Chinese State Official Hints Beijing May Bailout Greece

On Monday, after Greek PM Alexis Tsipras’ dramatic referendum call sparked a run on Greek ATMs, grocery stores, and gas stations, we did our part to help ameliorate the situation by sending a subtle message to Athens: Indeed, now may be an opportune time to tap Beijing for a few billion given that China officially launched the AIIB this week. As a reminder, the success of China’s AIIB membership drive was a political disaster for The White House, which expended considerable effort to discourage US allies from supporting the new China-led venture. 

As such, it would be difficult to imagine a more fitting pilot program for the world’s newest supranational lender than a rescue package for the birthplace of Western democracy which has been brought to its knees by that most Western of all multilateral institutions, the IMF. And while any funding to Greece from China would likely be channeled through the Silk Road fund (at least for now, given that the AIIB is just a few days old, officially), any aid from Xi Jingping’s deep pockets to Athens would represent a spectacular coup on both an economic and political level. 

While the world is by now likely incredulous about the prospects for a Greek “Eastern” pivot (around a half dozen Russian headfakes have made us somewhat numb to the idea), Chinese assistance might be more likely than Europe cares to admit. 

And while it's impossible to overstate how hilariously ironic it is that Communist China could be the world's best hope for preventing the birthplace of Western civilization from careening into the Third World, there's a more subtle joke here as well. We'll let readers discern what that joke is with the help of the following graphic:

 
DYI

Global Debt Time Bomb Ticks – Puerto Rico Is Next

With all eyes on Greece it would seem another crisis relating to unpayable debt is brewing in the Caribbean. The governor of Puerto Rico, Alejandro García Padilla, has warned that the island is unable to pay its debts of $72 billion. 

Puerto Rico has managed to rack up an astounding level of debt relative to the size of its economy. Moody’s estimates the small U.S. territory to have bond debts fifteen times greater than the median bond debt of the 50 U.S. states.

A complicated set of arrangements lulled investors into a false sense of security with regards to Puerto Rican bonds. For a start, the constitution “contains an unusual clause that requires general-obligation bonds to be paid ahead of virtually any other government expense,” according to the New York Times.The government then promised specific revenue streams to different groups of bondholders. 

A complicated set of arrangements lulled investors into a false sense of security with regards to Puerto Rican bonds. For a start, the constitution “contains an unusual clause that requires general-obligation bonds to be paid ahead of virtually any other government expense,” according to the New York Times.The government then promised specific revenue streams to different groups of bondholders. 

Dave Kranzler, from Investment Research Dynamics has warned that there are signs that the Puerto Rico situation may not remain a local crisis for much longer. 

He points out that share prices of MBIA, the bond insurers have been plummeting. MBIA are valued at $3.9 billion whereas their exposure to Puerto Rican debt is around $4.5 billion. Kranzler reckons their exposure could even be multiples of that figure. A default could wipe them out.

DYI

World’s largest ferris wheel takes shape in Dubai

The world’s largest ferris wheel is starting to take shape on the $1.6bn Bluewaters Island development, off the coast of Dubai’s Jumeirah Beach Residence. 

The 210 metre-high Dubai Eye, which is being developed on a manmade island by Meeras Holding, will overtake the new High Roller in Las Vegas (standing at 167.6m) as the world's tallest such attraction. The ferris wheel will include 48 luxury capsules capable of holding 1,400 visitors and offer views of Dubai’s iconic landmarks such as Burj Al Arab, Palm Jumeirah and Burj Khalifa, according to Meeras.

Computer generated image of how the Bluewater Island project is expected to look when complete in 2016

DYI Comment: WOW!