Wednesday, July 30, 2014
Posted by David Dayen at 4:10 am |
Today is technically the drop-dead date for Argentina to work out an agreement to pay off vulture funds that long ago purchased their distressed debt, or else the country will go into default for the second time in thirteen years. 11th-hour negotiations with a mediator have yielded no results thus far. WSJ divines momentum from the length of the mediation session, which is pretty weak tea.
The default would actually be to the exchange bondholders who already hold agreements with Argentina for restructured debt payments going back to the 2001 default. Judge Thomas Griesa prevented the country from making a scheduled interest payment to the exchange bondholders without the vulture funds getting their $1.5 billion first (the vultures paid roughly $48 million for the distressed debt, so it’s a huge payday).
The sanction spiral concocted by the US and the EU in response to the ever more tragic fiasco in Ukraine is supposed to force, or at least encourage Russian President Vladimir Putin to abandon whatever schemes he may have concerning Ukraine. So the 28 EU members are trying to hash out new sanctions today, to be duct-taped to the existing spiral that ineffectually jabs at 87 Russian individuals and 20 Russian organizations.
This time, the sanctions are supposed to have teeth. And a broad impact that would squeeze the Russian economy, much to the liking of the US government. Under discussion are, among other goodies, curtailing Russian banks’ access to EU capital markets and kicking the defense and energy sectors where European technologies play a big role.
Topics: Guest Post
Posted by David Dayen at 2:45 am |
As the recession in Europe painfully proves all attempts at austerity to be dead-ends, the search for the miraculous “silver-bullet” continues. The European Central Bank (ECB) has initiated a negative “nominal” interest rate. That means the ECB, the first monetary authority to ever take such an action in a common currency zone, will be charging commercial banks for the funds they deposit (overnight) rather than paying them interest.
Topics: Guest Post
Posted by David Dayen at 2:00 am |
This week marks the 100th anniversary of a nearly forgotten yet critical moment in global finance. As the looming outbreak of World War I appeared more and more imminent when Austria made an ultimatum to Serbia in the last week of July 1914, the resulting fear in global markets set off a massive financial panic. Investors, fearing unpaid debts, pulled out of stocks and bonds in a scramble for cash, which at this point in history meant gold. The London Stock Exchange reacted by closing on July 31 and staying closed for five straight months. The U.S. stock exchange, which witnessed a mass dumping of securities by European investors in exchange for gold to finance the war, would also close on the same day, for about four months. Britain declared war while on a bank holiday. Over 50 countries experienced some form of asset depletion or bank run. Here’s an incredible statistic: “For six weeks during August and early September every stock exchange in the world was closed, with the exception of New Zealand, Tokyo and the Denver Colorado Mining Exchange.”
Just to remind you: our meetup is 6:00 PM today at the Press Club. I’ll be there till at least 8:30 PM. Wolf Richter will be joining us, so I’m sure you’ll have fun meeting him as well. It looks like we’ll have a good, lively group.
Posted by Yves Smith at 12:48 am |
ObamaCare Roundup: Counting, Court Cases, Corruption, Narrow Networks, and an Amazing Catch on the Filibuster
The Obama administration continues its weary slog toward the goal of selling millions of Americans a defective financial product, because markets.
Topics: Health care
Posted by Lambert Strether at 5:55 am |
This story would be funny if it weren’t so pathetic. Yesterday, the Financial Times reported that the New York Fed woke up out of its usual slumber and realized that the crisis has changed nothing and that banks still
are in the business of looting have unaddressed ethics issues.
The dollar’s dominant role in international trade and finance has proved remarkably resilient. This column argues that financial stability – and the policy and institutional frameworks that underpin it – are important new determinants of currencies’ international roles. While old drivers still matter, progress achieved on financial-stability reforms in major currency areas will greatly influence the future roles of their currencies.
More and more it’s looking like Obama’s global warming and climate change “initiative” is just a legacy play. He says the right words, then does the wrong deeds.
Posted by Lambert Strether at 6:55 am |
Back-of-the-envelope calculations the CIA processed suggest several hundred people, at least. And we don’t know where they are now.
MDs think about you the patient as unique in your need for health care. MBAs think about you the widget as a source of profit and institutional power.
This week, the US hopes to get the EU to agree to impose so-called tier three sanctions on Russia to punish them for their alleged role in the downing of MH17 and for supporting the rebels in Ukraine. That would include prohibiting investment in Russian equity and debt of Russian banks more than 90 days maturity by European citizens as well as barring EU banks from sourcing funding for them on a regulated market.