naked capitalism Sun 2010-02-28 13:23 EST

Rogoff Foresees A Wave of Sovereign Debt Defaults

Kenneth Rogoff, former IMF chief economist warned that a series of sovereign debt defaults is likely to be in the offing...Rogoff is far from alone in seeing sovereign defaults as likely, but so far, the chorus of concern comes mainly from analysts and investors rather than well-known economists (Willem Buiter was notable exception in that regard). One correspondent said that one of his sources, with impeccable contacts, anticipates 12 sovereign debt defaults in the EU...

naked capitalism; Rogoff Foresees; sovereign debt Default; wave.

naked capitalism Sun 2010-02-28 13:08 EST

Martin Wolf is Very Gloomy, and With Good Reason

Martin Wolf, the Financial Times' highly respected chief economics editor, weighs in with a pretty pessimistic piece tonight. This makes for a companion to Peter Boone and Simon Johnson's Doomsday cycle post from yesterday...With the private sector debt overhang as great as it is, I doubt there is a way out of our mess that does not involve a period of debt restructuring and writeoffs. That process, no matter how adeptly handled, results in dislocation and has a chilling effect on bystanders...Swedish Lex interestingly sees another possible brake that may become operative prior to another bubble/bust cycle. He believes that the EU has much less tolerance for underwriting zombie banks than the US. The EuroBanks have written off less in the way of losses than their US peers, are also exposed to any EU sovereign debt defaults, and yet the biggest are still crucial parts of the international capital markets infrastructure (and therefore still tightly coupled to the very biggest US/UK firms). While any EU sovereign debt defaults could morph into a full blown crisis, the EU responses to the joint sovereign/bank debt overhang could lead to more radical changes in EU banking rules and practices that could blow back to the very biggest US banks in unexpected ways.

gloomy; good reason; Martin Wolf; naked capitalism.

Jesse's Café Américain Wed 2010-02-03 20:13 EST

Italy Seizes Bank of America Assets In Derivatives Fraud Probe

Jesse

"more than 519 municipalities that face 990 million euros in derivatives losses"...Globalization is used as a rationale for stripping nations of their sovereign rights, and the people from their ability to rule and protect themselves in accord with their own beliefs and preferences...The US is a relative safe haven for multinational corporations that engage in various forms of fraud and market manipulation around the world, like modern day privateers. It appears unable to regulate them because of widespread political corruption and the self interest of its monied elite.

America assets; Derivatives Fraud Probe; Italy Seizes Bank; Jesse's Café Américain.

Jesse's Café Américain Mon 2009-12-28 21:07 EST

Who Is Buying All These US Treasuries (And Can They Keep It Up in 2010)?

Jesse

...according to the government, US households are absolutely piling into US sovereign and corporate debt at record levels, and at record low interest rates. And almost no one but the Fed is buying Agency Debt...this is why I think we might see quite a bloodbath in the bonds in 2010, as mom and pop get skinned by the Street for weighing in so heavily on this one sided trade in US sovereign debt. The US household sector is a slow moving convoy, presenting a traditional and tempting target for the Wall Street wolf packs...Sprott Asset Management says: "Our concern now is that this is all starting to resemble one giant Ponzi scheme. We all know that the Fed has been active in the market for T-bills...under the auspices of Quantitative Easing, they bought almost 50% of the new Treasury issues in Q2 and almost 30% in Q3...We are now in a situation, however, where the Fed is printing dollars to buy Treasuries as a means of faking the Treasury's ability to attract outside capital. If our research proves anything, it's that the regular buyers of US debt are no longer buying, and it amazes us that the US can successfully issue a record number Treasuries in this environment without the slightest hiccup in the market."

2010; buy; Jesse's Café Américain; keeping; Treasury.

Debtor's prison Mon 2009-12-21 20:17 EST

Transitioning to a Global Credit Regime Part I

MAAA

...this is the first in a series of posts that will aim to discuss and dissect the more likely nature, features and requirements of the global monetary and debt system that will emerge once the current one disintegrates. To be clear, we define the current system as consisting of fiat sovereign currencies collaterized by sovereign (and now private) debt, primarily from the US. It is precisely this system that we have come to believe is unsustainable and will eventually crash in what many people call the Dollar Event Horizon (DEH). What emerges after DEH must therefore not be of a sovereign nature, but of a global one; of that we are certain.

Debtor s Prison; Global Credit Regime Part; transition.

Ambrose EvansPritchard Finance and business comments Thu 2009-10-08 17:07 EDT

China calls time on dollar hegemony

Ambrose Evans-Pritchard

You can date the end of dollar hegemony from China's decision last month to sell its first batch of sovereign bonds in Chinese yuan to foreigners. Beijing does not need to raise money abroad since it has $2 trillion (£1.26 trillion) in reserves. The sole purpose is to prepare the way for the emergence of the yuan as a full-fledged global currency. [dollar losing reserve status]

Ambrose EvansPritchard Finance; Business Comment; China calls time; dollar hegemony.

Thu 2009-10-01 17:56 EDT

98489 -- Landmark National Bank v. Kesler -- Leben -- Kansas Court of Appeals

J. J. LEBEN

Landmark National Bank brought a suit to foreclose its mortgage against Boyd Kesler and joined Millennia Mortgage Corp. as a defendant because a second mortgage had been filed of record for a loan between Kesler and Millennia. In a foreclosure suit, it is normal practice to name as defendants all parties who may claim a lien against the property. When neither Kesler nor Millennia responded to the suit, the district court gave Landmark a default judgment, entered a journal entry foreclosing Landmark's mortgage, and ordered the property sold so that sale proceeds could be applied to pay Landmark's mortgage. But Millennia apparently had sold its mortgage to another party and no longer had interest in the property by this time. Sovereign Bank filed a motion to set aside the judgment and asserted that it now held the title to Kesler's obligation to pay the debt to Millennia. And another party, Mortgage Electronic Registration Systems, Inc. ("MERS"), also filed a motion to set aside the judgment and asserted that it held legal title to the mortgage, originally on behalf of Millennia and later on behalf of Sovereign. Both Sovereign and MERS claim that MERS was a necessary party to the foreclosure lawsuit and that the judgment must be set aside because MERS wasn't included on the foreclosure suit as a defendant. The district court refused to set aside its judgment. The court found that MERS was not a necessary party and that Sovereign had not sufficiently demonstrated its interest in the property to justify setting aside the foreclosure. ...The district court properly determined that MERS was not a contingently necessary party in Landmark's foreclosure action. The district court also was well within its discretion in denying motions from MERS and Sovereign to intervene after a foreclosure judgment had been entered and the foreclosed property had been sold. The judgment of the district court is affirmed.

98489; appealing; Kansas court; Kesler; Landmark National Bank; leben.

Tue 2009-09-29 11:43 EDT

The Post-Bubble Malaise

Mike Whitney

...the Fed is building excess bank reserves (nearly $1 trillion in the last year alone) with the tacit understanding that the banks will return the favor by purchasing Uncle Sam's sovereign debt. It's all very confusing and circular, in keeping with Bernanke's stated commitment to "transparency". What a laugh. The good news is that the trillions in government paper probably won't increase inflation until the economy begins to improve and the slack in capacity is reduced. Then we can expect to get walloped with hyperinflation. But that could be years off. For the foreseeable future, it's all about deflation...The question is, how long can the Obama administration write checks on an account that's overdrawn by $11 trillion (the national debt) before the foreign appetite for US Treasurys wanes and we have a sovereign debt crisis? If the Fed is faking sales of Treasurys to conceal the damage--as I expect it is--we could see the dollar plunge to $2 per euro by the middle of 2010...The consumer is maxed out, private sector activity is in the tank, and government stimulus is the only thing keeping the economy off the meat-wagon. Bernanke might not admit it, but the economy is sinking into post-bubble malaise.

Post bubble malaise.

zero hedge Tue 2009-09-01 15:39 EDT

Head Of China Sovereign Wealth Fund Openly Admits Asset Bubble Addressed By Creation Of More Bubbles

In a phenomenal demonstration of frankness and true economic assessment, the head of the China Investment Council, Lou Jiwei, who controls China's $298 billion sovereign wealth fund, admits the ponzi nature of today's markets: Both China and America are addressing bubbles by creating more bubbles and we're just taking advantage of that. So we can't lose. $20 trillion+ global equity market Ponzi scheme.

bubble; China Sovereign Wealth Fund Openly Admits Asset Bubble Addressed; creation; Head; Zero Hedge.

Tue 2009-06-16 00:00 EDT

Jesse's Café Américain: This Is Your Economy on Credit Crack - and Heading for a Crack-Up

Jesse's Café Américain: This Is Your Economy on Credit Crack - and Heading for a Crack-Up; ``we may have already passed the point at which the Fed and Treasury will have no choice but to substantially devalue the bonds and reissue a 'new US dollar' as part of a managed default on our sovereign debt''

crack; Credit Crack; economy; Head; Jesse's Café Américain.

Satyajit Das's Blog - Fear & Loathing in Financial Products Tue 2009-06-16 00:00 EDT

Satyajit Das's Blog - Fear & Loathing in Financial Products: Credit Default Swaps -- Through The Looking Glass

Satyajit Das's Blog - Fear & Loathing in Financial Products: Credit Default Swaps - Through The Looking Glass; ``The specter of banks, some of whom have needed capital injections and liquidity support from governments to ensure their own survival, offering to insure other market participants against the risk of default of sovereign government (sometimes their own) is surreal.'' ``much of what passed for financial innovation was specifically designed to conceal risk, obfuscate investors and reduce transparency''

Credit Default Swap; fears; financial products; loath; Looking Glass; Satyajit Das's Blog.

Fri 2009-01-16 00:00 EST

Asia Times Online :: China News, China Business News, Taiwan and Hong Kong

China's inflation-free route from crisis, by Henry C. K. Liu; ``China produces from plants financed by foreign investment that operate with low domestic wages for foreign markets that pay with dollars that cannot be used in the domestic economy...China must finance plants with sovereign credit to produce for the domestic market where consumer purchasing power will come from high wages, with sovereign credit repaid from increased tax revenue from a vibrant domestic economy.''

Asia Times Online; China Business News; China News; Hong Kong; TAIWAN.

Tue 2008-10-07 00:00 EDT

Jesse's Café Américain: China Admits to Currency Manipulation, Dictates Terms for Support of US Sovereign Debt

Jesse's Café Américain: China Admits to Currency Manipulation, Dictates Terms for Support of US Sovereign Debt

China admits; Currency Manipulation; dictate terms; Jesse's Café Américain; sovereign debt; supports.

Fri 2008-06-20 00:00 EDT

naked capitalism: "Exploding Commodity Prices Signal Future Inflation"

"commodity prices are the result of portfolio shift against liquid assets by sovereign investors, sovereign wealth funds, partly triggered by lax monetary policy,...olicymakers should seriously start worrying about inflation and stop chasing imaginary destabilising speculators."

Exploding Commodity Prices Signal Future Inflation; naked capitalism.

Mon 2007-10-08 00:00 EDT

Adam Smith - An Inquiry into the Nature and Causes of the Wealth of Nations - The Adam Smith Institute

(Book Five, Of the Revenue of the Sovereign or Commonwealth. Chapter III, Of Public Debts; "In great empires the people who live in the capital, and in the provinces remote from the scene of action, feel, many of them, scarce any inconveniency from the war; but enjoy, at their ease, the amusement of reading in the newspapers the exploits of their own fleets and armies."

Adam Smith; Adam Smith Institute; caused; inquiry; nation; natural; wealth.

Fri 2007-09-07 00:00 EDT

Bogeymen of Financial Capitalism(The Korea Times)

Bogeymen of Financial Capitalism, by Nouriel Roubini (The Korea Times); Sovereign Wealth Funds (SWF); vast pool of state-controlled funds emerging

Bogeymen; Financial Capitalism; Korea Times.