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Crude
Crash Slams Venezuelan Bonds To Close At 5-Year Lows: 21% Yield
It
is no wonder Venezuela is suffering... Venezuelan
bond prices have collapsed around 51 - the lowest close in at least 5
years as yields surge to around 21% yield.
The market is pricing in extremely high probability of default
(around 63% over 2Y, and 80% based on 5Y CDS) which, as
Bloomberg reports, is
surging as "every
$1 drop in oil is around $770 million of lost revenue, so their
ability to pay has taken a big hit."
Venezuelan bonds fell to a five-year low as traders projected higher chances of default after OPEC’s decision to maintain oil output pushed crude lower.
...
“Every $1 drop in oil is around $770 million of lost revenue, so their ability to pay has taken a big hit,” Kevin Daly, a money manager at Aberdeen Asset Management, said in an e-mailed response to questions. “The market is already pricing in a high probability of default next year.”
Bank of America Corp. lowered its recommendation on Venezuelan bonds today to marketweight from overweight, citing the OPEC decision. At current oil prices, Venezuela will need an additional $25.6 billion to finance imports, the bank said.
...
“The Venezuelan government has not been very responsive, not acting fast enough to adjust, and not calming the markets with executable plans to respond to these external pressures.”
Venezuela can overcome any situation arising from lower oil prices and is taking measures to protect itself amid the drop, Rafael Ramirez, the nation’s foreign minister, said in an interview published in the newspaper Panorama.
Venezuela needs a break-even price near $85 a barrel with adjustments to pay for its dollar liabilities, Jefferies Group LLC analyst Siobhan Morden said in a research note.
*
* *
And
then, just to send Putin a very clear message where the allegiances
of this former Soviet satellite nation lie, NATO
deployed 12 F-15s and 180 troops to Bulgaria's Graf Ignatievo Air
Base.
A dozen F-15s and approximately 180 personnel from the 493rd, based at RAF Lakenheath, England, have deployed to Graf Ignatievo Air Base to participate in a two-week bilateral training exercise with the Bulgarian air force, Pentagon spokesmen Col. Steve Warren told reporters Monday.
The exercise began Monday and will continue through Sept. 1.
The purpose of the deployment is to “conduct training and focus on maintain joint readiness while building interoperability,” Warren said.
The move comes at a time when America’s Eastern European partners and allies are concerned about Russian military intervention in Ukraine. There are fears that Moscow might try to destabilize other countries in the region.
“This is a reflection of our steadfast commitment to enhancing regional security,” Warren said about the exercise.
We
concluded as follows: "How
will Putin react one wonders?"
We
now have the answer: earlier today, in a stunning announcement, Putin
revealed that the South Stream project is now finished. As the
WSJ reports,
"Putin said Moscow will stop pursuing Gazprom’s South Stream
pipeline project that would supply natural gas to Europe with an
underwater link to Bulgaria, blaming the European Union for scuttling
the project."
“We couldn’t get necessary permissions from Bulgaria, so we cannot continue with the project.We can’t make all the investment just to be stopped at the Bulgarian border,” Mr. Putin said. “Of course, this is the choice of our friends in Europe.”
“We think that the European Commission’s position was not constructive,” Mr. Putin said. “If Europe does not want to implement it, it will not be implemented.”
Putin
is right: Europe - Austria
excluded -
had seen rising resistance to the South Stream in recent months as
the crisis in Ukraine has intensified. The EU is concerned that the
project would cement Russia’s position as Europe’s dominant
supplier of natural gas. Russia already meets around 30% of Europe’s
annual needs.
So
what does Putin do? He signs a strategic alliance with NATO member
Turkey, the only country in Europe that is anything but European
(over the endless veto of Germany preventing its entrance into the EU
over fears of cheap, migrant labor) and which lately has been
increasingly anti-Western, to build a new mega-pipeline to Turkey
instead. As RT
reports,
Gazprom CEO Aleksey Miller said the energy giant will build a massive
gas pipeline that will travel from Russia, transit through Turkey,
and stop at the Greek border – giving Russia access to the Southern
European market. In effect, Russia will still have access to the
Southern Stream endmarkets
The pipeline will have an annual capacity of 63 billion cubic meters. A total of 14 bcm will be delivered to Turkey, which is Gazprom’s second biggest customer in the region after Germany.
Russia’s energy minister Aleksandr Novak said that the new project will include a specially-constructed hub on the Turkish-Greek border for customers in southern Europe.
In
a joint press conference between Putin and Turkish leader Erdogan,
the Russian said that the supply of Russian gas to Turkey will be
raised by 3 billion cubic meters via the already operating Blue
Stream pipeline, Last year, 13.7 bcm of gas was supplied to Turkeyvia
Blue Stream, according to Reuters.
And
another fringe benefit of becoming a preferred Russian ally: Moscow
will reduce the gas price for Turkish customers by 6 percent from
January 1, 2015, Putin said. Later, Novak said the discount could
reach 15 percent, subject to negotiations. Sorry Ukraine.
And
sorry Bulgaria, which despite being wholly reliant on Russian gas for
its commercial, industrial and residential needs, has decided to side
with the sinking European Union, making it merely the latest
insolvent vassal state of the sinking Eurozone, something Putin made
abundantly clear during today's conference:
- PUTIN: BULGARIA UNABLE TO ACT AS SOVEREIGN STATE OVER GAS LINK
- PUTIN: RUSSIA TO REORIENT ENERGY RESOURCES TO OTHER MKTS: IFX
Bulgaria
should now expect its gas costs to boldly go where Ukrainian energy
prices have so boldly gone before.
As
for Turkey, the country that bridges Europe with Asia is merely the
latest expansion of Putin's anti-dollar alliance:
- TURKEY, RUSSIA AGREE TO USE LOCAL CURRENCIES IN TRADE: TRT
Or,
as Obama would put it, Russia just got even more "isolated."
US
Debt In Public Hands Doubles Under Barack Obama
As
noted previously, total US debt is now
over $18 trillion.
Here is where it gets even more surreal: debt held by the public on
January 20, 2009, Obama's inauguration day, was $6.3 trillion. It is
now $12.9 trillion, a
105% increase.
And
here, for your viewing pleasure, is Senator Barack Obama saying on
July 3, 2008, that the $4 trillion in debt added by Bush was
"irresponsible and unpatriotic"...
That
is all.
Total US Debt Rises Over $18 Trillion; Up 70% Under Barack Obama
Last
week, total US debt was a meager $17,963,753,617,957.26. Two days
later, as updated today, on Black Friday, total outstanding US public
debt just hit a new historic level which probably would be better
associated with a red color: as of the last work day of November,
total US public debt just surpassed $18 trillion for the first
time, or
$18,005,549,328,561.45 to be precise,
of which debt held by the public rose to $12,922,681,725,432.94, an
increase of $32 billion in one day.
It
also means that total US debt to nominal GDP as of Sept 30, which was
$17.555 trillion, is now 103%. Keep in mind this GDP number was
artificially increased by about half a trillion dollars a year ago
thanks to the "benefit" of R&D and intangibles. Without
said definitional change, debt/GDP would now be about 106%.
It
also means that total US debt has increased by 70% under Obama, from
$10.625 trillion on January 21, 2009 to $18.005 trillion most
recently.
And
now we wait for the US to become Spain, and add the estimated
"contribution" from hookers and blow to GDP, once again
pushing the total debt/GDP ratio below the psychological 100% level.
Schadenfreude?
Russia
intervenes as crumbling ruble echoes 1998 debt crisis
Collapse
in Russian currency, which has been badly buffeted by a plunge of
almost 40% in oil prices, prompts central bank action
1
December, 2014
Russia’s
central bank was forced to step in to defend the ruble on the foreign
exchanges on Monday after fears over the economy’s vulnerability to
a weak oil price sent the currency to a record low against the
dollar.
Moscow
was forced to abandon its hands-off policy towards the ruble amid
heavy selling, unmatched since the Russian debt default of 1998.
The
Russian central bank intervened when the ruble was down 6.5% on the
day against the US dollar, and by the close of trading the currency
had recouped more than half its earlier loses.
A
bounce in the oil price from a fresh five-year low and a sense that
the sell-off since last week’s meeting of the Opec cartel has been
overdone helped sentiment towards the Russian currency, which has
been badly buffeted by a plunge of almost 40% in the cost of crude
since the summer.
Data
from the US suggesting that drilling activity in the shale oil sector
is being affected by lower oil prices also helped the ruble by
pushing down the value of the dollar.
Oil
is denominated in dollars, so when the US currency falls oil becomes
cheaper and more attractive for holders of other currencies.
With
Moscow fearful that the drop in the value of the ruble makes Russia
vulnerable to capital flight, Ksenia Yudaeva, the Russian central
bank’s deputy chairwoman, told newswires that households should not
panic. She said the rise in interest rates to 9.5% should encourage
them not to convert savings into euros or dollars.
“It’s
necessary to explain to people that the yield they get on their
deposits at the moment will guarantee a high degree of safety for
their savings with regards to inflation. They should think twice
before rushing out, losing the yield on their deposits, taking on
currency risks and losing money on their currency conversions.”
But
Lee Hardman, currency strategist at Bank of Tokyo-Mitsubishi, said
falling oil prices were “reinforcing the loss of investor
confidence in the ruble” at a time when it was affected by Western
sanctions imposed over Ukraine.
At
one stage on Monday, Brent crude was trading at $67.50 a barrel, a
fresh five year low, before recovering to $71.90.
“There’s
a sense that the market got a little bit ahead of itself, and we’re
seeing some producer buying come in and it’s driving the market
back up,” said Phil Flynn, analyst at the Price Futures Group in
Chicago.
Oil
is still down about 10% since producer group Opec’s decision last
Thursday not to cut output despite fears of a supply glut.
Saudi
Arabia, the most influential member of the Organization of the
Petroleum Exporting Countries, blocked moves by some smaller
producers to curb output. The Saudis argued that low prices would
ultimately hurt US shale oil production, which analysts say is
responsible for much of the oversupply now.
Capital
Economics said a degree of calm had returned to markets after weekend
talk of a commodity-led meltdown. It said the apparent freefall in
crude prices had been exaggerated by thin trading due to the US
holiday, adding that the impact of lower energy costs would be
positive for global growth.
Israel
sees ‘stars aligned’ for
new gas pipeline to Europe
1
December, 2014
But
Palestinians are warning that without a broader resolution of
regional disputes, the pipeline risks becoming a source of conflict.
The
Cyprus-centred project could be the world’s longest pipeline if
built, stretching up to 1,530km, and passing through depths of up to
3,000m.
The
Israeli energy minister, Silvan Shalom, raised the issue at a
ministerial conference in Rome last week and held talks on the
margins with the EU’s vice president for energy union, Maros
Sefkovic, Israeli sources say.
Israel,
Greece and Cyprus expect a formal meeting with Sefkovic to discuss
ways of actualising the project, on the fringes of an EU energy
ministers’ summit on 9 December.
“The
three countries involved intend to raise this issue [on the 9th] as
it involves funding from the commission,” an EU diplomat said.
Israel, as a non-EU member, will depend on its partner countries’
powers of persuasion.
With
energy diversification and security both rising up Europe’s
political agenda, “it looks like the stars have aligned in one
position now and that might be good for our timing,” Guy Feldman,
an advisor to Shalom told the Guardian.
But
the Palestinian Authority cautioned the EU against signing any
contract until territorial gas disputes with neighbouring countries
such as Lebanon were resolved.
“The
objective of energy security starts with a clear cut boundary of all
the gas fields,” said the PA’s energy minister, Omar Kettaneh.
“Otherwise instead of being a source of security the pipeline will
be a source of conflict.”
In
2010, the US Geological Survey (USGS) estimated that the Levant
Basin, could hold more than 3,455bcm of gas, which is comparable to
Iraq’s reserves.
But
until now, political instability has hindered its exploitation, with
Israeli and Cypriot claims to overlapping gas fields contested by
Lebanon and Turkey, respectively.
In
2012, Israel, Cyprus and Greece signed a deal to promote exports of
their gas to the EU through an eastern Mediterranean corridor.
The
planned offshore pipeline, which diplomats say could transport
between 8-15bcm of natural gas annually, has already been selected
for “project of common interest” status by the EU. This
potentially gives it access to a €5.85bn fund, and preferential
treatment from multilateral banks.
“It
is technically challenging and because of that it might be
financially challenging,” Feldman said. “But Minister Shalom said
in Rome that if the EU will lend a shoulder on the financing, it
might be a feasible option,” Feldman said.
A
commission timeline estimates that the pipeline could begin pumping
gas by 2020, four years after the Leviathan field, which contains
around 450bcm of gas comes online.
As
well as Leviathan, the already operating Tamar field has proven
reserves of 283bcm. Israel also has several smaller gas fields and is
searching for more exploitable reserves. The country wants to export
up to 60% of the gas it produces, Feldman said.
A
commission spokesperson said that east Mediterranean gas finds such
as Leviathan “could play a very important role in helping both
producing and neighbouring countries to address their energy security
problems. They could also have a growing role in the EU’s
diversification strategy, contributing not only to the security of
the region but to the entire EU.”
But
Kettaneh said that such words rang hollow in Gaza, which has been
prevented from exploiting its own natural gas resources as a result
of Israel’s blockade, and internal political divisions.
“It
is ironic to talk about energy security for the EU when Gaza only
enjoys five hours of daily electricity, and people are dying in
hospitals because of a lack of electricity,” he said. “We should
actually be talking about energy security for all.”
Snowden
receives Swedish ‘alternative Nobel Prize’ via video from Moscow
In
his acceptance speech broadcast from Moscow, Snowden said he hoped
this was only beginning. The audience in the building of the Swedish
parliament received the whistleblower with a long applause.
"I
hope despite all we have accomplished in the last year, we all
recognize that this is only the beginning," Snowden said,
prompting a standing ovation.
Gorbachev:
It’s up to Europe to prevent new Cold War between US and Russia
"We
must to go back to the starting line, from which we began building a
new world both in Europe and elsewhere,” Gorbachev
said in an interview with the TASS news agency.
The
former Soviet leader recalled his meeting with US President George
Bush Sr. in Malta on December 23, 1989.
During
the talks, which took place several weeks after the fall of the
Berlin Wall, the two leaders overcame their divisions and
acknowledged the end of the Cold War.
“There
are signs of Cold War” in
the recent cooling down of relations between Moscow and Washington
over Russia’s accession of the Crimea and the turmoil in Ukraine,
Gorbachev said.
"We
can and we must stop this whole process, like we did in the 1980s. We
opted for de-escalation, for the unification [of Germany]. And back
then it was a lot tougher than now. So why can’t we do it again?”he
said.
According
to Gorbachev, the “new
world order” after
the Cold War allowed major powers to quickly solve a lot of longtime
conflicts around the globe.....
Double standards? US preaches protest restraint abroad, fails to take own advice
Police
clash with protesters in Hong Kong amid multiple calls for restraint
coming from the US. RT's Gayane Chichakyan looks at what kind of
example the US has been setting when it comes to dealing with
domestic unrest.
UK
taxpayers funding ISIS through welfare system
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