Working for the government was always pitched as somehow being better guaranteed than risky private corporations. However, the problem with government pensions has been they promised whatever sounded nice, with zero accountability. The presumption that tax revenue was an endless pit is one of those fallacies that nobody ever investigates. The ramifications of what happens in Detroit will ripple through the entire debt structure nationally for if this will be the new game plan to follow, why should people buy any government debt whatsoever if not even bankruptcy laws apply? As we said – he who makes the laws never goes to jail for breaking them.
- EU to weigh extensive sanctions on Russia (FT)
- U.S. lifts flight ban to Israel (Reuters)
- Russia says will cooperate with MH17 probe led by Netherlands (Reuters)
- Norway faces ‘concrete and credible’ terrorist threat (FT)
- Don’t Tell Anybody About This Story on HFT Power Jump Trading (BBG)
- But... but... PMI: Unilever Sales Growth Misses Estimates on Asian Slowdown (BBG)
- World’s Biggest Wealth Fund Reviews $8 Billion Russian Stake (BBG)
- Qualcomm latest US tech company to reverse in China (FT)
- Hamptons Home Sales Rise as Buyers Find More Inventory (BBG)
- EU Works to Punish Russia as MH17 Bodies Leave Rebel Area (BBG)
- Bodies From Malaysia Airlines Flight Begin Long Trip to Netherlands (WSJ)
- Israel pounds Gaza as Kerry arrives (Reuters)
- U.S. judge dismisses Republican lawsuit over Obamacare subsidy for Congress (Reuters)
- Israel Soldier Missing Amid Assault on Hamas in Gaza (WSJ)
- Detroit Retirees Vote in Favor of Pension Cuts (WSJ)
- Russia Axes 1st Bond Sale in 3 Months as Ukraine Drives Up Yield (BBG)
- Wall Street Cut From Guest List for Jackson Hole Fed Meeting (BBG)
- Credit Suisse to Exit Commodities, Posts Big Quarter Loss (BBG)
- Draghi Cedes Euro Control to Yellen on Fed Rate Wagers (BBG)
Flint may be Michigan’s second city to plunge into bankruptcy unless retirees accept cuts in health benefits that threaten to unravel a balanced budget. As Crain's Detroit reports, Emergency Manager Darnell Earley (Flint’s third emergency leader since it was placed under state control in 2011) warned "If we have no ability to mitigate the cost of retiree health care, that’s going to make it very difficult for the city to remain financially stable over the next few years." As Eric Scorsone notes, "Flint's at the forefront, but a lot of cities are on the same train, and that train is headed for the cliff."
Martin Armstrong warns that 50% of the municipal governments in Germany are on the verge of bankruptcy. This is part of the reason they are looking for bail-ins and even Merkel has determined they cannot allow any referendums fearing the people will vote against the EU. The Bremen state government has now imposed a spending freeze today. The reason has been the unexpected expenditure and revenue shortfalls in the total amount of 60 million euros. Politicians cannot see that this system is doomed. They keep looking for everything possible to raise more and more taxes. It is just amazing who disconnected government are from the reality of the economy. Everything is geared to move toward the confiscation of wealth not reforming the system.
- Headline of the day: Complacency Breeds $2 Trillion of Junk as Sewage Funded (BBG)
- Israel intensifies Gaza offensive after surge in rocket fire (Reuters)
- Profits plunge at Vatican bank (FT)
- Investors Are Buying Troubled Golf Courses and Giving Them Makeovers (NYT)
- Pimco Dissidents Challenge Bill Gross in ‘Happy Kingdom (BBG)
- That's a new one: Marks and Spencer blames new website for sales drop (Reuters)
- Iran's Supreme Leader calls for more enrichment capacity (Reuters)
- Boeing Faces Long-Term Credit Risk if Ex-Im Bank Closed, S&P Says (WSJ) not to mention the collapse risk to US durable goods orders
- U.K. Manufacturing Unexpectedly Slumps Most in 16 Months (BBG)
- Some Still Lack Coverage Under Health Law (WSJ)
In Reality, War Will Bring An End to the Petrodollar, and Impose Hardship on the Average American ...
The Great Depression did not represent the failure of capitalism or some inherent suicidal tendency of the free market to plunge into cyclical depression - absent the constant ministrations of the state through monetary, fiscal, tax and regulatory interventions. Instead, the Great Depression was a unique historical occurrence - the delayed consequence of the monumental folly of the Great War, abetted by the financial deformations spawned by modern central banking. But ironically, the “failure of capitalism” explanation of the Great Depression is exactly what enabled the Warfare State to thrive and dominate the rest of the 20th century because it gave birth to what have become its twin handmaidens - Keynesian economics and monetary central planning. Together, these two doctrines eroded and eventually destroyed the great policy barrier - that is, the old-time religion of balanced budgets - that had kept America a relatively peaceful Republic until 1914. The good Ben (Franklin that is) said,” Sir you have a Republic if you can keep it”. We apparently haven’t.
The news that hundreds of thousands of people will lose water supplies is not a stunning headline anymore - poor old Ukraine... or Iraq. However, this time, the 'it couldn't happen here' crowd might be stunned to hear that The Motor City is playing serious hardball with residents who have fallen behind on paying their water bills. Detroit’s Water and Sewerage Department has begun turning off the taps of 150,000 residents who are at least two months behind on payments. As one advocate notes, "sick people have been left without running water and working toilets. People recovering from surgery cannot wash and change bandages. Children cannot bathe, and parents cannot cook." Of course, given that these are generally voting members of the US public, we would be stunned if the Federal government did not create a new fund to 'help' them out of this 'unfairness'.
- Obama Administration Widens Export Potential for U.S. Oil (BBG)
- WTI Pares Gains as U.S. Export Ruling Seen Limited (BBG)
- Senator Cochran defeats Tea Party rival in Mississippi Republican runoff (Reuters)
- Militants attack Iraq air base, U.S. assessment teams deploy (Reuters)
- Maliki rules out national emergency govt (AFP)
- Koch to Start EU Power Trading as It Plans LNG Expansion (BBG)
- Obama Said to Ready Sanctions on Russian Industries (BBG)
- Ghana Sends Plane With $3 Million to Calm World Cup Team (BBG)
- Ghana’s First Hedge Fund Planned by Ex-Exchange Regulator (BBG)
- SEC Is Gearing Up to Focus on Ratings Firms (WSJ)
- Abe Declares Deflation End as Growth Plan Confronts Skeptics (BBG)
- The Kerry Konfusion Kontinues: Kerry urges Kurds to save Iraq from collapse (Reuters)
- Abe Unveils Japan’s New Growth Strategy (WSJ)
- Because the recovery: Avon to Cut 600 Jobs as CEO McCoy Seeks to Trim Expenses (BBG)
- Iraqi Parties Pressure Prime Minister Nouri al-Maliki to Step Down (WSJ)
- Ukraine Rebels Call Cease-Fire to Match Government Truce (BBG)
- IRS accused of obstruction over lost emails in Tea Party affair (Reuters)
- IRS chief scorched as 'liar' (WND)
- Big Investors Missed Stock Rally (WSJ)
- U.K. Jury Finds Coulson Guilty of Conspiracy to Intercept Phone Voice-Mail Messages (WSJ)
- HSBC to halve countries served by private bank, sells assets (Reuters)
- Bond Market Has $900 Billion Mom-and-Pop Problem When Rates Rise (BBG)
There has been no forward progress in US hourly compensation over the last half century. How it is possible that the world’s richest and most technologically advanced economy ever, operating during a 50-year period that included the invention of the Internet … the triumph of capitalism in China and Russia … and a landing on the moon – that is the most bountiful half-century in human history – failed to make its most important component parts better off. And at the bedrock level, we find the explanation: Fed policies are dangerous claptrap.
A country dies slowly. Those living during the decline of Rome were likely unaware that anything was happening. The decline took over a couple of hundred years. Anyone living during the decline only saw a small part of what was happening and likely never noticed it as anything other than ordinary. Countries don’t have genetically determined life spans. Nor do they die quickly, unless the cataclysm of some great war does them in. Even in such extreme cases, there are usually warning signs, which are more obvious in hindsight than at the time. Few citizens of a dying nation recognize the signs. Most are too busy trying to live their lives, sometimes not an easy task. Most cannot conceive of the death of a nation. But signs or symptoms precede death for a country often as they do for a person...
The “war on compassion” when it comes to the homeless in America continues. There are many reasons we find this topic to be of such tremendous importance. First and foremost, we think that if we want to see how the state and crony corporate status quo will treat everyone in the future, all you have to do is look at how the homeless are being “dealt with.” Secondly, random groups feeding the homeless in various venues is a great example of decentralized compassion. Political power hates decentralization and is quite intentionally trying to corral the homeless into the centralized bureaucratic channels over which it has total control. So this isn’t merely a humanitarian issue, it is also a front line battle in the key war of our time: Decentralization vs. Centralization.
- Tea Party struggles to repeat Cantor-style shock in Tennessee (Reuters)
- Iran Deploys Forces to Fight al Qaeda-Inspired Militants in Iraq (WSJ)
- Oil Rallies as Militant Advance in Iraq Threatens Crude (BBG)
- Gold Set for First Back-to-Back Weekly Gain Since April (BBG)
- Hedge Funds Get Stung by Slow Markets (WSJ)
- Sterling nears 5-year high after Carney speech (FT)
- Britain Warns Boom in Real-Estate Prices Threatens Economy (WSJ)
- East Europe Leaders Urge EU Unity to Counter Russia (BBG)
- Formula One Said to Be Valued at $8 Billion as Malone Seeks Stake (BBG)
- Dumb and dumber: Abe Plans Company Tax Cut in 2015 as Kuroda Warns on Budget (BBG)