Ecuador, Egypt, Pakistan, Venezuela, Belize, Cuba, Cyprus, Greece, Jamaica and Ukraine are all on the verge of a default, according to Moody’s ratings.
Argentina defaulted for the second time in 12 years after hopes for a midnight deal with holdout creditors were dashed, setting up stock and bond prices for declines on Thursday and raising chances a recession could worsen this year.
After a long legal battle with hedge funds that rejected Argentina’s debt restructuring following its 2002 default, Latin America’s third-biggest economy failed to strike a deal in time to meet a midnight deadline for a coupon payment on exchange bonds.
France’s finance minister sends tremors through European capitals with a defiant warning that his country would no longer try to meet deficit targets
Eurozone strategy is in tatters after economic recovery ground to a halt across the region and France demanded a radical shift in policy, warning that austerity overkill is driving Europe into a depression.
Growth slumped to zero in the second quarter, with Germany contracting by 0.2pc and France once again stuck at zero. Italy is already in a triple-dip recession.
Yields on 10-year German Bunds fell below 1pc for the first time in history, beneath levels seen during the most extreme episodes of deflation in the 19th century. French yields also touch record lows. Much of the eurozone is replicating the pattern seen in Japan as it slid into a deflation trap in the late 1990s.
It is unclear whether tumbling yields are primarily a warning signal of stagnation ahead or a bet by investors that the European Central Bank will soon be forced to launch quantitative easing, buying government bonds across the board.
Data from Germany, Italy and Portugal put pressure on ECB to act
Portugal has crashed into deep deflation and Italy’s inflation rate has fallen to zero as the eurozone flirts with recession, automatically pushing these countries further towards a debt compound spiral.
The slide comes amid signs of a deepening slowdown in the eurozone core, with even Germany flirting with possible recession. Germany’s ZEW index of investor confidence plunged from 27.1 to 8.6 in July, the sharpest fall since June 2012, during the European sovereign debt crisis. “The European Central Bank has to act now,” said Andrew Roberts, credit chief at RBS. Continue reading
Today David Stockman warned King World News that investors need to brace themselves for historic and worldwide financial destruction. KWN takes Stockman’s warnings very seriously because he is the man former President Reagan called on in 1981, during that crisis, to become Director of the Office of Management and Budget and help save the United States from collapse. Below is what Stockman, author of the website contracorner, had to say in his powerful interview.
Eric King: “David, the man who is counsel to big money around the world, Michael Belkin, just spoke with KWN and issued a dire warning for the financial markets. I just wondered how you see things at this point with the Dow recently tumbling and everything that is happening across the globe? What should we expect?”
Stockman: “Well, the watchword at this point is stay out of harm’s way. We are headed into a perfect storm of policy failures. This is not simply a failure by the Fed, which has inflated this massive bubble and painted itself into a corner with no clue how to get out, but we are also seeing an absolute failure of American world dominance…
“Our foreign policy is collapsing everywhere and yet the Washington war party keeps wanting to do more of the same. This confrontation with Putin is utterly out of hand and unnecessary. Now we have a trade war going that is going to ricochet through an already fragile European economy. Continue reading
To get economy moving again, policymakers should go ahead with quantitative easing to boost liquidity and allow the euro to weaken
The euro zone’s “softly, softly” approach to the financial crisis is not working. The economy is sinking into deflation, dragged down by a zombie banking system and spiralling government debt. It is slipping back towards recession. A future break-up of the euro zone remains a potent threat.
Policymakers can ill afford to keep kicking the can down the road. The bailout earlier this month of Portuguese lender Banco Espirito Santo was a sharp reminder to investors the euro zone was not out of the woods by a long stretch. Continue reading
(CNSNews.com) – “Social Security is insolvent,” Boston University economics professor Laurence Kotlikoff told the House Subcommittee on Social Security at a hearing on Capitol Hill Tuesday. “And it’s not bankrupt in 30 years, or 20 years, or 10 years. It’s bankrupt today.”
“This is not my opinion. This is the only conclusion one can draw from Table IVB6 of the 2013 Social Security Trustee’s Report.”
“This table reports that Social Security has a $23 trillion fiscal gap measured over the infinite horizon,” noted Kotlikoff, who also served as a senior economist on President Ronald Reagan’s Council of Economic Advisers.
“Twenty-three trillion dollars is 32 percent of the present value, also measured over the infinite horizon, of Social Security’s future revenues. Hence, Social Security is 32 percent underfinanced, which means it is in significantly worse financial shape than Detroit’s two pension funds taken together.” Continue reading
Default is a major disaster for a government, but not much will happen right away now that Standard & Poor’s has declared Argentina to be in “selective default.”
S&P (MHFI) took the action today after Argentina’s talks with holdout creditors continued past the end of the 30-day grace period for a $539 million bond payment. Continue reading
Another horrific stock market crash is coming, and the next bust will be “unlike any other” we have seen.
That’s the message from Jeremy Grantham, co-founder and chief investment strategist of GMO, a Boston-based firm with $117 billion in assets under management.
Grantham pulls no punches when assigning responsibility for the coming financial carnage. In a recent interview with The New York Times, he calls Federal Reserve Chair Janet Yellen “ignorant” and says the Federal Reserve all but killed the economic recovery.
Here’s a quick question for you. What do the following years have in common:
1853, 1906, 1929, 1969, 1999
Those were the peaks of the five massive, generational stock-market bubbles in U.S. history.
And, according to a new research report, we are back there again. Continue reading
The International Monetary Fund has issued a blistering attack on Europe’s authorities for allowing the eurozone to remain stuck in a low-growth trap, warning that they may have to print money with “full conviction” to head off deflation.
“Inflation has been too low for too long. A persistent failure to meet the inflation target could undermine central bank credibility,” said the IMF with remarkable bluntness in its annual health report on the currency bloc.
Based on historical patterns and the alarming state of our current monetary system, Mike believes the fiat US dollar is in its last years as a viable currency. He sees its replacement as inevitable in the near term — as in by or before the end of the decade:
All of this is converging with the crazy experiments the Federal Reserve has done.
I absolutely believe that there are economic consequences to this that are inescapable. The Fed is not just in a box; a trap has been set. And before the end of this decade, if there is still a US Dollar around it will not be this US Dollar. It will be a dollar that is tied to a very different monetary system. Continue reading
Forget terrorism. The Pentagon’s best chance to field the best military with the smaller budget imposed by sequestration may just lie in preparing for nuclear war with Russia and China.
According to a new study, United States defense leaders should focus more on a “great power conflict” reflective of a newly aggressive Russia and rapidly modernizing China. Doing so would force the Defense Department to modernize its existing force and invest significantly in maintaining technological advantages at the expense of unlikely-to-be used ships, aircraft and soldiers. Among the arsenal the U.S. should keep: the full triad of bombers, submarines and intercontinental ballistic missiles meant to deter or carry out nuclear warfare.
While the space between Syria and Iraq commands headlines this month, it’s Moscow and Beijing that leads researchers to offer an unexpectedly “go big or go home” proposition for the U.S. military. The route offered on Wednesday by budget experts at the Center for Strategic and International Studies, or CSIS, calls for moving $10 billion from the procurement budget and “force structure,” (military jargon for the number of people in the military and all that is required to support them, roughly) and giving those funds to investments. The CSIS plan would increase the number of attack submarines at sea, significantly ramp-up surveillance in both air and space, and emphasize select ground troops like special operations forces and heavy infantry. The costs would be absorbed by a reduction in aircraft carriers, F-35 Joint Strike Fighters and the Air Force’s shorter-range aircraft. Continue reading
Zimbabwe’s President Robert Mugabe has called on the country’s remaining white farmers to cede land to black people.
“We say no to whites owning our land and they should go,” Mr Mugabe told his supporters at a rally.
The white farmers union said it was regrettable that racial tensions were flaring up again. Continue reading
On June 10th, Sergey Glaziev, Putin’s economy advisor published an article outlining the need to establish an international alliance of countries willing to get rid of the dollar in international trade and refrain from using dollars in their currency reserves. The ultimate goal would be to break the Washington’s money printing machine that is feeding its military-industrial complex and giving the US ample possibilities to spread chaos across the globe, fueling the civil wars in Libya, Iraq, Syria and Ukraine. Glaziev’s critics believe that such an alliance would be difficult to establish and that creating a non-dollar-based global financial system would be extremely challenging from a technical point of view. However, in her discussion with Vladimir Putin, the head of the Russian central bank unveiled an elegant technical solution for this problem and left a clear hint regarding the members of the anti-dollar alliance that is being created by the efforts of Moscow and Beijing: Continue reading
The United States could soon become a large-scale Spain or Greece, teetering on the edge of financial ruin.
According to Trump, the United States is no longer a rich country. “When you’re not rich, you have to go out and borrow money. We’re borrowing from the Chinese and others. We’re up to $16 trillion in debt.”
He goes on to point out that the downgrade of U.S. debt is inevitable.
“We are going up to $16 trillion [in debt] very soon, and it’s going to be a lot higher than that before he gets finished. When you have [debt] in the $21-$22 trillion, you are talking about a downgrade no matter how you cut it.” Continue reading