Will Social Security Go Bankrupt?

Warren Gibson By Warren C. Gibson – Re-Blogged From AIER

Just when one thinks everybody has gotten the message about the big problems facing Social Security, along comes John Tamny with a piece entitled “Let’s End the Myth About Social Security’s Looming Bankruptcy.” Really? Let’s go over the basics once again.

To his credit, he starts with a denunciation of Social Security. It was, he says, “always a terrible idea for countless reasons.” Yes! It was a terrible idea because it treats us all as dummies, unable or unwilling to provide for our own retirement. Because it tells us we have an “account” with the System, thereby fostering the illusion that our savings have been husbanded in a safe place where they will be available to us upon retirement. Because it provides returns that lag behind what prudent private investments return. Because even miniscule reforms, like tweaking the index used to calculate annual inflation increases, raise howls of protest from the likes of AARP.

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The Next Giant Industry in Need of a Bailout

Well this is starting to become a trend.

Over the past few weeks, state governments across the Land of the Free have been feverishly proposing new legislation that will virtually guarantee the entire insurance industry is wiped out.

The root of the issue has to do with something called business interruption insurance.

Business interruption is a pretty common type of insurance that’s designed to protect business owners against a number of risks.

Social Security Soon Will Slide Into Insolvency

By Robert Weisman – Re-Blogged From The Boston Globe

Some time next year, as the ranks of retirees swell, the Social Security system in the United States will pass an ominous tipping point and start the slide into insolvency.

For the first time in nearly four decades, the government program that provides retirement checks to older Americans will pay out more in benefits in 2020 than it takes in. That will force the program to dip into a rainy day fund that will be depleted in about 15 years.

And if the political dysfunction in Washington continues and lawmakers don’t fix the system, benefit cuts are in store for current and future retirees, most of whom haven’t socked away enough money in their personal retirement accounts.

Senator Bernie Sanders, Independent of Vermont, wants to expand Social Security, even as the program will pass an omnious tipping point.
Senator Bernie Sanders, Independent of Vermont, wants to expand Social Security, even as the program will pass an omnious tipping point.(Mark Wilson/Getty Images/File)

Death of Local Newspapers in Five Years

By Cathy Burke – Re-Blogged From Newsmax

The top editor at the New York Times is predicting the death of local newspapers in five years, lamenting it as “the greatest crisis in American journalism.”

In remarks to the International News Media Association’s “World Congress of News Media” last week, Times executive editor Dean Baquet speculated “their economic model is gone.”

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Are California’s Solar and Wind Projects at Risk in PG&E Bankruptcy?

By  – Re-Blogged From WUWT

PG&E has asked a bankruptcy judge for the authority to nullify billions of dollars in contracts with solar and wind farms.

California has the most far-reaching renewable energy laws in United States.

But with the bankruptcy filing Tuesday by the state’s biggest electric utility, PG&E, major questions are arising about whether California will be able to meet its ambitious targets for solar, wind and other types of green electricity in the years ahead.

The NextEra Energy wind turbines are seen from this drone view along Flynn Road North near Altamont Pass in Livermore, Calif.,

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PG&E Filing Bankruptcy

From Zero Hedge – Re-Blogged From WUWT

Confirming earlier reports that distressed California utility PG&E had rejected a proposal by some of the world’s most prominent investors that would keep it out of bankruptcy, moments ago Bloomberg reported that the board of the embattled utility which is facing $30 billion in wildfire liabilities, voted late Monday to file for bankruptcy protection as soon as midnight.

In pursuing a Chapter 11 bankruptcy filing, PG&E is declining a proposal by an investing group led by Paul Singer’s Elliott Management that would’ve been backed by $4 billion in bonds and given the company enough cash to stay avoid bankruptcy while working through its liabilities. A second group of investors including Ken Griffin’s Citadel and Leon Black’s Apollo who had pitched a rival plan, were also rebuffed.

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Pension Fund Problem Just Got Much Worse

By Bloomberg – Re-Blogged From Newsmax

The 14 percent drop in the S&P 500 Index last quarter has big implications for state and local pension funds, which probably saw the value of their assets fall by about 7 percent. Investors with the benefit of a long-term horizon have the ability to ignore market dips, and pension funds are among the longest-term investors, but their problems are not long-term and further short-term declines could precipitate a crisis.

The table below shows pension fund assets and liabilities as compiled by Pew Charitable Trusts. There is a large and growing gap, but that’s not the primary problem. Although the value of those assets is known with reasonable accuracy, the liability figure is based on assumptions about the future. The actuarial and political assumptions are uncertain, but it is the investment assumptions – plans assume an average discount rate of 7 percent – that are the most problematic.

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New York City Joins The “Imminent Bankruptcy” Club

By John Rubino – Re-Blogged From Dollar Collapse

The public pension crisis is the kind of subject that’s easy to over-analyze, in part because there are so many different examples of bad behavior out there and in part because the aggregate damage these entities will do when they start blowing up is immense.

But most people see pensions as essentially an accounting issue – and therefore boring – so it doesn’t pay to go back to this particular well too often. Still, New York City’s missing $100 billion can’t be ignored:

New York City Owes Over $100 Billion for Retiree Health Care

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Retail Apocalypse Picks Up Speed

By Michael Snyder – Re-Blogged From Freedom Outpost

Over 20 major retailers have filed for bankruptcy since the beginning of last year, and in 2018 we may break the all-time record for annual store closings that was established just last year.  We are in the midst of the worst retail apocalypse in American history, and it appears to be picking up speed as retail giants such as Sears, JCPenney, Brookstone and Mattress Firm spiral toward bankruptcy.  We live at a time when the middle class is being systematically destroyed, and so the truth is that U.S. consumers simply do not have as much discretionary income as they once did.  Many large retailers believed that things would eventually turn around, and they have been fighting very hard to survive, but now, time has run out for quite a few of them.

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Sears Warns It May Go Out of Business

By Thomson Reuters – Re-Blogged From Newsmax

Sears Holdings Corp. reported a smaller decline in quarterly same-store sales, but warned again that there is doubt about the company’s continued operation as it awaits approval to sell some of its businesses to its chief executive’s hedge fund.

“It is imperative that the Company reduce debt, adjust its debt maturity profile and eliminate the associated cash interest obligations,” Chief Executive Edward Lampert said in a blog post on the company’s website.

Retail Vacancy Rate Tops 10 Percent

By Bloomberg – Re-Blogged From Newsmax

Kids across the country are feeling the absence of Toys “R” Us. Retail landlords, too.

The amount of occupied retail real estate in 77 major U.S. metropolitan areas dropped by 3.8 million square feet (350,000 square meters) in the second quarter, the largest decline since 2009, according to a report by researcher Reis Inc. released Monday.

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Frontier Gun Maker Remington Seeks Bankruptcy Protection

By Associated Press – Re-Blogged From Newsmax

Remington, a company that began making flintlock rifles when there were only 19 United States, has filed for bankruptcy protection.

Mounting debts at the arms manufacturer have snowballed, ironically, since the election of Donald Trump, who has called himself a “true friend” to the gun industry.

Remington, which as roots dating to 1816, has lined up $100 million with lenders to continue operations.

It remains unclear what will happen to the 3,500 or so employees at Remington as it reorganizes.

Image: Frontier Gun Maker Remington Seeks Bankruptcy Protection

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Dodd-Frank Is Now Officially A Dud

By Frank Holmes – Re-Blogged From http://www.Gold-Eagle.com

I often remind investors to look past the negative and find the positive. Last week provided no shortage of big splashy headline stories, from yet another high-profile personnel shakeup at the White House to a nail-biter special election in Pennsylvania’s 18th Congressional District, from Russia’s alleged nerve agent attack on a former double-agent spy to a tragic bridge collapse in Miami.

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Three Myths About Fixing Social Security

By Brenton Smith – Re-Blogged From Newsmax

Social Security is the largest, and arguably most important, program in the federal government. It is a life-line for millions. For the rest of us the program is a set of never-ending, polarizing arguments.

The contentiousness is caused in large part by the number and conflicting nature of the urban legends surrounding the system. Everyone has a fact that is someone else’s myth.

These convictions about the program shape who voters elect, and seriously limit what candidates are willing to say to the electorate. These beliefs have so penetrated the public conscience that actual policy makers are left herding unicorns.

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Illinois Bankruptcy Acknowledged by the Mainstream Media

By Joe Scudder – Re-Blogged From Eagle Rising

The fact that Illinois bankruptcy is practically inevitable finally gets reported on.

There are signs of Illinois bankruptcy everywhere. The gridlock in the state legislature may be a cause of it, but it is more significant as a symptom. The Democrat-dominated system has broken down because there is no money left. The usual compromises don’t work anymore because they cost too much.

Another sign is that both Powerball and Mega Millions are halting business in Illinois because the state can’t afford to pay off winners. They’re afraid continuing in Illinois will wreck their reputations.

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Retailers Going Bankrupt at Staggering Rate

By F McGuire – Re-Blogged From http://www.newsmax.com

Retailers reportedly are filing for bankruptcy protection at a disturbing rate that’s flirting with recessionary levels.

Meanwhile, a steady stream of store closures continues to haunt the battered American retail industry.

“It’s only April, and nine retailers have already filed for bankruptcy since the start of the year — as many as all of last year,” Business Insider explained.

“2017 will be the year of retail bankruptcies,” Corali Lopez-Castro, a bankruptcy lawyer, told Business Insider. “Retailers are running out of cash, and the dominoes are starting to fall.”

More than 3,500 stores are expected to close over the next several months, BI reported.

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PEMEX: Mexico’s State Oil Company On The Verge Of Bankruptcy & Collapse

By SR Srocco – Re-Blogged From https://srsroccoreport.com

Mexico’s state oil company, Pemex, is a perfect example of the ongoing collapse in the global oil industry.  Falling oil prices and declining production are putting severe pressure on the company’s financial balance sheet.  It has been four long years since Pemex posted a small profit.  However, since 2012, Pemex has suffered huge annual losses while its long term debt has exploded.

The result is… Pemex is technically bankrupt.  Now, I am not the only one saying this.  There have been several articles written about horrible financial situation at Pemex.  According to the following article, Mexico’s Largest Company Is Broke:

March 3, 2016:

Mexico’s largest company is broke. The country’s state oil company, Pemex, which is one of the federal government’s main sources of revenue, is losing money and is one of the world’s most indebted oil firms. The company’s production has dropped for 11 straight years now, while gross income plummeted more than 80 percent last year.

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Welcome To The Third World, Part 21: This Pension Thing Is About To Get Real

By John Rubino – Re-Blogged From Dollar Collapse

“The problem with police officers and firefighters isn’t a public-sector problem; it isn’t a problem with government; it’s a problem with the entire society. It’s what happened on Wall Street in the run-up to the subprime crisis. It’s a problem of people taking what they can, just because they can, without regard to the larger social consequences. It’s not just a coincidence that the debts of cities and states spun out of control at the same time as the debts of individual Americans. Alone in a dark room with a pile of money, Americans knew exactly what they wanted to do, from the top of the society to the bottom. They’d been conditioned to grab as much as they could, without thinking about the long-term consequences.”

Michael Lewis, Boomerang: Travels in the New Third World

Though it may not be instantly clear, in the above quote Michael Lewis is talking about public sector pensions and how over the course of several decades, mayors and governors across the US have colluded with police, firefighter and teachers unions to promise outrageously-generous benefits and then failed to put aside enough money to pay for them.

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IS OUR ACCOUNTING SYSTEM FLAWED?

cropped-bob-shapiro.jpg   By Bob Shapiro

I have come across a readable, though scholarly, article explaining why government / central bank tinkering with interest rates – either raising rates above market or lowering them below market rates – is destructive to an economy. Dr. Antal Fekete outlines the accounting laws of Assets and of Liabilities, which were abandoned with the creation of the FED in 1913.

His piece is in pdf form, so it couldn’t be pasted here. I strongly suggest you follow the link to the online file: http://www.professorfekete.com/articles%5CAEFIsOurAccountingSystemFlawed.pdf

Could Zero/Negative Interest Rates Be The End Of The Fractional Banking System

With negative interest rates deposit holders might opt for paper money (notes) instead of digital money (digital wallet, bank account)! Which could bring down the fractional banking system because as we know of every $100 you deposit in the bank $90 is subsequently loaned on. US Federal Reserve sets a Required Reserve Ratio of 10%, but applies this only to deposits by individuals! Banks have no reserve requirement at all for deposits by companies! Go figure.

Anyway the Required Reserve Ratio of 10% means that only a fraction or $10 of the $100 you have deposited at the bank is available for cash withdrawal. Your $90 that is loaned

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