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Credit & Debt
Credit & Debt
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I'm not really looking at the transmission providers... but I do have some exposure to this event. I currently have a small position with ATO and they just recently filed their quarterly report and addressed the situation basically implying they will be reimbursed and maintained earnings projections. I am currently evaluating my position but I am not sold on dumping immediately. I did dump SPKE but it was only part of a bigger issue with that company.

There was a hearing yesterday with the Texas state senate on the financial implications and the pipes of how ERCOT works as a whole (link below). Overall the expenses incurred were about 1 years worth in 1 month. ERCOT is still short the money for their own bill as they have been short paid by many utility operators.

Funny story from the hearing, one of the energy companies basically said the credit agency that called discussed company financials for a total of 10 mins for their rating decision and did not waste any time. It looks like it's a blanket downgrading on everyone to negative credit watch regardless of merit. I suppose given the egregiousness of the situation and what you just mentioned above it makes sense but....

https://www.youtube.com/watch?v=mU1vFlXywjo

GBTC Discount what gives?

GBTC has been trading at a discount for a week or so. 

I am curious and interested in theories for why it's continuing to operate at a discount? 

It would seem the market would see this as cheap BTC and recalibrate.

Theory 1: New ETF's are imminent in BTC and markets see this, so 2% fee is being built in as a discount. 

Theory 2: Retail investors are piling out of GBTC and creating a discount because sellers are in control. 

 

UK consumer credit chart

I noticed @Remi Tetot posted this UK consumer credit chart a while back on Twitter. 

 

What I can't get my head around, and what I'd like some clarity on, is why this is a bad thing? 

Is it bad just because people are saving rather than spending their money? If so, what did we expect would happen when entire economies are locked down in quarantine?

Also, isn't deleveraging good in many ways, though?

Would appreciate some analysis from someone who knows. I'm sure I'm just missing an obvious aspect of economics here.

The Debt Jubilee is already here

Sovereign debt that is purchased by the central bank, and where maturing principal is reinvested, is effectively debt that has been cancelled. This post walks through the mechanics of the modern day debt jubilee, and how it is also indirectly a private debt jubilee. 

https://fedguy.com/the-debt-jubilee-is-already-here/