Diamond News Archives

You've probably heard the news by now: Social Security, America's top social program, is in some pretty big trouble.

Every year, the Social Security Board of Trustees releases a report examining the program's short-term (10-year) and long-term (75-year) outlook. For the past 35 years^[1], it's been cautioning Congress that long-term revenue creation would be insufficient to cover program outlays. In the 2019 report, the Trustees forecast a $13.9 trillion cash shortfall between 2035 and 2093, using the intermediate-cost model. While this doesn't mean Social Security is on its way to insolvency (thankfully, it can't go bankrupt)^[2], an across-the-board cut to retired worker benefits of up to 23% may be just 15 years away.

That's not a very rosy outlook.

But what you may not realize is that it's not a worst-case scenario, either. Based on a number of ongoing trends that can affect the U.S. economy and Social Security, the program appears to be headed down an even worse path that could lead to steeper benefit cuts. Here are three reasons Social Security's long-term cash shortfall could grow significantly in the years to come.

1. Growing income inequality

While most people have likely placed some semblance of blame for Social Security's deteriorating financial outlook on baby boomers retiring or increasing longevity, they may have overlooked the growing role that income inequality^[3] is having.

Rising income inequality is hurting Social Security two ways. First, we've seen a greater percentage of earned income exempted from the payroll tax in recent decades. While the program has three ways of generating revenue, the 12.4% payroll tax on earned income (wages and salary, but not investment income) ...

Europe’s main banking regulator is trying to clear the path for mergers between the continent’s lenders as the belief grows that scale is the key to reviving the struggling sector, people familiar with the matter said.

The regulator—an arm of the European Central Bank that covers the largest eurozone banks—is making this softer stance toward potential tie-ups known privately, according to bankers, supervisors and analysts. Some of its officials have also publicly tackled the issue in recent speeches. It marks a departure... ...

(IDEX Online) - Sales of fine jewelry and fine watches continued to rise in November 2019, increasing 3 percent compared to November 2018, as seen in the graph below. This marks the fifth successive month of positive sales. If the results are down slightly over October - just 0.2 of a percent - it's still evidence that there is some momentum in the market.

Outlook

While many jewelry retailers still haven't released their holiday results, Signet Jewelers Limited, the world's largest retailer of diamond jewelry, reported that same store sales were up 1.6 percent, with North American same store sales up 2 percent, which was ahead of its guidance. The retailer's ecommerce sales rose 13.5 percent. 

Holiday spending in general matched expectations with sales in the U.S. growing 4.1 percent year-over-year to $730.2 billion, according to the National Retail Federation (NRF). Online sales outperformed predictions, climbing 14.6 percent over 2018 to $167.8 billion. 

The 2019 growth rate was nearly double the weak 2.1 percent seen in 2018, leading Matthew Shay, NRF president and CEO to say that the results were a "positive indicator of what's ahead." 

With the continuing sales slump in Hong Kong leading to store closures and the outbreak of coronavirus in China affecting Chinese New Year buying, let's hope the positive U.S. holiday season figures can hold their own.

Click here^[1] to see the full IDEX Online Research Article...

"May you live in interesting times."

It's a famous curse, supposedly of Chinese origin. And it seems nearly as apt today as when it first came to the attention of the Western mainstream in the 1930s.

First quoted in print to a British politician, a much less famous Chamberlain named Austen, in 1936 the saying was quickly repeated again and again throughout the mid- to late-30s in media and speeches to sum up a tumultuous period which we all know now would capstone with WWII.

But it's appeal was about far more than the rapid rise of –isms… fascism, communism, nationalism. The world was healing...

Not only from the loss of 20 million souls to the bloodiest war it had ever known, and just beginning to show signs of recovery from America's Great Depression...

But also from the infamous “Spanish Flu” which, in half the time of WWI, killed an estimated 2.5 times as many people: 50 million dead in a mere two years. Some believe without that pandemic, the world might have avoided the worst of the decades to come.

We don’t make a habit of steering too far out of our lane, which is firmly global macroeconomics and the history of money and wealth. But the world is ever more connected in this new millennium. And the state of equity and money markets – which have rallied enormously over the last decade of relative peace and quiet – and the world economy they reflect, are all deeply intertwined with the health and well-being of our populace.

Which is why this video, from our good friend and PhD neurotoxicologist, Dr. Chris Martenson, on the sudden new threat presented by the rapidly-spreading coronavirus warrants your attention^[1]....