"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.
"What Europe Wants" - to use global issues as excuses to extend its power:
- environmental issues: increase control over member countries; advance idea of global governance
- terrorism: use excuse for greater control over police and judicial issues; increase extent of surveillance
- global financial crisis: kill two birds (free market; Anglo-Saxon economies) with one stone (Europe-wide regulator; attempts at global financial governance)
- EMU: create a crisis to force introduction of “European economic government”
Now you see it: "The chances that that data is real is very low," said Alicia Garcia Herrero, Natixis's chief economist for the Asia-Pacific region. "Would you publish GDP data that looks south at this point in time? I don't think so."
Now you don't.
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.
Despite losing marquee PGA and LPGA events, a bankruptcy at his Puerto Rico golf course, and the lowest ratings for his Miss USA pageant ever, Donald Trump has topped the rest of the GOP presidential field in polls for the second time in as many weeks...
At an annualized return of approximately 20,622,184,553,370,800,000,000,000,000,000,000,000,000,000%, Greece just gave everyone the best trade opportunity of the year...
"There’s been a colossal misjudgment of future demand. That long boom made it especially difficult for people to expect anything otherwise. Many bought the big story about urbanization, instead of thinking how things could go bad."
The time of deflationary confiscation is coming closer for the remaining Greek bank depositors. Those who kept their cash in safe deposit boxes at banks are out of luck too: the government has decreed they may not take it out. This is something one needs to keep in mind – if one wants to keep cash outside the banking system, one cannot leave it in a bank safe deposit box either. The government will confiscate it when push comes to shove and the banks need to be rescued.
SCHAEUBLE: OFFERED LEW TO TAKE PUERTO RICO IF US TAKES GREECE
Nobody apparently learned much from the whole bubble-bust affair as banks and financial firms are at it again, this time in corporate debt. The artificial suppression of default, in no small part to perceptions of those bank reserves under QE (just like perceptions of balance sheet capacity pre-crisis), has turned junk debt into the vehicle of choice for yet another cycle of “reach for yield.” In the past two bubble cycles, we see how monetary policy creates the conditions for them but also in parallel for their disorderly closure. It isn’t money that the FOMC directs but rather unrealistic, to the extreme, expectations and extrapolations. Once those become encoded in financial equations, the illusion becomes real supply.
"U.S. regulators are sounding the alarm about banks’ exposure to oil-and-gas producers, a move that could limit their ability to lend to companies battered by a yearlong slump in prices," WSJ reports, reinforcing the notion that North America's "zero hedged" O&G sector is in for a rough ride.
Global equities plunged on Monday as both carbon-based traders and HFTs tried in vain to keep their composure which watching in horror as Greece, the birthplace of Western civilization, quickly became Venezuela. With Europe’s “Lehman weekend” now in the books and as the currency union stares into an uncertain future, the sell side tries to make sense of it all.
As we previously noted, liquidity is there when you don't need it, and it promptly disappears once it is in demand. Consider it "cocktease capitalism." If liquidity lasts longer than 4 hours, call the CFTC because you may be experiencing a spoof. Right now, the ultimate spoof is setting up as the credit default swap market collapses, and a global bond market margin call is just around the corner.
The fact that Moody's and Fitch are beginning to reevaluate student loan ABS is indicative of an underlying shift in the market. Between the proliferation of IBR and the Department of Education's recent move to open the door for debt forgiveness in the wake of the Corinthian collapse, financial markets are beginning to see the writing on the wall. Perhaps Bill Ackman said it best: "there's no way students are going to pay it all back."
"Of the subprime vehicle loans bundled into securities, 73 percent now exceed five years, up from 64 percent during the first three months of 2014. 'Because cars depreciate quickly, a borrower is typically upside down or underwater toward the end of a long loan term.' 'The risk is that you extend a loan that a borrower cannot afford over its term schedule. Inching out to 75 and 84 months, I don’t think that has been tested yet.'"