Free Republic

The extreme carnage that we are witnessing in the junk bond market right now is one of the clearest signals yet that a major U.S. stock market crash is imminent. For those that are not familiar with “junk bonds”, please don’t get put off by the name. They aren’t really “junk”. They simply have a higher risk and thus a higher return than other bonds of the same type. And yesterday, I explained why I watch them so closely. If stocks are going to crash, you would expect to see a junk bond crash first. This happened in 2008, and...

ities: The problem with socialism, Margaret Thatcher once noted, is you eventually run out of other people's money. In progressive Chicago, that's hit home as Moody's has cut its credit rating to two grades above "junk." Chicago's finances are staggering under the weight of an unfunded pension liability that Moody's Investors Service has estimated at $32 billion, eight times the city's operating revenue. Chicago has a $300 million structural deficit. And Illinois law requires the city to up its 2016 contributions to its police and fire pension funds by $550 million. "This is an unfortunate wake-up call for anyone still...

Do you want to know if the stock market is going to crash next year? Just keep an eye on junk bonds. Prior to the horrific collapse of stocks in 2008, high yield debt collapsed first. And as you will see below, high yield debt is starting to crash again. The primary reason for this is the price of oil. The energy sector accounts for approximately 15 to 20 percent of the entire junk bond market, and those energy bonds are taking a tremendous beating right now. This panic in energy bonds is infecting the broader high yield debt market,...

Puerto Rico’s Senate approved several measures late Thursday aimed at helping the U.S. territory take on new loans and better manage its ability to repay an existing $70 billion public debt, an issue that has worried investors. One measure would create a corporation responsible for issuing bonds to help pay and refinance some of the $590 million in debt held by the island’s municipalities. The corporation would use a portion of revenues generated through an existing sales and use tax to guarantee payment. As a result, municipalities would see a slight drop in revenues they receive through the tax. Another...

Fitch Ratings Thursday dropped its credit rating on Portugal into junk territory and warned further downgrades were possible, as a recession in the country is increasing challenges for the government to comply with its austerity plans. Fitch lowered the rating one notch, to double-B-plus from triple-B-plus, and maintained a negative outlook. "The country's large fiscal imbalances, high indebtedness across all sectors, and adverse macroeconomic outlook mean the sovereign's credit profile is no longer consistent with an investment-grade rating," Fitch said.

Treasury Issues “Junk” Bonds To Finance Local Public Works The US Treasury has been quietly helping municipalities raise money for public-works projects, increasingly from foreign sources. Municipal projects are generally awarded to contractors willing to comply with strict federal hiring guidelines. The completed projects will likely employ, if anyone, mostly public union employees. In order to attract investors, the interest offered on the “Buy America Bonds” is higher than that of municipal bonds, which are the usual method of financing municipal projects. The taxable bonds, maturing in an average of 29 years, yield of 5.76%, a premium of 185 basis...

In the 1980s Michael Milken made a vast fortune and name for himself issuing and trading high yield corporate debt securities popularly known as junk bonds at Drexel Burnham Lambert. By the time BHO through is mismanaging the federal budget, U.S. government debt securities including T-bills, T-notes, and T-bonds are going to have the same level of safety and security as junk bonds, perhaps even worse. In the investment world, U.S. government bonds have traditionally been considered the safest of all investments. Safer than stocks, mutual funds, high grade corporate and muncipal bonds. The problem is the first thing we...

There was a newsflash this morning on Reuters that "Mark to Market is NOT going to be suspended", allegedly sourced from someone at the SEC. MTM was put into place after ENRON due to the amazing abuses on their balance sheet with asset "valuations" in an attempt to prevent re-runs of that debacle. It has been circumvented to a large part by "Level 3" assets, which are in fact marked to model (same thing as non-MTM eh?) So why the furor? Let's say you are a bank and have $1 billion of some bond issue that was stuffed to the...

Can't Rush and Sean afford to buy them now?

The state Republican Party has launched a television ad attacking state Insurance Commissioner John Garamendi for mishandling the collapse of the Executive Life Insurance Co. The ad targeting Garamendi, a Democrat running against Republican state Sen. Tom McClintock, R-Thousand Oaks, for lieutenant governor, began running Aug. 28 in the Sacramento and Los Angeles media markets. (snip) ANALYSIS: The GOP advertisement attempts to weaken Garamendi, a former gubernatorial candidate and statewide officeholder, by exploiting what is perhaps his greatest political vulnerability. Garamendi has long been dogged by criticism for allegedly mishandling the collapse of the Executive Life Insurance Co. In 1991,...

Ford Motor Co. shares took a hit Wednesday, pressured as Standard & Poor's pushed the automaker's credit rating deeper into junk status... At last check, shares of the second-biggest U.S. car manufacturer were down 13 cents, or 2%, at $6.41 -- just 3 cents above their lowest level in nearly 13 years. The ratings agency downgraded $151 billion in Ford debt by one notch, to a B+ rating, and thus put the rating four levels into speculative-grade territory, with a negative outlook. "Notwithstanding its multiyear plan to turn around the performance of its North American automotive operations, " S&P said,...

LONDON, June 15 (Reuters) - Moody's Investors Servicecut its credit rating on Tribune Co. (TRB.N: Quote, Profile, Research) one notch on Thursday, sending its debt to "junk", because of the U.S. publisher's plans to increase its debt load to return cash to shareholders. The publisher and broadcaster's plan to buy back stock had already prompted downgrades from Moody's, and rivals Standard & Poor's and Fitch Ratings to the lowest level of investment grade at the end of May. In a statement, Moody's said it cut its rating on Tribune to Ba1 from Baa3 and assigned a stable outlook. The downgrade...

(English-language translation) Moody's degraded Puerto Rico's credit rating today, thus aggravating the crisis that has left 90,000 public employees in the island without a job. "This action reflects Puerto Rico's tense financial situation, the continuing political conflict, and the lack of agreement to [take] the necessary measures to end years of financial deterioration by the government," Moody's stated in a release. The majority of the bonds, which were [originally] classified "Baa2", decreased to "Baa3", which is the limit for bonds [considered] healthy for investment. However, according to Secretary of the Governor's Office Aníbal José Torres, the ratings firm degraded some...

NEW YORK, April 20 (Reuters) - Moody's Investors Service on Thursday cut both Knight Ridder Inc. (KRI.N: Quote, Profile, Research) and McClatchy Co. (MNI.N: Quote, Profile, Research) to junk status, citing McClatchy's acquisition of its bigger rival newspaper publisher. In mid-March, No. 9 U.S. newspaper publisher McClatchy said it would buy Knight-Ridder Inc. for $4.5 billion to become the second-largest U.S. newspaper chain. Downgrades, particularly to junk, tend to raise a company's borrowing costs. Moody's cut both Knight Ridder and McClatchy's bond ratings to the top junk level of "Ba1" from the bottom investment-grade rating of "Baa3." The new combined...

Dear Barry, You've just resumed your chase on history, going after a record some thought would never be touched, and I'm with you every step of the way. I know you have taken a lot of heat over the years, and with all the recent news about a new book whose goal is to bring you down, it seems like that disdain isn't about to go away. And I don't know why. While many people seem to take joy in expressing the amount of distaste they feel for you, I come as a friend, a light in the dark who...

Seven home runs shy of passing Babe Ruth, this should be a time of unbridled joy and excitement for Barry Bonds. Not so, he says. ''My life is in shambles. It is crazy,'' Bonds said Monday in an interview with The Associated Press. ''It couldn't get any crazier. I'm just trying to stay sane.'' Then, clearly joking, he went for shock value: ''Go to the Empire State Building and jump off, commit suicide and people can say, 'Barry Bonds is finally dead.' Except for in San Francisco,'' he said. ''I'll leave something for them.'' Despite those pronouncements, the 41-year-old Bonds...

SAN FRANCISCO -- Barry Bonds' lawyer says he'll ask a judge to order that the authors of a new book detailing the Giants' slugger's alleged use of steroids turn over any profits they make. Notice of the lawsuit came today in a letter from attorney Michael Rains' office to the agent for authors Mark Fainaru-Wada and Lance Williams. They are reporters for The Chronicle and authors of the book "Game of Shadows." The book, published today, concerns the Bay Area laboratory known as BALCO and the athletes, including Bonds, who allegedly were illicitly supplied with performance-enhancing drugs. According to the...

NEW YORK (SI.com) -- Beginning in 1998 with injections in his buttocks of Winstrol, a powerful steroid, Barry Bonds took a wide array of performance-enhancing drugs over at least five seasons...*SNIP* ...By 2001, when Bonds broke Mark McGwire's single-season home-run record (70) by belting 73, Bonds was using two designer steroids referred to as the Cream and the Clear, as well as insulin, human growth hormone, testosterone decanoate (a fast-acting steroid known as Mexican beans) and trenbolone, a steroid created to improve the muscle quality of cattle. BALCO tracked Bonds' usage with doping calendars and folders -- detailing drugs, quantities,...

NEW YORK (AP) -- Barry Bonds used a vast array of performance-enhancing drugs, including steroids and human growth hormone, for at least five seasons beginning in 1998, according to a book written by two San Francisco Chronicle reporters. An excerpt of "Game of Shadows," which provides details of the San Francisco slugger's extensive doping program, appears in the March 13 issue of Sports Illustrated. Bonds, who testified before a San Francisco federal grand jury looking into steroid use by top athletes, repeatedly has denied using performance-enhancing drugs. Phone messages left by The Associated Press seeking comment from his attorney and...

NEW YORK (SI.com) -- Beginning in 1998 with injections in his buttocks of Winstrol, a powerful steroid, Barry Bonds took a wide array of performance-enhancing drugs over at least five seasons in a massive doping regimen that grew more sophisticated as the years went on, according to Game of Shadows, a book written by two San Francisco Chronicle reporters at the forefront of reporting on the BALCO steroid distribution scandal. The authors, Mark Fainaru-Wada and Lance Williams, describe in sometimes day-to-day, drug-by-drug detail how often and how deeply Bonds engaged in the persistent doping. For instance, the authors write that...