default | Paul the Poke

Archive for default

Is Turkey the “Catalyst” that Breaks the World?

Posted in #PaulthePoke, Ezekiel 38-39, Trend Update with tags bonds, Debt, default, Global Economy, Global Recession, interest rates, Turkey, Turkish Lira, US dollar on April 1, 2019 by paulthepoke

Isaiah 47:11 But evil shall come upon you, which you will not know how to charm away; disaster shall fall upon you, for which you will not be able to atone; and ruin shall come upon you suddenly, of which you know nothing.

Pay Attention!!!

By Michael Douville – I have forecast the Global Slowdown and now that fact has been recognized by virtually everyone. The Globe is slowing so quickly that the World may be entering a period of vulnerability to a sudden downdraft.

To paraphrase the famous question of “how does this happen?”: slowly, then all of a sudden! The economy has been dragged to the edge of a cliff; something just needs to push it over!

https://michaeldouville.com/

The last decade of repressed interest rates has encouraged a Global Debt Binge!

Italy is in Recession, The Netherlands is also. Germany is teetering avoiding a the statistical recession as the 3^rdQuarter GDP was -0.2% but the 4^thQuarter managed to rise to 0.0%. Revisions later may change the statistics.

The 1^stQuarter of 2019 is looking dismal as Global demand for Autos declined and mighty BMW announced it will not make earnings projections. The stock dropped over 6%. Lower earnings = lower stock prices!

More bad news for Germany as several Economic Indices are severely declining and the European Industrial powerhouse may be heading into further trouble. As Germany’s trading partners suffer, so suffers Germany as the German Economy is certainly Export driven.

European Interest Rates have been driven into negative returns forcing European Banks to search for better yields in Sovereign and Corporate Debt. Many Spanish, Italian, and German Banks have still not recovered from the Great Financial Crisis and are “woefully unprepared” for the next financial crisis and the currency union is not resilient enough to emerge unscathed from unexpected economic storms” as reported by Christine Legarde.

Which brings us to Turkey! The last decade of repressed interest rates has encouraged a Global Debt Binge! Not only has business and private borrowers indulged beyond their capacity, but Nations across the World have found that it was very easy and expedient to borrow their way to Prosperity!

Turkey is in trouble! The Turkish Economy has officially entered a Recession. Inflation has been unleashed on the population driving prices of everyday goods beyond reach. The Turkish national currency the Lira has lost tremendous value as the Foreign Exchange rate, although improved from the near 7 Lira to the US Dollar, is still vastly devalued at 5.75 Lira to the US Dollar. To make matters worse, the US Dollar is cycling higher. Portending Turmoil!

Debt denominated in US Dollars is now coming due; Billions and Billions of US Dollars are coming due all while the Lira sinks and the Nation of Turkey is gripped by a Recession. Much of this debt is owed to the Banks of Spain, Italy, and Germany; Banks that are “ill prepared” for Loss!! Banks that are “Systemically Important”!

Could Corporations in Turkey, struggling with Debt Repayment default on their loans? For that matter, could Turkey default on it’s Sovereign Debt? A Turkish default could lead to losses in Systemically Important Banks; losses now, while Europe struggles, would be felt everywhere!!!

As I have recommended before, build reserves, pay down debt, cut expenses, review vulnerabilities both personal and Business, and discuss with your advisers as to what is Prudent in your Investment Portfolio. If contagion ignites, financing will be restricted; check with your lenders and review loans for refinance and Lines of Credit. Preserve Capital for the huge Opportunities that will surely present themselves. Review rental agreements and maximize tenant quality rather than maximize revenue. Rental cash flows may be the “Life Boat” to sustain the quality of life jeopardized by a Global Recession.

https://michaeldouville.com/

For more detail linking modern day Turkey to ancient Meshech, Tubal, Gomer, and Beth Togarmah, see the link below.

https://godinanutshell.com/2017/08/08/ezekiel-38-who-are-meshech-tubal-gomer-beth-togarmah/

Will Turkey Align with Russia?

Posted in Ezekiel 38-39, Michael Douville, Prophecy, Trend Update with tags bankruptcy, Beth Togarmah, china, commodities, credit, default, emerging markets, Gog, Gomer, interest rates, Magog, Meshech, real assets, Russia, Tubal, Turkey, Turkish Lira, US dollar on September 10, 2018 by paulthepoke

Featuring: Michael Douville, Paul Lehr

Ezekiel 38:1-3 The word of the Lord came to me: “Son of man, set your face toward Gog, of the land of Magog, the chief prince of Meshech and Tubal, and prophesy against him and say, Thus says the Lord God: Behold, I am against you, O Gog, chief prince of Meshech and Tubal.

Ezekiel 38:6 Gomer and all his hordes; Beth-Togarmah from the uttermost parts of the north with all his hordes—many peoples are with you.

The brothers of Magog (Meshech, Gomer, and Tubal) appear to point to modern day Turkey.

For more evidence pointing to modern day Turkey, see the link below.

https://godinanutshell.com/2017/08/08/ezekiel-38-who-are-meshech-tubal-gomer-beth-togarmah/

For evidence pointing to modern day Russia, see the link below.

https://godinanutshell.com/2017/08/04/ezekiel-38-who-is-magog/

Modern day, 21st century Russians refer to themselves as the ancient Scythians or Magogians. See the link below.

https://paulthepoke.com/2017/08/23/trend-update-putin-netanyahu-meet-in-sochi-russia-august-2017/

https://michaeldouville.com

No Presidential Decree from Turkey’s de facto ruler will stop the Lira’s decline against the US Dollar.

Nations are no different than Families; each has a credit line. Using credit to enjoy today is always at the expense of tomorrow; maybe at the expense of a lot of tomorrows.

The US Dollar is cycling higher as uncertainty in Financial Markets starts to spread; just Capital looking for Safety! The easy credit and absurdly low interest rates of the last decade have encouraged gorging on Debt across the Villages, Hamlets, Towns, Cities, and Nations of the World. The Joy of Financed Prosperity is ending and the Day of Judgment is coming as the servicing of the Debt now is impeding Prosperity and the Creditors are looking for re-payment. Emerging Markets rely heavily on Debt to finance schools, airports, roads, water sanitation and all of the infrastructure already in place in modern countries. Further, Emerging Markets rely heavily on Foreign Investments for Capital to build retail, restaurants and housing. When local currencies start to decline against the benchmarks such as the US Dollar, these pools of Capital start to leave causing a liquidity problem for local governments and eventually a loss in confidence which can quickly and adversely affect exchange rates. Capital in Argentina, Brazil, India, Greece, Macedonia, Poland and of course Turkey is fleeing to the Safety of the US Dollar and their currency’s purchasing power is declining. Once started, it is very difficult to stop: even Presidential decrees do not work.

JP Morgan Emerging Market Currency Index

Nations are no different than Families; each has a credit line. Using credit to enjoy today is always at the expense of tomorrow; maybe at the expense of a lot of tomorrows. Eventually the credit line is completely spent; maybe an extension or two will postpone the inevitable. However, just as Families, nations can only service so much Debt and then something has to change. Families can declare Bankruptcy or allow a Foreclosure. Nations DEFAULT!!

Before a Nation Defaults, plans must be made for the continuation of the Government and essential services. This is done by securing funding from other sources; sources that previously would not even be considered; desperation changes things! Turkey is running out of Credit! Turkey will not accept constraints imposed by the IMF or creditor Banks and has received an emergency $15 Billion from Qatar. The Debt must be addressed while the Turkish economy and currency is quickly declining creating a very difficult situation. Overtures to Russia and China for funding will be a game changer. If the future funding requirements can be obtained, Turkey will be able to default on it’s Debt; geopolitics are also economic realities. Capital is fleeing now, time is short.

Prepare for Turmoil, but also prepare for opportunity! Defaults in Emerging Markets would impact Stocks and Bonds across the Globe. Reduce or eliminate debt, create personal reserves, stockpile needed medicine, store extra food and water, and keep personal cash handy. The Financial Asset Cycle is ending and Real Assets will rise. Natural Resources, Agriculture, Mining and Minerals, Lumber, Copper, Oil, Aluminum, and most if not all of the basic materials should rise as currencies decline. Things should be accumulate; very conservative Real Estate such as rental houses should do well. It is time to prepare, time to change, time to prepare for the next opportunity.

Currently, American economic sanctions and a strong US dollar are crippling the currencies of Russia, Turkey, and Iran. All of these countries are feeling an economic, monetary squeeze. Ultimately, the reason for the invasion of Israel from the north appears to be economic. Israel is a prosperous country.

Ezekiel 38:13 Sheba and Dedan and the merchants of Tarshish and all its leaders will say to you, ‘Have you come to seize spoil? Have you assembled your hosts to carry off plunder, to carry away silver and gold, to take away livestock and goods, to seize great spoil?’

Is now this time? It is looking like it more and more with each passing day. But, that remains to be seen. Will Turkey Align with Russia? God’s prophet Ezekiel says emphatically “Yes”!

Turkish Lira Still Falling: Trouble Ahead!

Posted in Ezekiel 38-39, Michael Douville, Prophecy, Trend Update with tags Beth Togarmah, bonds, credit, default, Gomer, hyper inflation, Inflation, Meshech, sovereign debt, Tubal, Turkey, Turkish Lira on September 3, 2018 by paulthepoke

Featuring: Michael Douville, Paul Lehr

Ezekiel 38:6 Gomer and all his hordes; Beth-Togarmah from the uttermost parts of the north with all his hordes—many peoples are with you.

The brothers of Magog (Meshech, Gomer, and Tubal) appear to point to modern day Turkey.

For more evidence pointing to modern day Turkey, see the link below.

https://godinanutshell.com/2017/08/08/ezekiel-38-who-are-meshech-tubal-gomer-beth-togarmah/

https://michaeldouville.com

Michael Douville is a syndicated writer for the Wall St. Greek.

Capital is the Life Blood of Business. When Credit is readily available, expansion of existing facilities to increase production becomes possible. With new production, employment expands, a ripple effect and a virtuous spiral starts spreading throughout the Economy. Optimism and Hope prevails as the outlook for the future brightens! Hope and Optimism are being crushed in Turkey!

Monday August 27, 2018, Turkey’s 10 year Bond closed over 21%. These rates spell doom for the Turkey.

Commercial debt in Turkey is estimated as $330 Billion US Dollars; Us Dollars have become a very precious commodity. The Turkish Lira has been declining for several years, but the US Dollar index DXY seems to have stopped declining and bottomed at 88.5 in February of this year and has been flirting with 97 just 6 months later; a technical target of 103.8 has been suggested by several analysts. The strategy of borrowing in a declining currency and gambling that the decline will hold until time for repayment has backfired on all of the Emerging Market debtors; Turkey has also lost that bet! Not only has the Turkish Currency declined, economic conditions have deteriorated swiftly causing a lack of confidence which then results in a Credit Risk Premium for new debt.

The unfortunate reality is Corporate and Sovereign Debt is never retired, just Refinanced; this negative loop has driven rates higher, unsustainably higher. Monday August 27, 2018, Turkey’s 10 year Bond closed over 21%. These rates spell doom for the Turkey.

Business will certainly suffer as Credit becomes illusive. Employment will suffer and Optimism will die. Compounding the loss of credit is the Currency Inflation that will transform any imported Goods or Services such as Oil, electrical and machinery spare parts, medicine, iron and steel plastics, fertilizer, and many industrial components into extremely expensive items; the Turkish Lira has lost 40% this year alone. This currency inflation will affect the populace as the Currency Inflation devastates their buying power. If shoes and jeans, bread and butter, antibiotics and insulin become HYPER EXPENSIVE, expect civil unrest!

Turkey has the real possibility of defaulting on it’s debt! Planned, intentional? Probably not! It really does not matter. Turkey will look for new allies to extend crucial new credit such as Russia and China. New Business allies often become new military allies; overtures to other previously unthinkable Middle East nations such as Iran become thinkable. Turmoil may be on the Horizon.

Learn the lessons from Turkey! Debt eventually overwhelms everyone and everything! Inflation, even currency inflation, raises the price of real things. Therefore, invest in REAL things, get out of personal debt, use investment debt judiciously and preferably use a fixed rate. Review your reserves and stockpile things that might become difficult to buy if Turmoil comes to our shores! Maintain and extend cash levels to weather an extended storm!

https://paulthepoke.com/2018/08/13/turkey-sovereign-systemic-trouble/

https://michaeldouville.com