In 2000, Argentina defaulted on international debt, and then renegotiated with most of its bondholders. Some of the rest of the bonds were snapped up by hedge funds at deep discounts. Recently a U.S. district court judge, Thomas Griesa, ruled that Argentina couldn't pay the renegotiating bondholders -- and no bank or other agent could help it pay them -- without paying the hedge funds, too, in full. The 2nd circuit affirmed, the Supreme Court denied appeal, and the ruling could have a major impact on the future of sovereign debt and on the role of the U.S. as a world financial center. If a solution is not found, Argentina will default again today.
"[S]tock jobbers[,]... confidence men,... an impecunious transportation entity", politicos, judges, scoundrels and Jackie O.: the near-death of Grand Central Terminal, and how it foretold the 2008 financial crisis. [sl Harper's]
Installed solar capacity is growing by leaps and bounds, led by Walmart and Apple, and helped by bonds backed by solar power payments,[*] which have sent industry stocks soaring, even as molten salt and new battery technologies come on line to generate storage for use when the sun doesn't shine. Of course we could always go to geostationary orbit -- or the moon -- as well we may (if politics allow it) as thirst from the developing world grows beyond the earth's carrying capacity. [more inside]
In 1820 Gregor MacGregor, chieftain of the Central American principality of Poyais arrived in London and explained his problem: his principality had a fine climate, friendly natives, and a democratic government, but it needed investors and settlers to help develop it and exploit its abundant natural resources. To this end his government was to issue a £200,000 bond which would pay off at a generous 6%, as well as land rights for a modest 3 shillings an acre. MacGregor would eventually raise funds worth £3.2 billion -at today's prices- for the entirely fictional principality; this makes him arguably the most successful con-men of all time. [more inside]
In a few weeks, ground-breaking will begin on the far West Side. The project: Hudson Yards, the largest real-estate development ever undertaken in the city's history, an enormous mini-metropolis whose planning might have left even Robert Moses dumbstruck. - Wendy Goodman [more inside]
Greece gains another €130bn in bailout funds. It's a nice headline, but the reports suggest it still isn't enough and Newsnight paint a picture of a fracturing Greek society.
Sovereign debt issued by governments is immense. In 2009, worldwide sovereign debt exceeded $34 trillion and is now the largest risk to the global financial system. Many of the potential problems and risks are surprising, even to those well-versed in their particular area of finance. What happens if Things Go Really Bad? ...out of the multitude of potential scenarios, I have settled upon one which is really bad, but doesn’t involve asteroids, mass extinctions, or apes taking over. It is consistent with prior bad episodes of sovereign debt default. Here is the Really Bad scenario. It’s not a worst possible scenario. It is more like the Long Depression or the Great Depression reoccurring under 2010 conditions. In the Really Bad scenario, 45% of the countries with large outstanding sovereign debts are in default within a 2-3 year period." A five-part article series on the imminent dangers of sovereign default from a guest columnist at Calculated Risk blog. Some of this strays into finance ubernerd territory but Part 5C in particular is the likely the playbook for the next financial crisis. [more inside]
On Tuesday, the Federal Reserve cut interest rates by 0.5%. Wall Street aggressively demanded the cut to stop the sub-prime mortgage contagion from triggering a credit crisis among large US and foreign investment banks and the collapse of their over-leveraged hedge funds, which ultimately threatened to drag the US economy into recession. The market rallied this week in response to the Fed's move. But there is no free lunch. [more inside]
When Sports Fans Go Mad. Just in time for your NCAA Final Four weekend: a celebration of sports fans' best and worst pranks, taunts, and hijinks. This ain't no Brady Bunch episode. Some require the skills of a tattoo artist. Some are confusing. Some are about public humiliation. This one, however, really takes the cake.
Want to learn about investing? Morningstar, an independent investment researcher, is offering 172 free online "classes" on stocks, bonds, funds, and portfolio building. And there's nifty quizzes at the end of each lesson where you can earn points that can be used for Morningstar products.
Sports Illustrated has an excerpt from the upcoming book Game of Shadows. The book claims to have detailed evidence of heavy drug use by Barry Bonds. Tom Verducci of SI (who has a Hall of Fame vote) has suggested this will keep him out of the Hall and is damning as the Dowd Report, which lead to a lifetime ban for Pete Rose. Would this provide any kind of closure to the steroid era? If Bonds does not sue, is that as good as an admission? And although his motives can be considered dubious, did Jose Canseco end up becoming a savior of baseball?
An unexpected side effect of iTunes. Remember Bowie Bonds? Introduced in 1997, bonds tied to future profits of music artists (besides Bowie, James Brown and the Isley Brothers offered them) tanked with the advent of online filesharing. Thanks to iTunes, some on Wall Street are betting that the Bowie Bond is a concept with a future.
Yesterday President Bush said, "Some in our country think that Social Security is a trust fund -- in other words, there's a pile of money being accumulated. That's just simply not true. The money -- payroll taxes going into the Social Security are spent." Is he advocating that the US default on its Treasury bonds?
'Vice or Price'? Don Johnson as Sonny Crockett in Miami Vice drove a fancy car while fighting the drug world. Now Don is suspected of trying laundering $8 billion in bonds, stocks and credit notes in Germany. He said he was there to buy a car. Some car!
Why do they (our goverment representives) do this? Do they think that no one pays attention or do they know that there is nothing we can do about it? Don't buy the war bonds.
Scripophily is the misunderstood love of owning stocks and bonds that shouldn't be worth anything anymore. So why not make a business out of it? I'm just glad to see that e-toys is doing good once again.