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Monday, 29 February 2016

Singapore Faces Icelandic Grim Economic Reeper

 Well, the global financial system has basically been teetering since 2008,  AND "insiders" have been expecting the dark forces to arrive any day. Looks like the first stop along the way may be  Singapore?    


 Why Singapore's Economy Is Heading For An Iceland-Style Meltdown


 

It has been just five years since the Global Financial Crisis, and the world – in brazen defiance of the lessons of 2008 – is already back to blowing massive bubbles and naively praising the countries that are benefiting from these “fool’s gold” economic booms. The Southeast Asian island nation of Singapore is currently inflating one of the most egregious examples of these post-2009 bubbles, and is displaying parallels to Iceland’s bubble that are causing me to believe that its boom will end in a similar (but not necessarily identical) manner.

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http://www.forbes.com/sites/jessecolombo/2014/01/13/why-singapores-economy-is-heading-for-an-iceland-style-meltdown/#346ffdb113cc


  


The Game Changed in Venezuela  


People continue to be arrested merely for protesting, and a long established local Human Rights NGO makes an urgent plea for an investigation into widespread reports of torture of detainees. There are now dozens of serious human right abuses: National Guardsmen shooting tear gas canisters directly into residential buildings. We have videos of soldiers shooting civilians on the street.




Washington warns top banks to stay away from Russian bonds   


Russia’s dollar-denominated 2023 bond now has a yield of 4.53 percent, sliding from 4.9 percent in September 2013 when Moscow raised $7 billion, data from the Financial Times showed.
According to the WSJ, some bank officials, including those at Citigroup, said they won’t participate. Goldman Sachs and J.P. Morgan Chase say they are still weighing their options.

Moody's Downgrades Brazil Sovereign Rating 

 Itau Unibanco Holding SA, Banco do Brasil SA and Banco Bradesco SA were among more than two dozen financial firms in Brazil that had credit ratings cut by Moody’s Investors Service after it stripped the nation of an investment grade this week.


Ratings affected in the latest shakeup included baseline credit assessments and bank deposit and debt ratings, New York-based Moody’s said Thursday in a statement.
While the moves were prompted by the change in the sovereign rating, Brazilian banks’ creditworthiness “may also face downward pressure if Brazil’s very challenging operating environment results in a deterioration of their financial fundamentals, particularly profitability, asset quality and capitalization,” Moody’s said.
Brazil was cut two steps below investment grade, to Ba2, with a negative outlook, a sign the rating might go lower. The downgrade came one week after Standard & Poor’s reduced Brazil’s rating to BB, also two steps below investment grade with a negative outlook. The moves reflect Brazil’s worst recession in more than a century, a nationwide corruption scandal and declining demand from China for Brazilian commodities.


Arab States Face $94 Billion Debt Crunch on Oil Slump, HSBC Says 




Gulf Cooperation Council countries may struggle to refinance $94 billion of debt in the next two years as the region faces slowing growth, rising rates and rating downgrades, according to HSBC Holdings Plc.

Oil-rich GCC states have to refinance $52 billion of bonds and $42 billion of syndicated loans, mostly in the United Arab Emirates and Qatar, HSBC said in an e-mailed report. The countries also face a fiscal and current account deficit of $395 billion over the period, it said.

Expectations that these funding gaps "will be part financed through the sale of sovereign U.S. dollar debt will complicate efforts to refinance existing paper that matures over 2016 and 2017," Simon Williams, HSBC’s chief economist for the Middle East, said in the report. "With the Gulf acting as a single credit market, the refinancing challenge will likely be much more broadly felt" and "compounded by tightening regional liquidity, rising rates and recent downgrades," he said.



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Friday, 26 February 2016

UK Pensions Are Imploding - Where's the Queen?



Certainly, the Royal family doesn't fret much about its multi-million dollar pensions, while many more common folks will have to do without. Oh my! Anyway this a very serious situation that could even lead to social unrest and political upheaval in merry ole England.

How times have changed, for the once mighty!  


Thousands Told Their Pension Savings at Risk






Thousands of workers who have been encouraged by the government to take out pension plans could be at risk of losing their savings, the industry regulator has told the BBC.
It follows fears that dozens of companies providing auto enrolment pensions are too small to survive.
The BBC has also uncovered evidence that employers and workers are being deliberately misled by some providers.
The government said it was aware of the issue, and was planning to take action.
Independent experts claim the problem could affect up to a quarter of a million people a year who are putting their savings into so-called master trust pensions.

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In Syria, rather than cooperate with Russia and Iran in helping Assad’s military defeat the jihadists, the Obama administration has continued playing it cute, insisting – as Secretary of State John Kerry has said recently – that armed “legitimate opposition groups” exist separately from Al Qaeda’s Nusra Front.




If the price of oil does not go back up, this could be just the beginning. It is being reported that a whopping 35 percent of all oil and gas companies around the planet are at risk of falling into bankruptcy, and the financial institutions that have been backing these energy companies are getting very nervous.




That’s particularly problematic considering that emergencies happen more often than you might think. A 2014 survey by American Express found that half of all Americans had experienced an unforeseen expense in the past year — some of which could be considered an emergency. Indeed, 44% of those who had an unforeseen expense(s) had one for health care and 46% for car trouble — two items that for many Americans are must-pay items, as you need a car to get to work and your health expenses are usually not optional. 



Can things get any worse for Russia? You're about to find out


For a decade, Dmitri Barinov has been following the volatile economy of his homeland from the safe distance of Union Investment’s offices in Frankfurt. Last year, as other money managers were steering clear of Russia’s broken economy, the Moscow-born Barinov pulled off something of a coup: He persuaded his bosses to take the plunge and buy Russian government bonds. It was a narrow bet, but he ended up winning because the central bank—after implementing the biggest interest rate hike since the Russian financial crisis in 1998 to prop up the collapsing ruble—changed course and aggressively backtracked. In the first 10 months of 2015, ruble-denominated government bonds handed investors such as Barinov a 25 percent return in dollar terms, the biggest gain for local bonds anywhere.

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Thursday, 25 February 2016

Sell Off Grips Emerging Market Debt

Every form of debt in every corner of the world is in trouble leading to a buildup in pressure on the banking system. Things are so bad that Central Banks pay you to take their debt - a tricky way to shore up the crippled banking system.

All this cannot be sustained and we are overdue for a major implosion  similar to Carl Icahn who  has lost billions of his oil fortune in the past few years. 

 Look out - there is more coming!



Foreign Investors Dump Emerging Market Debt




“The currency volatility means investors are unwilling to stomach these bonds. And as growth slows in the countries and the bond yields go higher, the cost of servicing debt is getting more difficult for these countries.”







The country already tops measures of the world’s most miserable economy, with inflation of 181 percent last year, a currency that has collapsed on the black market to less than 1 percent of its official value and shortages of basic goods such as detergent and antibiotics. It’s a horrific turnaround for what was once one of the region’s most stable democracies, famous for its big cars, cheap gasoline and beauty queens




Halfway through a two-year recession that’s forecast to be the worst since at least 1901, Brazil finds itself stuck in a grinding cycle of job loss and falling consumer spending. National unemployment has climbed to 9 percent as retail sales tank and industrial production contracts for 22 straight months, government reports show.




The move comes as crude-oil prices have fallen about 12% so far this year and have plunged 34% over the past 12 months, putting the finances of energy companies under pressure.

  


More Subprimes Borrowers Are Falling Behind on Their Auto Loans  

The delinquency rate reaches its highest level since 2010 


Rising delinquencies come as a warning sign that more loans may end up in default down the road, said John McElravey, an analyst at the bank. What may be most troubling, however, is that the default rate is already climbing, up to 12.3 percent in January from 11.3 the prior month. That is the highest rate since 2010, the data show. 




Wednesday, 24 February 2016

Global #Financial Cold War Crisis Looms

 

Reality Check : Financial Cold Wars are akin to  de facto trade wars; trade wars lead to HOT Wars.

Therefore. an extended  financial Cold War  could result in ...
 
The US may be pressing if its luck using  the IMF as a political tool. The fall out could impede world trade and  result in  more Syrias!

 New Global Financial Cold War  

The United States has responded by changing the IMF rules. It said, ‘Wait a minute. It’s okay for the IMF to make loans to countries that don’t pay China and Russia or the BRICs, because we’re in a new Cold War. The IMF really is working for us.’ As long as the U.S. has veto power in the IMF, its delegate can veto any loan to a country that owes money to the United States that the United States doesn’t wish to support. But it has no objection for the IMF making loans to U.S. satellites such as Ukraine, that official debts to Russia.

 


The $700 bank bailout plan Kashkari helped author, known as the Troubled Asset Relief Program (TARP), stopped the Wall Street firms that caused the crisis from going bankrupt. A parallel process, undertaken by New York President Timothy Geithner along with the Treasury Department, pressured the Wall Street banks to merge and get even bigger in hopes that size would increase confidence in the financial system



Why doesn’t government know what’s in your food? Because industry can declare on their own that added ingredients are safe. It’s all thanks to a loophole in a 57-year old law that allows food manufacturers to circumvent the approval process by regulators. This means companies can add substances to food without ever consulting the Food and Drug Administration about potential health risks.



The grey moving average on the larger chart is the 60 day moving average, which is more important than the widely followed 50 DMA, and it shows signs of flattening, a very bullish signal, certainly if it will transition into a rising pattern.




Tipping Point Looms for Despairing South Africa


Not since Nelson Mandela walked out of Victor Verster prison 26 years ago have investors been gloomier about South Africa’s economy.
Money is pouring out at a record pace as inflows dwindle. The rand has plunged and unemployment is the highest among almost 40 developing nations tracked by Bloomberg. Drought is driving up food costs. Hanging in the balance is the investment-grade credit rating South Africa sweated to achieve in 2000, shortly after Mandela left office.
South Africans are paying the price not just for a collapse in commodities prices -- metals and mining contribute more than 50 percent of exports -- but for growing questions over whether President Jacob Zuma is up to the task. Stoking doubts were the antics at the finance ministry in December, when Zuma removed Nhlanhla Nene and replaced him with little-known lawmaker David van Rooyen. As bond yields soared and the rand crashed, he changed his mind four days later and installed Pravin Gordhan, Nene’s predecessor.   
  
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Tuesday, 23 February 2016

BANKERS Panicking Over #Energy Loans

Panic Below The Surface: 


"Banks Are Selling Energy Loans At Cents On The Dollar  


One week ago, when we commented on the latest weekly update from Credit Suisse's very well hooked-in energy analyst James Wicklund, one particular phrase stuck out when looking at the upcoming contraction of Oil and Gas liquidity: "while your borrowing base might be upheld, there will be minimum liquidity requirements before capital can be accessed. It is hitting the OFS sector as well. As one banker put it, "we are looking to save ourselves now."




The Coming Storm  

The potential of these dislocations to derail the UK’s economic recovery has not been lost on our policymakers. The Bank of England’s Monetary Policy Committee has comprehensively surrendered the idea of finally raising interest rates: its one member who had been voting in favour joined the more pessimistic majority earlier this month. The Chancellor, meanwhile, has been at pains in recent speeches to warn of the “cocktail of risks” facing the British economy. There seems little doubt, in other words, that the sudden acceleration of uncertainty on global financial markets is serious. But why is it happening – and what does it mean?



Earlier this week, Baghdad extended an offer to pay the salaries of the KRG’s public employees in return for a halting of unilateral oil exports by the Kurds. Both sides need this deal. The KRG is struggling to pay salaries, and protests are mounting—threatening the stability of what was not long ago the only peaceful and secure place in all of Iraq.



Overall, imports by states in the Middle East increased by 61%; imports by European states decreased by 41% over the same period. Britain sold more weapons to Saudi Arabia than to any other country. Saudi Arabia is also the biggest US arms market and buys more American arms than British, the report shows.

Singapore Lawyers Warn of 1998-Like Pain as Debt Defaults Spread   

Rajah & Tann Singapore LLP, Southeast Asia’s largest law firm, reckons the region’s rising bond defaults will inflict as much pain on creditors as the financial crises of 2008 and 1998.
As distress spreads from shipping to mining and retail to construction industries, the law firm said in an interview that recovery rates will be similar to those seen in the global credit meltdown and Asian financial crisis. Secured creditors recover only less than 33 cents on the dollar from insolvencies in East and South Asia, compared with more than 80 cents in the U.S., according to World Bank studies. Rival law firm Hogan Lovells US LLP said in an interview that regional banks will likely boost sales of bad loans in coming months.
“The trough in the mining cycle seems to be continuing and some say it will be a while more before any significant recovery is expected,” said Sim Kwan Kiat, Rajah & Tann’s head of restructuring and insolvency based in Singapore. “From experience, the lower end of the spectrum for recovery rates this time round in 2016 is unlikely to be much different from those in 2008 or 1997-98.”

Monday, 22 February 2016

LOOK OUT - S&P to Downgrade China?



China’s debt-to-gross-domestic-product ratio climbed to 232 percent at the end of 2014, the highest since Bloomberg started compiling the data in 2004.

http://www.bloomberg.com/news/articles/2016-02-16/china-s-debt-surge-has-potential-to-pressure-ratings-s-p-says






Venezuela is rapidly heading for a showdown between its socialist government and the centre-right opposition that is likely to end up with the crisis-ridden country defaulting on its debt.
http://www.ft.com/intl/cms/s/3/cf14a292-d40d-11e5-829b-8564e7528e54.html#axzz40LXLVW73




Eight years after the financial crisis, the world is coming to grips with an unpleasant realization: serious weaknesses still plague the global economy, and emergency help may not be on the way.

http://www.chicagotribune.com/business/ct-global-economy-financial-crisis-20160216-story.html



The roughly 175 companies at risk of bankruptcy have more than $150 billion in debt, with the slipping value of secondary stock offerings and asset sales further hindering their ability to generate cash, Deloitte said in the report, released Tuesday.
http://www.reuters.com/article/us-usa-shale-bankruptcy-idUSKCN0VP0O6 

THE GREAT TURNING

Joanna Macy: The Great Turning is a shift from the Industrial Growth Society to a life-sustaining civilization.

center for ecoliteracy_the great turning
  
The Great Turning is a name for the essential adventure of our time: the shift from the Industrial Growth Society to a life-sustaining civilization.

The ecological and social crises we face are caused by an economic system dependent on accelerating growth. This self-destructing political economy sets its goals and measures its performance in terms of ever-increasing corporate profits—in other words by how fast materials can be extracted from Earth and turned into consumer products, weapons, and waste.

A revolution is under way because people are realizing that our needs can be met without destroying our world. We have the technical knowledge, the communication tools, and material resources to grow enough food, ensure clean air and water, and meet rational energy needs. Future generations, if there is a livable world for them, will look back at the epochal transition we are making to a life-sustaining society. And they may well call this the time of the Great Turning. It is happening now.

Whether or not it is recognized by corporate-controlled media, the Great Turning is a reality. Although we cannot know yet if it will take hold in time for humans and other complex life forms to survive, we can know that it is under way. And it is gaining momentum, through the actions of countless individuals and groups around the world. To see this as the larger context of our lives clears our vision and summons our courage.

The Three Dimensions of the Great Turning:
1. Actions to slow the damage to Earth and its beings
Perhaps the most visible dimension of the Great Turning, these activities include all the political, legislative, and legal work required to reduce the destruction, as well as direct actions—blockades, boycotts, civil disobedience, and other forms of refusal. A few examples:

  • Documenting the ecological and health effects of the Industrial Growth Society;
  • Lobbying or protesting against the World Trade Organization and the international trade agreements that endanger ecosystems and undermine social and economic justice;
  • Blowing the whistle on illegal and unethical corporate practices;
  • Blockading and conducting vigils at places of ecological destruction, such as old-growth forests under threat of clear-cutting or at nuclear dumping grounds.
Work of this kind buys time. It saves some lives, and some ecosystems, species, and cultures, as well as some of the gene pool, for the sustainable society to come. But it is insufficient to bring that society about.





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