Free Republic

America has too much junk in the trunk. That’s the assessment of Standard and Poor’s credit rating agency. Their average rating on United States corporate debt just sagged to almost a 15-year low. According to the agency, America faces a debt diet that many companies will not survive. And guess who is to blame? “We believe corporate default rates could increase over the next few years,” warn S&P credit analysts Jacob Crooks and David Tesher. “Lower-quality speculative-grade issuers seeking refinancing or new financing will likely face more onerous terms, conditions and funding challenges, especially in a more nominalized credit environment....

Fitch Ratings downgraded the City of Chicago’s credit rating to just one step above “junk bonds” on March 28.

Chicago's credit rating has been downgraded to one step above junk grade by Fitch Ratings after the Illinois Supreme Court struck down Mayor Rahm Emanuel's reform plan for two city pensions. Fitch lowered Chicago's rating from BBB+ to BBB- on Monday, increasing the cost of borrowing.

It’s a presidential election year so the quadrennially-maligned U.S. trade deficit is taking its lumps. Donald Trump says the trade deficit means the United States is losing at trade, and it’s losing because U.S. trade negotiators aren’t smart enough. Bernie Sanders believes the trade deficit deprives the economy of production and good jobs. Meanwhile, some of the economics commentariat argue that trade deficits are bad because they represent a burden on future generations – a debt that must be repaid. Trump and Sanders are both wrong... ...the debt argument is being used to wrap trade skepticism in a moral sheen...

It’s no secret by now that China has a rather serious debt problem.Although getting a precise read on it is next to impossible, all told the debt pile probably sums to something like $30 trillion. Various reports put the figure at between 250% and 300% of GDP all-in and as we reported back in January, that may have swelled to more than 340% by the end of 2015.Corporate debt-to-GDP was around 125% in 2014 and probably sits above 150% now. Depending on what business you’re in, servicing that debt has become all but impossible. As Macquarie discovered last autumn,...

For the first time ever, total credit card debt in the United States is approaching a trillion dollars. Instead of learning painful lessons from the last recession, Americans continue to make the same horrendous financial mistakes over and over again. In fact, U.S. consumers accumulated more new credit card debt during the 4th quarter of 2015 than they did during the years of 2009, 2010 and 2011 combined. That is absolutely insanity, because other than payday loans, credit card debt is just about the worst kind of debt that consumers could possibly go into. Extremely high rates of interest, combined...

In a bid to raise cash, foreign central banks and government institutions sold $57.2 billion of U.S. Treasury debt and other notes in January, according to figures released on Tuesday. That is up from $48 billion in December and the highest monthly tally on record going back to 1978. It's part of a broader trend that gathered steam last year when central banks sold a record $225 billion of U.S. debt. "Foreigners have no longer been our BFF when it comes to buying U.S. Treasuries," Peter Boockvar, chief market analyst at The Lindsey Group, wrote in a client note. So...

New data released Monday by the Federal Reserve shows U.S. federal debt has reached a post-WWII record high, now at 104.3% of GDP in Q4 of 2015. The previous record was set in Q1 of 2014 at 103.6% of GDP. In Q4 of 2008, the last full quarter before President Barack Obama came to office, federal debt was 73.5% of GDP -- 31% of GDP below its current value. Obama has, by far, overseen the largest increase in federal debt as a share of the American economy among all presidents during the past half-century. George W. Bush is in...

The global economy is heading for a storm as faith in policymakers dwindles, according to a stark warning from one of the world’s most respected financial institutions. The uneasy calm in financial markets last year has given way to turbulence, the Bank for International Settlements, known as the central bank for the world’s central banks, said in its latest quarterly report. Financial markets are losing faith in the healing power of central banks and their latest policy weapon - negative interest rates - to boost the world's main economies, the bank said.

The world's credit boom is beginning to show dangerous signs of unraveling, ushering in a period of fresh turmoil for the over-indebted global economy, the Bank of International Settlements has warned. The globe's top financial watchdog called time on the world's debt binge, noting that debt issuance and cross border flows in emerging economies slowed for the first time since the aftermath of the global credit crunch at the end of last year. With financial markets thrown into fresh paroxysms in 2016, oscillating between extremes of "hope and fear", the over-leveraged world was finally approaching a day of reckoning, said...

Central Banks Have Signed Their Death Warrants During the past year U.S. consumption spending for health care rose by 5%. Spending at restaurants and bars were up by 9%, while spending for gasoline and other energy products was down by 22%. This was Mr. Market at work--millions of households reallocating their spending in response to relative price changes. It had nothing to do with a macroeconomic abstraction called "weak demand". Actually, the medical care component of the CPI rose 3.3% last year. Housing and shelter were up by 3.2%, while gasoline prices were down by 7.3%. It all added up...

According to financial research firm ICI, total retirement assets in the Land of the Free now exceed $23 trillion. $7.3 trillion of that is held in Individual Retirement Accounts (IRAs). That’s an appetizing figure, especially for a government that just passed $19 trillion in debt and is in pressing need of new funding sources. Even when you account for all federal assets (like national parks and aircraft carriers), the government’s "net financial position" according to its own accounting is negative $17.7 trillion. And that number doesn’t include unfunded Social Security entitlements, which the government estimates is another $42 trillion. The...

William White, chairman of the Economic and Development Review Committee at the OECD and former chief economist at the Bank for International Settlements (BIS), says the risks posed by global debt levels are greater today than they were in 2007 and that central banking monetary policy has lost its effectiveness. He also explains the crucial differences between modern macroeconomic modeling and complexity theory (or viewing the economy as a complex adaptive system) and the key lessons this has for policymakers, both fiscal and monetary. Here's a portion of his recent interview with Financial Sense airing Friday on the Newshour page:...

"Fool me once, shame on you; fool me twice shame on me." That is a cliché that investors should keep in mind if they are considering buying into General Motors' latest debt offering. In fact, holders of GM common stock should also assess the growing similarity that New GM has with the bankrupted Old GM. GM announced last week that it will be offering an estimated $2 billion of unsecured debt to help prop up underfunded pensions with additional proceeds used for general business purposes. The move follows a contradictory continuing dialogue that proclaims the company is so cash...

Uh oh - here we go again. Do you remember the subprime mortgage meltdown during the last financial crisis? Well, now a similar thing is happening with auto loans. The auto industry has been doing better than many other areas of the economy in recent years, but this "mini-boom" was fueled in large part by customers with subprime credit. According to Equifax, an astounding 23.5 percent of all new auto loans were made to subprime borrowers in 2015. At this point, there is a total of somewhere around $200 billion in subprime auto loans floating around out there, and...

Ever since the financial crisis, many outside the wealthy elite (sometimes referred to as populists) have argued that the largest banks are too big and too risky. Minneapolis Federal Reserve president Neel Kashkari recently echoed those beliefs.Yet if a new Federal Reserve proposal goes through, Wells Fargo and other large banks might get even bigger and riskier, adding billions to their balance sheets that could increase the banks’ risk profiles.The Federal Reserve says the proposal, which specifies the amount and kind of debt that systemically important large banks must hold, could help make sure that those banks can be wound...

Federal Reserve Chairwoman Janet Yellen faced what may have seemed like an absurd line of questioning on Capitol Hill this week: Has the Fed considered negative interest rates? It's not a fantasy. At central banks around the world, negative benchmark interest rates have become the new normal, leading to some unusual paradoxes. In Denmark, instead of paying interest on their mortgages, many borrowers have been receiving payments from banks on their home loans. On the flip side, some Swiss bank customers have had to pay banks to keep cash in savings accounts. Yellen told Congress Thursday, following negative moves by central banks in Europe and elsewhere, the Fed has...

HOUSTON (FOX 26) - Believe it or not, the US Marshals Service in Houston is arresting people for not paying their outstanding federal student loans. Paul Aker says he was arrested at his home last week for a $1500 federal student loan he received in 1987. He says seven deputy US Marshals showed up at his home with guns and took him to federal court where he had to sign a payment plan for the 29-year-old school loan. Congressman Gene Green says the federal government is now using private debt collectors to go after those who owe student loans. Green...

Kanye West made a reference to being "$53 million dollars in personal debt" on Saturday. West, whose Twitter announcements have made headlines multiple times in recent days, tweeted, "I write this to you my brothers while still 53 million dollars in personal debt... Please pray we overcome... This is my true heart..." I write this to you my brothers while still 53 million dollars in personal debt... Please pray we overcome... This is my true heart...

Will the crash of 2016 be worse than 2008? Central banks have failed to solve the crisis, and instead have taken on more debt than any time in history. At the same time, western institutions are welcoming in Islamic money. Does this mean Sharia-compliant finance? Listen here: http://usatransnationalreport.org/2016/02/13/usa-transnational-report-february-13-2016-guest-charles-ortel/ While European banks, such as Deutsche Bank, falter, what does this mean for the U.S. economy? And what does the future look like? Charles Ortel is an investor and writer interested in economics, geo-politics, history, travel and just, lasting peace. He has done extensive research on the fraudulent activities of the Clinton...