The passage of a landmark bill to address Illinois’ worst-in-the-nation pension crisis means the yearslong fight over how to address the massive shortfall now likely shifts to the courts, where its fate — and much-needed relief for the financially troubled state — remains highly uncertain.
Lawmakers approved a measure Tuesday to eliminate the $100 billion unfunded pension liability by cutting benefits for workers and retirees. Public-employee unions promised quick legal action if Gov. Pat Quinn signs the bill, which the Chicago Democrat said he will do “promptly.”
The unions argue that the legislation violates a provision of the state constitution that says pension benefits may not be diminished. They criticized lawmakers who voted yes for approving a bill they say is clearly unconstitutional.
“A majority of legislators ignored and defied their oaths of office today — but Governor Pat Quinn doesn’t have to. He can stay true to his oath and the legal promise made to public employees and retirees by vetoing this unfair, unconstitutional bill,” a coalition of unions known as We Are One Illinois said in an emailed statement. “If he doesn’t, our union coalition will have no choice but to seek to uphold the Illinois Constitution and protect workers’ life savings through legal action.” Continue reading
Down de Shittah
A judge has upheld the bankruptcy of Detroit. In one fell swoop, the taxpayers of Detroit have freed themselves from the economic burden of the retirement and health programs that had been promised to municipal union members.
For decades, the liberal political establishment had bought votes from the unions. They had signed agreements guaranteed to bankrupt the city.
Taxpayers moved out of Detroit. Welfare recipients stayed put. It took 40 years, but the city went bust. The judge has now confirmed the obvious. Continue reading
On 15 November 1923 decisive steps were taken to end the nightmare of hyperinflation in the Weimar Republic: The Reichsbank, the German central bank, stopped monetizing government debt, and a new means of exchange, the Rentenmark, was issued next to the Papermark (in German: Papiermark). These measures succeeded in halting hyperinflation, but the purchasing power of the Papermark was completely ruined. To understand how and why this could happen, one has to take a look at the time shortly before the outbreak of World War I. Continue reading
What would happen if the Federal Reserve was shut down permanently? That is a question that CNBC asked recently, but unfortunately most Americans don’t really think about the Fed much. Most Americans are content with believing that the Federal Reserve is just another stuffy government agency that sets our interest rates and that is watching out for the best interests of the American people. But that is not the case at all.
The truth is that the Federal Reserve is a private banking cartel that has been designed to systematically destroy the value of our currency, drain the wealth of the American public and enslave the federal government to perpetually expanding debt. During this election year, the economy is the number one issue that voters are concerned about. But instead of endlessly blaming both political parties, the truth is that most of the blame should be placed at the feet of the Federal Reserve.
The Federal Reserve has more power over the performance of the U.S. economy than anyone else does. The Federal Reserve controls the money supply, the Federal Reserve sets the interest rates and the Federal Reserve hands out bailouts to the big banks that absolutely dwarf anything that Congress ever did. If the American people are ever going to learn what is really going on with our economy, then it is absolutely imperative that they get educated about the Federal Reserve. Continue reading
After the Roaring Twenties, a decade of partying, lavish living and social and cultural change, Americans thought the rising stock market and good times would last forever.
On Sept. 3, 1929 the stock market hit an all-time high, with the Dow Jones Industrial Average peaking at 381.17
But Oct. 24, 1929 — what became known as “Black Thursday” — the healthy bull market was shaken, and stock prices plummeted. The market lost 11 percent of its value. Investors tried to step in by putting money into the market, but it was no use.
By Oct. 29, ‘Black Tuesday’, stocks tanked again. People panicked. Some flooded Wall Street trying to get a straight story about what was going on. Others flocked to the banks to withdraw all their money. The market closed down 12 percent that day.
The hours leading up to, during and after the stock market crash of 1929 were documented in photos. We have some for you here.
This is a late edition of the now defunct Brooklyn Daily Eagle on October 24th
In the wake of all the misguided pleas for negative interest rates in Europe (hoping to get banks to lend), comes news US banks warn Fed interest cut could force them to charge depositors.
Leading US banks have warned that they could start charging companies and consumers for deposits if the US Federal Reserve cuts the interest it pays on bank reserves.
Depositors already have to cope with near-zero interest rates, but paying just to leave money in the bank would be highly unusual and unwelcome for companies and households.
The warning by bank executives highlights the dangers of one strategy the Fed could use to offset an eventual “tapering” of the $85bn a month in asset purchases that have fuelled global financial markets for the last year. Continue reading
Vietnamese refugees in Hong Kong
In 1981, a 10-year-old Vietnamese girl, her parents and nine brothers and sisters began preparing for a perilous journey, a journey they knew they might not survive.
Since the fall of Saigon and the end of the Vietnam War in April 1975, life had been hard for the little girl’s family. The Communist government of North Vietnam inherited a country deeply divided, devastated by war, and on the verge of economic collapse. In an attempt to unify the country, the government instituted a centrally planned program of economic reform, instituting price controls, forcing farmers into agricultural collectives and nationalizing manufacturing. It was the beginning of what would come to be known to the Vietnamese people as the “10 bad years.”
In September 1975, the Vietnamese government declared the new “liberation” dong to be worth 500 of the dong previously issued by South Vietnam, where the girl and her family lived. Continue reading
I have known my fair share of drunks in my day, real hardcore addicts who continue to believe they have their problem handled as their world crumbles around them. It is painful to watch and even harder to live through because despite all good intentions, there typically is a need to hit rock bottom before any true recovery can begin.
Much like these addicts, our debt economy is always on the lookout for its next fix of “cheap money”, rather than the hard work of getting fiscally sober. “More booze for the punch bowl”, cry the masses, because sobering up is uncomfortable–and who would want to choose difficult when easy is so much easier? Continue reading
You’re getting sleepy…sleepy!
On December 23, 2013, the Federal Reserve will celebrate its 100th birthday. No other government entity with a working website has as great an effect on the everyday lives of the masses as does our central bank, but yet it is one of the agencies least understood by the average shoveller. Indeed, many of the inhabitants of “flyover country” think Federal Reserve is a brand of whiskey.
As the centennial of this glorious people’s institution approaches, let us take this opportunity to peer a little deeper into its vaults.
Congress created the Federal Reserve system in December 1913, a date coming coincidentally between the sinking of the Titanic in April 1912 and the start of World War I in July 1914. Continue reading
Among the alternative financial press (the so-called bloggers of finance) there is a renewed buzz regarding a slowly unfolding crisis. Many believe we are near an inflection point.
The fear is certainly justified. Money or credit creation is now exponential. The US Federal Reserve is on a path toward monetizing anything and everything, while the European Central Bank is about to unleash its own bond buying program. Continue reading
“The world has consumed more than it produced for more than a decade,” Jim Rogers explains to BoomBust’s Erin Ade; but his comments to the leather mini-skirted anchor with regard the actions of the world’s central banks bear the most attention. “The world is floating on an artificial ocean of printed money,” he blasts, adding that while it’s going on “everyone’s happy,” but at the first sign of it slowing, he warns, “we will all dry up.”
Rogers sees gold as a crucial holding in this respect but believes there will be a better price to buy more, as he reflects on the suppressive actions of the Indian government.
This excellent far-reaching interview covers everything from gold standards to China’s 3rd Plenum “I much prefer the Chinese system of open markets than the US with the government dictating everything” and from Bitcoin to a barbaric destruction of the Fed and all it stands for, “the Fed will self-destruct, before the polticians realize what is going on.”
Erin Ade… (you’re welcome – is it any wonder Maria B quit?) asks every question we need answered… Continue reading
Can the U.S. government afford to pay for the health care of 38 million more people? As you will see below, Obamacare is going to be the biggest expansion of the welfare state in U.S. history. It is being projected that a decade from now 17 million Americans will be receiving Obamacare subsidies and an additional 21 million Americans will have been added to the Medicaid rolls. At a time when we are already running trillion dollar deficits, is this really something that the government should be taking on? In addition, it is being projected that bringing millions upon millions of new people into the Medicaid program will also cause enrollment in many other federal welfare programs such as food stamps to surge.
Right now, the percentage of Americans that are financially dependent on the U.S. government is already at an all-time high, and Obamacare is going to cause the level of government dependence to go much, much higher. But how much weight can the “safety net” actually carry before it breaks entirely? Continue reading
China just dropped an absolute bombshell, but it was almost entirely ignored by the mainstream media in the United States. The central bank of China has decided that it is “no longer in China’s favor to accumulate foreign-exchange reserves”. During the third quarter of 2013, China’s foreign-exchange reserves were valued at approximately $3.66 trillion. And of course the biggest chunk of that was made up of U.S. dollars.
For years, China has been accumulating dollars and working hard to keep the value of the dollar up and the value of the yuan down. One of the goals has been to make Chinese products less expensive in the international marketplace. But now China has announced that the time has come for it to stop stockpiling U.S. dollars. And if that does indeed turn out to be the case, than many U.S. analysts are suggesting that China could also soon stop buying any more U.S. debt. Needless to say, all of this would be very bad for the United States. Continue reading
Obamanomics: Amid reports of a spike in welfare spending and millions leaving the labor force comes more troubling news: The number of people on disability has leapt 20% under Obama as the U.S. jobs disaster worsens.
This surge in disability isn’t accidental, pardon the pun. There’s no mass epidemic causing literally hundreds of thousands to declare themselves disabled. It’s a result of the most miserable job creation in this nation’s modern history.
No doubt about it: the numbers are alarming. When President Obama entered office, some 7.44 million Americans were receiving federal disability checks, according to data from the Social Security Administration. By October of this year, the number had swollen to 8.94 million Americans, a 20% gain. Total spending on disability has likewise risen by $31.3 billion to $140.3 billion, an increase of 29%.
But this is just one of the many elements of the welfare system that are wreaking havoc on America’s finances. Continue reading