The US has abused its three phenomenal privileges – including the control of the only world currency – to put global financial stability at risk, “like a truck full of dynamite heading right toward us,” said the chairman of the International Advisory Board of the Universal Credit Rating Group. But a “new financial order” is forming. And there’s a timeframe.
Everything Bubble
Multi-Trillion Dollar Question: How Much of Our Debt Is “Odious”?
by Don Quijones • • Comments Off on Multi-Trillion Dollar Question: How Much of Our Debt Is “Odious”?
By Don Quijones: If there is a two-word combination that strikes primal fear into the hearts of global senior bankers and representatives of international financial institutions, it is “odious” + “debt,” a legal theory that holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation shouldn’t be enforceable.
Fed: Hedge Funds, Banks Sell Crappiest Debt To Small Investors (Before Credit Bubble Blows Up)
by Wolf Richter • • Comments Off on Fed: Hedge Funds, Banks Sell Crappiest Debt To Small Investors (Before Credit Bubble Blows Up)
In its report on shadow banking, the New York Fed buried some nuggets: Hedge funds and banks are bailing out of the highest-risk “opaque” but now relatively low-yielding loans – low yielding thanks to the Fed’s repressive monetary policies – by selling them to small investors via harmless-sounding and conservative-appearing mutual funds and ETFs.
S&P Threatens To Cut US Debt To Junk
by Wolf Richter • • Comments Off on S&P Threatens To Cut US Debt To Junk
“This sort of political brinkmanship is the dominant reason the rating is no longer ‘AAA,’” S&P ratings agency wrote in a research note. More ominously, it warned that if Congress failed to pass a debt-ceiling hike before the out-of-money date in mid-October, it would cut the U.S. to “selective default.” And then there would be the post-default era.
Bubble Trouble: Record Junk Bond Issuance, A Barrage Of IPOs, “Out Of Whack” Valuations, And Grim Earnings Growth
by Wolf Richter • • Comments Off on Bubble Trouble: Record Junk Bond Issuance, A Barrage Of IPOs, “Out Of Whack” Valuations, And Grim Earnings Growth
When Blackstone’s global head of private equity, Joseph Baratta, said Thursday night that “we” were “in the middle of an epic credit bubble,” the likes of which he hadn’t seen in his career, he knew whereof he spoke. Junk bond issuance hit an all-time record in September. IPOs are flying off the shelf. But earnings growth is grim – and plunging. What gives?
Whose Capital Will Get Destroyed? Wall Street Tries To Cash Out Of Newfangled “Asset Class”
by Wolf Richter • • Comments Off on Whose Capital Will Get Destroyed? Wall Street Tries To Cash Out Of Newfangled “Asset Class”
Oaktree Capital and Carrington Mortgage are trying to dump a portfolio of 500 single-family homes they’d bought out of foreclosure. They’re trying to get the heck out of the once hot buy-to-rent trade. Blackstone, which gobbled up 32,000 of these homes, is trying to get its money out. They all are. That trade is turning sour. Trouble in the housing market!
Just Replace The Whole Kit And Caboodle With Asset Bubbles
by Wolf Richter • • Comments Off on Just Replace The Whole Kit And Caboodle With Asset Bubbles
Fed digs in its heels, refuses to taper, though it could still start later this year, soon-to-be-ex Chairman Bernanke said. It would continue doing exactly what hasn’t worked for five years, in the hope that even more of the same might finally do the trick, rather than admitting, tail between its legs, that all QE has done is create asset bubbles.
Debt Zombie Verizon
by Wolf Richter • • Comments Off on Debt Zombie Verizon
Verizon will unleash a tsunami of money on Wall Street. To pay for its $130 billion acquisition of Vodafone’s share of Verizon Wireless, it will print $60 billion of its own inflated stock. It will borrow the rest – much of it via the largest bond sale in history, though it’s drowning in debt. Now that sale is slamming the already deflating bond bubble.
Stocks: “Drastic Correlation Between Printing and Pumping” – And What It means When The Printing Ends
by Wolf Richter • • Comments Off on Stocks: “Drastic Correlation Between Printing and Pumping” – And What It means When The Printing Ends
Fed: We Can Avoid A Crash At The End Of QE If Everybody Believes That Everybody Believes In A Mirage….
by Wolf Richter • • Comments Off on Fed: We Can Avoid A Crash At The End Of QE If Everybody Believes That Everybody Believes In A Mirage….
What rabble-rousers, economists (those banished from the mainstream media), and bloggers have hammered on for years, a study by the San Francisco Fed finally confesses: Quantitative Easing didn’t do a heck of a lot of good for the real economy. The timing of the study is impeccable: the nearing end of QE – and the market mayhem it might cause.