Grant’s Almost Daily reports that despite the seemingly calm economic winds, ‘Banco Popular has managed to run the ship aground. In order to shore up their sickly balance sheet, the acquiring [Banco] Santander will issue a 7 billion rights offering to shareholders. Banco Popular’s equity and junior debt are wiped out, to the tune of 3.3 billion.’
While America breathlessly waited for former FBI Director Comey to boast daytime TV ratings, the ‘announcement that Banco Popular Espanol SA will be absorbed by the sounder Banco Santander under the auspices of the European Central Bank for considerations of 1 harkens back to March 2008, Bear Stearns and J. P. Morgan,’ writes Philip Grant.
Have the world’s financial dominoes started falling on that side of the pond?
Here in the good old USofA. the DJIA rocks while Tesla and Amazon shares roll, but ‘Total US business bankruptcies in May rose 4.7% year-over-year to 3,572 filings, according to the American Bankruptcy Institute. That’s up 40% from May 2015 and up 10% from May 2014.’
Wolf Richter points out that bankruptcies are seasonal. Fewer of the hopelessly indebted normally throw in the towel in May. However, this year, ‘Total US bankruptcy filings by consumers and businesses in May rose 5.3% year-over-year to 69,668, the highest May since May 2014.’
Credit card debt is now a trillion dollars, auto debt is $1.12 trillion and student loan debt now totals $1.44 trillion. A trillion here, a trillion there. It starts to add up. And all of this doesn’t include the big driver of consumer bankruptcies, medical costs.
This post was published at GoldSeek on 9 June 2017.
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