China Exploding and Greece Imploding -- 08.20.15

 A total of seven or eight explosions rocked the Tianjin blast site Saturday, prompting armed police to evacuate residents within a three-kilometer radius. Wednesday’s double blast at a chemical warehouse killed 112 people and injured more than 700.








The way to wealth in a bull market is debt. The way to oblivion in a bear market is also debt, and nobody rings a bell.”
- James Grant

When corporations and even developing countries experience debt crises, one of the primary means of restructuring is the debt-equity swap. This sort of transaction involves canceling out debt of the company or government in return for equity of the company, or privatization of some of the assets of the country. Corporate debt-equity swaps typically result in severe dilution of the equity claims of existing shareholders, and in some cases, can wipe those claims out as creditors take control of the company. At a national level, debt-equity swaps can take a punitive form that forces countries to privatize and sell off their assets in satisfaction of their debts. Aside from austerity demands, one of the most severe outcomes of the ongoing saga in Greece is the demand for exactly that kind of debt restructuring.








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