Tag Archives: California Governor Jerry Brown

What CalPERS On The Brink Of Insolvency Means

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The largest public pension fund in the United States is the California Public Employees Retirement System (CalPERS) for civil servants. California is in a state of very serious insolvency. We (Martin Armstrong) strongly advise our clients to get out before it is too late. I have been warning that CalPERS was on the verge of insolvency. I have warned that they were secretly lobbying Congress to seize all 401K private pensions and hand it to them to be managed. Mingling private money with the public would enable them to hold off insolvency a bit longer. Of course, CalPERS cannot manage the money they do have so why should anyone expect them to score a different performance with private money? Indeed, they would just rob private citizens to pay the pensions of state employees and politicians.

CalPERS has been making reckless investments with retiree capital to be politically correct with the environment rather than looking at projects that are economically based. Then, CalPERS has been desperate to cover this and other facts up to deny the public any transparency. Then, because stocks they thought were overpriced last year, they moved to bonds buying right into the Bond Bubble. Clearly, California’s economy peaked right on target and ever since there has been a steady migration of residents out of the state.

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Meanwhile, Governor Jerry Brown has been more concerned about bucking the trend with Trump effectively threatening treason against the Constitution. The insolvency at CalPERS has exceeded $100,000 owed by every private citizen in California to government employees. It was $93,000 that every Californian owed back in 2016 for their state employees. In January 2017, Jerry Brown wanted a 42% increase in gas taxes to bailout CalPERS. California is an extremely liberal state – but that means they are also LIBERAL in spending the FUTURE earning of residents on public employees.

The pension crisis at CalPERS is getting worse by the day. The State looks to be totally bankrupt by 2021-2022. CalPERS has just decided to increase the contribution of local governments and cities to their fund. The cities say they are approaching bankruptcy because of rising subsidies, but CalPERS itself is approaching insolvency. The problem is that there really is no honest reform in sight. The choice is clear – CUT pension benefits of government employees or RAISE TAXES! 

CalPERS simply needs a bailout and very soon. It looks like they are hunting for it by sharply increasing taxes where ever they can get away with it, for state employees to grab whatever they can of your future income for themselves. This is a trend that will bring down Western society as a whole – a Sovereign Debt Crisis of untold proportions.

Board Member Steve Westly even told The Mercury News that a bailout was needed and soon. Currently, CalPERS manages approximately $350 billion of future pension claims of its members. Recently, CalPERS passed an amendment to the statutes, which resulted in higher contributions for the California municipalities. The amount of contributions has been increased several times over the past few years and this time the cities do not appear to be able to handle the increased costs. With the Trump tax reform, the real incompetence of local government is coming to a head.

Once CalPERS was 100% funded with assets under management. In fact, they had a surplus in the good old days before Quantitative Easing. Right now, the system no longer has more than two-thirds of future claims covered. CalPERS itself expects an annual return of 7% on its financial investments when it needs 8% minimum. Most pension funds run by the States are insolvent or on the brink of financial disaster. This is what I have been warning about that the Quantitative Easing set the stage for the next crisis – the Pension Crisis. The Illinois Pension Fund needs to borrow up to $107 billion to meet its payment obligations with no prayer of repayment. Promises to state employees are over the top and off the charts. This is why Janet Yellen at the Fed kept trying to raise rates stating that interest rates had to be “normalized” for this was the crisis she knew was coming. And guess what – Europe is even worse and Draghi will not raise rates for fear that government will be unable to fund themselves. The ECB is creating a vast European Pension Crisis while trying to keep member state governments on life-support. It has purchased 40% of all sovereign debt and appears trapped and cannot reverse this process. The choice is pensions collapse or state collapse.

There is NO WAY OUT of this crisis. The portfolio would have to be completely restructured and benefits reduced. Lame Duck Jerry Brown will do everything in his power to raise taxes and fees to try to hold CalPERS together. That is by no means a long-term solution. If you can transfer to one of the 7 states without state income tax – do it NOW before it is too late.

Source: Martin Armstrong | Armstrong Economics

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Jerry Brown Forbids Landlords from Cooperating with ICE to Deport Illegal Aliens

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California Gov. Jerry Brown signed a pair of new laws Thursday designed to protect illegal alien tenants from being threatened with deportation by making it illegal for landlords to report a tenant’s immigration status to Immigrations Customs Enforcement (ICE).

The bills were part of a package of laws pushed by the Democrat majority and signed by Brown ostensibly to protect illegal aliens from any increased enforcement measures under theTrump administration.

According to the Los Angeles Times,

One proposal by Assemblyman David Chiu (D-San Francisco) would bar landlords from disclosing information about immigration status in order to intimidate, harass or evict tenants without following proper procedures. It also would allow immigrant tenants to file civil claims against their landlords if they do.

Another bill by Assembly Majority Leader Ian Calderon (D-Whittier) would ensure that no state office or entity in California could compel a landlord to obtain and disclose information on a tenant’s immigration status.

The rationale behind the latest package of bills protecting illegal aliens, according to the Sacramento Bee, is fear of enforcement by ICE under President Trump, and fear that unscrupulous landlords might use a tenant’s illegal status to harass, intimidate or abuse them.

Chiu argues that tenants should not have to “live in fear” because they’re immigrants or refugees. He cited the legal uncertainty over young immigrants who were brought to the country illegally but have been educated here and hold down jobs as one of several reasons for the legislation.

“Trump’s escalating war on immigrants is ripping apart families and mass deportations could be our new reality,” Chiu said recently.

“This bill will deter the small minority of landlords who unscrupulously take advantage of the real or perceived immigration status of their tenants to engage in abusive acts.”

With the package of bills signed into law Thursday—including SB54 making California a “Sanctuary State” for criminal aliensCalifornia Democrats have kept their word to put the interests of illegal aliens first, ahead of legal, law-abiding California citizens.

By Assemblyman Tim Donnelly | Breitbart

Governor Gerry Brown Warned California Is Overdue For A Correction

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California Governor Gerry Brown warned on Thursday that the state, which generates revenue largely through volatile capital gains taxes, is overdue for a correction after years of economic expansion.

“Over the past four years, we have increased spending by billions of dollars for education, health care, child care and other anti-poverty programs. In the coming year, I don’t think even more spending will be possible,” he said. “We have ongoing pressures from Washington and an economic recovery that won’t last forever.”

On Wednesday, the state’s controller, Betty Yee, said revenues through April for the fiscal year that began July 2016 were $1.83 billion below initial estimates. Income tax in April lagged projections by about $708 million.

“This is another signal that we may be inching toward an economic downturn, and we must tailor our spending accordingly,” Yee said.

by Sharon Bernstein | Yahoo News