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We may be about to find out

Japan’s ongoing march to national bankruptcy has been a recurring theme here. See:

Japan Is In That Box
Japan Takes Another Step Towards the Cliff
How a Country Goes Bankrupt, In 10 Steps

Now the death spiral has entered a new phase, with the yen/dollar exchange rate heading straight down:

To restate the “Japan collapse” thesis, soaring government debt will eventually cause the yen to crater and/or interest rates to spike. The Bank of Japan will then face an impossible choice: Support the yen with even higher interest rates and watch government interest expense rise to national bankruptcy levels. Or push interest rates down to keep a lid on debt costs and cause the yen to collapse.

As the above chart illustrates, the “cause the yen to collapse” part of the story seems to be happening. Interest rates, meanwhile, are now spiking in a mirror image of the yen’s collapse.

Decision Time

So it’s decision time for Japan’s leaders. What will they choose? And — more importantly — what happens when the global financial system realizes that it no longer matters?

Japan is a big country, so its impending crisis creates risks for the global economy. But it’s more important as a signal to the US, Europe, and China that we’re heading in exactly the same direction.

In other words, the Fed is in the same box as the Bank of Japan, and that box is shrinking with every new trillion dollars of debt.

“Worried About Next Two Months”: Solar Firms Running Out Of Cash In California

January 19, 2024

“Worried About Next Two Months”: Solar Firms Running Out Of Cash In California

The solar industry in California is facing significant headwinds following the implementation of a new policy in April, which reduced incentives that had encouraged homeowners to install solar systems.

Bloomberg reports the California Solar & Storage Association has found about 63% of its 400 solar installer members have reported cash flow issues because the new policy crushed consumer demand.

Since last April, sales of rooftop solar systems across the state have crashed 85% in the most recent months of 2023 compared to similar periods one year before, according to solar firm Ohm Analytics.

On Wednesday, California Solar and Storage Association Executive Director Bernadette Del Chiaro told an audience at the Intersolar North America conference in San Diego that 25 to 30 solar companies have already closed shop or abandoned the state.

“We are worried about the next two months,” she said. “We think a lot more fallout may be coming.”

Besides a reduction in incentives, higher interest rates and expensive panels have also curbed demand. This means that solar installers have a dismal pipeline of work through the year’s first half.

Meanwhile, a Bloomberg MLIV Pulse survey of professional and retail investors from late last year found the green energy downturn will last well into 2024.

iShares Global Clean Energy ETF has nearly roundtriped Covid lows.

The ownership portfolio of the iShares Global Clean Energy ETF shows solar, wind, and hydrogen stocks have been clubbed like a baby seal over the past year.

Doug Casey on the Imminent Bankruptcy of the US Government

November 15, 2023

Doug Casey on the Imminent Bankruptcy of the US Government

International Man: Everyone knows that the US government has been bankrupt for many years. But we thought it might be instructive to see its current cash-flow situation.

The US government’s budget is the biggest in the history of the world and is growing at an uncontrollable rate.

Below is a chart of the budget for the most recent fiscal year, which had a deficit of nearly $1.7 trillion.

Before we get into the specific items in the budget, what is your take on the Big Picture for the US budget?

Doug Casey: The biggest expenditure for the US government are so-called entitlements. It’s strange how the word “entitlements” has been legitimized. Are people really entitled to the government paying for their health, retirement, and welfare? In a moral society, the answer is: No. Entitlements destroy personal responsibility, legitimize theft, destroy wealth, and create antagonisms.

The fact is that once people have an “entitlement,” they come to rely on it, and you can’t easily take it away. The Chinese call that breaking somebody’s rice bowl. In the case of the American welfare state, it’s more a question of breaking a whipped dog’s doggy bowl. It’s a shame because many have come to rely on their mother, the State, not entirely through their own fault. The US has become pervasively corrupt.

The World Economic Forum (WEF)—a pox upon them—isn’t entirely incorrect when it arrogantly calls most people “useless mouths.” An increasing number produce absolutely nothing but only consume at the expense of others. Courtesy of the State.

…click on the above link to read the rest…

Pakistan’s Dystopian Warning to the World

March 8, 2023

Pakistan’s Dystopian Warning to the World

Supporters of former Prime Minister Imran Khan at a rally in Rawalpindi in November. Photographer: Asad Zaidi/Bloomberg

Pakistan has touted itself as one of the world’s cradles of civilization, flourishing for thousands of years along ancient trade routes passing through the fertile Indus Valley.

Now it presents a dystopian vision of the future, bankrupt, unstable and threatened by climate catastrophe. Its fate offers a warning to other heavily indebted nations on the precipice, from Sri Lanka to Zambia.

Pakistan is due to hold elections no later than October, and political jostling is narrowing the nuclear-armed nation’s options.

Opposition leader Imran Khan, who was ousted from the premiership last year, is in a bitter standoff with Prime Minister Shehbaz Sharif over control of the country of 230 million. He’s held mass rallies in recent months to pressure the government into an early vote, while the authorities have filed numerous cases against him and issued a warrant for his arrest.

As Islamabad fiddles, the country is burning up its foreign reserves, and investors see a growing risk of default. The government is living hand to mouth, reliant on outside loans from China while negotiating with the International Monetary Fund for the remaining funds in a $6.5 billion bailout — its 13th since the late 1980s.

Pakistan already got a taste of economic disaster last year when deadly floods displaced millions. Such calamities are unlikely to be a one-off, with climate scientists forecasting massive increases in river flows as a result of melting Himalayan glaciers, inundating farmland and obliterating infrastructure — interspersed with drought.

Pakistan could hardly have a more strategic location, lodged between Iran and India and with China and Afghanistan to the north. That, plus its sheer size as the world’s fifth-most populous nation, make it too big to be allowed to fail.

…click on the above link to read the rest…

A Rogues’ Gallery

November 21, 2022

A Rogues’ Gallery

Ivan Aivazovsky Palace rains in Venice by moonlight 1878

Me, personally, I can’t get rid of the notion that all the stablecoins and shitcoins and altcoins that have been initiated and “legalized”, are just a way of “shining” bitcoin in a light of uninvestable darkness. And for that, a bunch of “trading places” (pun intended) were called for. One of the biggest, FTX, just went from $32 billion to $0 in a single day. Not even Enron could beat that.

Dr. D., yes him again, ties together an interesting history behind it. Which in turn ties into the DNC too. And Dr. D. doesn’t even mention yet that just this morning, FDX claimed they were hacked: “FTX Possibly Hacked, $895m Drained From Customer Wallets.” Should I believe that? How do you drain $895m out of $0?

“Early Saturday morning, Mr Bankman-Fried resigned as chief executive officer and FTX commenced Chapter 11 bankruptcy proceedings due to a massive liquidity crunch. A rescue deal with rival exchange Binance fell through earlier this week, precipitating crypto’s highest-profile collapse in recent years. Mr Bankman-Fried’s quant trading business (aka quantitative cryptocurrency trading firm) Alameda Research has also filed for bankruptcy.”

Here’s thinking that the DNC links will sink this as a story. Bankman-Fried will be renditioned to Barbados -or Gitmo-, and we all live happily ever after. Except for those who put their money into FTX. But then, what were they thinking in the first place? Crazy thought: was Hunter Biden a investor? Or The Big Guy?

Dr. D.: We really need to keep a rogue’s gallery. It’s like Dick Tracy and Batman. Bernie Made Off. Mr. Kash-n-Karry. Sam the Bank Man, Fried. You can’t make this up.

…click on the above link to read the rest…

Kim Dotcom Breaks Down the True Scale of US Government Debt

June 11, 2022

KIM DOTCOM BREAKS DOWN THE TRUE SCALE OF US GOVERNMENT DEBT

New Zealand tech CEO, Kim Dotcom did the math on the United States’ sovereign debt and he tweeted a thread about it, saying it may the most important thread that he may ever make.

Kim explains that US spending and debt have spiraled out of control and the Government can only raise the money it needs by printing more of it, which means that hyperinflation is guaranteed.

He says this has been going on for decades and there’s no way to fix it and that the US got away with this for so long, because US dollar is the world’s reserve currency. When the US Government prints trillions, it is thereby robbing Americans and the entire world in what he calls the biggest theft in history.

He says the total US debt is at $90 trillion, which together with $169 trillion in US unfunded liabilities totals $259 trillion, which is $778,000 per US citizen or $2,067,000 per US Taxpayer.

Now, the value of all US assets combined: every piece of land, real estate, all savings, all companies, everything that all citizens, businesses, entities and the state own is worth $193 trillion.

Our total debt, $259 trillion minus our total net worth, $193 trillion equals negative $66 trillion of debt and liabilities after every asset in the US has been sold off.

So even if the US could sell all assets at the current value, which is impossible, it would still be broke.

This is where the ‘Great Reset’ comes in and he asks, “Is it a controlled demolition of the global markets, economies and the world as we know it? A shift into a new dystopian future where the elites are the masters of the slaves without the cosmetics of democracy?”

…click on the above link to read the rest of the article…

Bankrupt Sri Lanka Takes Russian Crude As Fuel Crisis Depletes Stocks, Mulls Loan From China

May 28, 2022

Bankrupt Sri Lanka Takes Russian Crude As Fuel Crisis Depletes Stocks, Mulls Loan From China

A foreign exchange shortage has resulted in the worst financial crisis Sri Lanka has ever endured, with shortages of everything from food to crude. Fuel supplies are down to just days, food has run out at supermarkets, and social-economic chaos has unfolded across the island country in South Asia.

However, there’s short-term hope, and somehow the bankrupt country found enough money to pay for a shipment of Russian crude.

Bloomberg said Ceylon Petroleum Corp., the country’s only refinery, is set to take shipment of Russian grade Siberian Light on May 28. It will be the first time the refinery has processed crude to produce high-value products such as gasoline and diesel in two months.

Fuel supplies on the island nation are so low that the government has told citizens to stop waiting in long lines at filling stations. The government has run out of foreign reserves to pay for essential imports.

Last week, newly-appointed prime minister, Ranil Wickremesinghe, said his government needed $75 million for critical imports such as crude.

“At the moment, we only have petrol stocks for a single day. The next couple of months will be the most difficult ones of our lives.

“We must prepare ourselves to make some sacrifices and face the challenges of this period,” Wickremesinghe said.

Ship-tracking data compiled by Bloomberg shows the Nissos Delos tanker carrying Siberian Light has moved towards a mooring point where it can begin discharge operations. The vessel loaded up on March 29 at Novorossiysk, a port city on the Black Sea in southern Russia.

Bloomberg wasn’t exactly sure how Sri Lanka paid for the Russian crude, considering it owes more than $50bn in overseas debt. It’s seeking a $4bn loan from the IMF and has asked China to renegotiate at least $3.5bn in debt.

…click on the above link to read the rest of the article…

If you thought the Coinbase bankruptcy disclosures were bad…

May 16, 2022

If you thought the Coinbase bankruptcy disclosures were bad…

Just wait ’til you see your government’s bail-in rules

One of the subplots that made for a bad week in crypto included a largely manufactured crisis around “The Coinbase bankruptcy disclosure”. After posting an earnings miss, the next shoe to drop was the discovery in the latest version of the Coinbase Terms of Service, the addition of text that included the following:

“Custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors”

This verbiage became a big deal with every corporate media outlet dumping all over it. It trended on Twitter and quickly went viral, almost as if this was some sort of revelation.

It’s not. It’s basically the oldest adage in crypto, “not your keys, not your coins” spelled out in writing.

Do you really think if you’re holding your crypto on some exchange that suddenly becomes insolvent it’s going to make a difference if a paragraph to that effect appears in the ToS or not? Good thing Mt Gox or QuadrigaCX didn’t have that in their ToS otherwise everybody with assets in either exchange would have been really screwed, right?

You’re screwed no matter what. At least Coinbase is calling your attention to it.

Don’t hold your crypto on the exchange, any exchange, full stop. Even the largest crypto exchange CEOs will tell you that.

But if you’re one of those people for whom this is something to be up in arms about, I’ve got news for you:

…click on the above link to read the rest of the article…

Zog Energy becomes 25th UK supplier to go bust in three months

December 3, 2021

Zog Energy becomes 25th UK supplier to go bust in three months

Company, which supplied gas to about 11,700 households, is another victim of record market prices

A pan on a domestic hob — Zog Energy was founded in 2012 with a plan to offer households simple, affordable gas tariffs. Photograph: Niklas Halle’n/AFP/Getty Images

Another of the UK’s small energy companies has gone bust, bringing the total number of suppliers that have collapsed in the past three months after a record surge in energy market prices to 25.

Zog Energy, which supplies gas to about 11,700 households, announced on its website that it had ceased to trade and that the energy regulator, Ofgem, would appoint a new supplier to take on its customers.

Ofgem has been forced to find new suppliers for more than 2 million households affected by the collapse of energy suppliers since the start of September. The fate of another 1.7 million Bulb Energy customers is yet to be decided by a special administrator, which was appointed to handle the large-scale collapse.

Note: this table does not include MA Energy (2 November) or CNG Energy (3 November), which supply only non-domestic energy customers

Zog Energy was founded in 2012 with a plan to offer households simple, affordable gas tariffs. It said it was “starting with gas” because this was “normally the highest proportion of domestic customers’ annual fuel bill” but did not go on to offer electricity tariffs.

Bills have rocketed in recent weeks after a global gas supply crunch that has caused the wholesale market price to reach record highs in October, and remain at historic levels as temperatures have plunged.

Neil Lawrence, Ofgem’s retail director, said Zog’s customers “do not need to worry” because the regulator’s safety net process would ensure they have uninterrupted energy until a new supplier is appointed, and their bills would be protected by the energy price cap.

…click on the above link to read the rest of the article…

Brits Google ‘Energy Bill Help’ As Energy Suppliers Go Bankrupt

November 23, 2021

Brits Google ‘Energy Bill Help’ As Energy Suppliers Go Bankrupt

Extreme gas price volatility has led to a string of bankruptcies among British energy suppliers
UK Household gas bills have risen by 28.1 percent and electricity bills 18.8 percent in the year to October
Germany’s recent decision to halt approval of the Nord Stream 2 pipeline has added to UK energy woes

Google searches for ‘energy bill help’ exploded over three thousand percent in the UK on November 17, the same day two more energy suppliers collapsed.

Neon Energy and Social Energy Supply both ceased trading earlier this week, leaving 35,000 more customers in need of rescue from market regulator Ofgem.

Recent analysis of Google data from energy experts Boiler Central showed a massive spike in people looking for help with their energy bills.

This included a whopping 212 percent increase in searches for cheaper heating alternatives including ‘portable heater’ on November 17 as well.

Since the start of September, 21 energy companies have ceased trading due to soaring wholesale costs, while half of the country’s dual-suppliers have crashed out of the market in the past 12 months.

Household gas bills have risen by 28.1 percent and electricity bills 18.8 percent in the year to October, according to the ONS.

Germany’s recent decision to halt approval of a gas pipeline from Russia has also caused wholesale gas prices to jump 17 percent in the UK and EU.

Meanwhile, Ofgem is set to examine and potentially increase the energy price cap from its current £1,277 average use limit next year.

A spokesperson for Boiler Central said: “The rise in searches for help with energy bills in the UK, as well as an increase in searches for portable heaters, exposes how much recent soaring energy bills are affecting people.”

…click on the above link to read the rest of the article…

Britain faces ‘massacre’ of 20 more bust energy suppliers, Scottish Power says

October 22, 2021

Britain faces ‘massacre’ of 20 more bust energy suppliers, Scottish Power says

The sun rises behind electricity pylons near Chester, northern England October 24, 2011. REUTERS/Phil Noble/File Photo

LONDON, Oct 21 (Reuters) – Britain’s energy market faces an absolute massacre that could force at least 20 suppliers into bankruptcy in the next month alone unless the government reviews the energy price cap, Scottish Power Chief Executive Keith Anderson said on Thursday.

Natural gas prices have spiked this year as economies reopened from COVID-19 lockdowns and high demand for liquefied natural gas in Asia pushed down supplies to Europe, sending shockwaves through industries reliant on power.

Around 13 British suppliers have collapsed in recent months, forcing more than 2 million customers so far to switch providers. Before the crisis, there were more than 50 small- and mid-sized independent energy suppliers in Britain with around a 30% share of the market.

“There is a significant risk you could see the market shrink all the way back to five to six companies,” Anderson told the Financial Times.

Scottish Power, owned by Iberdrola (IBE.MC), is Britain’s fifth largest energy supplier with around 8% of the domestic gas supply market, according to data from regulator Ofgem.

“We expect, probably in the next month, at least another 20 suppliers will end up going bankrupt,” Anderson told Sky. “We are now going to start seeing some relatively well-run, good, commercially sound businesses going bankrupt because they just can’t pass the cost of the product through to customers.”

The soaring natural gas prices have strained Britain’s retail energy markets to breaking point, putting into question 30 years of energy deregulation which began in 1989 under then-Prime Minister Margaret Thatcher.

Anderson cast Britain’s energy market as facing months of tumult that could shrink the market all the way back to just five or six companies unless the price cap, set by Ofgem, was reviewed.

…click on the above link to read the rest of the article…

The Staggering Impact Of Online Shopping

December 8, 2020

The Staggering Impact Of Online Shopping

Expect Many Local Stores To Close

The ramifications of online shopping during this holiday season while covid-19 rages across the land will be staggering. The fourth quarter is the time of year when retailers normally make the bulk of their annual profits thanks to holiday shopping. The National Retail Federation reported online shopping soared 44% over the five days, including Black Friday and Cyber Monday. This indicates a huge drop in foot traffic in brick-in-mortar-stores at a time when retailers are headed into the holidays loaded to the gills with inventory. This season is seen as a do or die situation for many of these stores which will not make it anyway because the deck is stacked against them.This year due to the pandemic much of the world is in a semi-shutdown. This has caused online shopping to surge to the point where UPS was forced to impose shipping restrictions on major retailers. On Cyber Monday with delivery networks stretched thin, delivery drivers were instructed not to pick up any packages from six major retailers, including L.L. Bean Inc., Hot Topic Inc., New Egg Inc., and Macy’s. A memo confirmed by WSJ sources as authentic. stated: “No exceptions.” The limits imposed by UPS highlights how the influx in packages has put its shipping network under stress and its commitment to putting its regular customer base first.

Abandoned Malls, A Canary In A Coal Mine

Circling back to the retailers. Many small stores and businesses do not have much if any online presence, and if they do search engines intentionally bury them far under Amazon and the other big-boys. Another thing that will be missing this year is profits.

…click on the above link to read the rest of the article…

Election Distraction Has Taken Eyes Off Our Economic Ills

November 15, 2020

Election Distraction Has Taken Eyes Off Our Economic Ills

See the source image

Lately it has been difficult to write about the economy because of all the noise flowing from the election and covid-19 hype. There is a growing reluctance to opine by many economic skeptics because it appears we have been wrong on recent predictions. Only time will tell if this is true due to the huge distortions now evident in the markets. Still, all this tends to diminish confidence in the ability to see what is ahead. This has forced not only me, but other economic watchers to go back and question all we hold true.

Unfortunately, other than moving a few pieces around the board, the recent actions by the Fed only continues to move back the day of reckoning. The “extend and pretend illusion” our economy remains on a sound footing is alive and well. One place this is evident is in the area corporate bond market where many bonds now hold an investment-grade BBB rating. If a company or bond is rated BB or lower it is known as junk grade, this means the probability the company will be able to repay its issued debt is seen as speculative.

In this troubling time of covid-19 where companies are being stressed and tested, we have watched the high yield option-adjusted spreads fall back towards pre-covid levels. The fact we have not seen yields rise as lending standers have tightened indicates the Fed has removed the liquidity problem. This has temporarily masked but has not solved the solvency problem. As the “lag time effect” kicks into gear expect a growing number of defaults and bankruptcies to take place.

…click on the above link to read the rest of the article…

Extend-and-Pretend Caused Bankruptcies to Plunge in Germany, France, Spain. Now Central Banks Tell Banks to Prepare for Bankruptcy Surge

October 17, 2020

Extend-and-Pretend Caused Bankruptcies to Plunge in Germany, France, Spain. Now Central Banks Tell Banks to Prepare for Bankruptcy Surge

The “second wave,” if prolonged, could cause bad loans to almost triple, to €1.4 trillion, says the ECB.

German banks need to prepare themselves for a sharp spike in corporate bankruptcies early next year, the Bundesbank warned this week in its 2020 Financial Stability Review. It anticipates around 6,000 insolvencies in the first quarter of 2021. While this would be a little lower than at the peak quarter of the Global Financial Crisis, the Bundesbank cautioned that it “cannot rule out that … a lot more companies will go bankrupt than is currently expected.”

Although Germany is in the grip of its worst economic contraction since World War 2, fewer insolvencies have been filed this year compared to 2019. This is the result of the weird bailout-and-stimulus economy, and includes these factors:

Banks’ broad application of forbearance measures, which has given businesses extra financial leeway;
The roll out of state-backed emergency loans and grants for struggling businesses, large and small, which forms the backbone of the country’s €1.3 trillion (so far) stimulus program;
Germany’s “Kurzarbeit” social insurance program, which enables employers to reduce their employees’ working hours instead of laying them off, picking up government subsidies in the process.
And most importantly, the temporary suspension of bankruptcy-declaration requirements.

Helped along by these measures, the number of firms declaring insolvency in Germany fell 6.2% to 9,006 in the first half of this year from the same period last year, trending at their lowest level in 25 years, even as the economy shrinks at its fastest rate in over 70 years.

…click on the above link to read the rest of the article…

The Great American Oil & Gas Massacre: Bankruptcies Hit New Milestone as Bigger Companies Let Go

October 17, 2020

The Great American Oil & Gas Massacre: Bankruptcies Hit New Milestone as Bigger Companies Let Go

The American Oil Boom Was Where Money Went to Die.

The amount of secured and unsecured debts, such as loans and bonds, listed in bankruptcy filings in the third quarter by US oil and gas companies, at $34 billion, pushed the total oil-and-gas bankruptcy debt for 2020 to $89 billion, according to data compiled by law firm Haynes and Boone. And this nine-month total already surpassed the full-year total of oil-bust year 2016.

These are predominately exploration and production companies (E&P) and oilfield services companies (OFS) but also include some “midstream” companies (they gather, transport, process, and store oil and natural gas).

In mid-2014, the price of crude-oil benchmark WTI, which had been over $100 a barrel, started plunging. The companies involved in fracking couldn’t even generate positive cash flows at $100 a barrel. And as prices plunged, all heck broke loose. Creditors and equity investors, after drinking the Kool-Aid for years, suddenly got scared, and new money dried up to service the old money. A slew of bankruptcies ensued among the smaller players, reaching a high in 2016. And people thought that was it, the oil bust was over, and new money started pouring back into the sector.

But then came Phase 2 of the Great American Oil-and-Gas Bust in late-2018, with the price of WTI in the futures market eventually collapsing briefly to minus $37 a barrel in April 2020. In recent weeks, WTI has been hovering around $40 a barrel, at which the US oil industry is still burning millions of barrels of cash per day, so to speak:

The total number of oil-and-gas bankruptcies so far this year, at 88 filings, remains a lot lower than the 141 filings in 2016. Back then, scores of small companies were shaken out. Now the bigger ones with multi-billion-dollar debts are letting go as the crisis is working up the ladder.

…click on the above link to read the rest of the article…

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