Mon
SEP 10 18 SIT EC y POL
ND denounce Global-neoliberal debacle y propone
State-Social + Capit-compet in Econ
"Hurricane
Florence may end up being the
worst natural disaster in recorded history for the Carolinas and Virginia. 3
to 4 feet of rain, IF predictions hold!"
RELATED
As of now, Hurricane Florence has an uncertain path, but East Coast folks – please watch
this one closely, as some models suggest it could head right for you.
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ZERO HEDGE
ECONOMICS
Neoliberal globalization is over. Financiers know
it, they documented with graphics
LA DEBACLE OF THE FAKE ECONOMY CALLED NEOLIBERALISM,
SO FAR:
"...how a plunging currency in a far-off place
affects supposedly stable markets like the US – is worth exploring because it’s happening right this minute."
Let’s start with the choices facing an American or European
investor who needs a decent return, but who finds that interest rates have fallen to
the point where traditionally safe things like bonds and bank accounts no
longer yield enough.
Such an investor has two choices:
1) Stick with what they know and accept sub-par returns (which
might mean being fired if you’re a pension fund manager, or – if you’re a
retiree – having to spend your golden years as a Walmart greeter), or
2) Branch out into more exotic but higher-yielding instruments and hope for
the best.
Option number
2 has been pushed by financial planners and
pension advisors for the past few years, with emerging market securities being
the exotica of choice. The sales pitch went something like this:
Developing country stocks are cheaper relative to
earnings and dividend yields than their rich country counterparts, while their
bonds yield quite a bit – frequently two or three times – more than US
Treasuries for only marginally more risk, so they’re a great way to diversify
while goosing returns.
Many, many
investors swallowed this and bought emerging market stock and bond funds. And for a while
they reaped the promised high returns, allowing retirees to spend time with
their grandkids and pension managers to keep cashing their massive paychecks.
Then – in
part because of all the hot money flowing in from credulous First World
investors – the emerging market countries started to veer off course. They borrowed trillions
of US dollars and, when the dollar started rising
against their domestic currencies, went into tail-spins of varying severity.
And now tens of thousands of American investors who couldn’t settle for 1%
returns are looking at double-digit losses.
Here’s a chart from Saturday’s
Wall Street Journal featuring the Tennessee public sector retirement system, which
made (in retrospect) a really excessive bet on emerging market ETFs. Note the
great early-2018 results followed by a sickening plunge.
See Chart:
And here’s a chart showing the Tennessee system’s exposure to various
emerging market countries, as a percentage of its total EM
exposure.
See Chart:
To its credit, Tennessee focused on the cream of
the emerging market crop so presumably isn’t too exposed to Argentina or
Turkey. Even so, its biggest holding, South Korea, is down about 10% so
far this year.
See Chart:
The impact of these sudden losses on normally
risk-averse investors? It scares them, obviously, making them even more cautious. Pension
funds start shedding risk (which in this market means dumping tech stocks and
foreign instruments of all kinds) and individuals try to shore up their nest eggs
by spending less and saving more. It’s “risk off” all the way down, and the economy starts
slowing.
And that’s the best-case scenario. A system as leveraged as today’s
developed world might not tolerate even a mild deceleration, so pretty much any deviation from steady growth is
potentially destabilizing. Which means volatility might be the only safe
bet in the year ahead, and a return to QE thereafter.
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Source: https://www.zerohedge.com/news/2018-09-10/buenos-aires-nashville-how-emerging-market-crisis-spreads
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Chicago real disaster:
Emanuel is smart, and the smart reason for
leaving is glaring: He doesn’t
want to risk becoming “mayor bankruptcy.” Chicago is a ticking time bomb and Emanuel is jumping
ship just in case it goes off.
Despite his lofty intentions when he first took
office, Emanuel has failed
miserably to reform the city’s finances. Now
the risk of insolvency is rising.
Chicago’s financials are dire and the
city has no plan and no reserves to survive an inevitable recession. In fact, the city
has barely kept its head above the water despite a decade of national economic
growth. Chicago Public Schools was already at the brink
of bankruptcy just one year ago.
Rahm knows the risks of collapse are rising.
He’s passed
property tax hikes, emptied the reserves and employed every budget
trick he can to make the numbers “better.” He’s
evensold
off public assets – the city’s future sales tax revenues – to
“shore up” the city’s finances, and yet Chicago is still
junk rated by Moody’s.
CPS is in even deeper junk territory
– far lower than even Detroit. And that’s after the state poured more
money in as the result of a new funding formula.
See Box:
Rahm has to know city finances will
crumble when the nation’s economic rally ends. He only needs to look at how the city’s
pension funds have done with the market’s winds at their back. The S&P was up more
than three times from 2009 through 2017, and yet the city’s unfunded
liabilities increased 2.75 times over
the same period, largely the result of poor funding policies.
When the stock market rally started,
the city’s unfunded liabilities, including those at CPS, were less than $17
billion. Today, they are at $38 billion. And those numbers are
based on the official statistics – the rosy scenario. The pension
shortfall is
much larger – Moody’s pegs it at $67
billion – when more conservative investment return assumptions are used.
See Chart:
What will happen when the markets
reverse? Three of
the pension funds are now just one serious stock-market correction away from
insolvency – if they’re not already there. The
police and fire funds are officially less than 25
percent funded, while the municipal fund has just 28 percent of the funds it
needs. The city’s best-funded plans – the Laborers and
Teachers plans – are less than 50 funded.
See Chart:
Crumbling
cash flows for city, residents
The probability of a full meltdown when the next
recession comes has increased. Reports on the city’s finances show that’s
especially true when Chicago is compared to its peer cities.
The debt burden is overwhelming to both
Chicagoans and the city itself.
According to Joshua Rauh of the Hoover
Institution, the city of Chicago’s pension debts, using market-based
assumptions, are now 12
times the size of its annual revenues. .. According to Joshua Rauh of the Hoover
Institution, the city of Chicago’s pension debts, using
market-based assumptions, are now 12
times the size of its annual revenues.
See Chart:
That’s much larger than any other major
city in the nation. Dallas’ pension crisis is deemed one of the worst in the nation, and
yet its burden is less than half of Chicago’s.
An even more pertinent comparison is
the debt burden taxpayers face. Moody’s published those numbers recently and Chicagoans are in real
trouble.
Every single Chicagoan is on the hook
for more than $50,000 in debts, compared to just over $30,000 in New York and
$25,000 in L.A. Residents in Houston, Philadelphia and Phoenix all face burdens
lower than $20,000 each.
Those per capita numbers, however, understate the
true burden some Chicagoans will actually face. More
than a quarter of the city is at or near poverty, meaning they won’t be able to
pay much toward the city’s debts. That pushes the burden towards middle and
upper income residents.
See Chart:
What’s next
You can’t help but wonder if Emanuel is
stepping down because he can’t get the $10 billion pension bond deal done. The likelihood of
the deal has dropped as more people realize what a kick-the-can plan it is.
And without the scheme, the risk of a
meltdown is real. That’s a risk Rahm is unwilling to stick around for. He doesn’t want
to be the mayor that begs for a bailout, especially since he has ambitions for
higher office.
Emanuel will soon hand over the time
bomb that is Chicago finances to his successor. Will that new mayor tackle the big and
unpopular reforms by taking on the unions, special interests and crony
businesses to bring the cost of Chicago government in
line with what residents can afford? Or will their solution just be more
tax hikes that destroy the city’s tax base?
Chicagoans better hope, and vote, for
the former. The bomb is ticking.
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"Suddenly, the world ceased to make sense in terms of what, a few weeks before,
passed as conventional wisdom...Ten years on, the crisis unleashed in Wall
Street in 2008 is still with us. It takes
different forms in different countries..."
Read this:
Where are we
now?
Back in 1967,
John Kenneth Galbraith described how capitalism had shifted from a market
society to a hierarchical system owned by a cartel of corporations: the Technostructure, as
he called it. Run by a global elite that usurped markets, fixed prices and
controlled demand, the Technostructure replaced the New Deal’s full employment
objective with that of GDP growth.
From the late
1970s onwards, that Technostructure extended its realm by adding the black
magic of financialisation to its structure (through, for example, turning car
companies like General Motors into large speculative financial corporations,
that also made some cars!), magnifying by a dizzying factor its power and,
ultimately, replacing the aim of GDP growth with that of ‘financial
resilience’: enduring paper asset inflation for the few and permanent austerity
for the many.
The result was the strengthening of the
Technostructure’s dollar-based hegemony in a manner that no macroeconomic approach
(limited, by design, to looking at the national accounts of states) can even
recognise as, from the 1990s
onwards, the ‘real action’ was taking place in the balance sheets of the global
financiers.
In the end, this financialised Technostucture was
brought to its knees by the weight of its hubris. That’s what the Crash of 2008
was all about. Two
powers proceeded to save the financialised Technostructure from itself:
The US
government, and in particular the trillions of
dollars that the Federal Reserve pumped into European private and central banks
(through what is known in the trade as ‘swap lines’).
And China, whose skilful
economic management boosted domestic investment to unheard of levels, kept on
its books worthless dollar assets that many others were shedding, and even went
so far as to propose the elimination of trade imbalances via the adoption of a
multilateral clearing union of the type that John Maynard Keynes had proposed
at the Bretton Woods conference in 1944 (only to be denied by the Obama
administration, who preferred to keep the dollar’s privilege intact at the
expense of a seriously unstable capitalism).
Continue reading at
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US
DOMESTIC POLITICS
Seudo democ y sist duopolico in US is obsolete; it’s full of frauds & corruption. Urge
cambiarlo
"Liberal Hypocrisy and Conservative censorship
on full display .... again"
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El
precio del Uranio estalla ..la muerte por DU contamination will do .. worse if
WW3 starts
For the first time since a devastating tsunami
triggered the worst nuclear disaster since Chernobyl, uranium prices may finally break out of a seven-year
bear market thanks to a badly needed bout of supply destruction.
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THE
PATH TO HECATOMB.. el camino a la hecatombe.. URGE tomar calles por la PAZ
mundial
The simmering trade war with China may
be about
TO GO NUCLEAR, AND NOT JUST IN TRADE...
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A Harvard University professor claims
in a new academic study that merit-based admission processes at elite
universities "reproduce inequality."
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While
millennials face disdain from their elders, they experience real-world struggles their parents and grandparents never imagined...
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US-WW ISSUES (Geo Econ, Geo Pol &
global Wars)
Global depression is on…China, RU, Iran search
for State socialis+K- compet. D rest in limbo
[[ Stupid arrogance in title: India is a sovereign
State-Nation, not our colony or back yard ]]
India is increasingly finding itself caught between competing alliances...
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SPUTNIK and RT SHOWS
US
inside GEO-POL n GEO-ECO ..Focus on neoliberal expansion via wars
& danger of WW3
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RT SHOWS
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NOTICIAS IN SPANISH
Lat Am NEW FOCUS: alternat to neo-fascist
regimes, breaks to HR, Peace & support to US-terrorism
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COUNTER PUNCH
Analysis on US Politics & Geopolitics
Melvin
Goodman Trump’s
Psyche and the Threat of Force
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Victor
Wallis Wholesale
Crimes
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Juan Cruz Ferre Argentina
on the Brink
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Robert Fisk What
Will Follow the Battle of Idlib?
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Andrew
Levine Left,
Right, and Dead Center
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GLOBAL RESEARCH
Geopolitics & Econ-Pol crisis that leads to
more business-wars from US-NATO allies
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Albert
Einstein’s 1948 Letter to the New York Times Comparing Israeli Politicians to
Nazis By Dr. Albert
Einstein and Michael R. Burch,
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DEMOCRACY NOW
Focus on Trump policies & the Econ & Pol
crisis he creates
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PRESS TV
Resume of Global News described by Iranian
observers..
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