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    Daily Digest 6/8 – Germany Reaches Negative-Rate Milestone, NZ’s Half-Trillion-Dollar Debt Bomb

    by saxplayer00o1

    Wednesday, June 8, 2016, 2:56 PM

Economy

Puerto Rico Insurers Seek Talks to Avert Next Major Bond Default

Governor Alejandro Garcia Padilla has said the island is unable to repay $805 million of principal and interest due July 1 on the securities, which have the highest legal priority, and also continue providing essential services for the island’s 3.5 million residents. Those payments are part of $2 billion owed by Puerto Rico and its agencies next month.

Gov. Rauner calls some Chicago schools ‘crumbling prisons

Illinois remains without education funding. And for CPS, the situation is particularly dire. The district is facing a $1 billion budget deficit and must come up with a $676 million pension payment by the end of the month.

Chicago Water District sells bonds as pensions cost it AAA grade

Chicago’s more than $20 billion of unfunded liabilities led Moody’s Investors Service to cut its rating to junk in May 2015, causing investors to demand higher yields as the city sold more than $3 billion of bonds. While Chicago has since enacted a record property-tax increase for police and firefighters pensions, it’s still not paying enough to keep its debt to those funds from growing, nor has it put in place a plan to cut the cost of its other pensions after previous changes were thrown out in court.

China Forex Reserves Shrink, Renewing Capital-Flight Concerns

Reserves last month fell by $27.93 billion to $3.192 trillion, erasing $17 billion worth of gains in March and April, central bank data released Tuesday showed. As reserves fall, China’s soaring debt and flagging growth heighten the risk for capital outflows.

Puerto Rico’s air ambulance company ends service over debt

“We acknowledge the government’s fiscal situation … but there is no way we can continue to offer our services with inconsistent payments and fees that are unsustainable,” said Aeromed director Jose Hernandez. A growing number of companies in Puerto Rico are suspending services because of mounting government debt amid a 10-year economic slump.

China’s massive piling-on of debt is reminiscent of the lead-up to the GFC

As a result, the report says: “The trend of China’s leverage has probably deteriorated faster than we previously thought.” According to the report, the surge in shadow lending is likely to see China’s total debt level climb to close to 350 per cent of GDP by 2020. Previously Goldman Sachs had forecast that China’s debt to GDP ratio would be just under 300 per cent by 2020.

NZ’s half-trillion-dollar debt bomb (New Zealand)

Households are now carrying a debt level that is equivalent to 162 per cent of their annual disposable income – higher than the level reached before the global financial crisis.

Germany reaches negative rate milestone

The average yield on German government bonds has fallen below zero for the first time as the phenomenon of negative interest rates intensifies across global financial markets.

Asia Bond Yields Hit Record Lows as Nomura Says Tide to Turn

Average yields on corporate notes from Asian firms have slid 77 basis points this year to 3.76 percent, the lowest in data going back to 1996, according to Bank of America Merrill Lynch indexes.

Draghi Smashes Corporate Yields to 1% Before a Bond Is Bought

Companies benefiting from the lower borrowing costs are issuing bonds at an increasing clip. More than 50 billion euros ($57 billion) were sold in the single currency in May, the second-busiest month on record. Air Liquide SA, the investment-grade French industrial gas maker, issued 3 billion euros of bonds on Monday, with just one of five parts of the deal priced with a coupon above 1 percent, according to data compiled by Bloomberg.

Gold & Silver

Click to read the PM Daily Market Commentary: 6/7/16

Provided daily by the Peak Prosperity Gold & Silver Group

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

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5 Comments

  • Wed, Jun 08, 2016 - 8:39pm

    #1

    Taz Alloway

    Status Bronze Member (Offline)

    Joined: Feb 18 2010

    Posts: 461

    Alaska Continues to Bake, on Track For Hottest Year

    Alaska just can’t seem to shake the fever it has been running. This spring was easily the hottest the state has ever recorded and it contributed to a year-to-date temperature that is more than 10°F (5.5°C) above average…

    http://www.climatecentral.org/news/alaska-continues-to-bake-on-track-for-hottest-year-20422

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  • Thu, Jun 09, 2016 - 12:23pm

    #2

    KugsCheese

    Status Gold Member (Offline)

    Joined: Jan 01 2010

    Posts: 821

    Real Estate in PR?

    Anyone looking at it?

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  • Thu, Jun 09, 2016 - 3:55pm

    #3

    saxplayer00o1

    Status Silver Member (Offline)

    Joined: Jul 30 2009

    Posts: 2932

    Draghi Buying Junk Bonds Shows ECB Will Do Whatever It Takes

    Draghi Buying Junk Bonds Shows ECB Will Do Whatever It Takes
    In-DepthBloomberg5 hours ago

     

    ECB has to go to 'helicopter' money: Dennis Gartman

    Yahoo Finance UK4 hours ago
    Dennis Gartman, The Gartman Letter, weighs in on Mario Draghi's comments on the euro zone's economy. I think they have very real problems over there, says …

    'All China's assets in the US might be annulled', warns ex-BoE chief

    RT1 hour ago
    “Who knows what the future holds, but China and other countries do not want to be … Over the past 12 months Beijing has cut its Treasury securities 1.3 percent …

    BOJ Spurs Yen Investors Into Foreign Debt as Mexico Sells

    Bloomberg8 hours ago
    The 10-year notes pay a coupon of 1.09 percent, compared with a minus 0.12 percent yield on Japanese sovereign debt of the same maturity. Mexico sold …

    ECB in 'wait and see' mode; likely to extend QE later in year – Reuters poll

    Reuters UK – ‎1 hour ago‎
    After a temporary burst of 0.6 percent growth in the first quarter, the latest poll shows no change in the subdued outlook for euro zone growth, despite the ECB having already bought a trillion euros of sovereign debt and cut rates to record lows. The

    Draghi Fires Starting Gun on Corporate Bond Purchases in Europe

    Bloomberg – ‎Jun 8, 2016‎
    The ECB is adding investment-grade corporate notes to its 80 billion-euro monthly purchase program, which already includes covered bonds, asset-backed securities and sovereign debt, as part of efforts to encourage growth. The central bank has bought …

    Negative interest rates 'really starting to bite' – Blackrock

    Reuters5 hours ago
    LONDON Rock-bottom interest rates, with some $10 trillion of sovereign … Paz, Blackrock's head of emerging market fixed income, said he liked debt issued by …

    Desperate' ECB risks destroying European project with negative rates, warns Deutsche Bank

    Telegraph.co.uk – ‎20 hours ago‎
    David Folkerts-Landau, Deutsche's chief economist, said negative interest rates and quantitative easing had hurt savers and allowed politicians to delay badly-needed structural reforms. "ECB policy is threatening the European project as a whole for the

    Credit card debt could hit $1 trillion by the end of 2016

    MarketWatch – ‎4 hours ago‎
    With the economy improving and driving up consumer confidence, many people are spending more but shirking basic responsibilities like paying their credit card bills. If things continue at this rate, U.S. households will accumulate $1 trillion in

    BlackRock says Illinois should lose access to debt markets

    New York Post – ‎11 hours ago‎
    BlackRock, the world's biggest asset manager, said the debt-drunk state, with the worst pension shortfalls in the land, should lose its access to the $3.7 trillion municipal debt markets. “They're a state without a budget, they refuse to pass a budget
     

    Moody's cuts Illinois' bond rating

    CNBC – ‎4 hours ago‎
    Moody's Investors Service cut Illinois' credit rating by one notch to Baa2 with a negative outlook on Wednesday, citing a political stalemate that has prevented the state from addressing its budget imbalance and big unfunded pension liability. The

    Attention Massachusetts retirees: Your pension systems are crumbling

    Boston Business Journal6 hours ago
    With roughly $750 million in unfunded IOUs and a decade of lackluster investment returns, one would think Springfield's sprint toward pension insolvency would …

    Inside the Hell of Venezuelan Police Prisons

    TIME – ‎Jun 8, 2016‎
    But thanks to a profound crisis in Venezuela's judicial system, it now holds over 150 prisoners, some who have been here for months or years. The number grows daily as more Venezuelans are arrested for crimes, including mugging, kidnapping and murder.

    Venezuela's middle class is dumpster diving for food

    CBS News – ‎Jun 8, 2016‎
    Venezuela's poverty had eased during the administration of the late President Hugo Chavez. But a study by three leading Caracas universities found that 76 percent of Venezuelans are now under the poverty line, compared with 52 percent in 2014.

    Venezuela's top court bans media's publishing videos of lynchings

    Reuters14 hours ago
    In its statement, the top court, which Venezuela's opposition accuses of being subservient to Maduro … There is no official public data on lynchings in Venezuela.

     

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  • Thu, Jun 09, 2016 - 4:18pm

    #4

    sand_puppy

    Status Platinum Member (Offline)

    Joined: Apr 13 2011

    Posts: 1837

    Oklahoma Highway Patrol Civil Forfeiture Card Reader

    http://www.zerohedge.com/news/2016-06-09/oklahoma-cops-unveil-new-device-enabling-direct-seizure-bank-accounts-credit-cards

     

    You may have heard of civil asset forfeiture. 

    That's where police can seize your property and cash without first proving you committed a crime; without a warrant and without arresting you, as long as they suspect that your property is somehow tied to a crime.

    Now, the Oklahoma Highway Patrol has a device that also allows them to seize money in your bank account or on prepaid cards.

    It's called an ERAD, or Electronic Recovery and Access to Data machine, and state police began using 16 of them last month. 

    Here's how it works. If a trooper suspects you may have money tied to some type of crime, the highway patrol can scan any cards you have and seize the money.

    The police cheif explains that it is "not about taking money" but is about checking out a persons story by examining their finances.  Yeah right.

    The company that makes the card reader gets a 7% commission on all money seized.

    What will this lead to?  Once the average person understands that the police represent great injustice and that a traffic stop is likely to also be a robbery, how will people respond to red lights flashing behind them on the highway?

    —-

    I am reminded of CHS comment that the elite will use the police to hold on to power as long as possible.   I hope that the police are smart enough to get themselves out from between the elites and the citizens should this accelerate.

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  • Thu, Jun 09, 2016 - 5:24pm

    Reply to #4
    MarkM

    MarkM

    Status Silver Member (Offline)

    Joined: Jul 22 2008

    Posts: 347

    Disbelief

    [quote=sand_puppy]

    http://www.zerohedge.com/news/2016-06-09/oklahoma-cops-unveil-new-device-enabling-direct-seizure-bank-accounts-credit-cards

     

    You may have heard of civil asset forfeiture. 

    That's where police can seize your property and cash without first proving you committed a crime; without a warrant and without arresting you, as long as they suspect that your property is somehow tied to a crime.

    Now, the Oklahoma Highway Patrol has a device that also allows them to seize money in your bank account or on prepaid cards.

    It's called an ERAD, or Electronic Recovery and Access to Data machine, and state police began using 16 of them last month. 

    Here's how it works. If a trooper suspects you may have money tied to some type of crime, the highway patrol can scan any cards you have and seize the money.

    The police cheif explains that it is "not about taking money" but is about checking out a persons story by examining their finances.  Yeah right.

    The company that makes the card reader gets a 7% commission on all money seized.

    What will this lead to?  Once the average person understands that the police represent great injustice and that a traffic stop is likely to also be a robbery, how will people respond to red lights flashing behind them on the highway?

    —-

    I am reminded of CHS comment that the elite will use the police to hold on to power as long as possible.   I hope that the police are smart enough to get themselves out from between the elites and the citizens should this accelerate.

    [/quote]

     

    sp, you beat me to it. I didn't think there was anything that would make my jaw drop these days. I was wrong. Especially the commission the card reader company.

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