Although it may be unrealistically optimistic, I believe my paraphrase of a Churchill quote:
This is the biggest problem facing the world today, namely that at least 9 countries have debt/GDP above 300%, and that a whopping 39% countries have debt-to-GDP of over 100%!
Having put Russia on review in mid-January, Moody's has decided (somewhat unsurprisingly) to downgrade Russia's sovereign debt rating to Ba1 (from Baa3) with continuing negative outlook. The reasons:
*MOODY'S SAYS RUSSIA EXPECTED TO HAVE DEEP RECESSION IN '15, CONTINUED CONTRACTION IN '16
*MOODY'S SEE RUSSIA DEBT METRICS LIKELY DETERIORATING COMING YRS
We assume the low external debt, considerable reserves, lack of exposure to US Treasuries, and major gold backing were not considered useful? Moody's concludes the full statement (below) by noting that they are unlikely to raise Russian sovereign debt rating in the near-term.
Past: Scarily Prescient Analysis of @Grexit meets Present: Analysis of the Goldman Hedge meets Future: Goldman DisintermediationSubmitted by Reggie Middleton on 02/20/2015 15:12 -0500
A literal Tour de Force, likely the most indepth, practical analysis of the Grexit situation as you will ever read. This is why I like blogging... You can never find stuff like this in the mainstream media.
"... we almost hope those forecasts are proven wrong. They imply a widening gap between valuations and traditional fundamental relationships. They imply a dearth of yields and spreads that will almost invariably push more and more investors into positions they would ultimately rather not take. But if the old adage that markets move in the direction that causes the most pain to the largest number of people is anything to go by, then we suspect that this is what will happen. Depressingly, our instinct is that those new forecasts are more likely too conservative than too aggressive. Longer-term, sweet dreams really aren't made of this."
All of the biggest problems in the financial world revolve around the bond markets today:
The global financial system desperately needs a big, bloody sovereign default - a profoundly disruptive financial event capable of shattering the current rotten regime of bank bailouts and central bank financial repression. Needless to say, Greece is just the ticket: A default on its crushing debt and exit from the Euro would stick a fork in it like no other. But don’t count on the Greeks.
It turns out that the next best thing to Greek contagion in this bizarro, centrally-planned world is... anti-contagion.
Today, for the first time, the ECB released minutes from its historic January 21-22 meeting during which the ECB unleashed QE. While hardly containing anything earthshattering, here are the main highlights.
Like spirits, debt and risk make for a great party but a terrible hangover...
Our clueless President observed, "You cannot keep on squeezing countries that are in the midst of depression. At some point there has to be a growth strategy in order for them to pay off their debts..." No, paying off their debts is exactly the wrong medicine. You do not kick the can and extend and pretend that Greece can service its crushing debt. Instead, you permit it to default, and then to rebuild it’s economy and credit the old fashioned way. In any event, its a problem for the Europeans and the Greeks to resolve. Obama should stop sending Keynesian witch doctors to spread more policy poison around Europe.
All the gimmicks lenders press on borrowers to maintain the artifice that the loan is being serviced are financial frauds. They are simply new frauds piled on the initial fraud of issuing a visibly imprudent loan. The borrower was not creditworthy and the lender should never have offered him loans of that magnitude and at that low interest rate. The losses belong to the lenders, period.
Few people understand the global economy and its (mis)management better than David Stockman -- former director of the OMB under President Reagan - and he is now loudly warning that events have entered the crack-up phase, which he predicts will be defined by four key developments. As the crack-up phase gains momentum, he predicts an increasing number of "financial breaks" that will add to the unpredictability and instability of the environment for investors. Even 'dancing close to the door' sounds excessively risky at this point.
The world has begun to devolve into two distinct factions. The imperialist actions of the American Empire in the Middle East and Ukraine have pushed Russia, China, India, Brazil, and Iran closer together regarding trade deals; transacting commerce without using the USD; oil and gas pipelines; and military cooperation. Totalitarian regimes are known for using foreign threats to distract the populace from domestic suffering. As a matter of fact, all regimes use this tactic. When the global economy rips apart at the seams due to the debt saturation, world leaders will attempt to blame other countries for their dire circumstances. Foreign enemies are good for business. Ask our Nobel Peace Prize winning President. War is inevitable.