May 25

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May 23

China Has Quietly Bailed Out Over $220 Billion In Bad Debt In The Past 2 Months:

Today we learned that not only was China going through with its unprecedented debt-for-equity swap, but it has already equitized over $220 billion in non-performing loans. Note: these are not traditional, Chapter 11 prepacks where the debt is converted into equity and the debt holder gets the keys to the company. In this case, it is the Chinese government itself which indirectly via state-owned banks, has become the de facto owner of countless companies.

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May 21

stupid

America’s “Advanced Stupid” In 2 Stunning Charts:

This isn’t your average everyday stupid… this is ‘advanced’ stupid!

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May 21

State Of The States: New Jersey’s Problems Are Not “Mathematically Solvable”:

While the warning flags are raging in Illinois and Connecticut, JPMorgan’s Michael Cembalest states that New Jersey’s problems are “not mathematically solvable.” The stunning admission from a status-quo-sustaining bank that is “very focused on the total indebtedness of US states,” should be worrisome enough but as Cembalest explains the answer to a debt problem is not always piling up more debt – “when debt reaches a certain level, the can kicking is over and difficult decisions need to be made;” the issue is to address the root of the problem, which can be a delicate and at times politically incorrect topic.

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May 20

detroit-chitroit

Chicago Pension Liabilities Jump 168%, Understated By $11.5 Billion:

New accounting rules show Chicago has understated its pension liabilities by $11.5 billion.

At the end of 2015 the stated liability was $7.1 billion. Today it’s $18.6 billion. That’s a jump in net liabilities of 168%.

Mayor Rahm Emanuel has hopes pinned on union concessions and help from the state legislature. Neither is likely. Continue reading »

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May 19

Republicans, Democrats Agree On A Bill To Bailout Puerto Rico

Republicans, Democrats Agree On A Bill To Bailout Puerto Rico:

It turns out that Puerto Rico’s plan to default on its debt and beg congress for help is working out as planned.

After a slight delay, House Republicans have reached an agreement with the Obama administration to provide a path to restructure Puerto Rico’s $70 billion debt load. The bill would offer the island a legal out similar to bankruptcy and wouldn’t commit any federal money according to the WSJ. Continue reading »

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May 15

Dishonourable Debt: Why Borrowers Are Not Legally Bound To Repay Bank Loans

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May 09

trump cnn

Trump On Debt Renegotiation: “You Never Have To Default Because You Print The Money”:

Following Donald Trump’s Thursday comments that rising interest rates would be disastrous for the economy, saying that “we’re paying a very low interest rate. What happens if that interest rate goes up 2, 3, 4 points?” hinting that the U.S. should “renegotiate longer-term debt” with creditors and that if the economy crashes he “can make a deal”, various media outlets went to town on Trump, most notably the NYT, which took Trump to task: Continue reading »

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May 08

Albert Edwards: “Let Me Tell You How This All Ends”:

The dollar’s recent rapid slide has been accompanied by a constant backdrop of dovish cooing from the Fed. Until this week, SocGen’s Albert Edwards notes that both equity and commodity markets had embraced the weak dollar as the elixir to solve all their ills. That relief, however, has now proved fleeting as fear of weak economic activity has reasserted its influence on investors. The weak dollar, Edwards warns, should be seen as merely a shuffling of deckchairs on the Titanic before the global economy sinks below the icy waves. Continue reading »

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May 07

Showdown! In Leaked Letter IMF Tells Germany “Debt Relief For Greece Or IMF Drops Out”:

It’s showdown time.

The IMF has threatened it will pull out of the Greek bailout program unless Greece gets debt relief.

German Chancellor Angela Merkel, Austria, Finland, and the other Eurozone creditors will not like today’s development one bit.

Showdown! Continue reading »

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May 05

“Don’t Forget, I’m The King Of Debt, I Love Debt” – Trump Chimes In On Puerto Rico

In an interview with Wolf Blitzer, Donald Trump said that although he is the “king of debt”, and that he “loves debt”, he wouldn’t bail out Puerto Rico.

trump-debt

Responding to whether or not Trump would bail out Puerto Rico as president of the United States…

No I don’t believe they should, and I think frankly Puerto Rico is better if they don’t because they’ll cut the bonds, they’ll cut them way down there’s far too much debt. The problem with Puerto Rico is they are far, far too much in debt. Don’t forget, I’m the king of debt, I love debt

As far as how he would suggest Puerto Rico solve its debt issue, The Donald, of course, has a solution for that. Continue reading »

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May 03

Visa Unveils Plan To Burden Millennials With Billions In Debt:

For anyone concerned that $800 billion in student loans over the last decade simply won’t be enough debt burden for millennials to carry, worry no more, a solution has been found.

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May 01

Puerto Rico Says Will Default Tomorrow, Begs Congress For Help “Or Else Crisis Will Get Worse”:

Update: PR Governor Padilla has spoken…

  • *PUERTO RICO GOVERNOR SAYS WON’T PAY DEBT TOMORROW
  • *PUERTO RICO GOVERNOR SAYS ISLAND WON’T PAY DEBT MONDAY
  • *PUERTO RICO GOVERNOR: GOVERNMENT SIGNED MORATORIUM BILL YESTERD
  • *PUERTO RICO NEEDS DEAL W/ CREDITORS AND/OR CONGRESS: GARCIA

And of course, demands a bailout…

  • *PUERTO RICO GOVERNOR CALLS ON U.S. CONGRESS, PAUL RYAN FOR HELP

And then threatens… Continue reading »

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Apr 28

Greek Default Looms In July After EU Rejects Greek Emergency Summit:

More Greece “Uncertainty”: Default Looms in July, EU Rejects Greek Emergency Summit

Those who thought the situation in Greece was solved after prime minister Alexis Tsipras suddenly caved in to creditors’ demands need think again.

Greek tax revenues are running well under expectations. A default looms in July unless the creditors give more money to Greece so that Greece can pay back the creditors. As convoluted as that sounds, that’s precisely the way this madness works. Continue reading »

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Apr 26

“A Total Game Changer” – From Over-Population To De-Population:

An economic and financial system premised on perpetual growth was bound to run into trouble. What happens as population growth turns to population decline is honestly and literally a complete and total game changer. A flat to declining number of buyers and consumers opposite ramping elderly sellers plus their unfunded liabilities is a problem with no happy resolutions. Currencies (what will constitute “money”), “free-markets”, and perhaps the basis of civilization hang in the balance of the transition from high population growth to potential outright depopulation.

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Apr 25

The ECB’s Visible Hand: Unilever Issues Debt With 0% Coupon, 0.06% Yield:

Moments ago Unilever NV was set to raise money in bond markets Monday that will cost the consumer-goods giant almost nothing, in the latest sign of how the European Central Bank’s stimulus measures are slashing funding costs across the continent. In one tranche of a €1.5 billion deal, the Anglo-Dutch company was set to sell €300 million of debt maturing in 2020 with a coupon of 0%, potentially offering investors a yield of just 0.06%,

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Apr 24

Castrated:

Take away Saudi Arabia’s oil and all that’s left are a couple of Islamic shrines and a lot of sand and hot air.

Guest Post by Robert Gore at Straight Line Logic

After three decades of internecine war, Abdul-Aziz bin Saud, allied with the fundamentalist Wahhabist Islamic sect, consolidated the House of Saud’s dominance over Arabia in 1932 with the tacit support of regional imperial power Great Britain. The bedrock of the Saudi Arabian economy, the massive pool of oil in the Al-Hasa region along the Persian Gulf coast, was discovered in 1938 and development began in 1941. Towards the end of World War II, President Roosevelt and Abdul-Aziz reached a handshake deal that has governed relations between the two nations ever since: Saudi Arabia would guarantee the flow of oil to the US at a reasonable price; the US would protect the Saud regime. Continue reading »

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Apr 18

OK, I Get it, this Junk-Bond Miracle-Rally Is Doomed:

And since stocks follow junk bonds….

Junk bonds started to decline in June 2014, and earlier this year threatened to implode. Contagion was spreading from the collapsing energy sector to the brick-and-mortar retail sector, telecom (Sprint), the media (iHeartMedia), and other sectors. It was really ugly out there. Continue reading »

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Apr 18

FYI.

Related info:

SUPER SHEMITAH: Elite’s Jubilee Year Plan To Crash World Economy By October 2016 (Video)


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Apr 17

Hungary Issues Sovereign Bonds Denominated in Yuan; Another Nail in US Reserve Currency Status?:

Hungary has become the first Eastern European country to issue a yuan-denominated sovereign bond.

The deal that shows how currying favor with China may be a more important driver for the market than funding. Continue reading »

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Apr 17

H/t reader squodgy:

“When I studied Accountancy & Economics back in the 60’s & 70’s, common sense told us that Countries were like businesses, buying raw materials & converting them into products which were then sold worldwide.
As third world cheaper cost countries started to take pieces of the cake, we consoled ourselves with what were termed “Invisible Earnings” such as Banking & Insurance & Shipping Fees. That was OK in UK because we had a sudden Oil Boom which filled the gap & kept us buoyant.
That’s all over now, just as it is with U.S. economy. We import the very things we used to make & all our skilled labour has either gone off grid or on benefit, and the “Invisible earnings” are nearly really invisible. A reset is the only answer, default via catastrophe or war. We are all unknowingly sitting waiting for something to happen.”


Jim Grant On The United States Of Insolvency:

$13,903,107,629,266. Can the nation afford this much debt?

This much I have learned about debt after 40 years of writing and study: It is better not to incur it. Once it is incurred, it is better to pay it off. America, we have a problem.

We owe more than we can easily repay. We spend too much and borrow too much. Worse, we promise too much. We conjure dollar bills by the trillions–pull them right out of thin air. I won’t insist that this can’t go on, because it has. I only say that it will eventually stop. Continue reading »

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Apr 16

Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars’ worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the Sept. 11, 2001, attacks.

Obama-bows-to-Saudi-King


Saudi Arabia Threatens To Liquidate Its Treasury Holdings If Congress Probes Its Role In Sept 11 Attacks:

Back in January, when the market was watching in shocked silence as oil prices were crashing to decade lows and as concerns emerged that Saudi Arabia may need to commence selling its vast, if unquantified, USD reserves, we wrote a post titled “Attention Finally Turns To Saudi Arabia’s “Secret” US Treasury Holdings” where we noted something very surprising: whereas we do know that Saudi Arabia is the owner of the world’s third largest USD reserves…

SaudiReserves_0

… their actual composition remains as a secret, because while the US discloses the explicit Treasury holdings of all other nations, Saudi Arabia’s holdings, for some unknown reason, are not officially disclosed.
Continue reading »

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Apr 15

“With China’s debt/GDP already estimate at 350%, how much longer can China sustain this stunning debt (and by definition, deposit) growth continue?”


20160415_TSF

$1,001,000,000,000: China Just Flooded Its Economy With A Record Amount Of New Debt:

When China reported its economic data dump last night which was modestly better than expected (one has to marvel at China’s phenomenal ability to calculate its GDP just two weeks after the quarter ended – not even the Bureau of Economic Analysis is that fast), the investing community could finally exhale: after all, the biggest source of “global” instability for the Fed appears to have been neutralized.

But what was the reason for this seeming halt to China’s incipient hard landing? The answer was in the secondary data that was reported alongside the primary economic numbers: the March new loan and Total Social Financing report. Continue reading »

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Apr 13

peter thiel

Peter Thiel Says Everything Is Overvalued: “Public Equities, Houses, Government Bonds”:

Since the Fed may not, or simply refuses, to see if not a bubble then at least “froth” in any asset class, perhaps it should hire Peter Thiel to be on its macroproduential supervisory committee, because according to the venture capital legend who co-founded PayPal everything is overvalued. Speaking at the LendIt USA Conference in San Francisco on Tuesday, he said that he is “somewhat concerned about the frothiness of the markets” and adds that “startup tech stocks may be overvalued, but so are public equities, so are houses, so are government bonds.

He adds that “if there is a bubble it is probably centered on the zero % interest rates, the quantitative easing, the money printing and that’s a very strange one because it permeates everything.” Continue reading »

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Apr 13

Obama-Satanic-Hang-Sign

It Begins: Obama Forgives Student Debt Of 400,000 Americans:

Joining the ranks of “broke lawyers” who can cancel their student debt, “Americans with disabilities have a right to student loan relief,” now according to Ted Mitchell, the undersecretary of education, said in a statement. Almost 400,000 student loan borrowers will now have an easier path to a debt bailout as Obama primes the populist voting pump just in time for the elections.

On top of “the student loan bubble’s dirty little secret,” here is another round of student debt relief…as MarketWatch reports,

The Department of Education will send letters to 387,000 people they’ve identified as being eligible for a total and permanent disability discharge, a designation that allows federal student loan borrowers who can’t work because of a disability to have their loans forgiven. The borrowers identified by the Department won’t have to go through the typical application process for receiving a disability discharge, which requires sending in documented proof of their disability. Instead, the borrower will simply have to sign and return the completed application enclosed in the letter. Continue reading »

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Apr 12

Average German Bond Yield Crashes To Zero For First Time Ever:

“You Get Nothing” is the message for German bond coupon-clippers as for the first time in history, the average yield across the entire bond complex tumbles to zero.

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Apr 10

Austria Just Announced A 54% Haircut Of Senior Creditors In First “Bail In” Under New European Rules:

Just over a year ago, a black swan landed in the middle of Europe, when in what was then dubbed a “Spectacular Development” In Austria, the “bad bank” of failed Hypo Alpe Adria – the Heta Asset Resolution AG – itself went from good to bad, with its creditors forced into an involuntary “bail-in” following the “discovery” of a $8.5 billion capital hole in its balance sheet primarily related to ongoing deterioration in central and eastern European economies.

Austria had previously nationalized Heta’s predecessor Hypo Alpe-Adria-Bank International six years ago after it nearly collapsed under the bad loans it ran up when it grew rapidly in the former Yugoslavia. Having burnt through €5.5 euros of taxpayers’ money to prop up Hypo Alpe, Finance Minister Hans Joerg Schelling ended support in March 2015, triggering the FMA’s takeover. Continue reading »

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Apr 10

Meanwhile In Germany, An Unexpected Ad Appears:

During a leisurely stroll around Germany, one may encounter many strange sights but nothing would stranger than the following ad (courtesy of Peter Barkow) which promises negative 1% interest rates for consumer loans up to 24 months.

-1% germany

Here is the quick and dirty: take out a loan and pay 1% less.

For the fine print we go to Santander Consumer Bank AG, which has this to which has this to say about this self-amortizing (if only in the beginning) loan.

negative zins_0

-1.0% FINANCING

Finance now with 0% and is pay 1% off the purchase price.

Continue reading »

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Apr 07

In Shock To Wall Street, Puerto Rico Moves To Suspend Payments On $72 Billion Public Debt:

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.

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Mar 29

Corporate Debt Defaults Explode To Catastrophic Levels Not Seen Since The Last Financial Crisis:

If a new financial crisis had already begun, we would expect to see corporate debt defaults skyrocket, and that is precisely what is happening.  As you will see below, corporate defaults are currently at the highest level that we have seen since 2009.  A wave of bankruptcies is sweeping the energy industry, but it isn’t just the energy industry that is in trouble.  In fact, the average credit rating for U.S. corporations is now lower than it was at any point during the last recession.  This is yet another sign that we are in the early chapters of a major league economic crisis.  Yesterday I talked about how 23.2 percent of all Americans in their prime working years do not have a job right now, but today I am going to focus on the employers.  Big corporate giants all over America are in deep, deep financial trouble, and this is going to result in a tremendous wave of layoffs in the coming months. Continue reading »

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