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Daily Digest 12/13 - New Debt Ceiling $20.49T, The New Silicon Valley Paradox

Wednesday, December 13, 2017, 9:25 AM

Economy

No Easy Fix For Chicago's Debt Dereliction

Chicago has spent two decades digging itself into a hole. Back in 2000, the city had racked up $12.3 billion in debt, in current dollars; now, it owes $20.2 billion. Back then, the debt burden per person was roughly $4,400; these days, it's $7,500. Even scarier is what Chicago owes to pensioners: $31.5 billion, up from $5 billion in 2000.

China’s pension funds struggle as nation ages

Thirteen pension funds in regions and administrative units around China only have enough money to pay less than one year’s worth of pensions, media reported on Monday, as the country struggles with an aging population and shortfalls in the nation’s pension schemes.

Last day for refunds on Chicago red-light and speed camera tickets

From 2011 to 2015, the city raked in nearly $285 million from red-light cameras, according to a report in the Chicago Sun-Times. The idea has proved so lucrative that Chicago-area suburbs have installed their own red-light cameras. ABC 7 and the Chicago Sun-Times estimated that Chicago suburbs took in nearly $170 million from 2014 through 2016.

Surging Debt Will Make Asian Central Banks Cautious on Rates

In South Korea, whose borrowing costs were boosted on Nov. 30, household debt has ballooned to about 150 percent of disposable income. It’s an even larger 194 percent in Australia. In China, it’s companies feeling the strain with corporate debt equating to about 160 percent of gross domestic product.

Meet the new debt ceiling: $20.493 trillion

Now, the total national debt will sit at or around $20.493 trillion until Congress agrees to increase or suspend the ceiling again.

Former Facebook exec says social media is ripping apart society (blackeagle)

He went on to describe an incident in India where hoax messages about kidnappings shared on WhatsApp led to the lynching of seven innocent people. “That’s what we’re dealing with,” said Palihapitiya. “And imagine taking that to the extreme, where bad actors can now manipulate large swathes of people to do anything you want. It’s just a really, really bad state of affairs.” He says he tries to use Facebook as little as possible, and that his children “aren’t allowed to use that shit.” He later adds, though, that he believes the company “overwhelmingly does good in the world.”

Facebook responds to former VP who said social media is destroying society (blackeagle)

Palihapitiya’s critical remarks drew immediate and widespread attention in the media and were printed on the front page of the UK’s Daily Mail. “The short-term, dopamine-driven feedback loops we’ve created are destroying how society works,” he said. The former Facebook VP, who worked for the company between 2007 and 2011, urged people to consider a “hard break” from social media.

Mike's New Crypto Documentary & Large Silver Purchase (Diane C.)

Watch this 9-minute video to learn which indicators have prompted Mike Maloney to make an investment move. You'll also get some exciting news on a new cryptocurrency project.

Do not eat your veggies — if they are grown in your front yard, Miami Shores says (thc0655)

Florida’s 3rd District Court of Appeal upheld Miami Shores’ ban on front-yard vegetable gardens in a recent decision, so the couple will take their case to the Florida Supreme Court. They argue, on behalf of gardeners everywhere, that the village’s restriction is unconstitutional and an infringement on their property rights.

“That’s what government does – interferes in people’s lives,” Ricketts said. “We had that garden for 17 years. We ate fresh meals every day from that garden. Since the village stepped its big foot in it, they have ruined our garden and my health.”

The Silicon Valley paradox: one in four people are at risk of hunger (Suzie G.)

One in four people in Silicon Valley are at risk of hunger, researchers at the Second Harvest food bank have found. Using hundreds of community interviews and data modeling, a new study suggests that 26.8% of the population – almost 720,000 people – qualify as “food insecure” based on risk factors such as missing meals, relying on food banks or food stamps, borrowing money for food, or neglecting bills and rent in order to buy groceries. Nearly a quarter are families with children.

Gold & Silver

Click to read the PM Daily Market Commentary: 12/12/17

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7 Comments

saxplayer00o1's picture
saxplayer00o1
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'No Way To Sugarcoat That.' Health Insurance Premiums Skyrocket

Japan to keep record-low interest rates in FY2018 budget draft ...

Reuters-12 hours ago
... government sources told Reuters on Wednesday. A Japanese flag flutters atop the Bank of Japan building in Tokyo, Japan June 16, 2017. REUTERS/Toru Hanai/File Photo. The assumed interest rate hit a record low of 1.1 percent this fiscal year following the central bank's adoption of negative interest rate policy in 2016.

US government posts $139 billion deficit in November

Reuters-20 hours ago
A temporary measure that suspended the debt limit expired on Dec. 8, although the Treasury has emergency means to continue to pay all its bills through January, it has said. At the same time, Republicans, who control Congress, are nearing approval of an overhaul of the tax system. Their legislation would add $1.4 trillion ...

'No Way To Sugarcoat That.' Health Insurance Premiums Skyrocket ...

WAMU 88.5-19 hours ago
He has a preexisting condition and before the Affordable Care Act, no one would insure him. As soon as the Maryland health exchange started in 2014, he signed up, and he's mostly been happy. But this fall, he received a letter from his insurer informing him that for 2018, his silver plan premium is rocketing up to $1,300 a ...

 

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Time2help
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Re: No Easy Fix for Chicago's Debt Dereliction

As a follow up, here's another interesting read.

Chicago Police Adopt Israeli Tactics (ConsortiumNews)

Quote:

The Chicago police slaying of 17-year-old Laquan McDonald, like other recent police killings of blacks, may resemble the actions of an occupation military, in part, because Chicago and other U.S. cities have learned from Israel’s occupation of Palestine, writes retired JAG Major Todd E. Pierce.

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thc0655
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US police using "Israeli tactics" is getting to be a thing

I keep hearing and reading in multiple places that US police (primarily in big cities that vote blue) are being trained by Israelis in their counterinsurgency tactics and strategies. I'm hearing and reading that that means US police are becoming an occupying military force instead of a domestic police force.  Police state! Police state!

The above article by retired US Army major Todd E. Pierce is like everything else I'm reading on this subject. It is characterized by fuzzy logic, innuendo, and unsupported slurs against the whole profession of policing in the US (not to mention Israelis).  I'd advise readers think critically before swallowing this meme that is getting more and more play in the US.

Q: Can you name one Israeli tactic or strategy that has been adopted by the Chicago PD, or any other US department?  This article does not list even one tactic used by Israelis that has been adopted by the Chicago PD. This is consistent with everything else I've heard on this subject: not one tactic or strategy has ever been identified.  However, the author does shamelessly imply by innuendo that the execution (murder) of an armed Laquan McDonald (knife) is an Israeli tactic:

The Chicago police slaying of 17-year-old Laquan McDonald, like other recent police killings of blacks, may resemble the actions of an occupation military, in part, because Chicago and other U.S. cities have learned from Israel’s occupation of Palestine, writes retired JAG Major Todd E. Pierce.

Further, notice how the author blames the shooting on the whole Chicago police department when only Officer Jason Van Dyke fired any shots and the other eight officers on location did not see any danger great enough to fire their weapons. That's a slur on the rest of the department.

The author then goes on to detail how US police departments are adopting Israeli police state methods: training.

How could this be in the civilian government of Chicago? In part, because Police Superintendent McCarthy and the City of Chicago sought out and received training by Israeli occupation forces in “counter-terrorism” policing, that is, “pacifying” a population through aggressive intelligence gathering and the application of military force. Counter-insurgency is the term used for when this doctrine is applied by military forces.

This collaboration between Israel and U.S. police agencies, including Chicago, emerged after the Sept. 11, 2001 attacks on New York and Washington. Since then, by one count, at least 300 high-ranking sheriffs and police from cities both large and small have received counter-terrorism training in Israel. For instance, in January 2003, 33 senior U.S. law enforcement officials from Chicago and other major American cities flew to Israel for sessions on “Law Enforcement in the Era of Global Terror.”

In 2009, Israel’s Midwest Consulate General co-sponsored “an intensive seminar” in Israel for senior Chicago police officials “on intelligence-led policing techniques.”

Chicago Police Superintendent McCarthy was a key participant in this Israeli training. The Israel Trade & Economic Office of the U.S. Midwest Region invited police officials to “Join Chicago Police Superintendent Garry McCarthy & the Midwest Delegation to the Israel Homeland Security International Conference 2012, and be a part of an international gathering of public security officials and private technology companies.”

In 2012, these “security officials” got to “experience demonstrations of breakthrough technologies from Israel” and “tour security infrastructure at the Old City of Jerusalem,” a city under Israeli military occupation. It wasn’t made clear if the “demonstrations of breakthrough technologies from Israel” would extend to live subjects in occupied Jerusalem.

In November 2014, Chicago’s McCarthy “led a delegation of senior law enforcement officials to Israel” as part of a training mission “to engage directly with their Israeli counterparts to discuss best practices, unique strategies, and new technologies in a range of law enforcement areas,” according to the same Israeli trade office.

“The visit also aimed to build a foundation for enhanced collaboration between the Chicago Police Department and the State of Israel.” Included in the delegation was the Executive Director of Cook County’s Homeland Security and Emergency Management Office, the Chief of Staff of the Chicago Police Department, as well as police officials from other large American cities. [The itinerary of the delegation is explained more here.]

Major Pierce, the author, again implies there is something nefarious going on here by innuendo.  He doesn't name even one specific tactic, strategy, piece of equipment or computer software program the Israelis pushed on the Americans.  I guess that's because he doesn't know of any.  He's only seen the titles and executive summaries of the "trainings" and by innuendo jumps to accusations from there.  Never mind that Major Pierce sees nothing nefarious with the same US police officials going to Scotland for training, where the focus, according to Pierce, seemed to be on the virtues of unarmed police officers.

Secondly, maybe we should follow the money on these "trainings."  They sure look like trade shows to me. Who do you suppose paid for these trips/junkets?  My guess: not US police departments.  I imagine the Israelis had products to sell (mostly hardware and software related to surveillance and intelligence-led policing), and they considered it an investment to pay for the US police decision-makers who have control of police budgets to get a free trip to an exotic locale where a convincing sales pitch could be made.  Otherwise, if the focus was really training on tactics and equipment, the mayor and police commissioner would not be the right people to send.  But they would be exactly the right people to send if you had something to sell. I feel a little guilty for wondering if there were any under-the-table kickbacks to US officials/politicians who committed to buy stuff.

In my 18 years in big, blue city policing I can point to exactly ONE training, product or strategy that I have ever been exposed to that originated in Israel. About four years ago I attended a 90 minute presentation which was part of an all-day training in my city which was led by a high-ranking Israeli police official.  The subject was dealing with terrorist bombings, a subject the Israelis have been forced to become experts in.  The presenter was trying to expedite our learning curve so we don't have to repeat the mistakes they made over decades if bombings ever become as prevalent in the US as they have been in Israel.  We were told that US police expect that as the police arrive the bad guys will flee, but that in Israel (and other places) the bad guys purposely target police and other first responders.  They don't flee.  Instead they target the police and aren't afraid of them.  They purposely try to draw police in (with a first explosion for instance) so they can kill them with gunfire or secondary explosions.  We were warned NOT to approach what appears to be a wounded terrorist: many in Israel are fitted with explosive vests and are trained that if they are wounded to detonate their vests as police and medics approach them.  That will be a big mental change for US police.  Among other things, we were also told that it is psychologically important for the public to get the scene of the bombing processed for evidence as fast as possible and get it cleaned up.  This also robs the bombers of some of the satisfaction they get from watching the carnage they inflict.  We watched a slide show of one bombing that took place in the morning, was processed for evidence, cleaned up and reopened to the public before midnight.  (By contrast, US law enforcement are still working the scene of the October 1 Mandalay Bay shooting in Las Vegas and my guess is that the 32nd floor of the hotel may never again be opened to the public.  The school in Newtown, CT was left in a bloody shambles for months until it was finally torn down.)

Inexplicably, Major Pierce concludes his screed with a reference to a perfectly innocent training American police had in Scotland.  Unlike his review of Israeli training, Major Pierce identifies the specific strategy of using unarmed police in Scotland (98% are unarmed).  It seems Major Pierce is recommending that kind of thing to US police, instead of all the unnamed Israeli tactics he is sure are so terrible.

The American police officials appeared dumbfounded by the concept of operating without weapons and pressed their Scottish counterparts with questions about how many Scottish police officers have been wounded or killed in the line of duty.

It's no mystery to me why so few Scottish police officers have been killed in the line of duty.  First and foremost, theirs is a much more civilized population and they have very few crimes in which an officer's life would be in danger.  Secondly, an unarmed officer has enough sense not to rush in to a situation where s/he would put him/herself in mortal danger (like an active shooter).  Review the 1996 Dunblane school massacre and tell me what the unarmed police did do or could have done about that shooting. https://en.wikipedia.org/wiki/Dunblane_massacre  Exactly: they could write a report about it (and then seal it from public review for 100 years, possibly to cover up police helplessness).

Paris has many unarmed police too.  Here's an unarmed Paris bike cop rushing to the scene of the 2015 Charlie Hebdo shooting.  I guess he didn't get the memo on best practices for unarmed police ("don't arrive until the bad guys are gone").

I wonder how often unarmed Scottish police expect to go up against criminals like this, and what they think their superior verbal deescalation skills might accomplish:

Notice below that Officer Quincy Smith has drawn his non-lethal Taser to stop a theft suspect and is attempting to get him to stop for investigation by using verbal commands, when the suspect shoots him 8 times.

Here below an off-duty cop tries to use verbal commands to stop an active shooter at a mall.  It works at first then the suspect attacks.

I'd advise readers think critically before swallowing this meme that is getting more and more play in the US.

saxplayer00o1's picture
saxplayer00o1
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Credit card debt is costing you nearly $1000 per year

Credit card debt is costing you nearly $1000 per year

CNNMoney-22 hours ago
... smallest piece of American's total debt -- mortgage debt, for example, makes up 67% of our total household debt, student loans 10%, auto loans 9% and credit card debt accounts for 6% -- there are more credit card accounts than other forms of debt, according to the Federal Reserve. Our credit card debt totals $905 billion, ...

Canada's household debt-to-income ratio hits record ...

Reuters-1 hour ago
The ratio of debt to disposable income rose to 171.1 percent from an upwardly revised 170.1 percent in the second quarter. On a seasonally adjusted basis, households borrowed C$23.4 billion ($18.3 billion) in the third quarter, down from C$28.7 billion in the preceding quarter. The Bank of Canada - which regularly ..

Saudi king approves $19 billion of economic stimulus steps

Reuters-7 hours ago

The private sector's growth has slowed to a crawl this year because of government austerity policies designed to curb a state budget deficit caused by low oil export revenues. The economy faces more headwinds early next year in the form of the planned introduction of a 5 percent value-added tax in January and domestic ..

San Marcos making hard choices to close budget deficit

The San Diego Union-Tribune-14 hours ago
School officials said the challenges will continue, as pension costs keep rising. The district paid $5.5 million toward teachers pensions in 2012-13, but that will swell five-fold to $27.2 million by 2019-20, Schiel said. Likewise, pension expenses for other staff members will go from $2 million to $6 million over that time period.

Unfunded Liabilities of State Public Pensions Top $6 Trillion in 2017

Washington Free Beacon-4 hours ago
Unfunded liabilities of state public pension plans now tops $6 trillion, an increase of $433 billion from the previous year, according to a report from the American Legislative Exchange Council. "Unfunded liabilities of public pension plans continue to loom over state governments nationwide," the report states. "Absent ...

 

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cmartenson
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Imagine how bad it's going to be when...

These massive deficits are with an enormous stock bubble in play.

Unfunded Liabilities of State Public Pensions Top $6 Trillion in 2017

Washington Free Beacon-4 hours ago
Unfunded liabilities of state public pension plans now tops $6 trillion, an increase of $433 billion from the previous year, according to a report from the American Legislative Exchange Council. "Unfunded liabilities of public pension plans continue to loom over state governments nationwide," the report states. "Absent ...

Imagine how bad they are going to get when the next recession comes along and smacks the equity portion of these pension "plans."

[Doesn't the word plan imply, you know, planning?  Hence the "quote" marks there.]

Said another way, these are not going to be paid off without somebody eating some losses.  Either taxpayers in terms of jacked up state and/or local taxes combined with reductions in service, or pensioners getting less (and maybe far less) than they were told they could expect to receive.

So that's the only remaining question here; who's going to eat the losses?

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DennisC
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Posts: 239
"Pension Planning"

Hi Chris,

A new oxymoron has been coined perhaps?  I think this is such an important topic and an upending likely future event.  Will it be (a) or (b) or (c), all of the above or (d), none of the above.  The issue has been getting more visibility as is apparent by all the related articles posted here and I think some folks are starting to get a glimpse of the (your-favorite-large-animal) in the room.  I'm just thinking a taxpayer ballout (as in at the federal level) is a almost baked in at this point.  Once the interested parties go screaming to their legislators that they have to do something about it, we'll see the "socialization of the losses" start, in my opinion.  I think a lot of people are already seeing the impact at the local level as evidenced by town and education budget proposals.  This is particularly true if you live in a locale that is governed by the New England style, town meeting process.  What the largest cost (shhh, no hints from the audience please)? People and requisite benefits.

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thc0655
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Why not all of the above, in sequence?

I don't study the math and produce charts. I study human nature and its corollary: history (I.e. The history of human nature). By my method this is what I expect to happen (barring the possible disruptive influence of The Crash or WWIII): 

1. Taxes and so called fees will be jacked up. This is already happening.  This is the default response of humans in government. But this won't be sufficient so #2 will be necessary.

2. Government services will be cut. This is already happening. At first cuts will not be visible to most people in the public, but eventually the cuts will become visible. Cuts will be prioritized to cost politicians the fewest votes, so those with the least influence will suffer first and most. This will not be sufficient so #3 will be necessary.

3. Pension benefits will be cut starting with means testing. Those who have other sources of income and/or significant wealth will take the first cuts. Cost of living adjustments will be eliminated or reduced (this will be necessary to insure the success of step #4, which will cause huge inflation).  Medical benefits will have required member contributions instituted or raised. Actual monthly checks will be reduced. This step is in its earliest stages, and will require CHANGING THE RULES either in the courts or the legislatures, or both. This process will happen too slowly to "save" the pension system so when it becomes a crisis so big even the money printers can no longer ignore it then we'll move to #4 which will begin in the midst of this step being pursued.

4. The money printers will authorize a federal bailout in stages, because each stage will be insufficient to save the system as promised (just like multiple QE's and sequential interest rate reductions didn't save anything). The well-connected will game this move and add to their riches. Of course, huge inflation will rob pensioners of their purchasing power while nominally preserving something close to the amounts in their monthly checks.

"Welcome to the Hunger Games. And may the odds be ever in your favor."

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