Brazil’s central bank (BCB) surprised the market by foregoing a final rate cut overnight in what seemed like a hawkish effort to stem the tide of collapse in its currency. For a few brief minutes it worked… but the Real is no collapsing lower again to more than 3.70/usd.
As Goldman Sachs noted, the BCB decision went against a broad market consensus expecting a final 25bp rate cut: only 2 of the 39 analysts surveyed by Bloomberg expected the Copom to leave the policy rate unchanged at 6.50%. The forward guidance hardened, now indicating the end of the long easing cycle.
This was one of the few instances where a central bank surprises a heavy market consensus and, yet, is likely to be applauded for it and gain credibility. The reason analysts were expecting a rate cut was not because in their assessment of the macro fundamentals and overall evolution of the balance of domestic and external risks further easing would be warranted, but simply because the central bank guidance from the previous meeting, reiterated in the Quarterly Inflation Report, clearly suggested so, and in recent weeks, amidst already clear currency pressures, central bank officials did not publicly abandon such guidance.
Overall, while the Copom communication with the market may have been imperfect, the decision to hold is, in our assessment, perfectly justified by the recent developments in external financial markets and the ongoing depreciation pressure on the BRL. We expect the Copom to leave the policy rate unchanged at 6.50% for the foreseeable future and expect the next move to be a hike.
However, it didn’t and isn’t and the Real is now down almost 20% since the end of January…
President Donald Trump held a meeting on illegal immigration at the White House on Wednesday and one particular moment went viral… but for all the wrong reasons.
Fresno County Sheriff Margaret Mims expressed her frustrations with the federal government to the president regarding the handling of criminal illegal immigrants and cited MS-13 gang members as an example. Responding directly to that, Trump said the following:
“You wouldn’t believe how bad these people are. These aren’t people, these are animals, and we’re taking them out of the country at a level and at a rate that’s never happened before.”
However, dozens of media outlets have only shared the response to Sheriff Mims, not including her question and comments that were directly about MS-13 and in the process purposefully mischaracterizing the president’s remarks to accuse him of referring to immigrants as “animals.”
CNN, ABC News, CBS News, NBC News, and C-SPAN shared the clip on Twitter leaving out the crucial context of Trump’s response.
“We’re taking people out of the country. You wouldn’t believe how bad these people are. These aren’t people — these are animals.” During a meeting with public officials who oppose California’s sanctuary policies, Pres. Trump criticized US immigration laws https://t.co/2KcrIhMnyRpic.twitter.com/SsmCdaofHb
“These aren’t people. These are animals.” President Trump used the harsh rhetoric to describe some undocumented immigrants during a California “sanctuary state” roundtable. https://t.co/mOwXilRtwEpic.twitter.com/eYC6XhtR57
NBC News Chief Foreign Affairs Correspondent Andrea Mitchell tweeted that Trump’s “animal” jab was in reference to “people trying to get into the country.”
A tough take down by the California governor after @realDonaldTrump calls people trying to get into the country “animals” not people. https://t.co/LPKiHPJaWZ
Washington Post reporter Robert Costa noted that the president had used the term “animal” before on the campaign trail in 2015, but what he neglected to mention was that Trump specifically used the word in reference to the illegal immigrant who shot and killed Kate Steinle.
Among the headlines, The New York Times had “Trump Calls Some Unauthorized Immigrants ‘Animals in Rant,” USA Today had “Trump calls undocumented people ‘animals,’ rhetoric with a dark past,” Voxhad “Trump on deported immigrants: ‘They’re not people They’re animals,’” The Huffington Post had “Trump Refers to Immigrants As ‘Animals.’ Again,” Business Insiderhad “Trump says some unauthorized immigrants ‘aren’t people’ but ‘animals’ who will be rapidly kicked out of the US,” and The Washington Post had “Calling immigrants ‘animals,’ Trump evokes an ugly history of dehumanization.”
While the president’s attacks of the media by constantly dismissing them as “fake news” sets a dangerous precedent, the media certainly doesn’t help its cause – giving him and his supporters ammunition – when it misleads viewers and readers by purposefully taking him out of context.
Watch the full clip below again (via CBS) and decide just how ‘fake’ the media has become.
As Scott Adams tweeted“Apologies are coming, right?” – we won’t hold our breath.
And finally, here is Mark Constantine to summarize the state of the world…
libs: Trump calling immigrants ‘animals’ is the language of a fascist!
journo: Trump’s out of context quote was about MS-13 members
This below is the viral clip that is dividing America. It comes from a White House gathering held yesterday to discuss illegal immigration, deportations, and sanctuary cities. Is President Trump calling out all immigrants or is he referring to members of the violent MS-13 gang when he declares “These aren’t people, these are animals“?
‘These aren’t people. These are animals.’ — The President of the United States on undocumented immigrants pic.twitter.com/0ECEqPOzu1
After pro-Trump Twitter went bananas and charged obvious bias, a number of mainstream outlets have changed, altered, and revised their headlines to read “some immigrants” or add mentions of MS-13 in their accounts.
Fresno County Sheriff Margaret Mims: Thank you. There could be an MS-13 member I know about—if they don’t reach a certain threshold, I cannot tell ICE about it.
President Trump: We have people coming into the country, or trying to come in—and we’re stopping a lot of them—but we’re taking people out of the country. You wouldn’t believe how bad these people are. These aren’t people. These are animals. And we’re taking them out of the country at a level and at a rate that’s never happened before. And because of the weak laws, they come in fast, we get them, we release them, we get them again, we bring them out. It’s crazy.
The video below includes the full exchange, which begins around the two-minute mark.
But your immediate reaction to the story and the phrase “these aren’t people, these are animals” surely says something about our political hard-wiring just as hearing Yanny or Laurel or seeing a white-and-gold or a black-and-blue dress says something about our auditory and visual presets. Of course, how we feel about certain words, concepts, and people isn’t the same sort of thing as how our eyes see or our ears process audio. We have much more control over our mental reactions than we do over our physiological ones. That helps to explain why societies change attitudes towards all sorts of things, such as gay marriage, pot legalization, and interracial relationships over the years.
But that’s the long run, right? Is there any way that people who see or hear very different things when it comes to politics can reach some common ground rather than immediately act out the most-partisan scripts they can think of? Yes, at least when it comes to basic facts. In the immigrants/MS-13 case, the first step would be to actually double-check the context of the offending statement. Trump is himself a master of taking things out of context and it behooves his admirers and opponents alike to rise above his documented willingness to bend the truth if not lie.
In the current case, there is no question that he is specifically talking about MS-13, not even all illegal immigrants (whom he has previously referred to in starkly dehumanizing terms). Presenting the clip without that context is deliberately incendiary and it misrepresents Trump’s point. Outlets that decontextualized Trump’s quote might have gained a rush of traffic, but they do so at the cost of confidence in the media, which is already in the crapper. Gallup reports that over 80 percent of Americans believe the media are vital to a flourishing democracy and also believe the media are failing across a wide variety of measures:
Decontextualizing Trump also has the added effect of hardening his supporters in the position that the media traffics only in fake news and is deliberately out to get their man in the White House. On the other side, anti-Trumpers can bask in the glow that they are absolutely right about the racist ugliness of the pussygrabber-in-chief.
None of this is to say that because Trump was talking about violent gang members, there’s no issue with his figures of speech. There is a long and disgusting history of likening foreigners and racial and ethnic minorities to animals, and anyone invoking dehumanizing language in the context of immigration can (and should, in my opinion) be castigated for it (my Irish and Italian grandparents were routinely likened to apes and rats back in the early 1900s). This includes nativists such as Rep. Steve King (R-Iowa), who has likened immigrants to “livestock” while making the case for electrified border fences. But’s not difficult to engage and debate Trump or anyone else in good faith and with proper context. Indeed, it’s a necessary prerequisite if you want to persuade anyone who doesn’t already agree with you.
If many journalists are failing to report basic facts without proper context, news consumers are guilty of similar crimes against basic comprehension. As Michael Socolow, a journalism professor at the University of Maine, has told Reason, the social-media age requires a different form of literacy that all of us should keep in mind. To paraphrase: “Don’t share news that doesn’t have substantiating links, be wary of stories that perfectly confirm your pre-existing biases, and (for god’s sake!) always ask yourself why you’re talking in the first place.”
We know that Donald Trump is incapable of being the adult in the room, of speaking thoughtfully, carefully, and inclusively. That’s deeply regrettable in a president, but what can you do, really? The genius of America is that we are supposed to be our own adults and think for ourselves. A big part of Trump’s m.o. is to pull people around him down to his level. To each his own, I suppose, but as a journalist, reader, and citizen, I know that when you wrestle a pig in his pen, you both get dirty and the pig enjoys it. And, in the case of Trump, he seems to be winning too, at least based on approval ratings. Hey, anti-Trumpers, it’s time to try a different strategy.
Kilauea has been spurting lava, molten rock, and poisonous gases from multiple massive fissures on the island of Hawaii since May 3rd. On Tuesday morning, the Halema’uma’u crater on Kilauea’s summit also began continuously gushing ash — creating a plume that rose up to 10,000 feet in the air. Rocks falling into the vent may be responsible for more intense ash spurts. But that’s not even the worst of it, the US Geological Survey warned:
“At any time, activity may become more explosive, increasing the intensity of ash production and producing ballistic projectiles near the vent.”
In addition to dangers from the bubbling, scalding-hot lava from the Kilauea volcano, residents on the Big Island of Hawaii are enduring threats from both vog and volcanic ashfall. The U.S. Geological Survey issued a “code red” for ashfall late Tuesday, due to the hazard it poses for airplanes and jets. Vog, short for volcanic smog, is the haze formed by gas and fine particle emissions from volcanoes, according to the American Meteorological Society.
A long-awaited report by the Department of Justice’s internal watchdog has moved into its final phase – after the DOJ notified multiple subjects mentioned in the document that they can privately review it by week’s end, and will have a “few days” to craft any response to criticism contained within the report, according to the Wall Street Journal.
Those invited to review the report were told they would have to sign nondisclosure agreements in order to read it, people familiar with the matter said. They are expected to have a few days to craft a response to any criticism in the report, which will then be incorporated in the final version to be released in coming weeks. –WSJ
Inspector General Michael Horowitz told lawmakers in April that he expected to issue the report in May, however Tuesday’s notification indicates that he has largely completed his inquiry.
Congressional investigators will get their hands on the report in coming weeks.
A related report was released in April detailing the DOJ’s case against former FBI Deputy Director Andrew McCabe, who was found to have lied four times to the DOJ and FBI, including twice while under oath.
McCabe, who was fired a day before he was set to collect his full pension, authorized a self-serving leak to the Wall St. Journalclaiming that the FBI had not put the brakes on the Clinton Foundation investigation, during a period in which he was coming under fire over a $467,500 campaign donation his wife Jill took from Clinton pal Terry McAuliffe.
To be clear, this report will have nothing to do with the FBI’s alleged FISA abuse, high-level collusion against the Trump campaign, or the genesis of the counterintelligence investigation against then-candidate Donald Trump. The OIG will be covering those issues as part of a separate investigation announced in late March.
The report on the Clinton email investigation will, however, cover the conduct of FBI “lovebirds” Peter Strzok and Lisa Page. Strzok notably spearheaded the Clinton email investigation before also handling the early Trump-Russia investigation.
Horowitz’s report will undoubtedly also cover significant edits made by the FBI’s top brass to Hillary Clinton’s exoneration statement – effectively decriminalizing her mishandling of classified information so that she wouldn’t be prosecuted by the DOJ.
In January, we profiled Michael Horowitz based on thorough research assembled by independent investigators. For those who think the upcoming OIG report is just going to be “all part of the show” – take pause; there’s a good chance this is an actual happening, so you may want to read up on the man whose year-long investigation may lead to criminal charges against those involved.
Horowitz was appointed head of the Office of the Inspector General (OIG) in April, 2012 – after the Obama administration hobbled the OIG’s investigative powers in 2011 during the “Fast and Furious” scandal. The changes forced the various Inspectors General for all government agencies to request information while conducting investigations, as opposed to the authority to demand it. This allowed Holder (and other agency heads) to bog down OIG requests in bureaucratic red tape, and in some cases, deny them outright.
What did Horowitz do?As one twitter commentators puts it, he went to war…
In March of 2015, Horowitz’s office prepared a report for Congress titled Open and Unimplemented IG Recommendations. It laid the Obama Admin bare before Congress – illustrating among other things how the administration was wasting tens-of-billions of dollars by ignoring the recommendations made by the OIG.
After several attempts by congress to restore the OIG’s investigative powers, Rep. Jason Chaffetz successfully introduced H.R.6450 – the Inspector General Empowerment Act of 2016 – signed by a defeated lame duck President Obama into law on December 16th, 2016, cementing an alliance between Horrowitz and both houses of Congress.
1) Due to the Inspector General Empowerment Act of 2016, the OIG has access to all of the information that the target agency possesses. This not only includes their internal documentation and data, but also that which the agency externally collected and documented.
See herefor a complete overview of the OIG’s new and restored powers. And while the public won’t get to see classified details of the OIG report, Mr. Horowitz is also big on public disclosure:
13) Horowitz in 2017 took his organization to a new level via public disclosure. He no longer wants his findings hidden from us by the media. In May he created the twitter account @OversightGov. On October 1st his website https://t.co/TJqbITz0IR went live. pic.twitter.com/H8MKD6WzVE
Horowitz’s efforts to roll back Eric Holder’s restrictions on the OIG sealed the working relationship between Congress and the Inspector General’s ofice, and they most certainly appear to be on the same page. Moreover, FBI Director Christopher Wray seems to be on the same page as well. Click here and keep scrolling for that and more insight into what’s going on behind the scenes.
Here’s a preview:
13) “UNRING THAT BELL”#ChristopherWray reveals the IG Sword’s power to re-open investigations. After a tangled legal exchange that runs out the clock he puts the Hillary investigation back on the table almost as an afterthought. Easily my favorite moment. pic.twitter.com/Y8xmf3vaQ0
Which brings us back to the OIG report expected by Congress a week from Monday.
On January 12 of last year, Inspector Horowitz announced an OIG investigation based on “requests from numerous Chairmen and Ranking Members of Congressional oversight committees, various organizations(such as Judicial Watch?), and members of the public.”
The initial focus ranged from the FBI’s handling of the Clinton email investigation, to whether or not Deputy FBI Director Andrew McCabe should have been recused from the investigation (ostensibly over $700,000 his wife’s campaign took from Clinton crony Terry McAuliffe around the time of the email investigation), to potential collusion with the Clinton campaign and the timing of various FOIA releases.
On July 27, 2017 the House Judiciary Committee called on the DOJ to appoint a Special Counsel, detailing their concerns in 14 questions pertaining to “actions taken by previously public figures like Attorney General Loretta Lynch, FBI Director James Comey, and former Secretary of State Hillary Clinton.”
The questions range from Loretta Lynch directing Mr. Comey to mislead the American people on the nature of the Clinton investigation, Secretary Clinton’s mishandling of classified information and the (mis)handling of her email investigation by the FBI, the DOJ’s failure to empanel a grand jury to investigate Clinton, and questions about the Clinton Foundation, Uranium One, and whether the FBI relied on the “Trump-Russia” dossier created by Fusion GPS.
19) 14 Questions for the IG!
This powerful letter is a thing of beauty that expands the scope and establishes the legal framework for a special counsel. Read in it’s entirety to see where we are headed. (Steel Dossier, Uranium One, Clinton Foundation)
PDF> https://t.co/gscpkulJ5Opic.twitter.com/VjXjwGRkr8
23) The July 27th letter is the key document. Everything needed to appoint a special counsel is contained within it. The letters preceding it were precursors and the ones after are add ons. All the IG has to do is reinforce that letter and a special counsel will be appointed.
On September 26, 2017, The House Judiciary Committee repeated their call to the DOJ for a special counsel, pointing out that former FBI Director James Comey lied to Congress when he said that he decided not to recommend criminal charges against Hillary Clinton until after she was interviewed, when in fact Comey had drafted her exoneration before said interview.
21) #Comey‘s Lies are catching up to him.
September 26th, 2017 continues the call for a special counsel as well as targets Comey’s lie to Congress. They have Comey dead to rights. PDF>>https://t.co/G0ujwXzTE1pic.twitter.com/zJuL0tbKm5
And now, the OIG report can tie all of this together – as it will solidify requests by Congressional committees, while also satisfying a legal requirement for the Department of Justice to impartially appoint a Special Counsel.
As illustrated below by TrumpSoldier, the report will go from the Office of the Inspector General to both investigative committees of Congress, along with Attorney General Jeff Sessions, and is expected within weeks.
Once congress has reviewed the OIG report, the House and Senate Judiciary Committees will use it to supplement their investigations, which will result in hearings with the end goal of requesting or demanding a Special Counsel investigation. The DOJ can appoint a Special Counsel at any point, or wait for Congress to demand one. If a request for a Special Counsel is ignored, Congress can pass legislation to force an the appointment.
And while the DOJ could act on the OIG report and investigate / prosecute themselves without a Special Counsel, it is highly unlikely that Congress would stand for that given the subjects of the investigation.
After the report’s completion, the DOJ will weigh in on it. Their comments are key. As TrumpSoldier points out in his analysis, the DOJ can take various actions regarding “Policy, personnel, procedures, and re-opening of investigations. In short, just about everything (Immunity agreements can also be rescinded).”
10) The DOJ response is critical! Here Wray discusses actions that can be taken based upon the OIG Report. Policy, personnel, procedures, and re-opening of investigations. In short, just about everything. (Immunity agreements can also be rescinded) pic.twitter.com/Rf2qiXtVgm
Meanwhile, recent events appear to correspond with bullet points in both the original OIG investigation letter and the 7/27/2017 letter forwarded to the Inspector General:
With the wheels set in motion last week seemingly align with Congressional requests and the OIG mandate, and the upcoming OIG report likely to serve as a foundational opinion, the DOJ will finally be empowered to move forward with an impartially appointed Special Counsel.
The City of Hamilton in Ontario, Canada, seems to have a problem with a small cadre of black-clad anarchist radicals vandalizing storefronts and cars in their community. A group of them caused about $100,000 in damage in a protest in March.
In addition to condemning the violence and trying to track down the direct perpetrators, efforts to fight further violence have taken a weird and troubling turn. The city has ordered a local anarchist group to take the familiar anarchy symbol off its headquarters, designating it as “hate material.”
The Tower, a meeting space for anarchists in Hamilton, displayed the anarchist symbol—a capital A in a circle—alongside a paraphrase of a quote from Spanish anarchist Buenaventura Durruti—”We are not in the least afraid of ruins for we carry a new world here in our hearts”—on several pieces of plywood covering smashed windows on the building’s facade.
It was the symbol, not the quote, that drew city leaders’ ire, which is itself a little odd: The quote is what appears to support the vandalism. The city ordered The Tower to remove the offending symbol as hate speech. Canada, unlike the United States, does have laws that censor hate speech. The laws specifically require that the offending speech advocate genocide or incites hatred against an “identifiable group.” The groups that are recognized by Canada’s hate speech law are bound by “color, race, religion, ethnic origin, gender identity or expression, or mental or physical disability.”
You may be wondering which of these identifiable groups is targeted by the anarchy symbol. So are the police in Hamilton. City officials are pointing to the police as justification for their censorship demands, claiming it’s on a list of hate symbols the police have provided. But the police say they do not classify the anarchy symbol as hate speech. According to Canadian media outlet CBC, the police do provide a list of hate symbols and images to the city, but they don’t associate anarchists and displays of anarchism as “hate speech.”
There is one “identifiable group” anarchists have antipathy for, and that might explain the city’s odd behavior better. From the CBC‘s coverage:
Princewill Ogban, the head of Hamilton’s new anti-racism centre, told CBC News he’s never really heard of the anarchy symbol being classified as hate material. He did point to one instance in California where a specific anarchist group was linked to white nationalism, but said that group was essentially an outlier.
“Most anarchy groups in the past have been seen as anti-racist or anti-hate,” he said. “They are pro-people and anti-government.”
Ah, they’re anti-government! Subsequently Hamilton Mayor Fred Eisenberger defended classifying the anarchy symbol as hate speech Wednesday regardless of what Canada’s law actually says. From the Hamilton Spectator:
“Certainly the anarchists that have locally presented themselves have done things that would be considered to be inappropriate, so if you tie the two of them together, I would say that’s a symbol of destruction and mayhem and causing a crisis to a particular area,” Eisenberger said Wednesday. “Is that hateful? I think it is.”
And that quote is one of many reasons why laws against hate speech are so dangerous. The natural inclination of many government officials when given the power to decide what sort of speech and communication is out of the bounds of the law is to game the system to protect themselves from ideological opponents and critiques.
It has now been 28 days since the Hong Kong Dollar tumbled to the lower limit of its currency peg band and HKMA is still blowing billions every day to defend the currency…
So far HKMA has spent over US$8 billion buying Hong Kong Dollars and achieved nothing…
Having briefly achieved some lift of the pressure in mid-April, HKMA’s intervention has begun again this week…
The Hong Kong Monetary Authority bought HK$1.963b to support the local currency overnight, according to the de facto central bank’s page on Bloomberg, decreasing its aggregate balance to HK$115.47 billion (US$14 billion).
As Bloomberg points out, the HKMA’s actions have the effect of tightening liquidity in a city that’s grown fat on ultra-low borrowing costs.
“The HKMA may need to mop up more liquidity and push the aggregate balance toward HK$100 billion this week,” said Carie Li, a Hong Kong-based economist at OCBC Wing Hang Bank Ltd.
“But the Hong Kong dollar will rebound starting next week, as funding needs to increase at month-end. Liquidity will tighten further in June due to an expected interest rate hike in the U.S. and potential funding demand fueled by Xiaomi and China Tower IPOs.”
Li said Hong Kong lenders will lift deposit rates as liquidity conditions tighten.
“Banks are likely to increase the prime rate around mid-year, which will hurt property market sentiment, especially for mortgage borrowers. The home market may see a correction and slower growth this year.”
And sure enough, as Bloomberg reports, rising short-term funding costs (3-month borrowing rate is 1.75% – near the highest since December 2008 – and up from 0.8% a year ago) have prompted banks to offer deposit rates of as much as 3%.
For now, the rising HKD Hibor is undoing some of the huge positive carry trade, but as the chart below shows, that carry advantage is still pressuring HKD…
In other words, rates will have to go higher and liquidity tighter before HKD really lifts off the lower peg band limit.
Last week, the financial services giant Northwestern Mutual released new data showing that 1 in 3 Americans has less than $5,000 in retirement savings.
It’s an unfortunately familiar story. And Northwestern Mutual’s data is entirely aligned with other research we’ve seen in the past, including our own.
The Federal Reserve’s most recent Survey of Consumer Finances, for example, shows that the median bank balance among US consumers is just $2,900.
And Bank of America’s annual report from last year showed that the average balance per HOUSEHOLD (i.e. -not- per person) was $12,870… which was actually LESS than the average account balance that Bank of America reported in 1997!
On average, the typical US household has less savings today than they did 20 years ago… and almost nothing put away for retirement.
In fact 21% of Americans (based on Northwestern Mutual’s data) have absolutely nothing saved for retirement.
And 33% of Baby Boomers, the generation closest to retirement, have between $0 and $25,000 saved for retirement.
That’s hardly enough savings to last more than a few years… and a major reason why most retirees currently rely on Social Security to meet their monthly living expenses.
According to a Gallup poll from last May, 58% of US retirees said that they rely on Social Security as their major source of income. They simply don’t have enough of their own personal savings stashed away.
But as we’ve discussed many times before, Social Security is rapidly running out of money.
The most recent report from Social Security’s Board of Trustees (which includes the US Secretaries of the Treasury, Labor, and Health & Human Services) tells us that the program’s cost has exceeded its tax revenue since 2010.
Last year this shortfall was $59 billion, 11% worse than in 2016.
And in order to make up the difference and cover this deficit, Social Security has to dip into its trust fund, effectively burning through the program’s savings.
The problem with this approach is that, eventually, these annual deficits will burn through ALL of the program’s savings.
The government knows this; the Board of Trustees even state this in their annual report, projecting that the Social Security trust funds will become fully depleted in 2034.
Sixteen years may seem like a long way off. But we’re talking about retirement here. You’re supposed to think long-term about retirement. And the math simply doesn’t add up.
The Trustee Report states explicitly that, once the trust funds run out of cash, the program will have to, at a minimum, reduce the monthly benefit that’s paid to its recipients.
So if you’re planning on being retired at any point past 2034, the government is LITERALLY TELLING YOU that they won’t be able to pay the retirement benefit that’s been promised to you.
Longer term (pay attention to this if you’re under 40), the numbers get even worse.
The way Social Security works is that retiree benefits are essentially paid for by people who are currently in the work force.
If you have a job, a portion of your paycheck each month goes to Social Security and ends up in the pockets of people who are currently retired.
In order for Social Security to function, there has to be a certain number of workers paying into the program for each retiree.
Social Security tracks this worker-to-retiree ratio VERY closely. The higher the ratio, the better.
In 1995, for example, there were 4.9 workers paying into the program for every retiree receiving benefits.
By 2020, Social Security projects the ratio will be down to 3.7 workers per retiree. And by 2040, just 2.75.
That’s simply not enough workers.
Do the math– at 2.75 workers per retiree, you’d have to pay nearly 40% of your salary just in Social Security tax (i.e. NOT including Medicare, federal, or state income tax) to keep the program running.
It’s also noteworthy that, just this morning, the US government released data showing that the birthrate in the United States is at a 30-year low.
If you project this alarming trend forward by a few decades, you can see how the worker-to-retiree ratio could easily fall below Social Security’s already dismal forecast.
It’s not just Social Security either. State and local pension funds, and even a lot of union and corporate pension funds, are also terminally insolvent.
A report issued a few months ago by the American Legislative Exchange Council estimates that the total amount of unfunded liabilities for state and local government pensions now exceeds $6 TRILLION.
Bottom line, Social Security is broken. State and local pensions are broken. And the federal government is far too broke to be able to bail any of them out.
Even the Social Security trustees admit this– they’re practically giving us a date to circle on our calendars for when the program will run out of money.
Yet a disturbing number of Americans has little to nothing set aside for retirement… and they’re expecting to be able to rely on Social Security.
Something is obviously wrong with this picture, and it would be utterly ludicrous to expect this won’t have a substantial impact.
Either future workers and businesses are going to be hammered with all sorts of new taxes to bail out Social Security–
— or retirees who have no savings and rely exclusively on the program to survive are going to have their benefits drastically slashed.
Either way, retirement is a nuclear problem set to explode in the Land of the Free.
One way or another, tens of millions of people are going to have their lives turned upside down.
And it is beyond the powers of the government to do anything to stop it.
Yesterday when looking at the latest MBA Mortgage Application data, we found that, as mortgage rates jumped to the highest level since 2011, mortgage refi applications, not unexpectedly tumbled to the lowest level since the financial crisis, choking off a key revenue item for banks, and resulting in even more pain for the likes of Wells Fargo.
Today, according to the latest Freddie Mac mortgage rates report, after plateauing in recent weeks, mortgage rates reversed course and reached a new high last seen eight years ago as the 30-year fixed mortgage rate edged up to 4.61% matching the highest level since May 19, 2011.
But while the highest mortgage rates in 8 years are predictably crushing mortgage refinance activity, they appears to be having the opposite effect on home purchases, where there is a sheer scramble to buy, and sell, houses. As Bloomberg notes, citing brokerage Redfin, the average home across the US that sold last month went into contract after a median of 36 only days on the market – a record speed in data going back to 2010.
To Sam Khater, chief economist of Freddie Mac, this was a sign of an economy firing on all cylinders: “This is what happens when the economy is strong,” Khater told Bloomberg in a phone interview. “All the higher-rate environment does is it either causes them to try and rush or look at different properties that are more affordable.”
Of course, one can simply counter that what rising rates rally do is make housing – for those who need a mortgage – increasingly more unaffordable, as a result of the higher monthly mortgage payments. Case in point: with this week’s jump, the monthly payment on a $300,000, 30-year loan has climbed to $1,540, up over $100 from $1,424 in the beginning of the year, when the average rate was 3.95%.
As such, surging rates merely pulls home demand from the future, as potential homebuyers hope to lock in “lower” rates today instead of risking tomorrow’s rates. It also means that after today’s surge in activity, a vacuum in transactions will follow, especially if rates stabilize or happen to drop. Think “cash for clunkers”, only in this case it’s houses.
Meanwhile, the short supply of home listings for sale and increased competition is only making their purchases harder to afford: according to Redfin, this spike in demand and subdued supply means that home prices soared 7.6% in April from a year earlier to a median of $302,200, and sellers got a record 98.8% of what they asked on average.
Call it the sellers market.
Furthermore, bidding wars are increasingly breaking out: Minneapolis realtor Mary Sommerfeld said a family she works with offered $33,000 more than the $430,000 list price for a home in St. Paul. The listing agent gave her the bad news: There were nine offers and the family’s was second from the bottom.
For Sommerfeld’s clients, the lack of inventory is a bigger problem than rising mortgage rates. If anything, they want to close quickly before they get priced out of the market — and have to pay more interest.
“I don’t think it’s hurting the buyer demand at all,” she said. “My buyers say they better get busy and buy before the interest rates go up any further.”
Then again, in the grand scheme of things, 4.61% is still low. Kristin Wilson, a loan officer with Envoy Mortgage in Edina, Minnesota, tells customers to keep things in perspective. When she bought a house in the early 1980s, the interest on her adjustable-rate mortgage was 12 percent, she said.
“One woman actually used the phrase: ‘Rates shot up,’” Wilson said. “We’ve been spoiled after a number of years with rates hovering around 4 percent or lower.”
Of course, if the average mortgage rate in the America is ever 12% again, look for a real life recreation of Mad Max the movie in a neighborhood near you…
Emissions of carbon dioxide from burning fossil fuels is contributing to the rise of average global temperatures. Assuming that man-made climate change could become a significant problem for humanity during this century, switching to zero-carbon energy technologies to generate electricity would help prevent some of the harms stemming from addtional warming.
Based on this chain of argument, many folks concerned about climate change are seeking to mandate the deployment of solar and wind power as replacements for the coal and natural gas currently used to generate most of the world’s electricity. Will this work? No, argues Michael Shellenberger, President of Environmental Progress, over at Forbes. Contrariwise, he explains that the inherent variability of solar and wind will perversely “lock-in” fossil fuels making it harder and more expensive to “save the climate.”
Why? Basically because power generators will have to build and maintain a parallel set of fossil fuel plants to supply energy to make up for shortfalls in renewable energy when the wind falters and the sun goes down. It’s not quite the same thing as having to pay for and build two separate power generation systems, but it’s closer than most advocates for renewable energy would like to acknowledge.
There is one exception to this necessary fossil fuel lock-in: carbon-free nuclear power. Like conventional fossil fuel generators, nuclear power plants could step in when renewables go dark, but without emitting the carbon dioxide that is contributing to man-made climate change. Shellenberger then makes what should be the next exquisitely obvious point: Since nuclear power is zero-carbon and can supply all the electricity as needed, why build any wind and solar electric power generation at all?
The case of Germany illustrates the point. While pursuing its famous Energiewende (energy transformation) the country has spent $222 billion deploying wind and solar power while simultaneously closing its nuclear power plants. The result is that its carbon dioxide emissions in recent years have been rising instead of falling.
But aren’t nuclear power plants much more expensive than renewable sources of electricity? While it is true that the costs for wind and solar generation have been falling, it bears noting that even as renewable generation vastly expanded in Germany, consumers in that country are now paying twice what they did for electricity in 2000.
In contrast, China is building a number of new nuclear power plants at about one-third the cost of what can be done in over-regulated Europe or the U.S. Had ideological environmentalism not turned against nuclear energy in the 1970s, Australian economist Peter Lang calculates that nuclear power would likely have outcompeted most fossil fuel generation at one-tenth nuclear’s current cost.
Given the technological and fiscal realities pointed out by Shellenberger, one can hope that the folks concerned about climate change will eventually give up their reactionary insistence on wind and solar power generation and instead support the deployment of new safer nuclear power generation technologies, such as molten salt thorium reactors, small modular reactors, and traveling wave reactors.
Decontextualizing Trump also has the added effect of hardening his supporters in the position that the media traffics only in fake news and is deliberately out to get their man in the White House. On the other side, anti-Trumpers can bask in the glow that they are absolutely right about the racist ugliness of the pussygrabber-in-chief.
The City of Hamilton in Ontario, Canada, seems to have a problem with a small cadre of black-clad anarchist radicals vandalizing storefronts and cars in their community. A group of them caused about 
Emissions of carbon dioxide from burning fossil fuels is contributing to the rise of average global temperatures. Assuming that man-made climate change could become a significant problem for humanity during this century, switching to zero-carbon energy technologies to generate electricity would help prevent some of the harms stemming from addtional warming.
