Wednesday, October 19, 2016

Thursday October 20 20916 Housing and Economic stories


A federal solution to Chicago's public pension mess - Chicago Tribune - (www.chicagotribune.com) The Center for Pension Integrity has a proposed solution for a comprehensive settlement to rectify this mess, and it's a federal one. The relief would not be a bailout. Instead, it would legally allow state and local governments with plans that have funding levels below 50 percent to modify plan provisions and benefits, and ultimately freeze and terminate the troubled plans. At the same time, local taxes would be raised to fund the restructured plans completely because beneficiaries shouldn't give up benefits unless they get complete security for what is left. Because the plans would be terminated, taxpayers would be able to see their way out of this crushing problem. The plans would be restructured so that pension benefits would commence at age 65 no matter when an employee retires. There would be a cap on overall public employment pension benefits of 150 percent of the local median income — no more automatic cost-of-living adjustments. 

US Freight Volume Drops to Lowest Level since 2009, “Industrial Recession” Hits Full Stride, Overcapacity Crushes Rates - (www.wolfstreet.com) The Cass Freight Index, tracking US shipment volumes by all modes of transportation, fell 3.1% in September from a year ago, the 19th month in a row of year-over-year declines, and the worst September since 2009. Donald Broughton, Chief Market Strategist at Avondale Partners, wrote in the report: After offering a glimmer of “less bad” hope in August [the index was down “only” 1.1% year-over-year], the Cass Freight Index shipments data in September disappointed, providing hindsight that August only gave us “false hope.” September data is once again signaling that overall shipment volumes (and pricing) continued to be weak in most modes, with increased levels of volatility, as all levels of the supply chain (manufacturing, wholesale, retail) continue to try and work down inventory levels.

BlackRock CEO sees 'hostile' climate as index funds reel in cash  - (www.reuters.com) BlackRock Inc (BLK.N), the world's largest asset manager, reported better-than-expected quarterly profits on Tuesday, showing resilience in what has been a punishing market for fund managers. CEO Larry Fink nonetheless told Reuters his industry faces a "hostile" environment as investors migrate to products like index funds, which typically carry lower fees than actively managed funds. Even as BlackRock absorbed $55.1 billion in cash in its core products, revenue fell 2.5 percent due to lower performance fees. A favorable tax rate and income from non-core investments helped the company beat analyst forecasts.

Shadow Banks, No-Down-Payment Subprime Mortgages in Canada’s House Price Bubble - (www.wolfstreet.com) The new policies – covering mortgages that qualify for the government-guarantee program and the lower rates that come with it – elicited pronouncements of being everything from “somewhat overdue,” from Toronto Dominion Bank chief Ed Clark, to “premature,” from Gary Mauris, president and CEO of Dominion Lending Centres. The latter is a mortgage broker that negotiates with “shadow banks.” These mortgage finance companies, that include the less-regulated private lenders or mortgage investment corporations, offer a variety of loans, including for low-ratio refinancing, jumbo mortgages, long-term amortizations, and investment or rental properties. These “alternative” mortgages include subprime mortgages.

The Chicago Pension Scandal: $100,000+ Teacher Pensions Costing Taxpayers $1 Billion - (www.zerohedge.com) As we've known for quite some time now, Illinois is completely insolvent, and in large part due to enormous pension liabilities which as of December were underfunded to the tune of $111 billion. Not only is the state insolvent, its millionaires can't get out fast enough to avoid the massive tax hikes that will be coming in what is sure to be a failed effort to plug budget holes, as well as the soaring criminality in cities such as Chicago which recently just passed the historic milestone of 1,000 gunshot victims in the fastest time in decades. Citing unfunded pension plans, Moody's downgraded Illinois to Baa1, and gave it a negative outlook back in October. The issue with the pension funds (aside for the massive shortfall in funding) is that per the Illinois Supreme Court, benefits cannot be altered. In a ruling last year, the state's Supreme Court overturned a 2013 law that tried to ease the burden of what was then a $105 billion funding gap. "Crisis is not an excuse to abandon the rule of law. It is a summons to defend it." the supreme court said in its ruling.



No comments: