10-03-26 savo
spal.. when i am talking about buyers demanding higher and higher rates I am thinking about offshore buyers...
Domestically .. I agree that the government can force banks and other entities to continue funding the government at suppressed rates.
But there are other problems to that mess... including the trade deficit...
AI:
"The U.S. trade deficit in goods widened to $132.6 billion in August 2026, marking an increase from $118.9 billion in July. This was the largest deficit since March 2025 and indicates a significant impact on GDP growth for the third quarter of 2026."
March 2025 was before tariffs... hence.. when importers were rushing to import...
well... august beat that month...
The US needs the world to accept dollars to continue financing its over-consumption...
If that financing breaks the whole thing breaks.
Momentarily nobody is thinking about a major US financial crisis because hyperscalers continue reaching new ATH...
bu it is happening right in front of our eyes...
Death by inflation or Death by financial crisis.
regarding reshoring which you mention .. i do not think it is going to happen... production is interlinked interlinked worldwide... it would be massively inflationary... the US consumes a lot abroad because producing it at home is more expensive...the only way reshoring can happen is if the dollar falls over an extended period of time... hence inflation.. hence higher bond rates...
from wherever yyou try to grab them the result is always the same ... less buyers.. more sellers... higher rates... higher deficit.. more inflation.
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10-03-26 spal
| Lo que vendra ... capital flows overwhelmingly into state-sanctioned, tangible, or defensive sectors—energy corridors, industrial re-shoring, defense infrastructure, and multi-family real estate—while speculative, high-duration paper models lose their funding base. |
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10-03-26 spal
There was still an enormous reservoir of global and domestic private capital willing to buy long-term U.S. debt at 4.5% to 5.0% voluntarily.
For conservative pension funds, life insurance companies, and fixed-income allocators, 5% nominal yields looked like the best income return they had seen in fifteen years.
This voluntary capital absorbed the supply shock temporarily. However, as structural inflation settles at 3% to 4%+, those 5% nominal bonds offer a pathetic real return after taxes and inflation. Once that voluntary institutional wave finishes its rebalancing, the buyer vacuum appears. ... first failed bond auction and in come the liquidity and capital controls ... they will come. |
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10-03-26 spal
| If an individual bank tries to play the "bond vigilante" by dumping Treasuries or refusing to roll over sovereign paper, regulators adjust risk-weightings, capital adequacy ratios, or liquidity coverage requirements (LCR). The institution is immediately disciplined, absorbed, or forced into compliance long before it can destabilize state funding. ... Just watch ... actually you will not have to ... they will blink first. |
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10-03-26 spal
| The banking system in the United States - and this might surprise you - is already quasi nationalized. When push comes to shove there is no such thing as a vigilante (only a dead one). |
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10-03-26 spal
Savo - financial repression is coercion -it is not a request that the bond market accept low rates.
The state will do the following:
- stuff banks fuller with government debt
- stuff pension funds and IRA's with it (you know the old adjustments for "risk free" assets and related BS.
- impose capital controls
Pretty soon the market starts to look like Chinas.
This produces a managed real negative yield of 3% per year. It does not trigger hyperinflation - it triggers a slow, systematic 50% loss of purchasing power over 15 to 20 years. This is exactly how the US reduced its post WW2 debt levels.
But you are right there are only 2 choices now:
Explicit default (politically impossible) or coercing rates below inflation (financial repression).
You say 1 - I say 2.
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10-03-26 carib
| If there are elections in Spain this year, my expectation is "the left" will fail to win a relative majority. But making a new government might be less than easy. |
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10-03-26 carib
| The required and well known solution to the housing crisis (which actually exists only in certain locations).. is to build much higher in those locations. If land is worth 1.000 rather than 100.. 12 floors instead of two balances the accounts. |
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10-03-26 savo
victor... Propone bajar los impuestos hasta el 60 por ciento a los jóvenes para la compra de su primera casa
bad keynesian idea... more demand... higher prices.
The way to solve the housing affordability crisis ( or the affordability crisis of anything) is to always work on the supply side.. never on the demand side. |
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10-03-26 savo
let's go back to the simple equation.... US debt is growing at 8% pa. GDP at 2%.. hence the US needs inflation at 6% to keep real ratios stable.
That is more or less where US inflation is now... and rates are still below inflation...so erosion is working... slowly.
But the moment rates go up... the growth of debt increases and so will have to increase the rate of inflation to return real ratios to stable.
But as the rate of inflation increases... so will the rate of interest... and so the rate of growth of debt.
a death spiral. The US has entered that spiral.
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10-03-26 savo
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10-03-26 savo
spal... It will take 20-25 years ...
the economy is static... the other side also plays
with the strategy revealed... bond liquidation will accelerate... rates will have to go higher and higher to attract new investors becoming then real positive and hence ending the value erosion.
What the US is trying under the ignorant in Chief has been tried several times by other countries... ends in hyperinflation when the only taker left of government debt is the Central Bank.
The reason it worked during the last 40 years is because a) the starting amount of debt was small... and b) bonds were in a 40 years bull market...
Now the opposite happens. |
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10-03-26 victor
29 de noviembre, según eldiario
//
electomanía
‼️Sánchez 🌹 estaría barajando seriamente convocar elecciones 🗳️ el próximo 29 de noviembre, según eldiario
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10-03-26 victor
carib, feijoo wants elections ASAP.. according to polls pp+vox would have over 200 seats.
//
Alberto Núñez Feijóo
No pido elecciones por revanchismo. Las pido porque España no aguanta más.
Oct 3, 2026
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10-03-26 victor
Pedro Sánchez
España sigue avanzando.
El mejor septiembre de toda la serie histórica: 92.327 empleos más, un récord de 22,43 millones de afiliados y casi 740.000 trabajadores más que hace un año.
Más empleo, más derechos y más oportunidades para seguir construyendo una España más fuerte y con más futuro.
Oct 2, 2026
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10-03-26 carib
| Victor: if there will be elections in Spain this fall.. will Sanchez survive (politically, of course)? |
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10-03-26 carib
| Victor: most unlikely, hence free promise. |
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10-03-26 victor
yet again..
If Republicans win the House of Representatives and the Senate in the 2026 Midterm Elections, I’m going to give all Adult Citizens in the United States of America, $5,000. Thank you for your attention to this matter, and I look forward to signing those checks! President DONALD J. TRUMP
Oct 03, 2026 |
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10-03-26 victor
Feijóo promete aprobar un plan en su primer mes de mandato para construir un millón de viviendas
Propone bajar los impuestos hasta el 60 por ciento a los jóvenes para la compra de su primera casa |
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10-03-26 panasonic
| Vic, next year will be interesing to watch Spain, projected growth for 2027 around 1.8% vs 2.1% this year. |
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10-03-26 victor
pana, and when miriam gave her speech in parliament, explaining why she would be voting NO, sanchez was so pissed that he refused to listen to her and walked out of parliament.
he only returned after miriam finished. :-))
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10-03-26 victor
pana, "after parliament rejected a package of emergency tenant protection"
se llama Miriam quien tumbo los decretos de vivienda de Sanchez. :-))
Sanchez puede verse obligado por las protestas a convocar elecciones. |
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10-03-26 carib
| As Rudy Dornbush used to say.. certain things moves much slower that one expects, and then suddenly much faster that one anticipates.. |
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10-03-26 panasonic
"It will take 20-25 years"
Depends where, French seems to be running out of patience.
Spain not looking very promising:
"Massive housing protests have erupted across Spain, with tens of thousands of people marching in 50 cities. Demonstrators are demanding affordable housing after parliament rejected a package of emergency tenant protection" |
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10-03-26 panasonic
"Mostly exists now BTW at at the lower stratum"
True |
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10-03-26 carib
| UBI without the U.. is essentially a rationalisation of the current welfare system. |
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10-03-26 carib
| Spal: Brasil, in this century, had what you would call a "left democrat" government for 20 years out of 26. |
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10-03-26 carib
However, i would make no quarter century prediction of sorts. Things are moving too fast for that already.
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10-03-26 spal
The Single Point of Failure:
BofA concludes that the market has become extraordinarily fragile. Because equity valuations no longer reflect underlying bond yields or capital costs, the AI narrative is the last line of defense preventing a systemic equity re-pricing.
I think this is right. |
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10-03-26 spal
| We get there via the boiling frog effect ... and then in 20 years we wake up in a Brazil. |
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10-03-26 spal
| Carib - is Brazil unstable? The true stakeholders are few. |
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10-03-26 spal
| Panas - I agree with Carib UBI sans the U ... it mostly exists now BTW at at the lower stratum. |
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10-03-26 carib
Spal: I agree on that forecast, actually.
But political and social stability, IMHO, require a majority of stakeholders, rather than a small minority. |
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10-03-26 spal
| No US and the west are likely far from and street riots and the guillotine. For sure there will be mechanisms to ensure the roll over and preference of government debt - more sub market debt pushed into banks (and central banks) - rates capped under, capital controls, tariffs etc. The plan is to inflate the debt down. They will lie about this strategy continuously and even fudge numbers. But financial repression is the only way forward. It will take 20-25 years ... |
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10-03-26 carib
| Panas: IMHO the U in UBI is impossible, and the amount is the actual issue. |
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10-03-26 panasonic
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10-03-26 carib
| ..and taxation moving from income to wealth? |
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10-03-26 carib
Spal: pre-revolutionary conditions?
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10-03-26 spal
During financial repression, wealth stops being a function of income or hard work and becomes a function of asset positioning and leverage.
The Real Estate Stratification: Property ownership concentrates into two distinct camps: institutional/high-net-worth capital holding vast portfolios of multi-family and commercial assets, and a growing generation of permanent renters. Single-family homes become luxury capital-preservation vehicles rather than standard starter assets for young families.
The "Two-Tiered Currency" Reality: The wealthy operate in a world of inflation-hedged assets, private equity, and hard-capital corridors. The working population operates strictly in the debased circulating medium, watching their purchasing power erode between paycheck cycles. |
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10-03-26 spal
The defining characteristic of a "Brazilianized" society is not uniform poverty, but structural economic duality—a small, hyper-connected elite floating above a vast, informal or semi-formal working mass, with the traditional middle class hollowed out.
===
It is fair that actual Brazil become the role model ... I mean why not ...
;) |
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10-03-26 spal
| Savo - the financial repression playbook is now engaged. |
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10-03-26 spal
What Society and the Economy Look Like After Financial Repression
On the other side of a multi-decade financial repression cycle, the real purchasing power of historical debt has been liquidated, but the social and economic landscape is fundamentally altered:
A Multi-Generational Wealth Transfer
Financial repression does not destroy wealth; it reallocates it.
The Unspoken Tax: The real purchasing power lost by fixed-income savers, bondholders, and cash depositors over 25 years is transferred directly to the sovereign debtor (clearing state balance sheets) and to leveraged borrowers holding hard assets.
The Real Estate & Asset Divide: A stark divergence emerges between those who owned real estate, infrastructure, and equity in productive enterprises during the inflation window, and those who relied strictly on wage income or fixed paper assets.
Re-Industrialization Out of Necessity
Because capital costs were artificially managed and foreign import networks became increasingly volatile, domestic capital is forced back into domestic, tangible assets:
Infrastructure Re-Shoring: State policy heavily incentivizes domestic energy production, advanced manufacturing, and transport infrastructure—the physical "corridors" that generate real productivity.
Tangible Capital Dominance: Financial engineering, hyper-leveraged paper derivatives, and zero-interest rate speculative models give way to businesses that generate immediate, real cash flows and own scarce physical bottlenecks.
Structural Fiscal Realism
The End of Free Money Illusion: Having systematically inflated away one debt cycle, institutional trust in sovereign paper assets is depleted for a generation.
Harder Budget Boundaries: Government borrowing can no longer rely on un-capped central bank backstops without instantly triggering currency volatility. Fiscal policy is forced to align more closely with real tax receipts and primary balance constraints.
Summary
The post-financial repression United States is a nation that has successfully reset its sovereign debt burden without a formal debt restructuring or default.
However, the cost of that reset is paid through a quarter-century of stealth inflation—resulting in a society where tangible assets, real productive infrastructure, and cash-flow-generating corridors completely outshine paper assets, and where the state's balance sheet is healed at the direct expense of historical paper savings. |
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10-03-26 savo
Trump Says Inflation Will Pay Off The $40 Trillion Debt "Very Rapidly"
https://www.zerohedge.com/political/trump-says-inflation-will-pay-40-trillion-debt-very-rapidly
he blames Biden for the inflation he inherited... forgetting the inflation Biden inherited from him.
But if Biden's inflation was bad and he keeps on criticizing Biden for it... why is his inflation good? |
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10-02-26 Merlino
| Carib, Tks for the MS post |
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10-02-26 carib
FWIW:
“Iran will imminently be resolved,” Gorka said in an interview with The Jerusalem Post, while declining to disclose details of the Trump administration’s plans.
Gorka is US counter-terrorism boss. |
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10-02-26 carib
as predictable:
Israel’s top court has overturned a ban on the country’s two main Arab parties taking part in this month’s election |
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10-02-26 spal
Cyber-Schpal on Tanker Rally:
Yes, the tanker rally will continue, though it will transition from an explosive, sentiment-driven spike into a structural, cash-flow-rich consolidation at elevated levels.
While short-term headline risk (like temporary ceasefire rumors) causes periodic pullbacks, the structural fundamentals supporting VLCCs, Suezmaxes, and product tankers (MR/LR2) remain intact.
Perplexity
Four core drivers explain why this rally has structural legs:
1. The Tonne-Mile Multiplier Is Structurally Locked In
The rally is not purely about raw barrel demand; it is driven by distance and transit time.
Rerouting around the Cape of Good Hope, the closure or extreme risk of key choke points (Hormuz, Bab-el-Mandeb, Black Sea), and Russian/Iranian sanction-driven trade re-alignments have permanently lengthened global trade routes.
Moving a barrel of crude or refined product 40% further consumes 40% more ship capacity to move the exact same volume. Even if global oil demand flattens, tonne-mile demand remains near historic highs.
2. Historical Supply Scarcity (The Fleet Age & Orderbook Defense)
Unlike prior shipping cycles where sky-high dayrates triggered massive overbuilding, the supply side today remains constrained:
Near-Zero Deliveries: The global orderbook-to-fleet ratio for crude and product tankers hovered near multi-decade lows. Because global shipyards were choked with LNG carriers and container ships ordered years prior, new tanker capacity cannot enter the market in volume before late 2027/2028.
MB Capital Strategies
Aging Global Fleet: Over 15% of the active tanker fleet is older than 20 years (the traditional scrapping age). Furthermore, the fragmentation and shadow-market isolation of dark-fleet vessels removes real, legitimate capacity from Western-insured commercial routes.
3. Asymmetric Product Mismatches (The Refined Fuel Crisis)
While raw crude logistics get the headlines, clean product tankers (LR2s, LRs, MRs—e.g., TORM, Scorpio, Hafnia) hold immense pricing power. Ukrainian strikes on Russian refining infrastructure and Middle Eastern regional refining disruptions have forced global importers to source diesel, jet fuel, and naphtha from much further distances (e.g., India and East Asia to Europe).
4. Free Cash Flow Generation & "Floor Raising" Time Charters
Top-tier operators (Frontline FRO, DHT Holdings DHT, Okeanis ECO, TORM TRMD) are using record spot earnings to lock in multi-year fixed time charters at historically high dayrates.
MB Capital Strategies
For example, locking in VLCC time charters at $100,000/day for 3-year periods against operating costs of ~$10,000/day guarantees massive cash flow baselines.
Perplexity
These companies are returning 80%–100% of net income directly to shareholders as variable dividends, creating double-digit dividend yield backstops that floor equity valuations even during temporary spot-rate dips.
MB Capital Strategies
Key Risk to Watch: The "Diplomatic Air-Pocket"
The primary near-term threat to equity prices is headline volatility. Any brief diplomatic breakthrough, truce signal, or rumor of choke-point reopenings triggers immediate profit-taking by short-term paper traders.
However, because physical ship availability cannot be manufactured overnight and global trade routes cannot un-wind instantaneously, dip sessions represent buying opportunities for high-yield, logistics-backed cash flows rather than the end of the bull cycle. |
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10-02-26 spal
If the crisis is driven by severed supply routes and transport friction rather than a deficit of raw crude, capital appreciation will not accrue evenly across the energy sector:
The strategic trade shifts decisively from owning the molecule to owning the corridor.
In an environment defined by persistent logistical bottlenecks, hydrocarbon transport, midstream infrastructure, and product-tanker equities command the ultimate structural pricing power—capturing outsized rents while upstream producers bear the brunt of local discounts and rising operational costs. |
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10-02-26 spal
| Adding to tanker positions. |
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10-02-26 spal
As the regime sees its financial runway shrinking toward zero, its willingness to take catastrophic geopolitical risks increases rather than decreases.
This is why the danger of extreme, un-attributed infrastructure attacks peaks in the final stages of economic exhaustion—the regime attempts to force a global economic crisis before its own internal security apparatus fractures.
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10-02-26 carib
| Third carrier on the way.. |
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10-02-26 spal
| Panas - yes - as we discussed. |
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10-02-26 panasonic
Spal, Iran entering desperate zone, from what I read China has widely limited withdrawals from their banks.
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10-02-26 spal
BREAKING: Iran has just struck an oil tanker conducting an outbound transit of the Strait of Hormuz under US escort in the US-backed southern Omani corridor, with a fire and a blackout on board, per UKMTO.
Holy Houthi van Toothi! |
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10-02-26 carib
| AI agents can burn through tokens — the units of information a model processes — with little human oversight. One Amazon project ran 860 per cent over budget after incomplete tasks worked in the background for five months, costing more than $1mn, according to multiple people familiar with the matter.FT |
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10-02-26 carib
| SPAL: good summary.. but a society of differently embarrassed capitalists, I guess, would be much more effective and stable if a majority actually had capital (in different amounts, of course) |
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10-02-26 carib
By Nicolle Yapur, Vinícius Andrade and Maria Elena Vizcaino
(Bloomberg) -- Morgan Stanley emerged from a series of
meetings in Washington with a positive view of Venezuela’s debt
restructuring, citing signs that parties want to advance the
process quickly and that US officials are unlikely to force
creditors to accept a predetermined recovery.
Public remarks from Secretary of State Marco Rubio and
private comments from State Department officials suggest the
restructuring talks are “unofficially on” even as investors
await for a long-delayed debt sustainability analysis, the
bank’s emerging-market trading desk wrote in a note to clients
seen by Bloomberg. That is expected to give a clearer picture of
the size of the economy and how much debt it can sustain.
“We do not anticipate a ‘cram down’ of terms,” desk analyst
Raul Gallegos wrote in a Thursday note following the bank’s
meetings with officials from the International Monetary Fund and
World Bank, US government officials and other experts. “We came
away with a reinforced, credit-positive view of the Venezuela
debt restructuring.”
A representative for Morgan Stanley declined to comment.
The bank still expects the debt restructuring, one of the
biggest in modern financial history, to be completed by June
2027. Centerview, Venezuela’s financial adviser, should come up
with with a macro framework and a debt sustainability analysis
“very soon,” while a license by the US Treasury’s Office of
Foreign Assets Control allowing bondholders to engage in
negotiations would be issued concurrently, Gallegos wrote.
The note comes amid recent speculation around the delays in
the process, which has been putting pressure on the nation’s
bond prices. An article in local media last week reinforced
investors’ jitters by saying the Venezuelan government was
putting debt talks on hold for now to focus on oil projects,
sending dollar notes slumping. A broader rout in global markets
is also pushing Venezuela bonds due in 2027 — some of the most
liquid — below 50 cents on the dollar for the first time in more
than a month.
Venezuela started to default on its dollar bonds in 2017.
Unpaid interests accumulated since have taken the nation’s
financial debt to over $100 billion, but total commitments,
including bilateral loans and arbitration judgments, are
estimated to reach as much as twice of that. The lack of
official data makes the debt assessment by Centerview key to
understand the size of the restructuring and estimate potential
recovery scenarios. The so-called DSA was initially expected for
June.
Investors have also been gauging potential involvement by
the IMF in the process, but Gallegos is skeptical that they
would take the lead.
Read more: IMF Mulls Opening Caracas Office as Venezuela
Engagement Deepens
“We do not expect a material delay to the process, despite
recent news coverage to that effect,” he wrote. “We think the US
government wants to get this process finalized during the life
of the Donald Trump and Delcy Rodriguez administrations, as has
been our base case.”
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10-02-26 spal
| Tankers remain on the rise |
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10-02-26 spal
Unemployment rate 4.2%, Exp. 4.1%
Participation rate 61.8%, Exp. 61.6%
Average hourly earnings 0.1% MoM, Exp. 0.3% |
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10-02-26 spal
"I guess the trouble was that we didn't have any self-admitted proletarians. Everyone was a temporarily embarrassed capitalist."
Steinbeck reflecting on the Great Depression |
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10-02-26 spal
| That exists already in some markets. But it will not be a generalized trend yet IMO and there are way around in or to deal with it. |
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10-02-26 carib
Spal: I cannot disagree with you on facts.
;-)
The political corollary of that fact, however, is that is not impossible to imagine that one day the votes of the 50% without capital will bring about some obnoxious policies such as.. rents control... |
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10-02-26 spal
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10-02-26 spal
| Being a landlord is the functional equivalent of being a high yield lender. |
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10-02-26 spal
3.
This is 50% of all Americans.
End of story. |
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10-02-26 carib
Spal: I think the issue of rent vs purchase can occasionally be an issue of individual preferences, but fundamentally remains an issue of finance. If renting costs you 12% of purchase price, it makes sense only in three cases:
1) you are staying short term, and buying would not be a reasonable option
2) your capital yields much more than 12%
3) you have no capital
I tend to believe tenants who accept to pay 12% moslthy fall under case 3.
Am I mistaken? |
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10-02-26 spal
I never liked US real estate because of all the tax.
===
Hann - what tax? Property taxes are passed on. Income taxes are sheltered. Capital gains taxes are avoided.
Did I miss any? |
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10-02-26 spal
Savo - it is not that complex or demanding.
Hann - what you outline is fair and happens a lot. I have never bought into anyone else's RE deal and I do not work with partners - except banks. |
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10-02-26 panasonic
France's CDS rising sharply, doubled in the last 6 months.
Oh là là |
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10-02-26 spal
Spal: congrats.
But, if rent is 12% of value, I would certainly buy rather than rent.
===
Yes - you would, but this is actually how the market works so what you would do is simply an isolated preference. |
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10-02-26 spal
Carib - I did - I did a refi and cash out. These are commercial loans and you - normally 3 or 5 year fixed.
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10-02-26 carib
| SPAL: PS. may I ask why you did not refinance the entire asset when mortgage rates were at 3% or lower? |
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10-02-26 hann
US CRE
A friend of mine got offered 20% yield by a US property fund gp. As I understand they've done ok, multi fam + retail.
Automatically felt iffy. Running it through Gemini, typically 5-10 year loans. If u have to refi in this environment even w only minor rental softness, capital values can decline precipitously so lender demands instant equity top up or default. Gemini says best approach for GP is to separate into assets u can save and assets u can't. 20% is band aid and will blow up eventually.
I never liked US real estate because of all the tax.
Is this a fair, correct interpretation?
Tx |
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10-02-26 carib
Spal: congrats.
But, if rent is 12% of value, I would certainly buy rather than rent. |
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10-02-26 savo
spal...just curiosity... do you enjoy the complexity and admin demand of that kind of business?
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10-02-26 spal
Spal, that is what I call a conviction trade.\
===
Either that or I am mad - which is always a possibility.
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