Saturday, December 12, 2015

SAR #15346

"Wishful thinking and the denial of unpleasant facts are simply not survival characteristics." Jeremy Grantham
Good Times, Bad Times, Next Time: During the boom in oil prices energy companies – especially fracking companies - loaded up on debt. Now as prices slip below $40 a barrel many (most?) producers are pumping as much oil as they can into a market that is already oversupplied. They are cannibalizing their assets in hopes of surviving but increased production is increased downward pressure on prices. At least half of oil-patch junk bonds are likely to default, maybe as much as $180 billion. Joining them are about 72% of bonds in the mining, metals and steel industries. And if China is to be the savior, there is no joy, for China's insatiable appetite for raw materials seems satiated as seaborne imports (iron ore, coal, bulk commodities) are down year over year for the first time in a decade. The Baltic Dry Index of shipping rates for bulk materials fell to an all-time low last month.
At That Point In Time: A recently declassified report shows that the US government knew, within days, that 100% of Fukushima Unit #4's spent fuel was vented into the atmosphere, and that the cores of others had completely melted down. But the public didn't have the need to know.
Just Said No: The $800 million (marked down from $2.4 billion) Third Avenue Focused Credit Fund has lost its focus and is telling its investors that they can't have their money back, pretty much because they don't have it. What they said was that because reduced liquidity in some parts of the bond market it is impractical to pay off departing investors. Doing so would “unfairly disadvantage the remaining shareholders.” Wonder who got to get their money out before the door slammed shut?
Slow & Steady: On a monthly basis, retail sales were up 0.2% from October to November and up 1.4% from November 2014. Sales were greatly boosted by the sale of cars. On six year loans.
Glad Tidings: Investors are people and people prefer good news and somehow disbelieve the inconvenient. The most inconvenient truth is that which gives the lie to our entire economic and financial system: compound growth cannot continue forever. A simple chess board and a sack of corn can illustrate that. Yet we continue to believe in the ever rosier future, one where global warming is miraculously (and effortlessly and inexpensively) stopped and we find that we can feed 40% more people in 50 or 75 years because... grubs?


McMike said...

Re Fukushima. Takeaway: the government lies about important things. The more important the thing; the more likely they lie. Bonus takeaway: the lies always hide bad news. In other words, things are worse than they say; they know more than they are telling; they are hiding the fact that something is badly broken while they are telling you it is fine.

McMike said...

re oil patch defaults. Did you catch the last paragraphs?

"The good news is that few believe the commodity-fueled default wave will cause an all-out financial crisis like the mortgage bond storm did in 2008. That's at least partially because banks are stronger and better able to withstand financial storms.

"This is a cautionary tale -- but for the moment should not really impinge on the rest of the financial system," said Nicholas Colas, chief market strategist at ConvergEx."

"Banks are stronger". lol. Coffee flew out my nose. Sure sign that the end is near. What was the phrase The Bernanke used about subprime in 2008.... "contained"?

Anonymous said...

Huge problems in Fukushima and the fat lady hasn't even begun to sing, but there is something strange about the souce quotes. Burning Uranium, or any element, doesn't make them change into another element, just an oxide of the element. Uranium would become Uranium oxide, and it might degrade from one isotope to another isotope at an acceletated rate, but it would still be Uranium Oxide, which is dense, heavy stuff, just like lead oxide. It isn't all going up the smokestack.

Just say Ponzi: Sounds just like what China did to the stock market until they could convince enough fools that than even more fools from outside the country were waiting behind them.

George Anderson said...

Glad Tidings: It ALL starts with initially admitting a problem exists! Those willing to admit that the media is 'optimistic' (to put it mildly) don't believe there is anything they can do about it...and to an extent, they're right.

SAR is in the vanguard of demonstrating/raising awareness that the King has no clothes but those who fear being labeled 'ignorant peasants' continue to refuse to accept that they are being deceived.

Like how Trump is (allegedly) climbing in the polls for being 'decisive'...will he still be considered 'bold' when we are facing counterattack for an ill-considered nuclear strike against the 'Enemies of Israel?'

It will only be in the aftermath of just such an incident (when EVERYONE starts muttering 'I didn't vote for him' that we will realize that those who own the media have been rigging the ballot box for decades (at the behest of the same oligarchs people establish governments to protect themselves from! The lesson we never learn is we must keep money out of completely out.

But the laws governing money are all wrong anyway and this is what you get when nobody is paying attention!