Showing posts from January 17, 2016

Junk Bonds Go Sour, but the Question Is How Sour

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[On the dubious prospects of high-yield bond funds: their pricing models still depend dangerously on the Confidence Fairy. "In energy, bond valuations are pricing in an uplift in underlying commodities... most high-yield issuers' business models 'don’t work with oil in the $20-$40 range.' In this environment, even energy bonds that are trading at distressed levels — 20 cents to 30 cents on the dollar — could be worth 'close to zero in reorganization.'"  *RON*]
By Gretchen Morgenson, New York Times, 15 January 2016

The tide has definitely turned against investors in high-yield debt, better known as junk bonds.

Market indexes are down approximately 9 percent from their highs of last year. Plummeting prices for oil and other commodities have done most of the damage, but the decision last month by a well-known mutual fund, Third Avenue Focused Credit, to halt redemptions, has also spooked the market.

Is the worst over in …

The Subprime Specter Returns: High Finance and the Growth of High-Risk Consumer Debt

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[All the same greedy subprime lending errors that were made in the housing sector are being repeated, with few in government so much as raising an eyebrow, in the areas of auto, credit card, and personal loans - all of which are, you guessed it, also being turned into toxic financial instruments. *RON*]

By Jennifer Taub, New Labor Forum / TruthOut, 17 January 2016

With more than half of American consumers classified as having subprime credit scores,[1] it is no surprise that subprime lending is once again on the rise. Making expensive loans to the underemployed and overextended may help fuel economic growth[2]; however, it is neither just nor sustainable. Dependence on higher-risk subprime loans to boost spending seems to be a symptom of larger problems - low wages and income volatility. With nearly all Americans, other than the ultra-wealthy living paycheck to paycheck,[3] families have too little savings, if any, to cushion downturns.[4] It is…

Why are we looking on helplessly as markets crash all over the world?

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["The imminent collapse of the Chinese Ponzi-scheme economy shows that we need to bring control to the international economy." I agree with what he says but I'm finding it hard to be optimistic today for some reason - hopefully my outlook will bounce back soon! :-) *RON*]

Will Hutton, The Guardian, 17 January 2016
There has always been a tension at the heart of capitalism. Although it is the best wealth-creating mechanism we’ve made, it can’t be left to its own devices. Its self-regulating properties, contrary to the efforts of generations of economists trying to prove otherwise, are weak.

It needs embedded countervailing power – effective trade unions, law and public action – to keep it honest and sustain the demand off which it feeds. Above all, it needs an ordered international framework of law, finance and trade in which it can do deals and business. It certainly can’t invent one itself. The mayhem in the financial markets over t…

Dark Money review: Nazi oil, the Koch brothers and a rightwing revolution

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[This is precisely the kind of crony capitalism that the West routinely deplores in China and Southeast Asia. New Yorker writer Jane Mayer examines the origins, rise and dominance of a billionaire class to whom money is no object when it comes to buying power. When you read their biographies, it's interesting to not how similarly fanatical the upbringing and the fathers of the Koch brothers and Benjamin Netanyahu were. *RON*]
Charles Kaiser, The Guardian, 17 January 2016
Lots of American industrialists have skeletons in the family closet. Charles and David Koch, however, are in a league of their own.

Israel licks wounds as Iran sanctions end, looks to future U.S. aid

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[Nothing unpredictable here from Bibi. Netanyahu's face seems to say, "That's MY aid!" For some background, see: The Iran Nuclear Deal – A Simple Guide*RON*]

By Dan Williams, Reuters, 17 January 2016

Israel bristled on Sunday at the lifting of international sanctions on Iran and vowed to flag up any violations of its arch-foe's nuclear restrictions while drawing on U.S. defense aid to prepare for a possible military face-off in the future.

The International Atomic Energy Agency on Saturday ruled Iran had abided by last July's deal with world powers curbing its nuclear program, spelling a windfall in sanctions relief. A parallel Iranian-U.S. prisoner exchange, devised in secrecy, drove home the adversaries' desire to reengage diplomatically.

The developments put paid to years of intensive Israeli lobbying for more comprehensive curbs on Tehran - a campaign that strained relations between Prime Minister Benjamin Net…

Imam arrested after 'blasphemer' teen cuts off hand

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[Parents of 15-year-old boy in a Pakistan village proud that he cut off his hand after hearing wrongly in the mosque. The depth of the ignorance is abysmal, but I think the Pakistani government is correct in trying to control the imams, who exert such a powerful influence on such impressionable minds. *RON*]

17 Jan 2016 12:24 GMT | Pakistan, Religion, Asia

Pakistani police have arrested the imam of a mosque for inciting violence after a 15-year-old boy, who was told by the religious leader that he was a blasphemer, went home and cut off his own hand.

Shabbir Ahmed was delivering a sermon at a village mosque in the east of Pakistan's Punjab province when he told the gathering those who love the Prophet Mohammad always say their prayers before asking who, among the crowd, had stopped praying and did not love the prophet.

Local police chief Nausher Ahmed told Reuters news agency that Mohammad Anwar, mishearing the question, raised his hand. The i…

Three freed American prisoners leave Iran as Rouhani hails nuclear deal

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[It's unquestionably good that these 3 people were released. Balanced against the rest of this week's headlines, though, it's hard to be optimistic. Burkina Faso hotel attack leaves 6 Canadians from Quebec dead: at least 28 people from 18 countries die in the attack on the Splendid HotelIslamic State kidnaps 400 civilians in Syrian city of Deir al-Zor: monitorAt least 13 killed after terror attack at Afghan politician's homeLord's Resistance Army kidnaps dozens in Central African RepublicA growing gang of Islamic State supporters is taking root in the Philippines; and Malaysia minister warns tourist areas being targeted. *RON*]

Bozorgmehr Sharafedin and Lesley Wroughton, Reuters / Globe & Mail, 17 January 2016

Three Iranian-Americans left Tehran on Sunday under a prisoner swap following the lifting of sanctions on Iran that is likely to thaw ties further with the United States as Tehran emerges from years of inter…

U.S. Radically Changes Its Story of the Boats in Iranian Waters: to an Even More Suspicious Version

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[Very illustrative of the "Jump? How high?" mentality among the US mainstream media. *RON*]

Glenn Greenwald, The Intercept, 15 January 2016
When news first broke of the detention of two U.S. ships in Iranian territorial waters, the U.S. media — aside from depicting it as an act of Iranian aggression — uncritically cited the U.S. government’s explanation for what happened. One of the boats, we were told, experienced “mechanical failure” and thus “inadvertently drifted” into Iranian waters. On CBS News, Joe Biden told Charlie Rose, “One of the boats had engine failure, drifted into Iranian waters.”

Provided their government script, U.S. media outlets repeatedly cited these phrases — “mechanical failure” and “inadvertently drifted” and “boat in distress” — like some sort of hypnotic mantra. Here’s Eli Lake of Bloomberg News explaining yesterday why this was all Iran’s fault:
Iran’s handling of the situation violated international norms. … T…