Posts belonging to Category debt



Sears files for bankruptcy

Massive debt load

Sears has filed for Chapter 11 bankruptcy protection, buckling under its massive debt load and staggering losses. Sears once dominated the American retail landscape. But the big question is whether its shrunken version can be viable or will be forced to go out of business, ending the final chapter for an iconic name that originated more than a century ago.

Sears filed in U.S. Bankruptcy Court in White Plains, N.Y. Sears says it will “close 142 unprofitable stores near the end of the year. Liquidation sales at these stores are expected to begin shortly. This is in addition to the previously announced closure of 46 unprofitable stores that is expected to be completed by November 2018.”

Chairman and CEO Edeard Lampert is giving up his CEO role but will remain as chairman. Three executives will take over the CEO functions for now. The filing came just before Sears would have had to repay $134 million in loans later on Monday.

http://www.cbsnews.com

‘Economy looks like 1937’ says Hedge Fund legend Ray Dalio

A downturn is coming in about two years

Ray Dalio is the founder and co-chief investment officer of Bridgewater Associates, the largest hedge fund in the world. Dalio is sharing his template for understanding debt crises which he says helped him and his fund foresee and navigate the financial crisis. He sat down with Business Insider CEO Henry Blodget to discuss this new book and his outlook for the economy. Follwoing is a transcript of the video.

Lehman Brothers went bust 10 years ago

Can it happen again?

In early 2007, the then chairman of the Federal Reserve, Ben Bernanke, dismissed the idea that the slowdown in the US housing market had profound implications. It was, according to the man running the world’s most powerful central bank, just a local affair. Everybody knows what happened next. Within 18 months the local problem in the US subprime mortgage market had ballooned into the biggest global financial crisis since the 1930s. When Lehman Brothers went bankrupt 10 years ago this week, it was the catalyst for a month of turmoil in which no financial institution was considered entirely safe.

Inevitably, the anniversary of those tumultuous weeks in late September and early October 2008 has prompted speculation about whether it could happen again. And, if so, what will be the cause? Looking around the global economy, there are plenty of potential candidates…

Greece emerges from eurozone bailout programme

Greece is now free to borrow money on the financial markets

Greece has successfully completed a three-year eurozone bailout programme designed to help it cope with the fallout from its debt crisis. For the first time in eight years, Greece is now free to borrow money on the financial markets. As a condition of the loans, the Greek government was forced to introduce a series of unpopular austerity measures.
The Greek economy has grown slowly in recent years but is still 25% smaller than when the crisis began. Together with assistance from International Monetary Fund (IMF), the loans given to Greece since 2010 amounted to more than €260bn – the biggest bailout in global financial history. The European Stability Mechanism (ESM) provided the country with €61.9bn (£55bn; $70.8bn) over the three years.

https://www.bbc.com

Venezuela’s inflation rate may hit 1,000,000 percent

Hyperinflation in Venezuela

 When the International Monetary Fund predicted this year that hyperinflation in Venezuela could top 13,000 percent, it seemed as if the South American country’s economic outlook could not get any worse.

It just did. With the situation in the country deteriorating faster than expected, the IMF has unveiled a far more severe prognosis, saying that Venezuela’s hyperinflation is poised to reach an annualized rate of 1 million percent by year’s end. That inflation rate is set to catapult socialist Venezuela into a rogue’s gallery of nations that have suffered the worst inflation rates in history.

Venezuela’s “is one of the most severe hyperinflation situations that we’ve known about since the beginning of the 20th century,” said Robert Rennhack, deputy director of the IMF’s Western Hemisphere Department.

http://www.washingtonpost.com

Berkshire got a $29 billion gift from new tax code

Aversion to debt

Warren Buffett published his annual letter on Saturday, and it came with some of the usual trimmings: sage advice and reflections on the past year’s success.

With bonds, the “coupon rate” is the interest rate that an issuer uses to calculate regular interest payments to investors. The longer the term of a bond, the higher the coupon is likely to be; you’re paid more to wait longer to get your principal back. Higher risk, too, affects the coupon, with high-yield bonds from less solid companies offering more generous interest payments than you’ll get from higher-rated corporations or from U.S. Treasury bonds. Buffett told investors that Berkshire Hathaway (BRKB)made a $65.3 billion net gain in 2017 — but “only $36 billion came from Berkshire’s operations.”
The rest was a gift from the new U.S. tax code.

http://www.cnn.com…  Febuary 26, 2018

Global Debt Hits Record $233 Trillion

The ratio of debt-to-gross domestic product is now 318 percent

Global debt rose to a record $233 trillion in the third quarter of 2017, more than $16 trillion higher from end-2016, according to an analysis by the Institute of International Finance. Private non-financial sector debt hit all-time highs in Canada, France, Hong Kong, South Korea, Switzerland and Turkey.

At the same time, though, the ratio of debt-to-gross domestic product fell for the fourth consecutive quarter as economic growth accelerated. The ratio is now around 318 percent, 3 percentage points below a high set in the third quarter of 2016, according to the IIF.

http://bloomberg.com/ … Mon., 08  January 2018

United States, planet’s leading crude oil producer in 2018

The United States is poised to ramp up crude oil production by 10% in 2018

The United States will produce about 11 million barrels per day, according to research firm Rystad Energy. Surging shale oil output should allow the United States to dethrone Russia and Saudi Arabia as the planet’s leading crude oil producer, Rystad predicted in a recent report. The U.S. hasn’t been the global leader, nor ahead of both Russia and Saudi Arabia, since 1975.

“The market has completely changed due to the U.S. shale machine,” said Nadia Martin Wiggen, Rystad’s vice president of markets.

The prediction shows how the fracking revolution has turned America into an energy powerhouse — a transformation that President Trump has vowed to accelerate by cutting regulation. This long-term shift has allowed the U.S. to be less reliant on foreign oil, including from the turbulent Middle East.

http://money.cnn.com/… Thu., 04  January 2018

Sharp comeback in confidence for Argentima

Wall Street’s bulls are rushing to the land of gauchos

Larry Fink says he “came away more confident than ever” on Argentina after spending two days in New York this month with the nation’s leaders. Fink is the CEO of BlackRock, which manages $5.7 trillion, the most of any firm in the world.

He’s far from alone. American investors poured a net $1.2 billion into Argentine stocks and funds between January and October, 12 times more than they did during the same period just two years ago, according to EPFR, a Boston-based firm that tracks fund flows. It’s also four times more than last year.

http://www.cnn.com…  Tue., 28  November 2017

EU wants Apple to pay taxes

EU takes Ireland to court for not claiming Apple tax windfall

The European Commission said on Wednesday it was taking Ireland to the European Court of Justice for its failure to recover up to 13 billion euros ($15.3 billion) of tax due from Apple Inc (AAPL.O), a move labeled as “regrettable” by Dublin.

The Commission ordered the U.S. tech giant in August 2016 to pay the unpaid taxes as it ruled the firm had received illegal state aid, one of a number of deals the EU has targeted between multinationals and usually smaller EU states.

http://www.reuters.com…  Thu.,  05  October 2017

Will Trump reappoint Yellen?

Central Bank’s massive bond-buying program worries Republicans

From her early days as Federal Reserve chair, Janet Yellen has been the target of criticism from Republicans worried that the central bank’s massive bond-buying programs and near-zero interest rates engineered by her predecessor would be the ruin of the country. With little more than four months left in her term and questions swirling over whether the White House will ask her to stay on for another four years, Yellen has turned that story around.

The Fed has raised rates faster than markets had thought possible this year and, on Wednesday, it announced its $4.5 trillion bond portfolio would begin to shrink in October. All the while, unemployment has plunged to boomtime levels and inflation has remained well in check. Now Yellen’s stock appears to be rising, both among her critics and on a real-money exchange where traders can place bets on who they think will be the next Fed chair.

http://www.reuters.comFri.,  22  September 2017

Toys R Us files for bankruptcy

Hundreds of millions in debt

Toys R Us, facing imminent deadlines to pay off hundreds of millions in debt, said Monday that it has filed for Chapter 11 bankruptcy protection.   The move comes on the cusp of the all-important holiday season, a period in which many retailers earn nearly half of their annual revenue, and a time of year that is particularly lucrative for the giant toy seller. The filing was long in the making.

The filing also strikes at the heart of one of the nation’s most iconic retailers, a household name for more than a generation. Toys R Us pioneered big-box toy retailing generations ago, a national chain that displaced many smaller, neighborhood toy stores. The company emphasized that its roughly 1,600 locations will remain open and it will continue to work with suppliers to make sure its shelves remain well-stocked with games, gadgets, and other toys.

http://www.usatoday.com…  Tue.,  19  September 2017

US debt is still climbing

The US government just passed $20 trillion in debt for the first time ever

For the first time in its history, the US federal government has more than $20 trillion in outstanding debt.

The milestone was technically hit Friday, with the Treasury Department settling its accounts at the end of the day with $20,162,176,797,904 of debt outstanding. Of that debt, the Treasury said $14,622,661,213,046 is held by the public, while $5,539,515,584,857 is held by various parts of the government, also known as Intragovernmental Holdings.

http://www.businessinsider.com…  Tue.,  12  September 2017

EU explores account freezes to prevent runs at failing banks

Discussions were due to continue in September

European Union states are considering measures which would allow them to temporarily stop people withdrawing money from their accounts to prevent bank runs, an EU document reviewed by Reuters revealed. The move is aimed at helping rescue lenders that are deemed failing or likely to fail, but critics say it could hit confidence and might even hasten withdrawals at the first rumors of a bank being in trouble.

The proposal, which has been in the works since the beginning of this year, comes less than two months after a run on deposits at Banco Popular contributed to the collapse of the Spanish lender.

It also come amid a bitter wrangle among European countries over how to deal with troubled banks, roughly a decade after a financial crash that required the European Central Bank to print billions of euros to prevent a prolonged economic slump.

http://www.reuters.com…  Fri.,  08  September 2017

US Debt

Americans’ debt level notches a new record high

Americans’ debt level notched another record high in the second quarter, after having earlier in the year surpassed its pre-crisis peak, on the back of modest rises in mortgage, auto and credit card debt, where delinquencies jumped. Total U.S. household debt was $12.84 trillion in the three months to June, up $552 billion from a year ago, according to a Federal Reserve Bank of New York report published on Tuesday.

The proportion of overall debt that was delinquent, at 4.8 percent, was on par with the previous quarter. However a red flag was raised over the transitions of credit card balances into delinquency, which the New York Fed said “ticked up notably.” Loosening lending standards have allowed borrowers with lower credit scores to access credit cards, Andrew Haughwout, an in-house economist, said in the report.

http://www.reuters.com…   Wed.,  16  August 2017

U.S. home sales stumble

Prices hit record high

U.S. home resales fell more than expected in June as a dearth of properties amid strong demand pushed prices to a record high, keeping first-time buyers on the sidelines. The housing market has experienced an acute shortage of homes for sale for about two years. As the labor market churns out more jobs and builders struggle to secure land, building materials and skilled labor, the situation could worsen.

“The fact that demand is so high is actually a good sign of economic health,” said Svenja Gudell, chief economist at Zillow. “But that’s probably small comfort to buyers, especially first-time buyers that are having an especially difficult time finding entry-level homes for sale.”The National Association of Realtors said on Monday existing home sales dropped 1.8 percent to a seasonally adjusted annual rate of 5.52 million units last month.

Economists had forecast sales falling 1.0 percent to a 5.58 million-unit rate. Sales were up 0.7 percent from June 2016. The shortage of properties has led to bidding wars, culminating in house price increases outpacing wage gains.

http://www.reuters.com…   Tue.,  25  July 2017