Sorry folks, it’s not a bull market. Not yet. The evidence I’ll outline indicates it may be too early to celebrate. I know the headlines are dominated by calls for new highs to come, a bull market in f…
The fallout of popular anger emanating from Europe’s refugee crisis, which may have moderated in recent weeks following Europe’s desperate attempts to bribe Turkey to keep as many refugees in its borders as possible (unleashing the era of unprecedented…
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During the period of détente in the 1970’s, Iran was exporting crude oil to Nicolae Ceausecu’s Romania via the Eilat-Ashkelon pipeline in Israel to an …
The European Union now finds itself in a classic catch-22 situation. Large numbers of Muslim migrants will flow to Europe regardless of whether or not the EU approves the visa waiver for Turkey.
“If visa requirements are lifted completely, each of these persons could buy a cheap plane ticket to any German airport, utter the word ‘asylum,’ and trigger a years-long judicial process with a good chance of ending in a residency permit.” — German analyst Andrew Hammel.
In their haste to stanch the rush of migrants, European officials effectively allowed Turkey to conflate the two very separate issues of a) uncontrolled migration into Europe and b) an end to visa restrictions for Turkish nationals.
“Why should a peaceful, stable, prosperous country like Germany import from some remote corner of some faraway land a violent ethnic conflict which has nothing whatsoever to do with Germany and which 98% Germans do not understand or care about?” — German analyst Andrew Hammel.
“Democracy, freedom and the rule of law…. For us, these words have absolutely no value any longer.” — Turkish President Recep Tayyip Erdogan.
Turkey has threatened to renege on a landmark deal to curb illegal migration to the European Union if the bloc fails to grant visa-free travel to Europe for Turkey’s 78 million citizens by the end of June.
If Ankara follows through on its threat, it would reopen the floodgates and allow potentially millions of migrants from Africa, Asia and the Middle East to flow from Turkey into the European Union.
Under the terms of the EU-Turkey deal, which entered into effect on March 20, Turkey agreed to take back migrants and refugees who illegally cross the Aegean Sea from Turkey to Greece. In exchange, the European Union agreed to resettle up to 72,000 Syrian refugees living in Turkey, and pledged up to 6 billion euros ($6.8 billion) in aid to Turkey during the next four years.
European officials also promised to restart Turkey’s stalled EU membership talks by the end of July 2016, and to fast-track visa-free access for Turkish nationals to the Schengen (open-bordered) passport-free zone by June 30.
Turkish President Recep Tayyip Erdogan (left) has boasted that he is proud of blackmailing EU leaders, including European Commission President Jean-Claude Juncker (right), into granting Turkish citizens visa-free access to the EU and paying Turkey billions of euros.
To qualify for the visa waiver, Turkey has until April 30 to meet 72 conditions. These include: bringing the security features of Turkish passports up to EU standards; sharing information on forged and fraudulent documents used to travel to the EU and granting work permits to non-Syrian migrants in Turkey.
The European Commission, the administrative arm of the European Union, said it would issue a report on May 4 on whether Turkey adequately has met all of the conditions to qualify for visa liberalization.
During a hearing at the European Parliament on April 21, Marta Cygan, a director in the Commission’s migration and home affairs unit, revealed that to date Ankara has satisfied only 35 of the 72 conditions. This implies that Turkey is unlikely to meet the other 37 conditions by the April 30 deadline, a window of fewer than ten days.
According to Turkish officials, however, Turkey is fulfilling all of its obligations under the EU deal and the onus rests on the European Union to approve visa liberalization — or else.
Addressing the Council of Europe in Strasbourg on April 19, Turkish Prime Minister Ahmet Davutoglu said that Turkey has now reduced the flow of migrants to Greece to an average of 60 a day, compared to several thousand a day at the height of the migrant crisis in late 2015. Davutoglu went on to say that this proves that Turkey has fulfilled its end of the deal and that Ankara will no longer honor the EU-Turkey deal if the bloc fails to deliver visa-free travel by June 30.
European Commission President Jean-Claude Juncker has insisted that Turkey must meet all 72 conditions for visa-free travel and that the EU will not water down its criteria. But European officials — under intense pressure to keep the migrant deal with Turkey alive — will be tempted to cede to Turkish demands.
EU Migration Commissioner Dimitris Avramopoulos on April 20 conceded that for the EU it is not a question of the number of conditions, but rather “how quickly the process is going on.” He added: “I believe that at the end, if we continue working like this, most of the benchmarks will be met.”
European officials alone are to blame for allowing themselves to be blackmailed in this way. In their haste to stanch the rush of migrants to Europe, they effectively allowed Turkey to conflate the two very separate issues of a) uncontrolled migration into Europe and b) an end to visa restrictions for Turkish nationals.
The original criteria for the visa waiver were established in December 2013 — more than two years before the EU-Turkey deal — by means of the so-called Visa Liberalization Dialogue and the accompanying Readmission Agreement. In it, Turkey agrees to take back third-country nationals who, after having transiting through Turkey, have entered the EU illegally.
By declaring that the visa waiver conditions are no longer binding because the flow of migrants to Greece has been reduced, Turkish officials, negotiating like merchants in Istanbul’s Grand Bazaar, are running circles around the hapless European officials.
Or, as Turkish President Recep Tayyip Erdogan recently proclaimed: “The European Union needs Turkey more than Turkey needs the European Union.”
The European Union now finds itself in a classic Catch-22 situation. Large numbers of Muslim migrants will flow to Europe regardless of whether or not the EU approves the visa waiver.
Critics of visa liberalization fear that millions of Turkish nationals may end up migrating to Europe. Indeed, many analysts believe that President Erdogan views the visa waiver as an opportunity to “export” Turkey’s “Kurdish Problem” to Germany.
Bavarian Finance Minister Markus Söder, for example, worries that due to Erdogan’s persecution of Kurds in Turkey, millions may take advantage of the visa waver to flee to Germany. “We are importing an internal Turkish conflict,” he warned, adding: “In the end, fewer migrants may arrive by boat, but more will arrive by airplane.”
In an insightful essay, German analyst Andrew Hammel writes:
“Let’s do the math. There are currently 16 million Turkish citizens of Kurdish descent in Turkey. There is a long history of discrimination by Turkish governments against this ethnic minority, including torture, forced displacement, and other repressive measures. The current conservative-nationalist Turkish government is fighting an open war against various Kurdish rebel groups, both inside and outside Turkey.
“This means that under German law as it is currently being applied by the ruling coalition in the real world (not German law on the books), there are probably something like 5-8 million Turkish Kurds who might have a plausible claim for asylum or subsidiary protection. That’s just a guess, the real number could be higher, but probably not much lower.
“If visa requirements are lifted completely, each of these persons could buy a cheap plane ticket to any German airport, utter the word ‘asylum,’ and trigger a years-long judicial process with a good chance of ending in a residency permit.”
“There are already 800,000 Kurds living in Germany. As migration researchers know, existing kin networks in a destination country massively increase the likelihood and scope of migration…. As Turkish Kurds are likely to arrive speaking no German and with limited job skills, just like current migrants, where is the extra 60-70 billion euros/year [10 billion euros/year for every one million migrants] going to come from to provide them all with housing, food, welfare, medical care, education and German courses?
And finally, “the most important, most fundamental, most urgent question of all”:
“Why should a peaceful, stable, prosperous country like Germany import from some remote corner of some faraway land a violent ethnic conflict which has nothing whatsoever to do with Germany and which 98% Germans do not understand or care about?”
Turkish-Kurdish violence is now commonplace in Germany, which is home to around three million people of Turkish origin — roughly one in four of whom are Kurds. German intelligence officials estimate that about 14,000 of these Kurds are active supporters of the Kurdistan Workers’ Party (PKK), a militant group that has been fighting for Kurdish independence since 1974.
On April 10, hundreds of Kurds and Turks clashed in Munich and dozens fought in Cologne. Also on April 10, four people were injured when Kurds and Turks fought in Frankfurt. On March 27, nearly 40 people were arrested after Kurds attacked a demonstration of around 600 Turkish protesters in the Bavarian town of Aschaffenburg.
On September 11, 2015, dozens of Kurds and Turks clashed in Bielefeld. On September 10, more than a thousand Kurds and Turks fought in Berlin. Also on September 10, several hundred Kurds and Turks fought in Frankfurt.
On September 3, more than 100 Kurds and Turks clashed in Remscheid. On August 17, Kurds attacked a Turkish mosque in Berlin-Kreuzberg. In October 2014, hundreds of Kurds and Turks clashed at the main train station in Munich.
In an essay for the Financial Times titled “The EU Sells Its Soul to Strike a Deal with Turkey,” columnist Wolfgang Münchau wrote:
“The deal with Turkey is as sordid as anything I have ever seen in modern European politics. On the day that EU leaders signed the deal, Recep Tayyip Erdogan, the Turkish president, gave the game away: ‘Democracy, freedom and the rule of law…. For us, these words have absolutely no value any longer.’ At that point the European Council should have ended the conversation with Ahmet Davutoglu, the Turkish prime minister, and sent him home. But instead, they made a deal with him — money and a lot more in return for help with the refugee crisis.”
“Even though the price of crude oil may fall, because those refineries are not back online at full capacity, we’re seeing the gasoline supplies sapped …
As we’ve known for quite some time now, Illinois is completely insolvent, and in large part due to enormous pension liabilities which as of December were underfunded to the tune of $111 billion. Not only is the state insolvent, its millionaires can’t get out fast enough to avoid the massive tax hikes that will be coming in what is sure to be a failed effort to plug budget holes, as well as the soaring criminality in cities such as Chicago which recently just passed the historic milestone of 1,000 gunshot victims in the fastest time in decades.
Citing unfunded pension plans, Moody’s downgraded Illinois to Baa1, and gave it a negative outlook back in October. The issue with the pension funds (aside for the massive shortfall in funding) is that per the Illinois Supreme Court, benefits cannot be altered. In a ruling last year, the state’s Supreme Court overturned a 2013 law that tried to ease the burden of what was then a $105 billion funding gap.
“Crisis is not an excuse to abandon the rule of law. It is a summons to defend it.” the supreme court said in its ruling.
In other words, regardless of the fact that the pension funds are insolvent, the state cannot cut benefits to any of its participants. This is in stark contrast to the multi employer private pension funds, which as we pointed out, are able to cut benefits in order to keep the funds solvent.
At this point, it’s clear that without the ability to cut pension benefits, most plans will end up insolvent, at which point nobody will be receiving benefits. Until that point comes, however, there are a few who are living quite well off of the system.
As Forbes’ Adam Andrzejewski reports, there are currently 7,499 teacher retirees that earn at least six figure pensions, and he estimates that in just six years, the number will be three times what it is today because, as we noted previously, the Illinois Supreme Court recently confirmed that pension benefits are constitutionally guaranteed and “the public employee gravy train is running faster than ever.”
Now, there would be nothing wrong with these retirees collecting the “annuity” benefits after paying to the retirement plan for years as most other honest, hard-working employee do. There is just one problem: this was a human system, and like every human system (especially in Illinois) it was impeccably gamed from the beginning. Especially when Chicago is involved as it is here.
Take the example of two union lobbyists who substitute taught for one-day in the public schools and then started collecting over $1 million of lifetime public ‘teacher’ pension payout – despite a state law expressly designed to stop them.
And now take all the other 7,499 educators. The retirees in question paid so little into their own retirement (breaking even on their cost basis within the first 20 months of retirement) that taxpayers now face a $900 million bill just to keep the pension payments flowing!
Not unexpectedly, a well known culprit behind this systemic abuse emerges: the city of Chicago. As the following map showing where the 7,499 six-figure educator pensions located, most of the ‘heat’ is in the six-county area around Chicago.
The shifting of responsibility for funding retirement from the individual to the taxpayer at these levels is completely unsustainable.
This week, our organization at OpenTheBooks.com debuted our interactive info mapping platform giving context to the 7,499 retired Illinois educators who pulled-down a pension of $100,000 or more. These retirees cost Illinois taxpayers $900 million (2015). Individually, these pension millionaires contributed so little to the system that they ‘broke-even’ on their ‘cost-basis’ within the first 20-months of retirement.
It takes the equivalent of all income taxes paid by 330,177 individual Illinois taxpayers to fund the nearly $1 billion for the 7,499 ‘highly compensated’ six-figure retirees. By any estimation, this is unsustainable. Illinois only has 6.2 million people with jobs.
The article goes on to point out that by 2017, Illinois tax payers will be on the hook for more than 10,000 educator pensions that pay more than $100,000 a year, and by 2022 that number rises to over 20,000 people pulling in six figures after retirement. Readers can probably calculate on their own the nominal dollar taxpayer support that will be needed then.
Adam also draws attention to another critical issue further burying taxpayers, which is double-dipping.
[M]any administrators taking six-figure pensions really aren’t even ‘retired.’ Twenty-one highly compensated school administrators are now members of the municipal system, not the teacher’s system. It’s double-dipping: receiving a ‘teacher’ retirement pension, while also rehired by a school under the ‘municipal’ plan.
This form of doubling-dipping is not prohibited under Illinois law. It should be. For example, Mohsin Dada made $503,200 by double dipping the Teacher’s Retirement System (TRS) and the Illinois Municipal system (IMRF). Dada’s teacher pension is $254,700 and his current salary from North Shore School District 112 is $248,510 – up from $202,903 just three years ago (2012).
It gets wose: the public pension largess is not only for government educators, but also private education associations and union bosses. For example, Reginald Weaver was President of the National Education Association (NEA) in Washington, D.C. – the de facto national teacher’s union. Weaver’s Illinois teacher’s pension is now $22,759 per month, or $273,108 annually.
And lest we forget about the fact that outside of the tens of thousands of retirees who are making six figures, there are another 100,000 pensions for rank and file teachers who make less than that. Include these members, and an estimated $1 out of every $3 collected by the Illinois income tax now goes toward retirement annuities. That’s the equivalent of all income taxes paid by 2 million Illinois taxpayers every year.
The systemic abuse of the system goes to the very core: locally, school districts are spiking salaries – granting raises near the end of a career to raise guaranteed pensions – which drives costs even higher. The fraud appears to be focused on the city of Chicago. Some examples:
- Northern Illinois school districts are driving the majority of $100,000 pensions. In fact, 6,706 pensions for over $800 million in annual payouts were conferred by districts in the Chicago metropolitan suburban area. Only 793 six-figure pensions totaling $95 million in annual payouts were conferred by school districts in the rest of the state. Yet, income-taxpayers across the whole state guarantee the retirement annuities for everyone.
- The Top 100 All-Time pensions: #1 $302,991 (Lawrence Wyllie at Lincoln-Way CHSD) to #100 $200,812 (Michael Radakovic at Aurora East USD 131). Read the Top 500 All-Time IL teacher pension list.
- The Top 5 school districts conferring six-figure pensions are Palatine TWP HSD 211, Palatine (449); Township HSD 214, Arlington Heights (419); Consolidated HSD 230, Orland Park (196); Northfield TWP HSD 225, Glenview (188); Maine TWP HSD 207, Park Ridge (180).
Given what we know about the situation, there is no path forward that will save these pension funds from going insolvent. This brings us to an interesting twist… Under Illinois state law, the pension system is required to reach 90% funding by 2045. We’re curious if by that point, the state supreme court will view crisis as being a valid excuse to “abandon the rule of law.”
For those who are curious about more details, the following interactive map courtesy of OpenTheBooks.com lays out all the 7,499 “retired” Illionois reveals all those who hope to abuse the system until the very last drop. Click on the map for the interactive version.
Zambia’s kwacha is 2016’s star performing currency. Who says miracles don’t happen anymore?
Submitted by David Stockman via Contra Corner blog,
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