• Tag Archives Congress
  • Bond Market Bulls Embrace China Debt Downgrade

    It appears credit ratings agencies simply get no respect…
    Four months after Moody’s downgraded China to A1 from Aa3, unwittingly launching a startling surge in the Yuan as Beijing set forth to “prove” just how “stable” China truly is through its nationalized capital markets, S&P followed suit this week when the rating agency also downgraded China from AA- to A+ for the first time since 1999 citing risks from soaring debt growth, less than a month before the most important congress for Chiina’s communist leadership in the past five years is set to take place. In addition to cutting the sovereign rating by one notch, S&P analysts also lowered their rating on three foreign banks that primarily operate in China, saying HSBC China, Hang Seng China and DBS Bank China Ltd. are unlikely to avoid default should the nation default on its sovereign debt. Following the downgrade, S&P revised its outlook to stable from negative.
    ‘China’s prolonged period of strong credit growth has increased its economic and financial risks,’ S&P said.
    ‘Since 2009, claims by depository institutions on the resident nongovernment sector have increased rapidly. The increases have often been above the rate of income growth. Although this credit growth had contributed to strong real GDP growth and higher asset prices, we believe it has also diminished financial stability to some extent.”
    According to commentators, the second downgrade of China this year represents ebbing international confidence China can strike a balance between maintaining economic growth and cleaning up its financial sector, Bloomberg reported. The move may also be uncomfortable for Communist Party officials, who are just weeks away from their twice-a-decade leadership reshuffle.
    The cut will ‘have a relatively big impact on Chinese enterprises since corporate ratings can’t be higher than the sovereign rating,’ said Xia Le, an economist at Banco Bilbao Vizcaya Argentaria SA in Hong Kong. ‘It will affect corporate financing.’

    This post was published at Zero Hedge on Sep 23, 2017.


  • S&P Downgrades China To A+ From AA- Due To Soaring Debt Growth

    Four months after Moody’s downgraded China to A1 from Aa3, unwittingly launching a startling surge in the Yuan as Beijing set forth to “prove” just how “stable” China truly is through its nationalized capital markets, moments ago S&P followed suit when the rating agency also downgraded China from AA- to A+ for the first time since 1999 citing risks from soaring debt growth, less than a month before the most important congress for Chiina’s communist leadership in the past five years is set to take place. In addition to cutting the sovereign rating by one notch, S&P analysts also lowered their rating on three foreign banks that primarily operate in China, saying HSBC China, Hang Seng China and DBS Bank China Ltd. are unlikely to avoid default should the nation default on its sovereign debt. Following the downgrade, S&P revised its outlook to stable from negative.
    ‘China’s prolonged period of strong credit growth has increased its economic and financial risks,’ S&P said. ‘Since 2009, claims by depository institutions on the resident nongovernment sector have increased rapidly. The increases have often been above the rate of income growth. Although this credit growth had contributed to strong real GDP growth and higher asset prices, we believe it has also diminished financial stability to some extent.”
    According to commentators, the second downgrade of China this year represents ebbing international confidence China can strike a balance between maintaining economic growth and cleaning up its financial sector, Bloomberg reported. The move may also be uncomfortable for Communist Party officials, who are just weeks away from their twice-a-decade leadership reshuffle.
    The cut will ‘have a relatively big impact on Chinese enterprises since corporate ratings can’t be higher than the sovereign rating,’ said Xia Le, an economist at Banco Bilbao Vizcaya Argentaria SA in Hong Kong. ‘It will affect corporate financing.’
    ‘The market has already speculated S&P may cut soon after Moody’s downgraded,’ said Tommy Xie, an economist at OCBC Bank in Singapore. ‘This isn’t so surprising.’

    This post was published at Zero Hedge on Sep 21, 2017.


  • How to Beat Banks at Their Own Game

    When it comes to public sentiment, banks and Congress have a lot in common.
    People tell pollsters they dislike Congress in general, but they keep re-electing their own representative and senators.
    ***
    Similarly, people tend to like their own bank and disapprove of others, according to the latest American Banker/Reputation Institute survey.
    One glaring exception: Wells Fargo (WFC). Pretty much no one likes Wells Fargo since last year’s revelation that the bank’s staff had opened millions of false accounts to meet ambitious sales targets.
    I said at the time there’s never just one cockroach. Turn on the lights, and you’ll see more scurrying away.
    That proved true for Wells Fargo. It’s now embroiled in several other scandals, like forcing customers to buy car insurance they didn’t need. Other banks may have similar issues.
    The banking giants get away with these things because people feel powerless against them, but now there’s a new way to beat the banks at their own game – and keep some of those handsome profits for yourself.

    This post was published at Mauldin Economics on SEPTEMBER 19, 2017.


  • Defense Contractors on Cloud 9

    The backdrop: Money. More than ever before. The Senate is expected to pass by a wide margin a $700-billion defense bill today. When it comes to extravagant military spending, Congress is relentlessly bipartisan, and all bickering stops, as long as the bacon gets spread to every district and state.
    ‘The 1,215-page measure defies a number of White House objections, but Trump hasn’t threatened to veto the measure,’ the Washington Post mused. ‘The bill helps him honor a pledge to boost military spending by tens of billions of dollars.’
    So who gets this money?
    It’s going to get spread around, but defense contractors are going to get a chunk of it, and they’ve been on cloud 9 all year. Their shares – fired up by plenty of saber-rattling – have mostly soared from all-time high to all-time high.
    These are some of the biggest defense contractors and their shares year-to-date as of this morning:
    Rockwell Collins (COL), to be acquired by United Technologies: $130.90, up 40.6% YTD United Technologies (UTX) is gobbling up Rockwell, got beaten down 8% since July, and is the exception: $113.04, up a measly 3.1% YTD Boeing (BA), after implementing a series of big layoffs in the US: $253.51, up 61% YTD Northrop Grumman (NOC): $274.23, up 16% YTD Orbital (OA) jumped 20% this morning to $132.60, up 48% YTD Raytheon (RTN) $183.06, up 26% YTD Lockheed Martin (LMT) $303.74, up 19.8% YTD Honeywell International (HON) $137.50, up 18.4% YTD Orbital jumped 20% this morning after the announcement that Northrop Grumman would acquire it for $134.50 a share, in a deal valued at $9.2 billion including the assumption of $1.4 billion in net debt.

    This post was published at Wolf Street on Sep 18, 2017.


  • Experian, Equifax & TransUnion want to sell you new mortgage credit scores

    This is a syndicated repost courtesy of theinstitutionalriskanalyst. To view original, click here. Reposted with permission.
    Some of the housing industry’s largest trade groups reportedly want housing finance agencies Fannie Mae and Freddie Mac to look at using new types of credit scores for assessing default risk on residential mortgages. These groups argue that existing scores are ‘unfair’ to low income borrowers.
    Housing Wire reported last month that the groups sent a letter to Federal Housing Finance Agency Director Mel Watt, the Mortgage Bankers Association, National Association of Realtors, the National Association of Home Builders, and other groups pressing Watt on the issue.
    Watt, a former congressman from North Carolina and long-time member of the House Financial Services Committee, threw cold water on the idea that Fannie and Freddie would begin using alternative credit scoring models at any point in the next two years.
    ‘Watt said that making any changes to the government-sponsored enterprises’ credit scoring models before 2019 would be a ‘serious mistake,’ reports HW. Ditto.

    This post was published at Wall Street Examiner on September 18, 2017.


  • Big Trouble For The Silver Market If Mexico Monetizes Its Silver Libertad Coin

    Recently, there was a debate in the Mexican Congress on the proposal to monetize the Silver Libertad Coin. The debate took place during a forum for ‘The Promotion of Savings for Mexicans.’ If Mexico decided to monetize its Silver Libertad Coin, it could have a severe impact on the silver market and price.
    How much of an impact would the monetization of the Mexican Silver Libertad have on the market? There could be serious ramifications if we consider the vast amount of silver consumed by the minting of Mexican silver coins in the past. Before I get into that data, let’s look at the following text from the article, The Mexican Congress Debates the Monetization of the ‘Libertad’ Silver Ounce, on Hugo Salinas Price’s plata.com site;
    The central feature of the proposal is that the Central Bank of Mexico (Banxico) shall determine a value in pesos for the ‘Libertad’ silver ounce; and that this value shall be slightly higher (by a percentage that would be defined in the corresponding Law) than the price of silver in the international market, in order to provide Banxico with an assured profit in minting and placing these coins in monetary circulation.
    …. if the price of silver should shoot upward, Banxico would have to issue new, higher quotes for the ‘Libertad’ silver ounce (according to the formula to be established by Law). In this way, again, the coin will remain ‘in circulation’, and since it has no nominal price stamped on it, it will avoid ending up – like all the old silver coins that had stamped values – at the refineries.

    This post was published at SRSrocco Report on SEPTEMBER 15, 2017.


  • “I Know What North Korea Wants” – President Carter Warns “US Oligarchy Refuses To Do It”

    Former US President Jimmy Carter repeated his assertion that the US works more like an “oligarchy than a democracy,” while also lambasting Trump’s “hopeless” approach to the increasing tensions with North Korea.
    ***
    The former president was speaking at a ‘Conversation with the Carters’ event at his Carter Center in Atlanta on Tuesday. AP reports that he said money in politics is what makes the US more like an oligarchy – run by a small group of rich people – rather than a democracy, repeating an allegation he has vociferously uttered for a few years.
    ‘[Money in politics] violates the essence of what made America a great country in its political system.
    Now it’s just an oligarchy with unlimited political bribery being the essence of getting the nominations for President or being elected President. And the same thing applies to governors, and U. S. Senators and congress members.
    So, now we’ve just seen a subversion of our political system as a payoff to major contributors, who want and expect, and sometimes get, favors for themselves after the election is over.”
    Carter was referring to the Supreme Court’s 2010 Citizens United ruling to allow corporations to give unlimited campaign donations to political candidates, which he has previously said was ‘the most stupid decision’ the court had made.
    But then the former President went to town on Trump and North Korea…

    This post was published at Zero Hedge on Sep 14, 2017.


  • The Crushing of Equifax

    Banks, credit card companies, and other Equifax customers squeal. Consumers (the product) squeal. Congress squeals. Investors squeal.
    Equifax shares dropped another 16% during the day and after-hours on Wednesday to $97.51. They’ve now plunged 31%, or $44.82, in the four trading days since Equifax confessed that 143 million consumers had their data crown-jewels stolen when it was hacked. The stolen data is perfect for identity theft, such as getting a loan in your name, and tax fraud, such as getting a tax refund from the IRS in your name, with Kafkaesque consequences for you.
    Investors, seeing what this might do to the company, have voted with their sell-button. Based on the 120.4 million shares outstanding as of June 30, the four-trading-day loss amounts to $5.4 billion.
    The stink has been enormous, with Equifax having to back down from some of its most egregious solutions to this problem, including forcing consumers to give away their legal right to sue in order to sign up for its credit protection services. Equifax rescinded this requirement over the weekend, buckling under scathing criticism.

    This post was published at Wolf Street on Sep 13, 2017.


  • Gold Drops, USD Pops As Mulvaney/Ryan Signals Tax Plan Coming September 25th

    OMB Director Mick Mulvaney told Fox Business this morning that the target date for the release of details around a renewed tax plan is September 25th (presumably 2017) and that has triggered USD-buying and gold-selling.
    REVENUE NEUTRALITY `NOT ON THE TOP OF OUR LIST’: MULVANEY CAN’T BALANCE U. S. BUDGET LONG-TERM ON CURRENT GROWTH: MULVANEY TRUMP’S FRUSTRATED WITH SLOW PACE OF WASHINGTON ON TAX:MULVANEY TRUMP `ADAMANT’ ABOUT GETTING CORPORATE RATE TO 15%: MULVANEY These remarks follow Trump’s meeting with Congressional leaders Tuesday evening on the subject. As Reuters reports:

    This post was published at Zero Hedge on Sep 13, 2017.


  • Trump Suggests Eliminating the Debt Ceiling – Dollar Falls

    Those who paid any attention to the financial press last week saw the following narrative; President Donald Trump betrayed Republicans by cutting a deal with Democrats Nancy Pelosi and Charles Schumer. They agreed to punt on the borrowing cap until December and spend $15 billion for hurricane relief.
    Americans are supposed to conclude that Trump is flip-flopping, and that Republicans aren’t responsible. Dig just a little, and you’ll find only one of those things is true.
    Trump is flip-flopping, no question about that. The president campaigned on promises to honor the borrowing limit. This tweet from 2013 is what candidate Trump had to say on the matter: ‘I cannot believe the Republicans are extending the debt ceiling – I am a Republican & I am embarrassed!’
    But any implication that Republican leaders in Congress actually oppose more borrowing is patently false. Republicans in Congress overwhelmingly supported the deal. It was passed in the House with a vote of 316 to 90. The Senate voted 80 to 17.

    This post was published at GoldSeek on 12 September 2017.


  • Debt Nightmare: Does Anyone Actually Care That Our Exploding National Debt Is Destroying Our Future?

    When will America finally wake up? The borrower is the servant of the lender, and we now have a colossal 20 trillion dollar chain around our collective ankles. We have willingly enslaved ourselves, our children and our grandchildren, and yet our addiction is so insatiable that we continue to add more than 100 million dollars to our debt load every single hour of every single day. The national debt is sitting at a grand total of $20,162,176,797,904.13 at this moment, but now that the debt ceiling has been lifted that number is expected to shoot up very rapidly toward 21 trillion dollars by the end of the year. The national debt had been held down by accounting tricks to keep it under the debt limit for many months, but every time this has happened before we have seen the national debt absolutely explode back to projected levels once the debt ceiling was raised.
    But very few of our ‘leaders’ in Washington seem to care that we are in the process of committing national suicide. There is no possible way that we will be able to continue to be the most powerful economy on the planet if we continue down this road. During Obama’s eight years in the White House, we added more than 9 trillion dollars to the national debt. That certainly improved things in the short-term, because if we could go back and take 9 trillion dollars out of the economy over the past 8 years we would be in an absolutely nightmarish economic depression right now.
    But even with all of this borrowing and spending, our economy has still only grown at an average rate of just 1.33 percent a year over the last 10 years.
    And by going into so much debt, we are literally destroying the future for our children and our grandchildren.
    What we are doing to them is beyond criminal, and people should be going to prison over this. But instead we just keep rewarding these Congress critters by sending the same cast of characters back to Washington over and over again.

    This post was published at The Economic Collapse Blog on September 11th, 2017.


  • Congress Exploits Hurricane to Raise Debt Ceiling

    Former White House Chief of Staff Rahm Emanuel famously counseled politicians to never let a crisis go to waste. Sadly, this week President Trump and congressional leaders of both parties showed that they have taken this advice to heart when they attached a debt ceiling increase and an extension of government spending to the over 15 billion dollars Hurricane Harvey relief bill.
    This maneuver enabled Congress to avoid a contentious debate over whether to pass a clean debt ceiling increase or to pair it with spending cuts. After all, few members of Congress want to be accused of blocking a bipartisan deal to help those suffering from Harvey over what the media will spin as a ‘right-wing anti-government’ crusade.
    Combining hurricane relief with a debt ceiling increase and an extension of government funding had bipartisan support. Days before President Trump sat down with Democrats to hammer out a deal, Capitol Hill was abuzz with talk about a Senate GOP plan to attach a debt ceiling increase and an extension of government funding to the hurricane bill.

    This post was published at Ludwig von Mises Institute on September 11, 2017.


  • Blowing Off The Roof

    Of all the absurd Washington pantomimes none has been as reliably entertaining and maddening as the annual debates to raise the debt ceiling. Although the outcome was always a foregone conclusion (the ceiling would be raised), the excitement came when fiscal conservatives bemoaned the perils of runaway debt and ‘attempted’ to exact spending restrictions through threats ‘to shut down the government,’ (which often led to news coverage of tourists being turned away from national parks.) On the other side of the aisle Democrats would rail that the ceiling must be raised ‘because America always pays her bills.’ Lost was the irony that ‘paying’ bills with borrowed money was fiscally responsible, and that raising the ceiling actually enabled America to continue to avoid paying its bills. After these amateur theatrics, the ceiling would be lifted and Washington would go on as if nothing happened. But at least the performance threw occasional light on the nation’s debt problems.
    But this week the news dropped that President Trump had made a ‘gentleman’s agreement’ with Senate Minority Leader Chuck Schumer to permanently scrap the ‘debt ceiling’ so that government borrowing can occur perpetually without the need to air the nation’s fiscal dirty laundry. Given how much the national debt has exploded in recent decades, and how reluctant Congress has been to address the problem, it should be no surprise that the proposal has finally been made. The only shock is that it happening when the Republicans control the White House and both houses of Congress.
    The news came just a day after the President stunned the Republican party by abruptly siding with Congressional Democrats over the best way to deal with current debt ceiling negotiations. These developments should make it clear, as I described in the weeks after Trump moved into the White House, that budget deficits during the Trump administration will be far larger than just about anyone predicted. In fact, the self-proclaimed ‘King of Debt’ is reaching for his crown and the coronation profoundly affect the fate of the U. S. dollar and the American economy.

    This post was published at Euro Pac on September 8, 2017.


  • After The Storms Are Over: America Can’t Afford To Rebuild

    Authored by Raul Ilargi Meijer via The Automatic Earth blog,
    A number of people have argued over the past few days that Hurricane Harvey will NOT boost the US housing market. As if any such argument would or should be required. Hurricane Irma will not provide any such boost either. News about the ‘resurrection’ of New Orleans post-Katrina has pretty much dried up, but we know scores of people there never returned, in most cases because they couldn’t afford to.
    And Katrina took place 12 years ago, well before the financial crisis. How do you think this will play out today? Houston is a rich city, but that doesn’t mean it’s full of rich people only. Most homeowners in the city and its surroundings have no flood insurance; they can’t afford it. But they still lost everything. So how will they rebuild?
    Sure, the US has a National Flood Insurance Program, but who’s covered by it? Besides, the Program was already $24 billion in debt by 2014 largely due to hurricanes Katrina and Sandy. With total costs of Harvey estimated at $200 billion or more, and Irma threating to cause far more damage than that, where’s the money going to come from?
    It took an actual fight just to push the first few billion dollars in emergency aid for Houston through Congress, with four Texan senators voting against of all people. Who then will vote for half a trillion or so in aid? And even if they do, where would it come from?

    This post was published at Zero Hedge on Sep 9, 2017.


  • Mark Thornton: Trump’s Deal With Dems Increases His Power over GOP

    In this discussion, Mark Thornon examines how Donald Trump’s new deal with the Democrats on teh debt ceiling will help him bring the GOP into line on issues like tax reform.
    As Thornton notes, the debt-ceiling deal only extends the status quo, so is not a really a big win for the Democrats. It is, however, a win for Trump because it illustrates to the GOP leadership in Congress that Trump does not need them as much as the GOP thinks he does.
    This will, Thornton says, force the GOP to move forward on tax reform, which the GOP in Congress has been ignoring up until now. The details, however, don’t matter that much to Trump. Thornton explains how tax reform works in Congress – special interest groups descend on Congress, handing out campaign contributions, to ensure the latest tax reforms benefit their groups. Trump, on the other hand, just wants a general lessening of the tax burden. Trump has made it clear that if the GOP is not willing to help him, Trump is willing to hand more political defeats to the GOP by working with the dems.

    This post was published at Ludwig von Mises Institute on Sept 8, 2017.


  • Yet Another Theory of the Fed? Uggh!

    The world hardly needs another theory of the Fed, especially so soon after its Jackson Hole symposium. But we have a theory, too, and who knows, ours could be as close to the bulls-eye as any of the others. Plus, our theory is easy to explain – it rests on the simple premise that decision makers worry mostly about their reputations. We’ll propose that reputational risks are the primary drivers of central bank policies, and then we’ll use that belief to predict a major policy shift.
    Why are reputations so important? Cynics might say they determine how much central bankers get paid once they leave the FOMC. Ben Bernanke, for example, wouldn’t collect $250,000 speaking fees and plush consulting contracts if he hadn’t bolstered his reputation during the Global Financial Crisis. And that’s not all – the crisis also lifted Bernanke’s power and importance beyond what it would have otherwise been. By landing in the Fed chair at an opportune time, he profited immensely.
    Check out Fed Models Facing Technological Disruption
    But our theory doesn’t depend on that particular type of cynicism. We doubt that personal greed drives the Fed’s policy decisions. Whether they intend to cash their golden tickets or not (we’ll take the over on ‘intend to’), we view FOMC members as highly regarded folks who’d like to remain that way. They’ve reached a foothold at their profession’s highest mountain’s uppermost peak, from where the only direction is down. And remember – they didn’t arrive safely at their foothold by accident. If the president taps you for FOMC duty and sends you before Congress for approval, you’re already adept at protecting your reputation. You’ll probably do ‘whatever it takes’ to steer clear of any reputational damage that could arise in the future.

    This post was published at FinancialSense on 09/07/2017.


  • Trump Acts Like Businessman At Last

    There is no doubt that the feud between Donald Trump and Republicans in Congress has been astonishing. Even some Republicans support trying to impeach him thinking he will be a liability in 2018. Trump is responding like a businessman and not a politician, Many of his supporters hoped for this and voted for him to drain the swamp.
    The elite Republicans remain anti-Trump because they too like the swamp the way it is. However, the elite Republicans may find that turning their back on Trump may find things get crazier in 2018. Senate Majority Leader Mitch McConnell, said that Trump doesn’t understand how Washington works. What McConnell does not understand is the people are fed up with the way Washington works.

    This post was published at Armstrong Economics on Sep 8, 2017.


  • How the Dow Jones Today Will Respond to Trump’s Debt Ceiling Deal with Democrats

    The Dow Jones today is starting the day flat after U. S. President Donald Trump shocked Washington by making a surprise deal with Congressional Democrats on raising the debt ceiling. Dow Jones futures are down five points in premarket hours as Trump’s economic agenda is now in question and Florida braces for Hurricane Irma.
    Here are the numbers from Wednesday for the Dow, S&P 500, and Nasdaq:
    Index Previous Close Point Change Percentage Change Dow Jones 21,807.64 54.33 +0.25% S&P 500 2,465.54 7.69 +0.31% Nasdaq 6,393.31 17.74 +0.28%

    This post was published at Wall Street Examiner by Garrett Baldwin ‘ September 7, 2017.


  • Powerful Republican Group, With 155 Members, Opposes Trump Debt Ceiling Deal

    Having become best friends with top Congressional Democrats overnight, following yesterday’s stunning reversal in which President Trump unexpectedly struck a deal with Schumer and Pelosi in which he effectively handed control over the DACA process to Democrats in exchange for a 3 month extension on the debt ceiling as well as avoiding a government shutdown, Trump is now finding that it is Republicans who are engaged in open warfare with the president, and as Axios reports, the leadership of the powerful Republican Study Committee has come out against President Trump’s debt ceiling deal with Nancy Pelosi and Chuck Schumer.
    For Trump, this is the harshest message of disagreement yet from the Republican Study Committee, which has 155 members, and one which “the Republican leadership – which strenuously opposed Trump’s surprise deal – fully anticipated.”

    This post was published at Zero Hedge on Sep 7, 2017.