• Tag Archives Debt
  • THE BIGGEST WEALTH TRANSFER IN HISTORY

    What will happen between now and 2025? Nobody knows of course but I will later in this article have a little peek into the next 4-8 years.
    The concentration of wealth in the world has now reached dangerous proportions. The three richest people in the world have a greater wealth than the bottom 50%. The top 1% have a wealth of $33 trillion whilst the bottom 1% have a debt $196 billion.
    The interesting point is not just that the rich are getting richer and the poor poorer. More interesting is to understand: How did we get there? and what will be the consequences?
    PANAMA & PARADISE PAPERS – SENSATIONALISM
    As the socialist dominated media dig into the Panama Papers and now recently the Paradise Papers to attack the rich and tell governments to tackle the unacceptable face of capitalism, nobody understands the real reasons for this enormous concentration of wealth. Sadly no journalist does any serious analysis of any issue, whether it is fake economic figures or the state of the world economy.
    Instead, all news is accepted as the truth while in fact a lot of news is fake or propaganda. The media is revelling in all the disclosures of offshore trusts and companies. The British Queen is being accused of having ‘hidden’ funds. The fact that offshore entities have been used legally for centuries for privacy, wealth preservation and creditor protection purposes is never mentioned. The media sell more much news by being sensational rather than factual.

    This post was published at GoldSwitzerland on November 17, 2017.


  • This Michigan Bank Just Brought Back The Zero-Down Mortgage; They’ll Even Cover Your Closing Costs

    A small savings bank in Michigan, Flagstar Bank, has come up with a genius, innovative new mortgage product that they believe is going to be great for their investors and low-income housing buyers: the “zero-down mortgage.” What’s better, Flagstar is even offering to pay the closing costs of their low-income future mortgage debtors. Here’s more from HousingWire:
    Under the program, Flagstar will gift the required 3% down payment to the borrower, plus up to $3,500 to be used for closing costs.
    According to the bank, there is no obligation for borrowers who qualify to repay the down payment gift.
    The program is available to only certain low- to moderate-income borrowers and borrowers in low- to moderate-income areas throughout Michigan.
    Borrowers would not have to repay the down payment or closing costs. But a 1099 form to report the income would be issued to the Internal Revenue Service by the bank. So the gifts could be taxable, depending on the borrower’s financial picture.
    Flagstar said borrowers who might qualify for its new program typically would have an annual income in the range of $35,000 to $62,000. The sales price of the home — which must be in qualifying areas — would tend to be in the range of $80,000 to $175,000.

    This post was published at Zero Hedge on Nov 17, 2017.


  • How Corporate Zombies Are Threatening The Eurozone Economy

    The recovery in Eurozone growth has become part of the synchronised global growth narrative that most investors are relying on to deliver further gains in equities as we head into 2018. However, the ‘Zombification’ of a chunk of the Eurozone’s corporate sector is not only a major unaddressed structural problem, but it’s getting worse, especially in…you guessed it… Italy and Spain. According to the WSJ.
    The Bank for International Settlements, the Basel-based central bank for central banks, defines a zombie as any firm which is at least 10 years old, publicly traded and has interest expenses that exceed the company’s earnings before interest and taxes. Other organizations use different criteria. About 10% of the companies in six eurozone countries, including France, Germany, Italy and Spain are zombies, according to the central bank’s latest data. The percentage is up sharply from 5.5% in 2007. In Italy and Spain, the percentage of zombie companies has tripled since 2007, the Organization for Economic Cooperation and Development estimated in January. Italy’s zombies employed about 10% of all workers and gobbled up nearly 20% of all the capital invested in 2013, the latest year for which figures are available. The WSJ explains how the ECB’s negative interest rate policy and corporate bond buying are keeping a chunk of the corporate sector, especially in southern Europe on life support. In some cases, even the life support of low rates and debt restructuring is not preventing further deterioration in their metrics. These are the true ‘Zombie’ companies who will probably never come back from being ‘undead’, i.e. technically dead but still animate. Belatedly, there is some realisation of the risks.

    This post was published at Zero Hedge on Nov 17, 2017.


  • Rob From The Middle Class Economics

    Much of our financial world functions as a ‘Rob from the Middle Class’ economy. The system robs from the middle class and poor via ‘money printing’ and inflation of the currency supply!
    The rich get richer and the poor get poorer.
    Little benefit comes from complaining about the process or fighting it. Understand the process, work around it, and use it constructively. Explaining Our Rob from the Middle Class Economy:
    Governments, individuals, pension funds and corporations are increasingly financialized and dependent upon debt, central bank interventions and currency devaluations. Wages are less relevant in a financialized economy because wages rise slowly while debt, currency in circulation, and paper financial assets increase rapidly.

    This post was published at Deviant Investor on November 17, 2017.


  • Pay Down Your Mortgage

    The latest issue of Street Freak came out on Tuesday. Street Freak is a bit of an aggressive stock-picking newsletter, where we come up with a new idea every month. I try to keep the ideas a secret – if you want them, you have to subscribe! But I’m going to let you in on this month’s idea for free. Are you ready? Here it is:
    Pay down your mortgage.
    Yes, that’s a bit unorthodox for a financial newsletter. But people spend too much time thinking about the next get-rich-quick idea and not enough time thinking about their overall financial well-being. I’m willing to bet that in addition to having a successful portfolio, many investors reading this also have a lot of debt.
    Going into what might be a downturn, I’m uncomfortable having a lot of financial leverage. If you think the market is going to go down, then you should stop thinking about buying inverse VIX ETNs and start thinking about how to deleverage in a smart fashion.
    Better Risk-Reward Paying down your mortgage is part of that. It is part of an overall exercise in balance sheet repair, which includes –
    Building a cash position Paying off debt: Margin debt Credit card debt Car loans Mortgage debt

    This post was published at Mauldin Economics on NOVEMBER 16, 2017.


  • Kyle Bass Is Having A Bad Day – Greek Bank Stocks Crash To 16-Month Lows

    Just over a month ago, Kyle Bass discussed why he was long effectively “long Greece.”
    Bass penned a Bloomberg editorial in which the hedge fund founder and CIO called on the IMF to stop bullying Greece – publicizing the fact that he is now effectively long Greece. Greek government bonds have performed reasonably well so far this year: They’re up about 16%, and if Bass is right, they could have another 20% to 30% over the next 18 months if the IMF abandons its insistence on austerity and acknowledges that debt relief will need to be part of the long-term alleviation of debt. Bass added that, in the near future, voters will elect a more business-friendly government that will help reestablish the country’s creditworthiness, much like the government of Mauricio Macri did for Argentina.
    I think you also have an interesting political situation in Greece where I think there’s going to be a handoff from the current Syriza government to kind of a more slightly-center-right but very economically independent new leadership in the next, call it, 18 months.
    And so, I think you asked why now? And I think you’re starting to see green shoots. You’re starting to see the banks do the right things finally in Greece and you are about to have new leadership.
    So, I think that you’re going to see – and if you remember Argentina as Kirschner was going to hand-off – hand the reins over to someone that was much more let’s say focused on business and economics than being a kleptocrat, I think you’re going to see something again slightly similar in Greece where you have leadership today that might not be the right leadership and the government-in-waiting, I believe, and I think you know Mr. (Mitsutakous) – I think you’re going to see something great happen to Greece in the and next, kind of, two years.

    This post was published at Zero Hedge on Nov 16, 2017.


  • A Bullish Big Picture With Growing Near-Term Headwinds

    There are some growing signs of weakness in this market. Breadth is slipping, credit doesn’t look too great, there are more new lows versus new highs being made… that kind of stuff. I’m still not getting any major sell signals, except from my high-yield indicator. It flashed a signal today.
    But there’s word the recent weakness in junk may be due to concerns over how deductions for debt and interest payments will be treated in the Republican tax reform plan. I don’t know. Either way, I’m not seeing any major red flags outside of junk bonds just yet.
    I’m in ‘wait and see’ mode, just ‘sitting on my hands’ as Livermore would say. I’ve trimmed my book some but mostly because I want to free up capital for other trades that are lining up.
    One of these trades is long dollar. I won’t expend much digital ink laying out my long dollar case, I’ve already done that plenty.

    This post was published at FinancialSense on 11/16/2017.


  • BANK ADMITS FIAT CURRENCIES ARE FAILING AND CRYPTOCURRENCIES MAY REPLACE THEM

    As the transition towards a blockchain based economy continues, the established financial powers are desperately trying to stay relevant. In an attempt to boost their credibility, analysts at Deutsche Bank are finally admitting that state-run fiat currencies are becoming obsolete. For years, blockchain entrepreneurs and other critics of central banking have been branded either conspiracy theorists or criminals. But recently, those controversial opinions about the inevitable changes coming to the world’s financial system are being echoed by mainstream pundits.
    Deutsche Bank’s top strategist, Jim Reid, recently articulated a view on the economy that is shared by many but rarely talked about:
    ‘Central banks and governments which have ‘dined out’ on the 35 year secular, structural decline in inflation are not able to prevent it rising as raising interest rates to suitable levels would risk serious economic contraction given the huge debt burden economies face. As such they are forced to prioritise low interest rates and nominal growth over inflation control which could herald in the beginning of the end of the global fiat currency system that begun with the abandonment of Bretton Woods back in 1971.’

    This post was published at The Daily Sheeple on NOVEMBER 15, 2017.


  • Venezuela Signs $3.2 Billion Debt Restructuring Deal With Russia

    As Venezuela teeters right on the brink of complete financial collapse, Bloomberg reports that Russia has agreed to restructure roughly $3.2 billion in outstanding obligations. While details of the restructuring agreement are scarce, both sides reported that the deal spreads payments out over 10 years with minimal cash service required over the next six years.
    Russia signed an agreement to restructure $3.15 billion of debt owed by Venezuela, throwing a lifeline to a crisis-wracked ally that’s struggling to repay creditors.
    The deal spreads the loan payments out over a decade, with ‘minimal’ payments over the first six years, the Russian Finance Ministry said in a statement. The pact doesn’t cover obligations of state oil company Petroleos de Venezuela SA to its Russian counterpart Rosneft PJSC, however.

    This post was published at Zero Hedge on Nov 15, 2017.


  • Russell Napier: Debt Deflation Worries Are Starting to Rise Again

    There’s been very little deleveraging after the last financial crisis and, in fact, debt levels are at new records globally, which means investors should be thinking about the risk of ‘debtflation,’ Russell Napier, editor of The Solid Ground, told FS Insider last week (see Russell Napier on Debt Deflation: Too Much Debt, Not Enough Money for audio).
    No Deleveraging
    It isn’t the case that we’ve seen much deleveraging since the financial crisis, Napier noted. Globally, the debt-to-GDP ratio is at an all-time high, he added, significantly above the levels seen in 2007.
    Though there has been some deleveraging in the household sector, Napier stated, this isn’t the whole picture. It ignores the releveraging of the government during the last crisis, and also that corporations have been adding significant amounts of debt.
    If we look globally, emerging markets are fueling the rise to a new high in the debt-to-GDP ratio. It isn’t just China either, but other countries as well that are responsible for this effect.
    ‘If the world was fragile in 2007 because there was too much debt and not enough GDP, it is significantly more fragile today,’ Napier said.

    This post was published at FinancialSense on 11/14/2017.


  • Millions Of Millennials Could Be Trading Sex For Their Next Debt Payment – Here’s How

    As the storm clouds of peak stupidity gather over the heads of the millennial generation who were conned by banks, government, and universities to take out excessive amounts of leverage in auto loans, credit cards, and student debt; millions have flocked to a new website seeking ‘Sugar Daddies’ and or even ‘Sugar Mommies’ to pay off their debt amid an economic environment where wage growth remains non-existent.
    Today’s real simple get-out-of-debt option for the broke college/post college millennial is through an unconventional dating website called SeekingArrangement.com.
    In 2016, the website identified some 2.5 million college students who turned to the site in an act of desperation to find a ‘Sugar Daddy’ or even a ‘Sugar Mommy’ in exchange of personal time for straight cash.
    The website’s mission is to ‘delivers a new way for relationships to form and grow. Sugar Babies and Sugar Daddies or Mommas both get what they want, when they want it’.
    We find it hard to believe the intention of the website, when created by MIT graduate Brandon Wade in 2006, was to have 25% of the 10 million users – broke college millennials.
    According to Business Insider,
    A couple years ago, the site noticed an uptick in the number of members signing up with a university email address, Alexis Germany, a spokesperson for SeekingArrangement.com, told Business Insider.

    This post was published at Zero Hedge on Nov 15, 2017.


  • Nobody Is Going to Bail Out Venezuela

    Henkel Garcia U, Andres Bello Catholic University (UCAB)
    Venezuela, the South American country convulsed by economic and humanitarian catastrophe, has defaulted on some of its debt after missing an interest payment due in October.
    Even as investors meet in Caracas to discuss restructuring US$60 billion in foreign debt, the country is in urgent need of international financial assistance.
    Yet few nations are rushing in to offer financial assistance to the ailing country. Under the authoritarian regime of Nicols Maduro, Venezuela is isolated in Latin America, and the United States, Canada, and the European Union have all imposed sanctions against Venezuelan officials. Maduro has at times suggested he would not even accept humanitarian aid.
    Still, no indebted nation is totally alone in this world. As a financial analyst, I know there are always international players who see opportunity in the problems of others. And for Venezuela, my home country, all hope of a bailout rests with China, Russia, and the International Monetary Fund.
    Will they do anything to help?

    This post was published at FinancialSense on THE CONVERSATION /1/15/2017.


  • Auto-Loan Subprime Blows Up Lehman-Moment-Like

    But there is no Financial Crisis. These are the boom times. Given Americans’ ceaseless urge to borrow and spend, household debt in the third quarter surged by $610 billion, or 5%, from the third quarter last year, to a new record of $13 trillion, according to the New York Fed. If the word ‘surged’ appears a lot, it’s because that’s the kind of debt environment we now have:
    Mortgage debt surged 4.2% year-over-year, to $9.19 trillion, still shy of the all-time record of $10 trillion in 2008 before it all collapsed. Student loans surged by 6.25% year-over-year to a record of $1.36 trillion. Credit card debt surged 8% to $810 billion. ‘Other’ surged 5.4% to $390 billion. And auto loans surged 6.1% to a record $1.21 trillion. And given how the US economy depends on consumer borrowing for life support, that’s all good.
    However, there are some big ugly flies in that ointment: Delinquencies – not everywhere, but in credit cards, and particularly in subprime auto loans, where serious delinquencies have reached Lehman Moment proportions.

    This post was published at Wolf Street on Nov 14, 2017.


  • UK Debt Crisis Is Here – Consumer Spending, Employment and Sterling Fall While Inflation Takes Off

    – UK debt crisis is here – consumer spending, employment and sterling fall while inflation takes off
    – Personal debt crisis coming to fore – litigation cases go beyond 2008 levels
    – October consumer spending fell by 2% in October, the fastest year-on-year decline in four years
    – Britons ‘face expensive Christmas dinner’ as food price inflation soars
    – Gold investors buying physical gold due to precarious UK and US outlook

    Editor: Mark O’Byrne
    The long heralded UK debt crisis is here and data released in the U. K. this week clearly shows this.
    This is seen in UK retail sales and consumer spending which plunged in October, employment falling, pay stagnant and inflation ticking higher as sterling remains under pressure.
    Yesterday, official UK figures showed prices were up by 4.2% last month on 12 months earlier, the highest level in four years. Britons ‘face expensive Christmas dinner’ as food price inflation soars reported The Guardian yesterday.
    Meanwhile stock markets make new highs every week but the underlying economic data is not reflecting the ‘irrational exuberance’ being seen in global stock markets.

    This post was published at Gold Core on November 15, 2017.


  • Venezuela Defaults On A Debt Payment – Is This The First Domino To Fall?

    Did you know that Venezuela just went into default? This should be an absolutely enormous story, but the mainstream media is being very quiet about it. Wall Street and other major financial centers around the globe could potentially be facing hundreds of millions of dollars in losses, and the ripple effects could be felt for years to come. Sovereign nations are not supposed to ever default on debt payments, and so this is a very rare occurrence indeed. I have been writing about Venezuela for years, and now the crisis that has been raging in that nation threatens to escalate to an entirely new level.
    Things are already so bad in Venezuela that people have been eating dogs, cats and zoo animals, but now that Venezuela has officially defaulted, there will be no more loans from the rest of the world and the desperation will grow even deeper…
    Venezuela, a nation spiraling into a humanitarian crisis, has missed a debt payment. It could soon face grim consequences.
    The South American country defaulted on its debt, according to a statement issued Monday night by S&P Global Ratings. The agency said the 30-day grace period had expired for a payment that was due in October.
    A debt default risks setting off a dangerous series of events that could exacerbate Venezuela’s food and medical shortages.
    So what might that ‘dangerous series of events’ look like?
    Well, Venezuela already has another 420 million dollars of debt payments that are overdue. Investors around the world are facing absolutely catastrophic losses, and the legal wrangling over this crisis could take many years to resolve. The following comes from Forbes…

    This post was published at The Economic Collapse Blog on November 14th, 2017.


  • Financial Tyranny: “We The People” Are The New Permanent Underclass In America

    Authored by John Whitehead via The Rutherford Institute,
    Americans can no longer afford to get sick and there’s a reason why.
    That’s because a growing number of Americans are struggling to stretch their dollars far enough to pay their bills, get out of debt and ensure that if and when an illness arises, it doesn’t bankrupt them.
    This is a reality that no amount of partisan political bickering can deny.
    Many Americans can no longer afford health insurance, drug costs or hospital bills. They can’t afford to pay rising healthcare premiums, out-of-pocket deductibles and prescription drug bills.
    They can’t afford to live, and now they can’t afford to get sick or die, either.
    It’s a gamble any way you look at it, and the medical community is not helping.
    Healthcare costs are rising, driven by a medical, insurance and pharmaceutical industry that are getting rich off the sick and dying.
    Appallingly, Americans spend more than any developed country on healthcare and have less to show for it. While Obamacare (a.k.a. the Affordable Care Act) may have made health insurance more accessible to greater numbers of individuals, it has failed to make healthcare any more affordable.
    Indeed, health care in America has become just another way of making corporations rich at consumer expense.

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


  • China’s Credit Growth Is Freezing Up At The Worst Possible Time

    Submitted by Gordon Johnson of Axiom Capital
    CREDIT LEADS ‘ALL OTHER’ ECONOMIC DATA IN CHINA
    China until recently euphoric credit growth, is rapidly grinding to a halt. As we published last week, and a key underpinning of our negative outlook on commodity prices through the remainder of 4Q17 and into 2018, the moderation in China’s credit seen more recently appears to be gaining momentum. The evidence?
    Well, we note that: (1) new yuan loans in October came in at CNY1.04tn (vs. expectations of CNY1.1tn, and CNY1.8tn in the prior month), with banks making up CNY663.2bn of this amount – which was below the Consensus estimate of CNY783bn for October, and down from CNY1.27tn the prior month (Exhibit 1), (2) shadow banking remains around one-third of total social financing (‘TSF’), showing little signs of providing the ‘lift’ to credit it has previously when bank debt issuance underperformed – Exhibit 2, (3) year-over-year growth of new yuan loans, on a three-month-rolling average, has slowed to just +7.5% in October (Exhibit 3), (3) Y/Y M2 growth in China hit a multi-decade low of +8.8% in October (Exhibit 4), (4) household loan growth (i.e., mortgages) continued its precipitous fall in October (Exhibit 5), (4) Y/Y corporate bond and government bond issuance continues to trend negative (Exhibit 6), all ultimately resonating in (5) broad credit growth that continues to moderate (Exhibit 7).
    In short, we believe
    China’s efforts to deleverage are, increasingly, bearing fruit. What this means, in our view, is that China’s economic indicators will continue to slow, weighing on bulk commodity prices, and ultimately industrials, metals, and mining stock prices.

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


  • George Soros To Congress: “Please Don’t Cut My Taxes”

    After transferring over the bulk of his personal wealth to his ‘Open Society’ Foundation – the umbrella organization for a network of dozens of political groups that push Soros’s far-left agenda across the US and Europe, Soros is still comfortable enough to justify giving away even more of his money – this time to the US federal government.
    Taking a page out of Warren Buffett’s book, Soros and a group of some 400 other rich Americans – including doctors, lawyers and CEOs – are sending a formal letter to Congress chiding lawmakers for trying to reduce taxes on the richest American families at a time when wealth inequality is rapidly expanding. Instead, the letter asks Congress not to pass any tax bill that ‘further exacerbates inequality’ and adds to the debt (both of the current Republican plans would add $1.5 trillion to the debt over 10 years).
    The letter was penned by Responsible Wealth, a group of ‘enlightened’ rich people that includes Ben & Jerry’s Ice Cream founders Ben Cohen and Jerry Greenfield, fashion designer Eileen Fisher and philanthropist Steven Rockefeller, in addition to Soros. Along with the big names are many individuals and couples who rank among the top 5% of Americans (those who have $1.5 million in assets or earn $250,000 or more a year).
    In a rebuttal to Congress’s argument that corporate tax cuts will help stimulate growth, the letter argues that corporations are already reaping record profits. Instead of handing more money to the wealthy, the letter’s signers argue the government should use the funds to invest in education, research and roads that benefit everyone, while protecting entitlement programs like Medicaid.

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


  • Claudio Grass Interviews Mark Thornton

    Introduction
    Mark Thornton of the Mises Institute and our good friend Claudio Grass recently discussed a number of key issues, sharing their perspectives on important economic and geopolitical developments that are currently on the minds of many US and European citizens.
    A video of the interview can be found at the end of this post. Claudio provided us with a written summary of the interview which we present below – we have added a few remarks in brackets (we strongly recommend checking the podcast out in its entirety – there is a lot more than is covered by the summary).
    Interview Highlights
    We currently find ourselves in a historically and economically significant transition period. The already overstretched bubble in the markets is still expanding, but we now see bold moves by the Fed to reduce its balance sheet, at the same time the ECB plans to taper, overall presenting us with a fairly deflationary outlook. This reversal of the expansionary policies of the last decade can be seen as the first step toward a potentially ferocious correction in the not-too-distant future.
    The ECB is trapped, as it already holds 40% of euro zone sovereign debt. At the same time, Spain, Italy and Greece continue to potentially present major challenges, as a banking crisis could easily reemerge in these countries [ed note: banks in Europe have managed to boost their capital ratios, but the amount of legacy non-performing loans in the system remains close to EUR 1 trn. Moreover, TARGET-2 imbalances have recently reached new record highs, a strong sign that the underlying systemic imbalances remain as pronounced as ever]. Mario Draghi intends to reduce the ECB’s asset purchases from EUR60 billion to EUR30 billion per month. He may soon realize that if the ECB does not buy euro zone bonds, no-one will.

    This post was published at Acting-Man on November 14, 2017.


  • The Fed Issues A Subprime Warning As Household Debt Hits A New All Time High

    After we first reported last week that US credit card debt once again rose above $1 trillion, despite a recent sharp downward revision to the data, while both student and auto loans rose to a fresh record high…

    … it would probably not come as a surprise that according to the just released latest quarterly household debt and credit report by the NY Fed, Americans’ debt rose to a new record high in the second quarter on the back of an increase in every form of debt: from mortgage, to auto, student and credit card debt. Aggregate household debt increased for the 13th consecutive quarter, rising by $116 billion (0.9%) to a new all time high. As of September 30, 2017, total household indebtedness was $12.96 trillion, an increase of $605 billion from a year ago and equivalent to 66% of US GDP, versus a high of around 87% in early 2009. After years of deleveraging in the wake of the 2007-09 recession, household debt has risen more than 16.2% since the trough hit in the spring of 2013.

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