CalPERS cuts benefits for small California city employees after city defaults on its liabilities
Loyalton, a small California city of 700 people, has been declared in default by the $299.5 billion California Public Employees’ Retirement System in what could be an unprecedented action.
“It may be the first time, but we don’t know,” said CalPERS spokesman Wayne Davis in an e-mail. “It’s obviously very rare.” The action by the Sacramento-based retirement system affects four retired employees and one worker still on the city payroll whose retirement benefits will be cut by 60%.
Around a million employees in more than 1,000 government units, towns, school districts and municipal authorities are all covered by CalPERS and contribute to the pension fund.
CalPERS said in a news release that Loyalton voluntarily terminated its contract with the retirement system effective March 2013 and has refused to pay its termination liability of $1.6 million despite 50 phone calls by pension fund officials and 10 collection notices. Loyalton Mayor Mark Marin said in an interview that the city’s bookkeeper told him: “We are an inch from closing the door,” regarding the city’s ability to continue functioning.
Tempe-based First Solar plans 1,600 layoffs worldwide
Tempe-based First Solar Inc. has announced it will lay off about 1,600 workers at its U.S. and international solar-panel factories over the next year as it reconfigures factories to make more efficient solar panels.
The company headquarters with 350-400 workers are on Mill Avenue north of Tempe Town Lake, but the company does not have any factories here. Its U.S. manufacturing is done in Ohio.
The cuts will be made during the next year and will extend into administration, spokesman Steve Krum said.
Along with the cuts, which are about 27 percent of its workforce, the company announced this week that it will speed up the development of its planned Series 6 panels, which will offer significant jump in efficiency in converting sunlight to power. “Unfortunately these decisions will impact a number of our valued manufacturing associates,” CEO Mark Widmar said on a Wednesday call with investors. “While such decisions are very difficult, and not taken lightly, they are necessary and best position First Solar for long-term growth with the most competitive technology available to us.”
Jobless claims decline to lowest level since 1973
The number of Americans applying for first-time unemployment benefits dropped to a historic low last week, in another sign of slow but steady growth for the US economy.
The week ending November 12 saw only 235,000 initial jobless claims. The last time claims were that low was in November 1973, over four decades ago.
The low number of claims is good news for the US economy, but there might be more to the story. Many economists point to the fall in claims as part of the rise of the so-called "gig economy" for independent workers, where employment does not necessarily reflect the full-time, steady careers traditionally associated with a strong job market. Also, the good news for the slow-growing economy may not last, due to uncertainty associated with policy changes under Donald Trump and other factors heading into 2017.
According to the US Department of Labor, the latest historic low comes after 89 consecutive weeks of initial claims below 300,000. This constitutes the longest streak of this type since 1970.
AOL is laying off 500 employees
AOL will announce layoffs of 5 percent of its staff today, with 500 employees expected to lose their jobs. In an interview yesterday, AOL CEO Tim Armstrong said that most of the cuts will come in its corporate units, while resources will be shifted more at mobile, video and data offerings going forward.
“The layoffs are related to a 2017 strategy where we will add to our business,” he said. “These are super-targeted by area, and we will be re-growing, especially in video and mobile.”
Armstrong reiterated that plan in a memo sent to employees. “Based on our strategy and the changes we see in the industry, we are reshaping parts of the company today,” he wrote. “The company ... will be aligned to drive a talent and operations plan in line with profitability.”
The cuts come after AOL added about 1,500 workers this year from an advertising deal with Microsoft and its purchase of Millennial Media, which prompted the consolidation to improve financial performance. “The best way for us to grow is to move in front of change rather than be moved by change,” he wrote.
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Tesla Seals $2 Billion SolarCity Deal
Tesla Motors Inc. and SolarCity Corp. shareholders approved the electric-car maker’s purchase of the solar installer in a deal that’s poised to test their shared Chairman Elon Musk’s vision for a viable one-stop shop for clean energy consumers.
More than 85 percent of Tesla shares voted in favor of the deal, according to a company statement Thursday, which said SolarCity shareholders also approved the acquisition. The deal, valued at about $2 billion, integrates the maker of Model S and upcoming Model 3 sedans with the installer of rooftop solar panels.
Shareholders are signing off on Musk’s plan to combine and more efficiently run two companies that have a track record for fleeting profits and frequent fundraising needs. Tesla has lost about $4.8 billion in market capitalization since its initial offer to buy SolarCity on June 21, while the latter company’s value declined by about $86 million.
Tesla has forecast SolarCity will add $1 billion in revenue to the combined company next year and $500 million in cash to its balance sheet over the next three years. Joining Tesla’s retail network with SolarCity’s installers and consolidating the two companies’ supply chains may result in an estimated $150 million in cost synergies within a year.
Table service, touch-screen order kiosks coming to all U.S. McDonald's
McDonald's on Thursday announced a bold plan to roll out its "experience of the future" concept, including kiosk ordering and table service, to restaurants in Chicago and other big U.S. cities in an effort to better compete with "better burger" rivals.
The Oak Brook-based burger chain has nearly 500 redesigned restaurants around the country so far, including one in Chicago at Chicago Avenue and State Street that adapted the new concept earlier this year.
The world's largest burger chain will first focus the rollout in Chicago and a handful of other big U.S. cities, including Boston and Washington, D.C. But the company says it will eventually unveil the concept, which has already shown significant success in other countries like the U.K. and Australia, in all of its 14,000 U.S. restaurants. It didn't offer a timeline or overall cost for the rollout.
"Food ordering is one of the most enjoyable moments at restaurants, but at McDonald's that can be one of the most stressful moments," CEO Steve Easterbrook said. The aim is to eliminate that frustration, while also bringing employees out from behind the counter to interact with customers. With the ability to customize, upgrade and add-on items themselves, customers also tend to spend more per visit, Easterbrook said.
Your Phone Sends All Your Call Records To Apple When iCloud Is Turned On
You’ve got a computer in your pocket that works as a camera, a video recorder, an internet connection, a game console, and everything else. And odds are good there’s some data on there that you want backed up safely, and that you use a cloud storage service to do just that. But your smartphone is, indeed, a phone — and your good old-fashioned calling records may be going places and getting stored in ways you do not intend.
The Intercept reports today that a digital security firm has discovered that Apple devices automatically send call history data — phone metadata — to Apple’s servers when iCloud is enabled.
Phone metadata is basically everything you think of as “phone records” from watching detective procedurals on TV. It’s a record of what numbers you called (or that called you), when, from where (for mobile phones), and for how long. Mostly, in recent years, it’s been heard in the context of maybe-legal, maybe-not, wide-scale federal data dragnets and AT&T’s data sales to law enforcement agencies.
It’s not just traditional voice calling data at stake here either, the security firm adds. Apple’s also collecting call data on audio and video calls made through FaceTime, going back to March 2015. The firm also reports that iOS 10 added the ability for Apple to log incoming missed calls made through Skype, WhatsApp, Viber, and other apps that use the Apple CallKit backend.
Customers aren’t opening new accounts with Wells Fargo
Take that Wells Fargo! The fallout from the embattled bank’s cross-selling scandal has continued to hit the bank, which reported Thursday that openings of new customer accounts, credit cards and debit cards slowed last month.
The scam had cost Wells plenty of PR damage — and its CEO John Stumpf his job. October consumer account openings fell 27 percent from September and were down 44 percent from a year earlier, Wells Fargo said on Thursday.
“It is worrisome to have something fall so badly,” Erik Oja, a bank analyst at CFRA research, told The Post. “You don’t want to see trends like that.”
Mary Mack, head of Wells Fargo’s community banking business, said that October reflects the first full month of data since the bank agreed to pay regulators $185 million to settle charges on Sept. 8.
"Inflation Going to Tick Up More Than Rates Going to Pick Up" - Axel Merk
King of Debt Takes the Reins
The election of Ronald Reagan in 1980 provides the best recent precedent for the unexpected triumph of Donald Trump (in my opinion, the other post-war Republican takeovers of the White House --Ike in ’52, Nixon ’68, and W. in ’00 – did not constitute a real break from the status quo.) As many people expect great changes from Trump, it is worthwhile to look at what the Reagan Revolution actually wrought.
Both Reagan and Trump were better known to many as entertainers rather than politicians, both came from outside the Republican mainstream, and both engineered hostile takeovers of the Party. During the 1970s, the Republican Party was dominated by “Rockefeller Republicans,” the Ivy League-educated liberal Eastern elites. Reagan was the Western heir apparent to Barry Goldwater, the deeply conservative standard-bearer who went down in flames in 1964. In 1976, the brash Reagan had the nerve to challenge incumbent Republican President Gerry Ford in the primary, thereby weakening him in the general election, which he ultimately lost to Jimmy Carter. While Reagan was simply too conservative for the Rockefeller wing, Trump’s various positions are similarly inconsistent with much of the mainstream neo-conservative orthodoxy. Both candidates also capitalized on a weak economy as a catalyst to encourage voters to cross traditional party lines. Many of the rust belt ”Reagan Democrats” came home to Trump.
While books have been written about the cultural and political legacy of Reagan’s presidency, harder facts can be found in his budgetary record. Despite the economic revival that his tax-cutting and deregulation tendencies delivered, the national debt ballooned as it never had for any other peacetime President. Although the fiscal imbalances have gotten significantly worse since Reagan left office, the Gipper gave plenty of cover for future Republican presidents to run up red ink. President Donald Trump, the self-proclaimed “King of Debt”, now appears to be perfectly positioned to test the limit of how much debt the world’s largest economy can issue.
Leading up to the election of 1980, Reagan and the conservative economists who supported him, warned that Federal debt, which had risen to approximately 26% of GDP, had grown too heavy to bear (data from Congressional Budget Office, July 2010) Reagan brought the spirit of Milton Friedman into the Oval Office, and his campaign was based on a clear intention to roll back the nearly 50 years of socialist government expansion that had occurred since Roosevelt’s New Deal.
Yellen: Rate hike may be needed soon
Federal Reserve Chairwoman Janet Yellen gave a relatively upbeat assessment of the economy Thursday, further signaling a likely interest rate hike next month.
But she also noted that there is a "great deal of uncertainty" following the election and that she expected it would last for "some considerable time."
In her first public statements about the economy since Donald Trump's victory last week, Yellen did not talk specifically about the president-elect. Nor did she say that uncertainty, or the risks associated with it, had changed the Fed's outlook on the economy or its plan on raising interest rates, at least for now.
Yellen also said that she fully intended to serve out her four-year term as Fed chair, through January 2018. During the campaign, Trump had sharply criticized Yellen's performance, indicating he would most likely replace her.
At This Current Pace, A Record-Shattering 2.4 Trillion Dollars Will Be Added To The National Debt This Year
Barack Obama is about to become the 20 trillion dollar man. With less than two months to go in his second term, the U.S. national debt stands less than 150 billion dollars away from the 20 trillion dollar mark. And at the pace that the debt is increasing, it seems almost certain that we will cross 20 trillion dollars before Inauguration Day. After promising us that “deficits are under control”, the federal debt jumped by more than 1.3 trillion dollars last fiscal year, and so far this year it is on pace to rise by a record-shattering 2.4 trillion dollars. This is a recipe for national suicide, and yet it wasn’t even a major issue during the recently concluded presidential campaign.
It is really, really hard to spend a trillion dollars. For example, if you were alive when Jesus was born and you had spent a million dollars every single day since that time, you still would not have spent a trillion dollars by now.
And even though the Republicans have had control of the House of Representatives since 2010, the wild spending has not slowed down one bit. In fact, it is actually accelerating as we near the end of Obama’s second term. Last year’s rise in the debt of more than 1.3 trillion dollars was shocking enough, but this year we are on pace to top that number by more than a trillion dollars. The following comes from Simon Black…
According to data released by the Treasury Department yesterday, the US national debt has soared by a whopping $294 billion since the start of the 2017 fiscal year, just 45 days ago. That’s an annualized increase of 13%.
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Thanksgiving feast will cost less this year, American Farm Bureau says
The average cost for a Thanksgiving Day feast for 10 this year is $49.87, a 24-cent decrease from last year's average cost of $50.11, the American Farm Bureau Federation said.
The cost for a traditional feast, which includes turkey, vegetables and pumpkin pie, comes out to less than $5 per person, the organization said. A 16-pound turkey -- usually the most expensive part of the meal -- averaged $22.74 in 2016. That comes out to about $1.42 per pound, which is a decrease of 2-cents per pound when compared to 2015. The Farm Bureau has been collecting Thanksgiving cost data since 1986.
"We have seen farm prices for many foods - including turkeys - fall from the higher levels of recent years. This translates into lower retail prices for a number of items as we prepare for Thanksgiving and confirms that U.S. consumers benefit from an abundant, high-quality and affordable food supply," John Newton, the Farm Bureau's director of market intelligence, said.
In addition to a drop in price for turkey, other foods that have seen price decreases include pumpkin pie mix, milk, vegetable trays with carrots and celery and miscellaneous items that include coffee, butter and flour.
What’ll Happen to Housing Bubble 2 as Mortgage Rates Jump?
In the few days since the election, we got a flavor of what might happen when the bond market sees hues of inflation, expects the Fed to respond, and suddenly (after years of closing its eyes to it) dreads a tsunami of government deficit spending, on top of the flood of deficit spending already washing over the land.
The US government borrowed on average $850 billion per year over the last two fiscal years, in total $1.71 trillion. Very soon, the gross national debt will hit $20 trillion. And with a little help from the next administration’s plans, the annual new debt to be issued by the US government could balloon far beyond $1 trillion a year.
These bonds will have to be sold to someone, but the Fed is no mood of buying; instead, it has been flip-flopping about raising rates.
And the biggest foreign holders of US Treasuries are now net-sellers, according to the Treasury Department’s International Capital Data for September, released today. China dumped another $28.1 billion in Treasuries, bringing its stash down to $1.16 trillion, the lowest since September 2012. Japan, the second largest holder, shed $7.6 brillion, cutting its pile to $1.14 trillion. Saudi Arabia has been selling hand over fist for eight months in a row. Its holdings are now down to $89.4 billion. In total, foreign holders dumped $76.6 billion of Treasuries in September.
Indian Economy Grinds To A Halt After Cash-Ban: "Faith In System Shaken"
Amid scenes of panic across India, following PM Modi's shock decision to withdraw high-value bills in the middle of the sowing and wedding season, Reuters reports the move, aimed at cracking down on the shadow economy, has brought India's cash economy to a virtual standstill. With over 90% of all transactions done in cash, money flows in and out of the black-and-white system... until now, as Devangshu Datta exclaims, "The system works because everybody believes that those pieces of paper will be accepted by everybody else... This move has shaken that trust."
Farmers have been left stranded as traders have no cash to pay for their produce, while millions of Indians lined up outside banks and post offices for the ninth day to exchange old banknotes or withdraw rationed money from their accounts.
Many of India's 260 million farmers have no bank accounts and depend on local money lenders to fund sowing, which means those that have to borrow to sow winter crops like wheat or rapeseed could face debt trouble without a good harvest.
And so India's government on Thursday announced immediate steps to ease a cash crunch for farmers amid widespread criticism. In the latest in a series of ad hoc steps, Modi allowed farmers to withdraw up to 25,000 rupees ($368) a week against their crop loans to ensure that sowing of winter crops "takes place properly", a senior finance ministry official said.
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U.S. Consumer Prices Rose in October
U.S. consumer-price gains accelerated in October for the third-straight month largely due to rising energy costs, the latest sign inflation pressures in the economy are firming.
The consumer-price index, measuring what Americans pay for everything from rent to razors, advanced a seasonally adjusted 0.4% from a month earlier, the Labor Department said Thursday. But when excluding the volatile costs of food and energy, so-called core prices rose a milder 0.1%.
Higher prices for gasoline, electrical utilities and shelter drove the gain, despite flat costs for medical services and food. Compared with a year earlier, overall prices grew 1.6% in October, the strongest gain in two years. Core prices grew 2.1% from a year earlier, a slight deceleration from the prior two months.
The “report provided further confirmation of strong energy base effects boosting headline CPI,” said Barclays economist Blerina Uruçi. “Although core inflation rose less than expected, we still believe that domestic price pressures remain strong.”
Rickards: The War on Cash Just Escalated Big-Time
“I expected this soon,” Jim Rickards alerted us this morning… “But it’s playing out now.” Jim introduced his concept of “ice-nine” in Saturday’s reckoning. “Ice-nine” is a Frankenstein water molecule from Kurt Vonnegut’s science fiction classic Cat’s Cradle.
Once released, it freezes every normal water molecule it contacts. Then it spreads… and spreads… until every body of water in the world is frozen solid. In his brand-new book, The Road to Ruin, Jim applies the “ice-nine” metaphor to the global financial system. One part of the system freezes. Then it spreads… and spreads… until the entire financial system freezes over.
And “ice-nine” could be breaking out right now in one part of the global system… Ninety percent of all transactions in India are conducted in cash. And India just shocked its citizens this week by suddenly banning its popular 500-rupee and 1,000-rupee bills, worth $7.50 and $15 respectively. Hundreds of millions who depend almost exclusively on cash have been reduced to barter.
The Los Angeles Times: “The plan was shrouded in such secrecy that even India’s financial institutions were ill prepared, creating long, sometimes unruly lines outside banks, ATMs and chronically understaffed post offices that are authorized to exchange the now-worthless notes.” “Now I have nothing,” lamented one Anand Tokas, speaking for multitudes. “If I don’t withdraw cash today, I will have nothing to buy even basic essentials.”