The statistics remain utterly grim; not in the manner that 2008-09 was grim, rather in the way the dot-com bubble collapse was pure torture, down a little bit at a time stretched across year after year. For the fourteenth consecutive month in October 2016, IP contracted in the US…….As a reflection of just how bad this depression has been for consumers above all other parts, the production of consumer goods is only 6.6% (total) above the trough registered in June 2009, more than seven years ago! That remains more than 9% less than the peak of February 2007, a comparison that is agonizingly approaching a full decade. It cannot be a recovery or even business cycle where production for consumers is not even halfway back after so many years.
Warnings about the loans, bonds, and commercial-mortgage-backed securities (CMBS) tied to the vast $11-trillion commercial property sector in the US have been hailing down for months. Moody’s Investor Services just warned about the rising delinquency rate of some $360 billion in CMBS it rates. Delinquencies of 60+ days jumped from 4.6% last year to 5.6% in September….Alas, since the report was released on Election Day, interest rates have alread jumped. This comes at the worst possible moment, at the peak of the most gigantic CRE price bubble the US has ever seen.
Online lenders were supposed to revolutionize the consumer loan industry. Instead, they are rapidly becoming yet another “the next subprime.” We first started writing about the P2P sector in early 2015 with cautionary pieces like and “Presenting The $77 Billion P2P Bubble” and “What Bubble? Wall Street To Turn P2P Loans Into CDOs.” Things accelerated in February of this year when we first noted that substantial cracks were starting to show in the world of P2P lending, and more specifically, with LendingClub’s inability to assess credit risk of its borrowers that were causing the company to experience higher write-off rates than forecast.
Today India is on the verge of a major social-political crisis, unless either the government backs off from the decision of banning the currency or some real magic happens. There is chaos in the streets and daily life is slowly but surely coming to a full halt. What Modi did was not only heavy-handed, hugely arrogant, and of no value, it has been very badly implemented to boot — as everything in India always is — and carries the real potential of escalating and snowballing into something horrific. They could have seen that this was not going to end well by simply using primary school math.
But now we have a new President and the political pressures on the Federal Reserve to keep markets from falling prior to the US Presidential & Congressional election are over. Based on President-Elect Trump’s campaign rhetoric, Janet Yellen knows she is likely not to have her term renewed in 2018 and knows the Fed’s historical independence may in fact be exposed. IMMEDIATELY on Trump’s victory we have witnessed A Global Bond debacle as yields have shot skyward. Suddenly corporate borrowing has become even more expensive and most importantly, perceived low-risk Treasury yields are now the same or slightly higher than stock yields! Investors have been forced to buy US equity stocks (other than the FANGs & NOSH) for the dividends in a yield hungry world controlled by policies of Financial Repression.
It’s hard to think of a politician more punitive than Giuliani. As a federal prosecutor, he was credited for inventing the “perp walk,” the practice of parading arrestees before television cameras that prosecutors have notified ahead of time. He made a name for himself with high-profile prosecutions of Wall Street traders and mob bosses, but on more than a few occasions, Giuliani had to drop the charges against suspects he perp-walked. In others, the charges were later dismissed by an appellate court. Perhaps his most famous prosecution was of “junk bond king” Michael Milken. But as William L. Anderson explains in great detail here, in doing so Giuliani pioneered abusive prosecutorial practices like the expansive application of racketeering and conspiracy laws, and the seizing of all of a suspect’s assets before trial. Both are now common, and not just in cases against wealthy Wall Street barons.
From the moment of the invasion of Afghanistan in October 2001, in fact, everything the U.S. military touched in these years has turned to dust. Nations across the Greater Middle East and Africa collapsed under the weight of American interventions or those of its allies, and terror movements, one grimmer than the next, spread in a remarkably unchecked fashion. Afghanistan is now a disaster zone; Yemen, wracked by civil war, a brutal U.S.-backed Saudi air campaign, and various ascendant terror groups, is essentially no more; Iraq, at best, is a riven sectarian nation; Syria barely exists; Libya, too, is hardly a state these days; and Somalia is a set of fiefdoms and terror movements. All in all, it’s quite a record for the mightiest power on the planet, which, in a distinctly un-imperial fashion, has been unable to impose its military will or order of any sort on any state or even group, no matter where it chose to act in these years. It’s hard to think of a historical precedent for this.
A nine-year credit expansion meant to protect economic growth has prompted numerous warnings of impending financial trouble. China’s debt-to-gross domestic ratio reached 247 percent after expanding at the fastest pace among Group of 20 nations…..The adjusted loan-to-deposit ratio, which includes a range of off-balance sheet items and is an indicator of the banking system’s ability to weather stress, climbed to 80 percent as of June 30, according to S&P Global Ratings. For some smaller lenders, the ratio has already topped 100 percent, S&P estimates…Bank of Jinzhou Co.’s adjusted loan-to-deposit ratio stood at 153 percent at the end of 2015 and the lender got 43 percent of its funding from interbank borrowings last year, S&P estimates.
We reported yesterday on the telephone call between US president-elect Trump and Russian president Putin, where the current and future presidents discussed the need to set aside differences and look to more constructive future relations. With serious observers of this past year’s increasing tensions between US and Russia openly worrying about a nuclear war breaking out, with some 300,000 NATO troops placed on Russia’s border, with sanctions hurting average businesspersons on both sides, a normal person might look at the slight thaw in Cold War 2.0 as an early positive indicator of the end of the Obama Era….In a blistering statement he released today responding to the Trump/Putin telephone call, Sen. McCain condemned any efforts by President-elect Trump to find common ground with Putin. Any claim by Putin that he wants to improve relations with the US must be vigorously opposed, writes McCain
More selling in U.S. bond markets Monday pushed mortgage rates to a psychological breaking point. The average contract rate on the popular 30-year fixed mortgage hit 4 percent, according to Mortgage News Daily, a level most didn’t expect to see until the middle of next year. Rates have now moved nearly a half a percentage point higher since Donald Trump was elected president. “The situation on the ground is panicked. Damage control,” said Matthew Graham, chief operating officer of Mortgage News Daily.