‘We’re run by the Pentagon, we’re run by Madison Avenue, we’re run by television, and as long as we accept those things and don’t revolt we’ll have to go along with the stream to the eventual avalanche…. As long as we go out and buy stuff, we’re at their mercy… We all live in a little Village. Your Village may be different from other people’s Villages, but we are all prisoners.’ – Patrick McGoohan First broadcast in Great Britain 50 years ago, The Prisoner – a dystopian television series described as ‘James Bond meets George Orwell filtered through Franz Kafka’ – confronted societal themes that are still relevant today: the rise of a police state, the freedom of the individual, round-the-clock surveillance, the corruption of government, totalitarianism, weaponization, group think, mass marketing, and the tendency of humankind to meekly accept their lot in life as a prisoner in a prison of their own making. Perhaps the best visual debate ever on individuality and freedom, The Prisoner (17 episodes in all) centers around a British secret agent who abruptly resigns only to find himself imprisoned, monitored by militarized drones, and interrogated in a mysterious, self-contained, cosmopolitan, seemingly tranquil retirement community known only as the Village. The Village is an idyllic setting with parks and green fields, recreational activities and even a butler.
Along with the student loan debt bubble and other major financial factors, the looming pensions crisis is bound to be the death of us all. Because it’s based on a future promise to pay, it has long been a benefit dangled to solve strikes and union disputes – because, in the end, it is just more debt, whether private or public. With tens of trillions in unfunded liabilities, the weight of an avalanche remains dangling over our heads. An aging population is cashing in on needed retirement benefits while the younger generations must support multiples that are unsustainable financially. Somewhere between the retiree that needs clothing, food and lodging, and the bankruptcy of cities and state governments is the makings of the next economic crisis. via AgainstCronyCapitalism.org:
This post was published at shtfplan on March 15th, 2017.
Blind to Crony Socialism Whenever a failed CEO is fired with a cushy payoff, the outrage is swift and voluminous. The liberal press usually misrepresents this as a hypocritical ‘jobs for the boys’ program within the capitalist class. In reality, the payoffs are almost always contractual obligations, often for deferred compensation, that the companies vigorously try to avoid. Believe me. I’ve been on both sides of this kind of dispute (except, of course, for the ‘failed’ bit). People are usually struck by the seeming injustice of CEOs running companies into the ground and then getting paid obscene amounts in the form of ‘golden parachute’ type good-bye presents. Often there is no other way to get rid of a bad CEO though – if his or her employment contract guarantees a large termination benefit, the company may have little choice in the matter. As a rule, private shareholders are bearing the cost of such transactions, and they are in this position voluntarily (after all, they could sell their shares or vote against generous CEO payment packages at shareholder meetings). We realize of course that in the age of crony socialism, one usually has to judge such things carefully on a case by case basis. Still, it is a far cry from the misuse of taxpayer funds, which are appropriated by coercion and offer those bearing the costs no opportunity to ‘opt out’. So where’s the liberal outrage with a story like the pension swindle in El Monte, California? This is about a dying town, with a per capita income of $10,316 and a quarter of its population below the poverty line, that is paying a pension to one of its retired (at the age of 58) city managers of more than $250,000 per year. Adjusted for inflation. With medical for him and his wife. And survivorship benefits. And to which he contributed nothing. Or another retired city manager who collects $216,000 per year, allowing him to ‘take some things off his bucket list’ such as golfing at the Old Course at St Andrews. And it looks like the public is paying for more than just green fees. His retirement came shortly after he was swept up in an anti-prostitution sting operation.
This post was published at Acting-Man on January 12, 2017.
El Monte, California is a city of roughly 100,000 residents in East Los Angeles, many of whom struggle to make ends meet with a median household income of ~$39,000 and nearly 25% of people living below the poverty line. But while most of the people of El Monte struggle to meet monthly expenses, the city’s public employees are living the high life courtesy of one of the most egregious taxpayer funded pension plans in the country. Just ask the retired City Manager, James Mussenden, who told the LA Times that he gets paid $216,000 per year in retirement to tour the world on extravagant golf trips. The retired city manager of El Monte collects more than $216,000 a year, plus cost-of-living increases and fully paid health insurance. ‘It’s giving me an opportunity to do a number of things I didn’t get to do when I was younger, like travel to Europe, take some things off my bucket list,’ Mussenden, 66, said recently. He even flew to Scotland to play the famed Old Course at St. Andrews, a mecca for golf enthusiasts. Mussenden recognizes that few Americans have pensions anymore – least of all the El Monte taxpayers who are funding his retirement. So while he enjoys his monthly retirement check, he’s discreet about it. ‘The guys I play golf with, they get very angry about my pension because they don’t have anything like it,’ he said.
This post was published at Zero Hedge on Jan 1, 2017.
The three most hated modern American politicians were LBJ, Nixon, and Hillary. They were driven out of power by their enemies. Nixon was long called Tricky Dick by Democrats. The Democrats hated him as they hated no other nationally famous Republican. Speaker of the House Sam Rayburn at the Democratic National Convention in 1960 persuaded LBJ to take the Vice Presidency slot under Kennedy, whom LBJ despised almost as much as he despised his brother Bobby, in order to defeat Nixon. He ate a big mud sandwich in the name of Party unity against Nixon. Johnson quit in March 1968 before he was driven out of power by the Republicans in November. The anti-war Democrats had deserted him in the primaries. Nixon was driven out of power in 1974 by a small contingent of Republicans in Congress, who went to him and said he would be impeached by the House and convicted by the Senate. Hillary was defeated in full public view by the first man with zero political or government-employment experience to win the Presidency. All three went into forced retirement. THE HATED NIXON. The conservatives trusted Nixon in 1948 when Nixon trusted Whittaker Chambers. Nixon was a first-term Congressman from California. In 1948, he was the member of a House Committee on UnAmerican Activities. (Note: there was never a House UnAmerican Activities Committee. “HUAC” was a phenomenally successful acronym imposed by the Left onto a Committee that should have had “HCUA” as its acronym.) HCUA was investigating Communists in government. President Truman had issued an executive order in 1947 to require a loyalty oath for federal employees. This order was an extension of Truman’s growing surveillance state. His executive order and Eisenhower’s 1953 extension of it were repealed by Bill Clinton in 1998. Chambers, an editor at Time (and the translator of Bambi), testified to the committee that the Roosevelt Administration’s Alger Hiss was a Communist. Hiss had been an advisor at the Yalta Conference of February 1945. Then Chambers escalated his accusation in 1949: Hiss had been an informant to the USSR — in short, a spy. Chambers was ridiculed by the Establishment. Yet it was all true. Hiss went to prison for perjury in 1950; the statute of limitations against espionage had run out.
This post was published at Gary North on December 30, 2016.
After the Federal Reserve decided to leave interest rates unchanged, bond guru Bill Gross told CNBC he was barely able to speak. ‘I’m choked with emotion and hardly able to speak,’ the portfolio manager at Janus Capital Management said in an interview with CNBC’s ‘Power Lunch.’ ‘After hawkish talk at Jackson Hole from [Fed Chair] Yellen and [Vice Chair] Stan Fischer, who even said there’d be two hikes in 2016, they’ve chosen to defer once more a necessary hike to normalize short-term interest rates and provide savers, in my view, with at least a bit of thin gruel to work with to provide for education, retirement and health-care needs.’ He believes the contradiction between what Fed officials have said leading up to the meeting and the outcome of the gathering is leaving investors ‘very confused.’
Susanne Brasset has $5 in her bank account. She’s scared to save more. Brasset, a 39-year-old freelance photographer in Denver, has cerebral palsy, which limits her ability to work. To pay her bills, she relies on Social Security, which she gets because of her disability. But the program monitors her bank accounts to make sure she’s not putting away too much money. With more than a few thousand in the bank, she’d be disqualified for the program, as well as for Medicaid and other crucial benefits. Unable to plan for the future, Brasset said her finances put her in a ‘constant state of anxiety and fear.’ ‘There’s more money I could be making,’ she said. ‘But I’m discouraged by all the rules I need to adhere to.’ Brasset is caught in a bind familiar to many people with disabilities. Their well-being relies on government benefit programs, but these programs impose strict limits on how much recipients can earn and save. Rules intended to bar freeloaders end up keeping disabled people in a permanent state of poverty, unable to put money away for emergencies, retirement, and other life goals.
It was only a few weeks ago that I told you about the government’s annual report on Social Security. It was a veritable death sentence for the program. The Board of Trustees for Social Security (which includes the US Treasury Secretary) wrote that major parts of the program have already run out of money, and the rest of Social Security will run out of money in the next decade. Amazing. Even Social Security knows that they’re bankrupt and unable to keep their promises to taxpayers. This is going to cause an unbelievable crisis in the United States. Think about it: half of Americans have ZERO retirement savings and will be fully dependent on the Social Security once they retire. But by the time their retirement comes, the program will have likely already run out of money. Well, the government has figured out a solution. And it’s genius. Two weeks ago a new bill was introduced on the floor of Congress that, just like all the other really dangerous legislation, i.e. USA PATRIOT Act, this bill has a catchy acronym. It’s called the SAVE UP Accounts Act, which stands for. . .
The Japanese population of Japan, the world’s fastest-aging major nation, fell the most on record as the number of deaths outweighed those born in the country. The number of Japanese living in the country fell for a seventh straight year, down by 271,834 to 125.9 million people as of Jan 1., according to datareleased Wednesday. The figures, first compiled in 1968, showed those living in one of the three biggest urban areas (around Tokyo, Nagoya, and Kansai) rose to a record, while the number of foreigners living in the immigration-averse nation rose, mostly in large cities.
Like all employees of the FBI, James Comey lives off the sweat of the American taxpayer. His large salary, upon retirement, will be converted into a very generous pension. Like most federal employees in a high ranking position like his, Comey continues to look forward to decades of living at a standard of living far above what is experienced by ordinary people in the private sector. To maintain this life of comfort, all he had to do was agree to look the other way as a powerful politician clearly – by Comey’s own admission – broke federal law. Naturally, this same treatment would never be afforded to an ordinary taxpayer, who would likely be looking at years in federal prison for offenses similar to that which Hillary Clinton has apparently committed. Moreover, Comey even went out of his way to do his best to ensure no federal prosecutor would proceed with charges when he claimed that “no reasonable prosecutor” would proceed with charges. It wasn’t enough for Comey to simply not recommend charges. He had to pre-emptively condemn any prosecutor who might proceed with charges. Some have claimed that Comey was forced to cave to Obama administration pressure in order to protect his family. Of course, Comey could have resigned his position rather than take a position he regarded as unethical. Then the task of clearing Clinton would have fallen to Comey’s successor. There are precedents for this. When ordered by Nixon to fire the special prosecutor in the Watergate scandal, Attorney General Elliot Richardson resigned rather than do what the president mandated. Comey could have done the same, but then he would have had to give up some of his comforts and privileges. To find work, he might have had to move to an unexciting place like Indianapolis or Albuquerque.
THE MAN WHO shot over 100 people and killed 49 in an Orlando nightclub Saturday worked at a retirement home as a security guard for G4S – a giant, often controversial global contracting corporation that provides mercenary forces, prison guards and security services. G4S is one of the world’s largest private security companies, with more than 620,000 employees and a presence in over 100 countries. G4S confirmed in a statement that Omar Mateen had worked for the company since 2007, and said it was ‘shocked and saddened’ by the shooting. A later statement said that Mateen was subject to ‘detailed company screening’ in 2007 and again in 2013, ‘with no adverse findings.’ But one of Mateen’s former coworkers told the New York Times that he ‘saw it coming,’ that Mateen ‘talked about killing people all the time,’ and that he was ‘always angry, sweating, just angry at the world.’ The coworker, who said he quit his job due to harassment from Mateen, explained that he ‘complained multiple times’ to G4S, because Mateen didn’t like ‘blacks, women, lesbians, and Jews.’ Yet G4S continued to employ Mateen, who was able to obtain a ‘security officer’ license to buy firearms in addition to his state license and conceal carry permit.
The U. S. has approximately $80 trillion of unfunded liabilities for social security, medicare and other entitlements sitting atop a work force that is rapidly aging and an economy that is lapsing into stasis. Yet in the midst of a campaign diatribe about Donald Trump’s alleged lack of preparation for the highest office in the land, the current White House occupant proved that in nearly eight years he has learned exactly nothing about the nation’s abysmal fiscal plight. ‘And not only do we need to strengthen its long-term health, it’s time we finally made Social Security more generous and increased its benefits so that today’s retirees and future generations get the dignified retirement that they’ve earned,’ Obama said in an economic call to arms in Elkhart, Indiana. Don’t bother to say he must be kidding. After all, our President also claims the disaster known as Obamacare is a roaring success; and that he has created 14 million jobs – -when, in fact, there are fewer full-time, full-pay ‘breadwinner jobs’ in America today than when Bill Clinton scuttled out of the White House 16 years ago. Still, your don’t have to be even a know nothing about baby-boom demographics to recognize that the words ‘increase’ and ‘social security benefits’ will never again inhabit the same universe. To wit, there are about 50 million persons 65 or over at present, but this number will rise to 80 million by around 2040 and nearly 100 million a decade or two thereafter.
Just over a month ago, we reported that in addition to Georgie, Arkansas, Michigan and Oklahoma, the largest US health insurer UnitedHealthcare announced it would also depart the following “Affordable” Care Act state exchanges: Connecticut, North Carolina; Nebraska, Pennsylvania and Texas. That, however, was just a preview of what’s to come, because on April 19, UnitedHealthcare made its divorce with Obamacare complete when it announced plans to exit most of the Affordable Care Act state exchanges where it currently operates by 2017. And earlier today, United continued executing on this warning, when it first announced that it would stop offering Affordable Care Act plans in Illinois in 2017 followed promptly by news UnitedHealthcare was abandoning California at the end of the year as well. As PBS reports, while United announced in April it was dropping out of all but a handful of 34 health insurance marketplaces it participated in, the company had not discussed its plans in California. UnitedHealth’s pullout also affects individual policies sold outside the Covered California exchange, which will remain in effect until the end of December. ‘United is pulling out of California’s individual market including Covered California in 2017,’ said Amy Palmer, a spokeswoman for the state exchange. It’s expected that UnitedHealth will continue offering coverage to employers in California and to government workers and their families through the California Public Employees’ Retirement System. Amy Palmer, a spokeswoman for the state exchange said UnitedHealthcare policyholders will know their options for 2017 coverage when health plans and rates for next year are announced in July. It is safe to say any “options” will not be cheap.
This post was published at Zero Hedge on May 31, 2016.
In the not too distant past the United States had a vibrant middle class. Prosperity for most families was the rule rather than the exception. This didn’t happen by accident or some odd twist of luck. It happened because as a country we setup a foundation that valued a robust middle class. The Great Depression had taught us some profound economic lessons and humility. But like a car that is neglected and falls into disrepair, the middle class is now a minority group in this country. We tend to romanticize the past but in this case there is some truth to this view of history. Going to college is now putting millions of Americans into incredible levels of debt. Buying a home is moving further out of arms reach for most working families. And the notion of a secure retirement is turning out to be more of a fairy tale than reality. Once upon a time, the U. S. had a majority living in the middle class. Where does the middle class go from here? The middle class used to represent economic stability. For anyone with the desire to work hard providing economic stability was doable. That is no longer the case. And this isn’t some relentless free market capitalism that we are seeing. It is financial cronyism in many cases. The public is pushed into a narrative that discusses austerity and financial belt tightening. Then you have financial institutions using the government as a piggybank and gaming the system – bad bets they win, good bets they win. The losses are charged onto the public’s credit card. Privatizing the gains, socializing the losses.
This post was published at MyBudget360 on May 16, 2016.
The New York Times has highlighted the use of made-up financial metrics that have resulted in ‘phony-baloney financial reports.’ However, even the New York Times Company can’t resist using a few non-GAAP numbers each quarter to present its earnings in a flattering way. In its press release accompanying first-quarter earnings The New York Times Company says that the measures ‘provide useful information to investors.’ The New York Times NYT, -1.65% does what many other companies do and creates new metrics that ignore the impact of non-cash expenses like depreciation and amortization and subtract expenses that are one-time, non-recurring costs. The New York Times Company’s ‘adjusted diluted earnings per share’ metric eliminates costs associated with employee layoffs and contract buyouts, even though they have been occurring with some regularity the last few years. The New York Times also presents a non-GAAP operating costs figure that deducts severance and non-operating retirement-related costs as well as depreciation, amortization and charges resulting from the withdrawal from multiemployer pension plans. Pulling out all those expenses helps creates a profit instead of a loss. During a period of declining print advertising and subscription revenues, recurring layoffs, and significant challenges in making its digital initiatives profitable, these adjustments have certainly helped make the New York Times numbers appear to look better.
Yesterday, speaking before a rally audience in Rhode Island, Donald Trump called the coordination of election strategy between presidential candidates Senator Ted Cruz and Governor John Kasich ‘collusion.’ (See video clip below.) He then made the following off the wall statement: ‘If you collude in business, or if you collude in the stock market, they put you in jail.’ That statement is profoundly important on multiple levels. For one, it raises the question of just how closely Donald Trump has followed the serial crimes of Wall Street and the Justice Department’s failure to deliver jail time. Despite holding a degree from the Wharton School, perhaps Trump thumbs through the real estate section of the New York Times and skips over the Wall Street news. Maybe Trump is entrenched in an illusion that it’s his charisma and star quality that is responsible for his meteoric rise in the primary races rather than a citizenry outraged that one percenters on Wall Street created the greatest financial crash since the Great Depression through fraud, deceit, cooked books, and yes, lots of collusion, and not oneof the executives of these firms has seen the inside of the Hoosegow. A retired, veteran trial lawyer at the Securities and Exchange Commission, James Kidney, is one such outraged citizen. In April 2014, Kidney set off pandemonium inside the SEC by giving an interview with Bloomberg News and releasing the full text of his March 27 retirement speech. In the speech, Kidney excoriated the SEC’s leadership for policing ‘the broken windows on the street level’ while ignoring the ‘penthouse floors.’ Kidney linked the demoralization at the agency to its revolving door to Wall Street since the most talented and ambitious ‘see no place to go in the agency and eventually decide they are just going to get their own ticket to a law firm or corporate job punched.’ (Retirement Remarks of SEC Attorney, James Kidney (Full Text)
New numbers show that the 7,499 ‘highly compensated,’ six-figure school administrator/teacher retirees cost IL taxpayers nearly $1 billion per year. But in just six years, the problem of six-figure pensions will be three-times worse. In 2014 I wrote in Forbes about a pair of union lobbyists who substitute taught for one-day in the public schools and then started collecting over $1 million of lifetime public ‘teacher’ pension payout – despite a state law expressly designed to stop them. Now, after recent Illinois Supreme Court decisions confirming that pension benefits are constitutionally guaranteed (including the pensions for the pair of union lobbyists above), the public employee gravy train is running faster than ever. This week, our organization at OpenTheBooks.com debuted our interactive info mapping platform giving context to the 7,499 retired Illinois educators who pulled-down a pension of $100,000 or more. These retirees cost Illinois taxpayers $900 million (2015). Individually, these pension millionaires contributed so little to the system that they ‘broke-even’ on their ‘cost-basis’ within the first 20-months of retirement. It takes the equivalent of all income taxes paid by 330,177 individual Illinois taxpayers to fund the nearly $1 billion for the 7,499 ‘highly compensated’ six-figure retirees. By any estimation, this is unsustainable. Illinois only has 6.2 million people with jobs.
More than a quarter of a million active and retired truckers and their families could soon see their pension benefits severely cut – even though their pension fund is still years away from running out of money. Within the next few weeks, the Treasury Department is expected to announce a crucial decision on whether it will approve reductions to one of the country’s largest multi-employer pension plans. The potential cuts are possible under legislation passed by Congressin 2014 that for the first time allowed financially distressed multi-employer plans to reduce benefits for retirees if it would improve the solvency of the fund. The law weakened federal protections that for more than 40 years shielded one of the last remaining pillars that workers could rely on for financial security in retirement. For many workers, the promise of a guaranteed income stream for life – a benefit now nearly extinct for younger generations – was at times strong enough to convince them to sacrifice pay raises or other job opportunities. But after decades of challenges that left many pension funds in tough financial straits, some people are learning in retirement that the promises made to them may have to be broken. The Central States Pension Fund, which handles the retirement benefits for current and former Teamster union truck drivers across various states including Texas, Michigan, Wisconsin, Missouri, New York and Minnesota, was the first plan to apply for reductions under the new law.
If nobody will hire you, start your own enterprise to fill scarcities and create value in your community. Workers of all ages are caught in a vice. Older workers need to keep working longer in an economy which values younger workers (and their cheaper healthcare premiums). Younger workers are caught in the vice of “you don’t have enough experience” and “how do I get experience if nobody will hire me?” Middle-aged workers are caught between the enormous Millennial generation seeking better jobs and the equally numerous baby Boom generation seeking to work a few more years to offset their interest-starved retirement funds. (Thank you, predatory and rapacious Federal Reserve for siphoning all our retirement fund interest to your cronies the Too Big to Fail Banks.)
There has been a lot of coverage lately over whether stock buybacks are beneficial to investors. First, let’s recap why companies repurchase their own shares, and then present arguments for and against the practice. Finally, we’ll list U. S. companies that are just throwing away their (and possibly, your) money. Publicly traded companies issue additional shares to raise cash to fund projects or acquisitions, or to award employees with stock. Issuing shares dilutes the share count, which means if you hold shares, your percentage ownership of the company declines. Many companies repurchase enough shares in the open market to make up for the dilution caused by the issuance of new shares. Some companies go further, buying back even more shares to lower the share count, which boosts earnings per share. Arguments for buybacks The biggest argument in favor of net buybacks is that they boost earnings per share, something that can translate to a higher share price. After a board of directors authorizes a buyback plan, a company’s management may accelerate or decelerate the purchases, depending on cash flow or how the shares are trading in the open market. If a company is performing well – sales and profits are rising, for example – buybacks can have a wonderful effect on the stock price. Another argument in favor of buybacks is that they are more ‘tax efficient’ than dividends, unless you are holding the shares in a tax-deferred retirement account. If you receive dividends, you may have to pay taxes on them. If your shares rise in value, you pay no tax unless you sell them for a profit.