January 14, 2016

OK, I Get it, this is Going to be a Mess: Standard & Poor’s Lowers Boom at Worst Possible Time

OK, I Get it, this is Going to be a Mess: Standard & Poor’s Lowers Boom at Worst Possible Time
by Wolf Richter • January 13, 2016


[font color="blue"]Worst drop in the “net outlook bias” since the Financial Crisis.[/font]

The world’s biggest beer conglomerate Anheuser-Busch InBev’s acquisition of the world’s second biggest beer conglomerate SABMiller, both of which are getting their clocks cleaned in the US by over 4,000 mostly upstart craft brewers, isn’t going to improve the flavor of their brewskis. But the $106-billion deal is going to flood the market with one of the largest bond offerings in history.

It’s the first big bond deal this year. To fund and complete last year’s M&A frenzy, many more bond deals are looming on the horizon, at the worst possible time since 2009, according to Standard & Poor’s.

AB InBev has now started marketing this bond monster. In October, it was rumored that it could eventually issue $55 billion of bonds, plus up to $15 billion of loans. The US portion of the deal now being marketed is likely to be about $25 billion, Bloomberg reported. That alone would make it the second largest offering to finance an acquisition, behind Verizon’s $49 billion offering to fund its Vodafone deal.

About $630 billion in mega acquisitions from the record M&A frenzy in 2015 are scheduled to close this year and are still waiting for funding, according to Bank of America strategists cited by Bloomberg. They include Dell, Anthem, and Newell Rubbermaid. On top of the acquisitions this year. ..............(more)

http://wolfstreet.com/2016/01/13/standard-poors-lowers-boom-on-corporate-credit-worst-since-financial-crisis/

January 14, 2016

Hillary Clinton’s Wall Street Reform Plan Leaves Credit Rating Agencies Untouched

http://www.truthdig.com/eartotheground/item/hillary_clintons_wall_street_reform_plan_leaves_credit_rating_20160113


via truthdig:



“Clinton’s vision of financial reform neglects one part of the industry everyone agrees was an essential factor in the 2008 crisis: the credit rating agencies, which assess the worthiness of Wall Street securities for investors,” writes David Dayen at The Intercept.

Dayen continues:

Hillary Clinton’s response to Bernie Sanders’s plan to aggressively break up the big banks responsible for the financial crisis is to suggest that he is naive.

“My plan also goes beyond the biggest banks to include the whole financial sector,” Clinton wrote in a New York Times op-ed in December. “My plan is more comprehensive,” she said at the first Democratic debate in October — and for that reason, “frankly, it’s tougher.” (…)

Sanders’s plan, released last week, would no longer allow the companies that issue securities to pick which rating agency they use — a simple but outrageous practice that creates an enormous conflict of interest and helps facilitate fraud.

The heart of Clinton’s pitch on Wall Street is that she recognizes all potential hazards. But there is not one word in her big reform plan about the rating agencies.

Read more here.

—Posted by Alexander Reed Kelly.

January 14, 2016

Bernie Sanders Is Tapping Into a Vein of Anger Over Health Care

from truthdig:


Bernie Sanders Is Tapping Into a Vein of Anger Over Health Care

Posted on Jan 13, 2016
By Bill Boyarsky


Obamacare is leaving millions in serious financial pain, pointing up the need for universal health care—Medicare for all. That’s Sen. Bernie Sanders’ position, and it is a crucial difference between him and Hillary Clinton, his chief rival for the Democratic nomination for the presidency.

Reiterating one of his major themes Saturday, Sanders told a Putting Families First forum in Des Moines, Iowa, “What this campaign is about is ending the disgrace of the United States being the only major country not to provide health care to all people as a right.”

Clinton, who did not join Sanders and fellow candidate Martin O’Malley at the forum, has offered a considerably more limited plan. She would fix the Affordable Care Act rather than replace it with Medicare for all. She would limit what patients pay for doctor visits and prescription drugs and repeal the law’s planned tax on high-cost, employer-sponsored insurance. And she would try to stop excessive insurance rate increases and limit drug price increases.

These would just be fixes to a system scathingly described this way by Robert Pear of The New York Times: “For many families, the Affordable Care Act has not made health care affordable.”

A recent study by The New York Times and the Kaiser Family Foundation shows how Obamacare falls short of rescuing Americans from the nagging medical insecurity the act was supposed to have ended. .............(more)

http://www.truthdig.com/report/item/bernie_sanders_is_digging_into_a_vein_of_anger_over_health_care_20160113

January 13, 2016

Did You Know Banks Can Take Your Money in A Crisis?

Published on Jan 8, 2016
When the next financial crisis comes - the big banks could save themselves by stealing right out of your checking account. Banking expert Ellen Brown, Public Banking Institute/Web of Debt/The Public Bank Solution will explain how in tonight's Conversations with Great Minds.

January 13, 2016

The Rise of Shadow Banks and the Repeal of the Glass-Steagall Act

The Rise of Shadow Banks and the Repeal of the Glass-Steagall Act

Wednesday, 13 January 2016 00:00
By Deena Zaidi, Truthout | News Analysis


Prior to the 2008 financial crisis, the Federal Reserve had an important role - to solely act as a "lender of last resort" to traditional commercial banks. But during the crisis, the financial support was extended to many non-banking firms like money market mutual funds, the commercial paper market, mortgage-backed securities market and the tri-party repo market. Besides the extensive lending, non-commercial banks (also known as shadow banks) like Bear Stearns and Lehman Brothers were first to fail, triggering one of the worst financial crises across the world.

A shortage of short-term bank debt, a lack of liquidity in the commercial paper market and a sudden drop in confidence in the money market mutual fund industry initiated the crisis. Moreover, shadow banks helped in generating low-quality loans to investors seeking higher returns. All these financial products were traded through a network of financial institutions as part of the "shadow banking system."

Economist Paul McCulley, in his 2007 speech at the Annual Financial Symposium hosted by the Kansas City Federal Reserve Bank in Jackson Hole, Wyoming, coined the term "shadow bank." Traditional commercial banks have been the driving force for creating liquidity in the economy. They accept the illiquid liabilities of both nonfinancial and financial entities for their own liquid liabilities and have access to the emergency funding of the Federal Reserve.

The shadow banking system, in contrast, introduced activities that generated liquidity through capital markets without public guarantees and provided access to the central bank as the "lender of last resort." Unlike traditional commercial banks, shadow banks are unregulated and not subject to the traditional banking regulation system. This means that they cannot borrow in an emergency from the Federal Reserve, unlike traditional banks. The reason they are called shadow banks is because they remain uninsured under the Federal Deposit Insurance Corporation (FDIC), or roughly speaking, they remain in the shadows of the traditional banking system.

The Increasing Size of Shadow Banking in the US

Investment banks, structured investment vehicles, hedge funds, non-bank financial institutions, money market funds, mutual funds and exchange-traded funds are all a part of the shadow banking system and are not required to maintain any reserves or emergency capital. "No regulations" in a "regulated environment" could be the biggest worry of the shadow banking system. Often beyond the control of regulators and monetary policy, shadow-banking activities can resort to risky lending. According to the New York Fed, shadow banks have "increased the fragility of the entire financial system." While the total of non-bank financial intermediaries decreased immediately after the 2008 financial crisis, the number of shadow banks have picked up in recent years. ................(more)

http://www.truth-out.org/news/item/34387-the-rise-of-shadow-banks-and-the-repeal-of-the-glass-steagall-act

January 13, 2016

The “Enthusiasm Gap" between Bernie Sanders & Hillary Clinton

Published on Jan 11, 2016

Neil Sroka, Democracy for America joins Thom. It's just three weeks until the Iowa caucuses - and Vermont Senator Bernie Sanders is in a statistical dead heat with former Secretary of State Hillary Clinton. And that's despite the fact that Washington insiders have spent months saying that Bernie Sanders is just less electable than Hillary. We’ll be talking about why the insiders got it so wrong.

January 13, 2016

TYT: Bernie Sanders Takes The Lead

January 13, 2016

Gov. Snyder to the rescue (cartoon)

http://www.freep.com/story/opinion/columnists/mike-thompson/2016/01/12/snyder-flint-lead/78684440/

January 13, 2016

Las Vegas: Light Rail Presented as Best Option to Connect Strip, Airport, Downtown

NV: Light Rail Presented as Best Option to Connect Strip, Airport, Downtown

J.D. MORRIS ON JAN 13, 2016
SOURCE: MCCLATCHY


Jan. 12--Why does Las Vegas need light rail?

It would link the airport, the Strip and downtown Las Vegas, a critical connection that would benefit both the economy and the tourist experience, a local transportation official said today.

And it's the best type of transit to accomplish that goal, according to David Swallow, senior director of engineering and technology with the Regional Transportation Commission.

Swallow told the board of the Las Vegas Convention and Visitors Authority that planners looked at multiple technology options. They eventually recommended light rail because it has the flexibility to be expanded into a larger system, it's a proven technology that has been used elsewhere and it could draw in "a certain ridership," he said.

"Light rail systems tend to have a little panache that attracts a different type of rider," Swallow said. .............(more)

http://www.masstransitmag.com/news/12158044/light-rail-presented-as-best-option-to-connect-strip-airport-downtown

January 13, 2016

U.S. Media Condemns Iran’s “Aggression” in Intercepting U.S. Naval Ships — in Iranian Waters

(The Intercept) News broke last night, hours before President Obama’s State of the Union address, that two U.S. Navy ships “in the Persian Gulf” were “seized” by Iran, and the 10 sailors on board were “arrested.” The Iranian government quickly said, and even the U.S. government itself seemed to acknowledge, that these ships had entered Iranian waters without permission, and were thus inside Iranian territory when detained. CNN’s Barbara Starr, as she always does, immediately went on-air with Wolf Blitzer to read what U.S. officials told her to say: “We are told that right now, what the U.S. thinks may have happened, is that one of these small boats experienced a mechanical problem . . . perhaps beginning to drift . . . it was at that point, the theory goes right now, that they drifted into Iranian territorial waters.”



It goes without saying that every country has the right to patrol and defend its territorial waters and to intercept other nations’ military boats that enter without permission. Indeed, the White House itself last night was clear that, in its view, this was “not a hostile act by Iran” and that Iran had given assurances that the sailors would be promptly released. And this morning they were released, exactly as Iran promised they would be, after Iran said it determined the trespassing was accidental and the U.S. apologized and promised no future transgressions.

Despite all of this, most U.S. news accounts last night quickly skimmed over – or outright ignored – the rather critical fact that the U.S. ships had “drifted into” Iranian waters. Instead, all sorts of TV news personalities and U.S. establishment figures puffed out their chest and instantly donned their Tough Warrior pose to proclaim that this was an act of aggression – virtually an act of war: not by the U.S., but by Iran. They had taken our sailors “hostage,” showing yet again how menacing and untrustworthy they are. Completely typical was this instant analysis from former Clinton and Bush Middle East negotiator Aaron David Miller, now at the Woodrow Wilson International Center for Scholars:

Iran detains US sailors. Released promptly or not, a hostile act by a regime that acts w/o US cost/consequence https://t.co/0MNy0FnsjI

— Aaron David Miller (@aarondmiller2) January 12, 2016

....(snip)....

Just imagine what would happen if the situation had been reversed: if two Iranian naval ships had entered U.S. waters off the East Coast of the country without permission or notice. Wolf Blitzer would have declared war within minutes; Aaron David Miller would have sprained one his fingers madly tweeting about Iranian aggression and the need to show resolve; and Joe Scarborough would have videotaped himself throwing one of his Starbucks cups at a picture of the mullahs to show them that they cannot push America around and there “will be hell to pay.” And, needless to say, the U.S. government would have – quite rightly – detained the Iranian ships and the sailors aboard them to determine why they had entered U.S. waters (and had they released the Iranians less than 24 hours later, the U.S. media would have compared Obama to Neville Chamberlain). ...............(more)

https://theintercept.com/2016/01/13/us-media-condemns-irans-aggression-in-intercepting-us-naval-ships-in-iranian-waters/