And you thought Greece was "fixed"...
The political class has completely disrupted the American structure of production, made American workers uncompetitive, snuffed the life out of entrepreneurs, and burdened the entire nation with a debt obligation the size of Jupiter. The US economy is not the strongest and most durable in the world — it is an unskilled thirty-two-year-old waiter crashing at his parent’s place and trying to pay down an $80,000 international relations degree.
How the Chinese central bank derailed the yuan and help Donald Trump rose to power.
Puerto Rico has devised a scheme the island says will help put it back on the path to debt sustainability. You can read on to learn the specifics, but in essence, the commonwealth wants creditors to take a massive haircut which may or may not be ameliorated down the road.
Something dire has happened to the intelligence and awareness of Western peoples who seem no longer capable of comprehending the machinations of “their” governments. Accountable government in the West is history. Nothing but failure and collapse awaits Western civilization.
Two weeks ago we, in collaboration with several readers, requested an official response from the Fed through a Freedom Of Information Act submission. Surely if the Fed would go so far as to call us liars, it would have no problem either responding or providing the required information. This is what we got back.
Clearly, something’s gone horribly awry. Hard work, perseverance, and ingenuity likely have something to do with the shiny streets. Conversely, sloth, drug abuse, and mental defectives likely have something to do with the blighted streets. But we also have an inkling that 20 years of activist Fed policy has left its marks all over both.
"You can’t deny the price action. Over the last few weeks, it is positively buoyant. If I were short, my butt cheeks would be tightening up. I’m starting to develop a theory, which is crazy, but then again... it might not be entirely crazy. You can help me decide. Maybe gold is starting to price in some of this political instability. Maybe it is starting to price in a Sanders or Trump presidency."
Last week, we noted that Italy is rushing to defuse a €200 billion time bomb in the country’s banking sector as investors fret over banks’ exposure to souring loans. On Wednesday we learn that Italy has indeed managed to strike a deal with Brussels to help alleviate banks’ NPL burden but the agreement falls well short of the type of comprehensive "solution" the market was hoping to see.
"The Fed’s monetary policy of extraordinarily low interest rates helped create the asset bubbles in stock and commodity prices that are now bursting. In retrospect, the Fed’s rate hike last month will likely be viewed as monetary malpractice. None of this is likely to forestall turmoil in credit markets. Investors are wise to be worried..."
After the white-knuckle sell-off of global equities that was finally punctuated by a rally late last week, everyone wants to know: Was this the bottom for stocks? And now Moody’s weighs in with an unwelcome warning... "it’s hard to imagine why the equity market will steady if the US high-yield bond spread remains wider than 800 basis point."
As we said two days ago when looking at the paltry recoveries on their total debt that bankrupt energy debtors are generating in liquidation and bankruptcy asset sales, "the energy bankruptcy party is only just starting." And sure enough, overnight we learned that another company is preparing to throw in the towel following a Reuters report that SandRidge Energy - a shale oil and gas producer in the Mid-Continent region of the U.S. - is exploring debt restructuring options, "as the heavily indebted U.S. oil and gas exploration and production company struggles with the fallout from plunging energy prices."
Here Come The Blackouts: Largest Ever Muni Restructuring Falls Apart As Puerto Rico's Power Authority Balks At $9 Billion DealSubmitted by Tyler Durden on 01/24/2016 15:20 -0500
The largest restructuring in muni market history fell apart on Friday when Puerto Rican lawmakers failed to approve a deal to rework some $9 billion in liabilities for the island's beleaguered power utility. "This is incredible. Our power plants look like the cars in Cuba."
As part of its 363 Asset Sale, the 3rd largest bankruptcy of 2015 after Samson Energy and Sabine Oil, that of Quicksilver, the estate was only able to collect $245 million in cash proceeds from BlueStone Natural Resources. With $2.35 billion in debt, Quicksilver was one of the first casualties of the energy bust when it filed on March 17, 2015. Today's news means that the recovery for its creditors is a paltry 10 cents on every dollar of total debt.
"When the market speaks, as it has done in recent days, it is right that bank executives and shareholders comprehend the need for serious and swift intervention."