Steve Rattner

Hillary Clinton Is In Deep Trouble: "Hordes Of Wall Street Executives" Descend Upon Philly

We believe Hillary Clinton lost the Presidency this past week. While the explosive DNC leaks will undoubtably have a long lasting effect, this post will barely reference the leaks. Rather, it will explain how recent decisions by the Hillary campaign played right into Trump’s hands by essentially waving a gigantic middle finger to the 73% of Americans who think the country is headed in the wrong direction.

Norway Sovereign Wealth Fund Purges All Insolvent Eurozone Debt Holdings, US Hedge Funds Buying

One month later the purge is over: "Norway’s sovereign wealth fund sold all its Irish and Portuguese government bonds after rejecting the Greek debt swap and warned that Europe faces considerable challenges." Wait, what's that? The Eurozone's political strongarming (think Steve Rattner and GM) was unable to force the world's most powerful sovereign wealth fund into agreeing to what was essentially extortion when bank after bank noted how delighted they are to be bent over and take an 80% writedown on their Greek holdings. Stunning. But at least we now know who will be suing Greece shortly in an attempt to recoup par value of their strong law bonds: grab the popcorn - Norway vs Greece will be quite a spectacle. As for their dump of Irish and Portuguese bonds, no surprise there: fool me once (in perpetuity) shame on me, fool me twice, shame on Dan Loeb... who was buying everything Norway was selling. We wonder who ends up right.

Guest Post: The Corruption Of America

The numbers tell us America is in decline... if not outright collapse. I say "the numbers tell us" because I've become very sensitive to the impact this kind of statement has on people. When I warned about the impending bankruptcy of General Motors in 2006 and 2007, readers actually blamed me for the company's problems – as if my warnings to the public were the real problem, rather than GM's $400 billion in debt. The claim was absurd. But the resentment my work engendered was real. So please... before you read this issue, which makes several arresting claims about the future of our country... understand I am only writing about the facts as I find them today. I am only drawing conclusions based on the situation as it stands. I am not saying that these conditions can't improve. Or that they won't improve. The truth is, I am optimistic. I believe our country is heading into a crisis. But I also believe that... sooner or later... Americans will make the right choices and put our country back on sound footing.

Central Falls, Rhode Island Files For Bankruptcy

It's not Jefferson County, yet, but it could certainly be seen as the precursor to the first domino. "The state-appointed receiver overseeing the cash-strapped Rhode Island town of Central Falls has filed for bankruptcy on the city's behalf in an effort to help it get back on its feet. Receiver Robert G. Flanders and Rhode Island Gov. Lincoln Chafee announced the step - which Flanders has described as a last resort - at a news conference at City Hall. Flanders filed the legal paperwork seeking bankruptcy protection Monday. "From the ashes of bankruptcy Central Falls will rise again," Flanders said." The biggest losers: unions. "With the city now seeking bankruptcy protection, Flanders said he plans to reduce pension benefits beginning in late August. He has asked the federal court to immediately reject collective bargaining agreements. He said the next set of pension payments will reflect at least the cuts he outlined to city retirees. In addition, he said city workers will face layoffs. Flanders called the step unavoidable, as taxes have already been raised and city services have been cut "to the bone." Expect Barack Obama to thaw Steve Rattner from carbonite explain to creditors, using a variety of four letter words, that they will be last in line of payment after every single union claim has been satisfied, with the resultant husk of a town reverse merged with GM.

NYT Reports States Looking For Ways To File Bankruptcy, Muni Bondholders To Be GMed

A few days ago we reported that Newt Gingrich was pushing for legislation to allow states to file for bankruptcy, "allowing Them To Renege On Pension And Benefit Obligations." As we speculated back then "obviously what this means for equity investors in assorted muni
investments is that a complete wipe out is becoming a possibility, as
Meredith Whitney's prediction, which everyone was quick to mock and
ridicule, is about to come back with a vengeance." Sure enough, this most recent development in the states' path to insolvency was quickly ignored as it was not a dipping mushroom cloud that could be bought. Until tonight: the NYT has just rehashed the post in an article that would not only validate the Whitney thesis if true, but make a Cramer-Bove out of everyone who has been caught on tape in the past two weeks kicking and screaming that there is no chance in hell the carnage predicted by the scourge of Citigroup (and yes, back in 2007 everyone said that Citi could never fail either). From the NYT: "Policy makers are working behind the scenes to come up with a way to let
states declare bankruptcy and get out from under crushing debts,
including the pensions they have promised to retired public workers." Which means that up to $3 trillion in muni debt has a high probability of being GMed, precisely as we predicted: "proponents say some states are so burdened that the only feasible way out may be bankruptcy, giving Illinois, for example, the opportunity to do what General Motors did with the federal government’s aid." Oh, and since all this constitutes an EOD, readers are strongly urged to re-read the primer on what pervasive state bankruptcies will mean for muni CDS (hint: the MCDX is cheap).

Frontrunning: November 18

  • Fed Orders 2nd Round of Stress Tests  (WSJ), translation: more capital raises for Bank of America, Wells Fargo and Citi.
  • Lenihan Says Ireland May Ask for Bank Package as Bailout Nears (Bloomberg)
  • One in 20 Irish Mortgages in Arrears (FT)
  • China Vows to Tame Inflation (Reuters)
  • Korea to Revive Tax on Foreigners' Bond Holdings to Slow Capital Inflows (Bloomberg)
  • IMF Says HK Currency Peg Boosting Property Prices (FT)
  • India Microcredit Faces Collapse From Defaults (NYT)
  • Vilsack: Food Costs Won't Surge  (WSJ)
  • Failed Models and the Real Costs of QE2 (Economics21)
  • California Shrinks Planned Tax-Exempt Sale, Expands Taxable (Bond Buyer)

With BP's Dividend Cut A Done Deal, Here Is BP's Scary Debt Maturity Schedule

Now that BP's Q2 dividend of GBP1.8 billion ($2.6 billion) is virtually certain to be cut after increasing political pressure from the US president and house Democrats, impacting thousands of pensioners who rely on BP for annuity payments, the next question is whether the Obama administration will also be able to enforce additional capital structure limitations higher in the capital structure. If Chrysler and the Steve Rattner doctrine is any indication, we would not be surprised to see the administration next demand that BP creditors take the next haircut. Below is a chart of the upcoming 3 years of scheduled principal and interest maturities, payments and amortizations from the UK oil giant. Of BP's total $24.9 billion in debt and loan maturities, $11.4 billion, or 45%, comes due by the end of 2012. Add another $2 billion in interest payments over the same period and you get a number well over $13 billion. The bulk of this is due in 2011. BP better get its act together by then or those bondholders will certainly be seeing an Obama-mandated haircut on their maturities. That is, of course, assuming the company is not bankrupt long before then.

Frontrunning: June 11

  • That’s enough ‘kicking ass’, Mr President: Barack Obama’s attacks on BP may play well at home, but they are damaging millions of British people (London Times)
  • Banks with state debt ignore not-if-but-when default (Bloomberg)
  • As reported, Caja Madrid, Bancaja start moves to form Spain top savings bank, as BBVA says Spain may need €50 billion of capital to infuse into insolvent banks (Bloomberg)
  • BP weighs cutting dividend (WSJ)
  • Kerviel co-worker says SocGen should have known about trades (Bloomberg)
  • Waiting for inflation? It's already here (Minyanville)
  • Enough with the economic recovery. It's time to pay up (WaPo)
Leo Kolivakis's picture

Third World America?

While fundamentals are improving, serious long-term structural issues remain. Nowhere is income inequality growing more rapidly than among the elderly. Third World America has arrived. And unfortunately, it's not only an American problem.

Frontrunning: June 2

  • West moving toward deeper financial crisis (China Daily, h/t Ian)
  • SEC seeks to bar union-puppet Steve Rattner from Wall Street (NYT)
  • HFT - Fast, Loose and Out of Control (Newsweek)
  • Deepening right hampers ECB public opinion battle (Reuters)
  • Greece urged to give up euro (TimesOnline, h/t John)
  • BP at risk as share plunge fuels takeover speculation (Bloomberg)
  • Are the 180 M1 tanks rolling out of Fort Knox over the next year and a half carrying more than just MREs? (NYT, h/t Kyle)