Tuesday, June 30, 2015

Why There Is No Growth: The Entire S&P 500 Free Cash Flow Is Going Back To Shareholders

Translation: all that quantitative easing is going right back to the bankers and while making your food and housing much more expensive through inflation... -AK

Why There Is No Growth: The Entire S&P 500 Free Cash Flow Is Going Back To Shareholders
Submitted by Tyler Durden on 06/30/2015 08:12 -0400

In perhaps the best example of just how massive the impact of returns to shareholders have become, Deutsche Bank shows a snapshot the S&P's consolidated income statement as of 1995 and 2015.

While there are some clearly material changes transformations: the rise of financials' revenues above energy companies for one, the drop in net interest expense margin courtesy of ZIRP, the record high net income margin as a result of massive, if double seasonally-adjusted layoffs, one thing stick outs: virtually all of the corporate Free Cash flow in 2015 will go back to shareholders, as dividends and buybacks represent 94% of total S&P FCF uses.

Contrast this with "only" 60% of FCF in 1995 going back to shareholders and one can see why the US economy is caught in secular contraction in which virtually nobody wants to invest for the future and instead is forced to distribute all unretained earnings here and now.

Puerto Rico governor calls for bankruptcy; adviser says island 'insolvent'

This event is not as much talked about in the financial press as the Greece situation, Puerto Rico's debt is 300 billion less than the Greek debt, but its a mirror of the Greek situation in what it means to the US Municipal Bond market. -AK

Puerto Rico governor calls for bankruptcy; adviser says island 'insolvent'

Puerto Rico's governor on Monday called for the commonwealth to be allowed to restructure its debts under U.S. bankruptcy code, while a newly appointed adviser to the U.S. territory said it is "insolvent" and will soon run out of cash.

Governor Alejandro Garcia Padilla, in a televised address, said sacrifice must be shared by bondholders, as he called for Washington to allow a bankruptcy debt restructuring.

The Caribbean island is struggling to relieve a $73 billion debt burden. It came to a crunch point on Monday - ironically at the same time as did debt-laden Greece - after a dire report on its stability by former International Monetary Fund economists was released ahead of key deadlines on Wednesday to repay debt.

Steven Rhodes, the retired U.S. bankruptcy judge who oversaw Detroit's historic bankruptcy and has now been retained by Puerto Rico to help solve its problems, gave a blunt assessment on Monday.

Puerto Rico "urgently needs our help," Rhodes said. "It can no longer pay its debts, it will soon run out of cash to operate, its residents and businesses will suffer," he added.

Puerto Rico's bonds skidded on Monday as investors sought greater compensation amid the heightened risk.

Puerto Rico is not eligible for debt restructuring under the U.S. bankruptcy code because it is not a municipality.

My 'Acting' Part In This Play

Updated: 6/30/2015 I meant to post this weeks ago and it got way laid in the blog draft folder..., the original post below my commentary was from rumormillnews.com where many of Cobra's interviews are posted. -AK

There's a thread at Rumor Mill News sparked by a reader of that blog concerning one of COBRA's recent messages. And he's right there is a good deal of duality of us vs them in those messages which is apparent from the comment of "throwing the dark ones into the Central Sun", and the planet being "infected" with them.  

I believe Cobra is sincere. I've met him in person.  I believe he's trying to make a difference. I also believe I see growth in the man.  He is a spokesman for a hidden group that calls themselves "the Resistance", which he purports is a coalition Pleiadians and Planet X refugees.  My former blogging associate D. long claimed that 3D Pleiadians were embedded in Canadian Military and at some US Military bases. I don't know if all the views Cobra expresses are his own or the group he speaks for, much like Benjamin Fulford in that way I suppose. I do know Ben is used to send messages to other groups.  

He's not alone in that regard to that use of verbage.  Sheldan Nidle's "Rapscallions", "dark rascals" other adjectives are in every Sheldan Nidle update post.  If its a miltary objective just do it.. why the need to sway humanity with demonizing verbage?  Perhaps they need consent for something else in that agenda bag?  I actually like Sheldan's wife's newsletters more than Sheldan's posts.  The more I read of  Sheldan's Ascended Masters the more I hope I don't meet one. I say that in jest because as I became aware that in my own multidimensionality (which we all are as part of Source - not saying I am unique at all...), there appears to be an aspect of me is one of those - and I love him no matter what. But they, of all people, should know better.   Lots of talk about light but not a lot of talk about love and Oneness. 

Its amazing to see how many people are waking up from the illusion of duality... and its interesting to me that Cobra has sparked this discussion unwittingly.  Whatever role we play, one thing is certain is that Source works it for the good of all.   Fascinating reading the responses... as they are similar to the ones I have had for some time.


Varoufakis Confirms Greece Will Default To IMF Today

Varoufakis Confirms Greece Will Default To IMF Today

Submitted by Tyler Durden on 06/30/2015 07:13 -0400

May as well spoil the ending of what happens at midnight local time today. Nothing (as previously reported). From Reuters: GREEK FINANCE MINISTER SAYS GREECE WILL NOT PAY IMF ON TUESDAY.


AP has the well-known by now details:
Greek Finance Minister Yanis Varoufakis confirmed that the country will not make its payment due later to the International Monetary Fund. 
When asked while walking out of the Finance Ministry about whether Greece will pay the 1.6 billion euros due to the IMF, Varoufakis said "no." 
His comment came amid speculation that Greek Prime Minister Alexis Tsipras is trying to craft some sort of last-minute deal with creditors before the payment is due and before the European part of Greece's bailout comes to an end. 
A Greek official said Tsipras has spoken with European Commission President Jean-Claude Juncker, European Central Bank chief Mario Draghi and European Parliament president Martin Schulz. 
The official did not reveal what was discussed.
To which Merkel had a prompt reply:


The default may be in the books, but the bluff continues: can Greece default in the Eurozone as Varoufakis has claimed all along, or will the collapse of the Greek banking system tomorrow after the ECB makes the ELA illegal topple the government? Find out in a few short days.

Greece threatens top court action to block Grexit

The one-week closure of the Greek banks and the drastic escalation of the crisis over the weekend caught investors by surprise Photo: Konstantinos Tsakalidis/Bloomberg


Greece threatens top court action to block Grexit
Exclusive: European leaders warn in concert that a 'No' vote on Sunday means Greece will be pushed out of the euro

By Ambrose Evans-Pritchard

9:52PM BST 29 Jun 2015

• Greek crisis live: Threat of legal action looms over creditor powers as default day finally arrives for Greece

Greece has threatened to seek a court injunction against the EU institutions, both to block the country's expulsion from the euro and to halt asphyxiation of the banking system.

“The Greek government will make use of all our legal rights,” said the finance minister, Yanis Varoufakis.

“We are taking advice and will certainly consider an injunction at the European Court of Justice. The EU treaties make no provision for euro exit and we refuse to accept it. Our membership is not negotiable,“ he told the Telegraph.

Greek finance minister Yanis Varoufakis (Photo: Kostas Tsironis/Bloomberg)

The defiant stand came as Europe’s major powers warned in the bluntest terms that Greece will be forced out of monetary union if voters reject austerity demands in a shock referendum on Sunday.

“What is at stake is whether or not Greeks want to stay in the eurozone or want to take the risk of leaving," said French president Francois Hollande.

Sigmar Gabriel, Germany’s vice-chancellor and Social Democrat leader, said the Greek people should have no illusions about the fateful choice before them. “It must be crystal clear what is at stake. At the core, it is a yes or no to remaining in the eurozone,” he said.

Chancellor Angela Merkel – standing next to him after an emergency meeting of party leaders – was more oblique, but the message was much the same.

She praised hard-liners in her own party and insisted that the eurozone cannot yield to any one country. “If principles are not upheld, the euro will fail,” she said.

The refusal to hold out an olive branch to Greece more or less guarantees that it will not repay a €1.6bn loan to the International Monetary Fund on Tuesday, potentially setting off a domino effect of cross-default clauses and the biggest sovereign bankruptcy in history.

Any request for an injunction against EU bodies at the European Court would be an unprecedented development, further complicating the crisis.

Greek officials said they are seriously considering suing the European Central Bank itself for freezing emergency liquidity for the Greek banks at €89bn. It turned down a request from Athens for a €6bn increase to keep pace with deposit flight.

This effectively pulls the plug on the Greek banking system. Syriza claims that this is a prima facie breach of the ECB’s legal duty to maintain financial stability. “How can they justify setting off a run on the Greek banking system?” said one official.

Mr Varoufakis said Greece has enough liquidity to keep going until the referendum but acknowledged that capital controls introduced over the weekend were making life difficult for Greek companies.

Money is being rationed by an emergency payments committee made up of the key agencies and the banks. “We are having to prioritize spending,” he said.

The one-week closure of the Greek banks and the drastic escalation of the crisis over the weekend caught investors by surprise. Most had assumed that a deal was in the works.

Yields on Portuguese 10-year bonds spiked 47 basis points to 3.17pc before falling back as hedge funds look more closely at other EMU crisis states suffering from political dissent and austerity fatigue.

The sell-off ripped though debt markets in southern and eastern Europe. Yields jumped 24 basis points in Italy and Spain, and 22 points in Romania. German Bund yields dropped 13 points to 0.79pc on safe-haven flight. [Germans benefit when Greeks lose? Not much incentive to negotiate with the Greeks is there? -AK]

Does the referendum ballot paper make sense?
Greece is not the only country drowning in debt

The iTraxx Crossover index measuring risk on European corporate bonds jumped 42 basis points to 332 in one of the most violent one-day moves since the Lehman crisis in 2008, an ominous sign that any fall-out from ‘Grexit’ may be harder to contain that supposed.

European leaders insist that there is no longer any serious risk from contagion now that the EMU bail-out fund (ESM) is in place and the ECB has full power to act as a lender of last resort, if necessary by buying the bonds of vulnerable states on a mass scale.

This insouciance is not shared by the US Treasury or the US Federal Reserve. Britain’s Chancellor, George Osborne, warned that Grexit could be traumatic. "I don't think anyone should underestimate the impact a Greek exit from the euro," he said.

European Commission president Jean-Claude Juncker (Photo: EPA)  Photo: EPA
AK NOTE: This popped out this photo when I copy and pasted the text... is it a hidden message about the future of Juncker?  Is someone in the UK using photo attributes to send a message in 'plain sight'?  "Luxembourg PM quits amid spying scandal European Commission president Jean-Claude Juncker (Photo: EPA)  Photo: EPA"  Juncker is from Luxembourg...

The clash between Greece and the creditor powers has become deeply personal. “Goodwill has evaporated,” [one wonders if it was ever there to begin with... -AK] said Jean-Claude Juncker, the European Commission’s president.

He lashed out at the radical-Left Syriza government, accusing premier Alexis Tsipras of failing to tell his own people the “whole truth” about the terms on offer. “Playing off one democracy against 18 others is not an attitude worthy of the great Greek nation," he said.

Mr Juncker said angrily that he had “tried again and again” to stick up for the Greek people but warned that there is little he can do to stop events running their fateful course. "A 'No' would mean that Greece had said 'No' to Europe," he said.

"This isn't a game of liar's poker. There isn't one winner and another one who loses,” he said, adding that he felt betrayed by the “egotism, and tactical and populist games” of the Greek government.

Yet at the same time, Mr Juncker intruded deeply into the internal matters Greek democracy, exhorting voters not to “commit suicide" and kicking off what amounts to a referendum campaign by the Commission itself.

He denied that the creditors were demanding pension cuts as part of the deal, a claim dismissed a “preposterous lie” by one Greek official. In fact Brussels wants a cut equal to 1pc of GDP by next year, including a phasing out of the low pension supplement, and other indirect measures.

One Syriza MP, Dimitris Papadimoulis, caught the mood in Athens. “Juncker is calling for the overthrow of the government,” he said.

• Jeremy Warner: Regime change is goal for the creditors
• Allister Heath: Leftist politics have doomed Greece to collapse

Reserve. Britain’s Chancellor, George Osborne, warned that Grexit could be traumatic. "I don't think anyone should underestimate the impact a Greek exit from the euro," he said.

Luxembourg PM quits amid spying scandal European Commission president Jean-Claude Juncker (Photo: EPA)  Photo: EPA

The clash between Greece and the creditor powers has become deeply personal. “Goodwill has evaporated,” said Jean-Claude Juncker, the European Commission’s president. 
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