The Fairy Tale Of Portugal’s Successful Turnaround

Portugal-flag

The Fairy Tale Of Portugal’s Successful Turnaround (The Globalist, March 2, 2015): 

For all the attention given to Greece, is Portugal really that much better off?

Even a brief glance at the facts suffices. Portugal is no less bankrupt than Greece. The country’s government debt, at 124% of GDP, might be lower than in Greece. However, government debt is just one – even though important – part of the full debt picture.

On an aggregate level, Portugal’s overall debt level — at 381% of GDP when also including private households and non-financial corporations — is well above Greece’s total debt level (286% of GDP).

Read moreThe Fairy Tale Of Portugal’s Successful Turnaround

The Economy Of The Largest Superpower On The Planet Is Collapsing Right Now

Globe-Earth-World

The Economy Of The Largest Superpower On The Planet Is Collapsing Right Now (Economic Collapse, Nov 5, 2014):

How do you fix a superpower with exploding levels of debt, that has a rapidly aging population, that consumes far more wealth than it produces, and that has scores of zombie banks that could collapse at any moment.  You might think that I am talking about the United States, but I am actually talking about Europe.  You see, the truth is that the European Union has a larger population than the United States does, it has a larger economy than the United States does, and it has a much larger banking system than the United States does.  Most of the time I write about the horrible economic problems that the U.S. is facing, but without a doubt economic conditions in Europe are even worse at the moment.  In fact, there are many (including the Washington Post) that are calling what is happening in Europe a full-blown “depression”.  Sadly, this is probably only just the beginning.  In the months to come things in Europe are likely to get much worse.

Read moreThe Economy Of The Largest Superpower On The Planet Is Collapsing Right Now

Is Portugal Next In Line For Wealth Confiscation?

wealth-confiscation

Is Portugal Next In Line For Wealth Confiscation? (Doug Casey’s International Man, Aug 22, 2014):

The pattern should be seared in your memory by now. If you fail to recognize it, you could be struck with a huge financial blow.

It’s a pattern that has played out over and over throughout history: a government gets into financial trouble, then denies there’s a problem, which is followed by a surprise wealth grab.

That’s exactly what happened when bank deposits in Spain and Cyprus were raided. We’ve also seen retirement savings confiscated in some form in Poland, Portugal, and Hungary. Capital controls have been imposed in Cyprus and Iceland.

Of course these aren’t the only examples of blatant government thievery. These examples are just within Europe and just within recent years. They can and will happen anywhere.

Read moreIs Portugal Next In Line For Wealth Confiscation?

World Reserve Currencies: What Happened During Previous Periods Of Transition?

Reserve Currency Status

World Reserve Currencies: What Happened During Previous Periods Of Transition? (Economic Reason, Aug 11, 2014):

The decline of the US dollar hegemony is ever so clear today and this article aims to provide the reader with what exactly happened during past periods of reserve currency transitions. Historically, when a reserve currency transitioned over to a new one, it marked a pivotal change for the world. The economic paradigm shifted and the rules of the game changed. This time will be no different when the US dollar loses its status as the reserve currency!

The transition process of the world reserve currency brings much uncertainty

Read moreWorld Reserve Currencies: What Happened During Previous Periods Of Transition?

Portugal’s Insolvent Banco Espirito Santo To Be Bailed Out, Existing Equity To Be Wiped Out

Portugal’s Insolvent Banco Espirito Santo To Be Bailed Out, Existing Equity To Be Wiped Out (ZeroHedge, Aug, 3, 2014):

  • Portugal may use the Resolution Fund to recapitalize Banco Espirito Santo, Diario Economico reports, citing unidentified people linked to the process.
  • Resolution Fund may inject more than €3 billion
  • A “bad bank” may be created for the toxic assets of the credit portfolio
  • Solution aims to rescue Banco Espirito Santo without spending taxpayers’ money, and is being prepared by the government and the Bank of Portugal
  • From Aug. 4, Banco Espirito Santo will leave the stock market and will be 100% owned by the Resolution Fund, an entity created in 2012 and financed by Portuguese banks and by revenue from the special contribution that the banking sector pays the Portuguese state

Banco Espirito Santo Plunges: Shareholder Meeting Cancelled Due To “UNEXPECTED FACTS”

–  Banco Espirito Santo Plunges: Shareholder Meeting Cancelled Due To “Unexpected Facts” (ZeroHedge, July 29, 2014):

With all other operating holdcos having already declared bankruptcy, the anxiety over Banco Espirito Santo is growing (despite DE Shaw and Goldman Sachs recommending investors buy the shares). Despite Bank of Portugal reassurance last night that “BES is able to raise capital), the stock is plunging on news of “unexpected facts” this morning…

  • *BANCO ESPIRITO SANTO SAYS SHAREHOLDER MEETING WAS CANCELLED DUE TO “UNEXPECTED FACTS”
  • *BANCO ESPIRITO SANTO FALLS MORE THAN 13% IN LISBON TRADING

Remember, this is systemic (as the Portugues President has warned), and the contagion is potentially global… not “contained.”

Read moreBanco Espirito Santo Plunges: Shareholder Meeting Cancelled Due To “UNEXPECTED FACTS”

Portugal President Admits Espirito Santo Failure Could Be Systemic As Another HoldCo Goes Bankrupt

Portugal President Admits Espirito Santo Failure Could Be Systemic As Another HoldCo Goes Bankrup (ZeroHedge, July 22, 2014):

As RioForte joins its parent ESI in bankruptcy, in a strangely honest turn of events from a European leader, Portugal’s President Anibal Cavaco Silva warned on Monday that fallout from the financial troubles of the founding family of Banco Espirito Santo (BES) could affect the wider economy. With Portugal’s hope-strewn GDP growth expectations at only 0.9% for 2014, they do not have much room for disappointment before the nation (whose yields remain near record lows) double- or triple-dips back into recession. Silva concluded, “We cannot ignore that there will be some impact on the real economy,” which is odd given every talking-head has explained it is “contained” and “priced-in.”

Rioforte joins ESI in bankjruptcy…

  • *RIOFORTE SAYS IT SEEKS PROTECTION FROM CREDITORS
  • *RIOFORTE SAYS FILING IS LINKED TO DIFFICULTIES AT ESI

Just another default in the chain

Read morePortugal President Admits Espirito Santo Failure Could Be Systemic As Another HoldCo Goes Bankrupt

Holding Company Of Portugal’s 2nd Largest Bank Just Filed For Bankruptcy Protection

–  Holding Company Of Portugal’s 2nd Largest Bank Just Filed For Bankruptcy Protection (ZeroHedge, July 18, 2014):

Following this morning’s farce of huge investor demand and then Bank of Portugal’s Costa ‘hoping’ for demand from investors willing to pile more money on losing money into Espirito Santo, it appears things have escalated rapidly…

*ESPIRITO SANTO INTERNATIONAL SAYS IT CAN’T MEET OBLIGATIONS
*ES INTERNATIONAL APPLIES FOR `CONTROLLED MANAGEMENT’ REGIME UNDER LUXEMBOURG LAW

The “controlled management” application is the equivalent of declaring a breakup or controlled bankruptcy process (as we explained here). ESI is the ultimate HoldCo in the Banco Espirito Santo family.

 

The Next Domino: Espirito Santo Holding Company Preparing To File Bankruptcy

The Next Domino: Espirito Santo Holding Company Preparing To File Bankruptcy (ZeroHedge, July 15, 2014):

While Banco Espirito Santo continues to exist on fumes and life support (that last ditch equity injection by Baupost a week ago may not have been Seth Klarman’s wisest investment), a key link in the Espirito Santo Holding Company structure is preparing to default. According to Reuters:

  • ESPÍRITO SANTO GROUPS HOLDING COMPANY RIOFORTE PREPARING TO FILE FOR CREDITOR PROTECTION IN LUXEMBOURG – SOURCES

For those confused, “creditor protection” =  bankruptcy.

Which one is RioForte again? We showed this handy org chart a few days ago, here it is again.

Read moreThe Next Domino: Espirito Santo Holding Company Preparing To File Bankruptcy

CEO Of Europe’s Largest Insurer Pops The Utopia Bubble: ‘Nothing Is Solved And Everybody Knows It’

Wile_E_Coyote-Dont_Look_Down

–  CEO Of Europe’s Largest Insurer Pops The Utopia Bubble: “Nothing Is Solved And Everybody Knows It” (ZeroHedge, July 11, 2014):

It’s one thing for a tinfoil fringe blog to repeat, month after month, that nothing in Europe has been fixed, that Draghi’s disastrous policies are merely concentraing and stockpiling even more unresolved problems – for now ignored courtesy of the gentle sprinkle of ZIRP, or rather NIRP “fairy dust” – and that just like Portugal showed panic can grip the entire continent literally overnight because everyone knows this. It is something entirely different for the CEO of Europe’s largest insurer to make the same statement.

From Bloomberg:

When asking Allianz SE’s chief investment officer about the euro area’s sovereign debt woes, be prepared for an emphatic response.

The fundamental problems are not solved and everybody knows it,” Maximilian Zimmerer said at Bloomberg LP’s London office. The “euro crisis is not over,” he said.

While extraordinary stimulus from the European Central Bank has encouraged investors to pile into the region’s government bonds this year, that’s not a sufficient remedy for Zimmerer, who oversees 556 billion euros ($757 billion) at Europe’s largest insurer. Countries are still building up their debt piles, and that’s storing up trouble for the future, he said.

Read moreCEO Of Europe’s Largest Insurer Pops The Utopia Bubble: ‘Nothing Is Solved And Everybody Knows It’

Futures Tumble, Bunds Soar To Record, Gold Surges As Europe Is Broken Again; Espirito Santo Halted

Futures Tumble, Bunds Soar To Record, Gold Surges As Europe Is Broken Again; Espirito Santo Halted (ZeroHedge, July 10, 2014):

But… but… the VIX said everything is ok, and European rates were the lowest they have been in centuries… How can something possibly go wrong?

It just did.

20140710_banco1

The scandal which we first reported yesterday, after observing the record collapse in the bonds of troubled Portuguese lender Espirito Santo International following the failure to make a bond payment, has quickly escalated and overnight went nuclear.

Read moreFutures Tumble, Bunds Soar To Record, Gold Surges As Europe Is Broken Again; Espirito Santo Halted

Frontrunning: July 10

Always wanted to know the feeling of being in the eye of a monster hurricane?

Well, we all are in the eye of the biggest financial monster hurricane ever created, right now.

It’s already bad, but this is really nothing compared to what is coming.


Frontrunning: July 10 (ZeroHedge, July 10, 2014):

  • Espirito Santo Financial Suspends Shares, Bonds on ESI Exposure (BBG)
  • Europe Stocks Drop for Fifth Day as Espirito Santo Sinks (BBG)
  • Espirito Santo Creditors Doubt Containment on Missed Payment (BBG)
  • French Stocks Seen Extending Losses on Economy Concern (BBG)
  • Stocks Slide With Portugal Bonds as Yen Gains; Oil Drops (BBG)
  • U.S. Probes Hacking of Government Computers at Personnel Agency (WSJ)… finds terabytes of porn
  • It’s Congress’ fault: Obama rejects criticism over border crisis (Reuters)
  • Israel Mobilizes 20,000 Troops for Possible Gaza Invasion (BBG)
  • Chinese hackers pursue key data on U.S. workers (NYT)
  • Donetsk Primed for Siege as Ukraine Army Hems In Rebels (BBG)

Overnight Media Digest

WSJ

Read moreFrontrunning: July 10

Portugal’s Largest Bank Misses Bond Payment; Bonds Collapse

–  Portugal’s Largest Bank Misses Bond Payment; Bonds Collapse (ZeroHedge, July 9, 2014):

Brussels, we have a problem. As we warned 6 weeks ago, Espirito Santo International SA – is in a “serious financial condition” according to a central bank driven external audit by KPMG identified “irregularities in its accounts.” Sure enough, the ‘ponzi-like’ maneuvers have left the bank unable to pay its bonds as Bloomberg reports bonds plunged to record lows after a parent company delayed payments on short-term notes. More importantly, given the divisively dependent nature of the domestic sovereign bond market (and hence the health of the EU) and its banking system, it is noteworthy that Portuguese bond risk has surged to 4 month highs with the biggest 2-day spike in a year. As one analyst noted, “The bigger question is whether the government will have to get involved,” leaving the EU taxpayer on the hook once again (for fear of M.A.D. threats) as most critically, it “will have to step in to prevent systemic repercussions?

20140709_ESP

As Bloomberg reports,

Banco Espirito Santo has been “adequately isolated” by the Bank of Portugal from the financial problems, Parliamentary Affairs Minister Luis Marques Guedes said on July 3. The bank was the only one of the three biggest publicly traded Portuguese lenders that didn’t request state aid after the country received a European Union-led bailout in May 2011.

Read morePortugal’s Largest Bank Misses Bond Payment; Bonds Collapse

Heavy Snowfall Closes Roads In Central Portugal

Snow closes roads in central Portugal

Snow closes roads in central Portugal (The Portugal News, May 21, 2014):

While most of Portugal is currently experiencing strong winds and lower than average temperatures, residents in the Serra da Estrela in central Portugal have seen roads shut down due to heavy snow falls.

Access to the peak at Torre were cut on Tuesday evening and remained closed on Wednesday morning, local CDOS rescue services said.

The cooler weather is expected to last until Friday before clearing for a more spring-like weekend across Portugal.

The Countdown To The Nationalization Of Retirement Savings Has Begun

leviathan-to-eat-401k

The Countdown to the Nationalization of Retirement Savings Has Begun (International Man – Casey Research, Feb 5, 2014):

Simply put, the new myRA program put forward by Obama is at best a sucker’s deal… or worse, it’s a first step toward the nationalization of private retirement savings. (Note: If you haven’t yet heard of myRA, I’d strongly suggest you read this excellent overview by my colleague Dan Steinhart.)

Even before the new myRA program was announced, there had been whispers about the need for the US government to assume some risk for US retirement accounts. That’s code for forced conversion of private retirement assets into government bonds.

Read moreThe Countdown To The Nationalization Of Retirement Savings Has Begun