Sovereign Debt

Someone call the ECB because it looks like the game is well nigh up. Greek FinMins are taking time away from photo shoots and looting pension funds to call out QE for creating equity bubbles and the mainstream financial news media has figured out that there’s an acute collateral shortage and that buying €1.1 trillion in bonds €15 million at a time probably indicates a forced deviation from the original plan.

To summarize: Greek pensioners are now paying the IMF, which is paying Kiev, which is paying Gazprom, which is paying Putin.

All is not what it seems. Markets are upside down. Some ‘risk?free’ assets can be purchased for a guaranteed loss. EU asset markets (ex?Greece) are soaring at the same time that EU disunity is rising. An interest rate hike by the Fed is likely to cause a rally in Treasury bonds and a steep correction in US equities.

Do derivatives confuse you? Do you hate bond math? We feel the same way! So we simplified your life with headache free QE math. Compounded rates, equivalent rates, production functions: who needs old math?

When the same management teams that sell record amounts of their own company stock to the companies they control - companies which are now buying back record amounts of stock, this is not only the worst possible conflict of interest, it means, for lack of a better word, that the Nasdaq, bubble or not, has become the biggest circle jerk in history!

All of the biggest problems in the financial world revolve around the bond markets today: Greece, Japan, the Fed's interest rate hike, etc.

Financial collapse is already baked in, and it's only a matter of time before it happens, and precipitates commercial collapse when global supply chains stop functioning. Political collapse will be resisted, and the way it will be resisted is by starting as many wars as possible, to produce a vast backdrop of failure to serve as a rationale for all sorts of “emergency measures,” all of which will have just one aim: to suppress rebellion and to keep the oligarchy in power.

"On October 15, the deepest and most liquid market in the world demonstrated a six standard deviation move in less than two hours, a move that happens once in 506,797,346 days and a recent report by BlackRock highlights how “the secondary trading environment for corporate bonds today is broken. These examples signal that the probability of an accident is high and the stage is set for an adverse event meeting with an outsized impact on markets and possibly economies."

Somehow, monetary policy is still believed neutral in the long run and that bubbles are market events. Central banks have shown why they cannot command economic performance, but that doesn’t mean they can’t give one hell of a comedic performance. We have taken a monetary ride now into the theater of the absurd.

Never has our nation, corporations and wealthy top 1% faced so many new threats to their efforts to grow their power and wealth around the world.  But a real war would provide the crisis excuse to confiscate your gold and "excess" retirement plan and IRA assets, reduce or curtail your social security benefits, dramatically raise taxes and institute total exchange controls while curtailing your remaining freedoms and ability to resist for the duration of the crisis.

Although it may be unrealistically optimistic, I believe my paraphrase of a Churchill quote:

“Central Bankers will eventually do the right thing and return to a gold standard after they have exhausted all other alternatives.”

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.

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.