Category: zerohedge

Having entered the trader vernacular, it was only a matter of time before a car with a “BTFD” license plate emerged. And inevitably enough, as a reader points out, the following license plate was photographed yesterday on Clark Street in the Lincoln Park area of Chicago. 

 

Considering the plate was spotted on a 1 Series, we can only imagine the “D” wasn’t all that big: perhaps someone needs to advise Ken Griffedn to use this all too appropriate name for his next yacht.

Car notwithstanding, at least the driver (and anyone stuck behind him) will never forget the only rule one needs to trade this market.

via http://ift.tt/1PBlkJ8 Tyler Durden

Donald Trump is polarizing enough for most adults, but it appears The Donald polarizes 9-year olds as well.

After attending a rally and meeting Donald Trump, 9-year old Logan Autry was proudly wearing is newly signed hat bearing the campaign’s slogan “Make America Great Again” around his school (as is allowed outside of the classroom), but after a while, students started to pick at him for wearing the hat…

“They were saying that he’s stupid, they were saying stuff like that. I had to explain to them what Donald Trump was actually doing.” Logan said of the other children.

Instead of actually teaching the other students self-discipline and acceptance of others, school officials at Powers-Ginsburg Elementary just decided to be lazy and have Logan remove the hat.

“They told me to take my hat off because it brings negative emotions to the other children who don’t like him. I still said no I’m not taking it off, then the principal told me to take it off.” Autry said.

In a statement, the district said it tries to foster an environment that gives students the opportunity for “robust conversations of diversity and thoughts” – except when it comes to wearing Trump hats apparently, those are the exception to diversity and thought.

“We are proud that in this case, our school achieved that goal by allowing the student to wear his hat for several statements. However, it is also our responsibility to take precautions when the discourse begins to impact our school climate and interrupt school operations” the district concluded.

Logan’s Uncle said “they should be able to let kids freely express themselves without the fear of beat up, or harassed, or bullied.” We agree. And we’re curious to know whether or not wearing a Hillary Or Bernie hat would have meant Logan could continue wearing the hat freely for as long as he wanted. And in seeing that the school took the complete easy way out of the situation by not actually doing their jobs, we hope that the children being “taught” by those at Powers-Ginsburg Elementary find our article “7 Harsh Realities Of Life Millennials Need To Understand” before it’s too late and they find themselves here:

via http://ift.tt/1PBeKlI Tyler Durden

For those who have been forced to trade the market, or provide trading recommendations, the past few months have not been kind: we have seen several instances in recent weeks where a trader lost it, where a strategist – one as prominent as SocGen’s Albert Edwards – blew up and admitted “I’m Not Really Sure How Much More Of This I Can Take“, and even a central banker went off the rails saying he and his peers are “magic people.”

Today it is the turn of one of the more prominent (and bearish) sellside high yield analysts, BofA’s Michael Contopoulos, to join the bandwagon of those driven to near insanity by the Fed, something he himself admits in a note titled “cycle not acting its age as central banks create fantasy-land.”

The HY analyst says that while his bearish stance has gotten less pronounced in the last week as “Q1 earnings data was better than it had been in 6 quarters,” he adds that his “bearish stance most definitely still remains both on valuations and our disposition about the trajectory of corporate and economic data. Long term we continue to find it very difficult to see a path for high yield corporates to grow into their balance sheets.” 

That’s the fundamentals and they scream sell. On the other hand, Contopoulos adds that fundamentals do not matter when faced with activist central banks who are intent on inflating the biggest debt bubble ever, one which even Goldman warned over the weekend would lead to as much as $2.4 trillion in MTM losses if rates rise by just 100 bps: “at the same time, we fully recognize and appreciate that low global yields and the need to stay invested creates a positive technical that is difficult to fight against.”

However, it is return to the fundamentals, this precipitated his reaction: “But fight we do. Days like last Friday admittedly challenge our conviction, though. Oil down nearly 1%, and a payroll report that suggests our fears of a tightening labor market coupled with poor productivity, slowly rising wages and lackluster corporate earnings will lead to job losses later this year or early next year seem more than justified; and yet yields on our US HY index fell 3bps.”

What is provoking the most confusion?

What Perhaps the market has for now decided to overlook the following alarming statistic- during the heat of the early year selloff there were 21 important indicators. Of those 21 indicators, 16 of them are the same or worse today (Table 1). Interestingly, 3 of the indicators that are better today are related to the manufacturing sector (Factory Orders, Durable Goods and ISM Manufacturing). Personal Spending is also modestly improved (though Personal Consumption is worse) and New Home Sales is modestly improved (Existing Home Sales is much worse). With manufacturing still struggling, despite slightly better data, and a weaker consumer, we would argue that the macro landscape is as bad or worse than when investors were forecasting imminent recession (we were not in that camp).

 

That’s just the start, because when an analyst says “we find it incredible”, you know something is off. To wit:

We find it incredible that 76% of the most important economic indicators from the selloff are worse today but yields are about 200bp lower. Perhaps this suggests central bank policy will move the cycle deep into extra innings and that they are able to slow the path to a late 2017 or 2018 recession. Perhaps we’re wrong and the market this year has a healthy return as it takes a breather from what could ultimately become the most gradual global slowdown in the history of the world. Perhaps low rates spur capex investment and continued labor force gains. Perhaps corporate profits increase as consumers continue to repair their balance sheet and the best part of the cycle is just beginning.

Alas, only more questions follow:

Alternatively, perhaps the Fed overlooks this last month’s data and Chair Yellen sounds (and acts) more hawkish than pundits expect. Perhaps the British referendum results in a leave vote. Perhaps the general election this November causes market panic. Perhaps global growth wanes and the deflation/disinflation fears once again take hold. Perhaps, we awake in October with a hike in the bag, oil back to $39 and our first negative jobs print. Perhaps oil spikes and damages households. Perhaps corporate earnings fall after their decent Q1, economic growth continues its decline and the consumer begins to rein in spending.

Ultimately, the confusion boils down to a simple question: has the Fed succeeded in making the business cycle obsolete? 

… we continue to believe that the linkage between corporate earnings, Capex, credit conditions and labor productivity is not fully appreciated and will take many by surprise when companies begin to lay off more than they hire to save costs and try and expand equity multiples and the bottom line. We have likened this business and credit cycle to that of the late 1990s, and after Friday’s data we find yet another intriguing similarity- the pace of job growth has accelerated and decelerated nearly in concert with that period of time (Chart 1). Notice as well that in the late 1990s, corporate profits and payrolls declined roughly in tandem. In the post crisis years, however, EBITDA growth has been anemic throughout. This may suggest that the industries that are hiring (healthcare, food and service companies) are low profit, labor intensive industries.

 

Contopoulos’ conclusion:

It also may suggest that with margins high and borrowing costs low, the inevitable fall to negative payrolls may take a bit longer. In fact, we think there is a distinct possibility that we could live through a period of time when companies could even fire more than they hire without being in a recession, as consumer balance sheets are relatively healthy. In fact, without a banking crisis and housing crisis, we think the driving force behind the next leg in the economic slowdown is likely to be driven by households pulling back on spending as job security becomes an issue. Only unlike housing, which unraveled quickly, the consumer boom/bust cycle is likely to be slower and longer as the negative feedback loop of lower employment to reduced spending, reduced corporate profits, and more layoffs and liquidations may look less Fisherian than “glacierian”.

Perhaps… in which case the S&P may well hit 2500 or more even as profits and cash flows deteriorate with every passing quarter, leading to PE multiples that make those of the Nasdaq during the dot com bubble seems like amateur hour. After all if fundamentals are disconnected, why not go all the way? Meanwhile, as the levitation on increasingly worse fundamentals continues, we expect increasingly more traders and analysts – at least those who have been taught finance in a world where logica linkages made sense – to “lose it” in the coming months.

To all of them, our condolences: we can only suggest your click on the “online complaint form” at the Federal Reserve. Or we would, that is, if the hyperlink actually worked.

via http://ift.tt/1PB9y1s Tyler Durden

Stocks are now on borrowed time.

 

Corporate buybacks have been the single largest driver of stock prices in the last quarter. Institutional investors have been net sellers for 17 weeks. And individual investors have been pulling capital out of stock funds in record amounts.

 

This leaves corporate buybacks as the sole driver of stocks. But now that is ending.

Announced buybacks plunged 34% in 1Q16. This is the single largest plunge in announcements since 2009.

 

 

Now, this does not mean buybacks are drying up all at once. As you can see in the chart above, there were a record number of buybacks announced in 2015. Those plans are beginning to be implemented.

 

So there will be a significant degree of corporate buybacks going forward.

 

However, buyback announcements and actual purchases are not the same thing. Many times companies announce buyback programs that they later fail to complete.  So the buying power here is much less than most realize.

 

Meanwhile, earnings are collapsing, while stocks remain near all-time highs.

 

 

Either earnings need to erupt higher in the next few months (highly unlikely given lack of growth) or stocks need to drop at a minimum 20%.

 

This whole mess feels just like the end of 2007/ beginning of 2008 to me.

 

On that note, we are already preparing our clients for this with a 21-page investment report titled the Stock Market Crash Survival Guide

 

In it, we outline precisely how the coming crash will unfold, as well as which investments will perform best, including “crash” insurance trades that will pay out big returns during a market collapse.

 

We are giving away just 1,000 copies of this report for FREE to the public.

 

To pick yours up swing by:

 

http://ift.tt/1U5G0Jf

 

 

Best Regards

 

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

 

 

 

via http://ift.tt/1Zsm1Vg Phoenix Capital Research

Submitted by Simon Black via SovereignMan.com,

In a bizarre story disclosed over the weekend, we learned that Belgium’s Princess Astrid was robbed by two assailants on a motorbike.

The thieves apparently approached her while she was sitting in traffic, smashed in her window, snatched the Royal Handbag, and sped off with over 2,000 euros in cash.

I have no doubt that was a harrowing experience for the princess, as it would be for anyone.

But as I researched a bit more, I learned that Belgium’s royal family is lavishly paid, particularly for a small country of just 11 million people.

King Philippe of Belgium receives more than 10 million euros per year. His father, the ‘retired’ king receives a pension of nearly 1 million euros annually.

Princess Astrid, the King’s sister, receives about 300,000 euros per year, in addition to usage rights of the royal properties.

In order to pay for this largesse, Belgium suffers some of the highest tax rates in the world, as high as 50% if you earn even a modest income.

In addition there’s 13% employee contributions to Social Security (plus employer contributions of 35%), and a Value-Added Tax of 21%.

Businesses in Belgium are subject to a 30% corporate tax rate, a 3% ‘crisis surcharge’, and my personal favorite, a 5% ‘fairness tax’.

In total the Belgian government’s tax revenue eats up about 45% of GDP, which means that the government takes almost half of all economic output.

This is an astounding figure… though it’s less than other governments in Europe like France or Denmark.

Now, with due sympathy to the princess, I wonder if having 2,000 euros stolen by motorbike bandits is philosophically much different than having 50%+ of your income stolen by the government.

Both of these events can occur at gunpoint. Both carry severe penalties if you resist.

At least with the bandits it only happens once, or rarely, in a lifetime. With the government it happens every single day.

Every time you spend money. Every time you earn. Every time you invest. The government’s there taking its share.

US Supreme Court Justice Oliver Wendell Holmes Jr. once wrote that “Taxes are what we pay for civilized society.”

Of course, Holmes wrote that statement at a time when tax rates were about 3.5% (not a typo), so it’s completely taken out of context.

But the quote still serves as a rallying cry for Social Justice Warriors who want to take more of your paycheck.

The entire premise of income tax is that ‘your’ money isn’t really yours after all. It’s theirs.

They have first right to take as much as they like from your earnings, leaving you with whatever leftovers they choose.

Income tax is like a financial Primae Noctis. And yet governments always seem to want more.

I don’t get it. There are so many examples of low-tax countries that are thriving.

Even in Europe, for example, Estonia has a profits tax as little as 0%. And yet they consistently run a budget surplus.

Ireland has had a low-tax regime of just 12.5% on corporate profits for years, and they recently announced a new tax regime for certain companies as low as 6.25%.

Go figure, these low tax rates have attracted substantial investment (and jobs) from huge multinational companies, all of which has boosted the Irish economy.

So the Irish government essentially takes a small slice of a rapidly expanding corporate pie, as opposed to Belgium and France’s huge slice of a shrinking pie.

It’s not rocket science. If you create reasonable incentives, businesses will invest, the economy grows, and everyone wins.

But despite these obvious examples, bankrupt nations don’t want to do that. Instead they do the exact opposite, driving productive citizens and businesses away.

A few days ago, for instance, the European Commission released details of a tax directive that will create a pan-European tax system, complete with a brand new Tax ID number for all the good citizens of Europe.

The proposal also aims to increase taxes across the board if they feel that a member state (like Ireland) doesn’t charge enough tax.

According to the proposal, other European countries like Ireland and Estonia “distort competition by granting favourable tax arrangements.”

Apparently it’s not ‘fair’ that high-tax France and Belgium have to compete with low-tax Ireland and Estonia.

So rather than the bankrupt countries getting their act together to attract business, the solution is to penalize everyone and make the entire continent less attractive.

It’s genius!

The directive goes on to demand more onerous reporting, attack anyone who takes legal steps to reduce what they owe, and even threaten businesses with exit taxes if they try to leave Europe.

This really is like a return to the feudal system.

via http://ift.tt/1Xy0EEX Tyler Durden

At the same time that Obama made history on May 27, when he became the first standing US president to visit Hiroshima, protests were taking place in Japan after a former marine working at a US military base in Okinawa was arrested by the Japanese police for allegedly killing a Japanese girl in April. Then overnight, an American sailor was arrested on suspicion of drunken driving and causing a crash on the Japanese island of Okinawa, in the midst of a month-long curfew placed on U.S. service members after the arrest of an American contractor on murder-related charges.

The latest incident, which injured two people, is likely to further inflame local anger over the U.S. military presence on the island, which shoulders the overwhelming burden of the U.S.-Japan military alliance. Petty Officer 2nd Class Aimee Mejia, 21, crossed the center line on a highway and crashed head-on into two cars shortly before midnight Saturday, according to a police spokesman. She was not injured, but a 35-year-old woman and a 30-year-old man in the other cars were injured, one suffering a chest injury, the other an arm injury. Mejia, who serves on the Kadena Air Base in Okinawa, was found to have a blood-alcohol level about six times the legal limit during a breath test, officers from the Kadena police station told Kyodo.

In response to the incident, as well as due to rising anger against US marines in Okinawa, the U.S. Naval Forces Japan immediately banned its sailors from drinking alcohol, on and off base, and said they would be allowed off base only to “engage in official actions” such as taking their children to child care or going to the grocery store or gas station.

The decision impacts the 18,600 sailors currently stationed in Japan.

The measures would remain in place until commanders were “comfortable that all personnel understand the impact of responsible behavior on the U.S.-Japan alliance.”

“These measures are not taken lightly,” said Rear Adm. Matthew Carter, commander of Naval Forces Japan. “For decades, we have enjoyed a strong relationship with the people of Japan. It is imperative that each sailor understand how our actions affect that relationship, and the U.S.-Japan alliance as a whole.”

The latest incident came as the U.S. military observes a 30-day mourning period at bases on Okinawa after an American civilian working for the U.S. military there was arrested on suspicion of dumping the body of a 20-year-old Japanese woman.

Renewed anger among residents in Okinawa at the U.S. military presence threatens a plan to relocate the U.S. Marines’ Futenma air base to a less populous part of Okinawa, which was agreed in 1995 after the rape of a Japanese schoolgirl by U.S. military personnel sparked huge anti-base demonstrations.

Okinawa’s governor and many residents want the marines off the island.

All U.S. Navy sailors in Japan will be kept on base and banned from drinking until “all personnel understand the impact of responsible behavior on the U.S.-Japan alliance,” the press release said. “Sailors living off base will be allowed to travel to and from base and conduct only “essential activities.”

The restrictions do not apply to family members and civilian U.S. contractors, which brings the total number of people to 35,000, but they are being encouraged to observe the rules “in a spirit of solidarity,” a spokesman for the U.S. Navy said.

via http://ift.tt/1Ua8aCY Tyler Durden

Submitted by Diana Johnstone (author Queen of Chaos), via Contra Corner blog,

On June 2, a few days before the California primary, Hillary Clinton gave up trying to compete with Bernie Sanders on domestic policy. Instead, she zeroed in on the soft target of Donald Trump’s most “bizarre rants” in order to present herself as experienced and reasonable. Evidently taking her Democratic Party nomination for granted, she is positioning herself as the perfect candidate for hawkish Republicans.

Choosing to speak in San Diego, home base of the U.S. Pacific Fleet, on a platform draped with 19 American flags and preceded by half an hour of military marching music, Hillary Clinton was certain of finding a friendly audience for her celebration of American “strength”, “values” and “exceptionalism”. Cheered on by a military audience, Hillary was already assuming the role to which she most ardently aspires: that of Commander in Chief of the Armed Forces.

Whenever Hillary speaks, one must look for the lies. The biggest lies in this speech were lies of omission. No mention of her support for the invasion of Iraq, no mention of the disaster she wrought in Libya, no mention of her contribution to pursuing endless death and destruction in the Middle East.

But she also lied in claiming partial credit for the Iran nuclear deal, which she had tended to block, and most profoundly in presenting herself as a champion of diplomacy. As Secretary of State, she blocked diplomacy that would have prevented or ended conflict, most notoriously concerning Libya, where even senior U.S. military officers were told to cut off their contacts with Gaddafi agents seeking a peaceful compromise.

The Washington Post reported prior to the speech that her campaign “hopes there are many more national-security-minded Republicans and independents who would vote for her, even grudgingly, rather than see Trump win the White House.”

The Washington Post noted that the state of California’s “defense industry and military bases lend a backdrop for her speech.” Indeed! Hillary Clinton is quite simply catering to the military-industrial complex, as she has been doing throughout her career.   She is catering to the arms industry, which needs to keep the American people scared of various “threats” in order to continue draining the nation’s wealth into their profitable enterprises. She needs the support of military men and women who believe in all those threats invented by intellectuals in think tanks and editorial offices.

This is the core of the “national-security-minded” electorate that Hillary is targeting. She warned that Trump would jeopardize the wonderful bipartisan foreign policy that has been keeping us great and safe for decades.

In reality, such “national-security-minded” leaders as Dick Cheney and Clinton herself have led the United States into wars that create chaos, inspire enemies and endanger everybody’s national security. Despite the geographically safe position of the United States, it is that bipartisan War Party that has created genuine threats to U.S. national security by prodding the hornets’ nest of religious fanaticism in the Middle East and provoking nuclear-armed Russia by aggressive military exercises right up to its borders.

The basis of Hillary Clinton’s world view is that notorious “American exceptionalism” which Obama has also celebrated. If we don’t rule the world, she suggested, “others will rush in to fill the vacuum”. She clearly cannot conceive of dealing respectfully with other nations. The United States, she proclaimed, is “exceptional – the last best hope on earth.”

Not all people on earth feel that way. So they must be brought to heel. In practice, this “exceptionalism” means acting above the law. It means a unipolar world policed by U.S. armed forces. In practice, Hillary’s devotion to “our allies” means fighting wars in the Middle East for the benefit of Israel and of Saudi Arabia, whose arms purchases are indispensable for our military industrial complex. It means bombing countries and overthrowing foreign governments, from Honduras to Syria and beyond, in order to help them conform to “our values”.

Trump is groping clumsily, at times idiotically, toward a major shift in US foreign policy. He is ill-prepared for the task. If ever elected, he would have to fire the neocons and take on a whole new team of experts to educate and guide him. That would be something of a miracle.

But some of Hillary’s reproaches aimed at Trump’s “reckless, risky” foreign policy statements are not as self-evident as she assumes.  For example, his statement that he would sit down to negotiate with North Korean dictator Kim Jong Un. Is that really such a crazy idea?

North Korea is a small country, whose leaders call themselves “communist” but who are essentially a dynasty that emerged from the resistance against Japanese invaders in World War II. Their quarrel with South Korea stemmed from the domination of Japanese collaborators in that part of the country. That is practically ancient history, and today North Korea feels threatened – and is indeed threatened – by the everlasting U.S. military presence on its borders. A small isolated country like North Korea is not a real “threat” to the world. Even with nuclear weapons. Its much-vaunted nuclear weapons are clearly meant both to defend itself from attack and as a bargaining chip.

So would it be so terrible to sit down and find out what the bargain might be? Basically, North Korean leaders would like to make a deal to lessen the U.S. threat and bring their country out of isolation. Why not discuss this, since it could lead to the end of the “North Korean threat” which is artificial anyway?

Hillary’s reaction is typical. She boasts that her solution is to build up an expensive missile defense shield in Japan and increase everybody’s military buildup in the region. As usual, she goes for the military solution, ridiculing the notion of diplomacy.

Hillary Clinton’s speech will certainly sound convincing to the “national security minded” because it is so familiar. The same as George W. Bush but delivered with much greater polish. America is good, America is great, we must remain strong to save the world. This is the road to disaster.

Hillary Clinton is the clear candidate of the War Party.

via http://ift.tt/22JT2OG Tyler Durden

"Subprime lending is a calculated risk – we know that some of the customers won't pay, we just don't know which at the time the loan is made. With higher default rates come higher expenses, and higher interest rates are necessitated to remain solvent." That's a quote made in a statement by Midwest Acceptance corporation, who specializes in high interest car loans for subprime borrowers in the St. Louis area.

Stories like the one involving William Lesinski are becoming all too common in the St. Louis region. Lesinski's story begins with taking out a ridiculously high interest rate loan for a car to be given as a graduation present for his son, and ends with his wages being garnished – beyond the amount of the court judgement.

Wanting to buy his son a car as a high school graduation gift, Lesinski put $1,750 down and drove off the lot in a 2003 Ford Mustang. The loan for the car was $11,367, and it carried 29 percent annual interest over nearly four years. His son would make the payments, but the loan was in Lesinski’s name.

 

After paying the balance down to a little more than $10,000, his son, who had stopped making insurance payments, wrecked the car, Lesinski said. In 2011, after more than $4,000 in interest had accrued, Car Credit City’s in-house finance arm, General Credit Acceptance, sued Lesinski. Factoring in attorney fees, the court judgment came to more than $15,000.

 

After Lesinski fell behind on a payment plan later that year, General Credit Acceptance began garnishing a portion of his check from a Fenton painting company. It hasn’t stopped since.

 

As of Friday, the company has taken $22,600 of Lesinski’s wages. Because Missouri court judgments can carry the interest from the initial contract, little of that money has gone toward principal. Lesinski assumed the balance was near zero. In fact, he still owes almost $13,000.

In order to get a better understanding of the subprime auto lending activity in the region, the St. Louis Post-Dispatch analyzed court data from suits involving three area auto finance companies. Since 2010, those firms alone have filed more than 15,300 lawsuits against borrowers in local courts, and the vast majority of cases resulted in a judgement against the defendant, after which the lender often sought to garnish wages from the borrower.

The Post-Dispatch found that contracts involved in the suits typically have an interest rate between 24% and 29.75% over terms ranging from three to five years. The Post-Dispatch followed up with interviews of borrowers, many of whom had rates of nearly 30%. Some said they knew the interest was high, but signed papers because they couldn't get to work without a car. Others said they didn't understand the terms until they fell behind.

"I wasn't very good on paperwork" said Lesinski – that's an understatement.

Although Lesinski isn't alone in claiming ignorance…

"My clients aren't sophisticated enough to know that they should negotiate the price or interest rate. They just think this is the interest rate they deserve. They think they deserve a 30 percent interest on a car loan." said Rob Swearingen, an attorney who represents borrowers being sued by subprime lenders. "This is the way people get poor or stay poor in this country. This is the biggest purchase most low-income consumers will ever make. They don't buy houses. They buy cars. And if they get ripped off at a young age, you get a judgement against you, and you start off behind the eight ball immediately." Swearingen added.

Acording to the National Alliance of Buy Here Pay Here Dealers, those that focused on buyers with poor credit histories had a default rate of 31% in 2014. But even in that niche, loans carrying a 29% interest rate are too high said Ken Shilson, who heads the group. "When you load that kind of interest on a car they can't afford anyway, it's destined to fail. If you set someone up to fail, they're going to fail on their own. They don't need any extra help." Shilson said.

According to research firm Experian Automotive, the average subprime borrower received interest rates ranging from 15.3% to 18.5%.

Because many people sued over debts don't show up in court, debt collection dockets are often a parade of default judgements against borrowers. For those that do go to court, many were put on payment plans through consent judgements, but when they fall behind, the contract interest and the original unpaid balance applied, and lenders frequently resort to garnishing wages at that point.

Christopher McGraugh, now a family court judge has presided over countless debt collection suits and says that "In many of these instances, you can never get out from underneath these judgements because the interest rates are so high."

Cerissa Robinson said she is considering filing for bankrupcy in order to get out from underneath a mountain of debt. Robinson took out a 26.75% interest loan, and yet another to cover the down payment, which had an interest rate of 62%. Cerissa lost a job and had to take one at lower pay – "I'm considering filing bankruptcy"

David Chapnick, president of Modern Finance said that he makes extensive efforts to contact borrowers before resorting to lawsuits: "I don't want to sue anybody, but I've got to pay postage. I'm paying rent. I've got to run a business here."

At the end of the day, Lesinski says "Maybe I wasn't very smart. Shame on me. But damn, shame on them."

* * *

As we have pointed out numerous times, student loans and auto loans are the next two credit bubbles waiting to erupt and cause chaos in the markets, and St. Louis is a harbinger of what is to come. While we don't condone taking advantage of anyone's situation, we are stunned to see these decisions be downplayed by individuals as just chalking it up to "I wasn't very good at paperwork" and lawyers telling everyone that clients aren't "sophisticated enough". Then again, the fact that Bernie Sanders receives a large portion of his campaign funds from the government, we shouldn't be surprised at all.

via http://ift.tt/1UunDJH Tyler Durden

Following a brief surge of hedge fund closure announcements in late 2015 and early 2016, there had been a lull in hedge fund shutterings in recent months, as the smart money community had benefited by the dramatic jump in the S&P500 to just shy of all time highs. That changed moments ago when Reuters reported that hedge fund Pine River Capital Management is closing its Pine River Fixed Income fund and returning roughly $1.6 billion in assets to investors just two months after Steve Kuhn, one of the fund’s co-managers, left the firm.

As Reuters adds, Brian Taylor, Pine River’s founder and co-chief investment officer, told clients on Monday that the eight year old fund, which posted some of the hedge fund industry’s most eye-popping returns but lost money in 2015 and early 2016, will be closed.

“The next step in this rationalization effort will be the orderly process of converting the holdings of the Pine River Fixed Income Fund to cash and returning that cash to investors,” Taylor wrote in a letter which was seen by Reuters.

“We feel that the timing is appropriate following the recent decision by Partner and Fixed Income Fund founder Steve Kuhn to reduce his role at Pine River to focus on philanthropy.”

As a reminder, Steve Kuhn, one of the hedge fund industry’s most widely known fixed income traders, left Pine River Capital Management in April, only months after the fund he co-managed for eight years posted its first-ever loss. As Reuters reported then, Pine River Capital Management wrote to clients on Tuesday that Kuhn would soon be “completing his exit from the firm.” Kuhn told Bloomberg Television’s Stephanie Ruhle that he is leaving to focus more on philanthropy.

“I am searching for the narrow gate, trying to take a new path in life,” Kuhn told Ruhle, crediting two pastors plus friends and family for helping him reach this decision.

Kuhn was one of four managers who helped the Pine River Fixed Income Fund score some of the industry’s biggest gains. They included a 93 percent return in 2009, fueled largely by bets on the housing market. Jiayi Chen, Colin Teichholtz, and Brendan McAllister, the other managers, are staying at the fund, Pine River’s investor relations team wrote to clients in a letter seen by Reuters.

The fund was established in 2008 with a 21 percent gain and quickly helped bolster the now $14 billion firm’s reputation and assets only a few years after Brian Taylor founded it with $5 million in startup capital at his lakeside cabin in the town of Pine River, Minnesota. A 31 percent gain in 2010 followed by strong numbers every year until 2015, turned Kuhn, a Minnesota native with a degree from Harvard, into a popular speaker on the hedge fund industry conference circuit, often explaining complex trading strategies in simple language.

Last year was a rare misstep for the fund when investments in corporate junk bonds left it with a loss of 2.7 percent. Losses continued in early 2016 when it was off 4.6 percent through February. Assets have dwindled to roughly $2 billion from their peak of $4 billion.

This is not the only closure at Pine River: The Pine River Ultra Master Fund, which Kuhn managed alone, was closed this year after having lost money every year since it was launched in 2014. It never gained much traction, overseeing only $185 million in assets and losing 11 percent in the first two months of 2016.

According to the latest HSBC hedge fund performance report, Pine River was down 3.6% in 2016 after posting solid returns in the period 2012-2014, with 2012 standing out as a bumper year with a nearly 35% return.

It was unclear which bonds and holdings the fund would be liquidating in the coming months.

via http://ift.tt/1PeGuqP Tyler Durden

Submitted by Howard Kunstler via Kunstler.com,

Considering that the 2016 election looks like a Dark Age puppet show — Pantalone and La Signora smacking each other with dildos — we forget this spectacle is serious. Rather large matters are at stake, such as the continuity of governance, the legitimacy of the two major political parties, the credibility of our financial arrangements, perhaps even the durability of the nation as a united polity.

 Most of the deliberate comedy comes from Donald Trump, whose super-long dangling necktie looks like it was designed for laughs by the Commedia dell’Arte prop department, not to mention the hair, which I have maintained for many years is actually a wolverine living on top of Trump’s head. Trump certainly represents a large and valid strain of sentiment in the zeitgeist — the frustration of many ordinary citizens at government-sponsored racketeering that is shoving them into pauperdom. But his utterances against all that are so childish and disordered that he de-legitimates his own mission every time he opens his mouth.

 

Hillary delivers her laughs mostly deadpan, for instance her Sunday morning ABC interview with the old 1992 Clinton “War Room” hand George Stephanopoulos, who grilled the Flying Reptile rather mercilessly over the recent report from the State Department Inspector General that said she was “not allowed” to use the private email server no, ifs, ands, or buts. As she struggled to deflect the question, the “uh”s started to stipple her vapid evasions like holes punched in a life raft. It was fun watching her sink, uh, uh, uh, gurgle gurgle — though surely that was not the effect she was going for.

 

Bernie, of course, is not so funny. He’s as serious as a heart attack, which suggests that a pretty sizeable portion of the public is sick of being diverted with slapstick comedy. The old bastard is determined to give the Democratic Party poobahs some schooling in ethical procedure. I admire the heck out of that — also, his record as a demonstrably non-griftable public servant, and his stance against the racketeering-as-usual status quo — though I’m not persuaded he would be an effective president (if such a thing is even theoretically conceivable) given his nanny government disposition. But the bigshots of the DNC still have a lot of ‘splainin’ to do, and it looks like ole Bernie is going to beat it out of them at Philadelphia in July. What I wonder: is he strong enough to hold Debbie Wasserman-Schultz on his lap while he applies the rod.

The people of the United States have real grievances with the way this country is being run. Last Friday’s job’s report was a humdinger: only 38,000 new jobs created in a country of over 300 million, with a whole new crop of job-seeking college grads just churned out of the diploma mills. I guess the national shortage of waiters and bartenders has finally come to an end.

What’s required, of course, is a pretty stout restructuring of the US economy. And that should be understood to be a matter of national survival. We need to step way back on every kind of giantism currently afflicting us: giant agri-biz, giant commerce (Wal Mart etc.), giant banking, giant war-making, and giant government — this last item being so larded with incompetence on top of institutional entropy that it is literally a menace to American society.

The trend on future resources and capital availability is manifestly downward, and the obvious conclusion is the need to make this economy smaller and finer. The finer part of the deal means many more distributed tasks among the population, especially in farming and commerce operations that must be done at a local level. This means more Americans working on smaller farms and more Americans working in reconstructed Main Street business, both wholesale and retail. This would also necessarily lead to a shift out of the suburban clusterfuck and the rebuilding of ten thousand forsaken American towns and smaller cities.

For the moment, many demoralized Americans may feel more comfortable playing video games, eating on SNAP cards, and watching Trump fulminate on TV, but the horizon on that is limited too. Sooner or later they will have to become un-demoralized and do something else with their lives.

The main reason I am so against the Hillary and Trump, and so ambivalent on Bernie is their inability to comprehend the scope of action actually required to avoid sheer cultural collapse.

via http://ift.tt/1UmyWUJ Tyler Durden