Daily Digest 2/21 – LA’s $1B Giveaway, Credit Card Debt Can Be Bad For Your Health

Daily Digest

Image by stevegarfield, Flickr Creative Commons

by Les Pierce

Wednesday, February 21, 2018, 9:41 AM

Economy

Outside Audit Warns Santa Monica City Might Not Be Able to “Absorb” Coming Recessions

In 2016-2017, the City’s unfunded pension liability totaled $387 million, or 76 percent of the entire $507.9 million operating budget (the unfunded liability has since reached $461 million.) (“City of Santa Monica’s Unfunded Pension Costs Jump 20 Percent,” January 16, 20018).

Student loan borrowers with high debts aren’t making progress repaying them

The share of student loan borrowers owing more than $50,000 jumped from just 2% in 1990 to 17% by 2014, according to a new paper published by The Brookings Institution. The paper, authored by Adam Looney, a former Treasury Department official and Constantine Yannelis, a finance professor at New York University’s Stern Business School, also found that borrowers are having trouble repaying the debt.

LA’s $1 Billion Giveaway

The City’s Structural Deficit means we are looking at a river of red ink for years to come as our Elected Elite are unwilling to hold the growth in personnel expense to levels that do not exceed the growth in revenues. And this perennial shortfall does not include any additional funding to address the City’s $10 billion deferred maintenance backlog or the $15 billion unfunded pension liability.

Treasury $258 Billion Bond Auction Is Hogging All the Attention

Two-year Treasuries led the selloff, while the eurodollar curve — which is used to extrapolate Federal Reserve expectations — steepened too. The Treasury sells three-month bills worth $51 billion and six-month bills for $45 billion, both unprecedented in their size. Total issuance this week is expected at $258 billion.

Illinois Still Has $9-Billion in Overdue Bills

State Owes $946-Million in Late Payment Interest Penalties Alone

Canadians Have $230 Billion In Home Equity Loans – Raising Red Flags In Ottawa

Canadians are borrowing money against their homes in record amounts – a situation that is raising red flags among politicians and policy setters in Ottawa.

Chaos in Traverse City, as county government wrestles with pension debt

A task force reported to Gov. Rick Snyder last summer that Michigan’s roughly 600 municipalities had incurred $7.6 billion in unfunded pension debt and over $10 billion in unfunded retiree health-care liability. In county governments, pensions are the bigger nut – accounting for $5 billion in unfunded liabilities.

Junk-Bond Exodus by `Tourists’ Seen When Bunds Hit 1 Percent

Even though the ECB itself doesn’t buy speculative-grade debt, 745 billion euros ($923 billion) of corporate bond purchases since June 2016 have crowded out investors like pension funds and insurers from their usual high-grade realm, pushing them further down the risk spectrum into junk bonds.

How Japan’s Central Bank Policy Is Driving Speculation About Stimulus

With the central bank owning more than 40 percent of sovereign debt, there is also concern that the BOJ will crowd private investors out of the market.

Why credit card debt can be bad for your health

Still, the average American has about three credit cards and a total balance of $6,375, up nearly 3% from last year, according to Experian’s annual study on the state of credit and debt in America.

Gold & Silver

Click to read the PM Daily Market Commentary: 2/20/18

Provided daily by the Peak Prosperity Gold & Silver Group

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