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Gender: Male
Hometown: Detroit, MI
Member since: Fri Oct 29, 2004, 12:18 AM
Number of posts: 72,733

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This is When Bonds Go Kaboom!

This is When Bonds Go Kaboom!
by Wolf Richter • September 27, 2015

[font size="3"][font color="blue"]The toxic miasma of “distressed debt.”[/font][/font]

It’s getting tougher out there for our QE and ZIRP-coddled corporate junk-bond heroes.

Unisys, whose revenues and profits decline year after year and whose stock dropped from over $400 a share during the prior tech bubble to $13 a share now, withdrew its offer to sell $350 million of bonds on Friday.

The “current terms and conditions available in the market were not attractive for the company to move forward,” it said. According to S&P Capital IQ’s LCD, the five-year senior secured notes due in 2020, rated BB/Ba2, had been guided at around 8%. But buyers were leery, and they demanded more yield. They wanted to be rewarded just a little more for the substantial risk they were taking. So the notes failed to price, and Unisys withdrew the offering.

Unisys isn’t an oil company, or a mining company, or a coal company – sectors that have been eviscerated by the commodities rout and are having trouble issuing any debt at all. Unisys is a tech company.

But Unisys wasn’t the only one: It was the 15th bond offering withdrawn so far this year, according to LCD, though two of them – Fortescue Metals and Presidio – were able to pull them off later. In total, nearly $4 billion in bond offerings were withdrawn this year. ..................(more)


Shell Halts Alaska Offshore Exploration After Failing to Find Enough Oil

(Bloomberg) Royal Dutch Shell Plc will halt exploration in the U.S. Arctic after $7 billion of spending ended with a well off Alaska that failed to find any meaningful quantities of oil or natural gas.

Shell said it expects to take financial charges related to the Alaskan operations, which carry a value of about $3 billion on its balance sheet with additional contractual commitments of about $1.1 billion. The Hague-based company will cease further offshore activity in the region for the foreseeable future. The shares fell as much as 1.4 percent.

“This could be negative for third-quarter earnings because of potential impairment charges,” Ahmed Ben Salem, a Paris-based analyst with Oddo & Cie, said by phone. “On the other hand, in a $50 oil-price environment it’s not so bad to abandon that search because it’s expensive. Shell has enough resources already.” .................(more)


Protecting the Shield: Why ESPN Can't Be Trusted to Cover the NFL

Protecting the Shield: Why ESPN Can't Be Trusted to Cover the NFL

Sunday, 27 September 2015 00:00
By Michael Corcoran, Truthout | News Analysis

The National Football League (NFL) is not merely a sports league that helps entertain the US public. While football is just a game, the NFL is a major institutional power that uses billions of tax dollars to subsidize its owners, tries to weaken unions in courts and is potentially complicit in an increasingly disturbing mental health crisis among its workforce. In light of this, the league warrants close scrutiny and investigation from the media.

The organization that should be the most important watchdog of the league is ESPN, which as the largest sports media company in the world has the resources and reach to truly serve as a check on the league's power. Unfortunately, ESPN is too compromised to be trusted in this role. Its NFL broadcasts are worth billions, and an examination of its coverage shows that ESPN's priorities are not investigating the league, but protecting it.

In early September, Judge Richard Berman nullified the NFL's four-game suspension of famed quarterback Tom Brady. The suspension, affirmed by the league's commissioner, Roger Goodell, was for Brady's alleged role in the "Deflategate" scandal - arguably one of the most ridiculous cases in the history of US jurisprudence.

The judge ruled against the NFL on September 3 for not giving Brady a fair hearing in his appeal, and for punishing him for a rule that doesn't exist: alleged "general awareness" of an alleged equipment violation (deflating air out of a football). In two brutal hearings in open court (August 12 and August 19), Berman ripped the NFL's lack of due process and its "independent" report, aimed at rubber-stamping Goodell's "own brand of industrial justice," as Berman called it. ...............(more)


John Kiriakou: A Racist Wake-Up Call

A Racist Wake-Up Call

Sunday, 27 September 2015 00:00
By John Kiriakou, OtherWords | Op-Ed

I worked proudly with Muslim CIA officers in the aftermath of the 9/11 attacks. I used to think most Americans understood that Muslim Americans are patriots, too.

Ahmed Mohamed's recent ordeal proved how wrong I was.

He's the 14-year-old who was recently interrogated, arrested, and suspended from his Irving, Texas high school for bringing a clock he made as an engineering project to class. The school said it looked like a bomb.

Ahmed had wanted to impress his teachers. Instead, he exposed their racism and became an instant celebrity.

Ahmed, by all accounts, is a gifted student with a flair for engineering and science. He reportedly showed the clock to each of his instructors until one of them, his English teacher, advised Ahmed to put it away because it could "scare people." She then said it scared her and reported the teen to the principal, who called police. .............(more)


REPORT: ESPN to lay off 200-300 employees

ESPN is planning to lay off close to 300 employees in the coming months, Jason McIntyre of The Big Lead reported Tuesday.

These will be the first layoffs at the Worldwide Leader since 2013, and, as McIntyre notes, they are not likely to be the last.

Disney, ESPN's parent company, has reportedly asked ESPN to trim $100 million of their budget in 2016 and $250 million in 2017 in preparation for a massive NBA TV deal. The upcoming layoffs will reportedly save ESPN $30-40 million annually .................(more)


U.S. State Dept. making the world safe for hypocrisy

U.S. State Department “Welcomes” News That Saudi Arabia Will Head U.N. Human Rights Panel

Last week’s announcement that Saudi Arabia — easily one of the world’s most brutally repressive regimes — was chosen to head a U.N. Human Rights Council panel provoked indignation around the world. That reaction was triggered for obvious reasons. Not only has Saudi Arabia executed more than 100 people already this year, mostly by beheading (a rate of 1 execution every two days), and not only is it serially flogging dissidents, but it is reaching new levels of tyrannical depravity as it is about to behead and then crucify the 21-year-old son of a prominent regime critic, Ali Mohammed al-Nimr, who was convicted at the age of 17 of engaging in demonstrations against the government.

Most of the world may be horrified at the selection of Saudi Arabia to head a key U.N. human rights panel, but the U.S. State Department most certainly is not. Quite the contrary: its officials seem quite pleased about the news. At a State Department briefing yesterday afternoon, Deputy Spokesperson Mark Toner was questioned by the invaluable Matt Lee of AP, and this is the exchange that resulted:

QUESTION: Change topic? Saudi Arabia.

MR. TONER: Saudi Arabia.

QUESTION: Yesterday, Saudi Arabia was named to head the Human Rights Council, and today I think they announced they are about to behead a 21-year-old Shia activist named Muhammed al-Nimr. Are you aware of that?

MR. TONER: I’m not aware of the trial that you — or the verdict — death sentence.

QUESTION: Well, apparently, he was arrested when was 17 years old and kept in juvenile detention, then moved on. And now, he’s been scheduled to be executed.

MR. TONER: Right. I mean, we’ve talked about our concerns about some of the capital punishment cases in Saudi Arabia in our Human Rights Report, but I don’t have any more to add to it.

QUESTION: So you —

QUESTION: Well, how about a reaction to them heading the council?

MR. TONER: Again, I don’t have any comment, don’t have any reaction to it. I mean, frankly, it’s — we would welcome it. We’re close allies. If we —

QUESTION: Do you think that they’re an appropriate choice given — I mean, how many pages is — does Saudi Arabia get in the Human Rights Report annually?

MR. TONER: I can’t give that off the top of my head, Matt.

QUESTION: I can’t either, but let’s just say that there’s a lot to write about Saudi Arabia and human rights in that report. I’m just wondering if you — that it’s appropriate for them to have a leadership position.


Deer Accused Of 'Stalking' People, Stomping Small Dogs

A town in southern Oregon will hold a public meeting to discuss how to deal with droves of fearless deer that wander the streets, occasionally acting aggressively toward residents, state wildlife officials said on Tuesday.

The "Deer Summit 2015" will be chaired on Wednesday by Ashland Mayor John Stromberg as part of efforts to address deer that have stalked people, pawed at them with their hooves and even stomped on small dogs.

"The deer have no fear of humans," said Mark Vargas, District Wildlife Biologist for the Oregon Department of Fish and Wildlife.

The confident deer are a product of a long tradition in the town of 21,000 people of feeding and befriending them, Vargas said. ..................(more)


Mary Jo White doesn't seem to like it when her SEC regulators actually regulate corporations

via truthdig:

The head of the Securities and Exchange Commission—an agency involved in regulating the financial industry—has announced her intention to replace the current chair of a group formed to keep auditors of publicly traded companies honest with someone likely to be more amenable to corporate interests, reports David Dayen at The Intercept.

Congress created the group in question—the Public Company Accounting Oversight Board—in 2002 in response to the Enron scandal, in which the auditing firm Arthur Andersen was alleged to have helped Enron defraud investors by falsifying accounting records. The PCAOB’s function is to make sure auditors remain independent of the companies they monitor and do their jobs.

Just four firms—Deloitte, PricewaterhouseCoopers, Ernst & Young and KPMG—are in charge of virtually all the auditing of public companies in the United States. And, Dayen writes, “they often have lucrative business consulting relationships with the firms they audit. With only self-policing, auditors have every incentive to put their future profits ahead of the truth.”

Current PCAOB chief James Doty has been “one of the most persistent regulatory reformers in Washington,” Dayen continues:

Since January 2011, Doty, a former SEC general counsel under George H.W. Bush, has served as PCAOB chair. He has earned respect from both sides of the aisle, as evidenced by a letter recommending his re-appointment signed by numerous academics, former SEC chairs of both parties, Vanguard CEO John Bogle and Paul Volcker, the former chair of the Federal Reserve.

The letter’s signers commend Doty for negotiating agreements to oversee Chinese auditors of firms that trade in U.S. stock markets, improving the PCAOB’s ability to conduct auditing inspections and creating the Center for Economic Analysis, which uses high-quality research to inform the regulator’s actions.

His impact can also be seen in the U.S. Chamber of Commerce’s criticism that he has placed “new burdens” on its members.

Much of Doty’s best work has come outside the rule-making process, because the five-member board has been deadlocked on most key issues. While Doty and Steven Harris, a former aide to Sarbanes-Oxley author Paul Sarbanes, support stiffer rules, board members Jay Hanson and Jeanette Franzel have consistently opposed them. Lewis Ferguson, a Democrat and former corporate lawyer at Williams & Connolly, is the swing vote. That has put him in a position to prevent Doty’s reforms from seeing the light of day.

This has hampered Doty’s efforts to require individual auditors to sign their names to company audits, and to rotate auditing firms away from their clients every 10 years, so they don’t establish a cozy relationship with their employers.

Doty’s term ends in October, and PCAOB board member Lewis Ferguson wants the job. Democratic SEC Commissioners Kara Stein and Luis Aguilar want to see Doty reinstated, and he would like to keep the position.

But SEC Chair Mary Jo White—whom President Obama selected—told reporters earlier this month that she is “identifying interested and qualified candidates.” ....................(more)


The Smartest Building in the World

(Bloomberg) It knows where you live. It knows what car you drive. It knows who you’re meeting with today and how much sugar you take in your coffee. (At least it will, after the next software update.) This is the Edge, and it’s quite possibly the smartest office space ever constructed.

A day at the Edge in Amsterdam starts with a smartphone app developed with the building’s main tenant, consulting firm Deloitte. From the minute you wake up, you’re connected. The app checks your schedule, and the building recognizes your car when you arrive and directs you to a parking spot.

Then the app finds you a desk. Because at the Edge, you don’t have one. No one does. Workspaces are based on your schedule: sitting desk, standing desk, work booth, meeting room, balcony seat, or “concentration room.” Wherever you go, the app knows your preferences for light and temperature, and it tweaks the environment accordingly.

The Edge is also the ­greenest building in the world, according to British rating agency BREEAM, which gave it the highest ­sustainability score ever awarded: 98.4 percent. The Dutch have a phrase for all of this: het nieuwe werken, or roughly, the new way of working. It’s about using information technology to shape both the way we work and the spaces in which we do it. It’s about resource efficiency in the traditional sense—the solar panels create more electricity than the building uses—but it’s also about the best use of the humans. ...................(more)


Private Equity Asset-Stripping Strategy Meets Charter Schools to Produce Even Better Looting

from Naked Capitalism:

Private Equity Asset-Stripping Strategy Meets Charter Schools to Produce Even Better Looting
Posted on September 22, 2015 by Yves Smith

Eileen Appelbaum, co-author of the important book Private Equity at Work, flagged an important article in Philly.com on how a secretive consulting firm that was previously investigated for corruption and a local law firm are engaged in complex, high cost bond deals to implement an asset stripping strategy that Appelbaum and her co-author Rosemary Batt have called out as a private equity enrichment scheme that impairs operating businesses. It’s bad enough to see this sort of thing take place in the dog-eat-dog world of Corporate America. It’s even worse to see it take place in charter schools, where the losers are students, by virtue of unjustifiably large portions of charter fees go to unproductive rental payments and financing fees, as opposed to education, and to taxpayers, who over time face inflated costs to fund profiteering masquerading as education.

If you live in the Philadelphia area, I hope you’ll read articles Charter schools building boom: Charters borrow nearly $500 million on taxpayers’ dime and raise holy hell about the String Theory charter schools, whose expansion plans need to be stopped in their tracks, as well as the roles of its highly paid fixers, the consulting firm Santilli & Thomson and the law firm Sand & Saidel.

The nub of the looting strategy is the acquisition and leaseback of lavish buildings to house charter schools. Because charters are correctly perceived to be risky tenants, bond financings for these purchases are at junk bond rates, meaning high financing costs are heaped on top of what would already be unjustifiably high rental charges, by virtue of putting schools in educationally unproductive glamorous digs. And of course, in an environment where it’s business as usual to lard up bond deals that could be done on a plain-vanilla basis with far more complicated deals that lower interest rates a smidge in return for allowing consultants to charge hefty fees and the financiers to dump risks worth more than the cost savings on the hapless borrower through derivatives, the financial rent extraction can occur at an even greater scale on a high-cost financing. .................(more)


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