Debtor Nation

What Happens Next, Now That The 10-year Treasury Yield Hit The Psycho-Sound Barrier Of 3%

by Wolf Richter •  • Comments Off on What Happens Next, Now That The 10-year Treasury Yield Hit The Psycho-Sound Barrier Of 3%

Treasuries have been skidding, and the 10-year yield hit the psycho-sound barrier of 3%. What happened last time this phenomenon occurred? Well, yields bounced off and fell – because the mayhem they’d triggered gave the Fed conniptions and caused it to back off.

Fear and Trembling In Muni Land

by Wolf Richter •  • Comments Off on Fear and Trembling In Muni Land

Municipal bond investors, a conservative bunch eager to avoid rollercoasters and cliffhangers, are getting frazzled. Bankruptcies and the Fed’s taper cacophony are a toxic mix. So they’re bailing out of muni bond funds at record rate. Losses are mounting. And so are the fears.

Municipal Bankruptcy? Why Not! And so The Floodgates Open

by Wolf Richter •  • Comments Off on Municipal Bankruptcy? Why Not! And so The Floodgates Open

Individual investors have a unique opportunity now to buy sewer bonds – yup, that’s where they belong – issued by a bankrupt county to pay off holders of defaulted sewer bonds who’ll get a fashionable haircut as part of the deal – a deal made in bond-bubble heaven.

Human Inability To Grasp Very Large Numbers Abused By Politicians And The Fed

by James Murray •  • Comments Off on Human Inability To Grasp Very Large Numbers Abused By Politicians And The Fed

By James Murray: Crows are considered the most intelligent birds. They can count to three. Anything over three is “many” to a crow. Humans are basically the same way. At some point, numbers get so big that they just become “many.”

Next Step In Dismantling The Dollar And US Credit Hegemony

by Wolf Richter •  • Comments Off on Next Step In Dismantling The Dollar And US Credit Hegemony

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.

Which Law To Break If The Debt Ceiling Isn’t Raised?

by Wolf Richter •  • Comments Off on Which Law To Break If The Debt Ceiling Isn’t Raised?

That’s the question for Treasury Secretary Lew and Fed Chairman Bernanke during the debt-ceiling charade; it seems they’re boxed into a contradictory situation where one of them will have to break one of the laws, whether they want to or not, writes Vincent Reinhart, managing director at Morgan Stanley and former head of the Fed’s monetary division.

Wall Street Brushes Off Debt-Ceiling, Republicans Beg To Differ, But Default Would be “Catastrophic,” And Nothing Is Priced In

by Wolf Richter •  • Comments Off on Wall Street Brushes Off Debt-Ceiling, Republicans Beg To Differ, But Default Would be “Catastrophic,” And Nothing Is Priced In

Wall Street is convinced the government shutdown won’t hurt unless it drags out too long. It’s even more convinced that Congress would never be crazy enough to refuse to raise the debt ceiling in time and send the mighty and sole superpower, biggest debtor of all times, into default. That risk hasn’t been priced in. But a majority of Republicans begs to differ.

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.

BofA-Merrill: “When Excess Liquidity Is Removed, It Will Get ‘CRASHy’”

by Wolf Richter •  • Comments Off on BofA-Merrill: “When Excess Liquidity Is Removed, It Will Get ‘CRASHy’”

With Q3 GDP growth tracking 1.6%, Wall Street strategists, whose bullishness has been deafening despite realities on the ground, are starting to hedge their bets with some unusually candid analyses. Seeing overvalued assets everywhere, they’re struggling to point at solutions, other than a crash. And they predict a sour future for stocks and bonds.

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.