Day of Reckoning for Puerto rico

Puerto Rico will default on a $422 million bond payment for its Government Development Bank, escalating what is turning into the biggest crisis ever in the $3.7 trillion market that state and local entities use to access financing.
Governor Alejandro Garcia Padilla invoked a debt moratorium law approved last month, saying during a televised address Sunday that the commonwealth needs to focus on providing essential services. The bank, already operating under an emergency period, had until the end of Monday to make the payment....
The GDB missed payment may open the door to larger and more consequential defaults on general-obligation bonds, which are protected by the island’s constitution. Puerto Rico and its agencies owe $2 billion on July 1, including $805 million for general obligations. It also could imperil slow-moving efforts by U.S. lawmakers to resolve the biggest crisis ever in the tax-exempt market.
Puerto Rico officials have been negotiating with creditors to defer payments. No matter which route Puerto Rico took, credit-rating companies saw a default as inevitable. Moody’s Investors Service analysts said last week that any non-payment, even if it’s agreed to by creditors, constitutes a default in their eyes.

What's next for Puerto Rico? Bad stuff

With the government nearly drained of its cash, Moody’s Investors Service says such a lapse is a virtual certainty. Investors appear to agree: The securities last traded for 32 cents on the dollar, just weeks before the government was scheduled to pay them off at full face value. That effective yield: About 1,600 percent.

TTIP is in trouble

Talks for a free trade deal between Europe and the US face a serious impasse with “irreconcilable” differences in some areas, according to leaked negotiating texts.
The two sides are also at odds over US demands that would require the EU to break promises it has made on environmental protection.
President Obama said last week he was confident a deal could be reached. But the leaked negotiating drafts and internal positions, which were obtained by Greenpeace and seen by the Guardian, paint a very different picture.
“Discussions on cosmetics remain very difficult and the scope of common objectives fairly limited,” says one internal note by EU trade negotiators. Because of a European ban on animal testing, “the EU and US approaches remain irreconcilable and EU market access problems will therefore remain,” the note says.
Talks on engineering were also “characterised by continuous reluctance on the part of the US to engage in this sector,” the confidential briefing says.

"If this material goes well, I'm going to use it at Goldman Sachs next year. Earn me some serious Tubmans."
- President Obama

It's a Brave New World

Further QE should be viewed as an experiment in real time, where the point of inquiry is the level of real or nominal yields at which credit will begin to expand more strongly with loan-to-deposit ratios increasing. What seems increasingly clear to us is that this level is likely at negative yields, and probably substantially so. If this is true, it would suggest to us that the equilibrium level of rates in the economy is probably negative. This in turn would strongly suggest a significant re-think to short-rate policy. In this case, central banks should move more strongly toward penalizing savings, rather than just the institutions that “house” those savings – the banks. This would mean allowing significantly negative retail deposit rates or perhaps even wealth taxes. With this stick would also come a carrot – one example being that while deposit rates penalize savings (the whole point), banks might also pay borrowers to buy houses via negative mortgage rates.
- Deutsche Bank

Speaking of Deutsche bank

Deutsche Bank (DBKGn.DE) has "serious" and "systemic" failings in its controls against money laundering, terrorist financing and sanctions, according to a confidential letter by the UK's financial regulatory agency, the Financial Times reported.
The watchdog agency, the Financial Conduct Authority (FCA), has now ordered a separate independent review, the FT reported the letter as saying. The FCA declined to comment.
"Our overall conclusion was that Deutsche Bank UK had serious AML (anti-money laundering), terrorist financing and sanctions failings which were systemic in nature," the FT quoted the FCA letter, dated March 2, as saying.

And just to prove that it's a Brave New World, look at Japan

And now for Alaska in late April

Near Matanuska Glacier

Prince William Sound

Mr. Handsome himself

coming into Whittier, Alaska

Resurrection Bay, Seward Alaska

The Great One