As technology stocks and securitized mortgages have demonstrated all too recently, just because a bubble pops doesn’t mean it’s the end of the market. Hell, it doesn’t even necessarily preclude that another bubble won’t emerge years later.
This past weekend, Venezuela failed to make $237 million in bond coupon payment, blaming "technical glitches" when in reality it simply did not have the money (or wish to part with it). Adding the $349 million in unpaid bond interest accumulated over the past month as of last Friday, that brings Caracas' unpaid bills to $586 million this month, just days before the nation must make a critical principal payment.
Share prices of Indian state banks surged as the government announced it would hand over $32bn to recapitalize the sector. According to Reuters, the motivation was a bid by Prime Minister Narendra Modi to tackle a major drag on the economy that has frustrated his attempts to boost growth.
Muni investors seem to be absolutely elated today by the opportunity to scoop up their fair share of $4.5 billion worth of new Illinois bonds due in 2028 at a "juicy" yield of 3.74%...which makes a ton of sense if you can look beyond the fact that the state looks to be on an inevitable collision course with bankruptcy.
Be that as it may, Wells Fargo Portfolio Manager Garbriel Diederich insists that the new issue "offers a tremendous amount of yield in a pretty yield-starved environment." Per Bloomberg:
Authored by Charles Hugh Smith via OfTwoMinds blog,
The majority of middle class wealth is locked up in unproductive assets or assets that only become available upon retirement or death.
One of my points in Why Governments Will Not Ban Bitcoin was to highlight how few families had the financial wherewithal to invest in bitcoin or an alternative hedge such as precious metals.