Rating Agency

Tyler Durden's picture

"Debt Is A Fickle Witch"

Debt is a fickle witch. When left to its own devices, which it has been for nearly seven years with interest rates at the zero bound, it tends to get into trouble. Unchecked credit initially seeps, and eventually finds itself fracked, into the dark, dank nooks and crannies of the fixed income markets whose infrastructures and borrowers are ill-suited to handle the capacity. Consider the two flashiest badges of wealth in America - cars and homes...

Tyler Durden's picture

Violent Government Buying Spree Sends Chinese Stocks Soaring At Close Of Trading; Yellen On Deck

On a day when market participants will care about only one thing - how hawkish (or dovish) the FOMC sounds at 2:00 pm (no Yellen press conference today) - Chinese stocks provided the usual dramatic sideshow and traded unchanged or modestly negative for most of the day despite the latest $100 billion injection, the close of trading on Wednesday was a mirror image of what happened in the last hour on Monday, as various Chinese "plunge-protection" mechanism went into a furious buying frenzy and government-backed funds rushed to buy anything that trades in the last 60 minutes of trading in what may be the most glaring example of banging the close yet.

Tyler Durden's picture

Pension Shocker: Plans Face $2 Trillion Shortfall, Moody's Says

"Moody’s, which in 2013 began using a lower rate than governments do to calculate future liabilities, has estimated that the 25 largest U.S. public pensions alone have $2 trillion less than they need", Bloomberg reports.

Tyler Durden's picture

"Everybody Benefits By Avoiding Defaults": Citi Explains How To Goalseek Student Loan ABS Ratings

Moody's and Fitch are taking a hard look at student loan-backed ABS and they don't necessarily like what they see. Fortunately, Citi has some pointers on how the ratings agencies might go about avoiding downgrades.

Tyler Durden's picture

Frontrunning: July 10

  • Fed Chair Yellen To Speak As Global Tensions Rise (WSJ)
  • Greek PM Tsipras seeks party backing after abrupt concessions (Reuters)
  • France Hails Greek Aid Proposals as Germany Reserves Judgment (BBG)
  • Greek PM says does not have mandate to exit eurozone (Reuters)
  • France Intercedes on Greece’s Behalf to Try to Hold Eurozone Together (WSJ)
  • Frozen Funds, Fleeing Tourists: Greek Startups Feel the Pinch (BBG)
  • Doubts Simmer Despite China’s Gain (WSJ)
Tyler Durden's picture

Cities, States Shun Moody's For Blowing The Whistle On Pension Liabilities

In the wake of the Chicago downgrade, state and local governments are moving away from Moody's as the ratings agency questions pension fund return assumptions. 

Tyler Durden's picture

European Stocks Slide, Greece Tumbles But US BTFDers Emerge After Collapse In Greek Bailout Talks

European shares remain lower, close to intraday lows, with the banks and autos sectors underperforming and food & beverage, retail outperforming. Tsipras hardens Greek stance after collapse of bailout talks. The Italian and Swedish markets are the worst-performing larger bourses, the U.K. the best. The euro is weaker against the dollar. Greek 10yr bond yields rise; Spanish yields increase. Commodities decline, with copper, nickel underperforming and natural gas outperforming. U.S. Empire manufacturing, net TIC flows, NAHB housing market index, industrial production, capacity  utilization due later.

Tyler Durden's picture

As Seen In Greece: "I Rushed To The Bank" And The Return Of ATM Lines?

“I was spooked. It looked at first like a real default so I rushed to the bank."

“I used to take out half and leave the rest for an emergency. Now I feel relieved it’s there and make sure I take out every last lepto [cent].”

Tyler Durden's picture

Here's What Happens When Your City Is Cut To Junk

Last month, Chicago saw its debt cut to junk at Moody's, triggering billions in accelerated payment rights and jeopardizing efforts to improve the city's finances in the face of a budget gap that's set to triple over three years. Citi has more on the dreaded "downgrade feedback loop."

Tyler Durden's picture

Chicago "Junking" Triggers $2.2 Billion Payment, Deepening Financial Crisis

Following an Illinois Supreme Court ruling that struck down a pension reform plan aimed at closing a $100 billion funding gap, Moody's downgrades Chicago to junk, giving the city the dubious distinction of being the only major city "in recent history" to carry such a low rating other than Detroit. Chicago now faces accelerated payments to creditors of more than $2 billion.

rcwhalen's picture

Global Deflation & Credit Spreads

The results of the latest FOMC meeting confirm that most of the media and investor communities don't get the joke on Fed policy since the crisis.  No change in '15

Tyler Durden's picture

An Austrian Province Just Requested A State Bailout

Finance Minister Hans Joerg Schelling has said repeatedly that the Austrian government isn’t liable to cover Carinthia’s guarantees." Herr Schelling's warning is about to be tested. Yesterday, Carinthia officially asked Vienna for financial support. The spokeswoman said Carinthia would run out of money in June without help, confirming local media reports. No Austrian province has ever gone bankrupt and there is no legislation on how to handle such an event.

Tyler Durden's picture

The Committee To Destroy The World

Now we can see the real tragedy of negative interest rates: they not only have the perverse effect of reversing the flow of time, but they demonstrate that borrowers are not acting with the good faith incentives normally associated with someone who needs money. Rather than paying forward, borrowers are paying backwards because they are effectively trying to return something they don’t want. Such an arrangement renders it impossible for an economy to grow. By destroying the temporal and moral structure of money, negative interest rates destroy the economy. When tomorrow cannot be paid, the current regime must fail. The only question to be determined is the form that failure will assume. This may sound like philosophy but it is cold, hard reality.

Tyler Durden's picture

Greece Hints At Default, Russian Pivot:"Will Not Respect IMF Deadline" - What Happens Next


For now the algos can't decide if Greece is joking about making the payment or joking about not making the payment.


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