2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

[vinoveri]

Re: What is a "debt deflation"

A herd of sheep come to mind.

or stampede of bulls ...

[Slimprofits]

Re: What is a "debt deflation"

It's a magic number that means nothing except that traders believe it does and so it does mean something.

I get it now, Thanks EJ.

[Slimprofits]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

http://blogs.barrons.com/incomeinves...6-in-february/

The only thing lower than junk-bond yields these days is the default rate among junk-rated U.S. companies, which fell further to just 1.6% in February from 1.9% in January, Moody’s reported today. The default rate is measured on a trailing 12-month basis. Globally, the default rate fell to 2.4% in February from January”s revised rate of 2.6%.

[vinoveri]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

http://blogs.barrons.com/incomeinves...6-in-february/

Why do we need to default when we have essentially unlimited liquidity at near 0 costs. Roll-over, double down.

Borrow from Fed or primary dealers for 0-2%
Lend to subprime companies at 10%+ (skim 1-2% origination fee)
Securitize and sell to ETFs, mutual and pension funds

Watch all the hamsters in these distressed companies from executive management to mail room clerks continue to misallocate capital and push paper

What a life.

When does it end?

[Slimprofits]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

Take it easy on the mail room clerks! The only paper they push is fit for a copy machine.

[vinoveri]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

no, no, nothing against them, in fact I'm feeling sorry for them. But I guess because of our great system and those bankers doing "God's work" many including those clerks have jobs and can maintain an adequate level of "aggregate demand".

Print money, dole it out, get people to spend, and we have an economy .... of sorts

[Slimprofits]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

Martin Fridson of the FridsonVision financial research service...says investors shouldn’t rely on the sort of logic that assumes default rates must rise first before any trouble starts. Writing for Standard & Poor’s LCD today, Fridson looks back at 2007... [..] Fridson says distressed bonds started 2007 trading at an average of 67.1 cents on the dollar, while the bonds that defaulted during 2007 finished that year at 66.6 cents on average, meaning the bulk of price losses had occurred earlier. Fridson says an increase in distressed issuers, and price declines among bonds with the lowest C-level ratings, can be a precursor to market losses regardless of the default rate during a given calendar year.

http://blogs.barrons.com/incomeinves...rises-fridson/

[Slimprofits]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

March 12, 2014

CoBank has issued an event of default letter under the $40 million debt service reserve letter of credit that it provides to Terra-Gen's Coso Geothermal power portfolio. Coso has used draws on the reserve to meet debt service on its $629 million in senior lease bonds. Declines in production at the...

[oboy]

Re: What is a "debt deflation"

It's a magic number that means nothing except that traders believe it does and so it does mean something.

It appears Peter Grandich agree's.He has suggested to now short the market.

[vt]

Re: What is a "debt deflation"

http://bullmarketthinking.com/peter-...back-on-again/

[Slimprofits]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

http://www.bloomberg.com/news/2014-0...ni-credit.html

Puerto Rico’s record $3.5 billion sale of junk-rated municipal debt buys the struggling U.S. territory at least 15 months of financial breathing room. It took demand from hedge funds to get the deal done.

To help lure buyers, the commonwealth agreed to give investors the ability to sue in a New York court, a first for Puerto Rico general obligations, in the event of a default on this deal, according to bond documents.

[ProdigyofZen]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

and the vulture funds already know in another year PR is going to have to restructure their debt after the hedge funds have already sold the GO bonds to mutual funds/insurance companies during this year once the price pops higher.

I can't believe they agreed to be sued in NY court.... a death wish for the country. I believe their outstanding muni debt was 9 billion and now they just added another 3.5 billion on top of that, 1/3rd of their total muni debt in one offering.

When does it stop? How can these countries continue to finance their governments with more and more debt every year?

[jiimbergin]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

Of course, PR is not a country it is an unincorporated territory of the US. Maybe they assume the Feds will eventually bail them out.

[jk]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

a lot of public managers are like a lot of private managers: make the results look as good as possible for the next few years. you'll be elsewhere by the time the repercussions hit the fan.

[Slimprofits]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

a lot of public managers are like a lot of private managers: make the results look as good as possible for the next few years. you'll be elsewhere by the time the repercussions hit the fan.

They're not personally liable, only "the common good."