By Lee Adler, The Wall Street Examiner: One of the purposes of the Fed's Zero Interest Rate Policy (ZIRP) was ostensibly to allow banks to rebuild their capital through suppressed funding costs and increased profits. Theoretically that would add to their capital. But in this chart, we see that the growth rate of bank capital has fallen to zero.
A quarterly survey by the Bank of Japan brought a dose of reality to the glorious hype surrounding Abenomics, whose stated beneficiaries are the big banks and Japan Inc., including the formerly omnipotent nuclear power industry that Abenomics is trying to restore to its glory. But consumers are struggling with reality, apparently.
Supercar-makers Lamborghini, Ferrari, and Rolls-Royce are reacting to the forces whacking global markets for luxury products: a corruption crackdown in China, Abenomics in Japan, and the Fed’s money-printing in the US. The idea that sales in China, which is printing billionaires by the dozens, are crashing is a hard-to-swallow concept for the industry.
By Tim Parker, Benzinga Staff Writer: The news that Twitter filed for an IPO was huge, but the company planned to make the filing public this week with the goal of listing its shares within a few months. The process is now on hold; the SEC shut down! At the worst possible time – what might be a market peak! Delaying the IPO could get it caught up in a downdraft.
You can’t get away from it. The media fawn over it. Rational neighbors drool unexpectedly. Ads flood the airwaves. "Learn our simple three-step system on how to flip homes," the announcer says. Everyone knows: untold riches are waiting for you. "Right here in the Bay Area," he says. It’s hot, so hot that people will get burned. And banks will get hit (again).
“This sort of political brinkmanship is the dominant reason the rating is no longer ‘AAA,’” S&P ratings agency wrote in a research note. More ominously, it warned that if Congress failed to pass a debt-ceiling hike before the out-of-money date in mid-October, it would cut the U.S. to “selective default.” And then there would be the post-default era.
Bubble Trouble: Record Junk Bond Issuance, A Barrage Of IPOs, “Out Of Whack” Valuations, And Grim Earnings Growth
When Blackstone’s global head of private equity, Joseph Baratta, said Thursday night that “we” were “in the middle of an epic credit bubble,” the likes of which he hadn’t seen in his career, he knew whereof he spoke. Junk bond issuance hit an all-time record in September. IPOs are flying off the shelf. But earnings growth is grim – and plunging. What gives?
By James Burgess of Oilprice.com. The bad news from the Fukushima nuclear power plant has been the massive leaks of radioactive water into the Pacific, likely to get worse as Tepco, the operator, is unsure how to stop the leaks. But now there's a much bigger issue that could prove dangerous to much of the world, and again Tepco could be responsible.
"One of the hallmarks of financial manias is that propositions which are perfectly absurd nevertheless get widely embraced by those caught up in the excitement," writes David Stockman – in this case, Blackstone’s LBO of Extended Stay Hotels, and its subsequent sale at a ridiculous three times replacement cost, funded by Citibank ... a pre-packaged scam.
By Michael Lombardi, Profit Confidential: I want to share a chart. It compares the S&P 500 to the number of Americans on food stamps since the “recovery” began. They are on the same skyrocketing trajectory! In fact, since late 2009, for every one-percent increase in food stamps usage, the S&P 500 increased two percent! This is very troublesome.
By Dennis Miller: So long Larry Summers! It appears that Janet Yellen will be the next Fed chairman. Summers was Wall Street's choice. So good riddance. But Yellen isn't high on my list either: she has never cast a dissenting vote against QE. But seniors and savers have been sacrificed for the benefit of the banking system, and the Fed orchestrated it all.
Great Start in Germany: Three Days After Election Victory, Merkel’s Party Breaks Campaign Promise Of “No Tax Hikes”
Germans pay a lot of taxes. The value added tax was raised to 19%. The state grabs 42% of any income above €52,882 and 45% above €250,731. There’s the church tax, solidarity tax, gasoline tax.... Not much is left over when a German is done paying taxes. So, during the campaign, Chancellor Merkel’s party pledged categorically not to raise taxes.
By Rory Johnston, OilPrice.com: CN Rail, Nexen, and Ottawa are considering to ship Albertan oil to the West Coast of Canada by train, according to documents obtained by Greenpeace. The oil is to be loaded on tankers for export to Asia – to get Alberta’s burgeoning oil production to international markets, rather than just the US.
Why would anyone buy this crap? No, not the clothes in J.C. Penny’s stores – which practically no one is buying – but the shares it just sold. It desperately needed to raise capital because it’s bleeding cash and won’t be around much longer without lots of new cash to bleed. So it did. At a horrendous expense, overnight, to existing stockholders.
It could be an aberration. Or it could be the first visible crack in the insane leveraged buyout craze that has spread across the country: JPMorgan, Bank of America, and Goldman Sachs could get hit with a loss of up to $156 million on the $780 million in junk debt they pledged to sell to fund the buyout of teen-fashion retailer rue21. With consequences for investors.
By Marin Katusa, Chief Energy Investment Strategist: Vladimir Putin is on a roll. Ever since the Russian president-turned-prime-minister-turned-president got into office 13 years ago, he's been deftly maneuvering Russia back into the ranks of global heavyweights. These days, he's averting cruise missiles from Syria before breakfast.
How much have Americans received of the nearly $3 trillion the Fed printed since the financial crisis? The recipients included JPMorgan, now negotiating to settle its various mortgage scams for $11 billion; it made $53.2 billion in profits over the last three years. American consumers weren’t so lucky. And Wal-Mart shoppers have been hit the hardest.
By Lee Adler, The Wall Street Examiner: New home sales remain depressed, near historic lows despite the biggest August sales increase in 7 years. Housing may not be a drag on the economy, but it’s not making a positive contribution either. Yet housing inflation rages, with new home prices above the peak of the 2006 bubble. If that was a bubble, what’s this?
TEPCO, owner of the Fukushima nuke, whose lackadaisical handling of the fiasco is a fiasco itself, was bailed out by taxpayers after the disaster. It got another bailout as the government decided to deal itself with the radioactive groundwater leaking into the ocean. TEPCO should be bankrupt. But to add insult to injury, the government said, let’s not hurt investors!
Any “Government Is Evil To A Certain Extent” – Russian Deputy Prime Minister Shuvalov About The Troubled Economy
Global investors, whose money Russia needs to develop its economy, are staying away in droves. They have lots of reasons to just say no – political risks, judicial nightmares, legal bogs, corruption, an economy spiraling into a slowdown.... “There are questions about the future stability of the Russian economy,” said First Deputy PM Shuvalov. But he has a plan.