The Egyptian Central Bank is seen in Cairo, Egypt, Friday, May 20, 2005. Photographer: Eduardo Rossi/Bloomberg Newsnk of Egy The financial crisis in Egypt is
> “ In 2014, Marc Mezvinsky, a former Goldman Sachs employee and wife (sic) of Chelsea Clinton, launched along with two other Goldman employees to attract investors hoping to on Greece’s broadly touted economic recovery.”
What was corrupt Jon Corzine’s insider information flow here? Didn’t he steal billions to cover his losses after betting on the same inside infomation? Where is Comey?
GS helped Greece to cook the books and they got rewarded for that. But several Greek governments were responsible for hiding deficits, etc. because they winned votes by promising and delivering goodies to the Greek people. There was no fiscal responsibility and Greek thought it was ok. Nevertheless, banks that provided the loans to the Greek were bailed out, not the Greek people. They are on the hook to pay off that debt. The EU taxpayers are the collatoral, they are backstopping the bailout. The banks got their bailout and laughed all the way to their banks. The Greek by blinking and not going default saved the Eurozone at the time.
Bank America forced countrywide AiG, GE all bailed the paper to MBS or tranches of public debt,
Greece debt was sold (whatever printing from the AlanBenFelon calls it) including all the Crony GS den of thieves.. GE was the most unreported http://lawprofessors.typepad.com/files/clubbingcomplaint.pdf this was the most egregious crony capital use. Yup no hotels, Buildings or State gambling to secure these loans just Austerity (taxes at sanction and starvation gun point).
Peace out and as Pieczenik says internet was invented by defense department. The Greek debt is just another example of the fricking highway to Serfdom turned into a formula one race track.
1st RULE: You do not talk about FIGHT CLUB.
2nd RULE: You DO NOT talk about FIGHT CLUB.
3rd RULE: If someone says “stop” or goes limp, taps out the fight is over.
4th RULE: Only two guys to a fight.
5th RULE: One fight at a time.
6th RULE: No shirts, no shoes.
7th RULE: Fights will go on as long as they have to.
8th RULE: If this is your first night at FIGHT CLUB, you HAVE to fight.
RULE 7 RULE 7
He had a heads up on the crash of the Greek bonds alright. Then he went out and collected all the investors money. He never bought a single security. They just made up the documents. Then, when the Greek bonds crashed, they used that as a cover for stealing the money. Easy peasy.
`What’s the time line with Corzine placing his bets on Greek debt / then looting traders accounts at MFG to cover his loses? How did he get it so wrong being so close to the Clintons?
Tunisia set for Trump-led boom as Hillary cabal exits scene
Under the leadership of GE CEO Jeffrey Immelt is also destined to become the oil services leader in NAWA and Africa with its acquisition of American oil services giant Baker Hughes.
Tunisia’s unique position between two major oil producing countries such as Libya and Algeria; a developed economy with a strong equities market and proximity to Milan; on top of Tunisia’s good neighbor foreign policy — makes the country ideal as GE continues to win billions of dollars in contracts throughout Africa.
GE is currently eyeing taking a US$100 million plus wind farm project initially developed by Miami, Florida-based developer UPC Renewables at Cap Bon peninsula near the port city of Bizerte in northwest Tunisia. UPC Principal Peter Gish told Capitol Intelligence/CI MENA that his company has spent years negotiating land rights and regulatory approvals to build the wind farms.
GE is currently talking to Italy’s state controlled utility ENEL unit ENEL Green Power to team-up in the development of UPC’s and other renewable energy project in the region. The US government’s Overseas Private Investment Corporation (OPIC) is especially motivated to provide up to US$400 million in either corporate or project finance to any qualified operator in the renewable energy sector in Tunisia, one of OPIC’s strategic markets.
Enel Green Power is already the largest operator of wind power in the United States and it recently sold a 49% stake in its North American renewable energy assets to GE Energy Financial Services for US$440 million and operates 21.6 gigawatts of renewable power in Europe and North Africa.
The swamp is Wall Street Washington Hollywood and the Corporate Mdia. Trump will be lancing the boil and draining the swamp till end of days.
I love secret loans, especially when it’s to a Foreign Government.
Nuttin’, Nuttin’ at all, Pfffft it’s not like I’m doing a secret loan or something.
You know, ’cause that would be like, Kway-Zee, Right
And how do you know, they haven’t secretly paid it back
I always get my squid pro quo.
They eat a lot of squid in Greece. Calamari I believe it’s called. Tastes good but a little too rubery in the testure for my liking.
(I put the post below up on the Mezvinsky fund collapse thread earlier in the day. I never tire of sharing it. The MSM sure keeps a lid on it.)
Marc Mezvinsky’s father went to federal prison for about five years for basically scamming public funding programs – significantly targetig blacks. Kind of like raising funds to help Haiti but pocketint 90% of gross – except in this case the “donors” were the fed:
Marc’s mother filed for bankrupcy. That happens sometimes when your husband goes to the Big House. She was denied some $770K in relief when she couldn’t explain where that amount of her assets went in the few years preceeding the bankruptcy filing. You know how that goes…..wife senses that hubby is a criminal and the feds are on the trail….she starts preparing her nest egg for the day hubby appears in the orange jumpsuit and she needs to reboot the system. Why she didn’t go to jail as well, I don’t know.
Wait wait!!!!! There’s more:
‘Missing’ State Dept. Email Brings ANOTHER Clinton Family Member In Heat Of Scandal
A sitting secretary of state might well have professional business dealings with an economic bailout of an important – if bankrupt – European country, but what business did the American State Department have sharing government information with outside groups? Especially when big money and big names were involved?
That’s hard to say, because the State Department has “lost” the original email in question. It’s clear from the subject line that it refers directly to the Greek bonds –“Solidarity Bonds Greece Revised”— and therefore to Marc Mezvinsky’s business, but the email itself and its attachment have been “lost” by the federal bureaucracy Hillary once ran.
But considering it obviously bears directly on a topic the secretary of state’s son-in-law had bet his professional career on, the email should be of some interest to American taxpayers interested in just how corrupt and conniving Hillary Clinton actually is.
State Department Admits It ‘Lost’ Clinton Foundation Email
The email contained an attachment memo about Greek bonds — a significant detail given the heavy investments Clinton’s son-in-law, Marc Mezvinsky, was making in the Greek economic recovery during that same period.
He has that in common with Jared Kushner’s father who went to jail too; convicted felon for RE scamming; Clintons and Ducks, birds of a scamming feather.
That Mutti makes Greece pay to help Clintons just says she should be out in 2017.
It’s not lost, it’s all on Weiners laptop, most valuable piece of computer hardware on the planet. wrap it up in Monica’s blue dress and preserve it, ( after 3000 back up copies of course )
Wrap it up in Monica’s blue dress. Just the image – how am I going to have dinner now? Good God, where are the post police around here??
Aren’t Ivanka and Chelsea good friends?
Aren’t Sasha and Malia good friends with Chelsea?
The Bush daughters are good friends with Chelsea as well.
That info is in a lot more interesting places than Weiner’s lapdance.
The corruption runs so deep the only fix may be to tear it down and rebuild. You gotta kill the termites or the new structure will quickly fail.
“At a time where Greece’s financial woes were not only well known to Goldman Sachs, but becoming increasingly obvious to the world, the Eaglevale fund bears alarming signs of being a blatant attempt to steal cash from unwitting investors too foolish to see the writing on the wall.”
what Eagleview bought in terms of Greek securities – what were the securities, who was the seller and when did the transaction take place?
Well, nothing new here (or, rather, nothing surprising here), but I love this…
“Marc Mezvinsky, a former Goldman Sachs employee and wife of Chelsea Clinton”
It’s a story that has been told many times in part, but not in total. While Goldman Sachs’ role in helping to create the environment for crisis is well known, less discussion is given to the role the Clinton family played in helping Angela Merkel to consolidate political control of Greece while also assisting Goldman as it continued to benefit from the meltdown once austerity measures had begun. The Clintons appear to have received funds from both Germany and Goldman Sachs during this period.
I. Goldman Sachs Was Responsible For Greece’s Economic Collapse
Goldman Sachs is generally blamed for having a hand in intentionally causing Greece’s 2008 financial crisis. have noted that the financial group was instrumental in helping to arrange a secret loan of 2.8 billion euros for Greece, disguised as an off-the-books “cross-currency swap” – a complicated transaction in which Greece’s foreign-currency debt was converted into a domestic-currency obligation using a fictitious market exchange rate. This allowed Greece to hide 2% of its debt but left it immediately in a much worse position after the effects of 9/11 caused the amount Greece owed to Goldman double.
Meanwhile, Goldman padded its profits by leveraging Greece as much as possible along with most of the rest of the global economy. It continued this pattern of predatory lending advice in 2005, when they renegotiated the deal with Greece to lock in their debt at a staggering 5.1 billion euros. In 2009, it made another proposal for a financial instrument that would push the debt from Greece’s healthcare system into the future, delaying payment. In the aftermath of its efforts to financially hobble various nations across Europe, Goldman employees have moved into positions of control within Europe’s financial sector. Mario Draghi, managing director of Goldman’s international division at the time of their negotiations with Greece, has since moved on to become the head of the European Central Bank.
II. The Clintons Helped Goldman Sachs To Continue To Exploit The Greek Crisis Financially
As Greece’s crisis exploded, Goldman associates began to make apparent moves to continue to leverage the situation as much as possible. In 2014, Marc Mezvinsky, a former Goldman Sachs employee and wife of Chelsea Clinton, launched along with two other Goldman employees to attract investors hoping to on Greece’s broadly touted economic recovery. As a former Goldman employee, it is strange that Mezvinsky appeared to be so certain of a Greek recovery, given his relationship to the finance group that laid the foundation for the crisis and knew firsthand how unlikely Greece was to recover. reveal that new investors to Eaglevale Hellenic were required to put down at least $2 million. Goldman chief executive Lloyd Blankfein not only invested in the firm, but allowed his association with the fund to be used in its marketing. Hillary Clinton has on how much Blankfein invested in Eaglevale Hellenic. At a time where Greece’s financial woes were not only well known to Goldman Sachs, but becoming increasingly obvious to the world, the Eaglevale fund bears alarming signs of being a blatant attempt to steal cash from unwitting investors too foolish to see the writing on the wall.
The Clintons were receiving inside information that would have kept them incredibly well informed about the Greek crisis. Gary Gensler, former co-head of finance at Goldman Sachs and the financial director of Clinton’s 2016 election campaign was revealed in to have been sending Clinton inside information on Greece’s recover prospects while he was acting as the head of the U.S. Commodity Futures Trading Commission (CFTC) in 2011. In 2012, Sydney Blumenthal Clinton classified information about German leadership’s thoughts on further potential bailouts for Greece which apparently had been acquired by a “sensitive source” working undercover within the German government. While receiving some of this information was part of Clinton’s job as Secretary of State, her close relationship to Goldman Sachs and her son in law’s Greek fund raises very clear questions about potential conflicts of interest.
III. The Clintons Helped Germany Consolidate Political Control Of Greece By Encouraging Austerity
As Greece began to react negatively to austerity demands made by Germany during its first two successive bailouts of the financially embattled nation, the Clintons worked to ensure that Greece did not leave the Eurozone and continued to accept austerity measures even when these actions did not benefit the German and Greek people. By January 2015, Greeks were tired of increasingly demanding German financial bailouts and elected Alexis Tsipras as Prime Minister after he promised to . The media was awash with rumors that Greece would leave the Eurozone in a “Grexit.” By early July, emails from showed that the Clinton camp was working to ensure that Greece remained in the EU and that Bill Clinton speak directly with Prime Minister Tsipras to prevent Grexit.
On July 10, just days after the first flurry of emails worrying about a potential Grexit, reported that German Chancellor Angela Merkel was inclined to listen to the demands of German voters and say no to another round of austerity. Later on the same day, Bill Clinton’s foreign policy advisor and Hillary Clinton associate John Podesta were included in an email chain disapproval of Merkel’s decision and decided that Mr. Clinton should call Merkel to “suggest” a change of course. Just nine days after this email was sent, the reported that Merkel was “flip flopping” and would consider a third round of austerity measures for Greece. The austerity measures were as being far too generous to Greece and not being in the best interest of German taxpayers. The multiple measures of austerity ultimately reduced Greek sovereignty and increased their reliance upon the EU.
IV. The Clintons Received Apparent Compensation From Goldman Sachs And Germany For Their Work
The Clintons not only held improperly close financial and familial relationships to individuals associated with the finance group that caused Greece’s crisis, but also apparently assisted Angela Merkel in consolidating German control over the EU and forcing certain states such as Greece to become increasingly dependent upon the union. In both cases, they appear to have been compensated handsomely for the roles they played.
Goldman’s role in creating the Greek crisis and Mezvinsky’s attempts to attract cash to what savvy investors should have seen as a doomed venture raises new questions about the paid to the Clintons by Goldman for “speaking events” from 2001 to 2016, the exact same time that Goldman Sachs was involved with helping lay the foundation for Greece’s collapse. Some of these speeches Eaglevale Hellenic Opportunity opened its doors in 2014.
Germany also made significant donations to the Clinton Foundation and Hillary Clinton’s election campaign. In February 2015, at the same time Tsipras was pushing for an end to austerity measures, the German government was revealed in to be among foreign governments who were “recent donors” to the Clinton Foundation. Clinton insiders frequently about whether the foreign donations might be perceived as unethical or illegal. It has since been revealed that nearly £4 million in taxpayer’s money to the Clinton Foundation during the height of the 2016 U.S. presidential election.
Angela Merkel’s attempts to retain control over Greece through austerity have been just one of a number of measures to consolidate and centralize power in the European Union. In January 2017, reported on accelerated efforts to create an EU Army, which would cause substantial financial, military and political burdens for European states.
Many considered July 2, 1997 as the day the Asian financial crisis began, when the Thai Baht dropped by as much as 20 percent.
- Stock market dispersion is widening as technical indicators show sell signals, suggesting a turbulent road ahead for equities.
- Investment manager John Hussman points out that these indicators haven’t flashed sell simultaneously since the 2007 financial crisis.
All is not well beneath the surface of the stock market.
Market dislocations are running rampant, suggesting turbulence ahead that could go well beyond the modest weakness major indexes have seen over the past two weeks. And to make matters worse, some of the market’s most ominous technical indicators are flashing serious warning signals.
John Hussman, the president of the Hussman Investment Trust and a former economics professor, is particularly concerned about the growing dispersion of stock market returns. Dispersion reflects how widely market returns are distributed, and it’s an important measure to watch in order to assess the crosscurrents that drive broader indexes.
On November 14, the number of New York Stock Exchange companies setting new 52-week lows climbed above the number hitting new highs, representing a “leadership reversal” that Hussman says highlights the deterioration of market internals.To make matters even more dicey, stocks also received confirmation of two bearish market breadth readings, known as the “Hindenburg Omen” and “Titanic Syndrome.”
According to Hussman, these three readings haven’t occurred simultaneously since 2007, when the financial crisis was getting underway. And the previous instance before that was in 1999, right before the dotcom bubble crash. That’s not very welcome company.
Here are some more details around the Hindenburg and Titanic indicators referenced above:
- Hindenburg Omen— A sell signal that occurs when NYSE new highs and new lows each exceed 2.8% of advances plus declines on the same day. Note that on November 14, they totaled more than 3%.
- Titanic Syndrome— A sell signal that is triggered when NYSE 52-week lows outnumber 52-week highs within seven days of an all-time high in equities. Stocks most recently hit a record on November 8.
“While the names of these indicators may seem silly and overly menacing, they actually get at something very serious,” Hussman said. “They capture situations where the major indices are near new highs, yet market internals show much greater divergence. In my view, this type of market behavior is indicative of a subtle shift in the preferences of investors, away from speculation and toward risk-aversion.”
It must be noted, however, that Hussman has been sounding the alarm on a major stock market selloff for years now. In a recent blog post, he said that “Wall Street has gone completely mad” as investors continue to buy with stocks at stretched valuations, and called for negative equity returns over the next 10 years.
Throughout the second half of 2014, he issued regular warnings about a crash, even going as far as to say stocks were crashing in October 2014. The S&P 500 has rallied another 30% since then.
Hussman’s view also stands in stark contrast to many experts across Wall Street — most notably the equity strategists responsible for each firm’s S&P 500 forecasts. They forecast that the benchmark will be little changed from current levels into year-end, according to data compiled by Bloomberg.
Looking ahead to 2018, UBS sees the S&P 500 climbing as much as 9% over the course of the year. Meanwhile, Goldman Sachs thinks US stocks will be kept afloat by speculation and progress around tax reform.
With all of these varying opinions floating around, it’s easy for investors to get confused. At this point, its seems like the best approach is for even the most bullish investors to proceed with caution.
That will be the point when all the “non believers” will wake up. Too late of course. The acknowledgement that the “conspiracy nut jobs” were right all along will kill many of them.
No no no! You are supposed to blame the millennials!!! Duh!
Don’t you now all the current problems in America are because of the newest voting block (insert massive rolling eyes emoji here)
As so many pensioners find it normal that generation X won’t have a pension, it’s only just that the pensioners feel the burn also.
There’s way to many people who don’t give a fuck about anybody else. it’s dog eat dog. Well, let them get what they find normal for others.
The same shit is happening here in Europe. Over here, our pension funds will run dry in 2018/19.
That’s why it’s good to own gold and silver because they’ll confiscate all funds from the people to try to save it.
the bankers are ALWAYS behind it and ZIRP has quite deliberately robbed the elderly, savers and pension funds while further enriching the rich. Just keep the water temperature at simmer….
What’s that you say? A leftist program backfiring causing the masses to suffer? Bullish
Anybody with half a brain can figure out that creating tax burdens such as SS and then forcibly decreasing your replenishment rate through abortion and feminism is a recipe for disaster. It’s like building a bridge first and the support columns under it second.
Unfortunately for all of us the lefties have no brains and righties have no balls
Don’t forget allowing unbridled immigration and signing everyone up for benefits. If you managed to get refugee status you (and your family) go on full SS disability! We have far too many that are now collecting government mopney and services without every putting a dime in.
Let me guess these refees don’t have to pick up the phone and call Highpower Lawyer Esq. because they have the correct skin tone and can land their disability claim on the first app.
I don’t expect to get jack fucking shit from the government.
Which is why I have been stacking silver for years. That is my retirement plan. Period.
“But the next financial crisis that rocks America won’t be driven by bankers behaving badly.”
If it hadn’t of been for ‘bankers behaving badly’, which is the grossest understatement I have ever read, then there would not be a pension crisis. Period.
The ‘bankers’ engaged in multiple criminal acts, acts upon acts, until they blew it up. Then they ‘inhaled’ 5 Trillion in the US and 80 Trillion, world wide, of public debt money and not one of them has even been charged. That fact says more about where American ‘is at’ today, than anything else.
This problem goes back decades. For decades they were ‘cooking the books’ to make their corporations appear more profitable, and more valuable, than they were, as the fat profits walked out the door with them to somewhere safe like gold in Switzerland. And so the market went up and everybody was happy. Then, one day they noticed that there was an 80 Trillion US dollar discrepancy between the amount of debt and the ‘real’ value of their assets’, so, of course, the Central Banks ‘just had to give them all that brand new capital’, while destroying the value of the capital everyone else was holding. That is another crime. A crime against humanity. What has happened is the complete and utter repudiation of the capitalist system as nothing more than a money spigot for the few who are ‘connected’ to the mechanical tit. Everybody else loses, until, as Jefferson opined, ‘they will awake one morning homeless in the land their forefathers conquered’.
And that is EXACTLY what has happened.
Now, what are you going to do about it?
Meanwhile, Jamie Diamond is a billionaire.
And now you know the real reason for mass illegal immigration. They need more payers. Fuckers pissed away a surplus when boomers were young and now they will fuck you again by destroying culture
I strongly agree with the phyzz stackers, and that’s why I’m amongst them.
I also believe any convenient silver confiscation programs imposed by our benevolent Government will be such a failure. I watched one YouTube video where the government and/or bankers didn’t want the people to escape their chokehold, offering a pitiful $2 Oz on silver (WTF? a massive LOSS which of course would be revalued later after covering THEIR shorts), but we wouldn’t have to pay any capital gains. FUCK YOU! Make JPM/Chase pay that pittance instead on their damned 500MM Oz stash, then we’ll talk, if we even consider that shit!
The $11+ Trillion that was thrown at Banks/Corporations/Insurers and Wall Street after the last crisis should take care of the Pensions just fine.
What’s another $20 Trillion in debt? No such thing as money.
Pray to whomever you worship that a cop in a dangerous jurisdiction doesn’t pull you over and ask where all that $$ he saw in your wallet/purse/pocket/etc. came from, lest you wind up unintentionally funding his pension.
It’s time to rid both the Feds and States of Civil Asset Forfeiture, the Anal Rape without K.Y. of the 21st Century.
add another housing crash, a stockmarket crash and shit will be complete.
and the demographic pineapple shows that it can only GET WORSE FOR THE NEXT 3 TO 4 DECADES!!!! SO FORGET A QUICK FIX!!!
In Canada they denied me Old Age Pension because I couoldn’t produce records as far back as 1989.
They must be desperate to deny what I always thought was coming to me, yet mothers get a ton of money every month to feed and cloth their children. Foster parenting has become a lucrative business. Immigrants who have no real skills, cannot speak the language and walk accross the border from USA are expecting that Canadians shell out for them, yet it is an American problem as the USA bombed the shit of their countries, ruined their dwellings and businesses and made it unsafe to live there.
We need a wall and we need to prevent our governments from spending more than they take in and they should take in a lot less to give workers and savers in the private sector a chance. This robbery and murder has to stop.
I’m not a fan of the “greed is good” mentality of Wall Street investment firms. But the next financial crisis that rocks America won’t be driven by bankers behaving badly. It will in fact be driven by pension funds that cannot pay out what they promised to retirees. According to one pension advocacy organization, nearly 1 million working and retired Americans are covered by pension plans at the risk of collapse.
The looming pension crisis is not limited by geography or economic focus. These including former public employees, such as members of South Carolina’s government pension plan, which covers roughly 550,000 people— one out of nine state residents — and is a staggering $24.1 billion in the red. These include former blue collar workers such as roughly 100,000 coal miners who face serious cuts in pension payments and health coverage thanks to a nearly $6 billion shortfall in the plan for the United Mine Workers of America. And when the bill comes due, we will all be in very big trouble.
It’s bad enough to consider the philosophical fallout here, with reneging on the promise of a pension and thus causing even more distrust of bankers and retirement planners. But I’m speaking about a cold, numbers-based perspective that causes a drag on many parts of the American economy. Consider the following.
Pensioners have no flexibility
According to a Bureau of Labor Statistics report from 2015, the average household income of someone older than age 75 is $34,097 and their average expenses exceed that slightly, at $34,382. It is not an exaggeration, then, to say that even a modest reduction in retirement income makes the typical budget of a 75-year-old unsustainable — even when the average budget is far from luxurious at current levels. This inflexibility is a hard financial reality of someone who is no longer able to work and is reliant on means other than labor to make ends meet.
Social Security is in a tight spot
So who will step up to support these former pensioners? Perhaps the government, via Social Security, except that program itself is in crisis and will see its trust fund go to zero just 17 years from now, in 2034, based on the current structure of the program. If millions of pensions go bust and retirees have no other savings to fall back on, it will be nigh impossible to cut benefits or reduce the drag on this program. But won’t a pension collapse mean we desperately need Social Security, even in an imperfect form, well beyond 2034?
The guaranty is no solution
There is an organization, the Pension Benefit Guaranty Corporation (PBGC), which is meant to insure pensions against failure. However, it was created in 1974 as part of a host of financial reforms and is far from a perfect solution, primarily because it is funded by premiums from defined-benefit plan sponsors and assets seized from former plan sponsors that have entered bankruptcy.
What happens when a handful of troubled pension funds turns into dozens or hundreds? Remember, the PBGC guarantees a certain amount that is decidedly lower than your full pension — as members of the Road Carriers 707 pension fund learned when the group “protected” their pensions by helping to pay benefits, which had been reduced from $1,313 per month to $570. That’s better than zero, but hardly encouraging.
This is not about helping Baby Boomers fund an annual cruise to the Caribbean. Older, low-income pensioners are not saving their money. Instead, they’re spending it on necessities such as food, housing, healthcare and transportation. That means every penny you reduce from their budget means a penny in spending that is removed from the U.S. economy.
Anyone who has taken Econ 101 knows about the “multiplier effect” where $1 in extra spending can produce a much larger amount of economic activity as that dollar circulates around businesses, consumers and banks … or in this case, how $1 less in spending causes a an equally powerful cascade of negative consequences.
By helping ward against a pension crisis, America will be protecting its economy for everyone — plain and simple. But that requires some tough decisions on all sides. For instance, the U.S. Treasury denied a cut to New York Teamsters’ pension plan that was proposed last year. But now the fund is on the brink of collapse, and its recipients are facing benefits that are in some cases one-third what they were 15 years ago.
Like Social Security, current workers can’t contribute enough to offset the big obligations owed to retirees. And as with the flagship entitlement program, it’s up to regulators and legislators to step in — even when it may not be easy — in order to keep the system from collapsing. Let’s hope they make both pension reform and Social Security reform a priority in the near future.
Former U.S. Treasury Secretary Lawrence Summers attacked the policy proposals of Donald Trump on several fronts, saying the president-elect’s plans for deregulation were setting the stage for the next financial crisis.
“The deregulation in some areas like finance is hugely dangerous,” Summers said Sunday in an interview on Fox News Channel. “Who wants to go back to the era of predatory lending? Who wants to go back to the era of vastly over-levered banks?”
Summers, former chief economic adviser to President Barack Obama and Treasury secretary under President Bill Clinton, also took aim at Trump’s protectionist rhetoric. That’s already caused a plunge in the Mexican peso, giving Mexican manufacturing an extra advantage over U.S. competitors.
“Every business deciding whether to locate in Ohio or Mexico is finding Mexico 20 percent cheaper,” said Summers, who’s now a Harvard University professor. “That’s a huge tilt against the United States.”
The peso has lost 14 percent against the dollar since the Nov. 8 election.
Trump, via Twitter, has jawboned a number of companies, including automakers General Motors Co. and Toyota Motor Corp., on their plans for expansion in Mexico. “Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax,” Trump said in a Twitter post on Jan. 5.
Trump’s plans to reduce corporate taxation, Summers said, would “hugely increase inequality” and could also help strengthen the dollar, further hurting U.S. exporters and the people who work for them.
While Summers favors a big increase in infrastructure spending in the U.S. as a way to boost productivity and growth, he called Trump’s plans on that front “a Potemkin village of nothing.”
Trump’s proposal called for filling an estimated $1 trillion “10-year funding gap” of spending on bridges, highways and airports through private investment and tax credits. Prospects for the plan in Congress among Republican lawmakers are unclear.
When the stock market crashed on Oct. 19, 1987, investors panicked. It was an unfamiliar event — the previous decline of a similar magnitude occurred 58 years earlier, in 1929.
Now, 30 years after Black Monday in 1987, there are professional investors still at work who lived through that fateful day. In interviews, three of them talked about their experiences, offered insights into warning signs and gave advice on how to handle major downturns.
•Lewis Altfest, president of Altfest Personal Wealth Management, which manages about $1.3 billion for private clients. Altfest founded the firm in 1983 after working as a general partner and director of research at Lord, Abbett & Co.
•Brian McMahon, chief investment officer of Thornburg Investment Management, co-manages the $2.5 billion Thornburg Global Opportunities Fund and the $16.1 billion Thornburg Investment Income Builder Fund In October 1987, McMahon was managing Thornburg’s laddered maturity bond portfolios.
•Lawrence Haverty, associate portfolio manager of the $231 million Gabelli Multi-Media Trust In October 1987, Haverty co-managed the Putnam Growth Fund and the Putnam Convertible Fund, which had combined assets of about $2 billion.
First, let’s take a look at a chart showing the Dow Jones Industrial Average from 1987 through 1989:
The Dow dropped 4% on Friday, Oct. 16, 1987, and then plunged 23% on Black Monday.
There were many factors contributing to what was an unprecedented event to almost everyone on Wall Street. Those included a 44% run-up for the Dow from the end of 1986 through Aug. 25, 1987.
That jump was spurred, in part, by the Tax Reform Act of 1986. Long-term interest rates were rising quickly, which fed the atmosphere of uncertainty. The wild selling on Black Monday was driven in great part by the use of “so-called portfolio insurance, which everyone was selling and was basically stop-loss orders,” according to McMahon.
Also see: Here’s one key factor that amplified the 1987 stock-market crash
The New York Stock Exchange now has “circuit breakers” to temporarily halt trading on days of major declines. But those measures don’t prevent drops over multiple trading sessions.
Heading into Black Monday
“When my clients get nervous, they call,” Altfest said.
So after the Oct. 16, 1987, decline, he went to his office the next day, a Saturday, to make himself available to them. He tried to keep clients from panic-selling, but during a period of market turmoil, memories are short and people lose faith in the market’s ability to recover and set new records.
“Many people just got out and waited until the market came back sizably, before getting back in. So that didn’t turn out so well for them,” Altfest said.
Charles Schwab Corp. had begun taking client orders on weekends to be executed on Monday. “I called them and said I wanted to know the ratio of buy orders to sells. The sells were … maybe 12 to 1. So then I put in orders for about an 8% drop in the market,” Altfest said.
Altfest went in with heavy investments of accumulated cash after the Dow dropped 8% early on Black Monday. He couldn’t know that the market would decline another 15% that day, but said, “I was thrilled eventually” after the market recovered.
Black Monday was also a rough one for bond investors. A sharp movement in yields for 30-year U.S. Treasury bonds helped set the stage, with the yield jumping to 9.61% on Oct. 1, 1987, from 7.39% at the beginning of the year, according to the Federal Reserve.
“Today, if bond rates were to go up [by a similar amount], it would probably send a shudder through equity markets. So we went out of 1986 through most of 1987 with quite a bit of enthusiasm for equities,” McMahon said.
“I was not managing equity money then, but people were selling whatever they could sell. In my case, we were able to buy pre-refunded municipal bonds with [yields] in the teens,” McMahon said.
Haverty quoted a colleague of his who said “higher interest rates work,” which means rising rates can quell an overheated economy and inflation, “but eventually higher interest rates would cause problems,” he said.
Read: Wall Street pros recall ‘sheer panic’ of October 1987 stock-market crash
Haverty pointed out that October 1987 was part of the “Milken Era,” when Michael Milken and Drexel Burnham Lambert took advantage of investors’ hunger for high yields and pioneered varieties of high-yield debt securities.
“When I took over the convertible fund in 1984, it had $200 million in assets and we grew it to over a billion and a half dollars [in 1987], which was a huge amount of money in a small asset class at that point,” Haverty said.
He saw clear signs that the market for convertible bonds was overheated heading into the October crash. “Either you got good companies issuing convertibles at a preposterous price, or you got preposterous companies issuing convertibles at good prices,” he said.
Early on Tuesday, the day after Black Monday, Haverty “felt very comfortable” after the Federal Reserve made “a powerful statement” before the market open. He said that expressing his newfound confidence, while describing his decision for one of his funds to purchase shares of Caesars World (now Caesars Entertainment Corp. CZR, ) on Tuesday to his superiors at Putnam, eventually led to his firing in December 1987.
“I still have nobody to counterclaim my being the first professional fired” as a result of the crash, he said. The story had a happy ending, however. After receiving his severance pay in December, Haverty bought Caesars shares for himself and made “10 times on my investment,” he said.
Warning signs in the market today
“I think the bond market is generally overvalued, so it wouldn’t surprise me if we were to see upward pressure on interest rates and the widening of spreads on corporate credit,” McMahon said. Along with the Federal Reserve’s plan to draw down its securities investments by $30 billion a month, a possible tax-reform bill would lead investors to expect the economy to heat up, which would push interest rates higher and bond prices lower. Higher interest rates typically mean more volatility for stocks.
“I think that relative to norms, the market has an extra 20% in it,” Altfest said.
He made it clear that he was not predicting an immediate decline and that the current market is different from 1987’s, as well as the late 1990s tech bubble and the pre-crisis climate of 2007.
Haverty sees valuations of some stocks as serious warning signs for the health of the market.
“I work in the media area and have been totally wrong about Amazon and Netflix,” he said. “People are paying multiples of cash flows for these business (which essentially are not economically profitable) that basically defy gravity.”
As of Tuesday’s market close, shares of Amazon.com Inc. AMZN, traded for 127 times the consensus 2018 earnings-per-share estimate among analysts polled by FactSet, while Netflix Inc. traded for 89 times estimated 2018 EPS.
This chart shows how the ratio of price to trailing 12 months’ earnings has changed for the benchmark S&P 500 Index since 1999:
So valuations have risen considerably during the bull market that began in March 2009. But we’re nowhere near the levels of March 2000, when S&P 500 member companies were trading for a weighted 30.5 times trailing earnings, according to FactSet.
Haverty said investors’“mad quest for yield,” after so many years of very low interest rates, was a dire warning sign for the market. He cited the popularity of Tajikistan’s government bonds as one example.
Advice for investors
“I would say, if people are exposed to the frothier edge of the bond market, to take some gains,” McMahon said.
Altfest advises investors to “look at whether the companies they invest in are making money and how high the P/E ratios are.” Then, if the market takes a big fall, “take a deep breath and go outside,” he said.
In other words, keep in mind that the stock market has always recovered from crashes. If you wish to time the market, the danger is that you will wait too long for the market to recover before you jump back in. You will miss opportunities and possibly even buy back in at a higher level than the market was at when you sold. History shows that most non-professionals were better off not selling into a panic.
Haverty said that despite his opinion that stock valuations are very high, he is nearly 100% invested in equities. But when asked what he would do right now if he were a non-professional investor, he said: “I would take some money off now because valuations are high and there are clear signs of deranged valuations.”
Exchange Traded Funds
How Will Markets React When Central Banks Tap the Breaks?
It made sense during the financial crisis to throw money at the problem. Since then, balance sheets of the central banks in Europe, China and the U.S. have ballooned to $13 trillion, at least double their levels in 2008—largely through buying government bonds, and even debt and shares in companies, such as a French yogurt-maker and Japan’s top soy-sauce brewer. Now markets and analysts are seriously pondering what will happen if and when policymakers reverse course. What they don’t want is another “taper tantrum,” when yields quickly rose in 2013 after then-Federal Reserve Chairman Ben Bernanke talked about buying fewer bonds. Markets are going to have to find a way to absorb the banks’ moves. “You know what they say about mountaineering right? The descent is always more dangerous than the ascent,” said Stephen Jen, London-based chief executive of hedge fund Eurizon SLJ Capital Ltd.
Apple Will Finally Give Us a Reason to Upgrade
We rely on the world’s most valuable company to offer life-changing products. But it’s been something of a snoozer recently. Not since September 2014 has the flagship iPhone gotten a big revamp, with the larger 6 and 6 Plus series. Last year’s iPhone 7 not only brought little new to the table, it took away the headphone jack. Now, 10 years after the release of the first iPhone, Apple is preparing three phones, including one with design changes that might actually be worth upgrading for. The company is testing curved glass, bigger screens and advanced cameras.
We May Have Hit Peak Gadget
Silicon Valley’s hottest gadget has been Juicero, a $400 juice machine that squeezes $5 juice pouches. Investors thought the internet-connected device, with 400 custom parts, could replicate the subscription-model success of Nespresso and Dollar Shave Club. So they handed the founders $120 million to make a machine that … well … squeezes juice out of a bag. Turns out, you can also squeeze juice out of its pouches with your own hands, without even being connected to the internet. Venture firms wouldn’t have taken a meeting with someone just “hawking bags of juice that didn’t require high-priced hardware,” one investor said, Bloomberg’s Ellen Huet and Olivia Zaleski reported.
The Next Housing Crisis Will Probably Start in Florida
Climate change is already showing up in dramatic ways, like with the disappearance of a 300-year-old Canadian river in just four days. Its effects are becoming pretty clear in South Florida, too, where sea levels have risen 4 inches since 1992. Bloomberg’s Christopher Flavelle reports:
Tidal flooding now predictably drenches inland streets, even when the sun is out, thanks to the region’s porous limestone bedrock. Saltwater is creeping into the drinking water supply. The area’s drainage canals rely on gravity; as oceans rise, the water utility has had to install giant pumps to push water out to the ocean.
The extent of the flooding—and risk—has taken some new homeowners there by surprise. In some cases, people are selling just to get out of the market before everyone else tries to bail. Some are worrying about the ripple effects of a plunge in coastal property values, spreading to banks and insurers across the nation. In case you’ve ever wondered what’s really warming the world, these charts will help.
Here’s Where London’s Bankers Are Moving
Banks warned they would have to move people from London if the U.K. voted to leave the European Union. Now they’re following through, even before the political and economic ties are cut. Where are the jobs going? We have you covered. We’ll be tracking the moves in the wider banking sector, which represents 12 percent of the British economy. So far, 2,500 jobs are headed to Frankfurt, 1,000 to Paris and 150 to Dublin. In total, TheCityUK lobby group estimates that 70,000 jobs are at risk.
Beijing’s fear of a massive financial crisis is driving its sweeping crackdown on big borrowers such as conglomerates Dalian Wanda and LeEco, according to an opinion piece in Communist Party mouthpiece People’s Daily on Monday….
Then Treasury Secretary Henry Paulson looks over at his colleagues including then Fed Chair Ben Bernanke and then NY Fed President Tim Geithner.Eight years ago, the US economy went into recession, the US housing market crashed, and credit markets seized, bringing the banking industry to its knees.
Businesses went down. Workers lost jobs. And Americans were losing hope, which only made things worse.
For many, the critical low moment Lehman Brothers bankruptcy on September 15, 2008. But the memory of critical events before and after that day is slowly fading.
Business Insider outlined the major moments from 2007 to 2009. From the initial reports of subprime defaults to the collapse of Lehman Brothers to AIG’s second bailout, here are the 27 scariest moments of the financial crisis.
Note: Former Business Insider reporter Steven Perlberg contributed to this feature.
FEB. 8, 2007: HSBC says its bad debt provisions exploded because of a slump in the US housing market. Regular people begin to pay attention to what subprime is.
Flickr/Michael Fleshman (fleshmanpix)
APRIL 2, 2007: New Century files for bankruptcy. It was the largest subprime lender in the United States.
The side of a building in Detroit, Michigan.Joshua Lott/Reuters
JUNE 21, 2007: Merrill Lynch sells off assets in two Bear Stearns hedge funds as the funds hemorrhage billions of dollars on bad subprime bets.
Matthew Tannin, former investment bank Bear Stearns hedge fund manager, is escorted by law enforcement officials to a waiting car after being arrested in New York June 19, 2008, after a federal criminal probe into the collapse of funds he and fellow former hedge fund manger Ralph Cioffi oversaw, according to the Federal Bureau of Investigation. REUTERS/Chip East
AUG. 9, 2007: France’s largest bank, BNP Paribas, freezes withdrawals from three investment funds after U.S. subprime mortgage losses crush markets. “The complete evaporation of liquidity in certain market segments of the U.S. securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating,” BNP said in the release.
People pass the Paris headquarters of France’s biggest listed bank, BNP Paribas, which froze 1.6 billion euros ($2.2 billion) worth of funds citing U.S. subprime mortgage sector problems, August 9, 2007.Regis Duvignau/Reuters
SEPT. 4, 2007: Libor — the interbank interest rate — hits 6.7975%, its highest level since December 1998.
Burse trader Dirk Mueller reacts as he sits in front of the German DAX index board at Frankfurt’s stock exchange, August 17, 2007.Kai Pfaffenbach/Reuters
OCT. 24, 2007: Merrill Lynch announces an $8.4 billion quarterly loss, the largest in its history, thanks to write-downs on subprime mortgages.
OCT. 31, 2007: Meredith Whitney says Citigroup will have to cut its dividend. Later, it does.
OCT to NOV 2007: Numerous CEOs would not make it through the financial crisis. Stan O’Neal at Merrill and Chuck Prince at Citigroup both exit, taking monster severance packages with them. O’Neal, for one, walked out with $161.5 million.
DEC. 11, 2007: The FOMC reduces the federal funds rate to 4.25% and cuts the primary credit rate to 4.75%.
MARCH 16, 2008: JPMorgan Chase buys Bear Stearns for $2 a share in a fire sale (later it would be $10 a share). The Federal Reserve finances the deal, providing $30 billion so Bear doesn’t go bankrupt.
2008: Insurers like MBIA, who have written against the failure of CDOs, get downgraded and collapse. Hedge funder Bill Ackman would reportedly make his investors over $1 billion on a short position.
Bill Ackman.AP Photo/Richard Drew
SEPT. 7, 2008: The saga of Fannie Mae and Freddie Mac, guarantor of half of U.S. mortgages, culminates with a takeover by the U.S. government.
Alfredo Ochoa and his one-year-old daughter, Josefina, attend a rally to ask state lawmakers to stop home foreclosures and help modify loans at the State Capitol in Sacramento, California November 25, 2008.Max Whittaker/Reuters
SEPT. 14, 2008: Bank of America buys Merrill Lynch for $50 billion.
Flickr/See-ming Lee (seeminglee)
SEPT. 15, 2008: Meanwhile, Lehman Brothers can’t find a buyer and files for bankruptcy.
SEPT. 16, 2008: For only the second time in history, a money market fund “breaks the buck” and reports share value below $1. Americans run on money market funds, long considered safe havens, en masse. $140 billion has been withdrawn year-to-date.
Shannon Stapleton /Reuters
SEPT. 17, 2008: The Fed rescues insurance giant AIG from bankruptcy for $85 billion.
Ben Bernanke.REUTERS/Jonathan Ernst
FALL 2008: Longstanding banking giants like Wachovia and Washington Mutual begin to disappear as they are bought by other banks for pennies on the dollar.
A sign at a Washington Mutual Bank (WaMu) branch is shown in San Francisco, California September 26, 2008.Robert Galbraith/Reuters
SEPT. 29, 2008: The U.S. House of Representatives defeats a proposed $700 billion emergency bailout package, 228-205. Stocks plunge 788 points as the votes are counted live.
OCT. 3, 2008: TARP is passed. Congress approves a $700 billion bank bailout, but stocks continue to fall following investor worries that the bailout won’t be enough.
OCT. 8, 2008: The New York Fed bails out AIG for the second time, for $37.8 billion.
Ben Bernanke.Jonathan Ernst/Reuters
OCT. 13, 2008: Treasury Secretary Hank Paulson sits down with nine major bank CEOs. When they leave the room hours later, the federal government has taken a huge equity position in Wall Street. The total bailout package looks more like $2.25 trillion, well more than the original $700 billion available.
Hank Paulson.Lucy Nicholson/Reuters
OCT. 15, 2008: The stock market has another hellish day, plunging 733 points (7.9%).
OCT. 16, 2008: Warren Buffett authors a New York Times op-ed called “Buy American. I Am.” He gets absolutely crushed by critics when markets crash further. Rising stock prices in the post-crisis years would later vindicate him.
Warren Buffett.REUTERS/Fred Prouser
“Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497,” Buffett wrote in the NYT.
OCT 2008: Commentators wonder if this is the end of life as we know it. “The worst financial crisis since the Great Depression is claiming another casualty: American-style capitalism,” wrote The Washington Post’s Anthony Faiola. Simon Jenkins at The Guardian called this line of thinking “journalistic wish-fulfillment and glee.”
DEC. 11, 2008: The NBER announces that the economy is officially in a recession.
Chip Somodevilla / Getty Images
FEB. 17, 2009: Obama signs the American Recovery and Reinvestment Act of 2009.
NOV 2008 — SPRING 2009: The Financial Crisis continues, crippling employment. Eventually the Dow Jones plunged to 6,547.05 on March 9, 2009. It was at its lowest since April 1997.
Flickr/Tim Pierce (qwrrty)
Banks would continue to report losses, fight regulation efforts, and eventually stomach higher capital requirements.
Flickr/Cat Branchman (kozemchuk)
Eventually, after extraordinary bailouts from the Fed and Congress, the market bottomed and the economy slowly recovered.