Puerto
Rico, with at least $70 billion in debt, confronts a rising economic misery - (www.washingtonpost.com) Boxes
and wooden crates filled with household items bound for the U.S. mainland are
stacked high in the Rosa del Monte moving company’s cavernous warehouse,
evidence of the historic rush of people abandoning this beautiful island. The
economy here has been in recession for nearly eight years, crimping tax revenue
and pushing the jobless rate to nearly 15 percent. Meanwhile, the
government is burdened by staggering debt, spawning comparisons to bankrupt Detroit and
forcing lawmakers to severely slash pensions, cut government jobs and raise
taxes in a furious effort to avert default. The implications are serious for
Americans outside Puerto Rico both because a taxpayer bailout would be
expensive and a default would be far more disruptive than Detroit’s record
bankruptcy filing in July. Officials in San Juan and Washington are adamant
that a federal bailout is not on the table, but the situation is being closely
monitored by the White House, which recently named an
advisory team to help Puerto Rican officials navigate the crisis.
Ukraine
protesters urge general strike as markets hit currency - (www.bloomberg.com) Ukrainian
protesters blockaded the main government building on Monday, seeking to force
President Viktor Yanukovich from office with a general strike after hundreds of
thousands demonstrated against his decision to abandon an EU integration pact. Demonstrations
on Saturday and Sunday, which saw violent clashes with the police, drew as many
as 350,000 people, the biggest public rally in the ex-Soviet state since the
"Orange revolution" against sleaze and electoral fraud nine years
ago. Prime Minister Mykola Azarov accused the opposition of planning to seize
the parliament, while Yanukovich appealed for calm, saying protests should be
peaceful and law-abiding. "Any bad peace is better than a good war,"
Yanukovich said in his first comment on the mass unrest over the weekend.
"Everyone must observe the laws of our state."
Unilever
CEO Says Emerging Market Slowdown to Last for Years - (www.bloomberg.com) Unilever
(UNA) Chief Executive Officer Paul
Polman said the economic slowdown in emerging markets is here to stay as many
countries need to enact structural reforms to adjust to new conditions after
the boom of recent years. “They are still relatively stronger economies, but
still fragile,” Polman said. “And you see that growth coming off now a little
bit, obviously not being helped either by lower demand coming from Europe and the U.S. This will last a few years.
And it will only be corrected if some of the reforms have been made in these
places.” Unilever, the world’s second-largest consumer-goods maker, said Sept.
30 that slowing growth in emerging markets would weigh on second-half sales.
The company gets more than half its revenue from such economies in countries
such as India
and China.
So-called underlying sales rose 3.2 percent in the third quarter, the weakest
increase in four years and a slowdown from the first-half’s 5 percent pace, the
Anglo-Dutch maker of Lipton tea reported Oct. 24.
Detroit
Retirees Got Extra Interest After Their Guaranteed 7.9% - (www.bloomberg.com) Edna
Love’s 58 years as a nurse for Detroit’s health department earned her a
$2,000-a-month pension when she retired in 2011. That pales next to the $1
million she got from a separate city-sponsored savings plan where she put 5
percent of her pay year after year. The annuity savings program within the
Detroit General Retirement System created a class of privileged retirees in a
city where pensions average about $19,000 a year, according to municipal
records. The accounts got $756.2 million from the pension fund during 1985
through 2007 as extra interest, atop a guaranteed 7.9 percent backed by public
money. “Where else could you earn that
kind of money today?” Love, 83, said in a telephone interview from a retirement
home in Saline, Michigan. “At the time the city was doing well, we weren’t
worried about bankruptcy. It was a good place to work.” The use of money from
the $2.6 billion pension to bolster the savings accounts has drawn scrutiny
from Kevyn Orr, the state-appointed emergency manager, whose
plan to reduce Detroit pensions through the largest U.S. municipal bankruptcy
stirs outrage among 20,000 retirees. Orr may recoup what the fund paid to the
savings program, said his spokesman, Bill Nowling.
We Are On The Eve Of A Deflationary Shock - (www.zerohedge.com) In
the aftermath of Ray Dalio's conversion to an inflationista earlier
this year (even if he has since once again been pushing a deflationary agenda
when he once again went long Treasurys in late September as Zero Hedge reported previously), which
promptly got such permanent deflationists as David Rosenberg to change their
multi-year tune, it seemed as if there was nobody left in the deflationary
camp. Which, implicitly meant Bernanke was winning as the world's expectations
for a return to inflation were rising (remember: hyperinflation has nothing to
do with inflation per se, and everything to do with loss of confidence in
a currency, even if formerly a reserve), and also meant the Fed would need
to do less to further its reflationary agenda. Alas, as the Taper
Tantrum and the shock upon its subsequent withdrawal showed, not to mention the
recent outright disinflation in Europe, any rumors that the Fed was back in
control were wildly exagerated, and here we find ourselves, entering the last
month of 2013 with loud speculation thatnot only will the BOJ increase its own QE but the ECB itself will have no choice but to join the QE party (even as the Fed may or may not taper although
it is increasingly looking likely that with an economy this late in the cycle,
Yellen will simply forego tapering altogether, and may even navigate Bernanke's chopper) in order to stoke even more inflation as the
current amount was, surprise, insufficient. We ignore all discussion of what
such a reckless action would mean for the credibility of fiat, although we
remind readers that right now both the US and Japan monetize 70% of their gross
bond issuance, and thus deficit.
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