serve to penalize bad conduct and deter future misconduct,” an FCC spokesman said to the Wall Street Journal.
But the inability to collect on these penalties shows the limits that the government has in putting a stop to these illegal calls. In addition, it also shows why the threat of large fines may not be effective in deterring bad actors.
Margot Saunders, senior counsel at consumer advocacy group National Consumer Law Center said:
“It’s great that we have these laws; it’s great that we have public enforcement, but because there are so many calls and so many callers, the public enforcement is a joke. It doesn’t even make a dent.”
In 2018, there were 26.3 billion unwanted robocalls made to US mobile phones, according to robocall-blocking app Hiya. Another estimate put that number at nearly 48 billion. Companies like AT&T are already working to implement call verification systems that regulators and industry executives say will help identify legitimate calls.
The FTC and FCC say there are challenges to collecting these penalties, especially when small illegal operations quickly close up shop and change their name. Many are also based overseas, making it difficult to seize assets.
Daniel Delnero, a senior attorney at Squire Patton Boggs in Atlanta, said: “Fines are a deterrent on legitimate companies that have real assets in the U.S. For a spam caller or overseas operator, that’s really just pushing for Social Security numbers or bank account information—it’s less of a deterrent, because they don’t really have anything that could be collected anyway.”
In cases where there are civil penalties, the FTC may secure a judgment but it still may be difficult to get individuals to pay. Congress requires the agency to consider an individual‘s ability to pay, which may help them wind up being charged with a smaller sum. For example, in 2017, two defendants faced civil penalties of $2.7 million in a California suit filed by the FTC but were ultimately ordered to pay just $225,000 or less after disclosing their financials.
Ajit Pai, chairman of the FCC since January 2017 said: “It’s important to send a signal to other would-be robocallers that you’re not going to be able to get away with it.”
Of the $202 million in fines issued during Pai’s tenure, nothing has been collected.
via ZeroHedge News https://ift.tt/2JOLlYv Tyler Durden
It’s All Over Now, Baby Blue: Now the Deflation then The Repression
‘You must leave now, take what you need, you think will last
But whatever you wish to keep, you better grab it fast
Yonder stands your orphan with his gun
Crying like a fire in the sun
Look out the saints are comin’ through
And it’s all over now, baby blue’
It’s All Over Now, Baby Blue – Bob Dylan 1965
What a three weeks it has been, particularly in bond markets where, ten years after the launch of QE, the prospect of deflation is priced as a clear and present danger!
The good news is that we know what is coming next. The bad news is that we know what is coming next. The current war on deflation, a war lost if the shift in bond yields is to be believed, is bringing forth from the authorities not a new tactic but a whole new strategy – financial repression. So, is the financial repression, now renamed modern monetary theory/makeup strategy/nominal GDP targeting, imminent as bond yields in New Zealand and Australia reach all-time lows and the ten-year bond yields of both Japan and Germany return to zero?
Human beings are not naturally proactive and in groups they become less so. In groups trained to believe the same things, say for instance at economics faculties in the world’s finest universities, proactivity does not often extend beyond trying to get to the front of the lunch queue. We must expect the move to financial repression to be proactively discussed, now widely by central bankers and politicians, but to be implemented as a reaction. In terms of how central banks will move to their newly floated Plan B, financial repression, the remarks by Jay Powell in California on March 8th are very instructive –
My FOMC colleagues and I believe that we have a responsibility to the American people to consider policies that might promote significantly better economic outcomes. Makeup strategies are probably the most prominent idea and deserve serious attention. They are largely untried, however, and we have reason to question how they would perform in practice. Before they could be successfully implemented, there would have to be widespread societal understanding and acceptance – as I suggested, a high bar for any fundamental change….
Considering monetary policy mom broadly, we are inviting thorough public scrutiny and are hoping to foster conversation regarding how the Fed can best exercise the precious monetary policy independence we have been granted. Our goal is to enhance the public’s trust in the Federal Reserve – our most valuable asset.
Monetary Policy: Normalization and the Road Ahead, Chair Jerome H. Powell
March 2019 SIEPR Economic Summit, Stanford Institute of Economic Policy Research, Stanford, Califomia
These direct quotes and other comments in Powell’s speech in California on March 8th make it clear that the Fed’s goal, above all others, is to protect its own independence. Like just about any other institution, it believes in self-preservation and can compromise on much to achieve it. It is no coincidence that the new strategic target has been put forward just as key political voices have raised the prospect of a move to Modem Monetary Theory – a capture of the Fed which is indeed red in tooth and claw. This threat to the institution, as much as the risk of an economic slowdown, can force the Fed proactively to change its strategic target. While The Solid Ground expects a deflationary bust to provide the main prompt for a central banking revolution, we cannot rule out that it is a political bust, at least as seen through the eyes of an independent central banker, that drives action.
Many are to blame for the sudden outbreak in monetary theory madness, but the Fed must realize, at least in private, that their direct actions to boost asset prices have economically ‘orphaned’ many US citizens and created a political backlash. While their formal research may not recognise such a role, the point is that the citizens do and thus “it’s all over now” for a monetary policy seen to benefit the few and not the many. Given the need to shift strategy, what the Fed is grabbing fast is the policy that will abate the citizens but preserve as much of its independence as possible. They thus are preparing to inflate away debts but are looking for “widespread societal understanding and acceptance” before doing so. The speech refers to a series of ‘town-hall’ meetings that the Fed will run across the country in search of such acceptance. Should a recession/credit crunch come along before that exercise in democracy is completed such ‘acceptance’ may just have to be inferred.
Investors must be in no doubt that this is not more QE. It is a strategic shift in monetary policy aimed at benefiting debtors at the expense of creditors, and spenders at the expense of savers. As discussed in that last newsletter, a few weeks ago, what investors need to grab fast now is gold, even as the markets price in ever clearer risks of deflation. In those past few weeks bond yields have shifted markedly lower and the gold price markedly higher. That’s a terrible combination that suggests that it is indeed all over now, at least for those who believe that markets are ultimately better at allocating resources than governments.
If bond market moves do indeed augur another deflationary scare and a move to a new monetary strategy of financial repression, then gold is just beginning what could be a thirty-year bull market.
Sometimes it’s the cure and not the disease that ultimately kills you. So it is to be for savers/investors when it comes to the cure that has constantly cheered their chilled hearts since 2009. That cure, in the form of larger central bank balance sheets, was explicitly aimed at producing a positive wealth effect by boosting asset prices and encouraging consumption. It succeeded, at least it did for those who owned assets, and the FT ‘How to Spend It’ supplement beam testimony to the link between the rise in asset prices and a type of rise in consumption. Of course, that illustration of the gap between the ‘have nots’ and the ‘have yachts’ has created its own form of threat to savers, and now a new monetary policy is mooted which will shift wealth from the owners of assets, in particular credit assets, to wage earners and the leveraged. ‘They that sow the wind shall reap the whirlwind’ and the tactical victory for the owners of assets in the age of QE (2009¬2019) will unleash a whirlwind, in the form of financial repression, which will deplete the purchasing power of savings mightily over the forthcoming years. So much for the long-term political failure of QE, but what about its short-term failure: it’s creation of a deflationary bust!
For many years The Solid Ground has argued that QE was producing debt faster than it was producing money and thus was setting the stage for our next deflationary bust. The balance sheet deterioration that resulted from bringing forward growth via the accumulation of debt has troubled investors occasionally over the past decade. It did so in the Eurozone crisis, particularly regarding the debt levels for the so-called PIIGS (Portugal, Ireland, Italy, Greece and Spain), it did so for the so-called ‘taper tantrum’ for emerging markets, it did so when Glencore and other commodity producers were in trouble in early 2016 and it did so yet again when Turkey seemed incapable of servicing its huge foreign currency debt obligations. The monetary medicine called QE was liberally dosed out but despite this European equity prices, emerging market equity prices, and commodity prices are all lower than they were in 2014. Debt, however, is much higher. For most investors more monetary medicine still means more profits but increasingly this has relied upon an inflation of US equity prices- now 58% of the Morgan Stanley All Country World Index. So here we are again, central bankers are preparing more medicine and investors await their bounty despite the fact that the last dose had limited impacts – at least outside the US.
It is legitimate for investors to believe that a major deflationary shock will either not be permitted or at least reversed quickly by the action of the authorities. Indeed, in Anatomy of The Bear Lessons From Wall Street’s Four Great Bottoms (Harriman House Limited 2016) your analyst argues that it is this social panic to defeat deflation that signals the end of a bear market. However, in those four great bottoms equity valuations were extremely low and none of them coincided with debt-to-GDP ratios at the current excessive levels. Society has thus not yet had to face the true consequences of too much debt and thus not had to adapt the extreme policies necessary to inflate those debts away. Indeed, behaviour across the planet shows that the lessons they have learned from central bank actions is that they can only benefit from having even more debt.
For those who thought that QE was that extreme policy and it wasn’t too bad, then the rise of the global debt-to-GDP ratio and the recent dive in bond yields indicates that they have simply not been extreme enough or perhaps just extremely misconceived. There is no doubt that the assembled authorities cannot contemplate the consequences now of even less money, given the record high levels of debt to GDP. The Solid Ground has long argued that their inability to accept the social consequences of the gravity of financial market value will indeed lead them not to try to use their balance sheets to influence pricing, but ultimately to use their legal authority to suspend and set pricing – financial repression. When that comes all sorts of phoney prices can be created, albeit at an extremely high price for savers and also the efficient allocation of capital.
As Jay Powell made it clear in his speech at Stanford in March there would have to be ‘widespread societal understanding and acceptance’ for such a move. Your analyst continues to believe that it will be dramatically lower prices for equities, associated with a recession and probably deflation that will be taken as sufficient pain to imply such ‘understanding and acceptance.’ The recent dive in bond yields indicates that such pain is imminent.
In Capital Management In The Age of Financial Repression 3Q 2016, The Solid Ground shows, using historical examples, the Alice in Wonderland world that ensues for savers when acceptance grows that debts MUST be inflated away. Its a world where our political masters, fearful of the consequences from their own policy mistakes, subject us to a suspension of pricing for our own benefit. Be in no doubt that the continued dive in bond yields and the likely dive in equities, should the bond investors view on the growth deterioration be confirmed, paves the way for the new era of financial repression, perhaps tongue in cheek to be known this time as ‘capitalism with Chinese characteristics’.
So is there any good news for investors? Yes, there is. We can all retrain as investors who understand the nature and consequences of financial repression with some study of the history of financial repression. Algorithms, however, laboring with only post-repression data, will still be merrily investing funds to take advantage of the less government and more market and general disinflation that they have the past forty years of data to describe – oops!
Financial repression will be triggered by a deflationary episode and investors must now prepare for that episode. However, when we move to financial repression asset allocation becomes very easy by ignoring bonds, buying gold and buying equities with high fixed costs, usually companies that are asset heavy and not asset light. These are not unconventional assets, but the secret will be to hold them in unconventional amounts. Of course, the most important thing to do in any repression is to move your savings to a country that will not need to repress them – a country with a low debt-to-GDP ratio. Having taken such unconventional measures, your job is largely done because it should outperlom with little or no further active management for a few decades. Note your 2019 asset weightings and be prepared to liquidate, but only when the algorithms have reached the same weightings. I’d guess for these ‘vagabonds’ that will be about 2039! Active managers get to ‘strike another match’ whenever they want — well at least those free to move to unconventional asset sizing and leave the age of stepping stones behind.
Leave your stepping stones behind, there’s something that calls for you Forget the dead you’ve left, they will not follow you
The vagabond who’s rapping at your door
Is standing in the clothes that you once wore
Strike another match, go start anew
And it’s all over now, baby blue
via ZeroHedge News https://ift.tt/2uJZlsx Tyler Durden
Democrats like to deride President Trump’s warnings about a crisis at the southern border as a “fake emergency” reliant on “nonsensical” numbers about the flow of migrants. They even tried, and failed, to terminate his emergency declaration, which has also triggered a flurry of lawsuits, but that won’t change the fact that the first tranche of money from Trump’s expanded border wall has already been approved by the DoJ.
And the timing couldn’t have been better, because over the past month, as reports about the number of migrant families declaring asylum between border checkpoints climbing to an all-time high were picked up by the mainstream press, the true weight of the ongoing disaster at the border has suddenly become difficult to ignore. Even the peso, which had mostly shrugged off his prior threats, tumbled when Trump warned that he would close the border next week if Mexico doesn’t try to stop illegals from entering the US.
And in the latest report that, like the others, will be difficult for the public to chalk up to more conservative fear mongering, USA Today published a story on Saturday about a border city that has seen public resources overwhelmed as asylum seekers are released into the city at a rate of more than 800 per day.
The city is McAllen, Texas, which has seen a surge of migrants crowding church shelters and other resources in the community as ICE has been forced to release more asylum seekers as they await their immigration hearings. ICE shelters have simply become too overcrowded, and the agency, which can hold migrants for up to 20 days, longer than the 72 hours for the border patrol, has few alternatives.
Under a bridge connecting the U.S. with Mexico, dozens of migrant families cram into a makeshift camp set up by U.S. Customs and Border Protection. The families are there because permanent processing facilities have run out of room.
Seven hundred miles east, busload after busload of weary, bedraggled migrants crowd into the Catholic Charities Humanitarian Respite Center in McAllen, Texas. Organizers there are used to handling 200 to 300 migrants a day. Lately, the migrants have been arriving at a clip of around 800 a day, overflowing the respite center and straining city resources.
“It’s staggering,” McAllen City Manager Roy Rodriguez said. “Really, we’ve never seen anything like this before.”
Along the Texas border with Mexico – from El Paso to Eagle Pass to the Rio Grande Valley – masses of migrants have been crossing the border in unprecedented numbers, overwhelming federal holding facilities and sending local leaders and volunteers scrambling to deal with the relentless waves of people.
With the border patrol on track to apprehend 100,000 migrants during the month of March – a new monthly record – Customs and Border Protection Commissioner Kevin McAleenan said Wednesday during a speech in El Paso that the border had reached its “breaking point”. He urged Congress to do something – though it seems the Democrat-led House is preoccupied with stymieing Republican efforts to secure more money for border security. “The surge numbers are just overwhelming the system”, McAleenan said.
Theresa Brown, director of immigration and cross-border policy at the Bipartisan Policy Center, who was a CBP policy adviser under both President Obama and President Bush, put it even more bluntly: “This is a system-wide collapse”.
When migrants who have made it through the first round of the asylum process arrive in McAllen, they are typically released to the Catholic charities in town, which have also become overwhelmed.
In McAllen, migrants deemed to have credible asylum cases are released to the Catholic Charities respite center, where they’re allowed to shower, given medical attention and helped with getting a bus or airplane ticket to their final U.S. destination.
Sister Norma Pimentel, who oversees the shelter, said she received a phone call two weekends ago from a Border Patrol official warning that the numbers were about to skyrocket. The next day, around 800 migrants showed up to the shelter, she said.
On Wednesday, clusters of migrants crowded the halls of the center. Lines stretched down long halls, as migrants waited to use the shower or pick up diapers. Teams of volunteers called migrants’ relatives to get bus tickets. Every 20 minutes or so, a new tour bus would drive up and deliver another 50 migrants into the shelter.
As the charity’s respite center started to overflow, the town has gotten involved, opening new shelters and bringing in city buses for transportation. Local officials are applying for federal disaster grants to compensate them for the hundreds and thousands of dollars already drained from city coffers.
Despite the crush, Pimentel said she will continue taking in the migrants. “If you drop them off on the street, they’re not going to know what to do” she said. “We’re going to have chaos. We’re going to have a terrible problem.”
As the respite center started to overflow last week, city officials got involved, opening new shelters and contracting buses to take the migrants directly to shelters rather than have them cluster around the bus station downtown.
Rodriguez, the city manager, said he’s dedicated several city officials to spearhead the problem and the city’s spending thousands of taxpayer dollars a day on the buses and other services.
He’s lobbied the federal government for reimbursement, but he’s not overly hopeful. In 2014, when a similar crush of Central American migrants strained city resources, local officials applied for $600,000 in federal disaster funds. After years of wrangling, they got just $140,000, he said.
“This is very similar to what we saw then,” Rodriguez said. “It’s real people and real time and real money.”
Well it certainly hasn’t taken long for the establishment narrative control machine to pace Russiagaters into a new arsenal of talking points. Now if you try to speak online about how Attorney General William Barr’s letter says that the Mueller report contains the explicit phrase “[T]he investigation did not establish that members of the Trump Campaign conspired or coordinated with the Russian government in its election interference activities,” or mainstream media reports that there are no sealed indictments and that no new indictments have been recommended, you’ll be inundated with comments telling you “We don’t know what’s in the report! You don’t know! No one knows!”
“Mueller reported Trump did not collude with Russia to influence our elections,” Hawaii Representative Tulsi Gabbard stated on Twitter yesterday.
“Now we must put aside partisan interests, move forward, and work to unite our country to deal with the serious challenges we face.”
Peruse the comments on Gabbard’s post and you’ll see some 20 thousand furious responses all more or less saying the same thing: we don’t know what Mueller reported. It’s a complete and total mystery. There could be anything in there. For all we know Barr lied about the whole thing.
“Mueller has not reported anything,”tweeted journalist Soledad O’Brien to thousands of likes and retweets in response to Gabbard’s post. “Why does anyone support this idiotic lady?”
Mueller has not reported anything. Why does anyone support this idiotic lady? https://t.co/FTHQEzSvOr
This lays out clearly where the victims of the Russiagate psyop are being herded in response to Mueller’s report. A few days ago when I would talk on social media about the fact that Don Jr and Jared Kushner aren’t being dragged off in chains as promised, there was deathly silence from the Russiagate crew. Now when I talk about it (check out the responses to this post just for an example), I get a bunch of responders going on about the fact that we haven’t seen the report, and that Barr’s letter only contains partial sentences from the report (as though there’s anything else that could be in those sentences which would change the meaning of “did not establish that members of the Trump Campaign conspired or coordinated with the Russian government in its election interference activities”). These are the arguments that the narrative managers have taught them to make.
Of course, these arguments are absurd. As other analysts have noted repeatedly, the belief that the full Mueller report contains shocking and incriminating evidence of Russian collusion is premised on the idea that Robert Mueller, the paragon of virtue and integrity according to these same people, is simply sitting on the sidelines allowing William Barr to lie about his investigation uncorrected. Mueller, who had no hesitation in coming out to correct BuzzFeed’s false reporting about a single aspect of the investigation in January, has not stepped forward to say that Barr has lied about his entire two-year investigation as they are claiming. There has not been so much as a single anonymous leak from anyone on his team to the Washington Postcontradicting anything Barr’s said.
Mueller made it clear with the BuzzFeed debacle that he will intervene to prevent disinformation about his investigation from tainting public discourse, but he has not done so with Barr’s letter, even after the investigation is over. This fact kills the argument that there might be some dramatic revelations about a Russian conspiracy in the report.
Luckily for us all, this idiotic argument won’t last long. Barr now says that the Justice Department will be making the report available to the public by “mid-April, if not sooner,” and that “there are no plans to submit the report to the White House for a privilege review.”
Which of course means that by mid-April, if not sooner, Russiagaters will be subjected to yet another loud “told you so” victory lap from Russiagate skeptics like myself. And they will have brought it entirely upon themselves.
On the last-gasp conspiracy theory of the collusion dead-enders to keep the flock hooked: that William Barr is materially misrepresenting the Mueller report & Mueller and his entire team are just remaining quiet & not objecting about this wholesale distortion of their work: pic.twitter.com/ESq8Dw4nr1
The phrase deus ex machina comes from a common plot resolution technique in ancient Greek theater in which an actor playing a god (deus) was lowered onto the stage by a pulley system (machina) at the end of the play to save the day.
The god would swoop in, rescue the heroes, mete out punishment to the villains, and deliver a monologue saying everything’s fine now.
Today when people say deus ex machina they are usually referring to lazy writing in a book or a play, in which the conflicts faced by the protagonist are resolved not by their own efforts, but by the interference of some outside unexpected occurrence. It’s looked down upon by critics because it leaves the audience unsatisfied, thinking “Well why’d we spend all this time cheering for the heroes to succeed in all their struggles only to have aliens/the Queen/their long lost parents arrive to save the day? That means nothing they did really mattered!”
This is exactly what rank-and-file Russiagaters have been trained to expect from the Mueller report for the last two years. That it isn’t necessary to struggle to force major changes in the US political process and the Democratic Party or ask sober questions about how a reality TV star defeated “the most qualified candidate ever to run as president”, because any minute now Robert Mueller is going to be lowered onto the stage, arrest Trump’s whole corrupt inner circle, and hand Congress the evidence needed for his impeachment. The heroes would be vindicated, the villains punished, and none of the messy stuff in the beginning and middle of the play will have really mattered.
Deus ex Mueller isn’t coming, my pussyhat-wearing friends. The report may contain some indications of corruption, because Trump’s circle is very corrupt, but there’s not going to be any revelation about a Russian conspiracy, and there won’t be any impeachment. The only way you’re going to get him out of office is by voting him out, which you greatly hurt your chances of doing by putting all your eggs in a basket that Trump will now be able to label an unfair “witch hunt” throughout his entire reelection campaign.
You guys are not good egg-putters, Democrats. The fact that you put all your eggs in the basket of Robert “Weapons of Mass Destruction” Mueller bringing the Executive Branch of the US government to its knees is hilarious. And the fact that you’re now cramming all your eggs in the basket of the report being somehow a 180 degree switch from the summary that we’ve received already, thus setting you up for more ridicule when the full report is revealed, shows you just how bad at egg-putting you are.
Stop waiting for deus ex Mueller. Take off the tinfoil pussyhats, stop pouring your energy into baseless conspiracy theories, and start building a real political movement. If you actually see Trump as a threat, this is the only sane basket to put your eggs in. I, for one, cannot wait to see what the Easter Bunny brings in mine.
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As first reported in English media by Beirut-based Al Masdar News, the US Air Force dropped a bunker buster bomb on a cave in eastern Syria this week while wrapping up coalition operations against ISIS in the area of Baghouz, in Deir Ez-Zor province of eastern Syria.
The massive impact and explosion on the side of the Baghouz Mountains was caught on video as the coalition massive bomb targeted a cave reportedly used by Islamic State fighters who escaped the nearby US and Syrian Democratic Forces (SDF) successful liberation of Baghouz town, ISIS’ last small territorial enclave.
File photo of a 5,000-pound “Bunker Buster” GBU-37 bomb, via Reuters
Bunker buster bombs have been more commonly used by US coalition forces over mountainous Afghanistan, but could now be increasingly in action in Syria to root out hard to access ISIS hideouts in Syria’s Deir Ez-Zor region.
The Islamic State has been holding out in the Baghouz Mountains for two weeks now, as they are currently encircled by the Syrian Democratic Forces (SDF) after losing the Baghouz Camp in eastern Deir Ezzor.
Despite their presence at the Baghouz Mountains, the terrorists are all but finished in eastern Syria, especially after they were forced to concede the key towns of Hajin, Baghouz Tahtani, and Baghouz Fouqani.
A week ago the White House announced that all of ISIS caliphate territory in Syria has been “100 percent eliminated”.
Since liberating the last ISIS holdout of Baghouz, coalition forces have been pounding nearby mountains with airstrikes and heavy artillery, after remnant ISIS terrorists fled there instead of being among the bulk of those either fighting to the death or surrendering.
It doesn’t look like the escaped terrorists are fairing too well, considering the impact size of the bunker-busting bomb in the video.
Watch the US Air Force drop a bunker buster bomb to destroy an ISIS mountain base:
Meanwhile Russian officials over the past week have questioned whether ISIS’ territorial caliphate has been really stamped out, saying previously, “the US announcement about the complete elimination of Daesh (ISIS) is not very convincing,” according to state-run media.
Syria’s envoy to the UN, Bashar Jaafari, also last week called Trump administration claims of a total ISIS defeat in Baghouz and the region a “bluff”.
Regardless, the scenes of coalition bombings, Kurdish-led advances, and terrorist mass surrenders have been stunning over the past two weeks. Regardless it is clear that ISIS is in it’s final days, not discounting the potential for an underground “endless insurgency” that may continue to rattle Syria and the region for years to come.
But still the months-long question remains: when are US troops actually coming home as promised by Trump on many occasions?
No one should hold their breath, especially as just days ago American defense officials confirmed that “many troops” will stay in Syria through 2019, which means about 1,000 or even the current 2,000 — as there’s little evidence that any kind of major draw down is actually underway.
via ZeroHedge News https://ift.tt/2U5KVBL Tyler Durden
Battery energy storage deployment in the US has rapidly increased in recent years and appears set for further growth, assuming costs continue decreasing and pending market rule changes increase opportunities for storage resources to participate in wholesale power markets.
But importantly, the economics, policy drivers and use cases differ widely among regions.
The US currently has a little over 1 GW of installed battery storage capacity and could have more than 7 GW of utility-scale and grid-connected battery storage operating by 2022, according to S&P Global Platts Analytics’ most recent US Power Storage Outlook.
Lithium-ion battery prices have sharply declined in recent years driven by steadily expanding manufacturing capacity, which has led to economies of scale and improved learning. That learning curve is expected to continue as battery companies are planning a six-fold manufacturing capacity increase by 2023.
Over the medium to longer term, Platts Analytics anticipates that mass-market electric vehicle adoption will continue to drive battery costs down despite concerns around raw material prices. Lithium-ion battery prices are expected to decline 40% by 2025, making it difficult for other technologies such as flow-batteries to compete, particularly for shorter durations.
One potential battery storage deployment growth metric lies in the interconnection queues maintained by each wholesale power market operator, known as independent system operators (ISO) or regional transmission organizations (RTO). Any resource that wants to connect to a regional power grid must progress through a formal interconnection process. Not every resource will ultimately connect to the grid, but the queues provide a view of the level of market participants’ interest in storage.
Battery capacity in RTO/ISO interconnection queues more than doubled in 2018, surpassing 30 GW of capacity. The largest queued capacities are in the California ISO (CAISO), supported by storage mandates, and in the Southwest Power Pool (SPP), where several large solar-PV-with-battery projects entered the queue in 2018.
The Federal Energy Regulatory Commission’s (FERC) energy storage order 841 will impact the volume of wholesale power market energy storage participation over the longer term, but the impact is expected to vary by region.
The ISOs filed plans with FERC detailing market rule changes that would allow energy storage resources to participate in regional power markets on a level playing field with other resources. FERC is reviewing the proposals that were filed in December.
Market observers were initially concerned that a 10-hour participation requirement for storage in PJM Interconnection’s proposal would limit the ability of battery storage to engage. PJM Interconnection is an RTO whose territory spans a number of states in the eastern US.
However, president and CEO Andy Ott explained in a recent interview that changes to its energy and reserves markets are expected, to allow storage resources to earn the bulk of their revenue from those market segments. The 10-hour requirement only applies to the capacity market, which is not ideal for storage resource participation, according to Ott.
Outside those regions covered by RTOs/ISOs, several utilities have announced plans to procure battery storage as part of their Integrated Resource Plan processes. Portland General Electric recently announced a first-of-a-kind combined facility with 300 MW of wind, 50 MW of solar PV and 30 MW of batteries. And Arizona Public Service Company in February said it plans to add 850 MW of battery storage and at least 100 MW of new solar generation by 2025.
Platts Analytics estimates that solar PV with storage will become increasingly competitive with natural gas peaking plants in regions with high solar resources.
via ZeroHedge News https://ift.tt/2FCorhU Tyler Durden
