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.
Here’s the latest uncertainty facing China’s currency: sky high house prices.
A runaway boom in the largest cities will push investors to look for cheaper alternatives overseas, draining money out of China and putting downward pressure on the yuan in the process, according to analysis by Harrison Hu, Chief Greater China Economist at Royal Bank of Scotland Group Plc. in Singapore.
An ‘enlarged differential between domestic and foreign asset prices will lead to capital outflows and depreciation, until parity is restored,’ Hu wrote in a note. He said that the 30 percent year-on-year price gain in Tier 1 and leading Tier 2 cities implies a 25 percent rise in dollar terms, which far outpaces the 5 percent gain in major U. S. cities. That ratio is here in red:
This post was published at David Stockmans Contra Corner on September 26, 2016.
Besides handing down the vote to Leave the EU, the June 23rd Brexit referendum also demonstrated that the UK is a house divided. The vote itself was fairly narrow: 52% vs. 48%. Northern Ireland (NI), Scotland and London had clear majorities for Remain, but much of the rest of England were strongly for Leave. There was also a notable generational gap, with younger people broadly in favor of Remain and older people broadly in favor of Leave.
It is interesting too that the Leave vote was strong in much of the North of England, which is a traditional Labour heartland. The strength of the Leave vote in such staunch Labour areas illustrates how much senior Labourites were out of touch with their own people. The same can be to a lesser extent about many senior Conservatives too: they too misjudged the strength of anti-EU sentiment in their own ranks. Political leaders were so busy lecturing their supporters that they failed to listen to them. This theme of an out-of-touch political elite will, I believe, be the key factor across the continent as movements gather pace to follow the Brits and the EU now unravels. One thing though is for sure: it will not be pleasant.
The financial fallout was shattering. The day after the referendum, sterling fell by over 10%, the FTSE by 7.2%, the DAX by 7%, the CAC by 10% and the Nikkei 225 by 7.9%. It was reported that the 400 richest investors (who had all bet on Remain, including George Soros) lost over $127 billion, and that total market losses were almost $4 trillion. European bank stocks were positively hammered: they fell by over 15%. The VIX, the Chicago Board Options Exchange Volatility Index – usually known as the ‘Fear Index’ – jumped by 49%. The next trading day, Monday 27 June, the S&P rating agency downgraded the UK’s credit rating by two notches from ‘AAA’ to ‘AA’.
This post was published at David Stockmans Contra Corner on July 5, 2016.
Let us separate matters. We face a political upheaval of the first order, but this is a necessary catharsis. Governments come and go. So do political parties.
We face a much more serious constitutional crisis. It is why some of us want a national unity government, keenly alert to the interests of Scotland and Northern Ireland.
As Professor Kevin O’Rourke from All Souls College argues here, most Leavers waltzed into Brexit with scarcely a moment’s thought for trauma inflicted on both sides of the Irish border. This carelessness must be rectified immediately.
What we do not yet face is a global financial crisis or a ‘Lehman moment’. The world’s central banks were ready for Brexit and have acted in unison.
The S&P 500 index of Wall Street stocks has shrugged off the vote. It is 13pc above its lows in February, when we really did have a nasty fright across the world.
Jerome Schneider from Pimco says there have been none of the tell-tale signs of systemic seizure. Rates on commercial paper have hardly moved. The Libor/OIS spread – the stress gauge – has been well-behaved. So have collateralised funding markets.
This post was published at David Stockmans Contra Corner by Ambrose Evans-Pritchard The Telegraph – June 30, 2016.
The risk of a default chain reaction is looming over the $3.6 trillion market for wealth management products in China.
WMPs, which traditionally funneled money from Chinese individuals into assets from corporate bonds to stocks and derivatives, are now increasingly investing in each other. Such holdings may have swelled to as much as 2.6 trillion yuan ($396 billion) last year, based on estimates from Autonomous Research this month.
The trend has China watchers worried. For starters, it means that bad investments by one WMP could infect others, causing a loss of confidence in products that play an important role in bank funding. It also suggests WMPs are struggling to find enough good assets to meet their return targets. In the event of widespread losses, cross-ownership will create more uncertainty over who’s vulnerable – a key source of panic in 2008 when soured U. S. mortgage securities triggered a global financial crisis.
Those concerns have become more pressing this year after at least 10 Chinese companies defaulted on onshore bonds, the Shanghai Composite Index sank 20 percent and China’s economy showed few signs of recovery from the weakest expansion in a quarter century.
‘There’s abundant liquidity in the financial system, but a scarcity of high-yielding assets to invest in,’ said Harrison Hu, the chief Greater China economist at Royal Bank of Scotland Plc in Singapore. ‘All the risks are accumulating in an overcrowded financial system.’
This post was published at David Stockmans Contra Corner on May 30, 2016.
The most significant challenge of our times relates to the ongoing theft of society’s wealth across the board by a very small group of people known as ‘oligarchs,’ the ‘super rich,’ the ‘overclass,’ etc. Whatever you want to call them, this group is hellbent on using political cronyism in faux democracies across the global to aggregate all the world’s wealth and power, while concurrently implementing an Orwellian surveillance state spy-grid in order to protect their fiefdoms once the plebs finally become restless. This much we know.
While the above-mentioned clash between oligarchs and the demoralized and confused citizenry (a significant percentage of this class doesn’t even know the clash is happening) will be the defining battle of my lifetime, it is extremely important to understand another conflict that is almost equally important. This is the widening division between generations, which I believe will get quite ugly in the next severe economic downturn beginning sometime next year.
The reason this conflict is much more nuanced, is because millennials don’t dislike their parents, and baby boomers aren’t actively trying to harm their children’s future. Rather, both generations are going to experience a gigantic clash in the years ahead as these distinct generations’ collectively look to secure their own futures. For the boomers, this will quite singularly mean securing a comfortable retirement. For the millennials, it will mean a professional and family life that feels rewarding, higher standards of living, and political, cultural and economic self-determination. Notably, millennials have realized none of these things, due in large part to baby boomers holding firmly onto the reigns of political power and bailing-out their financial portfolios whenever they are threatened, and at any cost.
As millennials come into their own and realize how fucked they are, they are becoming more and more vocal. Thus, we see increased youth movements all over the world demanding self-determination, such as the massive gathering in Hong Kong known as #OccupyCentral. We also saw clear signs of generational fracturing in the recent Scottish independence referendum, which I discussed in the post, Fear and Loathing in Scotland – Why the NO’s Won and Lessons Learned from the Vote, in which I noted:
This post was published at Liberty Blitzkrieg on Oct 3, 2014.
From the Editors:
Today Scotland votes on a referendum concerning political independence from the United Kingdom.
For libertarians, the politics surrounding both sides of the vote are suspicious. The globalist banking class, ever fearful of decentralization of power, warns that Scotland needs Westminster’s economic assistance (read: welfare), Westminster’s military might, and Westminster’s currency. The largely socialist Scots, meanwhile, argue for a more ‘egalitarian’ society administered by Holyrood and a new alliance with their more enlightened fellow travelers in Brussels – leaving one master for another.
As always, libertarians should focus on first principles. Murray Rothbard’s 1993 essay,’Nations by Consent: Decomposing the Nation-State,’ does just that.
Rothbard asks the correct questions: What is a nation? What makes a nation legitimate? Are nation-states needed for collective security? When is secession allowed? Should open borders and open immigration be allowed? How should citizenship and voting rights be conferred? How would a completely private, anarcho-capitalist country operate?
These are the questions we must ask and answer as we argue against the state, against central banks, and against an increasingly global crony political class.
Nations By Consent: Decomposing the Nation-Sate
Libertarians tend to focus on two important units of analysis: the individual and the state. And yet, one of the most dramatic and significant events of our time has been the re-emergence – with a bang – in the last five years of a third and much-neglected aspect of the real world, the ‘nation.’ When the ‘nation’ has been thought of at all, it usually comes attached to the state, as in the common word, ‘the nation-state,’ but this concept takes a particular development of recent centuries and elaborates it into a universal maxim. In the last five years, however, we have seen, as a corollary of the collapse of communism in the Soviet Union and in Eastern Europe, a vivid and startlingly swift decomposition of the centralized State or alleged nation-State into its constituent nationalities. The genuine nation, or nationality, has made a dramatic reappearance on the world stage.
This post was published at Ludwig von Mises Institute on September 18, 2014.