The Puerto Rican Senate and the House of Representatives have both passed an emergency declaration authorizing the governor to suspend payments on $72 billion in public debt — setting up a dramatic showdown between Puerto Rico and hedge funds amid the island’s historic debt crisis. The bill authorizes the Puerto Rican governor to “protect the health, security and public welfare … [by] using government funds first and foremost for public services.” The dramatic move comes one day after a group of hedge funds sued to freeze the assets of Puerto Rico’s Government Development Bank in efforts to stop the bank from spending money on the island that the hedge funds want to go toward upcoming debt payments.
Three jailed Kaupthing bankers will be freed today due to a change in legislation.
Former Kaupthing Chairperson of the Board Sigurður Einarsson, former Kaupthing Luxembourg CEO Magnús Guðmundsson and former 10% owner of Kaupthing Ólafur Ólafsson will all be released from Kvíabryggja prison today, Stundin reports, on account of a change to the law. They will instead move to a halfway house, Vernd, where they will have to return every night but will otherwise be free. A member of parliament has criticised the legislation is being “handcrafted” for these bankers. Continue reading »
The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place. Administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.
Bill Morneau took centre stage last week in the Canadian Parliament and didn’t disappoint. The new Liberal finance minister’s first budget jacked up program spending across the board, to be paid for by borrowing and, eventually, presumably, money printing. His rhetoric was coated with suggestions that “economic growth” would solve the country’s problems. The only folks left out were taxpayers and savers.
On the face of it, Morneau’s logic makes sense. With interest rates near zero and the Canadian government’s debts among the lowest in the G-7, why not borrow a bit and invest in infrastructure? Well, there are several reasons – and all of them augur well for the future of gold. Continue reading »
CHRIS HEDGES: We’re going to be discussing a great Ponzi scheme that not only defines not only the U.S. but the global economy, how we got there and where we’re going. And with me to discuss this issue is the economist Michael Hudson, author of Killing the Host: How Financial Parasites and Debt Destroy the Global Economy. A professor of economics who worked for many years on Wall Street, where you don’t succeed if you don’t grasp Marx’s dictum that capitalism is about exploitation. And he is also, I should mention, the godson of Leon Trotsky.
I want to open this discussion by reading a passage from your book, which I admire very much, which I think gets to the core of what you discuss. You write, Continue reading »
By now it is common knowledge that when it comes to massive, taxpayer-backed hedge funds, few are quite as big as the Swiss National Bank, whose roughly $100 billion in equity holdings have been extensively profiled on these pages, including its woefully investments in Valeant and the spike in its buying of AAPL stock at its all time high.
But while the SNB’s stock holdings are updated every quarter courtesy of its informative SEC-filed 13F (we wish the Fed would also disclose the equities it holds courtesy of its Citadel proxy), getting a gllimpse of the flow is more problematic, and involves waiting for the hedge fund’s, pardon central bank’s annual report. Continue reading »
The stock market has regained all of its loses year to date as economic indicators continue to flash red, corporate profits continue to plunge, consumers continue to spend less at retailers, real wages continue to fall, and housing sales continue to decline. The entire dead cat bounce has been generated through corporate stock buybacks, Wall Street lemmings trying to make up for their terrible year to date investing performance, and central bankers who will stop at nothing to verbally manipulate markets higher – since their monetary machinations over the last seven years have been a miserable failure in reviving the real economy.
As John Hussman points out, the market is poised to deliver nothing over the next decade, with a 40% to 55% “dip” in the foreseeable future. I wonder how many barely sentient, iGadget addicted, non-questioning, normalcy bias dependent zombies are prepared for a third Federal Reserve generated market collapse in the last 15 years? Continue reading »
The incredible story behind the cyber heist that resulted in an $81 million loss for the central bank of Bangladesh continues to get more intriguing. Bangladesh is looking to sue the NY Fed for lapses in protocol, while Philippine officials race to untangle a complex web of bad actors and shady go-betweens that looks like it may lead back to one Kim Wong, who 15 years ago was accused of connecting then-Senator Panfilo Lacson to drug lords. Meanwhile, a cyber security expert who spoke to the police and the media was kidnapped from a motorized rickshaw by men in plainclothes who blindfolded him, threw him in a vehicle, and drove away.
Earlier today, Canada’s new Liberal government unveiled a stimulus budget meant to revive slumping growth with a surge in infrastructure spending and said it would run a deficit nearly three times larger than promised during last year’s election.
The government projected a C$29.4 billion ($22.5 billion) deficit for fiscal 2016-17 and gave no target date for returning to a balanced budget. This budget broke virtually all pledges the Liberals made before the election, including running just three years of deficits of up to C$10 billion before balancing the books by fiscal 2019-20. Continue reading »
Over the course of documenting the ECB’s push to phase out the €500 note, we stumbled upon something rather interesting that’s taking place at Greek banks.
Courtesy of a reader, we learned that Piraeus Bank (among others) has begun charging a fee to exchange large denomination bills for small. The charge is listed as 0.15% by the bank and Kathimerini would later report that across the Greek banking sector “exchanging one 500-euro note for smaller bills, [will cost you] 3-5 euros (depending on the bank), while the maximum charge comes to 200-250 euros regardless of the amount a customer wishes to exchange.” Continue reading »
On February 12, Jamie Dimon made headlines when he bought 500,000 shares, or some $26 million worth of JPM stock which coming one day after the market hit its lowest point in the recent selloff, has become known as the “Dimon Bottom.” Was it just good timing or was there something more to the purchase some wondered. As it turns out the purchase may have been nothing more than Jamie frontrunning his own company’s multi-billion buyback, because as JPM announced moments ago, the company of which he is a CEO, just authorized the repurchase of an additional $1.9 billion in stock over the next three months, thereby assuring CEO Jamie of an even great profits on his recent acquisition.
Jason Gross was the latest former banker to make a mockery of the US judicial system when he was spared prison on Wednesday, for stealing NY Fed secrets on behalf of Goldman Sachs. Instead Gross, 37, was fined $2,000 by U.S. Magistrate Judge Gabriel Gorenstein in Manhattan and sentenced to a year of probation with 200 hours of community service after pleading guilty to a misdemeanor charge of theft of government property.
Not too dovish (upgrade uncertainty), not too hawkish (lowered rate hikes), a goldilocks statement, with just a little less inflation and just a little less GDP growth, and just two more quarter of near-ZIRP rates is what it takes for the world to get it all together.
JPMorgan, Goldman Said to Discuss Buying Deutsche Bank Swaps
~Lender looking to complete sale of $1.1 trillion swaps book
~Deutsche Bank has sold about two-thirds of book since 2015
Deutsche Bank AG, the lender exiting some trading operations, is in talks with JPMorgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc. to sell the last batches of about 1 trillion euros ($1.1 trillion) in complex financial instruments, people with knowledge of the matter said. Continue reading »
Having discussed the market’s disturbing reaction to Mario Draghi’s desperate “all in” monetary gamble – one which saw an early bout of euphoria followed by one of the most aggressive Euro spikes in history, second only to the “December debacle” and the Fed’s March 2009 announcement of QE1, we were waiting for the just as important reaction by the ECB’s nemesis: the one country that not only has seen hyperinflation first hand (and appears to recall it vividly), but is just as aware where the ECB’s monetary lunacy ends: the Germans.
We got it from Germany’s Handelsblatt, when in an article titled “The dangerous game with the money of the German savers”, the authors provide a metaphorical rendering of what is happening in Europe as follows:
They also paint an oddly accurate caricature of the man behind this last ditch monetary policy:
And write the following:
A determined ECB chief Mario Draghi plows ahead with his negative interest rate policy. The positive effects on the economy are low. Great, however, are the risks: this is the greatest redistribution of wealth in Europe since World War II. Continue reading »
Last year, Baron David de Rothschild was indicted by the French government after he was accused of fraud in a scheme that allegedly embezzled large sums of money from British pensioners.
It has taken many years to bring this case against Rothschild and his company the Rothschild Financial Services Group, which trapped hundreds of pensioners in a bogus loan scheme between the years of 2005 and 2008.
One by one the pensioners lost their money and pressed charges against the notorious banker, beginning a case that would take many years to get even an indictment. Continue reading »
“While this is surely good news for the very short run, as it allows the worst of the worst in China’s insolvent corporate sector to issue even more debt, in the longer run it means that China’s total debt to GDP, which is already at 350% is about to surpass Japan’s gargantuan 400% within a year if not sooner.”
In what may be the biggest news of the day, and certainly with far greater implications than whatever Mario Draghi will announce in a few hours when we will again witness the ECB doing not “whatever it takes” but “whatever it can do”, moments ago Reuters reported that China is preparing for an unprecedented overhaul in how it treats it trillions in non-performing loans.
Recall that as we first wrote last summer, and as subsequently Kyle Bass made it the centerpiece of his “short Yuan” investment thesis, the “neutron bomb” in the heart of China’s impaired financial system is the trillions – officially at $614 billion but realistically anywhere between 8% and 20% of China’s total $35 trillion in bank assets – in non-performing loans. It is the unknown treatment of these NPLs that has been the greatest threat to China’s just as vast deposit base amounting to well over $20 trillion, which has been the fundamental catalyst behind China’s record capital flight as depositors have been eager to move their savings as far from China’s domestic banks as possible. Continue reading »
The story of the theft of $100 million from the Bangladesh central bank – by way of the New York Federal Reserve – is getting more fascinating by the day.
As we reported previously, on February 5, Bill Dudley’s New York Fed was allegedly “penetrated” when “hackers” (of supposed Chinese origin) stole $100 million from accounts belonging to the Bangladesh central bank. The money was then channeled to the Philippines where it was sold on the black market and funneled to “local casinos” (to quote AFP). After the casino laundering, it was sent back to the same black market FX broker who promptly moved it to “overseas accounts within days.”
Well, the people wanted a “bazooka-sized” surprise from Draghi, and they got it.
Moments ago the ECB announced not only a 10 bps cut to the deposit rate expected pushing it to -40%, but also announced a 5 bp rate cut to the refinance (pushing it to 0.00%) and the marginal lending rate (now at 0.25%), and also boosted QE by €20bn to €80 billion per month, the addition of afour new targeted TLTROs each with a maturity of 4 years, but the most surprising announcement was that the ECB would also for the first time include investment grade euro-denominated bonds issued by non-bank corporations along the list of assets that are eligible for regular purchases.
On February 5, Bill Dudley was “penetrated” when “hackers” (of supposed Chinese origin) stole $100 million from accounts belonging to the Bangladesh central bank.
As we reported on Tuesday, the money was apparently channeled to the Philippines where it was sold on the black market and funneled to “local casinos” (to quote AFP). After the casino laundering, it was sent back to the same black market FX broker who promptly moved it to “overseas accounts within days.”
Obviously, that’s hilarious, not to mention extremely embarrassing for the NY Fed. Here’s what the Fed had to say yesterday about the “mishap”: Continue reading »
Reports indicate that some of the stolen funds were traced to the Philippines, but given what we know about the “Cyber Axis of Evil,” we can only suspect it was Iranians, Chinese, or the criminal/military mastermind Kim Jong-Un who was behind the scam, but whatever the case, someone, somewhere, hacked into Bangladesh’s central bank on February 5.
According to Reuters, “some of the funds” have been recovered, but the bank didn’t initially say how much or how much was initially stolen. We suppose that theoretically it could have been a rather large sum, as the country has around $26 billion in FX reserves on hand:
But just moments ago we learned from the AFP that the amount lost was around $100 million. “Some of the money was then illegally transferred online to the Philippines and Sri Lanka, a central bank official told AFP on condition of anonymity.” Continue reading »
Morgan Stanley’s settlement for $3.2 billion pales in comparison to what they borrowed.
While some may claim that the settlements made with big banks in recent years are better than nothing or are significant amounts, no matter how much that bank borrowed in 2008-2009, to say that these settlements are minuscule at best is an understatement. Last month, Morgan Stanley, one of the largest investment banks in the world and biggest borrowers in the 2008 financial crisis, agreed to pay $3.2 billion in a settlement with federal authorities. Continue reading »