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Daily Digest 8/31 - Chinese Banks Report Rising Bad Loans, Negative Rates 'Seem To Work'

Wednesday, August 31, 2016, 6:52 AM


Greece may face aid-payout delay as EU warns on backsliding

Slipping timetables have been a regular feature of loan payouts to Greece since it first turned to the euro area and the International Monetary Fund for a rescue in 2010. Now in it's third bailout, the country faces continued creditor warnings about backsliding on overhauls that are a condition for aid.

California drivers asked to pay 'their fair share' for transportation work

The main component of the annual package would raise $4.8 billion via higher fuel taxes. Specifically, the gas tax rate would be increased by 17 cents and the diesel rate would be raised by a whopping 30 cents. The tax rates would also be indexed to inflation to allow for regular increases.

Taxpayers forced to pay $421 million more for teacher pensions (Illinois)

The Illinois Teachers’ Retirement System, or TRS, has voted to lower the fund’s future investment return assumption to 7 percent from 7.5 percent. Because the fund relies heavily on its investments to meet its retirement obligations, taxpayers, by law, are expected to make up any shortfalls in investment income. The changed assumptions mean taxpayers will pay an additional $421 million toward pensions in 2017 alone.

More Fed Bond Purchases Are the Wrong Answer

Ms. Yellen reiterated that the Federal Reserve intends to keep its $4.4 trillion bond portfolio—currently leveraged at more than 100-to-1—until rate increases are “well under way.” Even then, “it should take several years for our asset holdings, and the bank reserves used to finance them, to passively decline to a more normal level,” she said.

All four big Chinese banks report rising bad loans

China's three other giant state-owned banks have reported similar results in recent days, with all of their bad loan ratios creeping upwards as Beijing seeks to boost the world's second-largest economy with an infusion of cheap credit.

Australia's growing debt a 'ticking time bomb', says TD Securities

"The government is borrowing record amounts to consume, not invest - a ticking fiscal time bomb," the investment firm's chief Asia-Pacific macro strategist Annette Beacher said on Tuesday.

Deficits rise, debt set to hit $20 trillion in 2017

A new estimate from the Congressional Budget Office projects this year's deficit will spike to $590 billion, up 35% over last year. In addition, the CBO's numbers show the total national debt hitting $20 trillion next year.

Slowing German inflation puts pressure on ECB

"Now we clearly see downside risks to this forecast. We'll probably have stable inflation of 0.2 percent in the euro zone," Holstein said. "And this would clearly raise the pressure on the ECB to unleash more monetary stimulus."

ECB balance sheet expands to 3.33 trillion euros

The combined balance sheet of the European Central Bank and the euro zone's 19 national central banks expanded by 17.16 billion euros ($19.15 billion) to 3.33 trillion euros in the week to Aug 26, the ECB said on Tuesday.

Saudi Arabia’s Attempts to Boost Bank Liquidity Aren’t Working

The country, grappling with lower oil prices, raised 98 billion riyals ($26 billion) from bond sales to domestic institutions last year, with that figure probably set to rise to about 120 billion riyals in 2016, according to Saudi Fransi Capital.

Chinese Banks Step Up Bad-Loan Write-Offs

The International Monetary Fund estimates China’s nonperforming-loan ratio at 15%, compared with the official 1.75% figure reported by the government, because of differences in the way bad loans are recognized.

Helicopter Money Predictions Are Still Flying High in Japan

“It’s unthinkable that nothing would happen in September,” said Daiju Aoki, an economist at UBS Group AG in Tokyo. “The most likely measure would be pseudo-helicopter money where the BOJ will commit to holding Japanese government bonds for a long time.”

Japan top spokesman signals readiness to stem yen gains

He also stressed the need to respect the BOJ's independence from political interference, a sign the government will not get in the way if the bank opts to deepen negative rates to stimulate the economy.

Swiss central bank steps up stock buying spree

Switzerland's central bank now owns more publicly-traded shares in Facebook than Mark Zuckerberg, part of a mushrooming stock portfolio that is likely to grow yet further.

Fed’s Fischer Says Negative Rates Seem to Work in Today’s World

The European Central Bank and the Bank of Japan are relying on stimulus packages that include a negative deposit rate to fuel inflation and revive the economy. ECB President Mario Draghi and BOJ Governor Haruhiko Kuroda have both argued that they have the scope to cut rates further below zero if needed, even as the debate about risks and side effects of the policy gains momentum.

‘Rich Dad’ author Robert Kiyosaki: If you’re investing for the long term, ‘you’re crazy’

On his prediction that in 2016 the world would see the worst stock market crash in history: “We’re on the edge of a cliff right now. We have never been here before. If you’re still saving money when interest rates are negative, you’ve got to be crazy. When you’re investing for the long-term in the stock market, where there is no connection between stock price and reality, you’re crazy.”

Gold & Silver

Click to read the PM Daily Market Commentary: 8/30/16

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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Fed's Evans, citing slow growth, says low rates are here to stay


Fed's Evans, citing slow growth, says low US rates are here to stay

Reuters-7 hours ago
Evans, who does not have a vote on Fed policy this year, is known as one of the U.S. central bank's most outspoken doves, generally in favor of delaying rate ...

Pimco's Baz Says Japan In a Bind as Total Debt Tops 600% of GDP

Bloomberg-15 hours ago
Billionaire bond investor Bill Gross has said that the likely endgame is for the BOJ to forgive sovereign debt. Yukio Noguchi, a former Ministry of Finance official ...

Bill Gross says negative interest rates are nothing but liabilities

MarketWatch-10 minutes ago
His gripe about negative interest rates and a flood of debt, which he considers a risk, not a fix, for a global economy that's still limping out of the financial crisis, ...

Eurozone core inflation fall raises prospect of ECB stimulus measures

The Guardian - ‎3 hours ago‎
The ECB has been using negative interest rates and quantitative easing in an attempt to increase activity and push inflation back towards its target of just below 2%. Analysts said the inflation and unemployment figures would be discussed when the ECB ...

Bank of Japan official warns of sluggish consumer spending

MarketWatch - ‎11 hours ago‎
Funo was referring to the BOJ's 80-trillion-yen-a-year asset purchase program and its negative interest rates. But Funo offered few hints about what the central bank may do at the coming Sept. 20-21 policy meeting, where many economists expect it will ...

Talk persists of 'helicopter money' despite Kuroda denials

The Japan Times - ‎7 hours ago‎
Kuroda reiterated last month at a Group of 20 meeting in Chengdu, China, that helicopter money is not an option, but he has changed course without warning before. He announced a negative interest rate policy in January after ruling it out the previous ...

Polish Deflation Extends to Third Year, Amplifying Easing Calls

Bloomberg-1 hour ago
Since they last cut interest rates in March 2015, policy makers at the Polish central bank have resisted calls for further easing, citing economic growth that's held ...

Nigeria Faces Deeper Economic Slump as Oil Output Falls: Chart

Bloomberg-8 hours ago
Ireland now has to recover unpaid taxes of up to 13 billion euros, plus .... to pay down some of its 180 billion euros of national debt rather than fund spending.


SC pension fund deficit to increase by $1.4 billion

The State-17 hours ago

Billions in unfunded obligations in the S.C. pension funds for state and local government w

Alberta follows Ontario down deficit hole

Toronto Sun-17 hours ago
Let's go back in time to 2009 when Ontario saw its budget deficit climb to $19.3 billion due to a combination of unsustainable spending growth in the preceding ...

Saudi Arabia Burns Through Foreign Reserves As Oil Prices Tank

Forbes - ‎14 hours ago‎
Holdings peaked in August 2014 at $737 billion before prices tanked in July that year. The Saudis are also running budget deficits attributed to the prolonged oil price down turn. The Saudi budget deficit hit a record $98 billion last year, but Riyadh ...

Brazil's economy shrinks 0.6 pct in Q2

Reuters-3 hours ago
BRASILIA, Aug 31 Brazil posted a primary budget deficit of 12.816 billion reais ($3.97 billion) in July, central bank data showed on Wednesday, a much smaller ...

Soviet-style inspiration for Zimbabwean food scheme

The Zimbabwe Mail-Aug 29, 2016
Barely a year after Zimbabwe's political elites refused to repay $1.4 billion after receiving tractors and agricultural inputs under a state-funded scheme, a new ...


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Current Global Financial System is Toast-John Rubino

From Greg Hunter's USA Watch Dog,


Financial writer John Rubino says don’t be fooled by the phony economy propped up by central banks. Rubino co-wrote a book a few years ago called “The Money Bubble.” It could have been written this week because almost everything he predicted then is coming to a head now.  Rubino contends, “The money bubble is basically the big bubble that all previous bubbles have been built on.  All the previous bubbles have come and gone, and “The Money Bubble” is about money, government debt and financial instruments, in general.  So, it’s a global bubble that is bigger than anything that has come before.  Part of the reason it has gone on so long is everybody is participating.  Every central bank has a printing press, and that allows them to fool people . . . . It fools people into thinking that the world is basically normal, and it’s not normal. . . . We are creating the conditions for the Mother-of-All financial crises.  It is taking longer to happen than was thought of a few years ago, but it is starting to happen now.  The QE (money printing) programs of the past few years, which were wildly experimental and really shocking to economists and everybody else, turn out not to work. . . . Either the system is getting ready to break down shortly or go on to a new level of experiments that are going to be even more dangerous . . . either way, the current system is toast.”


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Thanks NIST

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The 5000-Year Government Debt Bubble

The 5000-Year Government Debt Bubble

Wall Street Journal-16 hours ago
But sovereign debt has become more expensive. Governments have succeeded in making their bonds more expensive in part by printing money and buying the ...

IMF Signals Another Downgrade to Global Growth

Wall Street Journal - ‎1 hour ago‎
The IMF indicated it would downgrade its July 2.2% forecast for the world's largest economy this year. European economies are still struggling to escape the legacies of the financial crisis with high unemployment and debt. Japan keeps flirting with ...

America's Corporate Bond Party Goes on as Sales Near $1 Trillion

Bloomberg-20 hours ago
The extra yield U.S. investment-grade corporate bonds offer over Treasuries is 1.35 ... of the taper tantrum of 2013 or the Chinese currency devaluation of 2015.

S&P affirms Japan's debt rating as negative rates lower govt debt ...

Daily Mail-3 hours ago
TOKYO, Sept 1 (Reuters) - Standard & Poor's Ratings Services on Thursday affirmed Japan's A+/A-1 sovereign debt rating and maintained a stable outlook ...

Stimulus, negative rates fueling Japan's budget bloat

Nikkei Asian Review-17 hours ago
TOKYO -- Budget requests for the fiscal year starting in April have exceeded 100 trillion yen ($966 billion) for the third year in a row, bolstered by stimulus ...

Emerging markets brace for $100 bln debt issuance deluge

Reuters-4 hours ago
He expects at least another $46 billion of emerging market sovereign debt to be issued over the remainder of the year, the bulk of it this or early next month, and ...

Janus fund manager Bill Gross says we need a rate hike before ...

The Denver Post-16 hours ago
Bill Gross Billionaire money manager Bill Gross said negative interest rates are turning assets into a liability stifling the capitalist system. In his monthly ...

China Engages in 'Backdoor QE' as Monetary Policy Shifts, Says ...

Yahoo Finance-20 hours ago
A pedestrian walks past the People's Bank of China (PBOC) headquarters in Beijing, China, on Monday, Jan. 18, 2016. China's economy slowed in December, ...

Investors lose out on $500 billion as global sovereign bond yields plunge

CNBC - ‎9 hours ago‎
"Cash flow benefits have effectively been transferred from global investors to sovereign issuers, as sovereign borrowing costs have dropped in response to central bank monetary stimulus," Fitch said in the report. "This has posed new challenges for ...

Merkel Faces Home-State Defeat Over Immigration

Bloomberg-11 hours ago
Although analysts don't foresee a coordinated plan at the G20 level for a large fiscal stimulus plan, markets will be keenly focused on the extent to which policy ...

Australia's Lower Jobless Rate is Masking Record Underemployment

Bloomberg-18 hours ago
Although analysts don't foresee a coordinated plan at the G20 level for a large fiscal stimulus plan, markets will be keenly focused on the extent to which policy ...

Deutsche Bank refuses clients' demand for physical gold

RT - ‎1 hour ago‎
Xetra-Gold is a bond on the Deutsche Börse commodities market, and Deutsche Bank is a designated sponsor. On the website, Xetra-Gold says its clients have the right for physical delivery of gold. “Physically backed: The issuer uses the proceeds from ...

The trillion-dollar rise in US student debt, explained in six charts

The Globe and Mail-18 hours ago
Total student loan debt in the United States has multiplied over the past decade. It currently sits at $1.26-trillion (U.S.), or about $1-trillion greater than a dozen ...

Chinese banks' shadow loans grow despite regulatory glower

Reuters-9 hours ago
The shadow loan book at China's largest joint-stock lender, Industrial Bank Co, rose 4.4 percent to 1.23 trillion yuan, equivalent to 63 percent of its normal loan ...

Illinois' pile of unpaid bills could hit record of $14 billion next summer

Chicago Tribune-16 hours ago
Without changes, Moody's said Illinois could see a bill backlog of $14 billion by ... "Moody's does not anticipate Illinois would suspend its statutory debt service ...

Moody's warns no state budget may mean further credit downgrades

Chicago Sun-Times-21 hours ago
Moody's is also warning that if the state begins to borrow from debt service funds ... The downgrade put the state's credit rating two steps above the “junk” level.

Nigeria approves plan to borrow more from abroad as recession hits

Yahoo News - ‎8 hours ago‎
Nigeria has said it wants to switch its debt mix so that 40 percent of loans would come from abroad, compared with 16 percent now, and extend its debt maturity profile. It plans to borrow as much as $10 billion from debt markets, with about half of ...

Dividend cut as UK pension deficits rise to £710bn

Citywire.co.uk - ‎8 hours ago‎
A listed plastics company has cut its dividend because of its spiralling pension deficits in what may be a sign of things to come, as UK defined benefit (DB) pension scheme deficits hit £710 billion. Carclo, a specialist plastics maker with operations ...

Britain's Pension Problem Just Got £100 Billion Worse

Bloomberg - ‎13 hours ago‎
U.K. pension deficits surged by 100 billion pounds ($131.4 billion) in August, as the gap between company set-asides and their obligations to retirees ballooned by more than 16 percent in a month. So-called defined benefit pensions, which pay retirees ...

US Treasury Accuses EU of Grabbing Tax Revenues With Apple Penalty

Fortune - ‎20 hours ago‎
The United States accused the European Union of grabbing revenue intended for U.S. coffers when it ordered Apple Inc to pay up to $14.5 billion in back taxes, a decision that could come up at an international summit in China next week. The EU executive ...

Brazil opts not to raise taxes to meet 2017 fiscal goal

Reuters - ‎15 hours ago‎
The government made only modest budget cuts of just over 5 billion reais, relying on a rebound in the economy to raise enough revenues to meet its primary deficit goal for 2017. The government set a primary deficit goal of 163.9 billion reais, or the ...

Still no end to Greece's recession in sight

Kathimerini-20 hours ago
Imports also continued to slide, as they came to 20.9 billion euros in H1, ... This has taken the trade deficit 1.7 percent higher to 9.1 billion euros, against 8.9 ...

Kane Co. may issue risky bonds to fund pension liability

Chicago Daily Herald - ‎18 hours ago‎
With a $5.3 million budget deficit looming for 2017, Kane County officials are on the verge of making a pension move some government finance experts believe has more risk than value. The plan involves issuing $52 million in pension obligation bonds.

Elderly Healthcare in APAC to Cost $20 Trillion-Plus over Next 15 ...

Insurance Journal-Aug 31, 2016
Elderly healthcare in the Asia Pacific region will cost more than US$20 trillion between 2015 and 2030, according to a report published by Marsh & McLennan ...

Taxpayers Foot 70 Percent Of California's Health Care Tab, Study ...

Kaiser Health News-6 hours ago
Of $367 billion estimated to be spent on health care in the state in 2016, ... A growing national population of people over 65 will mean higher health care costs.

Obamacare Premiums Set to Rise, Even for Savvy Shoppers

New York Times-8 hours ago
Premiums for the lowest-priced silver health care plans are expected to rise by ... But people earning higher incomes, who pay the full cost of their insurance, will ...


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What a Sorry Lot We Are


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