Budget Deficit

Former IMF Chief Economist Admits Japan's "Endgame" Scenario Is Now In Play

Japan is heading for a full-blown solvency crisis as the country runs out of local investors and may ultimately be forced to inflate away its debt in a desperate end-game, one of the world’s most influential economists has warned.  "One day the BoJ may well get a call from the finance ministry saying please think about us – it is a life or death question - and keep rates at zero for a bit longer."

Brazil Committee Votes To Begin Rousseff Impeachment Process: What Happens Next

Moments ago, in the first of two closely anticipated and watched votes, a special committee in Brazil's lower house voted 38 to 27 to begin the impeachment process against president Dilma Rousseff. But while the first key step in Rousseff's ouster has been taken, there is a long road ahead for the process and Dilma will not go quietly or without a fight.

Why "The Fed Can't Save Us": The Simple Explanation From Austrian Business Cycle Theory

Will the Fed be able to keep the game going? In a word, no. We’ve already seen that even the tiniest of interest rate hikes has gone hand in hand with a huge drop in the markets. Furthermore, the Fed’s subsidies to the banks are now on the order of $11 billion annually, but if they want to raise the fed funds rate to, say, 2 percent, then the annual payment would swell to more than $40 billion.

Disastrous Ticket Sales, Ongoing Political Turmoil Put Brazil Olympics In Jeopardy

With only four month to go until the Brazil summer olympics, only half of the tickets have been sold. Brazil’s new minister of sports Ricardo Leyser suggested that the Brazilian government may purchase tickets that will be distributed to public schools. He said public officials must also work to boost worldwide confidence in Rio's ability to host the games and ensure travelers' safety.

New Jersey In Fiscal Peril As David Tepper Departs

First it was Connecticut, now another state is in the crosshairs following the imminent "exstatiation" of another prominent hedge fund billionaire, David Tepper.  The decision by billionaire hedge-fund manager David Tepper to quit New Jersey for tax-friendly Florida has put the Garden State in fiscal peril, and  could complicate estimates of how much tax money the struggling state will collect, the head of the Legislature’s nonpartisan research branch warned lawmakers.

Brazil Posts Largest Budget Deficit Ever As Rousseff Cries "Coup," Olympic Ad Sales Top $1 Billion

Less than 24 hours after VP Michel Temer's PMDB split with President Dilma Rousseff's coalition government, Brazil posted its largest primary deficit on record, underscoring how dire the fiscal situation has become amid the political and economic turmoil. Meanwhile, NBC is still selling ads for this summer's Olympic games in Rio. Who's interested in some expensive air time? 

"It's An Attack On Higher Education": Connecticut Seeks To Tax Yale Endowment As Plug To Surging Deficit

In the aftermath of Connecticut yield spreads blowing out to the widest ever over fears of surging budget deficits, a proposed Connecticut bill is seeking a share of Yale's endowment gains as a source of state tax revenue. According to the introduced legislature, schools with funds of $10 billion or more, which is clearly aimed at Yale as that is the only university to fit the criteria. Yale’s record $25.6 billion fund is the second largest in U.S. higher education.

Frontrunning: March 23

  • Futures little changed day after Brussels attacks (Reuters)
  • Trump, Clinton win big in Arizona, but Cruz, Sanders show fight (Reuters)
  • Belgium identifies Brussels bomb suspect, suicide bombers (Reuters)
  • After Brussels Terrorist Attacks, Security Ramped Up in U.S. Cities (WSJ)
  • Terror Impact Threatens Cameron EU Pitch, Merkel's Open Door (BBG)
  • Brussels Attacks Will Jolt 2016 U.S. Presidential Race (WSJ)

Connecticut Credit Risk Spikes To Record High

Amid cuts in aid and surging taxes, it appears the market remains less than impressed at Connecticut's debt sustainability. Following last week's disappointing bond auction, CT bond risk has spiked to 65bps over the benchmark - a record spread demanded by investors to take CT repayment risk. CT becomes the 4th riskiest US state after NJ, IL, and PA. Is it any wonder more people than ever are looking to leave the increasing tax burden of this troubled state.

Spot The Sucker: Brazil Stocks Edition

If you are a foreign investor in Brazilian equities and you can't look at the net purchases chart shown here and tell us who the sucker is, well then you are the sucker.