Archive for May, 2011

Obama and the Arab Spring

By George Friedman

U.S. President Barack Obama gave a speech last week on the Middle East. Presidents make many speeches. Some are meant to be taken casually, others are made to address an immediate crisis, and still others are intended to be a statement of broad American policy. As in any country, U.S. presidents follow rituals indicating which category their speeches fall into. Obama clearly intended his recent Middle East speech to fall into the last category, as reflecting a shift in strategy if not the declaration of a new doctrine.

While events in the region drove Obama’s speech, politics also played a strong part, as with any presidential speech. Devising and implementing policy are the president’s job. To do so, presidents must be able to lead — and leading requires having public support. After the 2010 election, I said that presidents who lose control of one house of Congress in midterm elections turn to foreign policy because it is a place in which they retain the power to act. The U.S. presidential campaign season has begun, and the United States is engaged in wars that are not going well. Within this framework, Obama thus sought to make both a strategic and a political speech.

Obama’s War Dilemma

The United States is engaged in a broad struggle against jihadists. Specifically, it is engaged in a war in Afghanistan and is in the terminal phase of the Iraq war.

The Afghan war is stalemated. Following the death of Osama bin Laden, Obama said the Taliban’s forward momentum has been stopped. He did not, however, say that the Taliban are being defeated. Given the state of affairs between the United States and Pakistan following bin Laden’s death, whether the United States can defeat the Taliban remains unclear. It might be able to, but the president must remain open to the possibility that the war will become an extended stalemate.

Meanwhile, U.S. troops are being withdrawn from Iraq, but that does not mean the conflict is over. Instead, the withdrawal has opened the door to Iranian power in Iraq. The Iraqis lack a capable military and security force. Their government is divided and feeble. Meanwhile, the Iranians have had years to infiltrate Iraq. Iranian domination of Iraq would open the door to Iranian power projection throughout the region. Therefore, the United States has proposed keeping U.S. forces in Iraq but has yet to receive Iraq’s approval. If that approval is given (which looks unlikely), Iraqi factions with clout in parliament have threatened to renew the anti-U.S. insurgency.

The United States must therefore consider its actions should the situation in Afghanistan remain indecisive or deteriorate and should Iraq evolve into an Iranian strategic victory. The simple answer — extending the mission in Iraq and increasing forces in Afghanistan — is not viable. The United States could not pacify Iraq with 170,000 troops facing determined opposition, while the 300,000 troops that Chief of Staff of the Army Eric Shinseki argued for in 2003 are not available. Meanwhile, it is difficult to imagine how many troops would be needed to guarantee a military victory in Afghanistan. Such surges are not politically viable, either. After nearly 10 years of indecisive war, the American public has little appetite for increasing troop commitments to either war and has no appetite for conscription.

Obama thus has limited military options on the ground in a situation where conditions in both war zones could deteriorate badly. And his political option — blaming former U.S. President George W. Bush — in due course would wear thin, as Nixon found in blaming Johnson.

The Coalition of the Willing Meets the Arab Spring

For his part, Bush followed a strategy of a coalition of the willing. He understood that the United States could not conduct a war in the region without regional allies, and he therefore recruited a coalition of countries that calculated that radical Islamism represented a profound threat to regime survival. This included Egypt, Saudi Arabia and the rest of the Gulf Cooperation Council, Jordan, and Pakistan. These countries shared a desire to see al Qaeda defeated and a willingness to pool resources and intelligence with the United States to enable Washington to carry the main burden of the war.

This coalition appears to be fraying. Apart from the tensions between the United States and Pakistan, the unrest in the Middle East of the last few months apparently has undermined the legitimacy and survivability of many Arab regimes, including key partners in the so-called coalition of the willing. If these pro-American regimes collapse and are replaced by anti-American regimes, the American position in the region might also collapse.

Obama appears to have reached three conclusions about the Arab Spring:

  1. It represented a genuine and liberal democratic rising that might replace regimes.
  2. American opposition to these risings might result in the emergence of anti-American regimes in these countries.
  3. The United States must embrace the general idea of the Arab risings but be selective in specific cases; thus, it should support the rising in Egypt, but not necessarily in Bahrain.

Though these distinctions may be difficult to justify in intellectual terms, geopolitics is not an abstract exercise. In the real world, supporting regime change in Libya costs the United States relatively little. Supporting an uprising in Egypt could have carried some cost, but not if the military was the midwife to change and is able to maintain control. (Egypt was more an exercise of regime preservation than true regime change.) Supporting regime change in Bahrain, however, would have proved quite costly. Doing so could have seen the United States lose a major naval base in the Persian Gulf and incited spillover Shiite protests in Saudi Arabia’s oil-rich Eastern Province.

Moral consistency and geopolitics rarely work neatly together. Moral absolutism is not an option in the Middle East, something Obama recognized. Instead, Obama sought a new basis for tying together the fraying coalition of the willing.

Obama’s Challenge and the Illusory Arab Spring

Obama’s conundrum is that there is still much uncertainty as to whether that coalition would be stronger with current, albeit embattled, regimes or with new regimes that could arise from the so-called Arab Spring. He began to address the problem with an empirical assumption critical to his strategy that in my view is questionable, namely, that there is such a thing as an Arab Spring.

Let me repeat something I have said before: All demonstrations are not revolutions. All revolutions are not democratic revolutions. All democratic revolutions do not lead to constitutional democracy.

The Middle East has seen many demonstrations of late, but that does not make them revolutions. The 300,000 or so demonstrators concentrated mainly in Tahrir Square in Cairo represented a tiny fraction of Egyptian society. However committed and democratic those 300,000 were, the masses of Egyptians did not join them along the lines of what happened in Eastern Europe in 1989 and in Iran in 1979. For all the media attention paid to Egypt’s demonstrators, the most interesting thing in Egypt is not who demonstrated, but the vast majority who did not. Instead, a series of demonstrations gave the Egyptian army cover to carry out what was tantamount to a military coup. The president was removed, but his removal would be difficult to call a revolution.

And where revolutions could be said to have occurred, as in Libya, it is not clear they were democratic revolutions. The forces in eastern Libya remain opaque, and it cannot be assumed their desires represent the will of the majority of Libyans — or that the eastern rebels intend to create, or are capable of creating, a democratic society. They want to get rid of a tyrant, but that doesn’t mean they won’t just create another tyranny.

Then, there are revolutions that genuinely represent the will of the majority, as in Bahrain. Bahrain’s Shiite majority rose up against the Sunni royal family, clearly seeking a regime that truly represents the majority. But it is not at all clear that they want to create a constitutional democracy, or at least not one the United States would recognize as such. Obama said each country can take its own path, but he also made clear that the path could not diverge from basic principles of human rights — in other words, their paths can be different, but they cannot be too different. Assume for the moment that the Bahraini revolution resulted in a democratic Bahrain tightly aligned with Iran and hostile to the United States. Would the United States recognize Bahrain as a satisfactory democratic model?

The central problem from my point of view is that the Arab Spring has consisted of demonstrations of limited influence, in non-democratic revolutions and in revolutions whose supporters would create regimes quite alien from what Washington would see as democratic. There is no single vision to the Arab Spring, and the places where the risings have the most support are the places that will be least democratic, while the places where there is the most democratic focus have the weakest risings.

As important, even if we assume that democratic regimes would emerge, there is no reason to believe they would form a coalition with the United States. In this, Obama seems to side with the neoconservatives, his ideological enemies. Neoconservatives argued that democratic republics have common interests, so not only would they not fight each other, they would band together — hence their rhetoric about creating democracies in the Middle East. Obama seems to have bought into this idea that a truly democratic Egypt would be friendly to the United States and its interests. That may be so, but it is hardly self-evident — and this assumes democracy is a real option in Egypt, which is questionable.

Obama addressed this by saying we must take risks in the short run to be on the right side of history in the long run. The problem embedded in this strategy is that if the United States miscalculates about the long run of history, it might wind up with short-term risks and no long-term payoff. Even if by some extraordinary evolution the Middle East became a genuine democracy, it is the ultimate arrogance to assume that a Muslim country would choose to be allied with the United States. Maybe it would, but Obama and the neoconservatives can’t know that.

But to me, this is an intellectual abstraction. There is no Arab Spring, just some demonstrations accompanied by slaughter and extraordinarily vacuous observers. While the pressures are rising, the demonstrations and risings have so far largely failed, from Egypt, where Hosni Mubarak was replaced by a junta, to Bahrain, where Saudi Arabia by invitation led a contingent of forces to occupy the country, to Syria, where Bashar al Assad continues to slaughter his enemies just like his father did.

A Risky Strategy

Obviously, if Obama is going to call for sweeping change, he must address the Israeli-Palestinian relationship. Obama knows this is the graveyard of foreign policy: Presidents who go into this rarely come out well. But any influence he would have with the Arabs would be diminished if he didn’t try. Undoubtedly understanding the futility of the attempt, he went in, trying to reconcile an Israel that has no intention of returning to the geopolitically vulnerable borders of 1967 with a Hamas with no intention of publicly acknowledging Israel’s right to exist — with Fatah hanging in the middle. By the weekend, the president was doing what he knew he would do and was switching positions.

At no point did Obama address the question of Pakistan and Afghanistan or the key issue: Iran. There can be fantasies about uprisings in Iran, but 2009 was crushed, and no matter what political dissent there is among the elite, a broad-based uprising is unlikely. The question thus becomes how the United States plans to deal with Iran’s emerging power in the region as the United States withdraws from Iraq.

But Obama’s foray into Israeli-Palestinian affairs was not intended to be serious; rather, it was merely a cover for his broader policy to reconstitute a coalition of the willing. While we understand why he wants this broader policy to revive the coalition of the willing, it seems to involve huge risks that could see a diminished or disappeared coalition. He could help bring down pro-American regimes that are repressive and replace them with anti-American regimes that are equally or even more repressive.

If Obama is right that there is a democratic movement in the Muslim world large enough to seize power and create U.S.-friendly regimes, then he has made a wise choice. If he is wrong and the Arab Spring was simply unrest leading nowhere, then he risks the coalition he has by alienating regimes in places like Bahrain or Saudi Arabia without gaining either democracy or friends.

Obama and the Arab Spring is republished with permission of STRATFOR.”

Read more: Obama and the Arab Spring | STRATFOR
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Inflation for certain … hyperinflation?

In the past, before the Clinton years, we had an inflation valuation that included such things as food and fuel.

Not so now, the Consumer Price Index has been so manipulated and had core items like food and fuel taken out of it that it has become a useless measure.

Unless you are living in a cave or under a rock or do not have any need for gasoline you will have noticed an ongoing upward trend in gasoline prices.  Nothing so amply shows this than the graph here.

The trend line is unmistakeable, keep in mind this is a GROWTH, year over year.  Since this time last year there has NEVER been a time without a price INCREASE.  Moreover since the start of the year the rate of INCREASE has been INCREASING.

Even the core CPI is calling for an inflation rate of a modest 1.33%, however when taken for the whole year, this increase will exceed the target 2%.  When food and fuel are counted, the rate is more like 3.2% and has a year end projected figure close to 6%.  This means a definite inflation trend.

Hyperinflation becomes visible when there is an unchecked increase in the money supply (see hyperinflation in Zimbabwe) usually accompanied by a widespread unwillingness on the part of the local population to hold the hyperinflationary money for more than the time needed to trade it for something non-monetary to avoid further loss of real value. Hyperinflation is often associated with wars (or their aftermath), currency meltdowns, political or social upheavals, or aggressive bidding on currency exchanges.

Lets quickly examine the associations:

  • Wars – yes at least two that the US is actively engaged in: Iraq & Afghanistan
  • Currency Meltdowns: the world is still struggling with the meltdown of 2008
  • Political or Social upheavals: the Arab spring certainly fits that notion, moreover there have been signs of ongoing division withing the US electorate since the Supreme Court decided who was to be President in 2000.
  • Aggressive Bidding on Currency Exchanges: less clear here, as the T-Bills of the FED are basically being purchased by the FED or proxy of the FED by banks associated to the FED

So most of the trend points needed to have hyperinflation exist, what remains to be seen is if the powers that be in Washington can overcome the force of history and the K-wave Winter that is overdue.

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Welcome to the top of the ride … all downhill from here.

There is an adage in the market that says,

“Sell in May and walk away.”

Well, there are many leading indicators that are now pointing DOWN, way down.

From the Treasury Market Inflation Forecast to the Economic Cycle Research Institute’s (ECRI) Long Leading Index of global industrial growth, these indicators are showing that the “W” of recovery is more likely.

Given that the US housing market has not rebounded as was once hoped, that the QE and QEII have only resulted in a short term bull rally in the stock market and a temporary easing of short term bond rates and not the much touted employment that the bankers and others from Wall Street and DC were promising was ‘on the way’.  Indeed employment numbers are stalled, much like the sense one has in a roller coaster car just as you reach the top of the first ‘hill’ after being released from the lift chains.  We have had a drop and a ‘scare’ now the real ride begins.

Richard Russell, 86-year old author of the Dow Theory Letters commented as follows on the deteriorating market breadth: “This is a bearish picture. The ‘soldiers’ are deserting even while the ‘generals’ continue to march forward. In a war, this would be a prelude to disaster. In the stock market, it may be the same.”

I agree with that sentiment and add in argument that the broader market place is going to go into a panic situation, this summer will be pleasant enough, like the roller coaster car moving gently along the top of the rail in a near flat grade.  By this autumn?  Well Kondratieff Winter will blow in for real with a storm to remember …

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Correction only in Silver, this is not over at all

The recent pull-back in Silver has prompted some to begin speaking about the ‘end’ of the run in silver and gold.

While a risk of a prolonged pull-back (and by this I mean a few months) is a potential in the market the long-term fundamentals remain the same.

In the attached video Gold& Silver operator speaks about these fundamentals.

If you are still not convinced, try calling up anyone in Argentina that survived (or thrived) in that marketplace after the total default on sovereign debt…

Then ask yourself,

“What are the options for the way out of the situation for the US Federal government in the debt ceiling situation?”

Get ready for a wild summer.

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Arms Race … never a winner

The Chinese air force has a new player the J-20 stealth fighter.

In this game of cat & mouse there can be no more winners … what value can be ‘captured’ this way any more?

Source

http://www.businessinsider.com/china-j20-stealth-fighter-2011-5
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Ben Bernanke has a secret.

And it’s a secret that very likely terrifies him and his policymaking brethren at the U.S. Federal Reserve.

That secret has to do with his latest round of “quantitative easing,” a liquidity-push known as “QE2.”

What Bernanke & Co. don’t want Americans to know is that painfully slow growth – or even a double-dip recession – isn’t their greatest fear. Bernanke’s greatest fear is that without this liquidity, one or more of the massive, already-bailed-out U.S. banks could stumble and once again undermine the global financial system.

And this time around, the outcome would be much, much uglier.

Raising Questions

If you think about it, the proof of what I’m saying is right in front of each of us. You just have to take a step back and look at it objectively.

Last Sunday, in an appearance on CBS News’ “60 Minutes,” Bernanke said he could raise interest rates in 15 minutes if inflation ever became a problem. Not to worry, there’s no sign of inflation, at least according to him.

Well, there’s no sign of deflation either, and thanks to Fed policies, interest rates are at historic lows. So why embark upon “Round Two” of quantitative easing (known as “QE2″) and state on one of the nation’s most-watched television news programs that additional rounds might follow?

I’m going to break the magician’s code and tell you what the trick is and how it works.

Financial Sleight of Hand

The “outward” trick the Fed is pulling off is adding massive liquidity to the U.S. banking system to tide the big banks over in case they face insolvency issues in the near future.

Remember, most of these big banks were in the “too-big-to-fail” category. That’s why back in 2008-09 they got all that bailout money: Given their size and influence, the worry was that should one or more of these fail, the whole financial system could come crashing down.

But here’s the problem. Since that time, many of those big banks have gotten bigger. And their risks have been steadily increasing: Many of them now face litigation, as well as the balance-sheet, credit and liquidity risks that could cause any one of them to fail – which could take the financial system down with them.

What the Fed is hiding under its cloak is the inside knowledge of:

  • What the banks still have on their balance sheets in the way of so-called “toxic assets” – for starters, $2.4 trillion in mortgages and more than $1 trillion in mortgage-backed-securities.
  • How the banks have been able to juggle accounting rules to make their books look better.
  • How they’ve made their recent profitability look robust by moving loan-loss reserves back over into the revenue columns of their income statements – booking that as top-line growth.
  • And the onslaught of litigation banks now face that could force them to mark down their assets at the same time that they will have to buy back tens of billions of dollars of non-performing mortgages they originated and securitized.

Banks are subject to “put-backs” or “buybacks” of the mortgages they place into securities if it can be proven that the quality of the mortgages weren’t what they were represented to be when the securities contracts were originated. That’s not hard to prove.

Regulators are very worried about the size of the put-back problem. In an attempt to assess the put-back risk faced by individual banks, the Fed has embarked on internal investigations.

When asked in recent testimony about the depth of the problem, Fed Governor Dan Tarullo, while not willing to quantify banks’ put-back risk, termed it “substantial.”

Put-back risk is one key reason the Fed will be conducting another round of stress tests on the country’s 19 biggest banks. Only this time they’re keeping the results to themselves.

That’s frightening.

But, that’s only the beginning.

Toxic Mess

The U.S. Securities and Exchange Commission (SEC) is investigating the banks for their part in falsely – if not fraudulently – spreading their toxic financial Kool-Aid around to other institutions.

Hints that a settlement was in the works last week quickly got squashed. Besides costing the banks penalties in settling charges, by settling and admitting any kind of guilt, they would be subject to lawsuits for decades to come. And since the litigation costs and the damages themselves could reach into the hundreds of billions of dollars, banks would have to set aside capital and reserves against future liabilities.

Now that this cat is out of the bag, it’s doubtful that the SEC can let the banks off that easily.

Additionally, new Basel III international capital standards are being imposed on banks, which will mean changes in how they classify the risk profile of various assets over time and how much capital will have to be held in reserve. (A recent report in The Financial Times suggested that U.S. banks – related to Basel III alone – face a $100 billion shortfall.)

And while all this is happening, the U.S. Treasury Department sold its Citigroup Inc. (NYSE: C) stake for a tidy little profit (thanks to the Fed’s easy money-inflating equity prices) and banks are saying they’re planning on raising dividend payouts in 2011.

The Ultimate Objective

It’s a high-stakes poker game. The Fed is bluffing and the banks are playing their hands – and will be big beneficiaries if the central bank pulls this off.

Just this Tuesday, at the Goldman Sachs Group Inc. (NYSE: GS) financial services conference in New York, Bank of America Corp. (NYSE: BAC) Chief Executive Officer Brian Moynihan said the big bank has fixed its balance sheet and is planning to raise its dividend next year.

And, Wells Fargo’s CEO John Stumpf projected confidence about growing market share in 2011 and said the bank “was optimistic it can steal loan customers from community banks that are retrenching after overextending themselves before the downturn,” according to an American Banker story on the meeting.

That brings us to the trick behind the trick. What QE2 and any subsequent quantitative easing actions (as well as the original quantitative easing move that was worth $1.7 trillion) really does is create a direct liquidity lifeline into the big banks.

The big banks got to stuff themselves with liquidity to enhance their capital ratios and balance sheets. And when that money had no place to go (it wasn’t being lent out), it found its way into the stock and bond markets, giving them a very nice run.

But small U.S. community banks got nothing.

In fact, they got less than nothing.

Community banks got overly cautious regulators from the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp. (FDIC). Those OCC and FDIC visits sucked the life out of the community banks because, after missing all the banking problems that led to the credit crisis in the first place, bank examiners are now erring on the other side of caution.

There’s no question that things are bad at community banks. But while big banks reap the benefits of the Fed’s direct triage efforts, community banks are being left for dead. That works out fine for the big U.S. banks. They want to grab market share, and can do so in a big way when these community workhorses are put out to pasture.

The difference between big banks and community banks comes down to economies of scale and size. Big banks want to serve big clients with big loans and capital markets services. They don’t want little-guy loans, they’re too small to be profitable relative to the allocation of resources.

Now, more than ever, that’s especially true. With all the problems inherent in the securitization market, big banks aren’t interested in small loans because they can’t package them into big loans and offload them to investors.

It’s going to be a long time before securitization of small loans from disparate originations makes sense again to investors.

Community banks could be facing planned extermination. Of course, the big banks will say that community banks did it to themselves. Without the necessary support to backstop their shaky balance sheets and with capital so difficult to raise because of their weak future prospects, community banks are in great jeopardy.

Since all real estate is “local” and job growth comes from small businesses, who better than community banks to take back the high ground of personal-relationship banking to serve local banking needs that can be better assessed by local bankers?

If we want to empower small businesses to take chances, they need a more-direct access to capital. Since that capital isn’t coming from the big banks, we better take another look at whom quantitative easing is benefiting and whom it is hurting.

If the Fed really wanted to shore up community banks, it could backstop most of the “local” commercial real estate and local commercial and industrial loans at community banks with less than $100 billion in assets.

That would give the community banks room to breathe and money to lend to local small business start-ups. Some of the 18 million unemployed folks in America could sure use that kind of backstopping.

If you couldn’t initially see the ultimate objective in the QE2 trick, you could be forgiven. But now you know. The fact is that banks are being made to look healthy by means of massive liquidity thrown at them. To foster that “illusion,” the U.S. Treasury is cutting them free, and the banks themselves are talking about a future bright with dividends and buyouts.

But they’re doing this without really knowing what their liabilities, capital requirements and future revenue will actually be.

And that says it all.

source:

http://moneymorning.com/2010/12/10/quantitative-easing-the-real-reason-the-fed-may-go-for-qe3/

Raising Questions

If you think about it, the proof of what I’m saying is right in front of each of us. You just have to take a step back and look at it objectively.

Last Sunday, in an appearance on CBS News’ “60 Minutes,” Bernanke said he could raise interest rates in 15 minutes if inflation ever became a problem. Not to worry, there’s no sign of inflation, at least according to him.

Well, there’s no sign of deflation either, and thanks to Fed policies, interest rates are at historic lows. So why embark upon “Round Two” of quantitative easing (known as “QE2″) and state on one of the nation’s most-watched television news programs that additional rounds might follow?

I’m going to break the magician’s code and tell you what the trick is and how it works.

No Comments »

Canadian RE Marketplace … distortions

The Vancouver market is being used as a ‘boost’ to the provincial and national house sales numbers.

This sort of reporting is what brings about the market distortions and perpetuates the myth that ‘all is well’ in Canadian Real Estate.

Canadian banks want the retail residential mortgage consumer to continue to operate with confidence, while the truth of the matter is that home prices in major markets are moving beyond any sort of affordability and the re-sale values of properties almost everywhere else, especially in markets where employment challenges are evident (and growing) are suffering equity destruction.

Organizations like Real Estate Boards are getting desperate to paint a rosy picture over the more accurate decay that is settling in on many markets.

Watch for a significant correction in the working class neighborhoods while the white collar and advantaged locations will be used to ‘paper over’ the increasing losses.  Any reports that use the words ‘average’ or make year to year comparisons are worthless.

Read what the Financial Post is supporting from the CREA:

http://business.financialpost.com/2011/05/09/strong-housing-forecast-for-canada-report/

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S&P downgrade of US debt is more about next failure!

The S&P downgrade of the US debt is more about a pending failure or another ‘bailout’ than any shot at the stability of the US economy.

One Trillion dollars more may be needed to bail out the ‘too big to fail’ crowd in the next round.

Most interesting is the closeness of S&P to the situation and their understanding of the internal operations, given those factors these revelations are illuminating!

View the interview from the Real News:

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… with enough Viagra …

Q1:What happens after the money runs out?

With enough Viagra anyone can get it up.

Q2: What happens when the Viagra effect wears off?

The QEII (Quantitative Easing round 2) is set to end this summer.  Given the chart seen here, looking at the yellow section, we can see that GDP growth would have been negative but for the stimulus money pumped into the system to ‘get it up’ into positive territory.

There is little sign that the FED or Treasury will restart any sort of stimulus.  This will lead to a negative outlook, of the sort that would have been seen without the stimulus money.

Answers to 1 & 2: A drop off, disappointment.

For a detailed view of these and other issues, subscribe to the newsletter, button to the right.

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Why debt matters!

Many pundits have spoken about the debt ceiling of the USA and how it really does not matter, as a nation can continue borrowing on and on, unlike a ‘regular person’ with a credit card or mortgage.

A year ago, Mr Geithner, said about the US loosing its vaunted AAA status:

“Absolutely not,” Geithner said, when asked in an ABC News interview broadcast yesterday whether a downgrade is a concern. “That will never happen to this country.”

Yet now we see S&P now putting a ‘down’ in their view of US Treasuries, and while many savvy investors have been ignoring the recently discredited ratings agencies, there is a reality that must be faced.  Much of the pension funds and other large holders of Treasuries are contract bound by agreements with their unit holders to ONLY HOLD AAA rated assets.

What happens when such massive holders have to all liquidate at the same time?

Have such things happened before?

Where did ‘cinco de mayo‘ celebrations come from?

On July 17, 1861, Mexican President Benito Juárez issued a moratorium in which all foreign debt payments would be suspended for two years, with the promise that after this period, payments would resume.[11][12] In response, France, Britain, and Spain sent naval forces to Veracruz to demand reimbursement. Britain and Spain negotiated with Mexico and withdrew, but France, at the time ruled by Napoleon III, decided to use the opportunity to establish a Latin empire in Mexico that would favor French interests, the Second Mexican Empire.

What result do we really see coming from the USA President making such a declaration?

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