another site
It “all depends on Draghi,” warned UBS’ Art Cashin early this morning… and Draghi disappointed. Historically October 2nd, Cashin notes, usually sees a rebound but payrolls may complicate that pattern (and rumors that ISIS is consolidating west of Baghdad). Stick with the drill, he advises – “stay wary, alert and very, very nimble,” as the 120-day moving average (1945 on Cash S&P) is critical…
Charts: Bloomberg
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While the Obama administration is furiously scratching its head how to write off the debt of a few hundred million Americans, so they can once again load up on debt from scratch, spend like drunken sailors, and blow up the system once more, others are already a few steps ahead, such as UK’s largest payday lender, the Wonga Group Ltd., which we learn today has written off the debt of 330,000 customers after British regulators introduced tougher rules to “protect consumers” such as Master Elliot Gomme, 20, who admits he lied to get a loan: “the 20-year-old admitted lying on his application and told Newsbeat it was “too easy” to be accepted.”
This is how wholesale debt forgiveness is done: as Bloomberg explains the Wonga agreement applies to loans that wouldn’t have been made under new tightened lending criteria and that have been in arrears for more than 30 days, the London-based company said in a statement today. The company is writing off 220 million pounds ($356 million) in loans, according to a person with knowledge of the matter, who asked not to be identified because the information in private.
“The need for change at Wonga is real and urgent,” Wonga Chairman Andy Haste said in the statement. “Our regulator is determined to improve standards in consumer credit, and I share that determination. There is much to do in order to make Wonga a sustainable and accepted business, and today’s announcement is a significant step forward in that process.”
The U.K. payday loan market is being reviewed by the Financial Conduct Authority after a government survey found providers weren’t fully compliant with standards designed to protect consumers. Wonga, CashEuroNet UK LLC and Dollar Financial U.K. Ltd. are the three largest U.K. payday lenders, according to Bloomberg Intelligence.
Wonga also said today that about 45,000 customers who are less than 30 days in arrears are being given as much as four months to repay their loans without interest and charges.
Which is great news for Master Elliot Gomme, who admits he lied to get a loan. The best news: he now doesn’t even have to repay it! Here is his story:
When Elliot Gomme needed money for a holiday, like many people he turned to payday lender Wonga.
He needed £120 and says he didn’t have a problem convincing them to lend him cash saying he was in full-time work.
But the 20-year-old admitted lying on his application and told Newsbeat it was “too easy” to be accepted.
He’s now likely to be one of 330,000 people whose debts will be written off after a ruling that Wonga lent money to people who couldn’t repay it.
“My bank couldn’t give me an overdraft or anything, and so I went to them [Wonga],” he says.
He received his money and went on holiday, but a few weeks later he says the firm started calling him and he says they were “constant”. “They were ringing me every day,” he says. “They were telling me how much I owe and that there was added interest.”
Elliot says that a few months later he was being told his debt had risen to more then £800 and it began to affect his day-to-day life. The longer it went on, the more he says he worried he would get about his situation getting out of control.
* * *
Elliot is likely to be one of those to have his loan cancelled and says it’s come as a relief. He says the amount of the debt was making him feel depressed and that he had “no idea” what he would have done if this ruling hadn’t come.
Or, as the New Normal Dostoyevsky would say: crime, and no punishment.
In short, great job Elliot: you too have now joined the endless line of banks, corporate executives, deadbeats, Obamaphone-addicts and so on, who have managed to “lie” your way to some cash, and gotten away with it with zeroh punishment.
In the meantime, all those other taxpayers, who diligently, and idiotically keep paying their taxes to afford the crony bailout funding of the entire gamut from welfare queens to bailout recipients, are (and if they aren’t they should be) wondering: “why the hell do we still keep paying the government?”
via Zero Hedge http://ift.tt/YTraMv Tyler Durden
The 2008 crisis was just a warm-up.
The 2008 crisis was a banking and equities crisis. In the simplest terms, investment banks, leveraged to the hilt with garbage mortgage derivatives, became insolvent and began to collapse.
This collapse triggered a selling panic throughout the financial system as every financial entity questioned the quality of the assets backstopping its derivatives trades. The derivative market was over $700 trillion at the time. So just about every major global bank had broad exposure to this market.
The Federal Reserve and other Central Banks dealt with this issue by cutting interest rates to zero, opening emergency lending windows to needy banks, and engaging in Quantitative Easing.
The goal was of these strategies was to instill confidence in the banking system once again. However, by trying to prop up the big banks, the Fed has created an even bigger bubble than that which existed in 2007.
I’m talking about the BOND bubble.
With interest rates at zero, banks, financial institutions, and investors began to chase yields. This meant hundreds of billions of dollars worth of capital flowing into bonds of all different levels of risk.
When money poured into bonds, the bonds rallied, pushing their yields lower. This in turn meant more capital flowing into even riskier bonds as investors, still seeking yield, had to turn to riskier investments to obtain a significant return.
The end result? The bond bubble is so massive that it’s even hard to wrap one’s head around. Consider that:
1) Bond yields for many European countries are at multi-CENTURY lows.
2) US Treasury yields have only been lower TWICE going back to 1790.
3) Japan’s Government bonds now have negative yields.
We all know that most sovereign nations are bankrupt. But the “flight to yield” is so powerful in the system today that yields are negative in real terms. This is absolutely extraordinary.
When this bubble bursts, the REAL crisis, the crisis to which 2008 was just a warm-up, will begin. The global bond market is $100 TRILLION in size. That’s nearly TWO TIMES larger than the global stock market. And bear in mind that the only reason stocks are so high is because investors are piling into them to seek out returns.
So when this bubble bursts, it’s going to make the 2008 crisis look like a picnic.
If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.
You can pick up a FREE copy at:
Best Regards
Graham Summers
Phoenix Capital Research
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Public sector unions in
California have used their enormous clout to protect their plum
pensions, making it nearly impossible for municipal governments to
scale back benefits in any way shape or form (even for employees
they hadn’t even hired yet). Even as California cities file for
bankruptcy, unable to pay off various debtors, the California
Public Employees’ Retirement System (CalPERS) has argued that debts
owed to them are special and off the table. They cannot be reduced
or severed, even in the case of bankruptcy.
And then yesterday U.S. Bankruptcy Judge Christopher Klein’s
told CalPERS
it was wrong. In the case of a bankrupt city, pensions can be
cut just like any other debt. That’s what the bankruptcy process is
for. As The Sacramento Bee explains, the ruling came
because a debtor in the bankruptcy of the city of Stockton,
Franklin Templeton Investments, is upset that it’s only going to
get a ninth of what it’s due and wants a better deal, and that
might come from money going to pensions.
It’s important to note that this ruling doesn’t require Stockton
to cut pensions. Their current bankruptcy reorganization plan
maintains the status quo there, to the tune of $29 million a year.
Klein will rule on this plan at the end of the month. Certainly,
though, Klein’s ruling should be seen as a warning to Stockton that
he might not allow the city to favor some debtors over the others
to the extent that it’s doing with CalPERS.
Reason contributor Steven Greenhut has written extensively about
Stockton’s financial woes, both
here and at the San Diego Union-Tribune. He looked
over Stockton’s plan and noted that a failure to rein in pension
costs as part of its recovery could put the city back into
insolvency within four years. Read more
here.
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So, ECB, I’ve got this asset-backed security you might be interested in. DM me please. http://ift.tt/1BBAiBM
— Pedro da Costa (@pdacosta) October 2, 2014
via Zero Hedge http://ift.tt/1rPjYgb Tyler Durden
Surprised? Following last month’s 10.5% record rise in Factory Orders, August just printed -10.1% MoM – the biggest drop on record. While some give-back was excpected this is notably worse than the expected drop of -9.5% (the biggest miss since January 2014). Worse still durables orders cratered 18.4% (and non-durables dropped 0.4%) MoM and ex-transports dropped 0.1% – the 3rd drop in the last 4 months. So – in summary – last month saw a $56 billion rise and this month saw a $55.8 billion drop – ‘economic growth’ roundtripped… as inventories rose 0.1% and shipments fell 1%.
as Transportation collapsed…
Charts: bloomberg
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As Mario Draghi promised, here are the full details of the ECB’s asset-backed securities and covered bond purchase programs, as prepped by Blackrock.
ECB announces operational details of asset-backed securities and covered bond purchase programmes
- Programmes will last at least two years
- Will enhance transmission of monetary policy, support provision of credit to the euro area economy and, as a result, provide further monetary policy accommodation
- Eurosystem collateral framework is guiding principle for eligibility of assets for purchase
- Asset purchases to start in fourth quarter 2014, starting with covered bonds in second-half of October
The Governing Council of the European Central Bank (ECB) today agreed key details regarding the operation of its new programmes to buy simple and transparent asset-backed securities (ABSs) and a broad portfolio of euro-denominated covered bonds. Together with the targeted longer-term refinancing operations, the purchase programmes will further enhance the transmission of monetary policy. They will facilitate credit provision to the euro area economy, generate positive spill-overs to other markets and, as a result, ease the ECB’s monetary policy stance. These measures will have a sizeable impact on the Eurosystem’s balance sheet and will contribute to a return of inflation rates to levels closer to 2%.
The Eurosystem’s collateral framework – the rules that lay out which assets are acceptable as collateral for monetary policy credit operations – will be the guiding principle for deciding the eligibility of assets to be bought under the ABS purchase programme (ABSPP) and covered bond purchase programme (CBPP3). There will be some adjustments to take into account the difference between accepting assets as collateral and buying assets outright. To ensure that the programmes can include the whole euro area, ABSs and covered bonds from Greece and Cyprus that are currently not eligible as collateral for monetary policy operations will be subject to specific rules with risk-mitigating measures.
The two programmes will last for at least two years and are likely to have a stimulating effect on issuance. Asset purchases will commence in the fourth quarter of 2014, starting with covered bonds in the second half of October. The ABSPP will start after external service providers have been selected, following an ongoing procurement process.
Further technical details on the ABSPP are provided in Annex 1 of this press release and on CBPP3 in Annex 2.
Annex 1: Asset-Backed Securities Purchase Programme (ABSPP)
Annex 2: Covered Bond Purchase Programme (CBPP3)
* * *
Of course, none of the noted “spillovers” will ever take place, and instead we will merely get more of this type of headline: “Bond Investors Gifted Best ABS Returns in 20 Months by ECB“
via Zero Hedge http://ift.tt/1rPjV3U Tyler Durden
As Mario Draghi promised, here are the full details of the ECB’s asset-backed securities and covered bond purchase programs, as prepped by Blackrock.
ECB announces operational details of asset-backed securities and covered bond purchase programmes
- Programmes will last at least two years
- Will enhance transmission of monetary policy, support provision of credit to the euro area economy and, as a result, provide further monetary policy accommodation
- Eurosystem collateral framework is guiding principle for eligibility of assets for purchase
- Asset purchases to start in fourth quarter 2014, starting with covered bonds in second-half of October
The Governing Council of the European Central Bank (ECB) today agreed key details regarding the operation of its new programmes to buy simple and transparent asset-backed securities (ABSs) and a broad portfolio of euro-denominated covered bonds. Together with the targeted longer-term refinancing operations, the purchase programmes will further enhance the transmission of monetary policy. They will facilitate credit provision to the euro area economy, generate positive spill-overs to other markets and, as a result, ease the ECB’s monetary policy stance. These measures will have a sizeable impact on the Eurosystem’s balance sheet and will contribute to a return of inflation rates to levels closer to 2%.
The Eurosystem’s collateral framework – the rules that lay out which assets are acceptable as collateral for monetary policy credit operations – will be the guiding principle for deciding the eligibility of assets to be bought under the ABS purchase programme (ABSPP) and covered bond purchase programme (CBPP3). There will be some adjustments to take into account the difference between accepting assets as collateral and buying assets outright. To ensure that the programmes can include the whole euro area, ABSs and covered bonds from Greece and Cyprus that are currently not eligible as collateral for monetary policy operations will be subject to specific rules with risk-mitigating measures.
The two programmes will last for at least two years and are likely to have a stimulating effect on issuance. Asset purchases will commence in the fourth quarter of 2014, starting with covered bonds in the second half of October. The ABSPP will start after external service providers have been selected, following an ongoing procurement process.
Further technical details on the ABSPP are provided in Annex 1 of this press release and on CBPP3 in Annex 2.
Annex 1: Asset-Backed Securities Purchase Programme (ABSPP)
Annex 2: Covered Bond Purchase Programme (CBPP3)
* * *
Of course, none of the noted “spillovers” will ever take place, and instead we will merely get more of this type of headline: “Bond Investors Gifted Best ABS Returns in 20 Months by ECB“
via Zero Hedge http://ift.tt/1rPjV3U Tyler Durden
By forcing Americans to buy
their products, President Obama’s signature Affordable Care Act is
widely seen as a
winning proposition for health insurance companies. Conscripted
customers! What more could a well-connected business want? But the
law’s complex rules require insurers to cover the costs imposed by
older and ailing customers with the payments from young and healthy
customers. Potentially, a company could end up with a
disproportionate ratio of sick customers drawn by the promise of
subsidized coverage—drowning the seemingly winning proposition in
red ink. If that happens, says the
Government Accountability Office (GAO), the administration
can’t bail out insurers without permission from Congress.
The GAO decision comes in response to a congressional inquiry
about the administration’s “risk corridors” (officially, the
premium stabilization programs) scheme, which would subsidize
unprofitable plans by transferring money to them from those
actually in the black under Obamacare. The risk corridors plan is a
temporary measure intended to entice insurers to offer Obamacare
coverage while the program gets on its feet. The assumption is that
after 2016 plans will balance out costs and benefits because of
those conscripted customers.
But it’s not enough for a statute to require that an agency make
a payment—the funds have to be legally available. As the GAO
decision puts it, “At issue here is whether appropriations are
available to the Secretary of HHS to make the payments specified”
under the law. The GAO says they’re not.
The problem for the administration is that collecting money and
disbursing it through government agencies requires budgetary
authorization. That authorization can only come from Congress, and
must be authorized in each annual budget, year after year.
Language appropriating funds for “other responsibilities of the
Centers for Medicare and Medicaid Services” would need to be
included in the CMS PM appropriation for FY 2015 in order for it to
be available for payments to qualified health plans under
section 1342(b)(1). Similarly, language appropriating “such
sums as may be collected from authorized user fees” would need to
be included in the CMS PM appropriation for FY 2015 in order for
any amounts CMS collects in FY 2015 pursuant to
section 1342(b)(2) to be available to CMS for making the
payments pursuant to section 1342(b)(1)
So, if Congress doesn’t go along with the idea of gathering
money from profitable health exchange insurers and handing it to
unprofitable ones, the risk corridors idea is a non-starter.
Of course, Congress may authorize the payments because it
doesn’t have the backbone for another fight. That wouldn’t be a
shock. Or, the administration could ignore the GAO and use
executive authority to make yet another unilateral change to the
president’s health plan. That also wouldn’t be a shock.
But, if nothing else, the GAO decision is further evidence of
the slapdash crafting of the Affordable Care Act, even when it
comes to the legislative duct tape intended to hold it
together.
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Extending current programs (i.e. no imminent Sovereign QE)… may not spend the entire EUR1 trillion on current programs… no rate change… Markets are not happy. EUR is surging, European stocks are dropping, European peripheral bond risk is rising. Treasuries are bid and US equities have dropped to yesterday’s lows.
EURUSD not happy.. (and remember everyone and their mom is on one side of that trade)
European Stocks and Bonds not happy…
US equities (S&P 500) back at yesterday’s lows…
Charts: Bloomberg
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