Friday, November 28, 2014

Today's links

"I am all for getting our nose out of the rest of the world’s problems and taking care of our myriad problems here at home. That said, if our idiot “leaders” are bound and determined to blunder into another war, I’d much rather they bomb the hell out of Saudi Arabia (and the rest of those crappy little Sunni sheikdoms along the Persian Gulf) rather than Iran and Syria. They’ve been a pain in our ass for 40 years. In 20-20 hindsight, we should have let Saddam take Kuwait — and then helped him roll right on into Riyadh as well. Why do we keep destroying modern, secular Arab countries (Iraq, Libya, Syria) and protect the medieval religious fanatics that finance and export Wahhabi terrorism to the world?? After all, bin Laden was Saudi, as supposedly were most of the 911 hijackers. Cut off the head of the snake — send all the Gulf “royals” to see Allah and get their 70 virgins! That would go a helluva long ways toward solving a lot of the world’s problems."  6th-generation Texan, comments section, Naked Capitalism 

 "Bravo! Except the head of the snake resides in Washington DC."  EoinW, Naked Capitalism

1--Malaysia excluded from MH17 probe – for 'not pointing fingers at Russia'?, RT

2--Oil plunge could trigger financial crisis, wsws

the drive to wipe out higher-cost US shale producers could have far-reaching consequences for global financial markets. Energy projects in the United States have been heavily financed through the issuing of high-risk or junk bonds. In 2010, energy and materials companies made up 18 percent of the US high-index yield, a measure of so-called sub-investment grade borrowers. Today they account for 29 percent, as a result of massive borrowing by drilling companies.

Research carried out by Deutsche Bank showed that should the price fall to $60 per barrel, which is eminently possible, there could be a default rate as high as 30 percent among some US borrowers.
A report published earlier this month in the British Telegraph warned that the “rush to pump more oil in the US has created a dangerous debt bubble in a notoriously volatile segment of corporate credit markets, which could pose a wider systemic risk in the world’s biggest economy.”

Evidence of the oil price slide’s impact on major banks came to light in an article published in yesterday’s Financial Times. It reported that two major banks, Barclays and Wells Fargo, faced “potentially heavy losses on an $850 million loan made to two oil and gas companies, in a sign of how the dramatic slide in the price of oil is beginning to reverberate through the wider economy.”
The report also noted that of the 180 distressed bonds in the Bank of America Merrill Lynch high-yield index, some 52, or nearly 29 percent, were issued by energy companies.

3--Oil price slump could trigger another US debt default crisis as frackers face bankruptcy, Irish Independent

West Texas Intermediate crude is currently trading at multi-year lows of around $75 per barrel, down from $107 per barrel in June.
"A shock of that magnitude could be sufficient to trigger a broader high-yield market default cycle, if materialised," warn Deutsche strategists Oleg Melentyev and Daniel Sorid in their report.
Five years ago at the beginning of what has become known as the US shale oil revolution, drillers started to load up on debt to fund their operations and acquire new acreage as vast areas of North America started to open up for exploration.

In 2010, energy and materials companies made up just 18pc of the US high-yield index - which tracks sub-investment grade borrowers - but today they account for 29pc of the measure after drilling firms spent the past five years borrowing heavily to underwrite the operations.
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The result of this debt splurge has been a spectacular rise in US oil and gas output.
This rush to pump more oil in the US has created a dangerous debt bubble in a notoriously volatile segment of corporate credit markets, which could pose a wider systemic risk in the world's biggest economy.

Should oil prices fall for a prolonged period of time many frackers forced to borrow at a higher rate could be forced out of business and ultimately default. According to research from JP Morgan Asset Management, of the 12 largest shale oil basins in the US, 80pc are barely profitable.

4--Saudi Arabia Carries Out 61st Execution Of 2014, mpn

5--An Economic Recovery for the 1%, moyers

Average income growth in US recoveries: top 10% versus the bottom 90%. (Graph:  Pavlina Tcherneva)
Average income growth in US recoveries: top 10% versus the bottom 90%. (Graph: Pavlina Tcherneva)

6---Despite earlier claims that US had no intention of supplying Ukraine with weapons, a recent leak of government documents has revealed plans to supply weapons to Kiev. The leak was published online by Ukrainian hackers group CyberBerkut, sputnik

7---Why the US is to blame for trouble in Mexico, FP

8---Guest Post: The Coming Collapse Of The Petrodollar System, zero hedge

9--The Geopolitics of Gas and the Syrian Crisis: Syrian “Opposition” Armed to Thwart Construction of Iran-Iraq-Syria Gas . global research

10--Big investors pull back on housing, cnbc

11--America: your days as a global superpower are numbered, Telegraph

We've seen it before: the Roman empire fell, then the British. America's economic dominance could be about to end - and China is taking its place.
Based on current trends China’s economy will overtake America’s in purchasing power terms within the next few years,” Tim Reid of Deutsche Bank wrote in a research note. “Given this analysis it strikes us that today we are in the midst of an extremely rare historical event – the relative decline of a world superpower.”
The US’ economic prowess has been waning since the 1950s, but the downturn has sharpened over the last 15-or-so years. Part of this is due to internal political and economic issues in the US. Political polarization in the US is at its highest level in decades, economic confidence is drooping and most Americans are no longer in favour of international military intervention - once one of the pillars of American freedom and might.

But this is not just the story of America’s decline. China is on the way up - and could account for more of global GDP than the US by 2018, according to the IMF's World Economic Outlook index.
Another report, released earlier this week, said that China's nominal GDP will overtake that of the US by 2024, buoyed by a three-fold increase in consumer spending.
“China has begun to return to the position in the global economy it occupied for millenia before the industrial revolution,” Reid wrote, adding that China is on its way to overcoming the “centuries-long economic underperformance” that has held it back until recently.

12---U.S. 10-year yield slumps below 2.17% as oil collapses, marketwatch

13--Abenomics’ hit by more lackluster data, JT

The government released a string of lackluster economic data Friday showing that inflation hit its lowest level for more than a year, dealing another blow to the Abe administration’s attempts to conquer years of falling prices and tepid growth

Adjusted for the hike, however, the core inflation rate came in at 0.9 percent, compared with 1.0 percent the previous month — its lowest level since October 2013.
The weak reading makes the Bank of Japan’s 2.0 percent inflation target — which it initially aimed to hit in 2015 — look increasingly out of reach.

The BOJ shocked markets last month by saying it would expand its asset-buying stimulus program to about ¥80 trillion annually in a bid to overcome deflation and kick-start the economy.
“Even despite the BOJ’s surprise move, we maintain our view that there is a very long way to go before achieving the plus 2.0 percent target,” Credit Agricole said.

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