Economy
Editorial: Pressure builds to solve public pension crisis (Illinois) (Saxplayer00o1)
As our tax watchdog editor Jake Griffin reported last week, even an infusion of as much as $8.5 billion couldn’t get the funds supporting retired state employees, university workers, judges, lawmakers and educators outside Chicago back on track. In fact, the funds fell a total of $3.8 billion further in debt, pushing the funds to their highest combined total of unfunded liability ever, $137.3 billion.
Rising debt used for financial risk-taking could leave major economies vulnerable, IMF says (Saxplayer00o1)
The new update of the IMF’s Global Debt Database placed total global public and private debt at $188 trillion at the end of 2018, with the global average debt-to-GDP ratio edging up to 226%.
‘Decade of the central bank’ ends with the Fed and its global cohorts in need of some new tricks (Saxplayer00o1)
The U.S. Fed tried reducing its bond holdings over the past two years but had to retreat after bank reserves fell and overnight borrowing rates briefly surged. The Fed now is back in expansionary mode, though officials insist that the new Treasury note-buying is not the same as the old QE, which focused on longer-duration government debt.
Negative Interest Rates Are Destroying Our Pensions (Saxplayer00o1)
It’s been disastrous for pension plans. A 1% decline in interest rates increases calculated pension liabilities by about 20%. It reduces the funding ratio, which measures a pension provider’s ability to meet its future commitments, by about 10%. Those estimates come from a survey of 153 European pension providers with 1.9 trillion euros ($2.1 trillion) of assets sponsored by Amundi SA, Europe’s biggest asset manager, and published by Create-Research earlier this month.
‘System failure’ is what investors got from the Federal Reserve in 2019 (Saxplayer00o1)
It has been a giant system failure. Central banks can’t reduce liquidity, otherwise markets fall apart. The process of never letting markets correct themselves is producing valuations across the economic spectrum that are worse than in 2000, as household wealth (concentrated among the top 10%) relative to GDP has reached unprecedented levels…
Trump Impeachment Vote Updates: House Convenes to Debate Two Articles (tmn)
Once the motion is defeated, the debate over the articles of impeachment is also expected to fall sharply along party lines. Democrats will assert that Mr. Trump committed high crimes and misdemeanors by pressuring Ukraine to tarnish Democratic rivals to aid his re-election campaign while Republicans will argue that the majority was engaged in a partisan witch hunt against a president they fear they could not beat at the polls. The House plans to vote by the end of the day.
Trump Issues Fiery Letter to Pelosi over Impeachment: ‘You Are the Ones Subverting America’s Democracy’ (Thomas R.)
In the six-page letter, the president tackles both articles of impeachment — “abuse of power” and “obstruction of Congress” — and claims that Pelosi is obsessed with overturning the result of the 2016 election.
$5 billion leaves Hong Kong funds amid unrest, Bank of England says (Thomas R.)
The spokeswoman added that the $5 billion in the BoE’s report referred to portfolio capital changes via investment funds, which “could mean asset reallocation by or among investors and may not involve conversion of currencies, and therefore it does not necessarily lead to fund outflows from Hong Kong dollars or Hong Kong’s banking system.”
Welcome (?) to the New World Economic Order (tmn)
All of a sudden, the world has entered a new era for international trade. The main trade issue has been the United States vs. China, a bilateral struggle with many third parties suffering whiplash. The World Trade Organization, the largest multilateral player, has effectively been rendered irrelevant because it no longer has enough appeals judges to function. Brexit now seems set to happen, and that means the European Union is less of a final word on trade than it used to be.
The team of 15 scientists explained that “from these data, we derive a methane emission rate of 120 ± 32 metric tons per hour. This hourly emission rate is twice that of the widely reported Aliso Canyon event in California in 2015.” The incident in California, which lasted four months, is the largest known accidental methane leak in the United States. Methane is 84–87 times more potent than carbon dioxide over a 20-year period.
Updated World Magnetic Model shows magnetic north pole continuing to push toward Siberia (Thomas R.)
It is currently not known why the poles drift. Some have suggested it is due to an underground jet stream of sorts. Nor is the mechanism driving them understood. They were only discovered in 1831—since that time, both poles have been tracked, and the speed at which they move recorded. The north magnetic pole has traveled 1,400 miles since it was first discovered—and has changed speed, as well. As recently as 2000, the speed was clocked at 10 km/year. The latest readings show it moving at a brisk 50 km/year.
Keynes was wrong. Gen Z will have it worse. (tmn)
It’s true that today the system seems on the edge of transformation, but not in the way Keynes hoped. Gen Z’s fate was supposed to be to relax into a life of leisure and creativity. Instead it is bracing for stagnant wages and ecological crisis.
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The post Daily Digest 12/18 – ‘Decade Of The Central Bank’ Ends, Negative Interest Rates Are Destroying Pensions appeared first on Peak Prosperity.
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