http://www.zerohedge.com/fullrss2.xml/news/italy-miss-gdp-forecast-sees-sub-1-gdp-growth/In%20heated%20exchanges%20over%20the%20state%20of%20play%20of%20the%20Greek%20macro-economic%20adjustment%20program%2C%20the%20center-left%20parties%20%E2%80%94%20the%20Socialists%20%2526%20Democrats%20%28S%2526D%29%2C%20European%20United%20Left%20%28GUE%29%20and%20the%20Greens/In%20heated%20exchanges%20over%20the%20state%20of%20play%20of%20the%20Greek%20macro-economic%20adjustment%20program%2C%20the%20center-left%20parties%20%E2%80%94%20the%20Socialists%20%2526%20Democrats%20%28S%2526D%29%2C%20European%20United%20Left%20%28GUE%29%20and%20the%20Greens/- en "Arbitrage Is Dead" - Commodity Traders Lament A World "Where Everyone Knows Everything" http://www.zerohedge.com/news/2017-05-22/arbitrage-dead-commodity-traders-lament-world-where-everyone-knows-everything <p>For commodity traders operating in the Information Age,<a href="https://www.bloomberg.com/news/articles/2017-05-21/commodity-traders-lament-world-where-everybody-knows-everything"> Bloomberg reports </a>that just good old trading doesn&rsquo;t cut it anymore...<strong><em> &quot;Everything is transparent, everybody knows everything and has access to information.&quot;</em></strong></p> <p>Unlike the stock market in which transactions are typically based on information that&rsquo;s public, firms that buy and sell raw materials thrived for decades in an opaque world where their metier relied on knowledge privy only to a few. Now,<strong><em> technological development, expanding sources of data, more sophisticated producers and consumers as well as transparency surrounding deals are eroding their advantage.</em></strong></p> <p>Just ask Noble Group...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/20/20170522_comms.jpg"><img height="312" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/20/20170522_comms_0.jpg" width="600" /></a></p> <p>At a panel discussing <em>&lsquo;What&rsquo;s Next for Commodity Trading: Drivers, Disruptors and Opportunities&rsquo;,</em> <a href="https://www.bloomberg.com/news/articles/2017-05-21/commodity-traders-lament-world-where-everybody-knows-everything">Bloomberg reports that</a> Sunny Verghese, the chief executive officer of food trader Olam International Ltd., lamented declining margins.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>&ldquo;The consumers and producers are trying to eat our lunch. So we got to be smart about differentiating ourselves,&rdquo; </strong></em>he said.</p> </blockquote> <p>As market participants&rsquo; access to information increases, the traders highlighted the need to more than simply buy and sell commodities as profits from arbitrage -- or gains made from a differential in prices -- shrinks. That means getting involved in the supply chain by potentially buying into infrastructure that&rsquo;s key to the production and distribution of raw materials, and also providing financing for the development of such assets.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;The most valuable commodity out there is information, and the most useful information is the proprietary, critical information that you obtain from your own supply chain,&rdquo; said John Driscoll, the chief strategist at JTD Energy Services Pte, who has spent more than 30 years in the petroleum trading industry in Singapore.</p> <p>&nbsp;</p> <p><strong>&ldquo;You have to have skin in the game. You have to have access to assets, whether it&rsquo;s infrastructure, terminals, vessels or refineries.&rdquo;</strong></p> </blockquote> <p>It&rsquo;s critical for <strong>commodity traders to evolve as margins have declined because of more transparency and &ldquo;price arbitrage has disappeared,&rdquo;</strong> said Olam&rsquo;s Verghese. For example, the number of price quotes published by agencies such as S&amp;P Global Platts and Argus, which assess the value of commodities globally, have increased about 15 times since 1990, according to Verghese.</p> <p><em><strong>While &ldquo;arbitrage is dead,&rdquo; traders will &ldquo;continue to have substantial opportunity and disruption but the way of capturing that opportunity becomes more sophisticated,&rdquo; </strong></em>Mercuria&rsquo;s Jaeggi said.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="966" height="503" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170522_comms.jpg?1495472874" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-22/arbitrage-dead-commodity-traders-lament-world-where-everyone-knows-everything#comments Algorithmic trading Arbitrage Business Commodity Economy Finance Financial markets Money Trader Transparency Tue, 23 May 2017 02:50:00 +0000 Tyler Durden 596421 at http://www.zerohedge.com Nigel Farage Responds to Manchester Suicide Attack: 'This is a Direct Attack on Children' http://www.zerohedge.com/news/2017-05-22/nigel-farage-responds-manchester-suicide-attack-direct-attack-children <p>Nigel Farage was interviewed by Tucker Carlson this evening to discuss the <a href="http://ibankcoin.com/zeropointnow/2017/05/22/at-least-23-dead-hundreds-injured-in-massive-explosions-at-uk-arianna-grande-concert/">suicide attack in Manchester</a> that killed at least 19 and wounded dozens.</p> <p>Farage told Carlson, “we have been lulled into a slight sense of complacency,” refraining, however, from jumping to conclusions as to who was responsible for the attack.</p> <p>He noted that Britains shouldn't put their guard down, post BREXIT, saying "we've convinced ourselves that we’re in a better place than the rest of Europe on this.” </p> <p>Farage pointed out that the bombing was a 'direct attack on children... marks a new low in all forms of terrorism."</p> <p>Watch.</p> <p><iframe width="560" height="315" src="https://www.youtube.com/embed/Olz5vaQAEOI" frameborder="0" allowfullscreen></iframe></p> <p>Content originally published at <a href="http://ibankcoin.com/">iBankCoin.com</a></p> <p>&nbsp;</p> http://www.zerohedge.com/news/2017-05-22/nigel-farage-responds-manchester-suicide-attack-direct-attack-children#comments Aftermath of the United Kingdom European Union membership referendum Brexit Conservatism in the United Kingdom European Union Euroscepticism Farage Nigel Farage Politics of the United Kingdom War Tue, 23 May 2017 02:40:21 +0000 The_Real_Fly 596453 at http://www.zerohedge.com How Russia Became "Our Adversary" Again http://www.zerohedge.com/news/2017-05-22/how-russia-became-our-adversary-again <p><em><a href="http://www.strategic-culture.org/news/2017/05/22/how-russia-became-our-adversary-again.html">Authored by Paul Street via The Strategic Culture Foundation,</a></em></p> <p><img height="344" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/22/20170522_moscow.jpg" width="600" /></p> <p>Americans are routinely told by politicians and corporate media pundits and talking heads that <strong>Russia is their enemy &ndash; an &ldquo;adversary state.&rdquo;&nbsp;</strong> The assertion has been normalized.&nbsp; <strong>It passes without challenge or justification.</strong></p> <p><em>Forget for now the question of whether and how &ldquo;our adversary Russia&rdquo; intervened significantly on Donald Trump&rsquo;s behalf in the 2016 U.S. presidential election.&nbsp; Put aside the glaring absence of any smoking gun evidence to back that charge up and contemplate the fundamental matter of how and why Vladimir Putin&rsquo;s Russia became &ldquo;our enemy&rdquo; in the first place.</em></p> <p><strong>For those of us old enough to remember the long Cold War era, the designation of Russia as a leading global U.S. foe carries no small irony.</strong> From the Bolshevik Revolution of 1917 until the collapse of the officially Marxist-Leninist Soviet Union and its Eastern European satellites in the early 1990s, Russia was an ideological and political enemy of the Western capitalist &ldquo;elite.&rdquo;</p> <p>The USSR was no workers&rsquo; paradise.&nbsp; For all its formal allegiance to Marx and Engels, it was a militantly hierarchical class society ruled by a tyrannical state. After World War Two, it held brutal military power over Eastern Europe and East Germany. Still, Soviet-era Russia created an urban and industrialized society with real civilizational accomplishments (including cradle-to-grave health-care, housing, and food security and an impressive educational system and cultural apparatus) outside capitalism.&nbsp; It pursued an independent path to modernity without a capitalist class, devoid of a bourgeoisie, in the name of socialism. It therefore posed a political and ideological challenge to U.S-led Western capitalism &ndash; and to Washington&rsquo;s related plans for the Third World periphery, which was supposed to subordinate its developmental path to the needs of the rich nations (the U.S., Western Europe, and honorarily white Japan) of the world-capitalist core.</p> <p><strong>Honest U.S. Cold Warriors knew that it was the political threat of &ldquo;communism&rdquo; &ndash; its appeal to poor nations and people (including the lower and working classes within rich/core states) &ndash; and not any serious military danger that constituted the true &ldquo;Soviet menace.&rdquo;&nbsp;</strong> Contrary to U.S. &ldquo;containment&rdquo; doctrine after World War II, the ruling Soviet bureaucracy was concerned above all with keeping an iron grip on its internal and regional empire, not global expansion and &ldquo;world revolution.&rdquo; It did, however &ldquo;deter&hellip;the worst of Western violence&rdquo; (<a href="http://www.thirdworldtraveler.com/Chomsky/WhatUncleSamWants.html" target="_blank">Noam Chomsky</a>) by providing military and other assistance to Third World targets of U.S. and Western attack (including China, Korea, Indonesia, Egypt, Syria, Cuba, Vietnam, and Laos). &nbsp;Along the way, it provided an example of independent development outside and against the capitalist world system advanced by the superpower headquartered in Washington.</p> <p>To make matters worse from Washington&rsquo;s&nbsp;<a href="http://files.isanet.org/ConferenceArchive/dcb70c61c06c4071b36d9e774e4645b4.pdf" target="_blank">&ldquo;Open Door&rdquo; perspective</a>,<strong> the Soviet Empire kept a vast swath of the world&rsquo;s natural and human resources walled off from profitable exploitation by global capital.</strong></p> <p><u><strong>All of this was more than enough to mark the Soviet Union as global public enemy number one for the post-WWII U.S. power elite, which had truly planet-wide imperial ambitions, unlike Moscow.</strong></u></p> <p>The Soviet deterrent and alternative to U.S.-led capitalism-imperialism collapsed once and for all in the early 1990s.&nbsp; Washington celebrated with unchallenged invasions of Panama and Iraq. The blood-drenched U.S. President George H.W. Bush exulted that &ldquo;what we say goes&rdquo; in a newly unipolar, post-Soviet world. Russia reverted to not-so &ldquo;free market&rdquo; capitalism under U.S.-led Western financial supervision and in accord with the savage austerity and inequality imposed by the neoliberal &ldquo;Washington consensus.&rdquo; Chomsky got it right in 1991.&nbsp; &ldquo;With the collapse of Soviet tyranny,&rdquo;&nbsp;<a href="http://www.thirdworldtraveler.com/Chomsky/WhatUncleSamWants.html" target="_blank">he wrote</a>, &ldquo;much of the region can be expected to return to its traditional [subordinate] status, with the former high echelons of the bureaucracy playing the role of the Third World elites that enrich themselves while serving the interests of foreign investors.&rdquo; The consequences were disastrous for many millions of ordinary Russians.</p> <p><strong><em>The West said, &ldquo;welcome to the machine&rdquo; and &ldquo;enjoy your new freedom to starve and die young.&rdquo; The Soviet tyranny was turned into an oligarchs&rsquo; wonderland, a neoliberal wasteland combining untold new opulence for the fortunate Few with a stark decline in social and living standards for the Many. &nbsp;Russia remains a capitalist nightmare and plutocrats&rsquo; playground.</em></strong></p> <p><u><strong>So, what happened?&nbsp; How did &ldquo;our&rdquo; Cold War super-enemy become &ldquo;our&rdquo; brand new top &ldquo;adversary&rdquo; all over again, more than a quarter century after the tearing down of the Berlin Wall?</strong></u> The bottom line is that proud, post-Cold War Russia finally experienced too much brazen humiliation and betrayal at the hands of the U.S.-led West. It got up off the canvas under national/nationalist strongman Putin (a former KGB Lieutenant-Colonel wise in the ways of the West) and <strong>marshalled enough of still-intact natural and military resources and patriotic to challenge the American Empire&rsquo;s hubristic claim to the right to rule Eurasia with impunity. &ldquo;What we say goes&rdquo; hit a new wall of Russian dignity and power.</strong></p> <p><strong>One of the many dirty little secrets of the U.S. Cold War was that anti-communism functioned as a pretext and cover for Washington&rsquo;s Wall Street-fueled ambition to force open and run the entire world system in accord with its multinational corporate elite&rsquo;s globalist-&nbsp;<a href="https://books.google.com/books/about/Creation_of_the_American_Empire_U_S_dipl.html?id=arM6AAAAMAAJ" target="_blank">&ldquo;Open Door&rdquo; political-economic needs</a>.</strong>&nbsp; From this imperial perspective, the real Cold War enemy was not so much &ldquo;communism&rdquo; as other peoples&rsquo; struggles for national, local, and regional autonomy and independence. The enemy remains long after the statues of Marx, Engels, Lenin, and Stalin have come down.</p> <p>It doesn&rsquo;t matter than Russia is no longer &ldquo;socialist.&rdquo; Nationalist and regional push-back against Uncle &ldquo;We Own the World&rdquo; Sam has been more than sufficient to get Putin designated as the next official Hitler and Russia targeted as a malevolent opponent by the U.S. elite political class and media. Mike Whitney puts it very well in a recent&nbsp;CounterPunch&nbsp;essay:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;What has Russia done to deserve all the negative press and unsupported claims of criminal meddling?&hellip;Just look at a map. For the last 16 years, the US has been rampaging across North Africa, the Middle East and Central Asia. Washington intends to control critical oil and natural gas reserves in the ME, establish military bases across Central Asia, and remain the dominant player in an area of that is set to become the most populous and prosperous region of the world&hellip;&rdquo;</p> <p>&nbsp;</p> <p>&ldquo;But one country has upset that plan, blocked that plan, derailed that plan. Russia. Russia has stopped Washington&rsquo;s murderous marauding and genocidal depredations in Ukraine and Syria, which is why the US&nbsp;foreign policy establishment is so pissed-off.&nbsp; US elites aren&rsquo;t used to obstacles.&rdquo;</p> <p>&nbsp;</p> <p>&ldquo;For the last quarter of a century &ndash;&nbsp;since the fall of the Berlin Wall and the dissolution of the Soviet Union &ndash;&nbsp;the world&nbsp;had been&nbsp;Washington&rsquo;s oyster.&nbsp;If the president of the United States wanted to invade a country in the Middle East, kill a million people, and leave the place in a smoldering pile of rubble, then who could stop him? &hellip;Nobody. &nbsp;Because Washington owns this fu**ing planet and everyone else is just a visitor&hellip;Capisce?.&rdquo;</p> <p>&nbsp;</p> <p>&ldquo;But now all that&rsquo;s changed. Now evil Putin&nbsp;has thrown&nbsp;up a roadblock to US hegemony in Syria and Ukraine. Now Washington&rsquo;s land-bridge to Central Asia&nbsp;has been&nbsp;split in two, and its&nbsp;plan to control vital pipeline corridors from Qatar to the EU&nbsp;is no longer viable. Russia has stopped Washington dead-in-its tracks and Washington is furious.&rdquo;</p> <p>&nbsp;</p> <p>&ldquo;The anti-Russia hysteria in the western media is equal to the pain the US foreign policy establishment is currently experiencing. And the reason the foreign policy establishment is in so much&nbsp;pain, is because they are not getting their way.&nbsp; It&rsquo;s that simple. Their global strategy is in a shamble because Russia will not let them topple the Syrian government, install their own puppet regime, redraw the map of the Middle East, run roughshod over international law, and tighten their grip on another battered war-torn&nbsp;part of the world.&rdquo;</p> <p>&nbsp;</p> <p>&ldquo;So now&hellip; Putin must be demonized and derided. The American people must be taught to hate Russia and all-things Russian&hellip;Russia must be blamed for anything and everything under the sun&hellip;&rdquo;</p> </blockquote> <p><strong>Forget the charges of Trump-Russia collusion.&nbsp; Trump&rsquo;s main Russia problem is that he came into the White House from outside the elite&nbsp;<a href="https://monthlyreview.org/product/wall_streets_think_tank/" target="_blank">Council on Foreign Relations (CFR) ruling class establishment</a>.&nbsp;</strong> Unlike the plugged-in U.S. power and imperial elite, the orange-haired brute never got the Zbigniew Brzezinski-crafted, David Rockefeller-endorsed CFR memo on the grave peril Moscow still poses to &ldquo;the international system sponsored by the United States.&rdquo;&nbsp; (True, it&rsquo;s unlikely that Trump could have followed the memo). Candidate Trump showed his lack of ruling class credentials by admiring Putin&rsquo;s authoritarian manliness and calling for a stand-down from Obama and Hillary Clinton&rsquo;s reckless, Brzezinski-esque provocation of the Kremlin in Eastern Europe and Syria. He foolishly called for normalized relations with the vodka-swilling Eurasian power that arose from the grave to once again become Washington&rsquo;s &ldquo;all-purpose [global] punching bag&rdquo; (Whitney).</p> <p>After Herr Donald was ironically&nbsp;<a href="http://www.counterpunch.org/2017/01/06/hillary-clinton-and-the-installation-of-authoritarian-right-wing-regimes-in-the-americas/" target="_blank">installed in the White House</a>&nbsp;by leading Russophobe and &nbsp;<a href="https://www.commondreams.org/views/2016/08/18/vote-lying-neoliberal-warmonger-its-important" target="_blank">&ldquo;lying neoliberal warmonger&rdquo;</a>&nbsp;(LNW) Hillary Clinton, <strong>Russia-hating took on a new and seductive political meaning for Democrats and their many U.S. media allies. </strong>The Russiagate narrative has proved irresistible to these actors for three basic reasons.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>First, they have naturally wanted to delegitimize the early Trump administration for standard partisan reasons.</strong> They&rsquo;ve seen tarring Trump as a treasonous friend of a leading &ldquo;foreign adversary&rdquo; as useful for that purpose.</p> <p>&nbsp;</p> <p><strong>Second, highly placed NATO-expansionist New Cold Warriors in both major parties (e.g., John McCain) and the media have wanted to keep the heat on Moscow.</strong> The baseless Russia election-hacking and collusion charges have been tools for the New Cold War camp to hedge in Trump&rsquo;s promises of rapprochement with Russia. The Russiagate scam is part of why Clockwork Orangutan found it necessary to absurdly tell Russia to &ldquo;give Crimea back&rdquo; to Ukraine and why he theatrically launched 59 cruise missiles onto a Syrian airbase.</p> <p>&nbsp;</p> <p><strong>Third, the Russian interference allegation has been made in part to help the DNC and the neoliberal Democratic Party establishment avoid responsibility for blowing the 2016 election.</strong> The Democrats ran a wooden, Wall Street-captive, and corruption-tainted candidate (the aforementioned LNW) and a vapid and elitist campaign that couldn&rsquo;t mobilize enough working- and lower-class voters to defeat the epically noxious and unpopular Trump in key states like Pennsylvania, Wisconsin, Florida, Michigan and Ohio. The &ldquo;Moscow stole it&rdquo; narrative is a fancy version of &ldquo;The dog [bear?] ate my homework&rdquo; for a dismal dollar-drenched Democratic Party that abandoned the working class and the causes of peace, social justice and environmental sustainability long ago.</p> </blockquote> <p>The &ldquo;inauthentic opposition&rdquo; party (as the&nbsp;<a href="http://press.princeton.edu/titles/9175.html" target="_blank">late Sheldon Wolin aptly described</a>&nbsp;the neoliberal Democratic Party) <strong>would rather not take a long, hard and honest look at what it has become</strong>. It does not want to concede anything to those who dream (naively) of turning it into an authentic peoples&rsquo; and opposition party with a bold progressive vision and agenda. The &ldquo;Russia did it&rdquo; charge works for establishment Democrats hoping to stave off demands from leftish-progressive-populist types in their own party.</p> <p><strong>This perverse political logic works to sustain the strange new neo-McCarthyite anti-Russian madness, which is rooted in the U.S. imperial agenda, not any relevant Russian influence on U.S. life and politics.</strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="628" height="360" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170522_moscow.jpg?1495489373" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-22/how-russia-became-our-adversary-again#comments Anti-capitalism Anti-fascism Capitalism Central Asia China Cold War Council on Foreign Relations Democratic Party Donald Trump East Asia Eastern Europe Eastern Europe Economic ideologies European Union Florida Germany International relations Iraq Japan John McCain KGB Marxist-Leninist Soviet Union Michigan Middle East Middle East Natural Gas Noam Chomsky North Africa North Atlantic Treaty Organization Ohio Political ideologies Political philosophy Politics Politics Socialism Strategic Culture Foundation Syrian government Thought Trump Administration Ukraine Vladimir Putin western Europe White House White House Tue, 23 May 2017 02:25:00 +0000 Tyler Durden 596443 at http://www.zerohedge.com Enron 2.0? Asia's Largest Commodity Trader Halted After Crashing To 16 Year Lows On S&P Downgrade http://www.zerohedge.com/news/2017-05-22/enron-20-asias-largest-commodity-trader-halted-after-crashing-16-year-lows-sp-downgr <p>Once Asia&#39;s largest commodity trader,<strong> Noble Group has been halted after crashing almost 30% this morning</strong> following S&amp;P lowering its corporate credit rist rating to CCC+, citing continuing weak cash flows and profitability...</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>&quot;We downgraded Noble because we believe the company&#39;s capital structure is not sustainable,&quot;</strong></em></p> <p>&nbsp;</p> <p><em><strong>&quot;The negative outlook on Noble reflects the potential that the company will face distress and a non-payment of its debt obligations over the next 12 months,&quot;</strong></em></p> </blockquote> <p>This is the lowest prices for the Singapore-based firm since 2001...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/22/20170522_nob.jpg"><img height="316" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/22/20170522_nob_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p>This has been coming for a while, as we warned a year ago... <strong>Noble&#39;s &quot;Margin Call&quot; Part II - The Enron Moment</strong></p> <p><em>By <a href="https://jacquessimon506.wordpress.com/">Simon Jacques </a></em></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&quot;Our balance sheet - the strongest in recent history - represents a significant advantage as we continue to identify high value growth opportunities across the products and geographies we operate in. <span style="text-decoration: underline;"><strong>Maintaining our investment grade rating with the international rating agencies is a vital part of this strategy</strong></span>.&quot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </em></p> <p><em>- <a href="http://www.thisisnoble.com/images/stories/documents/ar/ar2014/ar2014.pdf">Noble Group 2014 Annual Report</a>, p. 27</em></p> </blockquote> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; * * * * *</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;Moody&#39;s Investors Service has downgraded Noble Group Limited&#39;s senior unsecured bond ratings to Ba1 from Baa3 and the provisional rating on its senior unsecured MTN program to (P)Ba1 from (P)Baa3.&quot;</p> </blockquote> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; - <em>Moody&#39;s, <a href="https://www.moodys.com/research/Moodys-downgrades-Noble-Group-to-Ba1-outlook-negative--PR_341857">December 29, 2015</a></em></p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; * * * * *</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;Noble Group Downgraded To &#39;BB+&#39; On Weakened Liquidity; Notes Lowered To &#39;BB&#39;; Ratings Still On CreditWatch Negative&quot;</p> </blockquote> <p>&nbsp;&nbsp;&nbsp;&nbsp; <em>- Standard &amp; Poors, <a href="https://www.standardandpoors.com/en_US/web/guest/article/-/view/type/HTML/id/1558850">January 7, 2016</a></em></p> <p><strong>The story of Noble is worth writing a book, mostly of how not to run your business.&nbsp; </strong></p> <p>If they are in this mess, it is in large part because the management was comprised predominantly of traders who were predisposed to defend their books.</p> <p>Noble has been desperately trying to revive their image by hiring former Goldman, JP. Morgan, Trafigura executives etc. By doing so they were looking for a form of credibility collateral.</p> <p>It didn&rsquo;t work well for the new employees as they rapidly found out that they inherited from the liabilities of one decade of Noble&rsquo;s poor decision making of the hard-core asset guys like William J. Randall and ex-Goldman Sach banker Yusuf Alireza.</p> <p>In the <a href="http://www.zerohedge.com/news/2016-01-02/noble-group%E2%80%99s-collateral-margin-call">part II of this analysis </a>we will review the gap between the liquidity headroom and the debt maturity profile of the trader and explain how Noble Group will have its Enron moment.</p> <p>The fatal mistake that Noble Group did was apparently to mislead the market about their financial performance &quot;presumably&quot; by using <a href="http://iceberg-research.com/">accounting devices</a>.</p> <p>During last November, Noble Group&#39;s chief financial officer Robert van der Zalm has stepped down from his position after taking a leave of absence for &ldquo;health reasons&rdquo;.</p> <p>Two months later,&nbsp; Moody&rsquo;s downgraded Noble Group.</p> <p>In a <a href="http://www.zerohedge.com/news/2015-11-23/sp-just-warned-asias-largest-commodity-trader-it-may-be-downgraded-junk">very awaited decision</a>, Standard &amp; Poor&rsquo;s has finally lowered Noble Group&rsquo;s to junk, placing Asia&rsquo;s largest commodity trader on watch for further possible as the rating agency remains skeptical about the liquidity headroom of the trader.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/01/noble.png"><img height="440" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/01/noble_0.png" width="600" /></a></p> <p>According to Noble Group, on September 30th 2015, the company had&nbsp; $15.5bn banking facilities and $1.669B in RMI (ready marketable inventories).</p> <ul> <li>$11.1bn of these $15.5bn banking facilities is uncommitted and are <span style="text-decoration: underline;">contingent on ability of maintaining investment-grade rating in the future</span>.</li> <li>Noble claims to have $900M of cash and 1.669B$ in RMI (ready and marketable inventories).</li> <li>Their 1.669B$ in RMI have claims on related- party notes that are under collateralized by their <span style="text-decoration: underline;">commodity merchant activity</span> and therefore should be excluded from their liquidity headroom.</li> <li>Noble Group currently uses $3.4B of borrowing facilities that are <span style="text-decoration: underline;">uncommitted</span>.</li> </ul> <p>Noble Group is left with only 1B$ of unutilized committed borrowing facilities and $900M of cash ready available to meet $2.966B of debt scheduled in the next 12 months.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/01/noble%202.png"><img height="78" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/01/noble%202_0.png" width="600" /></a></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/01/noble%203.png"><img height="296" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/01/noble%203_0.png" width="600" /></a></p> <p><em>Source: Noble Group MD&amp;A Q-3 2015</em></p> <p>Moreover, Noble Group counts on the completion of the Noble Agri stake divesture to reap $750M, a transaction which may not be completed by February 2016.</p> <p>Adding the 1B$ of unused uncommitted borrowing facilities plus the $750M of Noble Agri and the $900M of cash that Noble claims to have, Noble is still short by $316M.</p> <p>With the S&amp;P downgrade, <strong>the total collateral margin call on Noble Group could be as much as $3.4B</strong>, banking facilities that are uncommitted and contingent on the ability of maintaining their investment-grade rating.</p> <p><strong>Noble will have its Enron Moment.</strong></p> <p>Enron&#39;s bankruptcy occurred on November 2001 and <span style="text-decoration: underline;">was triggered by S&amp;P&#39;s downgrade of its debt below investment grade,</span> activating a call provision in some loan indentures with principal amounts totaling $4 billion, cash and liquidity that suddenly Enron didn&rsquo;t have.</p> <p>After the quick sale of Noble Agri, Noble&rsquo;s core business remains its coal &amp; energy &ndash; two very depressed commodities for the foreseeable future, and with no cash-flows to pay its debt and a sudden tightening of the credit,<u><strong> the trader is a cancer patient on the forward curve.</strong></u></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="960" height="506" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170522_nob.jpg?1495504968" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-22/enron-20-asias-largest-commodity-trader-halted-after-crashing-16-year-lows-sp-downgr#comments Accounting scandals Bond Business Credit rating agencies Economy Enron Enron ETC Finance Investment Grade Market liquidity Money Moody's Investors Service Noble Group Rating Agencies Rating Agency ratings related- party Standard & Poor's Systemic risk Tue, 23 May 2017 02:04:16 +0000 Tyler Durden 596452 at http://www.zerohedge.com China's Bond Market Chaos Continues - Yield Curve Double-Inverts http://www.zerohedge.com/news/2017-05-22/chinas-bond-market-chaos-continues-yield-curve-double-inverts <p>China&#39;s $1.7 trillion government-bond market is turning <strong><em>curiouser and curiouser</em></strong>...</p> <p><img height="313" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/22/20170522_chinacurve1_0.jpg" width="600" /></p> <p>In a fresh sign of the nerves among investors caused by Beijing&#39;s campaign this spring to make Chinese markets less risky, the yield on seven-year government bonds rose to 3.79% on Monday, above the yield on both five-year and 10-year bonds.</p> <p>The highly unusual move means that <strong>China&#39;s government-bond yield curve now resembles a triangle, with the seven-year yield at its highest since October 2014.</strong> Furthermore, the Chinese curve has a <strong>double-inversion 3s to 5s and 7s to 10. </strong></p> <p>In fact the 3s10s spread is the most negative ever...</p> <p><img height="314" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/22/20170522_chinacurve2_0.jpg" width="600" /></p> <p>The shift comes less than two weeks after the government-bond yield curve became inverted for the first time on record, with 10-year yields--now at 3.65%--lower than those for five-year bonds, currently at 3.68%. Normally investors demand higher yields on bonds that have longer to go until maturity.</p> <p>Intriguingly, <strong>30Y US Treasuries and 3Y China Treasuries have traded very tightly coupled</strong> at the same level for 6 years...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/22/20170522_chinacurve3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/22/20170522_chinacurve3_0.jpg" style="width: 600px; height: 315px;" /></a></p> <p><em><strong>&quot;We are seeing a butterfly on our screen that we have never seen before, &quot; </strong></em>said a Shanghai-based senior bond trader at a local mutual fund.</p> <p>The continued pressure on Chinese bonds (and stocks) is <strong>driven by both technical flows (China&#39;s ongoing crackdown on leverage in the financial system spewing out into the shadow banking system and hitting retail), and expectations for growth in a lower credit growth world (which has crushed the yield curve).</strong></p> <p>Just last night brokerage shares slumped as Chinese authorities blocked off-&#39;channel&#39; operations, barring securities firms from helping banks take loans off balance sheets...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/22/20170522_chinacurve4.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/22/20170522_chinacurve4_0.jpg" style="width: 600px; height: 298px;" /></a></p> <p><a href="http://asia.nikkei.com/Markets/Equities/Brokerage-shares-slump-as-China-blocks-off-channel-ops">As The Nikkei Asian Review reported, </a><strong>Chinese authorities have begun cracking down on brokerages engaged in the profitable business of helping banks keep inconvenient loans or assets off the books</strong>, sparking a broad slide among Shanghai-listed securities firms Monday.</p> <p>The China Securities Regulatory Commission on Friday<strong> banned so-called channel business helping banks convert on-the-books loans </strong>and notes into off-balance-sheet financial instruments, announcing the audit of an investment fund facilitating such transactions. The activities enable lenders to circumvent caps on loan-deposit ratios, for example.</p> <p><strong>Channel business is a significant source of fee revenue for brokerages </strong>but amounts to a firm abandoning its responsibility as an asset manager, the securities commission said.</p> <p>The resulting murky wealth management products form a cornerstone of China&#39;s shadow banking system, offering investors high returns in exchange for significant risk. The country&#39;s banks handle some 29 trillion yuan ($4.21 trillion) in such products. Regulators fearing such risk factors as defaults have stepped up a crackdown on shadow banking since April.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="964" height="503" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170522_chinacurve1.jpg?1495488713" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-22/chinas-bond-market-chaos-continues-yield-curve-double-inverts#comments Banking Bond Bond Business China China Securities Regulatory Commission China's government Economy Economy of China Finance Fixed income market Money Nikkei Security Shadow Banking Shadow banking system United States housing bubble United States Treasury security Yield Curve Yield curve Yuan Tue, 23 May 2017 02:00:00 +0000 Tyler Durden 596442 at http://www.zerohedge.com Buy The F**king Brazilian Political Crisis Dip http://www.zerohedge.com/news/2017-05-22/buy-fking-brazilian-political-crisis-dip <p>Nothing says<em><strong> &quot;go all in&quot; on Brazilian stocks</strong></em> like the one of the <a href="http://www.zerohedge.com/news/2017-05-18/brazilian-bloodbath-currency-halted-futures-crash-bonds-tumble-most-record">biggest equity market drops on record</a> following yet another political crisis... and that&#39;s just what investors did.</p> <p>Second only to the collapse surrounding Lehman&#39;s branruptcy, EWZ (the Brazil ETF) crashed over 16% last week (before rebounding)...</p> <p><img height="305" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/20/20170522_EWZ_0.jpg" width="600" /></p> <p>But it appears,<strong> the political crisis around President Michel Temer couldn&rsquo;t have come at a better time for the U.S. exchange-traded fund that invests in Brazilian stocks</strong>. The ETF had gone more than seven weeks without any deposits as investors questioned whether the equity rally had gone too far. <strong>But the 16 percent plunge on Thursday eased those concerns, and investors added $345 million to the fund, the biggest single-day inflow since Jan. 6, 2011...</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/20/20170522_EWZ1.jpg"><img height="312" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/20/20170522_EWZ1_0.jpg" width="600" /></a></p> <p><strong><em>Pent up demand?</em></strong></p> <p>It seems not, as while the Real is bid, <strong><em>Brazilian stocks are still languishing...</em></strong></p> <p><a _mce_href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/22/20170522_EOD2.jpg" href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/22/20170522_EOD2.jpg"><img _mce_src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/22/20170522_EOD2_0.jpg" height="311" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/22/20170522_EOD2_0.jpg" width="600" /></a></p> <p>Despite headlines that Temer&#39;s court hearing had been delayed today... stocks saw no love to end down 1.5%.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="964" height="502" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170522_EWZ1.jpg?1495456175" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-22/buy-fking-brazilian-political-crisis-dip#comments Brazil Business Exchange-traded funds headlines Lehman Michel Temer Politics of Brazil Temer's court Tue, 23 May 2017 01:35:00 +0000 Tyler Durden 596397 at http://www.zerohedge.com Greek Debt Relief Deal Fails In Last Minute, As Germany, IMF Clash Again http://www.zerohedge.com/news/2017-05-22/greek-debt-relief-deal-fails-last-minute-germany-imf-clash <p>Stop us if you've heard this story before. </p> <p>Insolvent Greece, having last week voted itself into even more austerity in hopes of unlocking some of the money promised it by Brussels so it can then use it to repay debt maturities owed to the ECB (whether it will actually follow through with said austerity measures remains unclear, though most likely not), is dragged to the finish line of yet another Euro finance minister negotiating session with promises that <strong>this time </strong>a debt relief deal is virtually guaranteed, and then... <em>it all falls apart.</em></p> <p>That's what <em><strong>again </strong></em>happened today, when Euro-area finance ministers gathered in Brussels with hopes, at least for the Greek delegation, to come home with a signed agreement, only to fail to break the impasse on debt relief for Greece, delaying the conclusion of the country’s bailout review and the disbursement of fresh loans needed to repay obligations in July. </p> <p>“The Eurogroup held an in-depth discussion on the sustainability of Greece’s public debt but did not reach an overall agreement,” said Jeroen Dijsselbloem, the Dutch finance minister who presides over meetings with his euro-area counterparts, and who again failed to reach a solution after <a href="https://www.reuters.com/article/us-eurozone-greece-schaeuble-idUSKBN18I1JG">another hardline stance </a>by his German colleague, Wolfgang Schauble, prevented any potential concessions. As a reminder, ever since the 3rd Greek bailout in the summer of 2015, rhe IMF and Germany have been at odds over Greece’s economic outlook and the amount of debt relief required to assure economic stability: it was the same debate, that prevented a deal from being inked on Monday.</p> <p>The big issue is what happens to the Greek economy after 2018, when the current bailout expires. The IMF, which has demanded debt haircuts in order to fund the ongoing bailout, has repeatedly raised doubts about Greece’s ability to maintain such an optimistic budget performance for decades - it's like Bank of America's forecast for US GDP through 2027 which anticipated precisely zero recessions; meanwhile, key creditors are pushing for a more positive outlook (guess who will be wrong). The reason is that less ambitious fiscal targets would increase the amount of debt relief needed, meanwhile the Greek population continues to suffer.</p> <p>As Bloomberg explained after the latest meeting, the debt measures proposed by euro area finance ministers <strong>were not enough for the IMF to come on board the Greek bailout, </strong>and unequivocally say that Greece’s debt is sustainable, according to an official familiar with the discussion. </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>There was some movement, though not quite enough, official says, asking not to be named as Eurogroup meeting wasn’t public There’s some frustration with the IMF among euro area finance ministers, pressure on Fund to move will increase over the coming weeks</p> </blockquote> <p>In any case, work will continue in the coming weeks <strong>with the aim of reaching a conclusion on June 15 at the next meeting of ministers</strong>, Dijsselbloem said. </p> <p>Last May, Euro-area finance ministers committed to a set of measures to ease the repayment terms on Greek bailout loans after the end of the program in 2018, but the degree to which these measures will be implemented is still a subject of contention.&nbsp; </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Among the options listed is the extension of maturities on euro-area loans to Greece, as well as the capping and deferral of interest payments. The IMF has said it wants these options to be specified further, so that numbers “add up” and annual Greek debt refinancing needs are kept below clearly defined thresholds</p> </blockquote> <p>According to <a href="https://www.bloomberg.com/news/articles/2017-05-22/greek-debt-deal-said-to-fail-as-creditors-defer-talk-until-june">Bloomberg</a>, after eight hours of talks and multiple draft compromises, <strong>Athens and its creditors couldn’t reach an accord that would ease Greece’s debt and that would convince the International Monetary Fund to agree to help finance the country’s bailout</strong>. The IMF has been seeking more debt relief for the country, pushing euro-area creditors to ensure the sustainability of Greece’s €315 billion ($354 billion) of obligations before it participates in the program. Some nations including Germany object to a debt restructuring while also insisting that the Washington-based fund join the program to lend credibility to the bailout.</p> <p>The reason why the can was kicked again is that Greece doesn’t have a large maturity deadline until July, when €7 billion euros in obligations come due, and Europe has a habit of waiting until the last moment before disbursing the funds that Athens will then turn around and use to repay the ECB. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/greek%20debt%20schedule.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/greek%20debt%20schedule_0.jpg" width="500" height="333" /></a></p> <p>Delaying resolution of the program review adds to months of uncertainty that have taken their toll on the Greek economy - which has slipped back into recession --and kept the country from returning to the bond market.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/greece%20recession.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/greece%20recession_0.jpg" width="500" height="281" /></a></p> <p>Recession notwithstanding, Dijsselbloem also said the parties agreed on a target for Greece’s primary surplus, which excludes interest payments, of 3.5% of gross domestic product until 2022. Which is funny: it was Mario Draghi's secret deals with Greece when he was still part of Goldman, that masked the Greek debt mountain, and made the country's surplus appear artificially high. The eventual result was not one, not two, but three Greek bailouts.</p> <p>“The Greek authorities are taking their responsibilities and I think the partners of Greece are also taking their own responsibilities,” European Union Economic and Monetary Affairs Commissioner Pierre Moscovici said. “There’s been a shared effort to narrow the gap between positions -- we haven’t yet concluded but I hope under the guidance of the president of the Eurogroup it will possible three weeks from now.”</p> <p>Additional debt relief is also needed for the ECB to include Greek bonds in its asset purchases program, which would ease the country’s access to bond markets, and is the reason why last week, Greek lawmakers approved more austerity measures in hopes of mollifying creditors, including pension cuts, tax hikes and other structural economic reforms. The resulting hope that Greece would be included in the ECB's QE was the longest winning streak in Greek capital markets in years. </p> <p>For now, however, Greece has to wait, most likely until the very last minute before the €7 billion in July obligations come due.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="600" height="392" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/UnFuck2_0_7.jpg?1495501750" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-22/greek-debt-relief-deal-fails-last-minute-germany-imf-clash#comments Bailout Bond Business Capital Markets Creditors Economy Economy of Greece Economy of the European Union Eurogroup European Central Bank European Union European Union European Union Eurozone Eurozone crisis Fail Germany Government debt Greece Greek government-debt crisis Gross Domestic Product International Monetary Fund International Monetary Fund International Monetary Fund Jeroen Dijsselbloem Recession Tue, 23 May 2017 01:15:33 +0000 Tyler Durden 596451 at http://www.zerohedge.com Why The Chinese Yuan Won't Be The World's Reserve Currency http://www.zerohedge.com/news/2017-05-22/why-chinese-yuan-wont-be-worlds-reserve-currency <p><a href="http://www.theepochtimes.com/n3/2250139-why-the-chinese-yuan-wont-be-the-worlds-reserve-currency-2/"><em>Authored by Valentin Schmid via The Epoch Times,</em></a></p> <p>Whenever someone gets too big and too important, <em><strong>the other players who&nbsp;can&rsquo;t compete by themselves call for a challenger.</strong></em> This is true in sports, business, and even for currencies.</p> <p>Because the dollar is so big and important, smaller countries were happy when the euro was launched to provide a counterbalance, if not to challenge the dollar&rsquo;s position outright.</p> <p><strong>The euro ultimately provided that counterbalance, but never managed to dethrone the dollar as the world&rsquo;s foremost reserve currency.</strong> The euro is used in 30 percent of all global payments, according to payment provider SWIFT; the dollar is still number one, at 40 percent.</p> <p>But what about the Chinese currency, the yuan, the one that investment bank HSBC predicted would become the third-largest global trade currency by 2015&mdash;<strong>is it the ultimate challenger to the dollar&rsquo;s top status? Not so much.</strong></p> <p><strong><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/22/20170522_chinafx.jpg"><img height="316" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/22/20170522_chinafx.jpg" width="594" /></a></strong></p> <p>Only 16 percent of Chinese trade is settled in yuan, or renminbi (RMB), and the share of global payments ranks sixth at only 1.78 percent, behind the dollar, euro, pound, yen, and even the Canadian dollar.</p> <p><strong>To be fair, China&rsquo;s leadership never called for the yuan to overtake the dollar. It was mainly Western cheerleaders like HSBC&nbsp;that looked at the country&rsquo;s economic growth and applied it to the currency.&nbsp;</strong></p> <p>Many pundits also thought the yuan would take a stronger role after Donald Trump&rsquo;s election last November.</p> <p><strong><em>&ldquo;No longer is the U.S. dollar the only haven of safety. There is an alternative&mdash;renminbi,&rdquo; </em></strong>Daryl Guppy, CEO of the Guppytraders financial market training platform, told&nbsp;<a href="http://www.cnbc.com/2016/11/11/king-dollars-role-as-the-global-reserve-currency-called-into-question-after-trumps-win.html" rel="nofollow">CNBC in November</a>.&nbsp;</p> <h2><u>Reserve Qualities</u></h2> <p><strong><em>But what does a currency have to be&nbsp;or do to become the world&rsquo;s reserve currency? Will the yuan ever qualify, and is the Chinese leadership pushing to replace the dollar?</em></strong></p> <p>According to a report by investment bank Natixis,<strong><em> there are four functions a successful currency needs to fulfill for both the private and the public sectors.</em></strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><u><strong>The first is being a medium of exchange.</strong></u> For private sector payments, we already saw that the RMB&rsquo;s share is minuscule compared to the euro and dollar. Even the RMB&rsquo;s use in trade with and investment into China is relatively small and no longer growing, according to the report.</p> <p>&nbsp;</p> <p>Public sector payments between governments and central banks are conducted via central bank swap lines. They allow central banks of different countries to issue money that is not their own. For example, during the financial crisis of 2008, the Federal Reserve provided the world&rsquo;s central bank with as much as <a href="https://www.newyorkfed.org/medialibrary/media/research/current_issues/ci16-4.pdf" rel="nofollow">$620 billion in liquidity</a>. China&rsquo;s swap lines amount to $430 billion, but are hardly ever used.</p> <p>&nbsp;</p> <p><u><strong>The second function is being a store of value,</strong></u> so that private players can invest their money in yuan assets like stocks and bonds and preserve their purchasing power. Also here, foreign ownership of Chinese equities is not very large, at around 0.8 percent, and for Chinese bonds, only slightly larger at 2 percent. Foreign bank deposits and loans into China have also been falling since 2014.</p> <p>&nbsp;</p> <p>For the public sector store of value, that is, global central banks&rsquo; holding of foreign currency, the yuan&rsquo;s share is 1 percent, despite the admission to the International Monetary Fund&rsquo;s (IMF) special drawing rights (SDR) basket late in 2016. The dollar still takes the lion&rsquo;s share at 64 percent.</p> <p>&nbsp;</p> <p><u><strong>The third function is the so-called unit of account.</strong></u> This means that trade invoices, for example, are issued in RMB and then paid in RMB rather than dollars. Also here, even for Australia, one of China&rsquo;s biggest trading partners, only 0.5 percent of exports to China are invoiced in RMB.</p> <p>&nbsp;</p> <p>For the official unit of account, another country would need to peg its currency to the RMB, but given China&rsquo;s relatively closed capital account, this hasn&rsquo;t happened yet. At least the RMB is now part of the SDR, which functions as a unit of account for the IMF, but it only has a 10.9 percent weight.</p> <p>&nbsp;</p> <p><u><strong>Lastly, the currency needs to have developed fixed income markets</strong></u> where payments can be parked in the form of bank deposits or bonds.</p> <p>&nbsp;</p> <p>And while local Chinese corporate bond issuance is strong, foreigners aren&rsquo;t buying into it, and the Chinese government bond market remains small in comparison to those in the United States and Europe.</p> <p>&nbsp;</p> <p>Furthermore, bank deposits in RMB in the so-called global clearing centers are also falling. In Hong Kong, for example, only 5 percent of all bank deposits are in RMB and 37 percent in dollars.</p> </blockquote> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/22/20170522_chinafx1.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/22/20170522_chinafx1_0.jpg" style="width: 600px; height: 400px;" /></a></p> <p><em>Zhou Xiaochuan, governor of the People&rsquo;s Bank of China, in Beijing on March12, 2015. Unlike Western pundits, the Chinese central bank never wanted the yuan to replace the dollar.&nbsp;&nbsp;(Feng Li/Getty Images)</em></p> <p>This, however, is not a disappointment for the Chinese regime, <strong><em>but rather for their Western cheerleaders.</em></strong> The Chinese have always favored an international solution to replace the U.S. dollar, namely in the form of the SDR, as China&rsquo;s central bank governor Zhou Xiaochuan called for <a href="http://www.bis.org/review/r090402c.pdf" rel="nofollow">in a 2009 speech</a> at the Council on Foreign Relations.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;The desirable goal of reforming the international monetary system, therefore, is to create an international reserve currency that is disconnected from individual nations,&rdquo; he said.</strong></p> </blockquote> <p>Disconnected from the dollar, yes - <u><strong>but not connected to the yuan.</strong></u></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="594" height="316" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170522_chinafx.jpg?1495484608" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-22/why-chinese-yuan-wont-be-worlds-reserve-currency#comments Australia Bond Business Canadian Dollar Central bank Central Banks China Chinese government Council on Foreign Relations Currency Donald Trump Economy Federal Reserve fixed Foreign exchange market Hong Kong International Monetary Fund International Monetary Fund International trade Monetary hegemony Money People's Bank of China Purchasing Power Renminbi Renminbi Reserve Currency Reserve currency Special drawing rights State Administration of Foreign Exchange SWIFT US Federal Reserve Yen Yuan Yuan Tue, 23 May 2017 00:45:00 +0000 Tyler Durden 596439 at http://www.zerohedge.com Seth Rich Plot Thickens: "DC Insider" Speaks Of "Complete Panic" At Highest Levels Of DNC http://www.zerohedge.com/news/2017-05-22/seth-rich-plot-thickens-dc-insider-confirms-complete-panic-highest-levels-dnc <p>Last week, <a href="http://www.foxnews.com/politics/2017/05/16/slain-dnc-staffer-had-contact-with-wikileaks-investigator-says.html">Fox News</a> dropped a bombshell report officially confirming, via anonymous FBI sources, what many had suspected for quite some time, that murdered DNC staffer Seth Rich was the WikiLeaks source for leaks which proved that the DNC was intentionally undermining the campaign of Bernie Sanders. In addition to exposing the corruption of the DNC, the leaks cost Debbie Wasserman Shcultz her job as Chairwoman.</p> <p>Of course, if it's true that WikiLeaks' emails came from a DNC insider it would end the "Russian hacking" narrative that has been perpetuated by Democrats and the mainstream media for the past several months.&nbsp; Moreover, it would corroborate the one confirmation that Julian Assange has offered regarding his source, namely that it was "not a state actor."</p> <p>Meanwhile, the plot thickened a little more over the weekend when Kim Dotcom confirmed via Twitter that he was working with Seth Rich to get leaked emails to WikiLeaks.</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">I knew Seth Rich. I know he was the <a href="https://twitter.com/wikileaks">@Wikileaks</a> source. I was involved. <a href="https://t.co/MbGQteHhZM">https://t.co/MbGQteHhZM</a></p> <p>— Kim Dotcom (@KimDotcom) <a href="https://twitter.com/KimDotcom/status/865987139166552064">May 20, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>&nbsp;</p> <p>Which was followed up by the following posts on 4Chan’s /pol/ subgroup that high-ranking current and former Democratic Party officials are terrified of the Seth Rich murder investigation.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“Anons, I work in D.C.</p> <p>&nbsp;</p> <p><strong>I know for certain that the Seth Rich case has scared the shit out of certain high ranking current and former Democratic Party officials.</strong></p> <p>&nbsp;</p> <p>This is the reason why they have backed away from impeachment talk. They know the smoking gun is out there, and they’re terrified you will find it, because when you do it will bring the entire DNC, along with a couple of very big name politicians.</p> <p>&nbsp;</p> <p><strong>It appears that certain DNC thugs were not thorough enough when it came time to cover their tracks. </strong>Podesta saying he wanted to “make an example of the leaker” is a huge smoking gun.”</p> </blockquote> <p>The post went on to claim that a <strong>"smoking gun in this case is out of the hands of the conspirators" which has resulted in near "open panic" in DC circles.</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>“The behavior is near open panic.</strong> To even mention this name in D.C. Circles [sic] will bring you under automatic scrutiny. To even admit that you have knowledge of this story puts you in immediate danger.</p> <p>&nbsp;</p> <p>If there was no smoke there would be no fire. <strong>I have never, in my 20 years of working in D.C. Seen [sic] such a panicked reaction from anyone.</strong></p> <p>&nbsp;</p> <p><strong>I have strong reason to believe that the smoking gun in this case is out o [sic] the hands of the conspirators, and will be discovered by anon.</strong> I know for certain that Podesta is deeply concerned. He’s been receiving anonymous calls and emails from people saying they know the truth. Same with Hillary.”</p> </blockquote> <p>And here is the original tweet:</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">An Anon working in DC says that he's seeing people in a panic like never before about <a href="https://twitter.com/hashtag/SethRich?src=hash">#SethRich</a>.</p> <p>They know their about to be exposed. <a href="https://t.co/wn9FiJ8ZrV">pic.twitter.com/wn9FiJ8ZrV</a></p> <p>— /pol/ News Forever (@polNewsForever) <a href="https://twitter.com/polNewsForever/status/866282398811652097">May 21, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>&nbsp;</p> <p>Meanwhile, Kim Dotcom has promised more information will be released on his interaction with Seth Rich by tomorrow.</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">I'm meeting my legal team on Monday. I will issue a statement about <a href="https://twitter.com/hashtag/SethRich?src=hash">#SethRich</a> on Tuesday. Please be patient. This needs to be done properly.</p> <p>— Kim Dotcom (@KimDotcom) <a href="https://twitter.com/KimDotcom/status/865989988554428416">May 20, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>&nbsp;</p> <p>This raises several questions.&nbsp; First, if Kim Dotcom knew that Seth Rich was, in fact, the WikiLeaks source, <strong>why is he just now coming forward with such information</strong>?&nbsp; Second, while Seth Rich may explain the DNC leaks we still don't know who is responsible for the "Podesta Files" which we're certain will continue to be attributed to "Russian hackers."</p> <p>Which leads to the most improtant queistion of all: is this all just another fake news diversion, or is there more to the Seth Rich murder?</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="577" height="348" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017.05.22%20-%20Seth%20Rich.JPG?1495456042" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-22/seth-rich-plot-thickens-dc-insider-confirms-complete-panic-highest-levels-dnc#comments Activism Anonymous Bernie Sanders Computing Corruption Debbie Wasserman Schultz Democratic National Committee Democratic Party Espionage FBI Federal Bureau of Investigation Fox News Julian Assange KIM Murder of Seth Rich National security Politics Russian interference in the 2016 United States elections Twitter Twitter WikiLeaks Tue, 23 May 2017 00:21:53 +0000 Tyler Durden 596404 at http://www.zerohedge.com Ponzi Scheme: What The Chicago Teachers' Pension Would Be Called If It Were A Hedge Fund http://www.zerohedge.com/news/2017-05-22/ponzi-scheme-what-chicago-teachers-pension-would-be-called-if-it-were-hedge-fund <p>A long, long time ago, back in 2008 when most of today's hedge fund analysts were still stressing over what to wear to prom, a man named Bernard Madoff was arrested for bilking unsuspecting investors out of $65 billion.&nbsp; Madoff ran what is traditionally referred to as a ponzi scheme in which new investments were solicited as a means to fund massive redemptions that otherwise would have resulted in a collapse of his fund long before the FBI finally caught up with his scheme.&nbsp; </p> <p>But, Madoff was eventually caught and in 2009 he was sentenced to 150 years in prison for his scheme.&nbsp; </p> <p><strong>Ironically, many of our states and cities today are running very similar ponzi schemes (aka "massively underfunded pension funds"), using taxpayer money nonetheless, but it's completely legal and not many people seem to notice and/or care.&nbsp; </strong></p> <p>Take, for example, the <a href="http://www.ctpf.org/AnnualReports/cafr2016.pdf">Chicago Teachers' Pension Fund</a> ("CTPF") which has roughly $10 billion in assets to cover $21 billion in future payment obligations.&nbsp; The fund has to payout roughly $1.4 billion to retirees each year to cover benefits.&nbsp; That said, in 2016 it actually lost $28 million on it's $10 billion in assets.&nbsp; </p> <p>So how did they make up the difference?&nbsp; Well, the CTPF simply took the $700 million that was contributed to the fund in 2016 from taxpayers and the $192 million contributed by teachers from their paychecks, money that was intended to be invested until those teachers retired, and gave it to current retirees.&nbsp; <strong>Put another way, just like Madoff, the CTPF takes money from 'new investors' (current teachers) and uses it to fund redemptions (benefit payments to retirees) even though the managers of the fund know that current claims don't have a chance of ever being paid in full.&nbsp; </strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/05/22/2017.05.22 - Chicago Pension 2.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/05/22/2017.05.22%20-%20Chicago%20Pension%202_0.jpg" style="width: 600px; height: 672px;" /></a></p> <p>&nbsp;</p> <p>Now, you could argue that returns in 2016 were not normal which, for the sake of Chicago's taxpayers, we hope is true.&nbsp; That said, even if the fund earns the 5.6% returns that it's averaged for the past 10 years going forward, it will still have to borrow roughly $850 million from new contributions each year just to cover annual benefit payments.&nbsp; </p> <p>As a side note, we would point out that Chicago's teachers have made roughly 1.4% off their investments in hedge funds, on average, over the past 5 years...which is probably just under the 1.5% management fee they pay to those same hedge funds.&nbsp; </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/05/22/2017.05.22 - Chicago Pension 1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/05/22/2017.05.22%20-%20Chicago%20Pension%201_0.jpg" style="width: 600px; height: 525px;" /></a></p> <p>&nbsp;</p> <p>Of course, you could also argue that reducing principal balances could be justified to the extent the number of future retirees is expected to decline versus current retirees.&nbsp; Unfortunately, that argument is also flawed as the number of current teachers actually exceeds the number of current retirees...not to mention the fact that their salaries, and therefore future benefit packages, are nearly double those of current benefit recipients.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/05/22/2017.05.22 - Chicago Pension 3.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/05/22/2017.05.22%20-%20Chicago%20Pension%203_0.JPG" style="width: 600px; height: 239px;" /></a></p> <p><em>Source:&nbsp; <a href="http://chicagocitywire.com/stories/511118108-chicago-teachers-pension-fund-paid-out-1-5-billion-in-16-earned-7-8-million#.WSMCQLWVVhN.twitter">Chicago City Wire</a>.</em></p> <p>Of course, like most financial grenades with a huge tail risk, the devastating consequences of America's failed public pensions will not be addressed until it's already too late.&nbsp; Unfortunately, with ~$5 trillion in underfunded pension obligations in the public sector alone, the pension catastrophe will be too large for even America's overly generous taxpayers to bail out. </p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="998" height="522" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/Pension%20Grenade_21.png?1495477479" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-22/ponzi-scheme-what-chicago-teachers-pension-would-be-called-if-it-were-hedge-fund#comments Bernard Madoff Bernard Madoff Business Chicago Teachers' Pension Fund Confidence tricksters Economics FBI Federal Bureau of Investigation Finance Fraud Hedge fund Labor Madoff investment scandal Money NASDAQ Pension fund Pension Fund Pensions Ponzi scheme Social Issues Tue, 23 May 2017 00:20:00 +0000 Tyler Durden 596438 at http://www.zerohedge.com