Equity 1 Group
Pushing back the frontiers of economic ignorance and restoring sound financial foundations, one family at a time.

Aug
11

MisesInstitute  |  Daniel Lacalle

BofA estimates that about 9% of the largest companies could be categorized as “walking dead.”

The Bank of International Settlements (BIS) has warned again of the collateral damages of extremely loose monetary policy. One of the biggest threats is the rise of “zombie companies.” Since the “recovery” started, zombie firms have increased from 7.5% to 10.5%. In Europe, BofA estimates that about 9% of the largest companies could be categorized as “walking dead.”

What is a zombie company? It is — in the BIS definition — a listed firm, with ten years or more of existence, where the ratio of EBIT (earnings before interest and taxes) relative to interest expense is lower than one. In essence, a company that merely survives due to the constant refinancing of its debt and, despite re-structuring and low rates, is still unable to cover its interest expense with operating profits, let alone repay the principal.

This share of zombie firms can be perceived by some as “small.” At the end of the day, 10.5% means that 89.5% are not zombies. But that analysis would be too complacent.

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Aug
10

InfoWars  |  Paul Joseph Watson

Experts gear up for catastrophe that would “bring society to its knees”

"Black Sky Event": Feds Preparing For Widespread Power Outages Across U.S.

Federal government agencies are preparing for the possibility of “widespread power outages” across the U.S. as a result of a “black sky” event that could “bring society to its knees”.

An exercise sponsored by FEMA and the U.S. Department of Energy set to take place on August 23 called EarthEX2017 will wargame responses to catastrophes such as mega earthquakes, cyber terrorism or high altitude electromagnetic pulse attacks.
The exercise will simulate a “subcontinent-scale, long duration power outage, with cascading failures of all other infrastructures,” according to the official Earth Ex website.

“Black sky events” are defined as, “Catastrophic occurrences caused by man or nature that bring society to its knees.”

“Cars would have no fuel. Restaurants and grocery stores would be bare. Electricity could be out for months in such an event,” writes Mike Vasilinda.

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Aug
08

MarketWatch  |  Marie Lamagna

U.S. households collectively have more than $1 trillion in credit-card debt.

Lenders are giving more lines of credit to sub-prime borrowers.

American consumers just hit a scary milestone.

They now collectively have the most outstanding revolving debt — often summarized as credit card debt — in U.S. history, according to a report Monday released by the Federal Reserve. Americans had $1.021 trillion in outstanding revolving credit in June 2017. This beats the previous record in April 2008, when consumers had a collective $1.02 trillion in outstanding credit revolving credit.

“This record should serve as a wake-up call to Americans to focus on their credit card debt,” said Matt Schulz, a senior industry analyst at CreditCards.com, a credit card website. “Even if you feel your debt is manageable right now, know that you could be one unexpected emergency away from real trouble.”

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Aug
07

BloombergMarkets  |  Oliver Renick & Liz McCormick

Equity bears hunting for excess in the stock market might be better off worrying about bond prices, Alan Greenspan says. That’s where the actual bubble is, and when it pops, it’ll be bad for everyone.

“By any measure, real long-term interest rates are much too low and therefore unsustainable,” the former Federal Reserve chairman, 91, said in an interview. “When they move higher they are likely to move reasonably fast. We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace.”

While the consensus of Wall Street forecasters is still for low rates to persist, Greenspan isn’t alone in warning they will break higher quickly as the era of global central-bank monetary accommodation ends. Deutsche Bank AG’s Binky Chadha says real Treasury yields sit far below where actual growth levels suggest they should be. Tom Porcelli, chief U.S. economist at RBC Capital Markets, says it’s only a matter of time before inflationary pressures hit the bond market.

“The real problem is that when the bond-market bubble collapses, long-term interest rates will rise,” Greenspan said. “We are moving into a different phase of the economy — to a stagflation not seen since the 1970s. That is not good for asset prices.”

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Aug
07

BloombergBusiness  |  Lananh Nguyen & Liz McCormick

The U.S. dollar has fallen hard and currency traders are now betting on even more declines.

“Stock market hits another high with spirit and enthusiasm so positive,” he tweeted on July 12, in one of nine posts about the market this month. (He was at it again today, exclaiming “Highest Stock Market EVER” in a morning tweet.)

But he’s hardly tweeted a word about another, less rosy measure of Trump’s America: the U.S. dollar. The greenback has fallen hard on his watch and currency traders are now betting on even more declines.

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Aug
07

TheHill  |  Olivia Beavers

“We will of course intensify work related to import substitution, reduction of dependence on U.S. payment systems, on the dollar as a settling currency and so on. It is becoming a vital need,”

MOSCOW, Aug 7 (Reuters) – Russia will speed up work on reducing its dependence on U.S. payment systems and the dollar as a settling currency in response to U.S. sanctions, RIA new agency cited Deputy Foreign Minister Sergei Ryabkov as saying on Monday.

“We will of course intensify work related to import substitution, reduction of dependence on U.S. payment systems, on the dollar as a settling currency and so on. It is becoming a vital need,” Ryabkov was quoted as saying. (Writing by Polina Nikolskaya; Editing by Maria Kiselyova abd Dmitry Solovyov)

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Aug
04

France24  |  Alexander Martinez

On Thursday alone, the bolivar slumped nearly 15 percent on the black market, to be worth 17,000 to one US dollar.  In a year, the currency has lost 94 percent.

Venezuela’s money, the bolivar, is sinking faster and faster under an intensifying political and economic crisis that has left citizens destitute and increasingly desperate.

Its depreciation accelerated this week, after a disputed vote electing an all-powerful “Constituent Assembly” filled with allies of President Nicolas Maduro, which the opposition and dozens of countries have called illegitimate.

On Thursday alone, the bolivar slumped nearly 15 percent on the black market, to be worth 17,000 to one US dollar.

In a year, the currency has lost 94 percent.

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Jul
27
Jul
27

AutomaticEarth  |

Our central banks have caused our financial crises, not saved us from them.

If there’s one myth -and there are many- that we should invalidate in the cross-over world of politics and economics, it‘s that central banks have saved us from a financial crisis. It’s a carefully construed myth, but it’s as false as can be. Our central banks have caused our financial crises, not saved us from them.

It really should -but doesn’t- make us cringe uncontrollably to see Bank of England governor-for-hire Mark Carney announce -straightfaced- that:

“A decade after the start of the global financial crisis, G20 reforms are building a safer, simpler and fairer financial system. “We have fixed the issues that caused the last crisis. They were fundamental and deep-seated, which is why it was such a major job.”

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Jul
27