The Wall Street machinery was back in business thanks to the Fed’s policies, David Stockman writes. When Extended Stay America exited bankruptcy, its new owner was, well, Blackstone – which had done the LBO. To underscore that speculators had returned to the scene of the strangulation, as it were, its partner in the deal was John Paulson’s hedge fund.
Federal Reserve
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.
Why The Wall Street Casino Lives On
by David Stockman • • Comments Off on Why The Wall Street Casino Lives On
David Stockman lashes out at the LBO of Extended Stay, a scam that made Blackstone billions, and saddled taxpayers with the detritus. It’s perhaps the most brilliant explanation ever as to why the Fed bailouts of Wall Street were an asinine idea that benefited the “0.0001%” but hurt everyone else, including taxpayers and the main-street economy.
Earnings Season Starts With A Bang, So To Speak
by Wolf Richter • • Comments Off on Earnings Season Starts With A Bang, So To Speak
They’re getting hilarious, the shenanigans on Wall Street. Revenues have been lousy all year, and despite feverish cost cutting, earnings are sliding. The third quarter has been over for almost two weeks, but Q3 earnings estimates are still being pushed down. A lot! So that companies can “exceed expectations.” They’re now at stagnation levels. And stocks soar.
“Yellen Props Up Stocks” And Other Scary Data Points
by Wolf Richter • • Comments Off on “Yellen Props Up Stocks” And Other Scary Data Points
Alarm bells went off: “Yellen props stocks,” the headline read. Somebody needs to. Politicians are actively contemplating how to most effectively send the largest and brokest debtor in history into default. Corporate revenues can’t keep up with inflation. Earnings estimates and actual earnings growth plunge. And the S&P 500 soared 16% year to date.
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.
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.
Enabled By ZIRP and QE, Bankers Continue Looting Instead of Building Capital
by Lee Adler • • Comments Off on Enabled By ZIRP and QE, Bankers Continue Looting Instead of Building Capital
By Lee Adler, The Wall Street Examiner: One of the purposes of the Fed’s Zero Interest Rate Policy (ZIRP) was ostensibly to allow banks to rebuild their capital through suppressed funding costs and increased profits. Theoretically that would add to their capital. But in this chart, we see that the growth rate of bank capital has fallen to zero.
Supercars In The US, Japan, and China: How QE And Corruption Boosted Sales
by Wolf Richter • • Comments Off on Supercars In The US, Japan, and China: How QE And Corruption Boosted Sales
Supercar-makers Lamborghini, Ferrari, and Rolls-Royce are reacting to the forces whacking global markets for luxury products: a corruption crackdown in China, Abenomics in Japan, and the Fed’s money-printing in the US. The idea that sales in China, which is printing billionaires by the dozens, are crashing is a hard-to-swallow concept for the industry.
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?