Sep 29

- Revealed – the Troika threats to bankrupt Ireland (The Irish Independent, Sep 28, 2014):

Honohan: ECB officials agreed to threaten Ireland with bankruptcy if the government tried to burn bondholders

The threat was made at a high-level teleconference meeting, details of which have been revealed for the first time by the Central Bank governor, Dr Patrick Honohan.

Mr Honohan, who famously told the nation Ireland would be entering the Troika bailout programme live on radio as government ministers were publicly denying it, also revealed he was kept out of loop about the meeting. Continue reading »

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Sep 28

- Standard & Poor’s Warns on Germany Triggering the Next Debt Crisis, Investors Would Lose their Shirts (Wolf Street, Sep 24, 2014):

A true debacle happened. Just when we thought the euro was safe, that ECB President Mario Draghi had single-handedly duct-taped the Eurozone back together in the summer of 2012 with his magic words, “whatever it takes.” Markets assumed that they were backed by the ECB’s printing press, and they loved their assumption. Spanish, Italian, even highly dubious Greek debt, some of it with a fresh haircut, soared. And hedge funds and banks gorged on it and loved it. The debt crisis was over! Stocks soared even more. Money was being made.

So bank bailouts continued, and the Eurozone recession proved to be a nasty long-term affair, but no problem, everything seemed to be guaranteed by the ECB. Debt-sinner countries, as Germans like to call them, could suddenly borrow for nearly free, and neither deficits nor debts mattered to financial markets.

But now comes ratings agency Standard & Poor’s and douses our illusions, because that’s all they were, with a bucket of ice water. The soaring popularity and electoral successes of Germany’s anti-euro party, Alternative for Germany (AfD), could push Chancellor Angela Merkel and her party, the conservative CDU, to take a harder line against bailouts, hopes of QE, and all manner of other ECB miracles that financial markets had been counting on. And it could spook them. And the nearly free money could suddenly dry up. So S&P warned: Continue reading »

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Sep 23


Jun 10, 2014

See also:


Sep 24, 2013

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Sep 23


Oct 15, 2013

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Sep 22

American-Flag-Tattered

- 50 Facts That Show How Far America Has Fallen In This Generation (The American Dream, Sep 18, 2014):

What has happened to America?  Please show these numbers to anyone that does not believe that the United States is in decline.  It is time for all of us to humble ourselves and face the reality of what has happened to our once great nation.  For those of us that love America, it is heartbreaking to watch the foundations of our society rot and decay in thousands of different ways.

The following are 50 facts that show how far America has fallen in this generation, but the truth is that this list could have been far, far longer…

#1 According to a survey that was just conducted, only 36 percent of all Americans can name the three branches of government.

#2 Only 25 percent of all Americans know how long U.S. Senators are elected for (6 years), and only 20 percent of all Americans know how many U.S. senators there are. Continue reading »

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Sep 17

- Germany Issues 2Y Note At Record Low Yield Of -7bps (ZeroHedge, Sep 17, 2014):

Germany sold EUR 3.34 billion 2-year notes to a desparate-for-collateral, safe-haven-seeking, ECB QE-front-running, deflation-pricing market (with exceptional demand – an elevated 2.26x bid-to-cover) for a stunning -0.07% yield… an all-time record low yield issuance for Germany. We have nothing to add…

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Sep 17

Obama_debt_star

The U.S. National Debt Has Grown By More Than A Trillion Dollars In The Last 12 Months (Economic Collapse, Sep 14, 2014):

The idea that the Obama administration has the budget deficit under control is a complete and total lie.  According to the U.S. Treasury, the federal government has officially run a deficit of 589 billion dollars for the first 11 months of fiscal year 2014.  But this number is just for public consumption and it relies on accounting tricks which massively understate how much debt is actually being accumulated.  If you want to know what the real budget deficit is, all you have to do is go to a U.S. Treasury website which calculates the U.S. national debt to the penny.  On September 30th, 2013 the U.S. national debt was sitting at $16,738,183,526,697.32.  As I write this, the U.S. national debt is sitting at $17,742,108,970,073.37.  That means that the U.S. national debt has actually grown by more than a trillion dollars in less than 12 months.  We continue to wildly run up debt as if there is no tomorrow, and by doing so we are destroying the future of this nation. Continue reading »

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Sep 16

- UK Hints At Next Reserve Currency, To Issue Chinese Yuan-Denominated Bond (ZeroHedge, Sep 15, 2014):

Yuanification continues around the world. As The USA attempts to corral its allies in a ‘broad coalition’, an increasing number of people – including domestic economic policy advisors – are shifting away from the USD as primary reserve currency. However, the move by British Chancellor of the Exchequer George Osborne, announced Friday, is likely the most notable yet in the world’s de-dollarization. As Xinhua reports, the British government intend to be the first nation (ex-China) to issue Renminbi denominated bond and to use the proceeds to finance the government’s reserves of foreign currency. Osborne described this dialogue outcome as “a historic moment” and a statement of British confidence in the potential of the RMB to become “the main global reserves currency”.

As Xinhua reports, Continue reading »

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Sep 16

What could possibly go wrong?
mad_max_2_1981



For the best viewing experience, watch the above video in hi-definition (HD) and in expanded screen mode

Debt

“… today the average family of four in America is associated with roughly $735,000 of debt.”

- Debt – Crash Course Chapter 13 (Peak Prosperity, Sep 12, 2014):

There’s just too damn much of it

The fundamental failing of today’s global economy can be summarized simply: Too Much Debt

We have taken too much of it on, too fast, in too many markets around the world, to have any hope of making good on it. Not only does the math not work out, but also on a moral level, we are placing a tremendous obligation on future generations that will unfairly limit the prosperity they can enjoy tomorrow in order to finance our consumption today.

In the US alone, total credit market debt stands at over $57 trillion and is doing its damnedest to continue expanding exponentially. Since simple math shows us that this debt level cannot be supported, the key questions to ask at this stage are:

Will the unsupportable debt disappear via default, or inflation?

And very important: Continue reading »

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Sep 15

Related info:

- The Fed Has A Big Surprise Waiting For You (ZeroHedge, Sep 13, 2014):

The US economy is dead. The Fed has known this for a long time, but pumped it up to where it is now to draw in all the greater fools, the so-called big investors who have made money like honey from QE and ZIRP. They are the greater fools. The American real economy ceased being a consideration long ago. We’re in for big surprises, and they won’t be pretty, they’ll be pretty nasty. There are far too many people who think of themselves as smart who don’t see the difference between a theater play and a reality show. The Fed will raise rates because that will make the biggest banks the most money. There’s nothing else that matters. The Fed can’t revive the US economy, that’s just a foolish notion. But it can suck a lot of wealth out of it.


Federal-Reserve-Bernanke1

- Speculation swirls over Fed language on rate hike (Guardian/AP, Sep 15, 2014):

When the Federal Reserve issues a policy statement after it meets this week, the financial world will be on high alert for two words:

“Considerable time.”

The presence or absence of that phrase will trigger a rush to assess the likely timing of the Fed’s first increase in interest rates since it cut them to record lows in 2008.

The Fed’s recent statements have said it expects to keep its key short-term rate near zero for a “considerable time” after it stops buying Treasurys and mortgage bonds. Those bond purchases have been intended to keep long-term rates down to support the economy. Continue reading »

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Sep 14

obama puppet

- America’s Poor Have Never Been Deeper In Debt (ZeroHedge, Sep 13, 2014):

When it comes to the poorest quartile of US society, some 14 million people, any suggestion that US society is deleveraging and setting the stage for pent up releveraging and thus, economic growth, is dead wrong. In fact, as the Fed’s triennial Survey of Consumer Finances, released last week showed, America’s poorest have never been more in debt! Continue reading »

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Sep 10

- Preparing To Asset-strip Local Government? The Fed’s Bizarre New Rules (Washington’s Blog, Sep 9, 2014):

By Ellen Brown

In an inscrutable move that has alarmed state treasurers, the Federal Reserve, along with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, just changed the liquidity requirements for the nation’s largest banks. Municipal bonds, long considered safe liquid investments, have been eliminated from the list of high-quality liquid collateral. assets (HQLA). That means banks that are the largest holders of munis are liable to start dumping them in favor of the Treasuries and corporate bonds that do satisfy the requirement.

Muni bonds fund the nation’s critical infrastructure, and they are subject to the whims of the market: as demand goes down, interest rates must be raised to attract buyers. State and local governments could find themselves in the position of cash-strapped Eurozone states, subject to crippling interest rates. The starkest example is Greece, where rates went as high as 30% when investors feared the government’s insolvency. Sky-high interest rates, in turn, are the fast track to insolvency. Greece wound up stripped of its assets, which were privatized at fire sale prices in a futile attempt to keep up with the bills. Continue reading »

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Sep 09

- JPMorgan Stunner: “The Current Episode Of Excess Liquidity Is The Most Extreme Ever” (ZeroHedge, Sep 8, 2014):

“The ECB’s quantitative expansion is hitting the financial system at a time when broad liquidity is also very high. The rise in excess liquidity, i.e. the residual in the model of Figure 3, is supportive of all assets outside cash, i.e. bonds, equities and real estate. The current episode of excess liquidity, which began in May 2012, appears to have been the most extreme ever in terms of its magnitude and the ECB actions have the potential to make it even more extreme, in our view…. These liquidity boosts are not without risks. We note that they risk creating asset bubbles which when they burst can destroy wealth leading to adverse economic outcomes. Asset yields are mean reverting over long periods of time and thus historically low levels of yields in bonds, equities and real estate are unlikely to be sustained forever.”
- JPMorgan

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Sep 09

Chris Christie

- New Jersey’s Debt is Downgraded by Fitch as Chris Christie Funnels Pension Money to Private Equity and Hedge Funds (Liberty Blitzkrieg, Sep 8, 2014):

David Sirota must be commended for his incredible work this year exposing the insidious relationship between public pension funds and “alternative asset managers,” namely private equity firms and hedge funds. It is the private equity component that has captured my attention the most due to the industry’s notoriously opaque and seemingly illegal fees.

One example I highlighted earlier this year was: Leaked Documents Show How Blackstone Fleeces Taxpayers via Public Pension Funds. The reason this relationship between public pension money and private equity is so incredibly important is because so many in the private equity world are so incredibly shady. Let’s not forget what SEC official Drew Bowden said back in May: Continue reading »

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Sep 05

Related info:

- Making $400,000 PER HOUR, The Best Paid Hedge Fund Manager In 2013 Was …


David-Tepper

- David Tepper Is Back, Sees “Beginning Of The End” Of Bond Bubble (ZeroHedge, Sep 4, 2014):

It has been a while since Tepper warned of “nervous time” and told his hedge fund pals “don’t be too freakin’ long.”

Since then the manipulated equity market bubble has gone straight up with every single dip bought massively by the algos, in the process surely eliminating any nervous thoughts Tepper may have had. So in a world starved for pundit philosophy, Bloomberg just reported that the bond market bubble is about to pop, at least according to the folicularly challenged billionaire. The reason, paradoxically enough, the ECB’s decision to monetize private assets and cut rates.

Continue reading »

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Sep 02

- Spain Sells First-Ever 50 Year Bonds At 4% Coupon (ZeroHedge, Sep 1, 2014):

Perhaps in order to celebrate its manufacturing PMI dropping from 53.9 to a below expectations 52.8, refuting the “growth story” promoted by its definitionally re-revised GDP (where the long overdue boost from hookers and blow is finally leading the country to new and improved Keynesian growth curves), moments ago Spain joined the likes of Canada, Caterpillar and Goldman and just issued, for the first time in its history, 50 Year bonds in a private placement. From Bloomberg:

  • SPAIN SELLS EU1B 50-YR BONDS
  • SPAIN TREASURY SELLS FIRST-EVER 50-YR BONDS, COUPON 4%

And since there is no hope that Spain will ever repay this bond, whose rate is dictated by anything – mostly the ECB’s monetary policy – but the fundamentals it is functionally equivalent to Spain raising new equity without a maturity date and a 4% dividend. Continue reading »

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Aug 28

- The Greatest Depression? German Yields Now Negative Through 2017 (ZeroHedge, Aug 27, 2014):

Another night, another sell-side bank suggests European QE must be getting closer and, along with more un-de-escalation in Russia-Ukraine, the bid for German bonds continues to surge as Europe’s greater depression appears increasingly priced into bonds. Yields on all German bonds out to 3 years are now negative and 10Y Bunds have collapsed to 90.5bps – record lows. This in turn – as we explained here - is dragging Treasury yields lower (10Y 2.36%) but leaves the spread to Bunds at record highs.


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Aug 22

- Argentina Stuns Bondholders With Scorched-Earth “Cramdown” Plan (ZeroHedge, Aug 20, 2014):

With the impasse over the latest Argentina default going nowhere fast, late last night president Kirchner stunned its creditors when she announced what amounts to a cramdown plan for holdouts, in which all bonds would be stripped of their existing indentures and converted to local law bonds. Or, as some would call it, a “scorched earth” transaction that burns all bridges, and goodwill, with the international creditor community and likely leaves Argentina unable to access global capital markets for the foreseeable future.

As part of its transaction Argentina would bypass the order issued by Judge Griesa halting payments to all creditors, not just the holdouts, and resume normalcy for the 90%+ of restructured bondholders while leaving Elliott, Aurelius and the like with little to no recourse aside from holding on to claims which would be two swaps behind, and with essentially no legal standing as it would completely bypass the Bank of New York (whom it would remove as trustee) custodian payment process and allow Argentina to make payments directly to those creditors it sees fit. Continue reading »

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Aug 15

bubble burst_0

- 14 Reasons Why The U.S. Economy’s Bubble Of False Prosperity May Be About To Burst (Economic Collapse, Aug 14, 2014):

Did you know that a major event just happened in the financial markets that we have not seen since the financial crisis of 2008?  If you rely on the mainstream media for your news, you probably didn’t even hear about it.  Just prior to the last stock market crash, a massive amount of money was pulled out of junk bonds.  Now it is happening again.  In fact, as you will read about below, the market for high yield bonds just experienced “a 6-sigma event”.  But this is not the only indication that the U.S. economy could be on the verge of very hard times.  Retail sales are extremely disappointing, mortgage applications are at a 14 year low and growing geopolitical storms around the world have investors spooked.  For a long time now, we have been enjoying a period of relative economic stability even though our underlying economic fundamentals continue to get even worse.  Unfortunately, there are now a bunch of signs that this period of relative stability is about to end.

The following are 14 reasons why the U.S. economy’s bubble of false prosperity may be about to burst: Continue reading »

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Aug 10

- US refuses to recognize UN court jurisdiction on Argentina’s debt (RT, Aug 9, 2014):

Washington has refused to allow the UN International Court of Justice (IJC) to hear Argentina’s claims that US court decisions on the country’s debt have violated Argentina’s sovereignty.

“We do not view the ICJ as an appropriate venue for addressing Argentina’s debt issues, and we continue to urge Argentina to engage with its creditors to resolve remaining issues with bondholders,” the US State Department told Reuters in an email.

The State Department sent an email with the same content to one of Argentina’s leading newspapers, the Clarin. Continue reading »

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Aug 06

- Three Chart Alarm: The Fed Has Set-Up The Corporate Bond Market For A Big Fall (David Stockman’s Contra Corner, Aug 5, 2014):

The three charts below, which appeared in this morning’s Wall Street Journal, are still another reminder that the Fed’s heedless fueling of the third financial bubble this century has done enormous damage to the internals of financial markets.  In this case, investors and savers being brutally punished by ZIRP were herded into bonds funds in a desperate scramble for yield. Accordingly, bond fund assets soared from $1.6 trillion at the time of the financial crisis to $4.1 trillion today.

Yet the market’s structural liquidity condition has gone in the opposite direction. Dealer inventories of corporate bonds have plummeted by nearly 75% from pre-crash levels, meaning that the ratio of dealer inventories to bond fund assets has virtually been vaporized. In 2008 that ratio stood at 15%, but presently it is only 1.5%.  Likewise, daily trading volumes have been cut in half since the crisis.

The implication is no mystery. When the financial markets eventually succumb to a “risk-off” selling panic, the corporate bond market will gap down violently. As one astute analyst put it:

“Everyone is hoping to be first through the exit,” said Matt King, global head of credit strategy at Citigroup in London. “By definition, that’s not possible.”

Stated differently, the Fed’s explicit campaign to force grandpa out of CDs and into corporate bond funds has caused a vast mis-pricing of liquidity. In a healthy free market, bond fund yields would carry a significant discount for illiquidity, and issuers of riskier corporate credits would face far higher yield spreads vs. the 10-year treasury benchmark.

So once again, the serial bubble machine in the Eccles Building has generated a huge unnatural market deformation that is inherently unstable and increasingly fragile. When the break comes, years worth of “extra” yield will be wiped-out in a traumatic drop in bond prices caused by a panic at the exit ramp.

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Aug 06

- How Economies Collapse: Systemic Friction and Debt Are Self-Liquidating (OfTwoMinds, Aug 4, 2014):

Paying for unproductive friction with borrowed money has generated the illusion that free to me is actually free–it isn’t.

We will discover, to our detriment, that friction and debt are both self-liquidating:that is, they bring about their own liquidation via systemic collapse.

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Aug 05

us-dollar-black-hole

- US is Bankrupt: $89.5 Trillion in US Liabilities vs. $82 Trillion in Household Net Worth & The Gap is Growing. We Now Await the Nature of the Cramdown. (Biderman’s Money, Aug 4, 2014):

There are many ways to look at the United States government debt, obligations, and assets.  Liabilities include Treasury debt held by the public or more broadly total Treasury debt outstanding.  There’s unfunded liabilities like Medicare and Social Security.  And then the assets of all the real estate, all the equities, all the bonds, all the deposits…all at today’s valuations.  But let’s cut straight to the bottom line and add it all up…$89.5 trillion in liabilities and $82 trillion in assets.  There.  It’s not a secret anymore…and although these are all government numbers, for some strange reason the government never adds them all together or explains them…but we will.

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Aug 05

- Argentina – the Economic Backdrop to the Default (Acting Man, Aug 4, 2014):

The Default is a Minor Problem – Argentina’s Real Problem is Something Else Entirely

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Jul 31

Related info:

- Clintonians Join Vulture Flock Over Argentina

- Argentina: 1 Week Left Until ‘D’efault-Day (ZeroHedge, July 22, 2014)


- Argentina Defaults (ZeroHedge, July 30, 2014):

It’s all over but the crying: having explained Argentina’s position (i.e. not giving to so-called vulture funds), Economy Minister Kicilloff explains:

  • *KICILLOF SAYS HEDGE FUNDS NOT WILLING TO GIVE DELAY ON RULING
  • *KICILLOF SAYS HARD TO BELIEVE ARGENTINA IN DEFAULT IF HAS FUNDS
  • *KICILLOF SAYS ARGENTINA CAN’T COMPLY WITH COURT RULING
  • *HOLDOUTS DIDN’T ACCEPT ARGENTINE OFFER: KICILLOF

As Bloomberg notes, by defaulting today, Argentina may trigger bondholder claims of as much as $29 billion — equal to all its foreign-currency reserves. Just remember that the last 2 days have seen ‘smart money’ buy Argentine bonds and stocks to all-time record highs. Continue reading »

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Jul 31

change-obama

- 21 Ways To End The Phrase ‘Americans Are So Broke…’ (Economic Collapse, July 29, 2014):

Did you know that 77 million Americans have unpaid debts that are “in collections” and that Congress is actually thinking about letting post offices offer payday loans?  We live in a country where almost everyone is drowning in debt and where most people are either flat broke or very close to flat broke.  Years ago, “your Mama is so broke” jokes were all the rage, and at the rate we are going they could make a big comeback.  Some of my favorites were “your Mama is so broke she went to McDonald’s and put a milkshake on layaway” and “your Mama is so broke your family ate cereal with a fork to save milk”.  Unfortunately, the facts that I am about to share with you are not funny at all.  In fact, they are quite sobering.  Yes, things are going fairly well for the elitists that live in the good areas of New York City, Washington D.C. and San Francisco right now, but most of the country is deeply struggling as our economic fundamentals continue to crumble.  Please share these numbers with as many people as you can, because we need people to understand that there has not been an “economic recovery” for most of America.  In fact, in many ways things just continue to get even worse.

The following are 21 ways to end the phrase “Americans are so broke”: Continue reading »

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Jul 29

- Deadbeat Nation: A Shocking 77 Million Americans Face Debt Collectors (ZeroHedge, July 29, 2014):

We have been warning for years that as a result of the Fed’s disastrous policies, America’s middle class is being disintegrated and US adults are surviving only thanks to insurmountable debtloads. But not even we had an appreciation of how serious the problem truly was. We now know, and it is a shocker: according to new research by the Urban Institute, about 77 million Americans have a debt in collections.

As the Washington Post reports, that amounts to 35 percent of consumers with credit files or data reported to a major credit bureau, according to the study released Tuesday by the Urban Institute and Encore Capital Group’s Consumer Credit Research Institute. “It’s a stunning number,” said Caroline Ratcliffe, senior fellow at the Urban Institute and author of the report. “And it threads through nearly all communities.”

 

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Jul 28

- The Italian Government Owes Over $100 Billion To Private Suppliers (ZeroHedge, July 27, 2014):

Much has been said in the popular press about Italy’s surprising economic recovery (which based on recent data is starting to lose steam), as well as its much improved fiscal picture (even if the country’s public debt hits record highs quarter after quarter and the bad debt within its banking system just rose by 24% from the prior year, to €169 billion the highest since 1998). Little has been said about just how Italy managed to pull this economic miracle off. The answer: robbing private suppliers to pay Paul, or rather, the public sector.

According to Reuters, the Italian state owes some 75 billion euros ($102 billion)to private suppliers, as reported by the Bank of Italy. The unpaid bills have starved companies of cash and triggered layoffs, factory closures and bankruptcies.

Continue reading »

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Jul 27

Vulture

- Clintonians Join Vulture Flock Over Argentina (Truthdig, July 24, 2014):

It is no surprise that right-wing Republican and hedge fund billionaire Paul Singer should be trying to wring hundreds of millions of dollars out of Argentina for a debt that Buenos Aires doesn’t really owe him. He screwed tens of millions of dollars out of poverty-stricken Peru and the Republic of Congo using the same financial sleight of hand. What may surprise people, however, is that key leaders in the administration of former President Bill Clinton are helping him do it.

Singer, who owns Elliot Management, a $17 billion hedge fund, is the leading “vulture investor”—a financial speculator who buys up the bonds of debt strapped nations for pennies on the dollar and then demands payment in full. When Argentina defaulted on its foreign debt in 2001, Singer moved in and bought up $48 million in bonds. He is now demanding that those bonds be paid at full-face value—$1.5 billion—plus interest and fees. It is a move that could derail Argentina’s long climb back into solvency, as well as undermine debt settlements worldwide. Continue reading »

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Jul 23

With 1 Week Left Until Argentina’s ‘D’efault-Day, Judge Blasts “Judgments Are Judgments” (ZeroHedge, July 22, 2014):

Day after day, headlines from Argentina implore Judge Griesa to do the “fair, responsible” thing and lift his judgment that holdouts get paid before current bondholders receive their payments… and day after day Argentina’s demands are met with silence or denials. Today, though, with 1 week left until Argentina must put up or shut up, Judge Griesa has come out swinging…

  • *U.S. JUDGE SAYS OF ARGENTINA RULINGS: ‘JUDGMENTS ARE JUDGMENTS
  • *ARGENTINA’S ‘INCENDIARY` RHETORIC `UNFORTUNATE,’ JUDGE SAYS
  • *U.S. JUDGE URGES ‘SENSIBLE STEPS’ TO AVOID ARGENTINA DEFAULT

While CDS spreads have surged once again, bonds trade with default probabilities around only 50% which, according to Jefferies “are expensive on underestimating the risk of default.” Continue reading »

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