Aftershocks, Part 1: That Austrian Bank

"Sometimes little things are the start of much bigger things. Probably the most famous historical example of this is the June 1914 assassination of an Austrian archduke who, it’s safe to say, 99% of the world had neither heard of nor cared about. But the aftershocks of the deed produced the biggest war in human history.

More recently, the US government’s 2008 decision to allow mid-tier investment bank Lehman Brothers to fail is frequently blamed for turning a mortgage bubble into a global financial collapse.

So in trying to understand the world it pays to look beyond the headlines to the secondary and tertiary effects of whatever is happening. And right now, more than the usual number of events and/or trends seem capable of turning a sector-specific story into a broader crisis. This series of columns will look at some of them, beginning, appropriately, with Austria, where the government has decided to “bail-in” rather than a bail out a failed bank. Already, the collateral damage is mounting:

Heta Damage Spreads in Austrian Downgrades, German Losses

(Bloomberg) — Austria’s decision to wind down Heta Asset Resolution AG sent ripples through the financial system, causing credit rating downgrades in Austria and bank losses in Germany.

Moody’s Investors Service cut the rating of Carinthia province, which guarantees 10.2 billion euros ($11.1 billion) of Heta’s debt, by four levels to Baa3 from A2, and said it may lower the ratings of three state-owned Austrian banks exposed to it. Dexia SA’s German unit, Deutsche Pfandbriefbank AG and NRW Bank said yesterday they own Heta bonds that may suffer losses.

“Notwithstanding the intention of the central government to protect taxpayers under the new banking resolution regime, Moody’s sees the steps taken so far as adding higher uncertainty to developments,” the ratings company said late Friday in a statement on the Carinthia downgrade. “Susceptibility to an adverse scenario has increased as a result.”

 at http://dollarcollapse.com/the-economy/aftershocks-part-1-that-austrian-bank/

Debt Bomb Going to Explode in September 2015-David Morgan

"Renowned precious metals analyst David Morgan is out with a new book called “The Silver Manifesto.” In a chapter called “The Debt Bomb,” Morgan lays out the biggest problem and the biggest reason to own precious metals. Morgan contends, “Basically, the United States have exported our inflation to every other country. So, for them to stay competitive, they are required to weaken their own currencies for what is called competitive advantage. It simply means if they don’t print . . . their currencies would become too strong, and they would not be able to export. In order to keep trade flowing, these other countries are basically required to do what the U.S. government does, and that is export a great quantity of un-backed paper promises that are impossible to pay back. That’s the crux of “The Debt Bomb.” It’s going to explode. . . . The basic premises are: You default on the debt . . . or you keep kicking the can down the road, and you continue to debase the currency, which is what governments have always done when it’s a non-backed currency. If you look at the value of the Federal Reserve from 1913 to now, in a little over a hundred years, the Federal Reserve itself will admit that 100 cents is now worth about 4 cents. So, you have lost 96% of the value of the U.S. dollar. . . . That has been a failure, a tremendous failure. That is a collapse in slow motion. Now, what we are really arguing about is what’s going to happen to the last 4 cents of the U.S. dollar. . . . It looks to me that at some point, a tipping point, that you will get an acceleration . . . and things will change dramatically.”

at http://usawatchdog.com/debt-bomb-going-to-explode-in-september-2015-david-morgan/

Jim Rogers: Expect more Turmoil in Global Markets

"Rogers Holdings Chairman Jim Rogers on predicting the markets, investing in currencies and investing in Russia..."

at http://jimrogers1.blogspot.com.tr/2015/03/jim-rogers-expect-more-turmoil-in.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+blogspot/WOHK+(Jim+Rogers+Blog)

All the Major Oil Fields Production is Static or Declining

"HB: Could the recent move in oil prices indicate a fundamental positive for the economy?

Jim Rogers : It's a fundamental positive for anybody who uses oil, who uses energy. It's not a positive for places like Canada, Russia, or Australia. It seems to me that this is a bit of an artificial move. The Saudis, from what I can gather, are dumping oil because the US has told them to in order to put pressure on Russia and Iran. And it's probably not a real move. I read about shale oil like you do. But at the same time, North Sea production is declining. Russian production will start declining next year. All the major oil fields that we know about - all the production is static or declining. So it doesn't quite add up on any kind of medium-term basis I can see."

at http://jimrogers1.blogspot.com.tr/2015/03/all-major-oil-fields-production-is.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+blogspot/WOHK+(Jim+Rogers+Blog)

Celente – Why The Closing Of London Gold Vaults Will Shake The World!

"On the heels of the remarkable news from Andrew Maguire today that HSBC is closing all of their gold vaults in London, today the top trends forecaster in the world called the news from Maguire“groundbreaking and earth-rattling.”  Celente then stunned King World News by exposing why this will shake the very foundation of the gold world.

Eric King:  “Gerald, your thoughts on this remarkable news that Andrew Maguire exposed to KWNthat HSBC announced they are closing all of their gold vaults in London — a real shock for their clients.”

Another Shocker – HSBC Is The Custodian For GLD

Gerald Celente:  “It should be a shock and it’s big news as is the rest of Andrew Maguire’s insights(in his KWN interview).  What’s so important about HSBC closing down all 7 of their London gold vaults is that the Spyder Gold Trust, ticker symbol GLD, the custodian of that GLD gold is none other than HSBC….

King World News: Continue reading the Gerald Celente interview after a key CNBC piece below regarding HSBC and their role with the gold ETF GLD:

[From CNBC]:  “While there are several gold exchange-traded products available, the SPDR Gold Trust, with over $60 billion in assets, is far and away the largest.

OK, so when you invest in the GLD you have an ownership interest in a Trust, which owns gold.Where is the gold, and who looks after it?

That is the job of the custodian. In the case of this ETF, the custodian is HSBC. The firm is responsible for safekeeping of the bars.

Where is the gold?

In the case of the GLD, in a vault in London…HSBC is required to notify Bank of New York every business day about the amount of bullion that is moved in and out of the allocated account. Every month HSBC also provides a weight list that identifies each bullion bar being held.”

Is The Gold Even There?

Gerald Celente continues:  “So if they are closing down all the vaults, where is the gold going?  Who’s going to be holding it, or is it really even there (in the vaults)?  So this should be shocking news to everyone that the Spyder (GLD) gold is now crawling out of HSBC vaults, going to whom?

Dark Cloud Over GLD

Who will be the new custodian?  Who is seeing if the gold is really there?  So this is shocking news because this also puts a dark cloud over the whole GLD Spyder (Gold Trust) experiment.”

Eric King:  “Gerald, when you say this puts a cloud over GLD, how do you think this will unfold in terms of how institutions view (the safety of) GLD?”

Mainstream Media Silence

Celente:  “This is huge news and King World News and Andrew Maguire are the ones who are breaking it.  And it’s not hitting the wires (of the mainstream media) as it should.  How many people really know that the Gold Trust is supposed to be in hard bullion that’s being held by a bank that’s now closing its vaults?

So how many people (and institutions) that are in GLD know the details of who is holding what and how much of what they are holding and where it is?  I would say very few.  And less than very few know, according to the groundbreaking and earth-rattling interview by Andrew Maguire, that HSBC is going to be closing their 7 (London gold) vaults.  That is huge news that should be headline news (in the mainstream media).”

at http://kingworldnews.com/celente-closing-london-gold-vaults-will-shake-world/

The Grand Deception Continues

"March 8 – (King World News) – The NFP jobs report for February was a complete joke. It didn’t match up at all with the plethora of weak data for the month such as; falling construction spending, disappointing durable goods and factory orders, negative consumer spending and retail sales, weak existing home sales, rising initial jobless claims and increasing layoffs reported by Challenger Grey and Christmas….

Continue reading the Michael Pento piece below…

Also, private data from the ADP payroll report showed only 212k jobs created in February; not the 295k reported by BLS. In addition, the Household survey conducted by the BLS showed that just 96k jobs were created. And more importantly, the Labor Force Participation Rate dropped yet again. 

There just isn’t any way that nearly 300k net new jobs were created and, at the same time, people became so discouraged with the labor market that they stopped looking for work. Therefore, I still believe this number will be revised lower and that the continued weakening economic data will prevent the Fed from increasing rates more than once this year. That is why I think gold is still a hold for now and will be a strong buy later this year when the US Dollar tops out..."

at http://kingworldnews.com/grand-deception-continues/

Andrew Maguire – Who Smashed Gold And Why As HSBC Shocks Clients By Closing All London Gold Vaults!

"...Physical Demand Exceeds Mine Supply – Takedown Is Naked Short Selling

The downside manipulations have become so embarrassingly obvious to anyone connected to the strong physical markets. There is no way of hiding that these sales are conducted in the face of a market where physical demand continues to exceed mine supply, meaning these sales can only be effected by way of high leveraged naked short selling.

Bullion Banks' 100/1 Leveraged Paper Positions

These too-big-to-fail banks are once again playing a high-risk game with taxpayer money. They are so obviously mismatched to their underlying physical holdings that large institutional entities are unwinding their fractional gold and silver risks. The resulting deleveraging exposes the bullion banks' rehypothecated positions. As this accelerates it is forcing a 100/1 unwind of paper positions. 

Eric, last week we talked about a membership-based physical exchange that has stealthily been built over the last 3.5 years and is now bullet-proof from LBMA interference.  In our interview last week we talked about how this physical trading platform provides a real alternative to the closed-loop LBMA system. 

It all boils down to the fact that providing direct access to the wholesale market, without going through a bullion bank, empowers the end user. Up until now, the end user hasn’t been able to directly access the wholesale market..."

at http://kingworldnews.com/andrew-maguire-smashed-gold-today-hsbc-shocks-clients-closing-london-gold-vaults/

A Terrifying World Of Bubbles And Geopolitical Chess Moves – Meanwhile, Where Is The Gold?

"With the eyes of the world recently focused on soaring stock markets, today a 50-year market veteran warned King World News that we are now living in a terrifying world of bubbles and geopolitical chess moves, and he also asked: what is really going on behind the scenes and where is the gold?  He also discussed the truth about what is really happening around the world.

John Embry:  “Last week was a particularly bizarre one for gold and silver.  All week any rallies were viciously rebuffed, so I was very uncomfortable going into Friday.  Then the extremely bogus U.S. Jobs Report, which Michael Pento brilliantly commented on, facilitated a total slaughter in gold, silver and the mining shares…."

at http://kingworldnews.com/terrifying-world-bubbles-geopolitical-chess-moves-meanwhile-gold/

Putin's Approval Rating Rises to 86 % - Independent Poll

"Russian President Vladimir Putin's approval rating has jumped to 86 percent, a 17-percent increase since February 2014, the Levada Center, an independent pollster, says.

Putin Warns Kiev Against Blaming Territorial Losses in Donbas on Russia

Russian President Vladimir Putin's approval rating has jumped to 86 percent, a 17-percent increase since February 2014, according to a recent poll by the independent Levada Center, media reports said.
While the majority approved of Putin's presidency, 13 percent of respondents disapproved or refused to answer the question, according to the poll.
It also revealed that 59 percent of those polled currently trust Putin.
Russian Prime Minister Dmitry Medvedev's approval rating is now 64 percent, a 7-percent decline since September 2014..."

at http://sputniknews.com/russia/20150226/1018785250.html#ixzz3TLvs61NL

Russia, Iran Sign New Agreement on Bushehr NPP

"Russia and Iran signed an agreement on March 2 to supply services to the Bushehr nuclear power plant, the head of Rosenergoatom said.

According to Rosenergoatom Chief Executive Officer Evgeny Romanov, the firm agreed on a five-year cooperation deal with Iran, he told Russian News Agency Rossiya Segodnya (Russia Today).
Both sides came to the agreement that Roseenergoatom, a subsidiary of Rosatom, will take part in building new power stations in Bushehr.
Bushehr power station has a 1,000 MW nuclear reactor which has been generating electricity since 2014.
Russian Company Rosatom and Iran's Atomic Energy Organization signed a treaty in 2014 to build the second and third units of Bushehr Power Plant."

at http://sputniknews.com/middleeast/20150302/1018941502.html#ixzz3TLvfnqpG

Bill Gross: Too Much Debt, Too Many Zombie Corporations, Low Interest Rates Destroy Pension System

"In an Bloomberg Television interview Bill Gross of Janus Capital spoke with Bloomberg Television's Trish Regan about the outlook for Federal Reserve policy, the U.S. economy and his objectives at Janus Capital.

Key Quotes

• "Not even thin gruel is being offered to our modern-day Oliver Twist investors. You have to pay to come to the dinner table and then sit there staring at an empty plate."
• "The interest rate can't be raised substantially even over the next two to three years."
• "The US has escaped the liquidity trap that euroland and Japan are in. But, not necessarily for all time."
• "[Low interest rates] keeps zombie corporations alive because they can borrow at 3 and 4 percent, as opposed to the 8 or 9 percent. It destroys business models. It's destroying the pension industry and in the insurance industry."
• "ultimately, [low interest rates] destroy the capitalistic model at the margin. Instead of investing in the real economy, [corporations] can now simply borrow at close to 0 percent and buy their own stocks, which yield 2 or 3 percent on a dividend basis and provide a return of 6 or 7 percent on an earnings to price ratio basis."

at http://globaleconomicanalysis.blogspot.com/2015/03/bill-gross-too-much-debt-too-many.html#vGaqX8DA24mHcmZ6.99

Richard Russell – The Shocking Secret Central Planners Are Hiding From The World

"As people continue to digest breaking news out of Greece and Ukraine, today the Godfather of newsletter writers, 90-year-old Richard Russell, discussed the shocking secret central planners are hiding from the world.  Russell also spoke about how this will impact people across the globe.

New Record Highs

Richard Russell: "I scour the newspapers for hints of coming turning points. By my calculations, the markets remain bullish. Massive amounts of money have gone into the US dollar and US Treasury Bonds. New record highs in the Dow attract the retail public.

My Largest Investment

I follow numerous gold items daily. Something is going on with gold. There’s a secret that’s causing every central bank plus Russia and China to be buying gold. Personally my biggest investment position is in physical silver and gold, plus a large position (for me) in TriContinental Preferred (TY.P), an excellent preferred stock with a fixed dividend of $2.50 per share..."

at http://kingworldnews.com/richard-russell-shocking-secret-central-planners-hiding-world/

Will This Pull The Rug Out From Under Major Markets?

"With the Dow near 18,200, crude oil still below $50 and gold on the move, today a legend in the business sent King World News a powerful piece that covers everything from Nasdaq 5000 to stock buybacks and what could pull the rug out from under major markets.

From Art Cashin's notes: "Buyback Fever – Corporate repurchases continued at a blistering pace.  Here's a bit from Bloomberg:

Stock buybacks, which along with dividends eat up sums of money equal to almost all the Standard & Poor’s 500’s earnings, vaulted to a record in February, with chief executive officers announcing $104.3 billion in planned repurchases. That’s the most since TrimTabs Investment Research began tracking the data in 1995 and almost twice the $55 billion bought a year earlier.

Even with 10-year Treasury yields holding below 2.1 percent, economic growth trailing forecasts and earnings estimates deteriorating, the stock market snapped back last month as companies announced an average of more than $5 billion in buybacks each day. That’s enough to cover about 2 percent of the value of shares traded on U.S. exchanges, data compiled by Bloomberg show.

Records show that companies have bought over $2 trillion of their own shares since the low of 2009.  They are on a pace to spend about 95% of their earnings on buybacks and dividends.  No wonder we're at new highs.

Reminiscences Of Things Past – The return of Nasdaq to the 5000 level saw the financial media scrambling to parade folks to "recall" what it was like 15 years ago.  Some of the recollections were – shall we say – foggy.

Several folks claimed that the Fed had raised rates to tame the soaring stock market and in doing so had inverted the yield curve.  Well, the yield curve was inverted alright but the Fed's action had little to do with taming the market.  The Fed was acting to clean up a mess that they, in fact, had created.

In 1997, the currency of Thailand, the Thai Baht collapsed, spreading chaos to the other Asian Tigers of southeast Asia. The Fed, and other central banks, poured money into the system to calm things down.

Before they got a chance to drain that infusion out, the Russian ruble collapsed, causing another infusion.  Before they were done with that Long Term Capital Management collapsed and the Fed added even more money.

Next came Y2K, when all the computers would fail and your bank records would evaporate.  To offset the expected hording of money by the public, the Fed pumped up reserves even further.  When Y2K came within hailing distance, and no hording had occurred, the Fed began to draw down the flood of reserves that they had created over two years.  By March of 2000 that pulled the rug out from under the Nasdaq and just about everything else.  All in hands of professionals."

at  http://kingworldnews.com/will-pull-rug-major-markets/

US inflames South China Sea disputes

"Top US intelligence and military officials used hearings of the Senate Armed Services Committee (SASC) and House Appropriations Subcommittee of Defense on February 26 to step up accusations against China over its construction of facilities on islands and reefs in the South China Sea. The immediate result has been the rise of tensions between China and the Philippines—which lays claim to some of the same territory as Beijing—and warnings by Chinese officials for the US to stay out of the dispute.
Appearing before SASC to present a “Worldwide Threat Assessment,” Director of National Intelligence James Clapper asserted during questioning that China was making “aggressive” efforts to secure control over the South China Sea, through which passes 83 percent of China’s oil imports and global trade worth an estimated $5.3 trillion each year.
Former Republican presidential candidate, Senator John McCain, displayed satellite images that have been widely published over recent weeks, purportedly showing Chinese construction on Gaven Reef and other reefs in the Spratly Islands. McCain labelled it “a rather dramatic change” and suggested that China was aiming to construct airfields and anti-ship and anti-air missile bases that would be used to deny the US Navy access to the area.
Clapper accused Beijing of being “more willing to accept bilateral and regional tensions in pursuit of its interests, particularly on maritime sovereignty issues.” In an open rejection of China’s territorial claims, Clapper labelled them as “exorbitant.” Last December, a US State Department report dismissed China’s so-called “nine-dash line” boundary, asserting that it “does not accord with the international law of the sea.”
At the House Appropriations Subcommittee of Defense hearing, in response to a question “do we still have the naval edge there [the South China Sea],” Chief of Naval Operations Admiral Jonathan Greenert warned that if sequester budget cuts to the military were implemented, “sooner or later, we won’t have it.” In early February, Greenert visited Australia to canvas the possibility of basing US marine amphibious assault ships in Darwin and an aircraft carrier battle group in Perth and enhancing the American naval presence in the Indo-Pacific as part of the “rebalance” or “pivot” that was formally announced in November 2011..."

at http://www.wsws.org/en/articles/2015/03/02/ssea-m02.html

‘Russia backs Iran membership of SCO’

"A senior Russian official says his country throws its weight behind Iran’s “beneficial” membership in the Shanghai Cooperation Organization (SCO).
Zamir Nabiyevich Kabulov told Russia’s RIA Novosti news agency that the SCO will benefit from the full membership of Iran, Pakistan and India in its current composition.
The Russian presidential envoy to Afghanistan also expressed hope that during the upcoming SCO summit in his country, “serious political decisions will be made to start the admission process” of the trio.
Russia says it will host the next summit of the Shanghai Cooperation Organization in the city of Ufa in July 2015.
Russian Foreign Minister Sergey Lavrov said last month that the criteria for adding new members to the SCO were approved during the 2014 summit in Tajikistan and that more applications for membership will be reviewed..."

at http://www.presstv.ir/Detail/2015/03/02/399938/SCO-to-benefit-from-Iran-membership

GONE GOLD — The Powerful Story Of Global Gold Repatriation

"What do Switzerland, England, Austria, Netherlands, France, Belgium, Mexico, Poland, Italy. Australia, Ecuador, Romania and the tiny country of Azerbaijan have in common? They all want to know where their gold is, and they all have burgeoning gold repatriation movements in various stages of progress. Peter Boehringer, the father of the gold repatriation movement in Germany, and founder of the website Goldseiten.dejoins us to discuss the great global awakening as nations begin asking, where is our PHYSICAL gold? We want it back!..."

at http://investmentwatchblog.com/gone-gold-the-powerful-story-of-global-gold-repatriation/#PWdhj7yIXhwb2WUO.99

Russia says ready to reciprocate nuclear strike

"A Russian military chief says the country's Strategic Missile Forces (SMF) are ready to defend the country against any possible “lightning-speed” nuclear strike.
“If we have to accomplish a task of repelling a ‘lightning-speed’ nuclear strike, this objective will be attained within a prescribed period,” Andrei Burbin, the SMF Central Command’s chief, was quoted by Russian media as saying on Saturday.

He voiced the SMF preparedness to deliver a retaliatory nuclear strike “unhesitatingly” if Russia comes under any assault.

Referring to the geographic position of Russia’s missile units, the major general said it will protect them from demolition by “any global strike,” adding that 98 percent of the SMF systems would be new in 2020.
The comments come against the backdrop of a recent boost in NATO’s military presence near Russia’s borders. In 2014, NATO forces held some 200 military exercises with the Western military block’s Secretary-General Jens Stoltenberg promising that such maneuvers would continue.
Stoltenberg has recently announced that NATO would immediately be establishing command and control units in six eastern European countries.
Russia has condemned NATO’s exercises and military buildup toward its borders on numerous occasions..."

at http://www.presstv.ir/Detail/2015/03/01/399690/Russia-says-ready-to-return-Nstrike

Chicago's Fiscal Freefall: Moody's Cuts Chicago Credit Rating to Two Steps Above Junk; Snake Oil and Swaps; It's All Junk Now

"Last week I wrote an article for the Illinois Policy Institute on the hugely unfunded and deteriorating nature of numerous Illinois' pension systems.

I will post the article on Monday. 

My article was on on state pension systems, not Chicago's, and was written well ahead of downgrades of Chicago's debt by Moody's on Friday. I was not surprised to see the downgrade.

Let's take a look at some articles on the debt downgrade starting with Chicago Credit Rating Cut by Moody's to Two Steps Above Junk. 

 Chicago had its credit rating cut to within two steps of junk by Moody’s Investors Service because of mounting pension liabilities, underscoring the city’s fiscal stress as Mayor Rahm Emanuel faces an unprecedented runoff.

The one-step reduction to Baa2 affects $8.3 billion of general-obligation bonds, which were already the lowest-rated among the 90 biggest U.S. cities, excluding Detroit. The outlook remains negative, signaling more cuts are possible, New York-based Moody’s said Friday in a report.

“The city’s credit quality could weaken as unfunded pension liabilities grow and exert increased pressure on the city’s operating budget,” Moody’s analysts Matthew Butler and Rachel Cortez wrote. “We expect substantial growth in unfunded pension liabilities even if the city’s recent pension reforms survive an ongoing legal challenge.”

The third-most-populous U.S. city has $20 billion in unfunded pension obligations that it can’t address without the approval of the state legislature. State lawmakers in June restructured two city pension plans with about $9.4 billion in underfunded liabilities for about 60,000 municipal workers and retirees by making them pay more and reducing benefits. The changes didn’t apply to the police and fire systems.

Labor unions in Chicago sued to block the law in December, and the litigation was put on hold pending the outcome of an Illinois Supreme Court ruling on a state pension overhaul.

at http://globaleconomicanalysis.blogspot.com/2015/03/chicagos-fiscal-freefall-moodys-cuts.html#VJYSoslype0Wo6Ht.99

Lehman Moment For Austrian "Bad Bank" Means Worse Coming

"Not "contained." Just six short months ago, the 2Y bonds of Austria's bank bank - HETA Asset Resolution AG - were trading well above par as the world and his mom reached for yield (~6%) in all the wrong places. Today, following the "spectacular development" over the weekend that the bank will be wound down due to the discovery of an $8.5bn "hole" in its balance sheet, the 2Y HETA bonds are trading below 50c on the dollar (at a yield of 54%). This is indeed Austria's "Lehman" moment as for the first time in the new European 'bail-in' era, senior debt is getting a massive haircut.

As we noted yesterday, the punchline, is that while the world was waiting for Greece to announce capital controls, or a bail-in over the past week, it was none other than one of the Europe's most pristeen credits (one which until recently was rated AAA/Aaa) that informed creditors a bail-in is imminent: "The finance ministry noted that creditors can be forced to contribute to the costs of winding down Heta - or "bailed in" - under new European legislation that Austria adopted this year so that taxpayers do not have to shoulder the entire burden."

Bloomberg confirms that the ministry announced that under new EU rules means creditors can be forced to share losses...

Resolution of wind-down vehicle of Hypo Alpe-Adria-Bank International represents first bail-in of senior debt under new European regime for imposing losses on bondholders, Gildas Surry and Geoffroy de Pellegars, analysts at BNP, write in client note.

Moratorium on liabilities of Heta Asset Resolution until May 31, 2016 gives time to work out necessary haircut and reduce the risk of litigation to a minimum

Bail-in legislation in Austria implements the European framework to the letter

Other jurisdictions that follow Austria’s example can be expected to treat resolution in this sequence: point of non-viability, independent review of assets vs liabilities, moratorium, haircut

Expect senior CDS old contract to trigger on Failure to Pay, and that HETAR govt-guaranteed sub bonds will continue paying (and trade with accrued interest)

*  *  *

And sure enough, the bonds have crashed...

Remember - these are senior unsecured notes of a major bank! Contagion is now a big problem for Austria (and its banking system)..."

at http://www.zerohedge.com/news/2015-03-02/lehman-moment-austrian-bad-bank-means-worse-coming

Housing Bubble Redux: Subprime Auto Market Begins To Crack

"As noted last week, the aggregate amount of loans for new and used cars will in short order eclipse the $1 trillion mark, joining total student debt in full-on bubble mode. Better still, early delinquencies on auto loans are now sitting back at their 2008 highs (both for all borrowers and for subprime borrowers, with 9% of the latter now missing a payment within the first 8 months of origination). Despite this, and despite the fact that nearly a third of all auto loans in 2013 were made to subprime borrowers (the same amount we saw in 2006 at the very height of reckless underwriting standards), Experian says everything is fine. 

Meanwhile, Wells Fargo recently noted that although lending standards had indeed gotten back to “normal” (and as a reminder, “normal” now means how things were in 2006) it’s beginning to look like some households “might be overleveraged.” Simultaneously, lenders are again showing a propensity towards origination for the purpose of selling loans rather than holding them; that is, originating loans and then happily passing them on to the Wall Street securitization machine, which explains why despite a collapse in the issuance of ABS backed by home equity loans since the crisis, total ABS issuance in the U.S. hit its highest level since 2008 last year. 

These are things that Wells should know something about as they made some $30 billion in auto loans last year and indeed it now appears the bank may be getting concerned about the market it’s helped to build. As the NY Times reports: 

Wells Fargo, one of the largest subprime car lenders, is pulling back from [subprime auto lending], a move that is being felt throughout the broader auto industry…

Wells Fargo has imposed a cap for the first time on the amount of loans it will extend to subprime borrowers.

The bank is limiting the dollar volume of its subprime auto originations to 10 percent of its overall auto loan originations, which last year totaled $29.9 billion, bank executives said.

The decision, detailed in interviews with top Wells Fargo executives, along with other large auto lenders, is a sobering moment for the booming market. Other lenders may decide to take their cue from Wells Fargo, one of the nation’s largest lenders.

The Times’ description of industry dynamics could easily be mistaken for a recap of the buildup to the housing bust, as investors chase returns, Wall Street chases fees, banks ease lending standards to increase volumes, and borrowers who are jobless (which must mean they aren’t experienced waiters) throw every semblance of prudence out the window:..."

at http://www.zerohedge.com/news/2015-03-02/housing-bubble-redux-subprime-auto-market-begins-crack