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[Tuff-Stuff]

AutomaticEarth<>Debt Rattle June 30 2017

Posted by Raúl Ilargi Meijer at 9:35 am


Claude Monet Impression Sunrise 1872

• Trump Travel Ban Goes Into Effect Amid New Court Challenge (BBG)

• Yes, Ms. Yellen…There Will Be Another Financial Crisis (Roberts)

• Car Deals: Must Be Subprime, Must Finance Through Chrysler Capital (Mish)

• Signs Of An Auto Bubble: Dealer Offers “Low Credit Score Discount” (ZH)

• Japan May Industrial Output Slumps At Steepest Pace In Over 6 Years (R.)

• Bob Woodward Chides NYT, Mainstream Media: ‘Fair Mindedness is Essential’ (DC)

• Russia-gate Is A Scandal In Search Of A Specific Crime (Robert Parry)

• New York Times Forced To Retract Longstanding Lie About Russian Hacking (M.)

• Maria Bartiromo Slams John Podesta Over His Ties To Russia (PFW)

• Comey Friend Unveils “Smoking Gun” Nothingburger (ZH)

• Peace is Popular (Ron Paul)


• Greece Garbage Cleanup Begins As Workers Halt Strike Action (K.)

• Italy Threatens To Turn Away Foreign NGO Ships With Rescued Migrants (dpa)

• Closing Italian Ports ‘A Cry For Help’, Say Weary Crew Of Rescue Boat (G.)

She’s gotta go. That was just too crazy. A few points and graphs from Lance’s longer article.


• Yes, Ms. Yellen…There Will Be Another Financial Crisis (Roberts)

That is a pretty bold statement to make considering that every one of her predecessors failed to predict the negative consequences of their actions. Will there will be another “Financial Crisis” in our lifetimes? Yes, it is virtually guaranteed. The previous “crisis” wasn’t about just “an asset gone bad,” but rather the systemic shock caused by a “freeze” in the credit markets when Lehman Brothers filed for bankruptcy. Counterparties evaporated, banks froze lending and the credit market ceased to function. Credit, not the stock market, is the “lifeblood” of the economy. Of course, it is all good now because the Fed says so with Ms. Yellen placing a great amount of faith in the Fed’s own carefully constructed, and recently released results, of “bank stress tests.” Interestingly, EVERY bank passed with flying colors. In other words, the Millennial generation has now passed the baton of “Everybody Gets A Trophy” to the banking sector. [..] Here is why Janet Yellen is wrong in believing another “Financial Crisis” can’t occur:

Catalyst 1: Delinquency & Defaults We are already seeing the early warning signs with delinquency rates rising and commercial lending on the decline in both consumer and commercial and industrial loans. [..] Of course, this also includes the credit problems of the collapse in Commercial Real Estate which is grossly leveraged at a time when prices have begun to stagnate with an oversupply of inventory sitting on the ground.

Catalyst 2: Leverage & Robots It isn’t just bank loans which will catalyze the coming financial crisis. It is also, be the massive surge in debt and leverage over the last eight years including student loans, credit cards, corporate debt and margin loans. As I discussed recently in the “Illusion Of Liquidity:” “The illusion of liquidity has a dangerous side effect. The process of the previous two debt-deleveraging cycles led to rather sharp market reversions as margin calls, and the subsequent unwinding of margin debt fueled a liquidation cycle in financial assets. The resultant loss of the ‘wealth effect’ weighed on consumption pushing the economy into recession which then impacted corporate and household debt leading to defaults, write-offs, and bankruptcies.”

Catalyst 3: Pensions Lastly, and a point clearly missed by Ms. Yellen in her quest to dismiss financial crisis risks, is the $3 Trillion “Pension Crisis” that is just one sharp downturn away from imploding. The cresting of the “baby boom” generation now puts these massively underfunded pensions at risk of a “run on assets” during the next downturn which could send the entire system into chaos. Of course, this problem can be directly traced to the malfeasance of pension fund managers, and pension boards, which used excessively high return rates to lower costs of contributions.

READ More BRIEFS or link out for full articles @
https://www.theautomaticearth.com/2017/06/debt-rattle-june-30-2017/