The
Next Domino: Espirito Santo Holding Company Preparing To File Bankruptcy - (www.zerohedge.com) While Banco Espirito Santo
continues to exist on fumes and life support (that last ditch equity injection
by Baupost a week ago may not have been Seth Klarman's wisest investment), a
key link in the Espirito Santo Holding Company structure is preparing to default.
According to Reuters: ESPĂRITO SANTO GROUPS HOLDING COMPANY RIOFORTE
PREPARING TO FILE FOR CREDITOR PROTECTION IN LUXEMBOURG – SOURCES
For those
confused, "creditor protection" = bankruptcy. Which
one is RioForte again? We showed this handy org chart a few days ago, here it
is again. The good news: as every
single European bank "expert" predicted last week when scrambling to
avoid a panic, there is no fear of contagion. Aside from this one of course.
Remember: there is always only one cockroach. The full report
from Reuters: Rioforte, a holding company of Portugal's
troubled Espirito Santo banking clan, is preparing to file for creditor
protection, sources familiar with the matter said on Tuesday, hours before
Rioforte was due to repay over $1 billion in debt to Portugal Telecom. The
filing will be made with a court in Luxembourg, where Rioforte is registered,
one source close to the process said, adding that the filing is aimed at
preventing insolvency that would entail uncontrolled asset sales at any price.
The
Implosion Is Near: Signs Of The Bubble's Last Days - Stockman - (www.davidstockmanscontracorner.com) The
central banks of the world are massively and insouciantly pursuing financial
instability. That’s the inherent result of the 68 straight months of
zero money market rates that have been forced into the global financial
system by the Fed and its confederates at the BOJ, ECB and BOE. ZIRP fuels
endless carry trades and the harvesting of every manner of profit spread
between negligible “funding” costs and positive yields and returns on a wide
spectrum of risk assets. Moreover, this central bank sponsored regime of
ZIRP and money market pegging contains a built-in accelerator. As carry trade
speculators drive asset prices steadily higher and fixed income spreads
steadily thinner—- fear and short interest is driven out of the casino, making
buying on the dips ever more profitable and less risky. Indeed, the explicit
promise by central banks that the money market rate will remain frozen for the
duration and that ample warning of any change in rate policy will be “transparently”
announced is the single worst policy imaginable from the point of view of
financial stability. It means that the speculator’s worst nightmare—–suddenly
going “upside down” due to a sharp spike in funding costs—-is eliminated by
central bank writ.
Puerto
Rico Utility May Default on January Interest Payment - (www.bloomberg.com) The
Puerto Rico Electric Power Authority, which supplies most of the commonwealth's
electricity, won't make a January interest payment to investors, according to
Municipal Market Advisors. The agency, called Prepa, used $41.6 million of
reserve funds to help pay bondholders $417.6 million on July 1. With the
reserve containing only one year of scheduled interest expense, now depleted by
about 10 percent, "we expect the bond trustee is unlikely to make any more
distributions to bondholders, reserving cash for likely litigation
expenses," Matt Fabian, a managing director at Concord,
Massachusetts-based MMA wrote today in a report.'
US
debt will eclipse GDP in 25 years: CBO - (www.cnbc.com) U.S. public debt remains on an unsustainable
path and will reach 106 percent of economic output in 25 years versus about 74
percent currently, the Congressional Budget Office said on Tuesday, marking a
slight increase from projections made last September. The non-partisan budget
referee agency attributed the changes in its long-term budget outlook based on
current tax and spending laws to a slight downward revision in its economic
growth projections, partly offset by assumptions of reduced interest rates and health
care costs. The revisions represent essentially no shift in the CBO's view that
despite some near-term relief, the federal deficits are unsustainable and could
lead to another financial crisis in the long run. It attributes much of the
increase in deficits and debt through 2039 to the costs of caring for an aging
population, especially the so-called Baby Boom generation.
Emerging
nations plan their own World Bank, IMF - (news.yahoo.com) Fed
up with U.S. dominance of the global financial system, five emerging market
powers this week will launch their own versions of the World Bank and the
International Monetary Fund. Brazil, Russia, India, China and South Africa —the
so-called BRICS countries — are seeking "alternatives to the existing
world order," said Harold Trinkunas, director of the Latin America
Initiative at the Brookings Institution. At a summit Tuesday through Thursday
in Brazil, the five countries will unveil a $100 billion fund to fight
financial crises, their version of the IMF. They will also launch a World Bank
alternative, a new bank that will make loans for infrastructure projects across
the developing world. The five countries will invest equally in the lender,
tentatively called the New Development Bank. Other countries may join later.
In
disputed sea, Vietnam and China play high-stakes cat and mouse - (www.reuters.com)
China tells U.S. to stay out of South China Seas dispute - (www.reuters.com)
China tells U.S. to stay out of South China Seas dispute - (www.reuters.com)
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