Speaker of the House Paul Ryan zeroed in on economic policy during his brief remarks to the audience at the Conservative Political Action Conference on Thursday.
“Public officials must see what these harmful regulations are going to do to people living paycheck to paycheck,” said Ryan. “Let’s go to the root cause of poverty to break the cycle of poverty.”
Ryan hailed welfare reform as something that would decrease unemployment.
“We have tens of millions of able-bodied adults who aren’t working, who aren’t looking for a job, or even getting training for a job,” he said.
Perhaps more notable than what Ryan said was what he didn’t say. There was no mention of politics, the election, or Donald Trump.
Ryan did mention his lack of a beard, though. Interviewer Carrie Shieffield thanked him for finally shaving it off.
Meanwhile, Trump has predicted he will get along great with Ryan—and if he doesn’t, that’s Ryan’s problem.
In a blistering speech this morning, Mitt Romney, the Republican party’s 2012 presidential nominee, attacked Donald Trump—currently the frontrunner to win the nomination in 2016—as a “fraud,” a “phony,” and a poor businessman who lacks both the qualifications and character to be the GOP’s presidential nominee. It was an unusual and perhaps unprecedented blast from one presidential nominee to his likely successor. In choosing to go after Trump now, however, Romney inadvertently demonstrated why the GOP is losing itself to Trump.
Romney’s attack on Trump was direct and unequivocal. “If we Republicans choose Donald Trump as our nominee,” he said,” the prospects for a safe and prosperous future are greatly diminished.” He ripped Trump for his insufficient economic plans, and for the calamities they might produce: “Even as Donald Trump has offered very few specific economic plans, what little he has said is enough to know that he would be very bad for American workers and for American families.” He called Trump a bad businessman who “inherited his business” rather than creating it, and whose bankruptcies have “crushed small businesses.” He called out Trump’s position on trade and foreign policy, warning that Trump would enter the U.S. into a devastating trade war. He charged that Trump lacks the character to be president, citing Trump’s mocking of a disabled reporter and his crude attacks on women. He called Trump a liar, saying that “dishonest is Trump’s hallmark,” and enjoined Republican voters to “think of Donald Trump’s personal qualities, the bullying, the greed, the showing off, the misogyny, the absurd third grade theatrics.”
In nearly every respect, Romney’s attacks on Trump were right on target. Over the course of this campaign, Trump has proven himself to be exactly the boorish, clueless, dishonest candidate that Romney said he is. It was a strong stand against Trump’s takeover of the Republican party.
The problem is that it comes far too late. Trump’s awfulness and lack of qualifications have always been apparent to one degree or another, and yet the Romney and the GOP sought the support of Trump and played to the people who are now his base anyway.
Just four years ago, during his presidential campaign, Romney stood on stage next to Donald Trump, who had toyed with running for president and placed as high as second in some early polls, and made a minor show of Trump’s endorsement.
At the endorsement event, Romney didn’t just thank Trump, he praised him for his business acumen and for his grasp of America’s place in the global economy.
“Donald Trump has shown an extraordinary ability to understand how our economy works, to create jobs for the American people,” Romney said. “He’s done it here in Nevada. He’s done it across the country. He understands that our economy is facing threats from abroad. He’s one of the few people who stood up and said China has been cheating. They’ve taken jobs from Americans. They haven’t played fair. We have to have a president who will stand up to cheaters.”
Romney didn’t just passively accept Trump’s influence. And he certainly didn’t warn, as he did today, that Trump was a dangerous fool who would destabilize and perhaps destroy the Republican party. Instead, Romney touted Trump for his business acumen and insight, saying that Trump understood America’s economy and its role in international affairs. In other words, he praised Trump using much the same language that Trump uses to praise himself today, and used Trump in an attempt to further his own political ambitions.
Romney, like many Republican elites, has now changed his tune, and he deserves credit for speaking unequivocally about Trump’s many serious flaws. But Romney and others in the party played Trump’s game, and talked Trump’s language, for long enough that they helped legitimize it, and allowed it, even encouraged it, to fester and grow.
Yes, Romney is right that Trump is a liar and a boor, a fraud and a phony. But he’s a fraud and a phony that Romney and the rest of the GOP were happy to build up and perpetuate for as long as it suited their own purposes. For far too long, the Republican party was a willing partner in Donald Trump’s scam.
Following the unprecedented Romney roundhouse kick to Trump's character, The Donald is about to rebuff "the loser." As John McCain backs Romney's rant, it appears yesterday's Koch Borthers, Icahn, Murdoch mega-donor call for a truce has been broken as Trump prepares to return fire against "failed candidate Romney" and his establishment cronies.
Super Tuesday was an earthquake, and not just because Donald Trump ran the tables. The best thing was the complete drubbing and humiliation that voters all over America handed to the little Napoleon from Florida, Marco Rubio.
So doing, the voters began the process of ridding the nation of the GOP War Party and its neocon claque of rabid interventionists. They have held sway for nearly three decades in the Imperial City and the consequences have been deplorable.
It goes all the way back to the collapse of the old Soviet Union and the elder Bush’s historically foolish decision to invade the Persian Gulf in February 1991. The latter stopped dead in its tracks the first genuine opportunity for peace the people of the world had been afforded since August 1914.
Instead, it reprieved the fading remnants of the military-industrial-congressional complex, the neocon interventionist camp and Washington’s legions of cold war apparatchiks. All of the foregoing would have been otherwise consigned to the dust bin of history.
Yet at that crucial inflection point there was absolutely nothing at stake with respect to the safety and security of the American people in the petty quarrel between Saddam Hussein and the Emir of Kuwait.
That spate, in fact, was over directional drilling rights in the Rumaila oilfield which straddled their respective borders. Yet these disputed borders had no historical legitimacy whatsoever. Kuwait was a just a bank account with a seat in the UN, which had been created by the British only in 1899 for obscure reasons of imperial maneuver. Likewise, the boundaries of Iraq had been drawn with a straight ruler in 1916 by British and French diplomats in the process of splitting up the loot from the fall of the Ottoman Empire.
As it happened, Saddam claimed that the Emir of Kuwait, who could never stop stuffing his unspeakably opulent royal domain with more petro dollars, had stolen $10 billion worth of oil from Iraq’s side of the field while Saddam was savaging the Iranians during his unprovoked but Washington supported 1980s invasion. At the same time, Hussein had borrowed upwards of $50 billion from Kuwait, the Saudis and the UAE to fund his barbaric attacks on the Iranians and now the sheiks wanted their money back.
At the end of the day, Washington sent 500,000 US troops to the Gulf in order to function as bad debt collectors for three regimes that are the very embodiment of tyranny, corruption, greed and religious fanaticism.
They have been the fount and exporter of Wahhabi fanaticism and have thereby fostered the scourge of jihadi violence throughout the region. And it was the monumental stupidity of putting American (crusader) boots on the ground in Saudi Arabia that actually gave rise to Bin Laden, al-Qaeda, the tragedy of 9/11, the invasion and occupations of Afghanistan and Iraq, the Patriot Act and domestic surveillance state and all the rest of the War Party follies which have followed.
Worse still, George H.W. Bush’s stupid little war corrupted the very political soul and modus operandi of Washington. What should have been a political contest over which party and prospective leader could best lead a revived 1920s style campaign for world disarmament was mutated into a wave of exceptionalist jingoism about how best to impose American hegemony on any nation or force on the planet that refused compliance with Washington’s designs and dictates.
And most certainly, this lamentable turn to the War Party’s disastrous reign had nothing to do with oil security or economic prosperity in America. The cure for high oil orices is always and everywhere high oil prices, not the Fifth Fleet.
Indeed, as the so-called OPEC cartel crumbles into pitiful impotence and cacophony and as the world oil glut drives prices eventually back into the teens, there can no longer be any dispute. The blazing oilfields of Kuwait in 1991 had nothing to do with domestic oil security and prosperity, and everything to do with the rise of a virulent militarism and imperialism that has drastically undermined national security.
It is the bombs, drones, cruise missiles and brutal occupations of Muslim lands unleashed by the War Party that has actually fostered the massive blowback and radical jidhadism rampant today in the middle east and beyond.
Indeed, prior to 1991 Bin Laden and his mujahedeen, who had been trained and armed by the CIA and heralded in the west for their help in defeating purportedly godless communism in Afghanistan, had not declaimed against American liberty, opulence and decadence. They did not come to attack our way of life as the neocon propagandists have so speciously claimed.
In fact, the ever destructive Dick Cheney was the proximate cause. In an act of monumental foolishness, it was he who persuaded the Saudi King to permit stationing of US troops on Arabian soil, thereby triggering a revolt against the House of Saud by Bin Laden and his Mujahedeen. The latter were then forced into exile by the Saudi government in April 1991 and soon metastasized into the fiendish scourge of al-Qaeda.
Misguided and despicable as their attack was, it was motivated by revenge and religious fanaticism that had never previously been directed against the American people. That is, not until the Washington War Party decided to intervene in the Persian Gulf in 1991.
Yes, the wholly different Shiite branch of Islam centered in Iran had a grievance, too. But that wasn’t about America’s liberties and libertine ways of life, either. It was about the left over liability from Washington’s misguided cold war interventions and, specifically, the 1953 CIA coup that installed the brutal and larcenous Shah on the Peacock Throne.
The whole Persian nation had deep grievances about that colossal injustice—-a grievance that was wantonly amplified in the 1980s by Washington’s overt assistance to Saddam Hussein. Via the CIA’s satellite reconnaissance, Washington had actually helped him unleash heinous chemical warfare attacks on Iranian forces, including essentially unarmed young boys who had been sent to the battle front as cannon fodder.
Still, with the election of Rafsanjani in 1989 there was every opportunity to repair this historical transgression and normalize relations with Tehran. In fact, in the early days the Bush state department was well on the way to exactly that. But once the CNN war games in the gulf put the neocons back in the saddle the door was slammed shut by Washington, not the Iranians.
Indeed at that very time, the re-ascendant neocons explicitly choose to demonize the Iranian regime as a surrogate enemy to replace the defunct Kremlin commissars. Two of the most despicable actors in the post-1991 neocon takeover of the GOP—-Dick Cheney and Paul Wolfowitz——actually penned a secret document outlining the spurious anti-Iranian campaign which soon congealed into a full-blown war myth.
To wit, that the Iranian’s were hell bent on obtaining nuclear weapons and had become an implacable foe of America and fountain of state sponsored terrorism. But there never was an Iranian nuclear weapons program, as the 2007 National Intelligence Estimates by 16 US security agencies documented, and the recent IAEA inspection report confirmed.
Not long thereafter in 1996, these same neocon warmongers produced for newly elected Israeli prime minister, Bibi Netanyahu, the infamous document called “A Clean Break: A New Strategy For Securing The Realm”.
Whether he immediately signed off an all of its sweeping plans for junking the Oslo Accords and launching regime change initiatives against the Baathist regimes in Iraq and Syria is a matter of historical debate. But there can be no doubt that shortly thereafter this manifesto became the operative policy of the Netanyahu government and especially its virulent campaign to demonize Iran as an existential threat to Israel. And that when the younger Bush took office and brought the whole posse of neocons back into power, it became Washington’s official policy, as well.
After 9/11 the dual War Party of Washington and Tel Aviv was off to the races and the US government began its tumble toward $19 trillion of national debt and an eventual fiscal calamity. That’s because the neocon War Party sucked the old time religion of fiscal rectitude and monetary orthodoxy right out of the GOP in the name of funding what has in truth become a trillion dollar per year Warfare State.
There were several crucial moments along the way—–the first being the sacking of Treasury Secretary Paul O’Neill by the White House praetorian guard led by Karl Rove. His sin was having the audacity to say that the Afghan and Iraqi wars were going to cost trillions, and that stiff tax increases and painful entitlements cuts were the only way to make ends meet.
Right then and there the GOP was stripped of any fiscal virginity that had survived the Reagan era of triple digit deficits. Right on cue the contemptible Dick Cheney was quick to claim that Reagan proved “deficits don’t matter”, meaning from that point forward whatever it took to fund the war machine trumped any flickering Republican folk memories of fiscal prudence.
The great Dwight Eisenhower left office at the height of the cold war in 1961, warning the American public about the insatiable appetites for budgets and war of the military industrial complex. At the same time, however, his final budget attested to his conviction that $450 billion in today’s purchasing power (2015 $) was enough to fund the Pentagon, foreign aid and security assistance and the needs of veterans of past wars.
Thanks to the GOP War Party and neocons we are spending more than double that amount—upwards of $900 billion—–for those same purposes today. Yet unlike the nuclear threat posed by the Soviet Union at the peak of its industrial vigor, we no longer have any industrial state enemy left on the planet; we have appropriately been fired as the world’s policeman and have no need for Washington’s far flung imperium of bases and naval and air power projection; and would not even be confronted with the domestic policing challenges posed by highly limited and episodic homeland terrorist tempests had Washington not turned Afghanistan, Iraq, Syria, Libya, Yemen, Somalia and others into failed states and economic rubble.
The Bush era War Party also committed an even more lamentable error in the midst of all of its foreign policy triumphalism and its utter neglect of the GOP’s actual purpose to function as an advocate for sound money and free markets in the governance process of our two party democracy. Namely, it appointed Ben Bernanke, an avowed Keynesian and big government statist who had loudly proclaimed in favor of “helicopter money”, to a Federal Reserve system that was already on the verge of an economic coup d’état led by the unfaithful Alan Greenspan.
That coup was made complete by the loathsome bailout of Wall Street during the 2008 financial crisis. And the latter had, in turn, been a consequence of the massive speculation and debt build-up that had been enabled by the Fed’s own policies during the prior decade and one-half.
Now after $3.5 trillion of heedless money printing and 86 months of ZIRP, Wall Street has been transformed into an unstable, dangerous casino. Honest price discovery in the capital and money markets no longer exists, nor has productive capital been flowing into real investments in efficiency and growth.
Instead, the C-suites of corporate America have been transformed into stock trading rooms where business balance sheets have been hocked to the tune of trillions in cheap debt in order to fund stock buybacks, LBOs and M&A deals designed to goose stock prices and the value of top executive options.
Indeed, the Fed’s unconscionable inflation of the third massive financial bubble of this century has showered speculators and the 1% with unspeakable financial windfalls that are fast creating not only an inevitable thundering financial meltdown, but, also, a virulent populist backlash. The Eccles Building was where the “Bern” that is roiling the electorate was actually midwifed.
And probably even the far greater political tremblor represented by The Donald, as well.
Yes, as a libertarian I shudder at the prospect of a man on a white horse heading for the White House, as Donald Trump surely is. His rank demoguery and poisonous rhetoric about immigrants, Muslims, refugees, women, domestic victims of police repression and the spy state and countless more are flat-out contemptible. And the idea of building a horizontal version of Trump Towers on the Rio Grande is just plain nuts.
But here’s the thing. While spending a lifetime as a real estate speculator and self-created celebrity, The Donald apparently did not have time to get mis-educated by the Council On Foreign Relations or to hob knob with the GOP inner circle in Washington and the special interest group racketeers they coddle.
So even as The Donald’s election would bring on a thundering financial crash on Wall Street and political upheaval in Washington—–the truth is that’s going to happen anyway. Look at the hideous mess that US policy has created in Syria or the incendiary corner into which the Fed has backed itself or the fiscal projections that show we will be back into trillion dollar annual deficits as the recession already underway reaches full force. The jig is well and truly up.
But a nation tumbling into financial and fiscal crisis will welcome the War Party purge that Trump would surely undertake. He didn’t allow the self-serving busy-bodies and fools who inhabit the Council on Foreign Relations to dupe him into believing that Putin is a horrible threat; or that the real estate on the eastern edge of the non-state of the Ukraine, which has always been either a de jure or de facto part of Russia, was any of our business. Likewise, he has gotten it totally right with respect to the sectarian and tribal wars of Syria and Iraq and Hillary’s feckless destruction of a stable regime in Libya.
Even his bombast about Obama’s “bad deal” with Iran doesn’t go much beyond Trump’s ridiculous claim that they are getting a $150 billion reward. In fact, it was their money; we stole it, and by the time of the next election they will have it released anyway.
Besides, unlike the boy Senator from Florida who wants to be President so he can play with guns, tanks, ships and bombs, The Donald has indicated no intention of tearing up the agreement on day one in office.
Most importantly, The Donald has essentially proclaimed the obvious. Namely, that the cold war is over and that the American taxpayers have no business subsidizing obsolete relics like NATO and ground forces in South Korea and Japan.
At the end of the day, the reason that the neocons are apoplectic is that Trump would restore the 1991 status quo ante. The nation’s self-proclaimed greatest deal-maker might even take a leaf out of Warren G. Harding’s playbook and negotiate sweeping disarmament agreements in a world where governments everywhere are on the verge of fiscal bankruptcy.
He might also come down with wrathful indignation on the Fed if its dares push toward the criminal zone of negative interest rates. As far as I know, The Donald was never mis-educated by the Keynesian swells at Brookings, either. No plain old businessman would ever fall for the sophistry and crank monetary theories that are now ascendant in the Eccles Building.
When it comes to the nation’s current economic wreckers-in-chief, Janet Yellen and Stanley Fischer, he might even dust off on day one the skills he honed during his ten year stint on the Apprentice.
Indeed, the sound of “your fired!” in that context would echo with high approbation down the pages of history.
It is well known that California has a pension problem that offers a challenge for public officials and current and future retirees alike. Even if people aren’t aware of the details, it has been talked about for quite some time that there are underlying aspects of the public retirement system that need to be addressed, sooner or later. The fact of the matter is that such problems can’t be ignored by the State forever; and what is perhaps more important to me, as one who professionally helps people secure their financial futures, is that the beneficiaries of these public pensions need to understand what is going on and work to prepare themselves for what is ahead.
Thus, the purpose of this short overview of the problem is to help awaken people to their own unique scenarios, to inspire them to make the proper moves before it is too late. Everyone is in a different situation and there is no one-size-fits-all approach to figuring out what one should do personally; but hopefully after considering the following, the reader will be encouraged to reflect deeper on how the pension crisis may affect their futures.
The first thing to understand is that California’s public pension system is made up of a conglomeration of “6 state plans, 21 county plans, 32 city plans, and 27 special district and other plans” according to the Independent Institute Senior Fellow Lawrence J. McQuillan (McQuillan, page 3). The majority of these operate on a “defined benefit” model, which means that, upon retirement, these plans pay a specific amount per month for the rest of the retiree’s life. By far, the three largest of these 86 CA pension systems are CalPERS (1.68 million retirees), CalSTRS (868k retirees), and UCRP (253k retirees). For the remainder of this article, we will refer to these as the Big Three.
The “defined benefit” for these retirees rests on a relatively complicated formula which includes the number of years employed with the employer, one’s age at retirement, and one’s “final compensation.” There are fluctuations and other variables within this formula as well and factors can also include the specific employer, the occupation, and even variations of contract specifics. However, as Jon Ortiz reports in the Merced Sun-Star:“the largest group of state workers is under a "2 at 55" formula. To give an example here, assume an employee has worked for 30 years before retiring at age 55, her final compensation being $100,000. The “2 at 55” formula would indicate that she gets 2% of her salary (100k) multiplied by the 30 years she worked. 2% of her salary is $2k, which multiplied by 30 giving her a total of $60k per year for the rest of her life.
As McQuillan explains (page 6), however, there are also a variety of COLAs (cost of living adjustments) and automatic “step increases” that can substantially effect the annual increase in pension benefits. These are a result of a variety of collective bargaining aspects that are part and parcel of the California pension system. Essentially, what these features allow is for the “final compensation” levels to be boosted above their actual levels so that “lifetime annual pensions for some retired government workers exceed their final year’s pay.” In other words, due to this practice of “pension spiking,” future state obligations can in many cases exceed the levels that existed while the retiree was still employed. This has a significant “snowball effect” on the obligations faced by the state (and future taxpayers).
There are two sources of funding for these pensions that are to be paid out to millions of California retirees: taxpayers and investment market returns. The taxpayer originated funds flow through both employer (the government agency) and employee payroll contributions. These contributions are invested and, at least in theory, both the contributions plus investment earnings are paid out as the defined benefits to retirees. In other words, the employer/employee contributions (originated as taxes) plus the investments gains needs to be at least equal to the pension obligation levels in order to be sustainable. Where things start to get interesting, and overwhelming, is that, according to McQuillan (page 12), over the last 20 years, “for every dollar paid in CalPERS pension benefits, CalPERS’s employer members contributed 21 cents, employees contributed 15 cents, and the remaining 64 cents came from investment earnings.” In other words, historically, 64 percent of the funds paid out needed to rely on the performance of capital markets.
Now, what happens when the total assets (contributions + investment earnings) are less than the pension promise? The answer is that a deficit is created and these deficits are referred to as an unfunded liability. This unfunded liability is the total amount between the assets of the pension and the liabilities of the pension. Whenever the liabilities (what are owed) are greater than the assets (the contributions + investment earnings), there is an unfunded obligation. It is the sheer level of CA’s unfunded obligation that is the primary face of the California Pension Crisis.
According to the U.S. Census Bureau, the pension obligations for the largest six pension systems in CA came to a stunning $613 billion in 2013. Of this, only a portion is covered by the pension’s current assets, resulting in a sizable unfunded obligation level. The specific dollar amount of these unfunded obligations depends upon which calculations are being used. According to the calculations of the Big Three pension systems themselves, the unfunded portions are as follows: CaPERS $85.5 billion, CalSTRS $50.6 billion, and UCRP $6.5 billion. These represent the amounts, calculated by the agencies themselves, that the pension plans are short what is needed in order to meet what they owe to retirees. Collectively, this number is $143 billion short of what retirees are expecting to live off of for the rest of their lives. To give the reader a sense of the absurdity of these numbers, these were calculated in 2011 and since that time the US stock market has experienced large multi-year rally; however, in that time, the assets have only gained $7 billion in investment earnings so that today the unfunded liability still sits at the impossible goal of $136 billion. That’s $136 billion in the hole.
This, after a massive stock market rally!
This means that the “funding ratio” of assets and liabilities is such that CalPERS is only 77% funded, CalSTRS is only 67% funded, and UCRP is only 80% funded. McQuillan quotes the American Academy of Actuaries on the issue of funding ratios to say: “Pension plans should have a strategy in place to attain or maintain a funded status of 100 percent or greater over a reasonable period of time.” McQuillian comments on this quotation by noting that “a lower funding ratio implies that a pension system has a greater potential not to pay its promised benefits.” And yet, as can be seen according to the pension’s own numbers, the funding ratio is troubling.
Unfortunately, the bad news does not stop here. As emphasized above, the numbers thus far have all been merely reflective of the pension fund’s own estimates. According to a 2011 study conducted by the Stanford Institute for Economic Policy Research (SIEPR), the unfunded obligation levels for the Big Three pensions in CA were as follows: $169.8 billion for CalPERS, $104 billion for CalSTRS, and $16.8 billion for UCRP. This means that the funding ratios too are in a much worse condition, according to the SIEPR calculations.
The chart shows the unfunded obligation levels and the funding ratios (in parentheses) for each pension according to both the agency and SIEPR estimates (remember, the greater the unfunded liability, the lower the funding ratio):
Needless to say, in the words of McQuillan, “by [the above] measure, California’s Big Three public pensions are dangerously underfunded, putting current and future taxpayers at risk.”
Without getting into too much detail, the reasons that there is such a severe discrepancy between the third party calculations and the agency’s estimates of itself have to do with the various assumptions that the agencies are making. Specifically, these agencies, in order to make their numbers look better (and, sadly, negative $136 billion is “better”) misrepresent the actual reality by massaging factors in the following ways:
Overestimating investment return potential (they are assuming between a 7.75 and 8% average annual return— compare this to private pension assumptions between 3 and 4%).
Implementing an abnormally large “smoothing recognition period,” which basically allows the potential market losses to be hidden in an average of many years (15 yrs, compared to the private sector smoothing period of 2 yrs).
Refusing to include the reality of increasing life expectancy into their models, so that their numbers assume they will have to pay for a shorter “lifespan” than what the recent mortality data reflects. Even Governor Brown’s office calculated that “CalPERS needs an additional $1.2 billion a year to pay for added pension expenses due to longer life expectancy.”
Overestimating the length to which public employees will keep working (therein overestimating how many years of contributions will be made and underestimating how many years these employees will be recipients of the pension system).
McQuillan quotes Stanford Professor Joe Nation to say:“In short, public pension systems utilize assumptions and methods supporting a consistent theme of understating liabilities, overstating assets, and pushing costs into the future.”McQuillan himself goes so far as to say: “The bottom line is that officials at California’s public pensions are permitted to engage in behavior that would be considered criminal under ERISA [Employee Retirement Income Security Act—CJE] if done by officials overseeing private-sector pensions.”
To bring things here to a close, let it be said that the systemic problems underlying the numbers themselves are such that there is no easy way to fix this. Even on their face, the numbers summarized above tell a frightening tale of severely underfunded pension obligations, problem which is growing worse and worse.
What needs to be remembered too, and this is the thing that far fewer people talk about, is that we are on top of a major bull market that has only since January threatened to come back down. The chart below is of the “S&P 500” which is an index of stock market price levels.
As can be seen, we are at much higher levels than we were before both the 2000 “dot com” crash and the 2008 financial crisis. In other words, all these pensions that are relying on years of 7% returns in order to be, well, hundreds of billions of dollars in the hole, may in fact be facing an era of negative returns if we are confronted with the likely situation of a stock market correction.
Needless to say, far from having “their future taken care of,” those relying on public pensions for their retirement are not only going to be requesting funds that simply aren’t there, they are going to be requesting funds from pension systems who have yet to face the third recession in 15 years. A recent report from Casey Research wrote that:
"Public pensions are a slow motion train wreck that can’t be stopped. Millions of workers who expect a steady stream of income when they retire will get nothing. The U.S. public pension system is mathematically guaranteed to crash.
According to the National Association of State Retirement Administrators (NASRA), U.S. public pensions expect to earn 8% per year on average.
That’s a wildly optimistic number. They’re extremely unlikely to earn anything close to 8% per year.
Earning 8% per year in normal times is difficult enough. And as Casey readers know, we’re not in normal times.
Returns on both bonds and stocks will likely be low or negative for the next many years. With interest rates at historic lows, bonds barely pay anything. And U.S. stocks have very little upside because they’re so expensive today.
Expecting returns to average 8% per year going forward is foolish. And we’re not the only ones who think so. BlackRock (BLK), the world’s largest asset manager, says state and local pensions should expect to earn 4% per year or less going forward.
The average public pension earned just 3.4% last year. And Bloomberg Business reports that the California Public Employees’ Retirement System (CalPERS), the largest pension fund in the U.S., earned just 2.4% last year."
Moreover, while many assume these pensions can “just go to the taxpayers” to fulfill their obligations, the fact of the matter is that this is politically and financially impossible in the context of a recession, especially when the taxpayers themselves are facing the reality of this very same market downturn. It is one thing to attempt to siphon off a little bit from taxpayers during a 7 year bull market, but it is an entirely other thing to do the same during a painful downturn. The long and short of the situation is this: those relying on public pensions for their retirement are quite possibly not going to receive the full extent of what they are expecting.
Practically speaking, therefore, any attempt to protect one’s non-pension assets, retirement accounts, and cash flows, is to be well heeded. This means that it is time to face the reality of the situation before retirement and before it becomes publicly obvious that there is a massive problem. There are many who are putting things off and looking to figure things out down the road. Unfortunately, I am not convinced that the prudent individual can afford this luxury. Some readers may need some creative strategies, capital preservation efforts, and an honest assessment of just how, exactly, one should minimize their dependency on public pensions. This is the key: separating one’s dependency on the pension system for retirement is the only way to avoid pain later on down the road.
The former Bank of England head Mervyn King said this week that the "depression" in Europe "has happened almost as a deliberate act of policy". Specifically, King said that the formation of the European Union has doomed Europe to economic malaise.
He points out that Greece is experiencing "a depression deeper than the United States experienced in the 1930s".
The depths of Greece's depressionCredit: RBS economics/RBS
Moreover – as Martin Armstrong has warned for decades – letting countries like Greece join he Euro without first structurally adjusting their debts was a recipe for disaster.
So it is fascinating to learn that the U.S. was largely behind the creation of both the European Union and the Euro.
The European Union: Funded By the CIA
Professor of International Security at the University of Warwick Richard J. Aldrich reviewed available historical documents, and concludes that the European Union was largely an American project:
US officials trying to rebuild and stabilize postwar Europe worked from the assumption that it required rapid unification, perhaps leading to a United States of Europe. The encouragement of European unification, one of the most consistent components of Harry S. Truman's foreign policy, was even more strongly emphasized under his successor General Dwight D. Eisenhower. Moreover, under both Truman and Eisenhower, US policymakers conceived of European unification not only as an important end in itself, but also as a way to solve the German problem.'
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One of the most interesting US covert operations in postwar Europe was the funding of the European Movement. The European Movement was an umbrella organization which led a prestigious, if disparate, group of organizations urging rapid unification in Europe, focusing their efforts upon the Council of Europe, and counting Winston Churchill, Paul-Henri Spaak, Konrad Adenauer, Leon Blum and Alcide de Gasperi as its five Presidents of Honour.
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The discreet injection of over three million dollars between 1949 and 1960, mostly from US government sources, was central to efforts to drum up mass support for the Schuman Plan, the European Defence Community and a European Assembly with sovereign powers. This covert contribution never formed less than half the European Movement's budget and, after 1952, probably two-thirds.
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The conduit for American assistance was the American Committee on United Europe (ACUE), directed by senior figures from the American intelligence community. This body was organized in the early Summer of 1948 by Allen Welsh Dulles, then heading a committee reviewing the organization of the Central Intelligence Agency (CIA) on behalf of the National Security Council (NSC), and also by William J. Donovan, former head of the wartime Office of Strategic Services (OSS) [predecessor to the CIA].
***
The International Organizations Division [a newly-established branch of the CIA] was also involved in the fourth type of US covert operation — provoking dissonance in the satellite states. This effort was channelled through the National Committee for a Free Europe, later known as the Free Europe Committee, which controlled Radio Free Europe and Radio Liberty. Much of the work, done with the help of irascible exile groups under the Assembly of Captive European Nations (ACEN), was coordinated by the CIA's burgeoning Munich station, which also gave aid to resistance groups within eastern Europe.
***
The ACUE and its short-lived predecessor were only two of many `American' and 'Free' committees established during 1948 and 1949. Well-documented examples include the National Committee for a Free Europe (later the Free Europe Committee) and the Free Asia Committee (later the Asia Foundation). The Free Europe Committee, formed in 1948 by the retired diplomat Joseph E. Grew at Kennan's request, worked closely with the CIA to maintain contact between exile groups in the West and the Eastern bloc. Their campaign 'to keep alive the hope of liberation in Eastern Europe', was launched publicly in 1949 by the recently retired American military governor in Germany, General Lucius D. Clay." The initial membership included many senior government figures such as the former Assistant Secretary of State, Adolphe Berle, Allen Dulles and ex-OSS personnel such as Frederic R. Dolbeare. The Free Europe Committee purported to draw its resources from private subscriptions and various foundations, but in reality the majority of its funds came from the US government through channels managed by the CIA.
***
The United States persuaded Britain and France to give the exile groups associate membership of the Council of Europe. A year later the White House endorsed State Department plans to accelerate these efforts. Outlining their proposals in a special guidance paper entitled 'The Concept of Europe', they admitted their concern that the main propaganda effort in the East lacked the `positive qualities which are necessary to arouse nations'. Several studies had been made in an attempt to find a positive concept and the themes of 'European Unity' and 'Return to Europe' might rectify this problem. Its 'solely European' nature ensured that it could not be `dismissed as another manoeuvre of "American imperialism"'.
***
Unification was officially a central component of US policy — Congress had stipulated it as a condition of further Marshall Plan aid
***
The ACUE's work in continental Europe during the early 1950s also focused increasingly upon propaganda and mass action
***
In 1951, the majority of ACUE funds for Europe were employed on a new venture — a unity campaign amongst European youth. Between 1951 and 1956 the European Movement organized over 2,000 rallies and festivals on the continent, particularly in Germany where they received the help of the US army. One of the additional advantages of deploying American funds on the large youth programmes was that it helped to disguise the extent to which the European Movement was dependent upon American funds. In May 1952 Spaak decided that funds from American sources that had previously been used in the ordinary budget of the European Movement would now be diverted for use in the 'Special Budgets' used to support their growing range of new programmes. This disguised their source and avoided any accusations of American dependency. Again, in November 1953, Baron Boel, the treasurer of the European Movement, explained that it was essential to avoid a situation where opponents of European unity could accuse them of being an American creation. For this reason 'American money, quite acceptable for the European Youth Campaign and certain restricted activities, could not be used for the normal running of the Movement'. Through the use of `Special Budgets', the large sums from American sources did not show up in the ordinary budget of the European Movement."
***
As early as 1949, at the behest of Allen Dulles, the Ford Foundation was cooperating with the CIA on a number of European programmes." By 1950, the ACUE and the Ford Foundation were coordinating their efforts to support federalism." Moreover, by the mid-1950s, the senior figures who directed both overt and covert American support were increasingly synonymous. By 1953 both John J. McCloy and Shepard Stone, who had been instrumental in arranging for substantial covert government funds for the European Youth Campaign, were both on the board of trustees of the Ford Foundation. McCloy was also a director of the Rockefeller Foundation. By 1955, McCloy had become chairman of the Ford Foundation, while serving as chairman of the Council on Foreign Relations. Simultaneously, the same circle, including Retinger, McCloy, Allen Dulles, Harriman, David Rockefeller, Jackson and Bedell Smith were busy creating the Bilderberg Group, yet another organization that bridged the narrowing gaps between government, private and public organizations and between overt and covert on both sides of the Atlantic."
***
Most ACUE funds originated with the CIA.
***
Mutual Security Agency [an American agency created by Congress] funds were also used to support the European Movement, indeed the Mutual Security Act of 1951 explicitly stated that its resources were to be used 'to further encourage the economic and political federation of Europe'.'
Born in Canada, Mundell taught at the University of Chicago for 7 years, and has since taught at Columbia University in New York for more 42 years.*
But didn’t Mundell create the Euro to help Europe?
Not according to Guardian, Independent and BBC investigative journalist Greg Palast, who explained in his book Vulture’s Picnic:
Who spawned this cruel little bastard coin?
I called its parent, Professor Robert Mundell. Mundell is known as the Father of the Euro. The Euro is often spoken of as a means to unite post-war Europeans together emotionally and politically and to give this united Europe the economic power to compete with the U.S. economy.
That’s horseshit.
The Euro was invented in New York, New York, at Columbia University. Professor Mundell invented both the Euro and the guiding light of Thatcher-Reagan government: “Supply Side Economics” or, as George Bush Sr. accurately called it, “Voodoo Economics.” Reagan-Thatcher voodoo and the Euro are two sides of the same coin. (Ouch! Some puns hurt.)
Like the Iron Lady and President Gaga. the Euro is inflexible. That is, once you join the Euro, your nation cannot fight recession by using fiscal or monetary policy. That leaves “wage reduction, fiscal constraints (cutting government jobs and benefits) as the only recourse in crisis,” The Wall Street Journal explains with joy—and sell-offs of government property (privatizations).
Why the Euro, Professor? Dr. Mundell told me he was upset at zoning rules in Italy that did not allow him to put his commode where he wanted to in his villa there. “They’ve got rules that tell me I can’t have a toilet in this room. Can you imagine?”
I couldn’t really. I don’t have an Italian villa, so I cannot really imagine the burden of commode placement restriction.
The Euro will eventually allow you to put your toilet any damn place you want.
He meant that the only way the government can create jobs is to fire people, cut benefits, and, crucially, cut the rules and regulations that restrict business.
He told me: “Without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business.” Besides bowl location, he was talking about the labor laws, which raise the price of plumbers, environmental regulations, and, of course, taxes.
No, I am not making this up. And I am not saying the Euro was imposed on the Old Country just so the professor could place his toilet at a place of maximum pleasure. The Euro is fashioned as an anti-regulation straitjacket that would eliminate gallons-per-flush laws, flush away restrictive banking regulation, and all other government controls.
Now does the destruction of Greece’s sovereignty make a littlemoresense?
The idea that the euro has “failed” is dangerously naive. The euro is doing exactly what its progenitor – and the wealthy 1%-ers who adopted it – predicted and planned for it to do.
***
For him, the euro wasn’t about turning Europe into a powerful, unified economic unit. It was about Reagan and Thatcher.
***
And when crises arise, economically disarmed nations have little to do but wipe away government regulations wholesale, privatize state industries en masse, slash taxes and send the European welfare state down the drain.
***
Far from failing, the euro, which was Mundell’s baby, has succeeded probably beyond its progenitor’s wildest dreams.
* Mundell is Canadian. But having taught at American Universities for more than 50 years, we're treating him as an honorary American. In any event, he created the Euro while at Colubmia.
via Zero Hedge http://ift.tt/1WXkZPH George Washington
The key (recurring) catalyst for today’s early spike in oil, was the latest desperate attempt by an imploding OPEC member, this time Nigeria to push oil higher when overnight its petroleum minister Emmanuel Kachikwu said that key members of OPEC intend to meet with other producers in Russia on March 20 to renew talks on an agreement to cap oil output, Nigeria’s petroleum minister said.
The headlines in question:
NIGERIA OILMIN SAYS OPEC/NON OPEC TO MEET ON MARCH 20 IN RUSSIA
NIGERIA OIL MIN SEES DRAMATIC PRICE MOVE AFTER OPEC/NON-OPEC
NIGERIA OILMIN SAYS OPEC/NON OPEC TO MEET ON MARCH 20 IN RUSSIA
As Kachikwu hopefully added, “there will be a dramatic price movement” when the meeting takes place.
Sure enough, the algos bought this hook, lie and sinker and proceed to force another attempt at squeezing near record shorts.
The only problem is that moments ago, we got confirmation that not only are such desperate attempts to prompt “dramatic price movements”, higher of course, laughable, they just suffered a spectacular loss of credibility when moments ago Reuters reported that no decision on the date or venue of a possible meeting between OPEC and non-OPEC producers has been made yet, a Gulf OPEC delegate said on Thursday.
“There has been no decision made regarding the meeting yet. No date or location decided yet. The Gulf countries prefer that it would be held in the first half of April, and preferably in Doha, or some other Gulf city,” the delegate told Reuters.
“We are looking forward to having a good meeting and positive results.”
Perhaps, but in the meantime you just outed one of the nations most impacted by the ongoing oil rout as nothing but a cheap liar, although in retrospect few would be surprised that the nation which unleashed on the world the infamous email scam is capable of stooping so low.
OPEC leader Saudi Arabia and non-OPEC member Russia, the world’s two largest oil exporters, agreed last month to freeze output at January levels to prop up prices if other nations agreed to join the first global oil pact in 15 years. As we further noted, however, not only did Russian oil output rise to a record post-Soviet era high in February, Russian output is now at its absolute limit, which also explains why Russia was eager to “freeze” its production.
Finally, recall that according to Saudi Arabia the oil market remains oversupplied by some 3 million barrels of production daily; the same Saudi Arabia who energy minister Al-Naimi said two weeks ago in Houston that not only will the Saudis never reduce production, but are eagerly looking forward to the marginal oil producers to go out of business.
As such, our advice to the algos is to not follow ongoing lies by desperate OPEC ministers who will do and certainly say anything to get an even 1 cent pop in oil, but to keep an eye on the number of bankruptcies in the shale space. Considering that many shale companies just sold a record amount YTD of new equity, the default wave was just postponed by at least several month, something which – if anything – may prompt Saudi Arabia to pump even more.
Hillary is the candidate of the corrupt establishment. The status quo wants Hillary in the White House so the parasitic gravy train can roll on. DNC head and Florida Congresswoman Debbie Wasserman-Schultz is one of these people. She isn’t interested in reform, because reform wouldn’t advance her personal interests. She wants things to stay the way they are, because it’s working great for her.
Genuine liberals are finally starting to see these people for the frauds they are, which is why the Democratic Party is currently splitting in two. On one side there are those who understand United States policy doesn’t need a tweak here or there — it needs to be hauled off to the emergency room immediately. The so-called “elites” in the Democratic Party are just as disconnected and clueless as their Republican counterparts. Instead of accepting that paradigm level reform is required, they merely double down on their support of cronyism and rent-seeking.
I think Donald Trump is one of the most underrated presidential candidates in U.S. history, while Hillary Clinton is likely the most overrated. Democrats across America will very shortly experience extreme buyers remorse as Hillary melts into a puddle of Goldman Sachs checks in the face of the political hurricane that is Donald Trump.
Over the past severals weeks, I’ve been hammering home the obvious fact that Hillary Clinton is a far weaker candidate than Sanders against Donald Trump in the general election. I’ve been taken aback by the massive traffic generated by the recent post, Why Hillary Clinton Cannot Beat Donald Trump, and I think it speaks volumes about how passionately people feel about the topic. It’s by far the most popular piece I’ve published this year, with over 23,000 reads on Liberty Blitzkrieg alone.
The charges include, according to the Union-Leader:
conspiracy to commit an offense against the United States, threatening a federal law enforcement officer, obstruction of justice, attempting to impede or injure a federal law enforcement officer and several firearms charges, according to court records.
They report the indictment is out of Nevada.
The Patch contains this from former New Hampshire GOP chair Jack Kimball, reporting what he was told by Rep. DeLemus:
“She said that the FBI just rolled up with lots of vehicles and Agents who were in tactical gear,” Kimball wrote on Facebook earlier this morning. ”They forced their way into Jerry DeLemus and Sue’s condo with weapons drawn and arrested Jerry and took him away.”
Kimball considers the arrest unjust, and as the very fact the Bundy ranch standoff occurred, as well as its quasi-sequel in Oregon this year, shows, many agree: “A good and Patriotic Marine is now being prosecuted for standing up for Liberty,” he noted,
The key (recurring) catalyst for today’s early spike in oil, was the latest desperate attempt by an imploding OPEC member, this time Nigeria to push oil higher when overnight its petroleum minister Emmanuel Kachikwu said that key members of OPEC intend to meet with other producers in Russia on March 20 to renew talks on an agreement to cap oil output, Nigeria’s petroleum minister said.
The headlines in question:
NIGERIA OILMIN SAYS OPEC/NON OPEC TO MEET ON MARCH 20 IN RUSSIA
NIGERIA OIL MIN SEES DRAMATIC PRICE MOVE AFTER OPEC/NON-OPEC
NIGERIA OILMIN SAYS OPEC/NON OPEC TO MEET ON MARCH 20 IN RUSSIA
As Kachikwu hopefully added, “there will be a dramatic price movement” when the meeting takes place.
Sure enough, the algos bought this hook, lie and sinker and proceed to force another attempt at squeezing near record shorts.
The only problem is that moments ago, we got confirmation that not only are such desperate attempts to prompt “dramatic price movements”, higher of course, laughable, they just suffered a spectacular loss of credibility when moments ago Reuters reported that no decision on the date or venue of a possible meeting between OPEC and non-OPEC producers has been made yet, a Gulf OPEC delegate said on Thursday.
“There has been no decision made regarding the meeting yet. No date or location decided yet. The Gulf countries prefer that it would be held in the first half of April, and preferably in Doha, or some other Gulf city,” the delegate told Reuters.
“We are looking forward to having a good meeting and positive results.”
Perhaps, but in the meantime you just outed one of the nations most impacted by the ongoing oil rout as nothing but a cheap liar, although in retrospect few would be surprised that the nation which unleashed on the world the infamous email scam is capable of stooping so low.
OPEC leader Saudi Arabia and non-OPEC member Russia, the world’s two largest oil exporters, agreed last month to freeze output at January levels to prop up prices if other nations agreed to join the first global oil pact in 15 years. As we further noted, however, not only did Russian oil output rise to a record post-Soviet era high in February, Russian output is now at its absolute limit, which also explains why Russia was eager to “freeze” its production.
Finally, recall that according to Saudi Arabia the oil market remains oversupplied by some 3 million barrels of production daily; the same Saudi Arabia who energy minister Al-Naimi said two weeks ago in Houston that not only will the Saudis never reduce production, but are eagerly looking forward to the marginal oil producers to go out of business.
As such, our advice to the algos is to not follow ongoing lies by desperate OPEC ministers who will do and certainly say anything to get an even 1 cent pop in oil, but to keep an eye on the number of bankruptcies in the shale space. Considering that many shale companies just sold a record amount YTD of new equity, the default wave was just postponed by at least several month, something which – if anything – may prompt Saudi Arabia to pump even more.
