Meltdown

"Where are the defaults?" UBS asks, referring to the highly leveraged US shale complex. "They're coming," is the answer, as current bond prices assume oil prices in the 60s and 70s. 

• Euro zone bond yields sink to historic lows (Reuters)
• Clinton Foundation to Keep Foreign Donors (WSJ)
• Russia says U.S. forced it to act on Ukraine (Reuters)
• Bankers to China's Rescue (BBG)
• Saudi Arabia Adds Half a Bakken to Global Oil Market in a Month (BBG)
• Valuations of Hong Kong's stock market operator go interstellar (Reuters)
• Switzerland Attracts Fewer Firms as Politics Hurt Business Image (BBG)

Three former Freddie Mac executives who understated the amount of subprime exposure on the GSE's book by a factor of 28 came to terms with the SEC today on a settlement which imposes fees no one has to pay and "limitations on future behavior" that "will not limit [anyone] in any practical way."

We are sure this is nothing to worry about... and Japanese officials will re-iterate that everything is on track but when a snake-like robot sent to inspect a reactor containment vessel at the Fukushima Daiichi nuclear power plant dies three hours into the operation, one might wonder just how "contained" the radiation situations really is.

GE’s announcement that its getting out of the finance business should be a reminder of how crony capitalism is corrupting and debilitating the American economy. The ostensible reason the company is unceremoniously dumping its 25-year long build-up of the GE Capital mega-bank is that it doesn’t want to be regulated by Washington as a systematically important financial institution under Dodd-Frank. Oh, and that its core industrial businesses have better prospects. We will see soon enough about its oilfield equipment and wind turbine business, or indeed all of its capital goods oriented businesses in a radically deflationary world drowning in excess capacity. But at least you can say good riddance to GE Capital because it was based on a phony business model that was actually a menace to free market capitalism. Its deplorable raid on the public purse during the Lehman crisis had already demonstrated that in spades.

This is why Bernanke said rates won’t normalize in his lifetime: any normalization means a crisis magnitudes larger than the 2008 crash.

Despite being an otherwise staid, traditional news service, the professional banking division of the Financial Times recently released an utterly scathing assessment of the British economy. It was entitled, “The UK economy is a ticking time bomb,” and the editor didn’t pull any punches in completely shattering the conventional fantasy that ‘all is well’, and that advanced economies can simply print and in debt their way to prosperity.

Stock-market crashes saw the light of day more and more as the world became industrialized. The 19th century saw a rapid increase in their numbers.

There are times when not only truth is stranger than fiction, but also, when serendipity coincides with moments that are branded into the pages of history where they become the allegory of the times. Sometimes its hard to judge or pick just one. Reason being they’ll seemingly come one right after another instead of that just one, almost surreal, moment. There’s no better illustration of these than the dreaded “front page magazine cover” proclaiming not only that the good times are here; but rather, the far more important underlying premise: they’re here to stay and will only get better! All the while insinuating – to worry about anything is a fool’s errand. i.e., “everything is awesome!”

If the government of Australia is concerned that their well-capitalized banking system needs a safety net and wants to tax deposits for such purpose, how in the world can we possibly expect the US and Europe, with all of their banking system risk, won’t do the same?

Greece officially runs out of cash on April 9 according to Reuters, citing Eurozone officials, and with interest payments due on the 17th and the 20th, and with €2.4 billion in t-bills coming due in two weeks, BofAML outlines the end game. 

When an economic crisis is coming, there are usually certain indicators that appear in advance...

Blogger Ben’s work is already done. In his very first substantive post as a civilian he gave away all the secrets of the monetary temple. The Bernank actually refuted the case for modern central banking in one blog. The truth is the real world of capitalism is far, far too complex and dynamic to be measured and assessed with the exactitude implied by Bernanke’s gobbledygook. In fact, what his purported necessity for choosing a rate “somewhere” actually involves is the age old problem of socialist calculation.