Is Sovereign Debt the New Subprime?

Is Sovereign Debt the New Subprime?

Posted Dec 16, 2009 08:30am EST by Aaron Task in Investing, Recession, Banking

That’s a question many on Wall Street are asking as 2009 comes to a close. Just as many subprime borrowers were unable to make their mortgage payments in 2007 and 2008, investors now fear certain nations will be unable to pay their debts in the year ahead.

Rising mortgage defaults and credit card delinquencies put many banks on the brink of bankruptcy in 2008, sending the global economy into a tailspin. But sovereign debt defaults are potentially even more catastrophic as they can lead to geopolitical instability, societal unrest and even war. And there will also be economic ramifications for investors worldwide, putting America’s (and the globe’s) fragile recovery at great risk.

To varying degrees, Greece, Spain, Ukraine, Austria, Latvia, Mexico are just a handful of the nations viewed at risk of defaulting. Meanwhile, Dubai only just avoided a similar fate thanks to a $10 billion bailout from their oil-rich neighbor Abu Dhabi.

So, who else out there could rattle our constantly more interconnected world? Here's a look at where the trouble spots could be:

• Greece: Fitch Ratings last week joined two other ratings agencies in expressing concern about the country’s health. “Greece faces the risk of sinking under its debt,” Prime Minister George Papandreou said Monday in a speech where he pledged to slash the nation’s budget deficit by overhauling the nation’s tax system and cutting government spending.

• Ecuador, which defaulted in December 2008 when President Rafael Correa said the nation wouldn't make an interest payment of more than $30 million on a $510 million bond issue, carries a CCC+ rating at S&P. They define the debt issuers in the CCC category as "[c]urrently vulnerable and dependent on favorable business, financial and economic conditions to meet financial commitments." Translation: Probably in for hard times.

• Argentina, Grenada, Lebanon, Pakistan and Bolivia are judged to be a little better off, but they're saddled with still dubious B- ratings. The single-B classification at S&P means these nations are "[m]ore vulnerable to adverse business, financial and economic conditions but currently [have] the capacity to meet financial commitments." Translation: Not good, and needs some things to go right, preferably soon.

• Mexico: This week, S&P cut some of its ratings on America’s southern neighbor, but said the outlook is stable. Why the move? Because the agency believes Mexico's attempts to raise money through sources other than oil revenue and to make the economy more efficient "will likely be insufficient to compensate for the weakening of its fiscal profile." Put it on your watch list.Read more.
  

Muslim Nations:Are They Ready To Take On The West?

Hantu Laut

I share former Prime Minister Mahathir Mohammad's sentiment on the OIC here.

It is probably one of the most dysfunctional groupings.There is no cohesiveness and very little cooperation and solidarity to bridge the gap between the West, Muslim countries and Islam. Not a single treaty had been adopted by members on how to bring those fanatical Muslims to their senses, to bring them to the negotiating tables and to end their stupid war of attrition, killing more of their own kin than their intended enemies giving the Western powers justification to attack Muslim nations deemed to be harbouring terrorists.

When I first started blogging I wrote the article below on how laggard Muslim nations have been since the collapse of the Ottoman Empire.None have risen from the ashes to become a strong economic or military power.

Germany and Japan, war belligerents, completely vanquished in World War II have risen back from the ashes to become one of the world's greatest economic powers.

China, politically and economically ravaged by the Cultural Revolution and closed its doors for decades under communism is now a fast rising economic and military giant and expected to surpass and overtake the US economy in the next decade or two.

One may ask, where are the Muslim nations heading to? 

Many ordinary Muslims share this sentiment but are powerless to do anything. Only those in power can change the fates of Muslims and sad as it is, those in power are only interested in money, power and self-preservation.

Many Arab nations still maintained the absolute monarchy system, which gave the monarch absolute control over the nation's wealth.Many Arab oil producing countries are rich but under the layer of profound wealth lies tons of debt.The recent financial fiasco in Dubai shows the over-stretched imagination of these Muslim leaders about how money should be spent.

According to its charter, the OIC aims to preserve Islamic social and economic values, promote solidarity amongst member states, increase cooperation in social, economic, cultural, scientific, and political areas, uphold international peace and security, and advance education, particularly in the fields of science and technology.

Has the grouping successfully accomplished any of those objectives?

It is probably one of the most useless organisations one can think of.Every members have their own selfish agenda.Their conferences are more on rhetoric and nothing on substance.There is no unity and no common ground.

Every man for himself and the devil take the hindmost is the common stand.

Thursday, May 31, 2007

MUSLIM NATIONS:ARE THEY READY TO TAKE ON THE WEST?

BTN Not For Hypocrites

Hantu Laut

Why should BTN release videos of those who didn't denigrate its basic foundation and called it a racist institution?They stood by their principles and defended BTN. It is people who speaks with forked tongue that should be exposed.

I support anyone who exposes hypocrites and snakes in the grass.They are danger to society.They lied, pretended and are good at hiding their true colour.Some are so good in hiding their traits you only get to know their true characters after they died.

Hypocrisy is the act of pretending to have beliefs, opinions, virtues, feelings, qualities, or standards that one does not actually have. Hypocrisy is thus a kind of lie. Hypocrisy may come from a desire to hide from others actual motives or feelings. Wikipedia.

There can't be a lesser description for a man who speaks like the medicine man.You still can find them at the Sabah weekly tamus selling their concoctions of cure alls. The master alchemist.The bullshit artiste!

Anwar Ibrahim lamented that BTN should also release video tapes on others particularly UMNO leaders.Why should they? UMNO leaders defended the BTN syllabus not disparage them.Unlike him, singing a new song under the chameleon skin and it wouldn't surprises me if his repertoire changed again in the event he returns to UMNO.

Hong Kong Serial Acid Attacker

Hantu Laut
Many Malaysians go to Hong Kong during the school holidays.Please take extra care when walking the streets or in shopping arcades.

Hong Kong's Acid Scare

Written by Maria Thuesen Bleeg

Monday, 14 December 2009

An unknown assailant baffles police, frightens tourists and shoppers

Hong Kong's police have been stymied for the seventh time in a year by unknown assailants who throws bottles of acid off buildings into crowded pedestrian areas in what has always been presumed to be one of the safest cities in the world. The latest attack, almost exactly a year from the first, occurred Saturday night when bottles were thrown off a roof in the Causeway Bay shopping area that injured six people, two seriously.

The attacks have emptied out popular shopping areas as tourists and shoppers have shunned them out of fear. Police believe the latest attack is linked to three others in the crowded Mong Kok shopping and entertainment area in Kowloon. The first took place on Dec. 12, 2008, when 46 Mong Kong Christmas shoppers suffered acid burns.

The attacks have prompted increased police surveillance, anxiety among locals and visitors, and the suspicion that at least one copycat might be involved. Calls have been made for "eye-in-the-sky" cameras to be installed in busy areas, but it would seem technologically impossible to cover all the possible areas where an attack could occur.

The attacks have injured more than 100 people, according to police records. Police have installed HK$1.7 million worth of cameras in the Mong Kok area, stepped up patrols and offered rewards, but the attacker has so far avoided detection and has given no reason for the attacks.

The attacks have confounded law enforcement. Hong Kong, according to a report to the 9th International Anti-corruption Conference by Ian McWalters, a senior director of public prosecutions, remains one of the safest in the world in terms of street crime, with a crime rate at roughly the same level as Singapore and lower than New York, London or Tokyo. The very randomness of the attacks argues against intimidation by the city's infamous triads of shopkeepers or extortion and protection racketeering against bars or billiard halls.

Nor is acid throwing common to either Hong Kong or mainland China. Only one incident, called China's first, was reported in Shanghai in 1986. It is common in South Asia as a form of revenge for sexual or marital refusals in Pakistan, India and Bangladesh and Afghanistan, blinding or maiming to women.

To some extent, the attacks call up the mysterious random poisoning of dogs along the five kilometers of Bowen Road above Central. So far, an unknown person has killed 22 dogs since 1989 and has never been identified or apprehended. The person leaves poisoned food along the path, one of the most popular hiking areas in the city and a magnet for people to walk their dogs to get away from crowded flats.

Prior to Saturday's attack, the latest was on Nov. 1 in the Sai Wan Ho neighborhood when someone tossed a bottle of acid at a noodle salesman, burning his leg. In late October, according to police records, beer bottles full of acid were tossed onto the street in the Sham Shui Po neighborhood. No one was injured in those incidents. Police presence has been increased after the most recent incidents, and neighborhood leaders in Sham Shui Po have called for surveillance cameras there, too. Police told the local press they think the most recent attacks aren't related to the ones in Mong Kok. Read more.