This Financial Creature Could Sink the System….This Is “A Great Time! A Troublesome Time! A Terrible Time!”

Greetings,

There is much prophecy concerning the terribleness of the judgment of the wicked. We know how prophecy tells us that God would come in person to deal with modern Babylon. He would destroy her power of resistance. This is happening now!

…Let it be remembered that Allah (God) came forth for the Redemption (to Deliver) the American Black People from their tormentors. Whether we like it or not, He Will Do This. This is the work of Allah (God) which is in effect.

…”We must not forget how we are warned by prophecies for one hundred years and for one thousand years that an end must come to his world.

The rulers of this world must be removed and the crown must be taken off and placed upon another head, and they will rule in justice and righteousness.

The people of this world have now become so wicked and so fearful of the consequences of their own rule until the almost thoughtless vision is gone, and fearfulness has taken hold of the people.

Their head is going to and fro to the nations of the earth to find a way of peace between the heads of the nations. “A Great Time! A Troublesome Time! A Terrible Time!”

The hearts of the people all begin to weaken and to fail because of what is going on and what they see is coming!”-Chp.46(tfoa)

Now it’s all becoming very apparent…………..

Treasury Warns Congress (and Investors): This Financial Creature Could Sink the System…. Unsuspecting Retail Investors Will Get To Eat The Losses

Wolf Richter wolfstreet.com, www.amazon.com/author/wolfrichter

Office of Financial Research slams Leveraged Loans

In its 2014 Annual Report to Congress, the US Treasury’s Office of Financial Research, which serves the Financial Stability Oversight Council, analyzed for our Representatives the “potential threats” to the US financial house of cards. Among the biggest concerns was a financial creature that has boomed in recent years. The Fed, FDIC, and OCC have warned banks about it since March 2013. But they’re just too juicy: “leveraged loans.”

Leveraged loans are issued by junk-rated corporations already burdened by a large load of debt. Banks can retain these loans on their balance sheets or sell them. They can repackage them into synthetic securities called Collateralized Loan Obligations (CLOs) before they sell them. They have “Financial Crisis” stamped all over them.

So the 160-page report laments:

The leveraged lending market provides a test case of the current approach to cyclical excesses. The response to these issues has been led by bank regulators, who regulate the largest institutions that originate leveraged loans, often for sale to asset managers through various instruments. Despite stronger supervisory guidance and other actions, excesses in this market show little evidence of easing.

How did we get here?

Relentless QE along with interest-rate repression by the Fed and other central banks – “accommodative global monetary policy,” the report calls it – caused changes in “risk sentiment,” compressed volatility, and reduced risk premiums. To get a visible yield in an environment where central banks wiped out any visible yield, investors were “encouraged” to take on more and more risk, even for their most conservative holdings, thus moving “out of money market instruments and into riskier assets such as leveraged loans….”

During the “bout of volatility” in September and October, investors sold off these creatures, but it wasn’t nearly enough to dent the vast positions they’d accumulated. “On the contrary,” the report pointed out, “the fleeting nature of the episode ultimately had the effect of reinforcing demand for duration, credit, and liquidity risk, and led many investors to reestablish such positions.”

This came at the wrong time.

The credit cycle has four phases: repair (balance-sheet cleansing), recovery (restructuring), expansion (increasing leverage, weakening lending conditions, diminishing cash buffers), and finally the downturn (funding pressures, falling asset prices, increased defaults). Now the US is “somewhere between the expansion and downturn phases.”

Nonfinancial corporate balance-sheet leverage is still rising, underwriting standards continue to weaken, and an increasing share of corporate credit risk is being distributed through market-based financing vehicles that are exposed to redemption and refinancing risk….MORE HERE
Read more at http://investmentwatchblog.com/treasury-warns-congress-and-investors-this-financial-creature-could-sink-the-system-unsuspecting-retail-investors-will-get-to-eat-the-losses/#SJr2rDMBlOWozhJu.99

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