Moody’s: U.S. can forget about Triple-A rating if it violates debt ceiling

The Treasury is running out of time and money. [Moody’s]

 

The U.S. will lose its Triple-A rating if it violates the debt ceiling, even if it quickly acts to meet its obligations, a rating agency said Tuesday.

The U.S. is facing a looming deadline to raise the debt ceiling, and there’s concern that despite the insistence of figures including Treasury Secretary Steven Mnuchin and House Speaker Paul Ryan, it won’t get lifted in time. The Treasury has estimated it will reach the debt limit by Sept. 29. Continue reading

S&P cuts UK credit rating on Brexit fears

Whether this is case of punishment for exiting or actual concern remains to be seen, although the former is quite plausible. The S&P has in the past been used as an economic warfare tool by the American government to bend or break nations to its will.

See the source link for the video.

 

Standard & Poor’s on Monday downgraded the United Kingdom’s sovereign credit rating by two notches, from “AAA” to “AA,” citing last week’s referendum that approved a British exit from the European Union.

“In our opinion, this outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the U.K. We have reassessed our view of the U.K.’s institutional assessment and now no longer consider it a strength in our assessment of the rating,” the ratings agency said in a news release. Continue reading

Illinois on the Fiscal Brink

Illinois—a state that has long embraced progressive fiscal policies—has moved one step closer to the financial abyss. Last week, Moody’s Investors Service issued the jarring announcement that it was downgrading Illinois’s general obligations bonds to Baa2 from Baa1, which is just two levels above junk bond status. The next day, Standard & Poor’s followed suit by lowering its rating to BBB+, or three levels above junk bond status. In one important sense, this is really not news at all, since Illinois had thirteen bond downgrades under its previous governor, Patrick Quinn, even though it passed a temporary tax increase that collected an additional $31 billion in revenues between 2011 and 2015, 90 percent of which was funneled into pension payments for public employees.

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Eurozone is ‘flying with one engine’ Disaster looms for EU, warns chief economist

EUROPE’s spluttering economy is equivalent to a plane “flying on one engine” a leading rating agency has warned, as it slashed growth projections for the bloc.

The wind has been knocked out of the finances of the single-market this year amid fears over a global crisis triggered by China’s slowdown and low oil prices, according to Standard and Poors (S&P).

Estimates from the agency are the eurozone economy will now grow just 1.5 per cent this year, down from a previous forecast at the end of last year of 1.8 per cent. Continue reading

Big banks brace for oil loans to implode

Big banks are cringing as crude oil is crumbling.

Now that the oil glut has caused prices to crash below $30 a barrel, turmoil is rippling through the energy industry and souring many of those loans. Dozens of oil companies have gone bankrupt and the ones that haven’t are feeling enough financial stress to slash spending and cut tens of thousands of jobs.

Three of America’s biggest banks warned last week that oil prices will continue to create headaches on Wall Street — especially if doomsday scenarios of $20 or even $10 oil play out. Continue reading

When Scary Headlines Don’t Scare – Climbing The Wall Of Complacency

From “Scary Headlines Don’t Deter Investors” by Bernard Condon, originally posted by Associated Press,

The U.S. economy is growing at a painfully slow pace. Greece still threatens the euro. Chinese stocks have just pulled out of a frightening free-fall. Big companies in the U.S. are struggling to boost profits.

You might think it’s been a rough year for investors, but it’s mostly been a smooth ride – and a profitable one.

Money is flowing into bonds issued by the riskiest of companies, home prices in some big U.S. cities are soaring, shares of technology companies are still near all-time highs – even after a drop this week – and auction houses are enjoying record sales of art. A Picasso painting sold at Christie’s for $179 million in May, the highest ever for an artwork at auction, prompting one dealer to exclaim, “I don’t really see an end to it.” Continue reading

Puerto Rico hurtles toward default

Government could run out of cash in 3 months

A severe liquidity crisis that threatens to shut down Puerto Rico’s government is making life difficult for U.S. municipal bond investors.

The island territory has been labeled “America’s Greece.” Its $73 billion in bonds trading in the U.S. municipal-bond market carry junk ratings and are trading at record-high yields.

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Greece Changes Strategy: No Longer Demands Debt Write Off, Ask For Debt Exchange Instead

Guess who blinked first.

The ECB’s February 28th warning shot across the bow from the Troika, which is fully stacked with Germany’s Fourth Reich, sent a clear message to fall back in line. Apparently the current Communist Greek government wants to hold on to its power and not let the situation descend into utter chaos. What they’re probably waiting on is to see what options they have with their friends in Russia in hopes of throwing them a line.

Up until now, Berlin and Washington looked pretty solid as it overturned and took Ukraine away from Moscow’s sphere of influence. Now Russia struck back and has a piece of the EU.

 

Over a week after the new Greek government came to power, it has presented its first actual proposal of how it hopes to negotiate with Europe that does not involve the infamous “debt write off”, which as both Germany and the ECB have made clear, is a non-starter as it impairs the ECB’s balance sheet and leads to a loss of “faith” in the money printer, the legacy monetary system and so on. So instead of yet another debt restructuring, the FT reports that Yanis Varoufakis “would no longer call for a headline write-off of Greece’s €315bn foreign debt. Rather it would request a “menu of debt swaps” to ease the burden, including two types of new bonds.” Actually he still does, only he is not calling it as such. Continue reading

Russian Central Bank voids Standard & Poor’s, Moody’s, Fitch ratings

What happens when a nation in retaliation refuses to recognize a universally accepted standard ratings agency? Stay tuned. Pandora’s box has been opened on yet another front. Full-blown economic warfare is in full motion.

 

The Central Bank of Russia will no longer use credit ratings from Standard & Poor’s, Fitch, or Moody’s that were assigned after March 1, 2014.

All credit ratings given to Russian companies and banks will now be at the discretion of the Board of Directors of the Bank, according to a press statement Monday. The regulator will assess whether or not the ratings made after March are accurate.

“According to the Bank of Russia Board of Directors’ decision, the rating date for credit institutions and their issued financial instruments, including securities, to implement Bank of Russia regulations, shall be 1 March 2014; as for other entities, listed in the ordinance, and their issued securities, this rating date shall be 1 December 2014,” the press release said. Continue reading

What Happens Now That Argentina Is in ‘Selective Default’

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

Fitch warns it may lower U.S. credit rating

Fitch has placed its “AAA” U.S. credit rating on “rating watch negative,” a step that would precede an actual downgrade. The agency said it expects to conclude its review within the next six months. The firm says it expects the debt limit will be raised soon, but adds, “the political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default.” Continue reading

France Is Heading For The Biggest Economic Train Wreck In Europe

“The emotional side of me tends to imagine France, like the princess in the fairy stories or the Madonna in the frescoes, as dedicated to an exalted and exceptional destiny. Instinctively I have the feeling that Providence has created her either for complete successes or for exemplary misfortunes. Our country, as it is, surrounded by the others as they are, must aim high and hold itself straight, on pain of mortal danger. In short, to my mind, France cannot be France without greatness.

– Charles de Gaulle, from his memoirs

Recently there have been a spate of horrific train wrecks in the news. Almost inevitably we find out there was human error involved. Almost four years ago I began writing about the coming train wreck that was Europe and specifically Greece. It was clear from the numbers that Greece would have to default, and I thought at the time that Portugal would not be too far behind. Spain and Italy clearly needed massive restructuring. Part of the problem I highlighted was the significant imbalance between exports and imports in all of the above countries. Continue reading

Spanish unemployment hits record 5.64 million

Believe that’s bad? America itself is not far off. In the United States we’re looking at 14.5% total unemployment. This also doesn’t account for “99%’ers” and various other factors after a revision of what statistics are taken into account.

The number of unemployed people reached 5,639,500 at the end of March, with the unemployment rate hitting 24.4%, the national statistics agency said.

The figures came hours after rating agency Standard & Poor’s downgraded Spanish sovereign debt.

Full article: Spanish unemployment hits record 5.64 million (BBC News)