Juggling Dynamite

An economist’s perspective on the flawed logic behind the proposed 2017 tax bill, and what policy makers could do to encourage U.S. economic growth.  Here is a direct video link.

Also see: It started as a tax cut. Now it could change American life. No responsible fiscal conservative could support a plan that will add to debt in order to help corporations buy back more of their own shares and flow more cash to shareholders, while deficits gap, pensions bust, critical infrastructure rots and the social fabric frays further.  Madness.

Investments in syndicated mortgages and related securities have been heavily sold to yield-hungry savers and retirees the past few years, especially as our world-famous realty bubble has billowed in Canada. Advertising yields of 7 and 8%+– in a world where GICs and government bonds are paying 1-3%–many who can ill-afford the risk of loss have been sucked in like bugs to a zapper.

The fact that these securities are eligible for RSPs/RIFs is also a big draw and serves to imbue a false of security or government endorsement of the products.  As many are just starting to find out, these instruments are no safe bet.  See Canada regulator ignored warnings on risky mortgage investments:

Syndicated mortgages, which pool investors’ money to finance construction of condominiums, retirement communities and the like, aren’t suited to most retail investors. The instruments typically fund more speculative projects that can’t rely solely on bank lending, making them relatively high-risk even in the best of times, suited to deep-pocketed professional investors. The risks have only grown as Canada’s real estate market has shown signs of slowing, potentially amplifying investor losses if more projects fail.

…brokerage firms’ promotions do not necessarily tell investors that Fortress and brokers take a big chunk of the money raised, or that investors are typically last in line, behind banks and other institutions, to get their money back if a project goes belly-up.

…Barry Stevens, a 70-year-old retiree in Canada’s capital, Ottawa, invested a total of C$150,000 in a Fortress condominium development in Barrie, Ontario, beginning in 2012.

He said a broker told him that syndicated mortgages “gave 8 percent interest, every one of these is a success, there are never any issues, and you always get your principal back.” The clincher, he said, was that the investment could be put in his RRSP.

He received regular interest payments, but when the loan matured in October 2016, he got back none of his principal. Fortress representatives assured him the money would arrive in mid-November, he said. It didn’t. Fortress later told him the developer had walked away from the project.

A million plastic bottles are bought around the world every minute and the number will jump another 20% [to top half a trillion  by 2021], creating an environmental crisis some campaigners predict will be as serious as climate change.

..Fewer than half of the bottles bought in 2016 were collected for recycling and just 7% of those collected were turned into new bottles. Instead most plastic bottles produced end up in landfill or in the ocean.

See:  A million bottles a minute:  world’s plastic binge ‘as dangerous as climate change.’

We avoid take out food containers and use reusable cups and plates, but things like personal care products are nearly impossible to find today in non-plastic containers.  Consumer choices are horrible.

Another example:  I have written Starbucks head office and asked why their restaurants do not offer customers recycling receptacles on site.  They tell me that their landlords are not providing the service in most locations.

Question then becomes: why are municipalities allowing commercial landlords to not offer recycling pick up as part of the property services. And why are chains like Starbucks not demonstrating leadership by stopping the use of plastic containers and demanding that recycling pick up is included as part of their lease contracts? Why are we customers and shareholders not insisting that they do?