Barclays Says 40% of Japan’s Investors See Risk of U.S. Default

Jan. 30 (Bloomberg) — Forty percent of Japanese investors said there is a risk that the U.S. government will default on its debt, a survey published by Barclays Capital showed.

Almost 34 percent of the 66 respondents in the poll sent to Japanese institutional investors from Jan. 26 to Jan. 28 said there is a “significant” or “slight” risk that the U.S. will lose its AAA sovereign debt rating this year. Twenty-two percent said they were concerned about the credit risk of German government bonds. China surpassed Japan in September to become the biggest foreign holder of U.S. Treasuries.

“Sovereign risk related to national debt has been a recent topic of discussion among market participants,” Lhamsuren Sharavdemberel, a Tokyo-based analyst at Barclays, wrote in the report published yesterday. She confirmed the details today.

Read moreBarclays Says 40% of Japan’s Investors See Risk of U.S. Default

Fitch Cuts Russia’s Debt Rating to ‘BBB’

Remember that these are the same rating agencies that rated a collection of highly risky loans with ‘AAA’, making them appear ultra-safe.


Fitch Ratings on Wednesday downgraded Russia’s sovereign rating to ‘BBB’ and said further cuts were possible due to low commodity prices, high capital outflows, melting reserves and corporate debt problems.

Fitch’s downgrade follows one from Standard & Poor’s in December, making it the second ratings cut for Russia since the end of the last major financial crisis a decade ago.

On the Fitch scale, Russia would now need to be cut just two more notches to become ‘junk’ rather than ‘investment grade.’

The downgrade pushed the euro down to session lows versus the dollar below $1.29.

Read moreFitch Cuts Russia’s Debt Rating to ‘BBB’

Portugal suffers S&P rating cut

Portugal on Wednesday became the third eurozone economy in two weeks to suffer a credit rating downgrade because of its failure to tackle deteriorating public finances.

Standard & Poor’s decision to reduce Portugal’s long-term ratings to AA minus, six notches below the highest triple A rating, followed downgrades of Spain on Monday and Greece last week. Ireland, which was put on negative outlook earlier in the month, could follow soon.

The move underlines the growing strains in the eurozone as the weaker economies, mainly in the south, struggle to stay competitive in the worsening economic climate without the option of devaluing their currencies.

The extra cost for Portugal, Spain, Greece and Ireland of issuing government bonds compared with that of Germany, Europe’s biggest economy has risen this week. This is because investors believe the continent’s smaller economies may suffer longer and deeper recessions.

The cost of insuring their government bonds against default through credit default swaps has risen to record highs, too, with investors judging the assets of these countries to be increasingly risky.

Read morePortugal suffers S&P rating cut

Global Economic Crisis Accelerating


U.S. President-elect Barack Obama waves after speaking during the “We Are One: The Obama Inaugural Celebration at the Lincoln Memorial” event in Washington on Jan. 18, 2009. Photographer: Andrew Harrer/Bloomberg News

Obama Issues Call to Service to Help Repair Nation (Bloomberg):
Obama is using the latest state of the art manipulating techniques. Don’t fall for this puppet of the elite, rather listen to some of the few people – like Ron Paul, Peter Schiff, Marc Faber and Jim Rogers – that are telling you the truth:
Paul Craig Roberts On The U.S. Leadership: “They Are Criminals” – The Potential Here Is Far Worse Than The Great Depression or Peter Schiff: We are the United States of Madoff

More change: Obama Reaches Out for McCain’s Counsel (New York Times)

California Finds Public-Works Spending No Unemployment Cure-All (Bloomberg):
“What infrastructure spending can do is bolster employment in a group of industries, like construction, with workers who are ready to go,” said Brad Kemp, director of regional research at Beacon Economics in Los Angeles. “What it can’t do is stop the unemployment rate from rising currently because there are a lot of forces coming at consumers, who are holding back on spending.” California is totally broke: Here

– ! Bonds tumble as Government admits no cap on taxpayer risk (Telegraph)

Brazil Cut Record 654946 Registered Jobs in December (Bloomberg)

Brussels sees Eurozone economy shrink 1.9% (Financial Times)

Taxpayers are spending over $1 billion to send refined fuel to the Israeli military — at a time when Israel doesn’t need it and America does (Salon)

Spain Downgraded by S&P as Slump Swells Budget Gap (Bloomberg):
Jan. 19 (Bloomberg) — Spain had its AAA sovereign credit rating removed by Standard & Poor’s in the second downgrade of a euro-region government in five days, as the country’s first recession in 15 years swelled the budget deficit.

China GDP Growth May Cool to Slowest Pace in 7 Years (Bloomberg)

Ruble Drops to Pre-1998 Crisis Low on 6th Devaluation This Year (Bloomberg):
Jan. 19 (Bloomberg) — The ruble fell below the weakest level seen in the 1998 Russian crisis after the central bank devalued for the sixth time in seven days to protect reserves.

Fifty jobseekers chasing every vacancy in some parts of the country (Telegraph)

Treasury Yields Flattened as Fed Fights to Cut Mortgage Rates (Bloomberg):
Fed Chairman Ben S. Bernanke helped spark a rally by reiterating Jan. 13 at the London School of Economics that he’s considering buying long-term Treasuries to reduce borrowing rates as the recession deepens.
(Bernanke helped to create the ultimate Bond Bubble: Here, here and here.)

Bonds no safer than houses (The Financial Standard)

Denmark agrees on 13.4-bln-euro line of credit to banks: govt (AFP)

How the Treasury Bubble Will Burst and Why (Seeking Alpha)

Investor puts pressure on HSBC to let US sub-prime unit go bankrupt (Times)

Tory chief’s firm cost councils £470m (Independent)

RBS on the brink as shares plummet by 69% and City is warned: ‘You’re about to become
Iceland-on-Thames’
(Mail Online)

RBS ready to write off £1bn loan to Russian oligarch (Scotsman)

RBS Plummets Amid Concern Bank May Be Nationalized (Bloomberg)

RBS shares dive 70% on mounting debt fears (Times Online)

Tax rise for rich won’t make society fair, says Mandelson (Guardian)

More Americans Joining Military as Jobs Dwindle (New York Times)

Circuit City to close remaining 567 stores in US (Los Angeles Times):
The failure of the No. 2 electronics retailer means the loss of 34,000 jobs.

BASF warns of possible job and production cuts (Houston Chronicle)

Standard & Poor’s said it may cut Spain’s credit rating; Euro Weakens to One-Month Low on ECB Outlook

The following picture depicts the future Euro/US$ exchange rate.
The US dollar will be destroyed.



A euro banknote is arranged for a photograph atop U.S. bills, in New York, Dec. 30, 2008. Photographer: Daniel Acker/Bloomberg News

Jan. 13 (Bloomberg) — The euro weakened for a third day versus the dollar, reaching a one-month low, as traders added to bets the European Central Bank will reduce interest rates, decreasing the appeal of the region’s assets.

The 16-nation currency also declined to the lowest level in more than a month against the yen after Standard & Poor’s said it may cut Spain’s credit rating. German Chancellor Angela Merkel’s coalition said yesterday it will spend 50 billion euros ($66.6 billion) to support Europe’s largest economy. New Zealand’s dollar fell to a four-week low after S&P said it may cut the country’s foreign-currency credit rating.

Related article: New Zealand’s AA+ Credit Rating May Be Cut, S&P Says (Bloomberg)

“There is more than enough room for the euro to fall further,” said Hideki Amikura, deputy general manager of foreign exchange in Tokyo at Nomura Trust and Banking Co., a unit of Japan’s largest brokerage. “The focus of the currency market is how far rates will fall in Europe, because the ECB is behind the curve compared with other central banks.”

Read moreStandard & Poor’s said it may cut Spain’s credit rating; Euro Weakens to One-Month Low on ECB Outlook

Motorola downgraded to junk status

Ratings agency downgrades Motorola on worries about the impact of the global financial crisis on mobile phones

Motorola fell into junk territory yesterday after Standard & Poor’s (S&P) downgraded the telecoms company.

The ratings agency cut Motorola’s rating by two notches to BB+ from BBB, putting the company one notch below investment grade.

S&P blamed problems in Motorola’s mobile phone business, saying that the ratings action reflected “continual operational challenges … which are not likely to be reversed over the intermediate term”.

Read moreMotorola downgraded to junk status

Toyota woes deepen with rating downgrade


Toyota has lost its top credit rating

Toyota Motor, the world’s biggest automaker and a towering icon of Japanese industrial power, has been stripped of its AAA credit rating under the darkening global economic storm.

The downgrade, said analysts at Fitch Ratings, effectively passes sentence on the entire worldwide auto industry, showing that the business of building cars can no longer produce a single player with the sort of cast-iron corporate resilience of Exxon Mobil or Johnson & Johnson.

“This crisis is demonstrating that the auto industry cannot support a triple-A rating,” said Frederic Gits, a Tokyo-based credit analyst at Fitch Ratings, which issued the downgrade earlier today and declared the auto-industry’s problems “substantial and fundamental”.

Fitch Ratings’ downgrade of Toyota’s unsecured debt to AA deals a stunning blow to Japanese corporate pride, but reflects “severe” turmoil across world car markets and the company’s own spectacular profits warning earlier this month.

To demonstrate the extent of the problem, brokers in Tokyo have recently started circulating aerial photographs of a military airfield in Oxfordshire that has become a colossal warehouse for thousands of unsold cars.

Read moreToyota woes deepen with rating downgrade

US May Lose Its ‘AAA’ Rating

The United States may be on course to lose its ‘AAA’ rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche.


Source: YouTube

“The U.S. might really have to look at a default on the bankruptcy reorganization of the present financial system” and the bankruptcy of the government is not out of the realm of possibility, Hennecke said.

“In the United States there is already a funding crisis, and they will have to sell a lot more bonds next year to fund the bailout packages that have already been signed off,” Hennecke told CNBC.

In order to solve or stem the economic slowdown, Hennecke suggested the US would have to radically reduce spending across all sectors and recall all its troops from around the world.

As for a stimulus package, there is not much of an industry left to stimulate back into life, Hennecke said.

10 Nov 2008 | 07:49 AM ET

Source: cnbc

Credit-Rating Companies ‘Sold Soul,’ Employees Said


Deven Sharma (R), president of Standard & Poor’s and Raymond McDaniel, chairman and CEO of Moody’s Corporation listen to remarks by committee members as they display a quote on a screen during the House Oversight and Government Reform Committee hearing on “Credit Rating Agencies and the Financial Crisis,” on Capitol Hill in Washington October 22, 2008.

Oct. 22 (Bloomberg) — Employees at Moody’s Investors Service told executives that issuing dubious creditworthy ratings to mortgage-backed securities made it appear they were incompetent or “sold our soul to the devil for revenue,” according to e-mails obtained by U.S. House investigators.

The e-mail was one of several documents made public today at a hearing of the House Oversight and Government Reform Committee in Washington, which is reviewing the role played by Moody’s, Standard & Poor’s and Fitch Ratings in the global credit freeze.

“The story of the credit rating agencies is a story of colossal failure,” Committee Chairman Henry Waxman, a California Democrat, said at the hearing. “The result is that our entire financial system is now at risk.”

Moody’s and S&P in recent months had to downgrade thousands of mortgage-backed securities, many of which were originally given top AAA ratings, as delinquencies on the underlying loans soared well beyond the companies’ estimates and home values fell faster than they expected.

Read moreCredit-Rating Companies ‘Sold Soul,’ Employees Said

WaMu shares plummet 25%

WaMu Said to Approach Blackstone as Bailout Debated

Sept. 25 (Bloomberg) — Washington Mutual Inc.’s options may be dwindling as potential bidders shy away from making an offer because it’s not clear how much the proposed $700 billion U.S. bank rescue package will benefit the Seattle-based lender.

Five banks that were considering bids, including JPMorgan Chase & Co., have failed to make an offer in the week since WaMu put itself up for sale. WaMu next approached Carlyle Group and Blackstone Group LP, two people briefed on the matter said. Those talks are preliminary, and hinge on the government’s role in helping WaMu, which faces an estimated $19 billion in bad loans, the people said, speaking anonymously because the discussions are private.

“A WaMu deal is likely frozen until the bailout gets worked out,” said Steven Kaplan, a finance professor at the University of Chicago Graduate School of Business. “People aren’t in a hurry to make any decision until they know what’s coming out of Washington.”

WaMu is under increasing pressure to strike a deal as its stock sags and ratings companies pummel its debt. Standard & Poor’s yesterday cut WaMu’s rating for the second time in nine days, dropping it to CCC from BB-. WaMu’s regulator, the Office of Thrift Supervision, and the Federal Deposit Insurance Corp., which guarantees customer deposits, have declined to comment.

Read moreWaMu shares plummet 25%