Tag Archives: False Sense Of Security

World’s Biggest Pension Fund Loses $64 Billion Amid Equity Rout

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“The world’s biggest pension fund posted its worst quarterly loss since at least 2008 after a global stock rout in August and September wiped $64 billion off the Japanese asset manager’s investments.  The 135.1 trillion yen ($1.1 trillion) Government Pension Investment Fund lost 5.6 percent last quarter as the value of its holdings declined by 7.9 trillion yen, according to documents released Monday in Tokyo. That’s the biggest percentage drop in comparable data starting from April 2008.  Fund executives have argued that holding more shares and foreign assets is a better approach as Prime Minister Shinzo Abe seeks to spur inflation that would erode bonds.”

http://www.bloomberg.com/news/articles/2015-11-30/world-s-biggest-pension-fund-loses-64-billion-amid-equity-rout

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Takeover Loans Have Few Takers on Wall Street

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“Wall Street banks are struggling to sell billions of dollars of loans they made to finance the corporate buyout boom, a sign that investor appetite for riskier debt remains muted despite a robust autumn rally in other financial markets.  The slowdown threatens to cool the surge in mergers-and-acquisitions that has sent takeover volume in 2015 to record levels, thanks in part to easy credit.  In past decades, banks sometimes held the loans until markets stabilized, but such warehousing became prohibitively expensive because of high capital charges required under the Dodd-Frank law that was passed in response to the 2008 financial crisis.”

http://www.wsj.com/articles/takeover-loans-have-few-takers-on-wall-street-1447028873

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Junk Bonds Are Tanking; Icahn Says Meltdown `Just Beginning’

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“A day after a prominent Wall Street firm shocked investors by freezing withdrawals from a credit mutual fund, things only got nastier in the junk-bond market. Prices on the high-risk securities sank to levels not seen in six years and, to add to the growing sense of alarm, billionaire investor Carl Icahn said the selloff is only starting.  ‘The meltdown in High Yield is just beginning,’ Icahn, who’s been betting against the high-yield market, wrote on his verified Twitter account Friday.  Junk-bond investors, already stung by the worst losses since 2008, are the most nervous they’ve been in three years after Third Avenue Management took the rare step of freezing withdrawals from a mutual fund.”

http://www.bloomberg.com/news/articles/2015-12-11/junk-bond-fear-gauge-nears-3-year-high-after-third-avenue-freeze

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Dodd-Frank Creates a Liquidity Crunch for Bonds

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“While each individual institution is undoubtedly safer due to capital constraints imposed by Dodd-Frank, this makes for a more illiquid market overall. The lack of liquidity will be especially potent in the bond market, where all securities are not mark-to-market and many bonds lack a constant supply of buyers and sellers.  The bond market is much larger than the equity market, and a 30-year bond bull run has many investors and institutions heavily invested in the asset class. Furthermore, studies have shown bond investors to be more sensitive to poor performance since the asset class is usually perceived as having lower risk than equities.”

http://www.investopedia.com/articles/investing/072915/doddfrank-creates-liquidity-crunch-bonds.asp

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Ben Bernanke Was Incredibly, Uncannily Wrong [2009]

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“We now have the diametrical opposite of the famous ‘Peter Schiff Was Right‘ video (a compilation of 2006 and 2007 clips in which Schiff, a financial expert who subscribes to Austrian economics, predicted the deep recession that would follow the bursting of the housing bubble).  The new, opposite video is a compilation of the 2005–2007 prognostications of Federal Reserve Chairman Ben Bernanke. In it, Bernanke is shown to have been just as embarrassingly wrong as Schiff was uncannily right.  Could their differences in economic understanding have anything to do with this remarkable dichotomy?”

https://mises.org/library/ben-bernanke-was-incredibly-uncannily-wrong

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U.S. Banks to Face $120 Billion Shortfall in Fed Crisis Plan

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“The largest U.S. banks would face a $120 billion total shortfall of long-term debt under a Federal Reserve proposal aimed at ensuring their failure wouldn’t hurt the broader financial system.  Banks such as Wells Fargo & Co. and JPMorgan Chase & Co. will be required to hold enough debt that could be converted into equity if they were to falter, according to a Fed rule that was approved by a unanimous vote on Friday. The Fed’s proposal, which applies to eight of the biggest U.S. banks, requires debt and a capital cushion equal to at least 16 percent of risk-weighted assets by 2019 and 18 percent by 2022.”

http://www.bloomberg.com/news/articles/2015-10-30/u-s-banks-to-face-120-billion-shortfall-under-fed-crisis-plan

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U.S. pension backstop faces $76.4B deficit; sharp premium hikes stir opposition

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“Despite the Pension Benefit Guaranty Corp.’s record high deficit, business groups say recent PBGC premium hikes meant to cover those deficits are unjustified and detrimental to the defined benefit pension system itself.  PBGC on Tuesday said its total deficit reached $76.4 billion in fiscal 2015, up nearly 24% from the year before. The deficit for single-employer pension plans accounted for $24.1 billion of that, up from $19.3 billion in fiscal 2014.  The widening deficit was driven by changes in interest factors that increased the value of single-employer program liabilities, PBGC said.”

http://www.businessinsurance.com/article/20151118/NEWS03/151119792/despite-pbgc-deficit-sharp-premium-hikes-stir-opposition

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High-yield debt fund blocks investors from withdrawing funds

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“A high-yield mutual fund is blocking investors from withdrawing their money, in a rare and jarring move amid a severe downturn in below-investment-grade and distressed debt.  The move at Third Avenue Focused Credit Fund is intended to facilitate an orderly liquidation of the fund, which recently had $789 million in assets, down from more than $2.4 billion earlier this year. It comes amid redemption requests at the fund and reduced liquidity in some parts of the bond market. Those two factors made it ‘impractical’ for the fund to pay off departing investors without selling holdings at fire-sale prices ‘that would unfairly disadvantage the remaining shareholders.'”

http://www.marketwatch.com/story/high-yield-debt-fund-blocks-investors-from-withdrawing-funds-as-junk-bonds-swoon-2015-12-10

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James Bovard: TSA Bombs the Holidays

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“Perhaps I was targeted because I have repeatedly criticized TSA in articles for the New York Times, USA Today and other places and was denounced last year by TSA chief John Pistole. Or perhaps such punishment is routinely dished out to people who opt out from Whole Body Scanners. On the Monday after the Thanksgiving encounter, I e-mailed the TSA, asking how often its explosive detectors generate false alerts and how often alerts identify bona fide threats to air travel safety. The TSA press office was unable to provide a single example of the explosive detection tests exposing someone who intended to detonate a device on an airplane.”

http://www.counterpunch.org/2015/12/07/tsa-bombs-the-holidays/

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Dozens Of Homeland Security Employees On Terrorist Watch List

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“A minimum of 72 employees at the Department of Homeland Security (DHS) are on a terrorist watch list, according to an inspector general report.  Democratic Rep. Stephen Lynch revealed the existence of the inspector general report during an interview with Boston Public Radio.  Lynch also used part of the interview to complain about the Transportation Security Administration.  In some cases, DHS Red Team employees strapped guns to their ankles and walked right through security without a hitch. In another, the TSA did not detect an explosive device taped to the back of one of the Red Team members, despite a pat-down.”

http://dailycaller.com/2015/12/07/dhs-employees-on-terrorist-watch-list/

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