Tuesday, March 1, 2016

Today's Links

1--Some Real Costs of the Trans-Pacific Partnership: Nearly Half a Million Jobs Lost in the US Alone

• The TPP will generate net GDP losses in the USA and Japan. Ten years after the treaty comes into force, US GDP is projected to be 0.54 percent lower than it would be without the TPP. Similarly, the TPP is projected to reduce Japan’s growth by 0.12 percent.

• The TPP is projected to lead to employment losses overall, with a total of 771,000 jobs lost. The United States will be hardest hit, losing 448,000 jobs.

• The TPP will also likely lead to higher inequality due to declining labor shares of national incomes. In the United States, labor shares are projected to fall by 1.31 percent over ten years, continuing an ongoing multi-decade downward trend.

2--Fed’s Dudley says risks to economy rising, FT

Should the turmoil in markets persist, it would trigger a “more significant downgrade” to his outlook, Mr Dudley said, according to prepared remarks to be delivered on a trip to China. He said a further fall in market and survey-based inflation expectations would be “worrisome”, as doggedly low inflation could eventually become entrenched in investors and consumers’ outlooks

3--Red Light Flashing: no new energy debt was issued in February, oil price

The magnitude of the crisis facing the oil and gas sector is illustrated by the fact that broader U.S. corporates with credit ratings in junk territory are seen as less risky than investment-grade oil and gas companies....

The bond markets, in other words, are no longer confident that even large oil and gas companies are creditworthy....

Of course, rising bond yields is just another way of saying that the borrowing costs for energy companies have surged. As a result, after a record year in 2015 for bond issuance in the energy sector, the debt markets have now all but closed off. Bloomberg says that no new energy debt was issued in February.

The net debt levels across the U.S. energy sector ballooned in 2015, quadrupling from the year before. Net debt is now eight times EBITDA.

From mid-2014 through December 2015, an estimated 35 U.S. E&P companies have declared bankruptcy on more than $18 billion in debt.

4--Saudis kill their economy to aid Uncle Sam's war on Russia

The amount of money held in foreign reserves has fallen in almost direct proportion to the price of oil over the past 18 months. The world's most crucial commodity has lost about 70% of its value since mid-2014, falling from more than $100 (£72.17) a barrel to about $33 (£23.82) thanks to a massive oversupply in the market and stagnant demand.

Saudi Arabia, along with its fellow OPEC members, has strongly resisted calls to cut the amount of oil it produces, though it did recently agree to a freeze in production. ...

The country is now running a massive budget deficit, just shy of $100 billion (£72.2 billion), as it refuses to cut spending even though oil receipts are down. This led to Business Insider's Lianna Brinded arguing that the country's refusal to cut production of oil is effectively "killing" its economy.

The country has also discussed the possibility of floating its state oil company, Saudi Aramco.

5--The debt comes due: Corporations owe $9.5 trillion

Companies still have a little time before they must pay down the bulk of $9.5 trillion of debt maturing in the next five years. That’s the good news

But it’s not getting any easier for these corporations to borrow, at least not in the U.S. In fact, many of these obligations are becoming harder and more expensive to repay at a time when companies face a historic pile of bonds and loans coming due.

This wave of debt coming due through 2020 is bigger than previous five-year schedules of debt maturities in 2013, 2014 and 2015, according to Standard & Poor’s data. It includes about $2.3 trillion of junk-rated debt, with about $418 billion of that rated B- or lower. And it peaks in 2020, with $2.1 trillion of debt coming due, which is greater than the peaks of the most recent previous maturity walls....

It’s not terribly surprising that companies have a bigger debt load to pay down. They borrowed trillions of dollars on the heels of unprecedented stimulus efforts started by the Federal Reserve at the end of 2008 during the worst financial crisis since the Depression. They kept piling on the leverage as central banks around the world doubled down on low-rate policies and kept purchasing assets to encourage investors to buy riskier securities.

If investors don’t return to their carefree ways of lending, global companies will be in for a rude shock. All that money that came so cheaply in the recent past will actually have to be paid back at some point. It’s not just a merry-go-round of lending. The buck must eventually stop with them.

6--China Feb factory activity shrinks more than expected, layoffs on the rise


The establishment is aghast that Donald Trump is storming towards the presidency. They are blind to the fact their unconcealed felonious actions rise to the level of treason in the eyes of average hard working Americans. The fabric of this country is being torn asunder by a contemptible class of corporate fascists, ego maniacal bankers, shadowy billionaires, and media titans. They have reaped billions of profits since 2009 as the Fed and politicians in D.C. rolled out “solutions” designed to enrich them. They are confident their failures will be shifted to the American people again. The American people may have a different opinion this time. Pitchforks and torches are being readied....

Corporate earnings reports for the fourth quarter are pretty much in the books. The deception, falsification, accounting manipulation, and propaganda utilized by mega-corporations and their compliant corporate media mouthpieces has been outrageously blatant. It reeks of desperation as the Wall Street shysters attempt to extract the last dollar from their muppet clients before this house of cards collapses.

The CEOs of these mega-corporations accelerated their debt financed stock buybacks in 2015 as stock prices reached all-time highs and are currently so overvalued, they will deliver 0% returns over the next decade. This disgraceful act of pure greed by the Ivy League educated leaders of corporate America to boost their own stock based compensation is reckless and absurd.

It is proof education at our most prestigious universities has produced avaricious MBAs following financial models and each other like lemmings going over the cliff

Dividends and stock buybacks in 2015 topped $1 trillion for the first time according to S&P Capital IQ Global Markets Intelligence. As CEOs have borrowed billions to buyback their inflated overvalued stock, they have put the long-term sustainability of their firms at extreme risk.

When a dead retailer walking like Macy’s, which is seeing it’s sales fall and profits crater by 30%, announces a $1.5 billion stock buyback when it already is weighed down with $7 billion in debt, you realize the men running these companies have no common sense or concern for the long-term viability of their companies. They’ll get a golden parachute no matter how badly they screw the pooch.

8--The global economy risks becoming trapped in a low growth, low inflation, low interest rate equilibrium.

9--Sanders Must Offer Tulsi Gabbard The VP Slot. Now!

10--Chemical terrorism now a reality, extremists getting real warfare agents - Lavrov

11--O'Reilly agonistes

Following the initial ruling last year, it emerged O’Reilly’s 17-year-old daughter claimed she had witnessed O’Reilly “choking her mom” and that he had “dragged her down some stairs”.

She has said she found O’Reilly’s temper “scary” and also branded him an “adulterer” and an absentee father as he was “never around”.

...In 2004, O’Reilly settled a sexual harassment lawsuit levelled against him by a former producer for the ‘Falafelgate’ scandal, who claimed he repeatedly subjected her to “lewd, lascivious, vile, and threatening” behavior.

12--Turkish PM admits aiding jihadists in Syria

Here is how Davutoglu replied: “How have the Syrian people defended themselves if they lack Turkish support? Would have they been able to defend Aleppo otherwise? If a true Syrian moderate opposition exists today, this is thanks to Turkey. If the regime doesn’t control all of the country’s territory today, this is thanks to Turkey and some other states. If the Syrian people are still in Tell Rifat, Aleppo and Azaz, defending their lands, after last week’s heavy bombardment that Russia conducted there with 500 sorties and without targeting IS, this is thanks to our support. Our support will continue.”

But Davutoglu’s remarks constitute an open confession of how he and Erdogan have made Turkey a direct party to the Syrian war. If the Damascus regime has lost territory control because of Ankara’s role, Davutoglu’s words mean he assumes also the historic responsibility for the seizure of these territories by myriad jihadi and radical Islamist forces, including IS and Jabhat al-Nusra. If regime opponents have been able to defend themselves thanks to Turkey, as Davutoglu says, they could have done so only with weapons sent from Turkey. Hence, Davutoglu’s remarks constitute also an implicit acknowledgement of arms supplies to the rebels. And his pledge of continued support echoes like the continuation of arms supplies as well.

In sum, Ankara has given up the idea of intervention, but the position it maintains keeps the risk of a military confrontation with Russia alive.

13--The Australian Defence White Paper and the drive to war

14--G-20 summit rules out coordinated stimulus


The G-20 meeting of finance ministers and central bankers held in Shanghai over the weekend has failed to come up with any coordinated plan of fiscal stimulus to revive the global economy. In fact such a plan was not even considered because of the deepening divisions among the major economic powers.

The communiqué from the meeting said downside risks to the global economy had increased, amid volatile capital flows and a large drop in commodity prices, but did nothing to initiate coordinated fiscal policies to boost growth. This was despite calls for a move in this direction from the International Monetary Fund and the Organisation for Economic Cooperation and Development in the lead-up to the meeting.

The closest it came was an acknowledgment in the communiqué that “monetary policy alone cannot lead to balanced growth.” Anything more than that was ruled out as each of the major powers insisted it was up to others to take action.

15--Share Buybacks: The Bill Is Coming Due

16--macronomy.blogspot   http://macronomy.blogspot.com/2016/02/macro-and-credit-monkey-and-banana.html

"US deleveraging – not that great
US consumer deleveraging stands out as one of the major achievements of the Yellen Fed. Yet the corporate picture looks much less impressive. Total amount
of US corporate debt has approached the highs seen in the financial crisis (chart 3). 

- source Deutsche Bank

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