Tag Archives: History Repeating

The State’s Worst Atrocity

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LewRockwell20111

“Nothing in the world is easier than opposing a war that ended long ago. It takes no real courage to be against the Vietnam War in 2014. What takes courage is opposing a war while it is being fought – when the propaganda and intimidation of the public are at their height – or even before it breaks out in the first place. With the memory of the moral and material catastrophe of World War I before us 100 years later, let us pledge never again to be fooled and exploited by the State and its violent pastimes.”

http://www.thedailybell.com/editorials/35529/Llewellyn-H-Rockwell-Jr-The-States-Worst-Atrocity/

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BIS chief fears fresh Lehman from worldwide debt surge

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“Jaime Caruana, head of the Swiss-based financial watchdog, said investors were ignoring the risk of monetary tightening in their voracious hunt for yield.  Mr Caruana said the international system is in many ways more fragile than it was in the build-up to the Lehman crisis. Debt ratios in the developed economies have risen by 20 percentage points to 275pc of GDP since then. Credit spreads have fallen to to wafer-thin levels. Companies are borrowing heavily to buy back their own shares. The BIS said 40pc of syndicated loans are to sub-investment grade borrowers, a higher ratio than in 2007, with ever fewer protection covenants for creditors.”

http://www.telegraph.co.uk/finance/markets/10965052/Bank-for-International-Settlements-fears-fresh-Lehman-crisis-from-worldwide-debt-surge.html

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Argentina Declared in Default by S&P as Talks Fail

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“Standard & Poor’s declared Argentina in default after the government missed a deadline for paying interest on $13 billion of restructured bonds.  The South American country failed to get the $539 million payment to bondholders after a U.S. judge ruled that the money couldn’t be distributed unless a group of hedge funds holding defaulted debt also got paid. Argentina, in default for the second time in 13 years, has about $200 billion in foreign-currency debt, including $30 billion of restructured bonds, according to S&P.  Argentine Economy Minister Axel Kicillof described the group of creditors as ‘vulture funds’ and said the country wouldn’t sign an accord under ‘extortion.'”

http://www.bloomberg.com/news/2014-07-30/argentina-defaults-according-to-s-p-as-debt-meetings-continue.html

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Seth Klarman On “Born Bulls”, Bitcoin, & “The Truman Show” Market

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“Robert Schiller’s cyclically adjusted P/E valuation is over 25, a level exceeded only three times before – prior to the 1929, 2000 and 2007 market crashes.  Even with the ranks of the unemployed and underemployed still bloated and the economy barely improved from a year ago, the S&P 500, Dow Jones Industrial Average, and Russell 2000 regularly posted new record highs.  Our assessment is that the Fed’s continuing stimulus and suppression of volatility has triggered a resurgence of speculative froth. Margin debt measured as a percentage of GDP recently neared an all-time high. IPO activity in 2013 was greater than it has been in years, approaching 2007’s record of 288 transactions.”

http://www.zerohedge.com/news/2014-03-08/seth-klarman-born-bulls-bitcoin-truman-show-market

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In a Subprime Bubble for Used Cars, Borrowers Pay Sky-High Rates

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“Millions of Americans with shoddy credit are easily obtaining auto loans from used-car dealers, including some who fabricate or ignore borrowers’ abilities to repay. The loans often come with terms that take advantage of the most desperate, least financially sophisticated customers.  Auto loans to people with tarnished credit have risen more than 130 percent in the five years since the immediate aftermath of the financial crisis, with roughly one in four new auto loans last year going to people with credit scores at or below 640.  Many subprime auto loans are bundled into complex bonds and sold as securities by banks to insurance companies, mutual funds and public pension funds.”

http://dealbook.nytimes.com/2014/07/19/in-a-subprime-bubble-for-used-cars-unfit-borrowers-pay-sky-high-rates/?_r=0

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Subprime Credit Card Offers Are Everywhere

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“For the first time since the financial crisis began, approximately 33% of new credit cards were placed in the hands of subprime borrowers, those with credit scores under 660. By comparison, the most credit-worthy customers generally have scores between 725 and 850, where the scale tops out.  What is prompting this party atmosphere? A recovering economy and brighter jobs picture are surely part of the reason, as well as the fact that banking revenue from other areas such as mortgages has become almost nonexistent. This last factor makes subprime borrowers, who usually pay much higher interest rates than prime customers, especially attractive.”

http://www.fool.com/investing/general/2014/07/13/credit-card-offers-are-everywhere-but-that-may-not.aspx

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1.1 million UK households could be in ‘debt peril’ by 2018: report

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“A modest increase in interest rates could render almost 25 percent of UK households in severe financial stress, according to a report published on Thursday. The Bank of England (BOE) has confirmed that such rate hikes are imminent.  High levels of household debt – resulting from consecutive years of easy credit – mean even a moderate rise in interest rates could create profound financial struggle for one in four households in the UK.  Despite a five year run of exceptionally low interest rates, many UK mortgage holders have struggled to pay their debts as a result of a troubled jobs market and very low wage growth, according to the RF.”

http://rt.com/uk/175368-debt-crisis-uk-recession/

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Merger mania returns to 2007 levels

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“It’s only June, but already there has been $786 billion worth of mergers and acquisitions in the United States, according to Dealogic. That’s a lot more than the past few years and not far off from the total for all of 2007, the last ‘big spender’ year.  Historically low interest rates coupled with strong corporate balance sheets — all that cash on hand — are also making acquisitions attractive. Companies often borrow heavily to finance deals, and debt is cheap right now.  But the fact that the stock market is hovering near records also suggests that takeover targets are not cheap.  [And] the reality is that successful acquisitions that really help companies long-term are in the minority.”

http://money.cnn.com/2014/06/16/investing/mergers-and-acquisitons-boom/

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The Fed Chairs Have a Habit of Hazing

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“Paul Volcker took over as Chair of the Fed in August 1979. A recession officially began five months later.  This was the worst recession since the Great Depression.  In August 1987 Alan Greenspan took over the Fed. Two months later ‘Black Monday’ occurred on October 19, 1987, when the Dow dropped 22.6% that day alone–the worst one-day crash in history.  In February 2006 Ben Bernanke became Fed chair. The worst recession since the Great Depression officially began in December 2007, and you may recall there was some trouble in the financial markets in September 2008…  In January 2014 Janet Yellen became Fed chair.”

http://consultingbyrpm.com/blog/2014/07/the-fed-chairs-have-a-habit-of-hazing.html

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Fed Hawks Want Rate Hikes Soon

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“A trio of inflation hawks at the Federal Reserve — Richard Fisher, Esther George and Charles Plosser — believe it’s about time to take the punch bowl away.  The three regional Fed bank presidents are on a mission to urge their colleagues to take a tougher monetary policy stance, CNNMoney reported.  If they are successful, Americans would be hit with higher rates on mortgages, small business loans and credit cards, and many on Wall Street fear bonds and stocks would also suffer. But the Fed hawks believe the alternative to tighter policy could be high inflation and more dangerous asset bubbles.”

http://www.moneynews.com/StreetTalk/Federal-Reserve-rates-Plosser-inflation/2014/07/17/id/583292/

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