Archive for the ‘Pension Crisis’ Category
In this modern mobile, global economy, few workers can honestly show a full curriculum vitae without admitting to being fired at least once. Sacrifices must be made - for the profit margins not being ample enough, a client’s displeasure, a supervisor’s ego, occasionally even someone is fired who deserves it - and we have all had our turn as the fatted ram on the altar of the pagan gods of business. I might not have the best tale, but it ranks up there fairly high. I became untouchable to mainstream editors by telling the truth.
The last article I ever attempted to publish via mainstream media was on public pensions. The pension of a public employee - teacher, firefighter, police officer – is ostensibly the biggest reason to pick public over private sector, as public pensions are generous, offer earlier retirement ages and double-dipping, and are protected by state Constitutions in some locations. In 2010, I put together facts to show that these pensions were being woefully – deliberately – underfunded.
The scam is a simple one. Like all cons, it relies on the naivety of the mark. Public pension funds are invested in the markets. The income produced through this investment portfolio is rolled back into the pension fund to pay future obligations, and the state or municipal pays forth whatever the difference is between actual portfolio earnings and total projected pension costs.
Or, that’s how most people think it works. In reality, the pension fund managers estimate “projected earnings”, and the state funds the rest (sometimes, unless something really important comes up in the budget, in which case they’ll get back to you next year… promise). Two years ago, my eye caught what appeared to be a discrepancy. Pension managers were posting projected earnings of seven, eight, even nine percent in a market experiencing a years-long meltdown. Anyone in the market already knows what I spotted then – those projected returns were laughably unrealistic.
The briefest search proves just how unrealistic. Calpers – the California public pension system – showed a return as low as 1%. This year, Colorado’s pension fund earned 1.9%. Due to the miracle of compounded returns, a DPD beat cop has had *21% of his pension evaporated by fuzzy math over the last four years. Aaaannd… it’s gone. Poof!
Wonder who Denver’s police call when they get robbed by the very people who employ them?
We might not know for years, actually, as this topic has been verboten to mainstream media outlets until very recently. Journalism has long been known as the “fourth estate” – a reference to the three branches of government, and the ultimate check-and-balance being a voting populace kept well-informed by the press. This system fails when all four branches collude to keep voters in the dark.
My working relationship with editors slowly eroded as the economy imploded. My calls on the housing market’s imminent collapse, predicting student loans as the next bubble, articles on HFTs turning our markets into casinos and regulatory agency capture… Sometimes, it is better to be wrong than to be correct when no one wants you to be. That what I wrote was true, didn’t matter nearly as much as whether editors perceived their readers as being capable of handling the truth.
So, the truth about pensions was not published. For your own good, I’m sure. Consider this story – of how one freelancer was fired from mainstream publishing for telling too much truth – when you read your daily dose of “news”.
By Jo Newton
Colorado pension official statement of returns: http://www.copera.org/pera/about/investments.htm
Biz journal analysis on Colorado pension return: http://www.pionline.com/article/20120627/DAILYREG/120629895
Biz journal on Calpers pension: http://www.bizjournals.com/triangle/morning_call/2012/07/california-pension-fund-returns-1.html
investment reports (pdf): http://www.calpers.ca.gov/index.jsp?bc=/investments/reports/home.xml
Forbes article on Calpers: http://www.forbes.com/sites/tomiogeron/2012/07/16/calpers-returns-1-for-fiscal-year/
*The 21% loss to Denver police pensions math was done with pen and paper. The above links verify a projection of 8%, a return of 1.9% for 2011, and it took me five minutes of basic math to get just under 21% (20 and big change) after four years using those official figures.
The WSJ’s OpEd page has once again highlighted the State fiscal mess — and it’s time for we as citizens, with an election coming up, to demand answers.
The slow-motion collapse of the government status quo across the Western world is obvious, but the reality is the opposite of what Twain said about Wagner’s music—it’s worse than it sounds. That’s the message of a recent report from Richard Ravitch and Paul Volcker that deserves far more attention than it has received.
Since 2010 the former New York Lieutenant Governor and Federal Reserve Chairman have been scrutinizing the balance sheets of six of the largest states—California, Illinois, New Jersey, New York, Texas and Virginia. Their conclusions make clear that Washington is not the only part of the government headed for the fiscal cliff.
It’s not just six states, of course. Medicaid, they project, will grow at 8.1% annually over the next decade. While this is lower than the realized expansion from 1980 to present (9.x%) the fact is that projections are almost always low simply because they’re politically expedient and rely on scenarios that are unrealistic. As just one example of many I’ve highlighted Rep. Ryan’s “budget framework” in the US House relies on GDP growth numbers that have never been achieved in the post-war era, yet those numbers form the entire predicate of his projected revenue base for the government itself.
Simply put Medicaid (and Medicare) cannot be resolved with changes in the entitlement programs themselves — we must instead fix the medical system. So long as we permit medical providers of all sorts (pharmaceutical companies, hospitals, etc) to create cost-shifting environments where the price of one’s own conduct is hidden and allow citizens to choose to save nothing nor buy insurance against catastrophic outcomes yet received the same medical care as someone who both takes care of their body and has a reserve (either through saving or insurance) for bad outcomes we will never find a solution to medical cost growth.
The fact of the matter is that medical care is not a right — it is a service one buys with one’s economic surplus. Charity can and will pick up the slack to a degree, but there will be bad outcomes under such a model, and those who receive less than they would want (or “need”); this is unavoidable in any free-market economic system and pretending otherwise is foolish.
The other glaring problem that I’ve highlighted multiple times is that of pensions for public employees being protected under constitutional construct. This makes modifications only possible through one of three paths, none of which are guaranteed to succeed. The states can argue that the contracts for these benefits were entered into under false pretense (“fraud”), thereby eviscerating the contract as performance was physically impossible, the residents of a state could modify its constitution (again) or the residents could revolt, at least in a tax sense. The latter, of course, has a high probability of leading to violence; we should therefore be hoping that the States come to their senses and choose one of the first two options, as the third tends to come in the throes of an all-on fiscal collapse.
Many argue that the recession “made the problem worse.” This is a lie; the fact is that pension systems at the state level tend to claim 8% returns as “normal.” This, however, means that they are counting on assets doubling every 9 years. To put this in perspective this argues that the assets will increase in price by a factor of 32 over 45 years; from 1-2 in 9, then 2-4 in 18, then 4-8 in 27, from 8-16 in 36, and from 16-32 in 45.
To be succinct this is a prediction that the DOW will stand at 400,000 (~32 times its present level of 13,000) 45 years from now. This is utter lunacy, yet it is the prediction upon which the entire pension mess is predicated.
Ponzi schemes, of which this is one, are inherent frauds. We are well beyond the point where we should demand that our legislators stand to account, along with the public employee unions, that have “negotiated” such benefit packages. Under any reasonable interpretation of the law they are unenforceable as they rely on mathematical pyramiding that cannot happen; as such they must be discarded.
What makes much of what is happening in municipal and state finance worse is the gimmickry that states use. Much of the “accounting” used to present so-called “balanced” budgets are artifices that in a private company would lead to felony criminal charges. Yet we permit states to get away with this sort of deception on a regular basis.
In short with an election coming up we the people must insist that all state lawmakers and those who aspire to these offices, from county commissions and city boards on upward, answer to these issues. We must demand not only honest accounting but reasonable forward projections, along with a clear and delineated strategy for dealing with the ridiculously-escalating cost profile of government retirement benefits and entitlement costs. The medical cost situation is particularly dire but by no means the only place where attention must be focused.
If we fail to do so, demanding reform, we will only have ourselves to blame when our state fiscal environment detonates and fiscal collapse, or worse civil unrest, follows.
How would you feel if you worked for a state or local government for 20 or 30 years only to have your pension slashed dramatically or taken away entirely? Well, this exact scenario is playing out from coast to coast and in the years ahead millions of elderly Americans are going to be affected by broken promises and vanishing pensions. In the old days, things were much different. You would get hired by a big company or a government institution and you knew that the retirement benefits that they were promising you would be there when you retired in a few decades. Unfortunately, we have now arrived at a time when government institutions and big companies have promised far more than they are able to deliver, and “pension reform” has become one of the hot button issues all over the nation. Many Americans that have been basing their financial futures on their pensions are waking up one day and finding that their pensions are either gone or have been cut back dramatically. According to Northwestern University Professor John Rauh, the latest estimate of the total amount of unfunded pension and healthcare obligations for state and local governments across the United States is 4.4 trillion dollars. America is continually becoming a poorer nation and all of that money is simply not going to magically materialize somehow. So where is that 4.4 trillion dollars going to come from? Well, either pension benefits are going to have to be cut a lot more all over America or taxes will need to be raised dramatically. Either way, we are all going to feel the pain of these broken promises.
There simply is not enough money out there to keep all of the pension commitments that have been made. Something has got to give. In the end, millions of elderly Americans will likely be plunged into poverty as pensions disappear.
Some local governments around the nation are already declaring bankruptcy and are either eliminating pensions or are cutting them very deeply. Just check out what just happened in Central Falls, Rhode Island….
For years, city officials promised robust union contracts and pensions without raising revenue to pay for them. Last August, the math caught up with them. Central Falls was broke, its pension fund short $46 million. It declared bankruptcy.
“My daughters grew up here, went to school here. It’s all gone,” said Mike Geoffroy, a retired firefighter.
He said he could not make the payments on his house after his pension was cut by $1,100 a month.
When will the math catch up with the city where you are living?
For years and years most of our state and local politicians have been ignoring this problem. But eventually a day comes when you simply cannot ignore it any longer.
Check out what Pensacola Mayor Ashton Hayward said about the situation in his city recently….
“When our annual pension liability is more than our yearly property tax revenues, we have to do something”
Keep in mind that taxpayers don’t get any new services for money spent on pensions. It is money that goes straight into the pockets of retired workers. State and local governments are desperately trying to pay retired workers what they are owed and fund ongoing government functions at the same time, but many have reached the breaking point.
All over the country, state and local governments are going broke. The following is from a recent article by Duff McDonald….
Alabama’s Jefferson County has actually gone bankrupt. Stockton, California is all but ready to do the same. And all you have to do is look to Detroit—or any of the nearby auto towns named after a Buick model of one sort or another—and you see fiscal crisis playing out right now. Look in your own backyard—or at the potholes on your neighborhood roads—and you will likely find the same.
Things are so bad in Stockton, California that they are actually skipping debt payments….
The city of 290,000 that rode the wave of the housing boom in the late 1990s and early 2000s now finds itself littered with foreclosed homes, saddled with pension, health care and other obligations it can’t afford, and unable to pay its bills.
The City Council voted last month to suspend $2 million in bond payments and begin negotiations with bond holders, creditors and unions.
And did you notice what is being blamed for the financial problems in Stockton?
Pension and healthcare benefits.
Sadly, we are seeing pension nightmares erupt all over the nation right now.
For example, check out what is happening to the Public School Employees’ Retirement System and State Employees’ Retirement System in Pennsylvania….
PSERS had an accrued unfunded liability of nearly $26.5 billion, the amount of money the fund is short to cover existing retirement benefits. That hole is expected to grow to $43 billion by 2019. SERS is $12.5 billion in the red, and that shortfall is expected to climb to nearly $18 billion by 2018. Unless the stock market makes giant sustained gains, taxpayers will have to refill those funds.
That doesn’t sound good at all.
In California, the Orange County Employees Retirement System is estimated to have a 10 billion dollar unfunded pension liability.
How in the world can a single county be facing a 10 billion dollar hole?
This is madness.
The state of Illinois is facing an unfunded pension liability of more than 77 billion dollars. Considering the fact that the state of Illinois is flat broke and on the verge of default, it is inevitable that a lot of those pension obligations will never be paid.
In fact, there are going to be a whole lot of broken promises all over the country.
Pension consultant Girard Miller told California’s Little Hoover Commission that state and local government bodies in the state of California have $325 billion in combined unfunded pension liabilities.
That comes to about $22,000 for every single working adult in the state of California.
So where is all of that money going to come from?
But at least most state and local government employees are still covered by pension plans, even if they are failing.
In the private sector, pension plans are vanishing at lightning speed.
According to the Boston College Center for Retirement Research, the percentage of workers in America covered by a traditional pension plan fell from 62 percent in 1983 to 17 percent in 2007.
That isn’t just a trend.
That is a tidal wave.
And many of the private pension plans that still exist are massively underfunded. For example, Verizon’s pension plan is underfunded by 3.4 billion dollars.
So what should Americans do in light of all this?
Well, the number one thing to realize is that the pension plan you have been counting on could disappear at any time.
We live in an economic environment that is extremely unstable, and about the only thing you can count on in this environment is rapid and dramatic change.
Do not plan your financial future around a pension plan. If you do, you are likely to be bitterly disappointed.
Americans that plan to retire in the coming years should do their best to try to fund their own retirements.
Unfortunately, most Americans are not putting away much of anything for retirement. As I have written about previously, one study found that American workers are $6.6 trillion short of what they need to retire comfortably.
Over the next 20 years approximately 10,000 Baby Boomers will be retiring every single day.
A lot of them are going to be blindsided by empty pension funds and broken promises.
We are facing a retirement crisis of unprecedented magnitude, and there is not much hope in sight.
And if there is a maor stock market crash, things are going to be much, much worse.
Most pension funds and retirement plans are heavily invested in the stock market. If we were to see a major financial crisis like we saw back in 2008 it would be absolutely devastating. Millions of Americans could see their retirement plans wiped out in short order.
Once again, please do not place your faith in the system.
If you do, you are likely to end up holding a bag of broken promises.
A gigantic tsunami of unfunded pension obligations is coming. A lot of state and local governments are going to go broke. A lot of promises are going to be broken.
If you hope to retire any time soon, you better plan on being able to take care of yourself.
This sort of behavior ought to earn a long stay in prison — not continued employment:
ALBANY — When New York State officials agreed to allow local governments to use an unusual borrowing plan to put off a portion of their pension obligations, fiscal watchdogs scoffed at the arrangement, calling it irresponsible and unwise.
And now, their fears are being realized: cities throughout the state, wealthy towns such as Southampton and East Hampton, counties like Nassau and Suffolk, and other public employers like the Westchester Medical Center and the New York Public Library are all managing their rising pension bills by borrowing from the very same $140 billion pension fund to which they owe money.
That’s utter and complete crap.
It is identical to taking a $20 out of your left pocket, putting it in your right, and claiming you’ve increased your net financial position by +$20.
You have not. The claim is a bald lie.
How the actuaries and other financial watchdogs allow this is beyond me.
This is a fraud upon the public, a fraud upon the pensioners, and a fraud upon the workers who are being promised those pensions. It is a scam; you cannot borrow from yourself and claim you have somehow improved your own lot, as you’ve done no such thing — you have simply moved money from one bucket to another.
When this sort of scam becomes commonplace you know that the end of the line is near — this is such a blatant rip-off that nobody in their right mind would attempt it unless they were literally at the end of their rope. By borrowing from the very fund that you’re allegedly funding you are, in each and every instance, destroying the already-accumulated surplus that is already pledged to pay other people!
Public pensions are one of the points I cover in depth in Leverage, as there’s no possible way for the promises that have been made to be kept.
This is not about what we want to do — it is about what’s possible, and we must tell current and future retirees the truth about the promises made and what we will actually be able to sustain — two entirely-different things.
Last month, I presented to the National Association of State Treasurers. The room had all 50 State Treasurers, lots of Deputy and Asst Treasurers, and staff. I was realistic about how credit crises unwind over long periods of time.
The prior panel had the major ratings agency reps, and they had discussed Pension Return Assumptions. Given their utter incompetency, it was no surprise the Ratings firms were okay with expected blended returns of 8%.
An audience member asked a question to me about this, and I laughed. I told the Treasurers that the consultants who tell them they should have expected 8% blended returns for the past 5-10 years were dead wrong, and the ones who told them they could expect 8% blended returns for the next 5-10 years were probably high. My joke was to get to 8% required bad math — blended expected returns of 8% requires taking 5% gains in equities and adding 3% gains in bonds (5+3=8). How often do you get to make a wonky accounting joke to a room full of treasurers?
They’re high all right — that is, high on drugs.
This is their set of assumption:
What Barry is missing in his missive, however, is why this appears to have worked up until the last ten years. The answer is found in my favorite chart, once again:
Let’s look at what the market did as a consequence:
Look closely at those two charts. What I want you to pay attention to is the overlay. Here:
What coincided with the ramp from 1980 forward? Let’s go back ten more years, because it makes the point much clearer. We’ll do it with a nice overlay.
So we had a nice stable stock market, with reasonably-stable leverage (growth in debt .vs. growth in GDP.) Then we started emitting unbacked credit, and lots of it. The market responded. We emitted more. The market responded more.
But then, in 2000, we hit the wall. The emission of new credit over output no longer worked because it was impossible to service the debt with available economic surplus, and the market collapsed.
The response? Even easier credit. Liars loans. Zero-down mortgages. Goading people into speculating on property, taking out HELOCs to buy Suburbans and similar. Frauds were run throughout the financial system in order to prop this up, including issuing CDS and various securities based on claimed credit quality that the writers knew damn well was impossible, as there was at the time a 20 year history that showed credit expansion and thus asset price inflation was the only way it could possibly “work.”
Nobody knew, of course, exactly when the wall would be hit, but that it would happen was inevitable and mathematically certain.
Well now “when” has happened. Yet the same projections on a forward basis are still being run, despite the fact that further credit creation to maintain this bubble in asset prices is not possible, as there’s no ability to pay higher and higher percentages of income in debt service!
This — basic mathematics — is at the root of the problem with these “forecasts.” The people who have made them might have been excused if they made them in 1970 if the goal is to get to 2000, since there’s a “time certain” on the end game. That might have been defensible.
But it’s not defensible on an infinite-forward-horizon basis, which retirement systems always are, since there will always be someone new coming in behind the guy who retires — unless you’re forecasting (and so stating!) the end of the government and/or the company involved on that future “date certain.”
The dynamic that drove this insanity from the mid to late 1970s up until the collapse in 2000 is over. The “last gasp” of fraud attempted in the 2000s to keep the consequences from coming home to roost not only failed it also doubled the damage we must accept in our economy now from what it was in 2000.
This was not an accident and it was not simple “greed.” It was an intentional series of actions and inactions. It was willful in both activity (deficit spending) and blindness (to indefensible acts by financial institutions) by our government acting in concert with The Fed, including the current Chair Ben Bernanke. May I remind everyone that Ben was with The Fed at the time of Greenspan’s actions in the early part of the 2000 decade prior to assuming the Chair?
Do not kid yourselves folks. This is literally 5th grade mathematics — the simple story of exponential growth gone mad, and the inevitable mathematical consequence of two compound functions where one has a higher rate of growth (debt, in this case) than the other (economic output.)
Today, as I write this, we have still not recognized and accepted that this path cannot continue as it is mathematically impossible for it to “work” as we are being told and sold.
Discussion below (registration required to post)
Pension plans are based on 8% annual growth forever. What happens to these plans in a zero-interest rate world as the global economy and stock markets contract?
I’m afraid it’s time for an intervention. I don’t enjoy being the bearer of difficult news, but now that Europe has stumbled drunkenly into the pool and been “rescued,” it’s once again tearfully blubbering that this time it’s all going to change, and a new prime minister in each dysfunctional, insolvent EU nation is going to make the pain and the addiction all go away.
It’s time we face the reality that Europe and the U.S. are full-blown financial alcoholics, addicted to illusion and debt. And what do they turn to as “solutions”? The very sources of their pain: illusory “fixes” and more debt.Have you ever seen a global market as dependent on rumors of “magical fixes” for its “resilience” as this one?
What’s truly remarkable is the psychotic distance between the facts–Europe’s debts are impossible to service, its economy is free-falling into recession, the U.S. is already in recession, China’s real estate bubble has popped and cannot be reinflated– and the heady leap of global markets on every trivial rumor of a magic fix.
Since it runs in our family, I do not use the word “alcoholic” lightly. Those of you who have to deal with alcoholics know the drill: the liquor stashed behind the fridge, as if everyone doesn’t know it’s there; the stumbling into the pool, the humiliating rescue, the tearful promise of change which goes nowhere, and all the rest.
I seriously suspect the entire global economy is alcoholic–not about liquor, but about debt and the impossibility of paying entitlements which expand by 8% a year in an economy which grows by 2% a year at best.In all the millions of words printed about the subprime meltdown, the gutting of the U.S. financial and housing markets and now about Europe’s impossible burden of debt, how often have we seen anyone in the MSM or mainstream financial press confess that “borrowing our way of out of trouble” is not just financially bankrupt but morally bankrupt as well?
Like a full-blown alcoholic, the people and governments of the U.S. and Europe stagger from debt source to debt source, weaving drunkenly between “stashes” of new debt in the Fed, Treasury and private sector markets.Despite the abject failure of the magical-thinking “fix” of becoming solvent by exponentially expanding debt, we see the same pathetic pattern repeating in Europe, where the apologists for the alcoholic debt-binge continue to claim the risk of systemic failure and collapse of asset values is low.
While everyone is focused on the drunk being pulled from the pool–Europe’s sovereign debt–another drunk is teetering on the edge: public and private pension plans.Here’s the reality in a nutshell: pension plans only work if they earn average returns of around 8% per year, basically forever.
Gripped by the mono-maniacal desperation of an addict who sees no other path but another hit, central banks have lowered interest rates to near-zero to “spark growth.” Unfortunately the only thing being goosed is the future cost of servicing the additional debt.
How do you earn 8% on money which yields at best 3%? You can’t. How do you reap a gain on bonds when interest rates have already hit bottom and can’t fall any lower? You can’t.
Which leaves the stock market as the only hope for pension plans. Since the bottom in March 2009, central banks engineered a “magic solution” that generated fantastic stock market returns: by constantly lowering interest rates and increasing liquidity, central banks force-fed stock markets with demand (there was no other place to get a fat return) and the see-saw of interest rates and “risk-on” equity markets: as rates decline, equities floated ever higher.
Now that rates are near-zero, then the central banks are pushing on a string: there is no “magic” left to juice equity markets.
The equity markets are in effect living on vitamin C and cocaine:rumors of new “magic fixes” and the hit of central bank infusions.
Once rumor is no longer enough to float markets higher, then the consequences of depending on stock market returns will hit pensions with a terminal case of the DTs.
The “magic” of ramping up debt to create the illusion of a healthy economy only works once.The “fix” “worked” from 2009 to 2011, but now the high is wearing off. The next round of rumor and debt expansion won’t even create the illusion of growth, as the global economy is already careening back into the contraction that trillions in new debt staved off for three years.
I have covered the disconnect between the promises of 8% yields forever built into public pension plans and a slow-growth/no-growth economy many times:
Yes, There Will Be Armageddon: Government Goes Bankrupt (July 24, 2008)
Public Pension and Healthcare Costs and Financial Common Sense (February 28, 2011)
Every once in a while an MSM outlet addresses the issue directly, for example:
Pension issue balloons with soaring costs(S.F. Chronicle):
Pension costs are soaring to $800 million, tripling during the last decade, as Los Angeles faces years of projected budget deficits even with deep cuts in services and staff.The main driver of higher pension costs is the stock market crash. CalPERS (California’s primary public pension plan) gets about 75 percent of its revenue from investment earnings. Its portfolio peaked at $260 billion in 2007, fell to $160 billion last year and now is about $204 billion.
But under the laws now dominating government budgets, many expenditures essentially are or will be growing faster than both revenues and the rest of the economy. In fact, in many areas of the budget, automatic expenditure growth matches or outstrips revenue growth under almost any conceivable rate of economic growth.Now, so much spending growth is built into permanent or mandatory programs that they essentially absorb much or all revenue growth. Meanwhile, we’ve also cut taxes, widening the gap between available revenues and growing spending levels.
Consider government retirement programs. Most are effectively “wage-indexed” insofar as a 10 percent higher growth rate of wages doesn’t just raise taxes on those wages, it also raises the annual benefits of all future retirees by 10 percent. Meanwhile, in most retirement systems, employees stop working at fixed ages, even though for decades Americans have been living longer.
Today, so much of government spending is devoted to health and retirement programs that their growing costs tend to swamp gains we might achieve in holding down the ever-smaller portion of the budget devoted to discretionary spending. Still other programs add to the problem, such as tax subsidies for employee benefits, the cost of which grows automatically without any new legislation.
In other words, the entire system of state and local government is now based on the same 8% “permanent high growth” of the 1990s speculative market.Funding increases are wired in, regardless of how much tax revenues fall. That is a recipe for insolvency.
Now we get to the heart of the matter. Which institution engineered the heady stock market bubble of the 1990s that created the illusion of “permanent high returns” and growth of tax receipts? The Federal Reserve.Which institution has made the stock market the proxy for the economy? The Federal Reserve. Which institution has engineered a three-year stock market rally to put off the inevitable implosion of pension plans, entitlements and tax revenues that must grow by 8% annually while the real economy is flat-lined? The Federal Reserve.
We can ask the same questions of Europe and get the same answer there, too: the European Central Bank (ECB).
Addiction is a terrible disease, founded on the illusion that the pain of facing reality can be put off forever by dulling the pain of addiction itself with ever-higher doses of self-destruction. We are witnessing the self-destruction of economies and machines of governance that have chosen denial, illusion, rumor and magical thinking over facing reality. The drunk has been pulled from the pool once again, slobbering self-piteously and promising to really, really change tomorrow, and we believe the lie, at least until morning, because hope is so much easier than reality.
Charles Hugh Smith – Of Two Minds