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Monday, November 30, 2015

Recession Looms As Dallas Fed Manufacturing Contracts 11th Month In A Row

Following Milwaukee Fed weakness, Dallas Fed Manufacturing printed -4.9 (better than expectations of -10 and up from October's -12.7). This is the 11th monthly contraction (sub-50) in the index, something not seen outside of a recession. Prices paid and received tumbled, wages dropped and new orders contracted once again but number of employees and average workweek both jumped? Despite all the promises from former Dallas Fed Fisher, it appears the economy is not so diversified after all.

Attention to ALL ""LAB RATS"" of Planet EARTH......................The Party "IS" Over and NOW Comes the ""Mother of ALL Hangovers""!!!!!!!!!!!!!!!!!!!!!!!!!!

THIS "IS" Not GOOD!!!!!!!!!!!!!!!!!!!!!!!!!

Chicago PMI Plummets To 48.7, Below Lowest Estimate

One month ago, the Chicago PMI soared, printing at 56.2, far above the highest estimate. It was not meant to be, and printing moments ago at 48.7, a mirror image of last month, as this time it printed below the lowest estimate of 49, with consensus expected a 54.0 print.

Low rate party will end with a bad hangover: Lindsey
1 Hour Ago

Lawrence Lindsey, The Lindsey Group CEO, discusses...

Lawrence Lindsey........................READ and Listen to this VERY Wise Man!!!!!!!!!!!!!!!!!!!!!!!!

BTFD "Is Coming To An End" JPM Warns, As It Lowers Equity Allocation Most In 6 Years

Year end is usually a time when Wall Street strategists, so close to that holiday bonus check they can practically smell it, break out optimstic forecasts for the next year and tell their clients to forget any of the pain experienced in the current year and focus on the coming upside. Not so from JPMorgan, however, whose equity strategist Mislav Matejka has just released a note in which the bank lays out why it is the most bearish on stocks it has been in the past 6 years, and with a call that will make every E-trade baby accustomed to BTFDing shiver in their diapers: "The long period of indiscriminately buying any dip might be coming to an end."

Rarefied Air: Valuations and Subsequent Market Returns
By John P. Hussman, Ph.D.
November 30, 2015

The atmosphere is getting thin up here, and every ounce counts triple when you're climbing in rarefied air. While near-term market dynamics are more likely to be impacted by Friday’s employment report than any other factor, our broad view remains that stocks are in the late-stage top formation of the second most extreme episode of equity market overvaluation in U.S. history, second only to the 2000 peak, and already beyond the 1929, 1937, 1972, and 2007 episodes, not to mention lesser extremes across history.

On the economic front, much of the uncertainty about the current state of the economy can be resolved by distinguishing between leading indicators (such as new orders and order backlogs) and lagging indicators (such as employment). It’s not clear whether the weakness we’ve observed for some time in leading indicators will make its way to the employment figures in time to derail a Fed rate hike in December, but as we’ve demonstrated before, the market response to both overvaluation and Fed actions is highly dependent on the state of market internals at the time. Presently, we observe significant divergence and internal deterioration on that front. If we were to observe shift back to uniformly favorable internals and narrowing credit spreads, our immediate concerns would ease significantly, even if longer-term risks would remain.

Having reviewed the divergences we observe across leading economic indicators and market internals last week (see Dispersion Dynamics), a few additional notes on current valuations may be useful.

As I’ve noted before, the valuation measures that have the strongest and most reliable correlation with actual subsequent market returns across history are those that mute the impact of cyclical variations in profit margins. If one examines the deviation of various valuation measures from their historical norms, those deviations are rarely eliminated within a span of a year or two, but are regularly eliminated within 10-12 years (the autocorrelation profile drops to zero at that point). As a result, even the best valuation measures have little relationship to near-term returns, but provide strong information about subsequent market returns on a 10-12 year horizon. Among the most reliable valuation measures we identify, those with the strongest relationship with subsequent 12-year nominal S&P 500 total returns are:

Shiller P/E: -84.7% correlation with actual subsequent 12-year S&P 500 total returns

Tobin’s Q: -84.6% correlation
Nonfinancial market capitalization/GDP: -87.6%

Margin-adjusted forward operating P/E (see my 8/20/10 weekly comment): -90.7%

Margin-adjusted CAPE (see my 5/05/14 weekly comment): -90.7%

Nonfinancial market capitalization/GVA (see my 5/18/15 weekly comment): -91.9%

2015: The Last Christmas in America
By Charles Smith

The game of enabling more debt by lowering interest rates and loosening lending standards is coming to an end.

If we define Christmas as consumer spending going up while earnings are going down, 2015 will be the last Christmas in America for a long time to come. In broad brush, Christmas (along with all other consumer spending) has been funded by financialization, i.e. debt and leverage, not by increased earnings.

The primary financial trick that's propped up the "recovery" for seven years is piling more debt on stagnating incomes. How does this magic work? Lower interest rates.

In a healthy economy, households earn more money (after adjusting for inflation, a.k.a. loss of purchasing power), and the increased earnings enable households to save, spend and borrow more.

In an unhealthy, doomed-to-implode economy, earnings are declining, and central banks enable more borrowing by lowering interest rates to zero and loosening lending standards so anyone who can fog a mirror can buy a new pickup truck with a subprime auto loan.

Black Friday Wasn’t All That——Sales Down 10%

Total sales in the US on Black Friday fell 10% to $10.4bn this year, down from $11.6bn in 2014, according to research firm ShopperTrak.

The decline in sales on the traditional busiest shopping day of the year has been blamed on shops opening the day before. But this year, sales on Thanksgiving also dropped, and by the same percentage, to $1.8bn.

A big reason for the decline is increased online shopping, as Americans hunt down deals on their smartphones, tablets and computers. Many retailers are also offering bargains long before Thanksgiving, limiting the impact of Black Friday specials.

Online retailers have been bombarding customers with email discounts and bargains for weeks. Online sales jumped 14.3% on Friday compared with last year, according to Adobe, which tracked activity on 4,500 retail websites. Email promotions drove 25% more sales compared with 2014, the company said.

Brick-and-mortar retailers saw fewer customer visits on Thanksgiving and Black Friday, compared with last year, according to Kevin Kearns, ShopperTrak’s chief revenue officer.

Shoppers are researching products ahead of time, targeting their store visits, and arriving in store with the intention of making a purchase,” Kearns said.

The drop in Thanksgiving Day visits may also reflect a “social backlash” against stores opening on that day, Kearns said.

Chris Christopher, director of consumer economics at consulting firm IHS, said many retailers’ warehouses and store shelves were overstocked heading into the fall. That prompted many to offer deep discounts as early as the beginning of this month.

“The price discounting has been creeping toward Halloween,” he said.

“We’ve Seen this Before” – in 1999, then Stocks Crashed
By Wolf Richter

“A lot of deterioration and decay under the hood”

The fourth quarter is normally a very strong quarter, and December exceptionaly strong in the global markets, says Christine Hughes, Chief Investment Strategist at OtterWood Capital. This quarter too, global markets are in the green after a powerful rally in October.

But for the year, the S&P 500 has been stagnating. Wthout the top 10 mega-cap stocks (which are up 14%), the index is actually down 6%. This spread between the top ten names and the rest of the index now amounts to 20%.

“We’ve seen this before,” Hughes says. Last time a spread of this magnitude occurred was in 1999. At that time, the rest of the market was strong. And it ended in a three-year crash. This time, the rest of the market is already weak. Then there’s Glencore, whose collapse would ricochet around the global credit markets and hit stock markets. So here’s Christine Hughes, charts and all:

2016 Will be a YEARS when Many of the FED Induced Bubbles EXPLODE!!!!!!!!!!!!!!!!!!!!!!!!!

World's Largest Pension Fund Suffers $64 Billion Loss After Doubling Down On Stocks

The thing about being a pension fund in a world where returns on risk free assets are at best an inflation adjusted zero and at worst guarantee a loss when held to maturity is that you’re effectively forced to go out and take bigger risks if you want to hit your targets. In the US, public sector pension funds cling to the fantasy that they can return 7-8% while still keeping risks manageable while a lower discount rate attributable to ZIRP and NIRP has caused the present value of eurozone defined benefit plan liabilities to soar. In short, the “lower for longer” rates regime can be tough for large pension funds to navigate as the whole enterprise becomes an impossible balancing act between achieving an acceptable rate of return and managing risk.

Earlier this month we took a look at the Q3 numbers for The Government Pension Fund of Norway (the SWF) and the picture was not pretty. In what amounted to the worst quarter in four years, the fund lost 16% on EM equity bets. All told, the SWF lost 5% in Q3.

Dollar-Denominated Corporate Time Bomb Set to Blow

Hot Money Flees Mexico.
By Don Quijones, Spain & Mexico, editor at WOLF STREET.

Emerging economies around the world are already feeling the first pangs of withdrawal as fast yield-chasing investors send their funds back to the U.S. in anticipation of higher Treasury yields and a further appreciating dollar.

In Mexico, the central bank has just published its balance of payments data for the third quarter, 2015. The results do not make for pretty reading.
Early Signs of a Stampede

Net portfolio investment – the total amount of foreign money spent on Mexican financial assets – clocked in at a paltry $933 million, down from $4.47 billion during the same quarter last year. That’s a 79% drop. It was also Mexico’s fifth successive quarterly decline and the lowest level recorded since 2002. Although the rout was across the board, it was particularly pronounced in the private sector which suffered a $241 million net outflow of funds.

Interestingly, while portfolio investment stagnated, foreign direct investment (FDI) flourished, growing by 57.6% in the first nine months of 2015. In other words, those who are investing for the long haul continue plowing funds into Mexico. Which is wonderful news — in the long term! The problem is that investors who are after the quickest of monetary fixes are frantically moving their money out. And that is bad news in the short term! Crises are made of this phenomenon.

And right now, with monetary pressures building around the globe, it’s the short term that counts.

Emerging Markets are Totally SCREWED in 2016!!!!!!!!!!!!!!!!!!!!!!!!!!!!

The Coming CORRECTION "IS" going to be FRICKING BRUTAL!!!!!!!!!!!!!!!!!!!!!!!!

Sunday, November 29, 2015

Oversupplied oil market now = acute shortfall later: Pro
1 Hour Ago

OPEC will meet next week in Vienna. Discussing oil...

""Falling Crude OIL Prices""...............Recession for Exporters DEAD Ahead!!!!!!!!!!!!!!!!!!!!!!

Saudi money supply, loan data show economy slowing

DUBAI: Saudi Arabian money supply and bank lending figures show the economy of the world's biggest oil exporter has started to slow as low global energy prices force the government to clamp down on spending.

M3 money supply grew just 3.9 percent from a year earlier in October, the slowest expansion since November 2010, when Saudi Arabia was emerging from the global financial crisis, according to central bank data released late on Thursday. Annual growth in September 2015 was 8.5 percent.

Growth in narrower measures of money supply, M1 and M2, also slowed sharply to multi-year lows. Growth in bank lending to the private sector fell to 5.0 percent, again the lowest rate since November 2010, from 7.1 percent.

The government has until recent weeks been able to keep the economy growing strongly by boosting Saudi oil output; the October data suggest this strategy may have reached its limits.

Facing a budget deficit of over $100 billion this year, Saudi finance officials have said they are trimming spending in some areas to economize, and the cut-backs have started to crimp money supply.

"There have been hints of the government introducing a fiscal squeeze, and the data point to the impact of this," said Jason Tuvey, Middle East economist at London-based Capital Economics.

The government's 2016 budget, due to be released next month, is expected to reveal details of the cut-backs and impose tougher austerity measures for next year.

Oil Plunge Raises Fears of Societal Unrest
By Elizabeth MacDonald

With Wall Street shops like Goldman Sachs (GS) and government officials in Venezuela signaling oil could go to the mid-$20 per barrel range next year, analysts at places like RBC Capital Markets have been warning that chronically low oil prices plunging towards seven-year lows means increasing social chaos in countries on the edge—including those battling ISIS.

Five countries are high on the radar screen for societal risks from low oil prices, which RBC Capital Markets has labeled the “Fragile Five.” They are Algeria, Iraq, Libya, Nigeria, and Venezuela. ISIS operatives are believed to be in most of these countries.

The wealthier Gulf State governments can adapt to low oil prices by borrowing in the bond market or raising taxes and cutting government spending, though the latter risks more social unrest. Already, the United Arab Emirates pulled fuel subsidies and is mulling corporate and sales taxes. Still, OPEC member companies have seen their group’s revenues drop by nearly $500 billion in the past year, as oil has plunged more than 40%.

Plummeting oil prices are slamming poorer countries, who are dealing with terrorism as well. Already, 1.6 million have been internally displaced in South Sudan, with another 600,000 refugees in neighboring countries on the move. South Sudan has been battling a civil war for more than a year and a half in the oil-rich southern part of the country, an area that’s bigger than Syria. In 2011, the year of its independence, South Sudan was pumping out almost 350,000 barrels of oil per day, but today can only produce 120,000 to 150,000 barrels a day.

Iraq, battling ISIS terrorists daily, has moved to borrow $6 billion in new bond debt, something it hasn’t done in nearly a decade. The bond issuance comes as Iraq’s oil output hit a record high in July at 4.18 million barrels per day, up sharply from an average of 3.42 million barrels per day in the first quarter of this year, notes

I took out already, as you used that word twice before above, and took out move as you say moved at the beginning of the sentence.

Saudi Borrowing Rate Soars in November as Bank Deposits Drop
By Arif Sharif

Saudi Arabian banks are feeling the squeeze from falling oil prices.

The rate at which banks in the biggest Arab economy lend to each other jumped the most in seven years in November following a slump in deposits the previous month.

"The drop in deposits in October, in absolute amount, is probably the biggest since the 1990s," Murad Ansari, a bank analyst at EFG-Hermes Holding SAE, said by phone from Riyadh on Monday. "There are payment delays from the government to contractors, which is one of the reasons for the decline in private sector deposits, and public sector deposits are shrinking as the government is running a deficit."

The rising cost of overnight lending is further evidence of the impact oil’s 37 percent price drop in the past 12 months is having on the desert kingdom. Traders are already boosting bets the Saudi riyal may be devalued and Standard & poor’s has lowered the country’s credit rating. Now liquidity in the banking system is being squeezed, with demand deposits dropping 4.7 percent in October as businesses, individuals and government entities withdrew cash.

By James Quinn

In Part 1 of this article I discussed the catalyst spark which ignited this Fourth Turning and the seemingly delayed regeneracy. In Part 2 I pondered possible Grey Champion prophet generation leaders who could arise during the regeneracy. In Part 3 I focused on the economic channel of distress which is likely to be the primary driving force in the next phase of this Crisis. In Part 4 I assessed the social and cultural channels of distress dividing the nation. In Part 5 I’ll examine the technological, ecological, political, and military channels of distress likely to burst forth with the molten ingredients of this Fourth Turning, and finally in Part 6 our rendezvous with destiny, with potential climaxes to this Winter of our discontent.

The level of distress being produced by technology was probably underestimated by Strauss & Howe when they wrote their book in 1997. The internet, cell phones and e-commerce were still in their infancy, while cyber security was an unknown concept. Huxley would be shocked by how backwards we have “progressed” through the efficient distribution of iGadgets, creating millions of distracted, non-thinking, passive, easily pliable, willfully ignorant sheep who adore their technological servitude.

A vast swath of the populace never reads a book and can’t go more than a few minutes without checking their iGadget to view the latest funny cat video, the latest update on Kim Kardashian’s ass, Bruce/Caitlyn Jenner’s courage, or Lamar Odom’s latest whorehouse escapade. Our country is drowning in a sea of irrelevance as our infinite craving for diversions and triviality overwhelms any thoughts of confronting our oppressors. The adoration of technology has degraded our ability to think and allowed the Deep State to control the masses by amusing them to death.

The totalitarian Orwellian utilization of technology was exposed by a millennial with courage, intelligence, and love of his country – Edward Snowden. His revelations were very distressful to the felonious government apparatchiks who blatantly flaunt their disregard for the Fourth Amendment to the Constitution. The criminals at the NSA, fully supported by Obama and Congress, have made Big Brother look like an amateur, as they siphon up every phone call, text, email, and facebook entry made by each person in this country and for good measure the political leaders of our allies and enemies.

The failure of Americans to be outraged at this traitorous offense against their right to privacy and ludicrous belief that Snowden is a criminal is distressful to the principles of liberty and freedom upon which this country was founded. Sacrificing freedom for security is a false trade-off, as we become less free, less secure, and less responsible for our own lives. The implications of allowing an all-powerful surveillance state to use your private communications against you are far reaching and a dire moment for humanity. The one method left for citizens to communicate without the government able to decipher their messages is encryption. The government is now attempting to gain a backdoor to encryption with the recent terrorist attacks in Paris as their rationale. Every real or imagined threat is used to grow the Deep State.

""GLOBAL WAR"" before the END of this DECADE!!!!!!!!!!!!!!!!!!!!!!!!!!!

Part 1
By James Quinn

*Economic distress, with public debt in default, entitlement trust funds in bankruptcy, mounting poverty and unemployment, trade wars, collapsing financial markets, and hyperinflation (or deflation)

*Social distress, with violence fueled by class, race, nativism, or religion and abetted by armed gangs, underground militias, and mercenaries hired by walled communities

*Cultural distress, with the media plunging into a dizzying decay, and a decency backlash in favor of state censorship

*Technological distress, with cryptoanarchy, high-tech oligarchy, and biogenetic chaos

*Ecological distress, with atmospheric damage, energy or water shortages, and new diseases

*Political distress, with institutional collapse, open tax revolts, one-party hegemony, major constitutional change, secessionism, authoritarianism, and altered national borders

*Military distress, with war against terrorists or foreign regimes equipped with weapons of mass destruction”

The Fourth Turning – Strauss & Howe – 1997

September 2015 marks the seventh anniversary of this Fourth Turning Crisis. The economic, social, cultural, ecological, political, and military distress propagates by the minute as the globe is besieged by economic turmoil, increased human suffering, and endemic corruption of the political and ruling classes. The Federal Reserve/Wall Street created global economic implosion was the spark which catalyzed this fourth Crisis period in U.S. history in September 2008. Neil Howe in a 2012 essay assessed the beginning of this Fourth Turning and why 9/11 was not the catalyst:

By James Quinn

The nearly seven year reign of Barack Obama has resulted in furthering wealth inequality, in spite of his socialistic rhetoric. Notwithstanding his Nobel Peace Prize, military spending is at all-time highs and we are engaged in actual and proxy wars across the Middle East and in the Ukraine. Race relations have never been worse. Poverty levels have never been worse. Real median household income is lower than it was in 1989. Real hourly wages are at 50 year lows. Home ownership has plunged to 50 year lows, as middle class workers have been kicked out of their homes and young people are saddled with so much student loan debt and bleak job opportunities they will never have an opportunity to own. The ownership society pushed by Clinton and Bush, with the proliferation of Wall Street created “exotic” subprime mortgages, peddled to people incapable of paying their mortgages, blew up the world in 2008, and the fall out will last for decades.

By James Quinn

In Part 1 of this article I discussed the catalyst spark which ignited this Fourth Turning and the seemingly delayed regeneracy. In Part 2 I pondered possible Grey Champion prophet generation leaders who could arise during the regeneracy. In Part 3 I will focus on the economic channel of distress which is likely to be the primary driving force in the next phase of this Crisis.

There are very few people left on this earth who lived through the last Fourth Turning (1929 – 1946). The passing of older generations is a key component in the recurring cycles which propel the world through the seemingly chaotic episodes that paint portraits on the canvas of history. The current alignment of generations is driving this Crisis and will continue to give impetus to the future direction of this Fourth Turning. The alignment during a Fourth Turning is always the same: Old Artists (Silent) die, Prophets (Boomers) enter elderhood, Nomads (Gen X) enter midlife, Heroes (Millennials) enter young adulthood—and a new generation of child Artists (Gen Y) is born. This is an era in which America’s institutional life is torn down and rebuilt from the ground up—always in response to a perceived threat to the nation’s very survival.

For those who understand the theory, there is the potential for impatience and anticipating dire circumstances before the mood of the country turns in response to the 2nd or 3rd perilous incident after the initial catalyst. Neil Howe anticipates the climax of this Crisis arriving in the 2022 to 2025 time frame, with the final resolution happening between 2026 and 2029. Any acceleration in these time frames would likely be catastrophic, bloody, and possibly tragic for mankind. As presented by Strauss and Howe, this Crisis will continue to be driven by the core elements of debt, civic decay, and global disorder, with the volcanic eruption traveling along channels of distress and aggravating problems ignored, neglected, or denied for the last thirty years. Let’s examine the channels of distress which will surely sway the direction of this Crisis.

The ""GREAT Rest"" has BEGUN and in 2016 YOU are ALL going to have a Full Understanding of What the Political Class and the ""PIMPS"" of Wall Street have Done to YOU!!!!!!!!!!!!!!!!!!!!!!
A Whole LOT of American Taxpayer's MONEY "IS" about to go UP in SMOKE All thanks to the LIBERALS Running ""BIG Government"" in Sunny Puerto Rico!!!!!!!!!!!!!!!!!!!!!!!!!! 

Puerto Rico's Dec. 1 Deadline: A Guide as Possible Defaults Loom
By Michelle Kaske

Puerto Rico faces a dilemma: pay bondholders $354 million on Dec. 1 or hold on to the cash to ensure it can keep the government running.

The decision may mark a turning point in the long-simmering fiscal crisis for the Caribbean island, which is seeking to cut its $70 billion of debt by persuading investors to accept less than they’re owed. While it began skipping payments on bonds backed only by legislative appropriations in August, next week’s payment includes debt that the central government has guaranteed, giving investors legal recourse. Another $957 million is due from Puerto Rico and its agencies on Jan. 1. 

Behind Puerto Rico’s Woes, a Broadly Powerful Development Bank

If anything stands as a symbol of how Puerto Rico ended up mired in billions of dollars of debt, it is an oceanside golf resort going to seed some 15 miles east of San Juan.

Known until this month as the Trump International Golf Club Puerto Rico, it was built as a for-profit venture, subsidized by federal taxpayers and backed by the island’s powerful Government Development Bank, which sold to investors and guaranteed repayment of more than $50 million in tax-exempt bonds.

Despite the Trump name, which the former owners licensed from the billionaire investor and now presidential candidate Donald J. Trump, the resort failed to attract enough wealthy golfers since the first tee-off in 2004.

This year, it went bankrupt. (Mr. Trump was not involved in the financing or operation of the club.) Then, about a week ago, a buyer scooped up the property, wine cellar and all, for a mere $2.2 million and is rushing to get it ready for a Professional Golfers Association tournament in March, a nationally televised event and a point of pride for Puerto Rico.

The name “Trump” is being removed from the signs, to be replaced by “Coco Beach.” A spokesman for the buyer said it was committed “to making this a showcase for the island and the community.”

But the new owner, OHorizons Global, a private investment firm based in San Juan, did not take over the existing debt. The Government Development Bank is still making payments on the bonds that are outstanding; the last one is due in 2034. The firm declined to speak on the record about the purchase and its plans. 

Puerto Rico Girds for Default

Puerto Rico is set to default on the first of several payments on December 1, which will end up totaling $1.5 billion through the end of January. Puerto Rico’s finances have been deteriorating since as early as 2006, with the bulk of the debt burden currently facing the territory stemming from liabilities in pensions programs. As the Economist notes, the largest government pension program is only 0.7% funded at this point. More:

State pension pots are not in quite such bad shape, but massive liabilities still loom. In Illinois, where the labour force has shrunk by about 3% since 2007, pensions are just 39% funded. Puerto Rico will not be the last local government to run out of money.

Perhaps for that reason, many politicians are adamant that the federal government should never rescue insolvent localities. Detroit, for one, was left to write down its debts in bankruptcy court. Puerto Rico cannot do that. The law bars states and territories from declaring bankruptcy, in order to deter profligate behaviour.

President Obama released a plan earlier this year that tries to address some of these problems (here‘s Peter Orszag’s eloquent defense of it as the best way forward). It calls for increasing the cap on federal Medicaid payments to the territory, on largely humanitarian grounds, to match what the Washington already pays out to the 50 states. It calls for bringing the Earned Income Tax Credit in Puerto Rico to encourage labor force participation. But more controversially, it seeks to extend Chapter 9 bankruptcy protection to the territory as a whole—something that the states themselves don’t have (although individual municipalities within them do). In exchange, the plan proposes to impose a fiscal oversight board on the territory’s government, not unlike the one imposed on the District of Columbia in 1995.

The devil is in the details, of course, and the Obama plan recognizes that the implementation of both the bankruptcy protection and an oversight board would have to be left to Congress. With the first default days away, little progress has been made.

Puerto Rico Governor loses support of mayors as debt crisis bites
SAN JUAN | By Nick Brown

Nov 25 As Puerto Rico's debt crisis takes its toll on the U.S. territory's economy, Governor Alejandro Garcia Padilla is losing support within his own party, increasing the chances he won't seek reelection next November.

His public approval ratings are dire - just 12 percent in a recent poll by newspaper El Nuevo Dia - but more detrimental to his campaign plan is the growing number of mayors and other local politicians from his Popular Democratic Party (PPD) who have deserted him. Support from such officials in Puerto Rico's towns is crucial for effective governance.

The governor's struggles are good news for the main opposition party, the New Progressive Party (PNP), which in turn may favor holders of the Caribbean island's $72 billion in debt, including foreign creditors.

PNP gubernatorial candidates, who include Pedro Pierluisi, Puerto Rico's representative in Congress, and Ricky Rossello, the son of a revered ex-governor, have said they support trying to pay back the island's creditors, while Garcia Padilla has called the debt "unpayable" and called for concessions from those who hold it.

"Creditors would have higher priority in the minds of a PNP candidate," said Height Securities analyst Daniel Hanson, who is closely following Puerto Rico's debt crisis. But the island's "budget would likely sustain more cuts," he said.

Garcia Padilla's predecessor as governor, the PNP's Luis Fortuno, reduced the government's workforce by about 15 percent. Garcia Padilla has added some jobs, Hanson said.

Puerto Rico......................America's GREECE!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 
Brokers wave red flags on five key China bond deadlines
By Judy Chen

A chemical producer, chicken processor, a sausage maker, a tin smelter and a coal miner have something in common. Surging losses and high leverage have prompted brokerages to put red flags on their debt.

China International Capital, Guotai Junan Securities and Haitong Securities all flagged the five companies' liquidity risks this month after China Shanshui Cement Group became at least the sixth firm to default in the onshore bond market on November 12. Corporate notes are suffering, with the yield premium for five-year, AA-rated debentures over the sovereign widening 20.6 basis points this month, the most this year.

"One of the triggers for a financial crisis in China would be high-profile corporate defaults, which could change a deep- rooted mindset among investors that the government would always stand behind troubled companies," said Xia Le, a Hong Kong-based economist at Banco Bilbao Vizcaya Argentaria. "Then a panic would follow."

China's shadow banking risk shifts to booming bond market

* Property, local govt finance firms' private placements up

* Leveraged bond investment products selling briskly

* Bond leverage sharply up, yield spreads down

By Nathaniel Taplin and Engen Tham

SHANGHAI, Nov 29 A year after China's financial regulators squared up to the systemic perils of "shadow banking", the threat is shifting to a booming corporate bond market, and risky borrowers' debt is finding its way into products aimed at retail investors.

An opaque network of trust companies and non-bank lenders had grown their annual market to a hefty 2.9 trillion yuan ($450 billion) in loans before regulators stepped in, spooked by rising defaults on wealth-management products (WMPs) backed by such high-interest shadow lending.

Now the high-risk borrowers who took those loans, such as unlisted real-estate firms struggling with a stagnant property market and financing companies backing shoddy local government investment, are finding a new avenue of funding after regulators began allowing unlisted companies to issue bonds on public exchanges.

New corporate bond issuance leaped to 914 billion yuan in the third quarter, accounting for 29 percent of all new credit, up from 381 billion yuan and just 8 percent in the first.

And the profile of new borrowers looks strikingly like the patrons of the shadow banking set.

Banking, credit crises flash danger signal
By Matein Khalid

2016 to be a minefield for markets.

Global markets end November 2015 at an inflection point. An era of go-go leverage, central bank easy money and colossal debt creation will end when the Federal Reserve raises interest rates in mid-December. Excessive, even idiotic lending is nothing new in international banking.

From Texas shale to African offshore oil, from Australian mining to GCC property, bank credit crunch cycles are now impossible to ignore. Overvalued asset markets will fall. I see credit spreads widen and credit default swap rates spike in the world's debt markets. Even Saudi Arabia, owner of one-fourth of the world's proven oil reserves, just got a sovereign credit downgrade. This is scary stuff. The ghosts of 2008 continue to haunt me, as they will for life.

Higher US dollar interest rates are the kiss of death for emerging markets, down 10 per cent in 2015. The Bloomberg Commodities Index has plunged to a 17-year low and China has accumulated history's biggest credit bubble, a $25 trillion financial Frankenstein, 250 per cent of GDP, via its shadow bank and local government Ponzi schemes. There is $18 trillion in unhedged emerging market debt that will become leprosy as King Dollar continues to rise and commodities continue to plunge as the Fed tightens while Chinese GDP growth falls to four per cent. Last summer, I warned about the world's first "Made in China" recession. The risk SOS in my nervous system flashes yet another danger signal; ain't no sunshine when she's gone, (I mean Mama Yellen). I see dozens of Brazilian, African, Russian, Turkish, Chinese and Indian corporates that borrowed in US dollars face ruin next year. This world will face another Lehman moment as emerging markets banks cannot roll over their debt. An international banking crisis that on the scale of Latin American sovereign lending in the 1980s, Asian/Russian/Mexican currency meltdowns in the 1990's, subprime/CDO excreta in 2008 could be the dominant theme of 2016.

Another Bubble? China’s Corporate Bonds Market Surges on Shadow Investment

Real estate in 2015, the stock market this past summer, and now the corporate bonds sector might be in line for the speculative assets acquisition in mainland China's ‘shadow banking’ sector.

Kristian Rouz – While mainland China is rebalancing its economic model toward domestic consumption, negotiating its integration into the global financial system and liberalizing its regulations on market operations, its massive ‘shadow banking’ sector might be fueling another asset bubble within the nation’s economy.

After the 2014 bubble in real estate and this past summer’s dramatic crash in the stock market following the stunning equity rally in a matter of several months, this time around, the mainland’s corporate bond market is booming. Given the widely known scarcity of investment capital in mainland China, the ‘shadow banking’ sector is possibly laundering their assets via corporate bonds. Yet, as unsustainable borrowers’ loans have entered the

Chinese consumer market, the entire Chinese economic remodeling strategy might be at risk should the overheated bond market experience a profits-taking rout similar to those seen in real estate and stocks during the past two years.

Mainland Chinese companies, frustrated by the lack of quality investment resources, have recently decided to attract funds via bond issuance. For instance, new corporate debt in Q3 rose to 914 bln renminbi ($142.99 bln) and 29% of the total volume of new loans from just 381 bln renminbi and only 8% in Q1.

China’s Bond Stresses Mount as Two More Companies Flag Concerns

A Chinese fertilizer maker and a pig iron producer have flagged bond payment difficulties, adding to signs of stress in the nation’s corporate note market after at least six defaults this year.

Jiangsu Lvling Runfa Chemical Co., based in the eastern city of Suqian, is asking its guarantor to repay 53.1 million yuan ($8.3 million) in bond principal and interest due Dec. 4, according to a statement posted on Chinamoney’s website. Sichuan Shengda Group Ltd., based in the southwestern province of Sichuan, is uncertain it can repay notes due in 2018 that holders can opt to sell back early on Dec. 5, it said in a statement on the same website Thursday.

More companies in China are struggling to repay bonds amid the worst economic slowdown in a quarter century. China Shanshui Cement Group Ltd.this month became at least the sixth company in 2015 to default on yuan-denominated domestic notes. State-owned steel trader Sinosteel Co. postponed a bond payment for a second time last week.

The guarantor of Jiangsu Lvling Runfa’s bond is Jiangsu Re-Guarantee Co. The bonds are so-called collective notes, which are typically issued by several small- and medium-sized companies that don’t have the ability to sell securities on their own. A filing earlier this week didn’t specify the other issuers of the 6.2 percent notes that have a face value of 100 million yuan.

Bank of Tianjin Co., the trustee manager on Sichuan Shengda’s notes, said it will hold a bondholder meeting on Dec. 3, according to a statement to Chinamoney Thursday. Sichuan Shengda’s subsidiary’s pig iron production is in halt because of falling prices and the cash shortage, the lender said in a separate statement.

Sichuan Shengda and its subsidiary had a total of 514.41 million yuan of overdue borrowings as of Nov. 25, according to Bank of Tianjin’s statement.

Chinese Debt Snowball Gaining Momentum
By John Rubino

Financial crises can happen quickly, like the bursting of the tech stock bubble in early 2000, or slowly, like the late-1980s junk bond bust. The shape of the crash depends mostly on the asset in question: Equities can plunge literally overnight, while bonds and bank loans can take a while to reach critical mass.

China’s bursting bubble is of the second type. During its post-2009 infrastructure binge, trillions of dollars were lent to (way too many) producers of cement, steel, chemicals and other basic industrial inputs. And now a growing number of them can’t make their payments:

Outlook for global growth weak: Schroders
By Marissa Lee

World growth will continue to flatline this year and next, as global trade remains weak and cheaper oil crimps the energy sector more than it has stoked consumer spending.

That was the view of Schroders chief economist Keith Wade, speaking at the recent Schroders International Media Conference.

Schroders had earlier predicted that the world economy would grow by 2.9 per cent next year, but is now trimming its forecast.

""GLOBAL Trade""...............The Global Economy "IS" Totally SCREWED!!!!!!!!!!!!!!!!!!

China HARD Landing........................"IS" Happening NOW!!!!!!!!!!!!!!!!!!!!!!!!!!

China SHADOW Banking..........................BANKING Crisis II Coming at YOU!!!!!!!!!!!!!!!!!!!!!

China DEBT..................................""OH SHIT""!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

The Coming CORRECTION "IS" going to be Fricking BRUTAL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

""LAB RATS"" of Planet EARTH......................Just another WARNING to YOU All, 2016 "IS" Going to be a Royal BITCH!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Doing the THINGS Needed to Prepare for WAR!!!!!!!!!!!!!!!!!!!!!!!!!!!! 

Well at LEAST Poland hasn't Forgot 1939!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 

New Polish Leadership Could Shift Military Policy
By Jaroslaw Adamowski

WARSAW — Recent elections have installed politicians of the anti-Kremlin Law and Justice (PiS) Party as Poland's president and prime minister, and local observers say the new Cabinet is likely to increase the country's defense spending.

The government was formed by Prime Minister Beata Szydlo and sworn into office Nov. 16 by President Andrzej Duda.

PiS won the Oct. 25 parliamentary election with a comfortable enough majority to allow it to designate its candidate, Beata Szydlo, to form a new government without teaming up with other parliamentary factions. This situation, unique in the last 25 years, provides the new government with a strong mandate to implement its program.

And with the party’s candidate, Andrzej Duda, winning last May’s presidential election, Law and Justice has all the necessary political instruments to reshape Poland’s defense policy. Combined with the party’s pronounced Euroskepticism, its mistrust toward Russia could lead the government to seek a stronger partnership with the US, local analysts said.

In the wake of the October vote, relations between Warsaw and Moscow are expected to remain tense and stringent. The party’s leader, Jaroslaw Kaczynski, is the brother of Poland’s late President Lech Kaczynski, who died in a plane crash that killed 96 Polish politicians and military officials in April 2010. The country’s new Defense Minister Antoni Macierewicz has been calling on the former government to further investigate the crash, which, he claims, could have been orchestrated by the Kremlin.

"Poland is NATO’s eastern flank, and its relations with Russia are a key component of the Polish foreign policy,” said professor Marek Jablonowski, a political scientist from the University of Warsaw. "There has been much distrust on both sides, and since [the conflict in] Ukraine, this has further intensified.”

Damn.................NOW Britain!!!!!!!!!!!!!!!!!!

David Cameron Says He Will Increase Britain’s Military Spending

LONDON — In a significant reversal of British government policy, Prime Minister David Cameron promised on Monday to bolster military spending, ending years of cutbacks that had prompted critics to claim that Britain was retreating from its global role.

Announcing the outcome of a defense review, Mr. Cameron told lawmakers that his government would add 12 billion pounds, or about $18 billion, to the defense budget over the next decade, largely for military equipment, adding that such an investment was “vital at a time when the threats to our country are growing.”

At present, British bombing raids against the Islamic State are limited to Iraq because of a vote in Parliament in 2013, but on Thursday Mr. Cameron will make the case to extend British airstrikes into Syrian territory.

He appears anxious not to lose again on the issue, but with the opposition Labour Party divided over intervention in Syria, Mr. Cameron may decide that he could win a vote before Christmas.

In the aftermath of the Paris assaults, Mr. Cameron had already announced plans to increase resources for Britain’s intelligence agencies, and to invest in drones and special forces. 

Britain Begins to Rearm

London notices that security threats are rising in Europe.

Europeans will remember 2015 as the year in which national security became an everyday concern, from Russia’s encroachments on NATO’s periphery to the jihadist threat to their urban centers. So kudos to David Cameron’s government for reversing years of cuts to Britain’s military spending with a strategic review that starts to take account of the world as it is.

“We must expect the unexpected,” the Prime Minister warned Parliament on Monday. Britain, he added, “can make sure that we have the versatility and the means to respond to new risks and threats to our security.”

To that end, the government plans to spend £2 billion ($3 billion) on additional weapons for its special forces, hire 1,900 new foreign and domestic intelligence personnel, buy 20 long-range Reaper drones, restore Britain’s maritime patrol capabilities with nine P8 Poseidon aircraft (useful for hunting Russian submarines), and add new squadrons of land-based Typhoon and sea-based F-35 jets. The government will also set aside £41 billion to build Britain’s next generation of nuclear missile submarines.

As important, Mr. Cameron seems belatedly to recognize the need for Britain to maintain robust expeditionary forces. The number of deployable troops will increase to 50,000 from 30,000, including two new strike brigades of 5,000 troops each, capable of moving on short notice. “Not one of these capabilities is an optional extra,” he noted. “These investments are an act of clear-eyed self-interest.”

David Cameron announces 5,000-strong 'strike brigades' to take the fight to terrorists

Britain will spend £178 billion on military equipment over the next decade, David Cameron announces as he vows to 'defeat the terrorist threat' 
By Steven Swinford

Britain's army is to be restructured to form two "strike brigades" of 5,000 soldiers which can be deployed immediately to fight terrorists and others threatening the country, the Prime Minister has announced.

In an article for The Telegraph, David Cameron sets out how he will spend £178 billion on military equipment over the next decade as Britain rushes to tackle the threat posed by Isil.

The Prime Minister will on Monday travel to Paris for talks with Francois Hollande, the French President, before returning to Parliament to set out details to overhaul Britain's armed forces.

He hopes to convince dozens of Labour MPs to defy Jeremy Corbyn and back international air strikes against Isil in Syria, in a Parliamentary vote which is expected to be called within the next fortnight. 

Defence and security
More gear, maybe more fighting?

A big review of the armed forces—days after Paris and days before a probable decision to bomb Syria—reasserts British military power

FOR David Cameron, the publication of the Strategic Defence and Security Review on November 23rd was a case of grim good timing. It came ten days after the horrific shootings and bombings in Paris by Islamic State (IS) terrorists. Indeed, the prime minister announced the review’s results in Parliament just a few hours after coming back from Paris, where he pledged full support for Fran├žois Hollande’s “war” against IS. His statement also came three days before he returned to the House of Commons to initiate a debate, ahead of a likely vote next week, on approving British air strikes against IS in Syria.

What recent events have shown is that global security threats remain clear and tangible. Mr Cameron embarrassingly lost a Commons vote in August 2013 to authorise the use of force against Syria, partly because the Labour opposition ambushed him but also because many in his own party had reservations. That vote explains why Britain is now in the awkward position of bombing IS in Iraq (at the invitation of the Iraqi government), but not in Syria, even though IS does not recognise the border and its main base is Raqqa in Syria. 

Damn it must Really be Getting BAD...............Even the French are Spending MORE!!!!!!!!!!!!!!!!!!

French recruits line up to join fight after Paris attacks
By Liz Alderman

The attacks by militants tied to the Islamic State less than two weeks ago in Paris have awakened a patriotic fervour in France not seen in decades.

Thousands of people have been flocking to sign up with the military. Those seeking to enlist in the French Army have quintupled to around 1,500 a day. Local and national police offices are flooded with applications. Even sales of the French flag, which the French rarely display, have skyrocketed since the attacks, which left 130 dead.

"I've never seen anything like it," said Colonel Eric de Lapresle, a spokesman for the French army's recruiting service. "People are coming in and contacting us in droves through social media, using words like liberty, defence and the fight against terror."

The surge in France, which no longer has conscription, mirrors what happened in the United States after the September 11 attacks. In the two years after those terrorist assaults, the number of US active-duty personnel rose more than 38,000 to 1.4 million. The reasons many of those young Americans offered for volunteering to serve are echoed by some of their French counterparts today.

A few miles from where gunmen stormed restaurants and the Bataclan nightclub November 13, recruiters at the Fort Neuf de Vincennes in eastern Paris were deluged the next day with inquiries from young people, former military personnel and even retirees wanting to know whether and how soon they could take up arms.

Why Defense Acquisition Has a Need for Speed
By James Jay Carafano, Ph.D.

Not since the heady days of the “revolution in military affairs” over a decade ago has reforming the Pentagon been such a central focus of Washington musings. Recently, Senate Armed Services Committee Chairman John McCain (R-AZ) kicked off a series of hearings looking at the roles and missions of the armed forces with an eye toward reducing overlap, duplication and bureaucracy.
The hearings look to build on the momentum to rethink American defense and foreign policy in the post-Obama era. How the military buys stuff will no doubt be a key topic of the debate. If the U.S. is going to outpace pressure from global competitors, the top priority for acquisition reform ought to be figuring out how to get new capabilities into the field faster.

Both the Senate and House Armed Services Committees started digging into the specifics of acquisition practices months ago. Acquisition reform also ought to be one of the next administration’s priorities for delivering better defense.

All of this attention is welcome, but defense reform has to serve a strategic purpose. It can’t become just a green-eyeshade exercise about getting more for less. Otherwise, mismanagement at the Pentagon could leave America both poorer and less safe.

Government has an absolute obligation to be a good steward of our tax dollars. Washington has to figure out how to adequately support the armed forces without ballooning the national debt. But beyond making Pentagon spending more rational, the goal of reform must be to fulfill the duty of providing for the common defense.

“Yes,” writes defense analyst Dan Goure at the Lexington Institute,

Can Russia Afford To Fight Two Wars In Syria And Ukraine?
By Lydia Tomkiw

Russian President Vladimir Putin is already having a bad week and it’s only Tuesday. A Russian military aircraft was shot down by Turkey Tuesday, further complicating the Kremlin’s involvement in the long-running war in Syria. Closer to home, activists in Ukraine cut off electricity to 1.6 million people in Crimea Sunday plunging Russia’s newest territorial point of pride into darkness as violence again increases in Eastern Ukraine.

While Russia’s airstrikes in Syria were likely envisioned as a way for the Kremlin to come out of the cold and reengage with the West after the annexation of Crimea in March 2014, the conflict has further increased the burden on the country’s already crippled economy with predictions of a 3.7 percent GDP contraction this year. Added to the long-term support of separatists in Eastern Ukraine and the high cost of supporting the annexed peninsula of Crimea, Russia’s two conflicts – one with ground troops in Eastern Ukraine and the other with air power in Middle East – are proving unsustainable.

“I don’t think Russia can fight a two-front war in earnest,” said Anna Borshchevskaya, an expert on Russian policy in the Middle East at The Washington Institute for Near East Policy think tank. “Russian military forces have many problems, and while they are still the strongest in the post-Soviet sphere, it’s not the level it was in the Cold War.”

4 Ways Russia's Military Is More Advanced Than You Might Think

With Russia itching to fight after one of its jets was shot down by Turkey, we assess why Putin's war tech might be better than many people believe.
By David Hambling

Vladimir Putin is not a man to back down from provocation, especially a direct, lethal provocation like the shooting down of a Russian Su-24 aircraft by Turkey on Tuesday. Such an attack raises the possibility of a direct military confrontation, and makes you wonder just what Russia could do if you rattled its cage. How dangerous are they?

Russia's defense complex may be just a shadow of the old Soviet Union, with defense spending only about 12 percent of the USA's. As such, many in the West tend to see Russian hardware as second-rate—stuck with 1970's electronics, crude manufacturing standards, and no money to improve matters. If the Russians make anything good, the thinking goes, they must have copied it from the West. The poor performance of the Russian-equipped Iraqi army in 2003 (and Russian-supplied Arab forces against the Israelis) reinforces the idea of inferior Russian military tech. 

Russia cooks its defense books

Moscow says it spends less than it does so that NATO will cut back too.
By Paul R. Gregory

Reports that Russia is limiting military spending to a 1 percent (nominal) increase in 2016 may be timed to deflate NATO’s initiative to raise defense spending to the target 2 percent for each member country. Russia is playing a dual role. On the one hand, it exults in its military power on prominent display in Syria. On the other, it plays the role of impoverished cousin — too poor to keep up military spending. Russia cannot have it both ways.

As reported by Russian official news sources and other media (Moscow Times, Defense News), the Russian Federation’s 2016 draft budget calls for a miniscule (less than 1 percent) increase in defense spending. According to the draft budget, 2016 spending on national defense and national security will be around $50 billion (at current depressed exchange rates), or some 4 percent of GDP and only eight-tenths of 1 percent higher than 2015. With a projected 7 percent inflation rate, these figures call for a substantial decline in real military spending.

These static figures seem counterintuitive in the face of Russia’s military engagement in Syria and east Ukraine and its military exercises on its western borders and the Arctic. According to the official numbers, Russia is either a paper tiger or getting huge efficiencies from its military spending.

Closer examination shows that Russia is reprising Soviet times, when official USSR defense budget figures had little meaning and actual defense outlays had to be calculated independently and with large margins of error. 

China Secret Military Spending
By Glen Asher

It is becoming increasingly apparent that China is becoming a "player" when it comes to the world's superpowers.  With their recent moves in the South China Sea and their displays of game-changing weapons, the United States could find itself sharing top spot as the world's number one "cop".  A recent study by Transparency International provides us with a glimpse of the secretive nation, showing us that the People's Republic of China may be spending far more "off-the-books"  on defense than either we or its citizens are aware of, leading to both corruption within the PRC and mistrust and instability in the region.

Transparency International defines secretive military spending as "military expenditures where no meaningful details are released either to the public or to parliament.".  To give us a sense of the size of China's spending on its military, in early 2014, the nation announced that its defense budget would rise by 12.2 percent to $132 billion dollars after increasing by 10.7 percent in 2013.  This high growth rate has caused concern among outside nations, particularly since China's spending on defense is growing at a far faster rate than its economy.  While there is no doubt that $132 billion is a lot to spend on defense, as you can see on this graphic, China's spending on defense still pales compared to that of the United States: 

India spends more on defence infra, less on men & maintenance: Study
By Vijay Mohan
Tribune News Service

Chandigarh, November 21

India is at the top among 10 major countries in terms percentage of expenditure on procurement of military equipment and development of defence infrastructure of the total defence spending, but is at the bottom of the list as far as expenditure on operations and maintenance is concerned. The position regarding expenditure on defence personnel is also on the lower side.

While the imminent pay hike for the armed forces, as for all other central government employees, is good news on the personal front, higher pay scales come at the cost of funds for operations and maintenance.

This has been the finding of a study conducted for the Seventh Pay Commission by New Delhi-based think tank, Institute for Defence Studies and Analysis. The countries with which India has been compared include the United States, United Kingdom, France, Germany, Japan, South Korea, Russia, China and Pakistan.

In 2007, India had been placed in the ninth spot in terms of expenditure on personnel and in 2012 it moved up to the sixth spot. On the operations and maintenance front, it was in the ninth place in 2007 and slipped to the 10th in 2012. 

Egypt continues defence spending spree

The recent €950 million purchase of the two Mistral-class amphibious ships (LHDs) that France had originally built for Russia illustrates the close defence relationship between Egypt and France.

The ships are expected to be delivered in March 2016, with crew training and modification to Egyptian specifications included in the package. Indeed, this deal makes Egypt France’s number one weapons customer. In just 18 months, Egypt has ordered roughly $8 billion worth of French weapons and services.

The cooperation began in early 2014 with the purchase of four Gowind corvettes, derived from the DCNS L’Adroit offshore patrol vessel. The value of the contract is estimated at about €1 billion, but the corvettes will also add €400 million worth of MBDA’s MICA Vertical Launch air-defence missiles and MM-40 Exocet anti-ship missiles, and DCNS’ torpedoes for €100-200 million. Deliveries are scheduled to start in 2017.

In addition, in February 2015, Egypt became the first export buyer of the Dassault Rafale, with an order of 24 aircraft in a deal which also includes a FREMM frigate and a large quantity of guided weapons to be supplied mostly by MBDA and also SAGEM. This package was estimated to be worth €5.3 billion. Three Rafales were delivered in July 2015 and the FREMM frigate was previously delivered in June.

That is not all as Egypt recently announced two other deals under negotiation and two potential deals with France. The largest deal concerns NH90 naval helicopters for the Gowind and Mistral vessels. The value of the contract is still unknown. Cairo has also decided to acquire another FREMM frigate and two additional Gowinds. 

Aquino OKs P44-B defense spending

Frigates, anti-sub choppers, surveillance planes in DND shopping list

CLARK FREEPORT ZONE: President Benigno Aquino 3rd has authorized the Department of National Defense to enter into a P44-billion multi-year contract for seven major military acquisitions as part of measures to beef up the armed forces, a defense official announced Saturday.

Defense Undersecretary Fernando Manalo told reporters, who witnessed the arrival of the first two of 12 FA-50 Golden Eagle lead-in fighter-trainer jets acquired by the government from South Korea, that the President signed the proposal last Friday, November 27.

“In-approve na ni Presidente iyong authority ni SND (Secretary of National Defense) to enter into a multi-year contract for seven projects,” Manalo, the official in charge of the military’s modernization program, said.

He said among those in the “new” shopping list were two frigates, anti-submarine helicopters, amphibious assault vehicles, long range patrol aircraft, close air support aircraft, munitions for the FA-50s and an air surveillance radar for the Philippine Air Force.

The payment for the projects will start from 2015 to 2017 or 2018, Manalo said.
It was not clear if Manalo’s disclosure was a repeat of what he said last July.

He then said that the President had signed a P60 billion “shopping list” last July 22. 

Europe is battling ISIS (and Russia) with wimpy defense budgets
By Rick Newman

Odds are rising that France and other European nations could end up in a Middle East ground war. That’s worrisome in itself, but there are also concerns that years of cutbacks in European defense budgets could leave the continent’s militaries unprepared for a wily battlefield foe like the Islamic State terror group that recently killed 129 people in a spate of Paris attacks.

The 28 nations that comprise the North Atlantic Treaty Organization agreed last year that every member’s defense spending should total at least 2% of that nation’s GDP. But only five NATO members are likely to hit that threshold this year: The United States, United Kingdom, Greece, Estonia and Poland. A few of Europe’s biggest nations are far below that target. Germany spends just 1.2% of GDP on defense; Italy, 1%; Spain, a paltry 0.9%.

“These are countries that have enormous shared responsibility with the United States and their NATO partners,” says Jeff Rathke, deputy director of the Europe program at the Center for Strategic and International Studies. “We all agree they need to redress their low defense spending.”

Here’s a breakdown of defense spending as a percentage of GDP for every NATO member:

Putin Russia Military.......................READ FOLKS!!!!!!!!!!!!!!!!!!!!!!!!!

China Military........................Getting READY for WAR!!!!!!!!!!!!!!!!!!!!!!!

ISIS......................Pure Evil!!!!!!!!!!!!!!!!!!!!!!!!!!!!

""GLOBAL WAR"" before the END of this DECADE thanks to the FOOLS the WEST Continues to ELECT to RUN ""BIG Government""!!!!!!!!!!!!!!!!!!!!!!!!!!!

Saturday, November 28, 2015

Folks ""GLOBAL WAR"" IS Coming thanks to the ASSHOLES Running ""BIG Government"" around the World!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 

Syria, the South China Sea: Two flashpoints for world war
By Peter Symonds Correspondent

The downing of a Russian bomber by Turkish fighters last week dramatically escalated global tensions and posed point blank the danger of a conflict between nuclear-armed powers.

Yet even as the US-led war in the Middle East was placing the world on a knife-edge, President Barack Obama spent last week ramping up the confrontation with China over its land reclamation activities in the South China Sea.

Obama took part in top-level Asian gatherings — the Asia Pacific Economic Co-operation (APEC) in Manila and the Association of South East Asian Nations (ASEAN)-sponsored East Asia Summit—determined to drive home the point that the US would continue to challenge Chinese maritime claims, even if that led to war.

In the lead-up to the summits, the Pentagon last month provocatively sent the guided missile destroyer, the USS Lassen, within the 12-mile-territorial limit around Chinese-controlled islets and flew nuclear-capable B-52 strategic bombers close to the same area. Like the shooting down of the Russian aircraft, a provocation, accident or miscalculation on either side in the hotly-contested South China Sea could become the trigger for a catastrophic conflict.

Obama’s first engagement in Manila was onboard the Philippine navy’s flagship, the Gregorio del Pilar, speaking to assembled military officials, including the country’s defence secretary and armed forces chief. He used the occasion to again declare his commitment to “freedom of navigation” in the South China Sea and announce $250 million to provide “maritime security assistance to our allies and our partners across the region.” 

Japanese Military Scrambles F-15 Jets After Chinese Planes Fly Near Okinawa

Japan scrambled military jets after 11 Chinese military planes flew near Okinawa Island during a drill, a report said Saturday.

“Six of the Chinese aircrafts flew over open seas between the southern Japanese islands of Okinawa and Miyako, about 1,700 kilometers south-west of Tokyo, on Friday morning, Jiji Press cited Defense Ministry officials as saying,” DPA agency reported. 

Japan's F-15 aircrafts

Chinese military planes fly near Okinawa Island during drill

BEIJING – China’s air force said Friday its planes had again flown over the Miyako Strait, near Okinawa Island, as part of a drill in the western Pacific Ocean.

The move comes as China’s military ramps up its combat capability amid growing maritime tensions in the region.

The drill took place a day after Chinese President Xi Jinping announced a major overhaul of the country’s military to make the world’s largest army more combat ready and better equipped to project force beyond the country’s borders.

“The air force has conducted drills four times this year in the western Pacific Ocean and it has improved its long-distance operational capability at sea,” read a statement on the People’s Liberation Army Air Force’s official microblog.

It said it also carried out a patrol Friday in China’s air identification zone in the East China Sea, adding that H-6K bombers, jets and other aircraft participated in the two operations.

The statement added that the operations were in line with international law and norms.

The strait between Okinawa’s main island and Miyako Island is strategically vital for China as it is one of the few international waterways through which its navy can access the Pacific Ocean.

Philippines Accuses China of Trying to 'Physically Expel' Filipinos from South China Sea
By Benjie Batanes

The Philippine legal representatives at the Hague International Arbitration Court this week accused China of bullying and trying to physically expel its citizens from the disputed parts of the South China Sea. Beijing has refused to participate in the court proceedings and insists on bilateral negotiations instead to settle the dispute between the two countries. 

China Military....................The EVIDENCE of China's Intent "IS" VERY Clear..............Accept China's Dominance in Asia or get Ready for WAR!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Can The Oil Industry Really Handle This Much Debt?
By Ekaterina Pokrovskaya

As the crude industry has been wrestling with low oil prices that declined by over 50 percent since its highest close at $107 a barrel in 2014, many exploration and production companies worldwide and in the U.S., in particular, have faced large shortfalls in revenue and cash flow deficits forcing them to cut down on capital expenditures, drilling and forego investments in new development projects.

High debt levels taken on by the U.S. oil producers in the past to increase production while oil prices soared, have come back to haunt oil and gas companies, as some of the debt is due to mature by the end of this year, and in 2016. Times are tough for U.S. shale oil producers: Some may not make it, especially given that this month, lenders are to reassess E&P companies’ loans conditions based on their assets value in relation to the incurred debt.

Throughout the oil price upturn that lasted until the middle of 2014, companies sold shares and assets and borrowed cash to increase production and add to their reserves. According to the data compiled by FactSet, shared with the Financial Times, the aggregate net debt of U.S. oil and gas production companies more than doubled from $81 billion at the end of 2010 to $169 billion by this June

In the first half of 2015, U.S. shale producers reported a cash shortfall of more than $30 billion. The U.S. independent oil and gas producers’ capital expenditures exceeded their cash from operations by a deficit of over $37 billion for 2014.

In July – September 2015, after a couple months of a rebound, a further slump in crude futures prices fluctuated between $39-47/bbl, thus putting more strain on the oil-and-gas producers, and making them feel an even tighter squeeze.

As The Wall Street Journal reported in August, Exxon Mobil Corp. and Chevron Corp. stated they were cutting stock-buyback programs, while Linn Energy LLC announced it would stop paying dividends to its shareholders. Meanwhile, several small U.S. oil and gas producers have filed for chapter 11 bankruptcy protection this year. Companies with persistently negative free cash flow fall into the trap of borrowing, as they have to incur more debt to repay what they have already borrowed before. This makes such companies vulnerable to default and bankruptcy. 

What it costs to produce oil
By Alanna Petroff and Tal Yellin

The collapse in the price of oil has squeezed energy companies and countries that were betting on higher returns. Here’s what it costs on average to pump a barrel of oil in the 20 biggest oil producing nations.

Why Vladimir Putin Won't Be Helping OPEC to Cut Oil Production
By Dina Khrennikova and Elena Mazneva

OPEC: Oil inventory surplus bigger than during recession
By Collin Eaton

HOUSTON — Crude and petroleum-product stocks in rich economies this year have surged past levels last seen during a financial crisis in early 2009 — the latest grim milestone for a global oversupply that doesn’t appear to be fading yet, OPEC says.

For the oil market, the first nine months of the year have seemed like a slow-motion repeat of the huge build in inventories that occurred six years ago amid a worldwide recession, which drained oil demand and left crude stocks with an overhang of 180 million barrels above the five-year average in the group of generally wealthier nations called the Organization for Economic Cooperation and Development.

This year, the Organization of Petroleum Exporting Countries said in its monthly oil-market report, the overhang those same inventories has risen to 205 million barrels, plus another 80 million-barrel increase in non-OECD countries.

In other words, the world has packed on 1 million barrels a day in crude stocks. Daily supplies from OPEC and outside the Saudi-led cartel rose to 2.5 million barrels, far outpacing this year’s 1.6 million barrels in global demand growth.

The two episodes — this year’s crude build and the one in 2009 — were the only times in the last decade when crude shot past 150 million barrels above the five-year average.

“In both cases, crude oil prices dropped to multi-year lows,” OPEC said.

But OPEC believes that lower oil prices have started to bring up global demand as China, India and other countries have piled crude into their strategic reserves.

That, a cold winter and the slowdown in oil production outside the cartel could “help alleviate the current overhang and support a recovery of crude oil prices in the coming months,” OPEC said.

U.S. crude fell $1.12 cents to $41.81 a barrel on the New York Mercantile Exchange in early trading Thursday. Brent, the international standard, has come down 66 cents to $45.15 a barrel on the ICE Futures Europe.

Crude prices sank even though OPEC said its crude production fell sharply by 256,000 barrels a day to an average 31.38 million barrels a day in October, as surging production in Iraq slowed.

Several western oil producers in the third quarter told analysts that Iraq has asked them to slow investments in the oil patch while the government diverts funds to fight terrorists.

The Three Largest Economies Are In Recession
By Graham Summers

The central dynamic of the last 12 months continues to dominate financial market price action.

That dynamic is:

1) The global economy is contracting with former engines for growth (Emerging Market economies, particularly China) growing little if at all.

2) Financial markets continuing to rally/ hold up in hope of additional monetary measures by Central Banks.

Regarding #1, the recent spate of economic data is absolutely awful:

1) In China, the official growth numbers suggest GDP is growing by 7.3%, however…

China’s electricity consumption suggests GDP growth is 3% at best.

China’s rail freight volume for the first eight months of 2015 fell 10.1% from the comparable period in 2014.

China’s monthly Caixin PMI reading has fallen to levels not seen since March 2009: when everyone thought the world was ending.

August exports fell 5.5% year over year following an 8.9% collapse in July (exports account for 30% of China’s GDP).

Let’s now turn to Japan, where the largest QE program in history was launched in April 2013, only to be increased in October 2014. This was a Keynesian dream come: an amount of spending equal to 25% of GDP.

2) Since that time, Japan experienced an uptick in economic growth for two quarters before turning back down again. Which brings us to today.

Japan’s GDP shrank at an annualized pace of 1.2% in 2Q15.

Industrial production fell 0.5% in August, after falling 0.6% in July, indicating that Japan is in a technical recession (the country’s second in as many years).

Consumer prices fell 0.1% in August, marking the first drop in two years…suggesting a return to deflation.

So that’s the second and third largest economies in the world teetering on the verge of recession… but what about the largest economy, the US?

Oil Patch Problems: Rigs Down 60%, Production Down 3%, $40-$50 Price Doesn't Work
By Mike "Mish" Shedlock

With every bounce in the price of oil, US producers used enhanced techniques to get more and more oil out of existing wells. So even as rig counts collapsed, production is barely off the highs, at a price that isn't even profitable.

Oil Flirts with $40 Again

Autumn Statement 2015: Dig at Scottish Nationalists as oil revenue estimates for next year plunge by 94pc

North Sea oil revenues are forecast to fall by 94pc this fiscal year.
By Tara Cunningham

Once one of the Treasury’s main tax receipts from the business world, North Sea oil revenues are forecast to fall by 94pc this fiscal year as the beleagured industry continues to decline.

Data from the Office for Budget Responsibility (OBR) estimates that UK oil and gas revenues will be down 94pc in the 2015-16 year at £130m, from £2.2bn in 2014-15.

Analysts last night criticised the Chancellor for “abandoning” the sector, after he failed to provide any additional support for the industry.

Instead, George Osborne used the industry’s plight to make a jibe at Scottish nationalists. “Of course, if Scotland had voted for independence, they would have had their own Spending Review this autumn,” he said.

“With oil prices falling, and revenues from the North Sea forecast by the OBR to be down 94pc, we would have seen catastrophic cuts to Scottish public services.”

Energy Downturn Spreads Beyond the Oil Patch

Oil slump ripples into areas of North American economy that had avoided the worst of the downturn
By Chester Dawson

The prolonged slump in crude prices is rippling beyond the oil industry into areas of the North American economy that, until recently, had managed to avoid the worst of the downturn.

With the crude-market decline in its 17th month and nearly a year after OPEC dealt prices a sharp blow by refusing to rein in output, lower profits and mounting losses are crimping budgets, spurring multiple rounds of job cuts and driving some energy companies to seek bankruptcy protection.

Signs of that distress are spreading throughout once-booming oil-producing regions across North America. Sales of single-family homes in Houston fell 10% on the year in October, the first double-digit decline this year, according to the local association of real-estate agents. Restaurants in Texas and the Southwest have experienced a drop in revenue and customer traffic, industry tracker Black Box Intelligence said in a recent report.

Chili’s Grill & Bar operator Brinker International Inc. blamed low oil prices for weak results in some states that rely heavily on the energy industry.

“While we have been seeing pockets of softness within those regions for a while, the top-line challenges expanded during the quarter across Texas, Oklahoma, Arkansas, Louisiana,” Chief Executive Wyman Roberts said on a conference call last month.

The gloom is deepest in and around pockets of the industry where costs are highest: shale oil, oil sands and the offshore Arctic. Tapping those fields made sense when oil was $100 a barrel, but less so below $50. From plunging car sales in Calgary, Alberta, to higher hotel-room vacancies in Williston, N.D., and weakening restaurant traffic in Texas, the ripple effects of the downturn are spreading.

North Dakota earlier this month said output from the Bakken Shale, once one of the hottest growth areas in the industry, marked the first year-over-year decline since 2004 in September. That came as some producers gave up on the Bakken, where profit margins are thin due to higher production and transportation costs than many other oil-producing areas.

OMG!!!!!!!!!!!!!!!!!!! ""LAB RATS"" of the WEST, I Strongly Suggest You ALL make this Christmas the BEST You have EVER HAD because in ""2016"".................The Global Recession Led by Energy(Crude Oil Prices) "IS" going to LAY Waste to MILLIONS of Jobs and PUSH Many Energy Export Economies into RECESSION!!!!!!!!!!!!!!!!!!!!!!

Crude Oil Debt Defaults!!!!!!!!!!!!!!!!!!!!!!!!!!

Venezuela warns OPEC of oil price drop to mid-$20s
By Javier Burns

It was just one year ago this week that Saudi Arabia and OPEC declared war on U.S. and Canadian shale producers. Crude futures are already down around 60 percent since mid-2014 as supply has exceeded demand by 700000 to 2.5 million barrels per day creating a glut that analysts say will last well into 2016.

"It's hard to see what else moved the price besides the Saudi statement, even though it's exactly what Oil Minister al-Naimi said last week", said Giovanni Staunovo, an analyst at UBS Group AG in Zurich.

Venezuela had made a proposal in Vienna on October 21 about an equilibrium price that could stabilize the market, del Pino said, repeating that the equilibrium price where future investments can continue to replace a natural decline in production is at the level of $88.

Crude futures lost ground in early Asian trading on Monday, with United States oil plunging more than 2 per cent, pressured by a global supply surplus despite a cut in the number of U.S. rigs for an eleventh week out of 12. The 12-member group meets December 4 to discuss its production target.

Brent oil settled 1 per cent higher on Friday on pre-weekend short-covering, while USA crude settled lower but just above the $40-per-barrel support it has struggled to defend after a surge in inventories.

Oil is sliding again following some fleeting gains, while Venezuela is predicting that crude prices may fall to the mid-$20s next year if OPEC fails to stem supply.

Furthermore, he mentioned increasing production to increase its exports, for which he doesn't require any permission from OPEC or any other related organization, as the West-imposed sanctions are likely to be relaxed in the coming months.

Oil Faces a Long Stretch of Low Prices

Global oversupply shows no sign of easing and will keep prices down. Relief from weather and OPEC doesn’t look likely for now.
By Nicole Friedman

Oil at $50 was unthinkably cheap just a year ago. Now, it may be too pricey.

Many analysts and investors adopted a “lower for longer” outlook on oil prices in midsummer and predicted that supply and demand would not come into balance until the second half of 2016 or 2017.

After rallying to nearly $50 a barrel in October, prices look unlikely to trade above that level again until 2016.

Though U.S. oil production has fallen in recent months, the global crude market remains oversupplied. Tankers filled with crude have backed up at ports around the world in recent weeks waiting to unload. The current futures market is close to the point at which it becomes profitable to buy oil and store it in a ship to sell later—a sign of a serious glut.

“It’s impossible to disregard the amount of oil around,” said Al Levine, chief executive of energy brokerage Powerhouse.

U.S. oil prices fell 19 cents, or 0.4%, to $41.71 a barrel on the New York Mercantile Exchange on Friday. Brent, the global benchmark, rose 20 cents to $44.86 a barrel on ICE Futures Europe.

The oversupply could get worse in the coming months if Iran floods the market with hundreds of thousands of barrels a day of crude. Iran has said it can increase exports even before sanctions are lifted.

Eeopolitics, a historic booster of oil prices, is unlikely to spark a serious rally this year. Developed nations are sitting on record-high commercial stockpiles, which should act as a buffer to any supply shock, and some countries, including the U.S., have government-held strategic inventories on top of that.

The International Energy Agency expects global demand growth to hit a five-year high this year, with large gains in gasoline and jet-fuel consumption. But heating-oil demand, a key driver at this time of year, has been subdued due to a mild start to winter in the U.S. and Europe.

If moderate temperatures persist, stockpiles of heating oil and other distillates will continue to increase, weighing on refinery profits and decreasing demand for crude. Goldman Sachs has warned that distillates’ storage tanks could reach capacity, helping send oil prices as low as $20 a barrel.

OPEC determined to keep up oil production despite financial strain
By Dillon Hess
Chronicle Daily

The market also got a taste of Saudi Arabia 's power this week, when a flip comment by the Saudi oil minister at a cabinet meeting was taken to signal a change in production policy by the Kingdom, as a way of "cooperating" with the other OPEC and non-OPEC producers.

SEOUL _ Oil buyers in Asia are sure of one thing as OPEC prepares to meet: They'll emerge as winners from the group's rift over production.

Crude oil future prices fell Friday as the market remained anxious about a growing global glut after the USA reported a buildup in its commercial crude inventories last week.

Oil prices soared on Tuesday after Turkey shot down a Russian warplane in Syria for alleged airspace violation.

Gasoline merely matches demand at this time past year, and distillate demand is lower, said Donald Morton, senior vice president at Herbert J. Sims & Co., but stockpiles are still filling up with new production.

At 0930 GMT the FTSEuroFirst 300 index of leading shares was up 0.8 percent at 1,493 points .FTEU3, Germany's DAX was up 0.7 percent at 11,015 points and Britain's FTSE 100 .FTSE was up 0.8 percent at 6,329 points.

Still, the political stand-off between Turkey and the Kremlin, prompted by the downing of a Russian fighter jet on the Syrian border on Tuesday, continues to add a bit of frissance to the markets.

West Texas Intermediate (WTI) futures, the USA crude benchmark, dropped 38 cents to $42.66 per barrel.

OPEC has stated its intention to keep pumping oil vigorously despite the resulting financial strain, and heightening fears prices may slump further towards $20.00 U.S. Distillate product supplied averaged over 3.9 million barrels a day over the past four weeks, up by 2.1% when compared with the same period a year ago. Without a collective effort to ease production by both members and nonmembers of the oil cartel or a drastic increase in global demand, prices will likely stayed subdued.

"We expect inventories to continue to remain low with strong USA refinery utilization which was at 92 percent".

Russian Federation accounts for about 12 percent of global oil output.

Why Low Oil Prices Won’t Cure Low Oil Prices
By Gail Tverberg

The traditional understanding of supply and demand works in some limited cases–will a manufacturer make red dresses or blue dresses? The manufacturer’s choice doesn’t make much difference to the economic system as a whole, except perhaps in the amount of red and blue dye sold, so it is easy to accommodate.

Figure 1. From Wikipedia: The price P of a product is determined by a balance between production at each price (supply S) and the desires of those with purchasing power at each price (demand D). The diagram shows a positive shift in demand from D1 to D2, resulting in an increase in price (P) and quantity sold (Q) of the product.

A gradual switch in consumer preferences from beef to chicken is also fairly easy to accommodate within the system, as more chicken producers are added and the number of beef producers is reduced. The transition is generally helped by the fact that it takes fewer resources to produce a pound of chicken meat than a pound of beef, so that the spendable income of consumers tends to go farther. Thus, while supply and demand are not independent in this example, a rising percentage of chicken consumption tends to be helpful in increasing the “quantity demanded,” because chicken is more affordable than beef. The lack of independence between supply and demand is in the “helpful” direction. It would be different if chicken were a lot more expensive to produce than beef. Then the quantity demanded would tend to decrease as the shift was increasingly made, putting a fairly quick end to the transition to the higher-priced substitute.

A gradual switch to higher-cost energy products, in a sense, works in the opposite direction to a switch from beef to chicken. Instead of taking fewer resources, it takes more resources, because we extracted the cheapest-to-extract energy products first. It takes more and more humans working in these industries to produce a given number of barrels of oil equivalent, or Btu’s of energy. The workers are becoming less efficient, but not because of any fault of their own.

One Chart Shows Where Oil Prices Could Be Headed
By Brian Weepie, Growth Stock Wire:

There’s a rare extreme in the oil sector right now. The oil-to-U.S. dollar ratio, which reflects the relationship between the price of oil and the dollar, is near its lowest point in almost seven years.

When this ratio hit a low in 2009, the price of oil went on to soar 214% to its peak in June 2014. But if you think this extreme means oil prices could soon rally, you’re making a mistake…

As regular readers know, the dollar has broken out over the past year. It’s now stronger than it has been since 2003 versus other major currencies. The U.S. Dollar Index is up 40% since it bottomed in 2008. Historically, when the dollar rises, commodities like oil tend to fall. This is what we’ve seen this time around. The price of benchmark West Texas Intermediate (WTI) crude oil is down more than 60% since June 2014 – to around $40 per barrel.

As a result, the ratio between the price of oil and the dollar has fallen. It’s down around 68% since oil peaked.

Loan defaults in the energy sector continue climbing: Fitch

Loan defaults in the energy sector continue to increase, with the latest company to file, Miller Energy Resources, the fifth energy loan default since March, Fitch Ratings reported this week.

The Miller Energy filing raised Fitch’s trailing 12-month (TTM) default rate for October to 5.8% — compared to the historical sector average – Kallanish Energy learns.

Energy and second-lien issuance has virtually stopped, according to Fitch. “Since April, the energy sector has provided just 6% of second-lien issuance due to a lack of appetite for junior liens, and as oil prices in the mid 40’s [per barrel] pressure valuations,” the ratings agency said.

The energy sector has the largest share of second-lien loans, at 21%. From third quarter of 2014 through the first quarter of 2015, energy accounted for 22% of total second-lien issuance. Third-quarter 2014 ushered in most of the volume as crude oil prices peaked, Fitch found.

(A second-lien loan is debt subordinate to the rights of other, more senior debt issued against the same collateral, or a portion of the same collateral. If a borrower defaults, second-lien debt stand behind higher lien debt in terms of the right to collect proceeds from the debt’s underlying collateral.)

Weak energy second-lien bids are also a focus for Fitch. The average bid price for second-lien loans on a par-weighted basis last week was 89.9 cents, with 14% of the sample bid below 80 cents.

A total of $2 billion of loan defaults in November pushed the TTM default rate to 1.7% from 1.5% at the end of October, according to Fitch.

Overall, the 2015 default rate should come in near the top of Fitch Ratings’ 1.5%-2% projection.

"On The Cusp Of A Staggering Default Wave": Energy Intelligence Issues Apocalyptic Warning For The Energy Sector

The Energy Intelligence news and analysis creator and aggregator is not one to haphazradly throw around hyperbolic claims and forecasts. So when it gets downright apocalyptic, as it did this week in a report titled "Is Debt Bomb About to Blow Up US Shale?", people listen... and if they are still long energy junk bonds, they panic.

The summary:

"The US E&P sector could be on the cusp of massive defaults and bankruptcies so staggering they pose a serious threat to the US economy. Without higher oil and gas prices -- which few experts foresee in the near future -- an over-leveraged, under-hedged US E&P industry faces a truly grim 2016. How bad could things Get?"

Debt Bomb Ticking for US Shale
By Paul Merolli

The US E&P sector could be on the cusp of massive defaults and bankruptcies so staggering they pose a serious threat to the US economy. Without higher oil and gas prices — which few experts foresee in the near future — an over-leveraged, under-hedged US E&P industry faces a truly grim 2016. How bad could things get and when? It increasingly looks like a number of the weakest companies will run out of financial stamina in the first half of next year, and with every dollar of income going to service debt at many heavily leveraged independents, there are waves of others that also face serious trouble if the lower-for-longer oil price scenario extends further.

"I could see a wave of defaults and bankruptcies on the scale of the telecoms, which triggered the 2001 recession," Timothy Smith, president of consultancy Petro Lucrum, told a Platts energy conference in Houston last week. Much has been made about the resiliency of US oil production in the face of low prices, but the truth is that many producers are maximizing their output — even unprofitable volumes — because they need the cash flow to service their debt (related). "As an industry, we're at the point where every dollar of free cash flow now goes to paying back debt," Angle Capital's Steve Ilkay told the same conference. Ilkay, who advises North American producers on asset management, said during the boom years of 2012-14 about 55% of the sector's free cash flow, which is calculated by subtracting capital expenditures from operating cash flow, was allocated toward debt repayment.

With West Texas Intermediate (WTI) stuck below $50 per barrel since August — and closer to $40 recently — the industry has responded with deeper cuts to capex and a greater focus on efficiency (EIF Nov.4'15). However, experts say this won't be enough to avoid a bloody reckoning with persistent low oil and gas prices, as the sector grapples with some $200 billion-plus in high-yield debt, which it absorbed to finance the shale oil boom. Credit quality has been steadily deteriorating since June 2014, when WTI peaked at $108/bbl. Standard and Poor's says there have been 19 defaults so far in 2015 across the US oil and gas industry, while another 15 companies have filed for bankruptcy. Besides those that have missed interest or principal payments, the default category also includes companies that have entered into "distressed exchanges" with their creditors, including Halcon, SandRidge, Midstates, Goodrich, Warren, Exco, Venoco and Energy XXI (EIF Jul.8'15).

Canadian energy companies seen disappearing in oil’s ‘new world’

Chairman says some Canadian oil-sands developers will be forced out of the industry

Alberta: Canada is poised to lose energy companies as the industry faces the “new normal” of lower and more volatile oil prices along with tougher climate and regulatory policies, billionaire investor Murray Edwards warned Friday.

The chairman of the nation’s largest heavy-oil producer, Canadian Natural Resources Ltd., likened the oil industry to a horse race in which western Canadian producers are struggling to compete with developers of light crude from US shale. While cost cuts and innovation are allowing some oil-sands developers to stay in the game, parts of the Canadian industry will go by the wayside, Edwards said at a conference hosted by Bennett Jones LLP in the mountain community of Lake Louise, Alberta.

“We have a lot of wind blowing in our face right now, a lot of challenges before us,” Edwards told reporters after delivering remarks to a crowd of more than 300 at a ski resort hotel. “Only those that are going to be top in class on execution are going to be able to survive in that environment.”

Snow-covered peaks in the background at the conference offered an uplifting contrast to the pall cast over Calgary. Office buildings in the Centre of the nation’s oil patch are emptying with a persistent price slump that began in June 2014, which has led to 40,000 lost jobs across the Canadian industry and 100,000 cumulatively with the spillover to other industries, according to the latest figures Friday from the Canadian Association of Petroleum Producers. US crude is down about 60 per cent since its high last year, hovering just above $40 a barrel.

Higher Levies

Oil companies in Alberta are facing higher levies, with a new climate policy this month including a rising carbon tax, and await the results of a policy review to finish later this year on the royalties the provincial government collects on their production. Some parts of the industry won’t outlive the new regime, said Peter Tertzakian, chief energy economist at ARC Financial Corp. and a member of the royalty review panel.

Battle over Canadian Oil Sands hinges on crude price

Canadian Oil Sands said it’s meeting potential bidders, but Suncor’s C$4.5 billion hostile takeover offer is the only one on the table

Alberta: Suncor’s bid for Canadian Oil Sands comes down to one number: the price of a barrel of oil.

With shareholders holding out for a better offer than a quarter of a share in Canada’s largest crude producer for each of Canadian Oil Sands, the price of oil may make them think twice. The bigger suitor is better positioned to endure a prolonged market slump, so as crude teeters near $40, Suncor’s offer looks more attractive, said Sachin Shah, a special situations and merger arbitrage strategist at Albert Fried & Co.

“Oil price changes the sentiment,” he said. “Canadian Oil Sands is going to have to be realistic.”

The US crude benchmark- which was trading above $45 a barrel when Suncor made its offer in early October and approached $50 later that week — has been languishing 60 per cent below its 2014 peak. The world remains awash with oil as Opec continues to pump above its quota, while US stockpiles rose for a ninth week. West Texas Intermediate for January delivery closed at $43.04 a barrel on the New York Mercantile Exchange on Wednesday.

Poison Pill

While Canadian Oil Sands said it’s meeting other potential bidders, Suncor’s C$4.5 billion hostile takeover offer expiring Dec. 4 remains the only one on the table. The Alberta Securities Commission will hear a plea by Suncor in Calgary on Thursday to strike down a so-called poison pill adopted by Canadian Oil Sands last month that imposes a longer period for shareholders to accept an offer than the time given by Suncor.

Beyond the Alberta hearing, the fate of Canadian Oil Sands may be decided elsewhere.

Canadian Dollar Falls As Oil Prices Slide

The Canadian dollar weakened against the other major currencies in the late Asian session on Friday, as oil prices declined amid supply glut concerns, and after China reported a decline in industrial profits for the month of October.

Crude oil for January delivery are currently down $0.54 to $42.50 a barrel.

Data from the National Bureau of Statistics showed that the profits earned by Chinese industrial enterprises fell notably by 4.6 percent year-over-year in October, much faster than the 0.1 percent slight decrease in September.

Canadian Dollar Forecast: Crash Coming in 2016
By Gaurav S. Iyer

Canadian Dollar Outlook Weakens

Last year’s epic crash in crude oil prices rocked the Canadian energy sector to its core, decimating the Canadian dollar ahead of 2016. Now, a provincial government in Canada passed a piece of environmental legislation that could drive the “loonie,” a nickname given to the Canadian dollar, further into the ground. Based on the latest Canadian dollar forecast, the loonie could hit $0.50 in 2016.

Canada’s oil sands projects are located in the western province of Alberta, which recently elected a new government. There are three major political parties in Canada, and the one that recently swept to power in Alberta is furthest to the left.

As such, Alberta’s political priorities are vastly different than they were a year ago. Oil and natural gas were considered hugely important, central to the Canadian economy and, consequently, the Canadian dollar. However, the left-wing leaders of Alberta are more concerned with saving the sky than people’s jobs. They want to impose a massive carbon tax.

Don’t get me wrong; I’m an environmentalist myself. I love camping and hiking and there’s a part of me that burns at the thought of Canada’s gorgeous landscape getting ravaged through natural resource extraction. But I also live in the real world. In a year when the Canadian economy has already slipped into recession caused by low energy prices, does it make sense to further crush the oil industry?

Forget how you feel about the oil sands projects; ask yourself whether the Canadian economy can withstand a further blow to its energy sector. I’m not so sure it can.

Oil prices not expected to recover — Russian Deputy Finance Minister

Oil prices are not expected to recover, Russia’s Finance Minister Maksim Oreshkin said on Thursday, adding that one should adjust to the current levels.

“One should not expect recovery of oil prices as well as of commodities-based industries on the whole, and should adjust to new environment,” Oreskin said.

On Wednesday he said the Ministry considers oil price plunge to $30 per barrel very unlikely. “We’re facing oil (price) at around $40 per barrel while prices should go down to around $30 per barrel for the current situation to worsen. But this scenario is only likely in case of a sharp slowdown of the global economic growth and a sharp slowdown of the US economy,” Deputy Minister said.

Russia’s Central Bank bases its monetary policy for foreseeable future on low oil prices. According to its worst case scenario, crude oil prices will be substantially below $40 per barrel.

However, the Economic Development Ministry says it bases its conservative forecast for 2016 on $40 per barrel oil price.

Russian economy: GDP falls by 4.1% in the third quarter
By Alanna Petroff

This marks the third consecutive quarter of contraction, keeping the country firmly in a deep recession.

However, economists said it could have been worse. After all, Russian GDP dropped by a more dramatic 4.6% in the second quarter.

"The worst of the recession appears to now be over," said Liza Ermolenko, an emerging markets economist at Capital Economics in London. "Monthly activity data suggest that Q3's improvement was driven by the industrial sector."

Russia Sees Biggest Decline in Wages, Retail Sales Since 1999
By Anna Andrianova

Russian wages and retail sales declined by the most since 1999, a sign consumer demand will remain a weak link in the economy’s efforts to break out of its first recession in six years.

Real wages fell 10.9 percent in October from a year earlier, a deeper contraction than the median estimate by economists for a 9.7 percent decrease, the Federal Statistics Service in Moscow said Thursday in a statement. The office revised down September’s wages contraction to 10.4 percent. Sales declined 11.7 percent from a year earlier after shrinking 10.4 percent the previous month. That compared with forecast of a 10 percent drop.

Russian consumption, battered by persistent inflation and a weaker ruble, is lagging improvements in industry that propped up the economy last quarter. The loss of purchasing power is deepening the prospect that the recession will extend into next year as a glutted oil market leaves little hope for a recovery in crude prices to ignite growth.

“It is more like crawling out of the recession rather than rebounding,” Liza Ermolenko, a London-based analyst at Capital Economics Ltd., said by phone before the data was released. “In consumer-facing sectors, the situation is still extremely difficult. Inflation is slowing down much slower than expected, meaning that real incomes are still falling very sharply.”

""FALLING Crude Oil PRICES"".......................NOW Comes the REAL PAIN!!!!!!!!!!!!!!!!!!!!!!!

Crude Oil Derivatives!!!!!!!!!!!!!!!!!!!!!!!!!!!!

The Coming CORRECTION "IS" going to be FRICKING BRUTAL!!!!!!!!!!!!!!!!!!!!!!!!!!