Treasury Department

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Meet Andorra: Europe's Next Failed State





Nestling idyllically between France and Spain in the foothills of the Pyrenees, Andorra - which has enjoyed the benefits of European borders without the restrictions of EU membership - has seen its risk "increase beyond our expectations," according to S&P. As a reminder, when Cyprus was "templated" and depositors awoke with a 47% haircut, its total financial assets to GDP was around 8x, Andorra is now at a stunning 17x. As The Telegrpah explains, in the last three weeks, the state has been gripped by a banking crisis that threatens to take it to the brink; and Andorra, which is not a member of the eurozone but uses the single currency on an informal basis, would have no way of bailing them out (with no central bank or lender of last resort). In short, the country faces a catastrophe if its banks fall apart.

 
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How The Eurodollar Brought About The Rise Of London Banking





Bankers who took up their business in the Square Mile of London’s banking heart could smell the Eurodollars in the air. As Anthony Sampson wrote, “Young British bankers and their foreign counterparts began to earn higher salaries than other bankers. Skyscrapers shot up by the old classic architecture near St. Paul’s Cathedral. Far Eastern and Arabic banks appeared, as did Mercedes and Cadillacs to cart bankers around the thin London streets.” The Soviet Union and other Eastern Bloc countries needed dollars for trade but wanted to avoid adverse US policy by not keeping or borrowing money in the United States. So they stuck funds in the London offices of British and American banks, causing the City of London to grow as a banking center and recoup some prewar financial glory.

 
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Frontrunning: March 17





  • Israelis vote as 'King Bibi's' reign hangs in the balance (Reuters), Factbox: Main candidates in Israel's election (Reuters)
  • Iran Can Add Million Barrels a Day of Oil If Sanctions Halt (BBG)
  • Kremlin rules out handing back Crimea to Ukraine (Reuters)
  • Saudi Arabia Needs More Oil to Feed Local Refinery Expansion (BBG)
  • How Lafarge’s CEO Went From Holcim Merger Architect to Obstacle (BBG)
  • When Yellen Gets Less Predictable She’s Getting Back to Normal (BBG)
  • Iran nuclear talks intensify as sides face tough issues (Reuters)
  • Debunking $1.4 Trillion Europe Debt Myth in Post-Heta Age (BBG)
 
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The Best "Democracy" Money Can Buy: For Every Dollar Spent Influencing US Politics, Corporations Get $760 Back





Between 2007 and 2012, 200 of America’s most politically active corporations spent a combined $5.8 Billion on federal lobbying and campaign contributions. What they gave pales compared to what those same corporations got: $4.4 Trillion in federal business and support. Here is the visual representation of this stunning finding: for every dollar spent on influencing politics, the nation’s most politically active corporations received $760 from the government.

 
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Debt Ceiling Drama Is Back: Two Days Until US Borrowing Capacity Is Exhausted





And so, a little over a year after the last debt ceiling melodrama, in which the US kicked the can on its maximum borrowing capacity to this Sunday, March 15, in the meantime raking up total US public debt to $18.149 trillion the soap opera with the self-imposed borrowing ceiling on America's "credit card" is back, and the US is once again faced with sad reality of its debt ceiling (now at well over 100% of America's upward revised GDP of $17.7 trillion). Tthe reason: two days from today Congress’s temporary suspension of the debt ceiling, which was approved in February 2014, ends.

 
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Next Mega-Bailout On Deck: White House Studying "New Bankruptcy Options" For Student-Loan Borrowers





It appears that just as the administration is finally figuring out what HFT is, it also decided to take a look at the charts above and has made a decision: the next bailout is about to be unveiled, and it will involve a "streamlined" bankruptcy law allowing students to discharge their student debt.

 
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Treasury 'Short Overhang' Lifts After Actavis Prices 2nd Largest Bond Issue Ever





Just a day after Blackrock saw its biggest Bond ETF outflows in history ($525.8 million pulled on Monday), Actavis sold $21 billion of almost-junk 'BBB-' rated debt (at a minsicule yield of only 3.5%) in the 2nd largest bond issuance ever (2nd only to Verizon's massive $49 billion deal in 2013). The issue was oversubscribed 4.5x (around $90bn in the order book) as a ten-part offering varying from 18-month floaters to 30Y fixeds all went off below guidance. With Treasury liquidty disappearing fast, one wonders just how much rate-locking on this massive deal was responsible for a net short overhang on the Treasury complex the last few days...

 
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Frontrunning: February 26





  • Goldman Employees Reaped $2 Billion From 2008 Options Last Year (BBG)
  • On Bush turf, Obama blames immigration woes on Republicans (Reuters)
  • Tougher Internet rules to hit cable, telecoms companies (Reuters)
  • Russia's Gazprom says can exempt rebel-held areas from Ukraine gas contract (Reuters)
  • Allianz Says Pimco Seeing ‘Substantially’ Lower Outflows (BBG)
  • Merkel Faces Stepped-Up Dissent on Greek Bailout in Party (BBG)
  • SEC Probes Companies’ Treatment of Whistleblowers (WSJ)
  • 2-Year Trek From Turf to Table Delays Cheaper U.S. Beef (BBG)
  • Turkish jets violate Greek air space (Kathimerini)
 
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Janet Yellen Is Freaking Out About "Audit The Fed" – Here Are 100 Reasons Why She Should Be





Janet Yellen is very alarmed that some members of Congress want to conduct a comprehensive audit of the Federal Reserve for the first time since it was created. During testimony this week, she made “central bank independence” sound like it was the holy grail. Even though every other government function is debated politically in this country, Janet Yellen insists that what the Federal Reserve does is “too important” to be influenced by the American people. Does any other government agency ever dare to make that claim? If the Fed is doing everything correctly, why should Yellen be alarmed? What does she have to hide?

 
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If You See A Terrorist Say Something, FBI Warns After Busting ISIS Threat To "Kill President Of US"





With the invasion of Syria, pardon, the "Islamic State" on behalf of US allies in the middle east imminent, it is time to send the fear meter to Max, and spook the US population with the reminder that far from being expert, Hollywood-quality video editors, ISIS is engaged in not only in selective, carefully sponsored and funded beheadings several thousand miles away, but is operating right under everyone nose.

 
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Washington Unable To Mind Own Business: Urges Greece, EU "Tone Down Rhetoric"





In its role as global hall monitor, Washington appears to have jabbed its nose into the Greece-EU talks:

*LEW SPOKE WITH SAPIN, DIJSSELBLOEM, VAROUFAKIS TODAY: OFFICIAL
*U.S. URGES SIDES IN GREEK TALKS TO TONE DOWN RHETORIC: OFFICIAL

Treasury Secretary Lew "urges compromise" and explains he is in touch with Eurogroup, IMF, and Greece putting the onus back on Varoufakis' shoulders by urging them to reach a deal of face additional hardhsip.

 
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Second Thoughts On US Official Gold Reserves Audits





What is not often covered in the media are the audits of the US official gold reserves stored at the US Mint, which is the custodian for 95 % (7716 tonnes) of the stash – nowadays also referred to as custodial deep storage, and at the Federal Reserve Bank Of New York that safeguards the remaining 5 % (418 tonnes). The lawful owner of the US official gold reserves is the US TreasuryPart one covered the most recent records I could find published by the US government, in this post we’ll examine more historical records and approach this matter from a more critical angle.

 
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Now On The Endangered Species List: Bond Traders





The bond market may have gotten so fragmented in recent months that even Bloomberg was amazed at how little trading volume it necessary to make a price impact, the amount of bond traders (and certainly salesmen), and certainly their bonuses, appeared to only go up. "Appeared" being the key word, however, because as Bloomberg reports, "the average number of dealers providing prices for European corporate bonds dropped to a low of 3.2 per trade last month, down from 8.8 in 2009, according to data compiled by Morgan Stanley."

 
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The NYT Exposes The Criminal Money-Laundering Underworld Supporting Manhattan's Luxury Housing Bubble





“We like the money,” said Raymond Baker, the president of Global Financial Integrity, a Washington nonprofit that tracks the illicit flow of money. “It’s that simple. We like the money that comes into our accounts, and we are not nearly as judgmental about it as we should be”... Mayor Michael R. Bloomberg said on his weekly radio program in 2013, shortly before leaving office: “If we could get every billionaire around the world to move here, it would be a godsend.”

 
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