Muni-Implosion
QUESTION: Marty,
If this discussion is happening in Newport Beach, CA, one of the richest cities in the US, how can any US city survive the pension crisis?
ANSWER: Nobody can. This system of unfunded pensions just assuming they will always be able to just raise taxes is collapsing. The morons didn’t do the math. If you retire 100 government workers, you have to replace them. Now you are paying for the retired folks and their replacements. The cost of government rises exponentially. This is why cities will move into bankruptcy to escape pension liabilities and then you have workers who will not work seeing they too will get screwed. That is the vortex that took down Rome. So get your hip-boots ready. A lot of shit is going to fill the streets and airwaves. Watch what happens after 2015.75. We are headed into a muni-implosion. Get rid of muni-bonds. It will become a contagion whereas they will all be painted with the same brush.
QE or Austerity? Is there a 3rd Alternative?
QUESTION:
In your writings you seem to be both against QE and against Austerity. What then is the third way? How do we get out of this high debt, high deficit, low growth cycle without using either of these methods or a collapse and reboot?
On a side note I was curious if you were familiar with … and his work on predicting bubbles and possibly altering their course and what what you thought of it?
Sincerely,
T.U.
ANSWER: Neither QE nor austerity will get us out of the crisis. We are preparing the Solution. There is the Sovereign Debt Crisis conference we held in Philadelphia that a DVD is available. This cannot be solved by either tool. We need a debt restructuring on a major scale – a structured bankruptcy.
I do not like really to comment on other people’s work. Suffice it to say, the approach is too domestic and assumes bubbles are created internally when in fact they are the product of international capital inflows. The person you mention predicted a bubble as of May 2013. I think he is off on that one as evidenced by the market. Bubbles require a spike high like you see in 1929, 2000, or Tokyo 1989. Without that Phase-Transition spike high, there can be no bubble.
China’s Reform Push for 2020
China has vowed to push toward free markets and to allow them to take a more dominant role in developing the economy – its reform for 2020. When I was invited by the Central Bank of China back in 1997 and was given a tour of a major facility where they were monitoring everything that moved price wise in the country, it became clear at that time that China would take off like never before. While the West is clamping down in Europe and America in anticipation of economic hard times ahead, China is moving in the opposite direction toward free markets while the West is moving closer and closer toward communism.
There is little doubt that China, despite its ups and downs, will become the Financial Capital of the World. That title is moving back to Asia as it historically migrates globally. This is just part of the overall major business cycle..
Rise of Dictatorship in Germany
Germany is turning seriously against Democracy at every chance it gets. It is now flirting with the Dictatorship and its State Police are to monitor the people for signs of disposition. Yes, a new draft of the CDU-CSU has revealed that the federal German government is promoting the transformation of the German legal system to justify NSA style massive spying on its own citizens not that far from the East German Stasi. The basis for a comprehensive surveillance of citizens is the final stages of every state when it enters the fall of its economy as suspicion rises out of fear that the people are dissatisfied. The proposal allows for a conviction, in which the right to free speech is destroyed. Germany is thus flirting with punishing anyone who dissents from the desires of government – the classic dictatorship. syndrome.This is much the same as the Venetian Mouth of Truth and what I experienced myself in East Germany when I went behind the Berlin Wall.
Swiss Looking to Limit Executive Pay
The Swiss are known for their frugality. When it comes to executive pay, they are voting on executive pay being limited to 12 times that of the lowest paid employee. This will be a first step in this direction as a matter of law. It reflects the rising tide of socialism as we enter the end of the Private Wave in 2032 with the last two business cycles (8.6) on the horizon.
UBS in Switzerland is even making its employees pay now for coffee. The bank has blown money out every crack it could find so now it is down to making employees pay for coffee. Sometimes you can be just penny-wise and pound-foolish as they say..
US Will Pass Russia by 2015 as Top Oil Producer
It is reported that the U.S. will surpass Russia as the world’s top oil producer by 2015, and be close to energy self-sufficiency in the next two decades. This is having a major impact in politics as the Saudis start to worry about losing influence in the wake of the Syrian debacle.. There is a production rise in output from shale formations that we have been able to confirm. (see Financial Post)
Google Wins Searchable Books
Google won in the SDNY and may now make millions of copyrighted scanned books searchable on the Internet. A New York judge Denny Chin of the SDNY dismissed a lawsuit from the U.S. Authors’ Guild, seeking money simply from authors because their books are searchable. Quiet honestly, digitization of works is furthering knowledge and i myself have been taken to a book by Google and then bought it whereas I would never have done so otherwise. Here is one decision I actually agree with out the SDNY. Of course it did not involve government interest so it was rational and fair.
Global Market Watch for Close 11-14-2013
The Global Market Watch has been posted for the close of November 14, 2013.
Merkel rejects referendums in Germany
The Crisis in DEMOCRACY Continues. The European politicians are scared to death to allow citizens to votes. Angela Merkel has rejected any more direct referendums in Germany. Merkel is outright against any further democracy in Europe. This is the real reality. The end of democratic processes that goes hand in hand with the final stages of economic meltdown.
Another Muni Bankruptcy
A possible third California City, Desert Hot Springs, has announced that it may seek bankruptcy protection since it will run out of money come March. This would be the third city in that state along with San Bernardino and Stockton to seek court protection from creditors. This is how pensions will be renegotiated at the municipal level where they cannot just print money like the Feds.