Credit Crisis

Tyler Durden's picture

Our "Junkie Economy" Will Soon Hit Rock Bottom





A robust economy would allow central banks to raise rates and still allow debts to be paid down. But that is not what is happening. And it won’t happen. Junkies rarely go out and get a job... and gradually “taper off” their habit. No. They have to crash... hit bottom... and sink into such misery that they have no choice but to go cold turkey. Now, major central banks are committed to QE and ZIRP forever. They have created an economy that is addicted to EZ money. It will have to be smashed to smithereens before the feds change their policies.

 
Tyler Durden's picture

Smile, Nod, Lie, & Prepare For The Reset





Unless you are growing sales i.e. expanding the business, any growth in cash flow is temporary.  And that is really the point of all this isn’t it? So go ahead boys tell me how the market is fairly valued.  Tell me that PE’s prove it.  Tell me how earnings are great and that unemployment is bang on in line with a full steam ahead economy.  Tell me the lackluster economic growth year on year since the big bang is just transitory pains with a bit winter thrown in.  I, like you, will smile and nod, both knowing it’s a lie and both of us preparing for the reset. 

 
Tyler Durden's picture

Did A Tap On The Shoulder "Prevent" The US Economy From Sliding Into Recession?





It appears The US Ministry of Truth has been hard at work this week...

 
Tyler Durden's picture

We Just Broke 2008's Record For The Fastest Economic Unraveling!





The final Q1 GDP revision was just released and we saw that GDP has again missed expectations by such a large margin that 2015 is another write off for a 3% growth year.  Almost comically we heard the same excuses we got last year.  “Weather was wintery and next year is going to be the turnaround year”.  So in order to explain to these supposed economic and market ‘experts’ who seem wholly incapable of understanding economic and market forces with any sense of accuracy, let’s run through a few fundamentals.

 
Tyler Durden's picture

"We're All Frogs In Boiling Water" Santelli Says After Lacy Hunt Warns "This Is Far From Over"





Global debt has expanded by $35 trillion since the credit crisis and as Lacy Hunt exclaims, "that's a net negative, debt is an increase in current consumption in exchange for a decline in future spending and we are not going to solve this problem by taking on more and more debt."  "This process is far from over," Hunt concludes, "rates will move irregularly lower and will remain depressed for several years." Santelli sums up perfectly, "we're all frogs in boiling water," as we await the consequences of central planning.

 
Tyler Durden's picture

CLO Volume Hits Record As PE, Wall Street Look To Stay Ahead Of New Rule





March was a record month for CLO issuance with $15.2 billion in deals coming to market, bringing the YTD total to $29 billion and making Q1 2015 the best first quarter in history for CLO new issue volume. And while a JPM analyst who spoke to Bloomberg says managers “want to get deals done early before risk retention kicks in,” we're confident that it’s all about keeping credit flowing to deserving borrowers and not at all about a desire to keep exposure to 5% of a collateral pool littered with loans to “companies that are of lower credit quality or that do not have a third-party evaluation of the likelihood of timely payment of interest and repayment of principal” off of the books.

 
Tyler Durden's picture

The Madness Of Negative Bond Yields





Confidence in the system likely hangs by a much thinner thread than is currently widely perceived. Since “risk asset” prices are soaring in much of Europe, the underlying currents of suspicion are well masked, but that certainly doesn’t mean they don’t exist. While we believe that central bank and regulatory interventions in the market are a major reason why so many bond yields have dropped into negative territory, the role played by distrust in the banking system is probably quite large as well – a suspicion that seems to be confirmed by the strength of the euro-denominated gold price.

 
Tyler Durden's picture

Gundlach Lieutenant Says Risk/Reward In US Corporate Credit Most Unattractive Proposition Ever





“In my 30-year career, it’s one of the most unattractive risk-return propositions that I’ve seen,” DoubleLine's Bonnie Baha says. Between abysmally low yields, heightened rate sensitivity heading into a rate hike cycle, and balance sheet re-leveraging on the part of US corporations, it’s a bad time to be betting on corporate credit.

 
Tyler Durden's picture

The American Dream Part 2 - We Now Live In A "Pimpocracy"





Americans still say they believe in free markets, democracy and financial rectitude. But only as platitudes and hypocrisies... the free market was one of the first casualties of the post-1971 fiat money period. In a free market, people earn money by working (income) or by saving and investing it (capital growth). But credit-based money needed neither work nor saving; you just had to know the right people.

 
Tyler Durden's picture

The American Dream Part 1 - America Is No Longer A Republic Or A Democracy





“Government can have no more than two legitimate purposes,” wrote the 18th-century English political philosopher William Godwin, “the suppression of injustice against individuals within the community and the common defense against external invasion.” But the US system of government – nourished by the almost unlimited credit that its money gives it – has swelled to a shape that would have been grotesque and unrecognizable to Godwin. To those who still maintain some romantic attachment to the ideals of the American Revolution, it is merely repulsive.

 
Tyler Durden's picture

"We Have Front-Row Seats To An Imminent Market Shock", Hedge Fund Billionaire Warns





"Central banks are not all singing and all dancing," and cannot avoid the consequences of what they are doing, concluding, "you and I have got grandstand seats here [to an imminent market shock]," and investors are about to "find out just how illiquid it really is out there."

 
Tyler Durden's picture

The Global Problem: Monetary Policy Can't Fix An Economy's Structural Problems





What with all the praise being heaped on central banks for "saving" the world from economic doomsday in 2008, it's only natural to ask which structural problems their unprecedented policies solved in the past 6 years. After all, "saving" the world from financial collapse was relatively quick work; so what problems beyond imminent implosion did the central banks policies solve in the past 6 years? Answer: none. zip, zero, nada. The truth is central bank policies of zero-interest rates and free money for financiers have made many structural problems worse.
 
Pivotfarm's picture

The Global Financial System Stands On The Brink Of Second Credit Crisis





The world economy stands on the brink of a second credit crisis as the vital transmission systems for lending between banks begin to seize up and the debt markets fall over. The latest round of quantitative easing from the European Central Bank will buy some time but it looks like too little too late.

 
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