Latest news with #debtCrisis
Forbes
21 hours ago
- Business
- Forbes
Beyond Golden Visas: How To Navigate Global Citizenship Options In An Increasingly Complex World
With factors like escalating tensions and many nations facing unprecedented debt crises, the concept of financial sovereignty has gained popularity.
The Independent
2 days ago
- Business
- The Independent
Thames Water lenders offer £17 billion rescue deal in return for looser rules
A group of Thames Water's creditors have proposed a multibillion-pound rescue deal for the struggling supplier, offering new investment in exchange for regulatory leniency. The proposal, submitted to Ofwat, includes investment firms such as Aberdeen, Elliott Management, and BlackRock offering to overhaul £17 billion of Thames Water's debts. The firms would invest £3 billion in new equity and a further £2 billion of funding. The proposal would also involve writing off "several billion" pounds' worth of debt and a "complete loss for existing shareholders" in what they claim would be the "largest financial loss suffered by investors on an infrastructure asset in British history." The creditors are asking for leniency on performance targets and compliance, and warned that without a "regulatory reset" Thames Water's "pollutions, asset health deterioration, and customer service levels are likely to worsen." Under the proposals submitted to Ofwat, customer bills would not increase by more than the regulator has already approved over the next five years. They are holding intensive talks with Ofwat in the hope of securing approval for their deal in early July. The plans come after US private equity giant KKR last week pulled out of a rescue deal to inject much-needed cash into Britain's biggest water supplier, which has 16 million customers and is sinking under £19 billion of debt. It threw the future of Thames Water into doubt once more and raised the threat of temporary nationalisation by the Government if a deal cannot be agreed. A spokesperson for the creditors said their turnaround plan was 'designed to fix the root causes of Thames Water's problems, restore its balance sheet, rebuild customer trust, and provide the financial investment and operational capabilities to fix the fundamentals of the business once and for all'. They added: 'The plan seeks to break from the patterns of the past by delivering customers' priorities and improved outcomes for the environment in the shortest possible timeframe. 'The creditors include some of the largest investors in UK water companies, as well as UK and global infrastructure more broadly, with a proven track record of corporate turnarounds and long-term stewardship. 'These investors have the funding and experience required to deliver a transformation of the company's performance which is intended to mark a departure from past failings, creating a 'new' Thames Water that works effectively alongside Government, regulators, and customers to deliver for the environment and economic growth.' The creditors are the bondholders who effectively own Thames Water after the High Court earlier this year approved a financial restructuring through a loan of up to £3 billion to ensure it can keep running until the summer of 2026. Other investment and pension firms in the group include Apollo Global Management, M&G and Silver Point Capital. As part of their plans, the creditors would appoint a new board at Thames Water to run the utility. They would commit to spending £20.5 billion over the next five years, as agreed under the current five-year plan with Ofwat. But they are calling for a 'pragmatic approach' to regulation – including 're-basing incentives and performance targets – and 'realistic levels of compliance'. 'Without the regulatory support requested, the creditors believe that customers will remain exposed to the risk of a continued 'doom loop' of underperformance and non-compliance,' according to the creditors. 'A clean slate that would see Thames Water and investors held to account to deliver an ambitious trajectory for the company's return to compliance,' they added. A spokeswoman for Ofwat said the regulator had been 'engaging regularly' with Thames over the funding plans. 'We have commenced a thorough review of the submission from the group of senior creditors,' Ofwat said. 'The submission includes their turnaround plans, approach to financial resilience and proposals for governance. 'Our focus is on assessing whether the plans are realistic, deliverable and will bring substantial benefits for customers and the environment.' Liberal Democrat MP Charlie Maynard, who has previously appealed against a £3 billion rescue deal for the utility, said: 'What will it take for the Government and the regulator to put a stop to this horror show Thames Water customers are forced to suffer through and pay for? 'Having created a mountain of debt, all at customers' expense, this latest plan for Thames Water would let them continue to pollute with impunity.'
Yahoo
4 days ago
- Business
- Yahoo
America's biggest lender is closing its wallet — and investors and home buyers will feel it. Here's what to watch.
Over the past 40 years, Japan has helped bankroll Americans' lifestyle while its own economy sank into decades of stagnation. Now the tab's due, and it might cost the U.S. a fortune. The Japanese have been floating America's boat since the mid-1980s. Not out of kindness. Not out of stupidity. But because of a deal so sweet that nobody wanted to talk about it. 'He failed in his fiduciary duty': My brother liquidated our mother's 401(k) for her nursing home. He claimed the rest. I help my elderly mother every day and drive her to appointments. Can I recoup my costs from her estate? 'The situation is extreme': I'm 65 and leaving my estate to only one grandchild. Can the others contest my will? My new husband gave me a contract and told me to 'sign here' — but I refused. It was the best decision of my life. My daughter's boyfriend, a guest in my home, offered to powerwash part of my house — then demanded money Now the deal's going bad. Japan's drowning in debt, its politics are in chaos and it needs its money back. And when your biggest lender starts heading for the exits, it's time to pay attention. Japan holds $1.1 trillion in U.S. Treasury bonds. It's got more U.S. paper than any other country. But unlike China — the second-largest Treasury holders — Japan has never complained about it. Japan just kept buying, kept lending, kept quiet. But here's the thing about quiet money — when it stops being quiet, you've got problems. Look at Japan today: government debt at 235% of GDP — that's like owing your annual salary times 2.3 to Visa. Prime Minister Shigeru Ishiba hanging on to power like a cat on a screen door, with 21% approval after a series of fundraising scandals and economic missteps. You know what happens when your biggest lender is both broke and paralyzed? America's reliable ATM is about to display 'INSUFFICIENT FUNDS.' Picture this: 1945. World War II is over. America's got the guns, Japan's got the ruins. The U.S. cut a deal — military protection for economic cooperation. But the real magic trick came later. For the next 40 years, Japan rebuilt itself, accumulating dollars and using them for its own development. Japan went from making tin toys to Toyotas JP:7203 TM, from cheap radios to world-class electronics. By 1985, they'd completed their first miracle. Then came the second act. The Plaza Accord of 1985 — five finance ministers in a New York hotel room deciding to dismantle Japan's export machine. Japan signed on too, thinking they could manage it. They couldn't. The yen USDJPY shot up 50% against the U.S. dollar DXY in two years. Japan faced a choice: Watch its economic miracle turn into a pumpkin, or get creative. They got creative. Instead of converting their mountain of trade-surplus dollars to yen (which would have pushed the yen even higher), the Japanese did something beautiful. They started buying U.S. Treasury bonds. Mountains of them. It was perfect. The U.S. got to keep borrowing. Japan got to keep exporting. Nobody had to mention that the whole thing was a shell game. As economists have long warned, this recycling machine couldn't last forever. But that's a problem for the next guy. For the next 40 years — from 1985 to now — this recycling machine has been running nonstop. Japan made our Walkmans (Google it, kids), Americans would buy them with dollars, and then — here's the beautiful part — Japan would loan those dollars back to the U.S. by purchasing Treasury bonds. It's like paying your bartender with an IOU, then having him loan you money to keep drinking. Genius! Three major shifts are killing this arrangement, and they're all happening at once. First, demographics. Japan's aging population needs those savings for retirement, not for subsidizing American consumption. Turns out, elderly Japanese people prefer eating actual food to dining on Treasury bonds. Read: Why America's aging population will be a problem for stocks — and your retirement Second, debt. At 235% of GDP, Japan's government debt makes America's national debt look positively prudent, like comparing a shopaholic to someone who merely forgot to cancel their gym membership. As Japan's bond rates rise, the math becomes more impossible than explaining cryptocurrency to your grandmother. Third, politics. Prime Minister Ishiba's government hangs by a thread, with 21% approval after a series of fundraising scandals and economic missteps. You can't run a corner store with 21% approval, let alone a country. Adding to the pressure, there's declining demand for Japanese government bonds domestically. This forces Japan to raise interest rates, which in turn makes holding U.S. Treasurys even less attractive. When your own bonds can't find buyers, it's hard to justify buying someone else's. Enter Masayoshi Son, the SoftBank JP:9984 SFTBY billionaire who's become President Donald Trump's favorite Japanese dealmaker. He pledged $100 billion in U.S. investments in December, but that was just the warm-up act. Son doesn't look like a financial revolutionary. He looks more like your accountant's fun uncle. But this billionaire who makes Elon Musk look risk-averse has reportedly floated an idea more radical than Trump's Gaza resort plan: transform Japan's passive Treasury holdings into active investments in American companies through a joint sovereign wealth fund. According to financial press reports, this would mean converting government bonds into equity stakes in U.S. technology, infrastructure and energy projects. Picture this: Instead of Japan parking $1 trillion in government bonds yielding less than a savings account at the Bank of Mattress, this money would flow into U.S. technology, infrastructure and energy projects. Both nations would share the profits. Americans might even be able to buy shares, receiving dividends from Japanese investment in the U.S. economy. Of course, converting $1 trillion in bonds to equity investments would be fraught with risks — currency fluctuations, market volatility and political backlash on both sides of the Pacific. U.S. Treasury Secretary Scott Bessent would face a delicate task in making this transition without triggering a bond-market crisis — kind of like defusing a bomb while riding a unicycle. If Japan simply dumped its Treasury holdings, interest rates would spike faster than blood pressure at a tax audit. Time to panic? Not yet. But keep your running shoes handy. The immediate risks are clear: But the opportunity is equally significant. A U.S.-Japan investment fund could: This isn't just about financial engineering — though let's be honest, financial engineering is sexier than it sounds, like accounting's dangerous cousin who rides a motorcycle. It's about whether America can maintain access to foreign capital while reducing its debt dependence, kind of like keeping your rich friends while learning to pay for your own drinks. For 40 years, the U.S. has run its economy on other nations' savings like a teenager with Dad's credit card. That model is more exhausted than a parent of triplets. Critics will call this government interference in free markets. But free markets in international finance have always been about as real as professional wrestling — entertaining, but heavily choreographed. Every major economy practices industrial policy; America just outsourced its policy to allies and called it 'free trade.' Now the U.S. is bringing it home like a college kid with dirty laundry. Read: Why Trump's tax and spending bill isn't getting the bond market's vote Japan's quiet subsidy of American prosperity is ending. The U.S. Federal Reserve can't print its way out of this one — they've tried that trick more times than a birthday party magician. Congress can't tax its way out either, though God knows they'll probably try. The only path forward is a new bargain that transforms debt into equity, dependence into partnership. For American investors and homeowners, the message is crystal clear: The era of cheap money is over. Lock in fixed-rate mortgages while you can. Prepare for higher interest rates. And watch for announcements of new investment vehicles that could reshape global finance. The greatest risk isn't change — it's pretending the old system can continue. Japan's bondholders are already voting with their wallets. The only question is whether Washington can engineer an economic soft landing for the U.S. or whether the country is headed for the kind of turbulence that has flight attendants reaching for their own oxygen masks. Here's what to watch as these transitions unfold: For 40 years, Americans' have been drinking champagne on Japan's tab. Now it's closing time and they want to be paid in something besides IOUs. Welcome to the morning after. . More: Jamie Dimon's bond-market warnings put investors on alert to diversify outside U.S. Also read: The 'mother of all credit squeezes' is coming — hang on to your wallet 'I'm not wildly wealthy, but I've done well': I'm 79 and have $3 million in assets. Should I set up 529 plans for my grandkids? How do I make sure my son-in-law doesn't get his hands on my daughter's inheritance? Circle's stock is having another big day. What the blockbuster IPO has meant for other cryptocurrency plays. The S&P 500 closes at 6,000 as bulls aim for return to record territory 'I was pushed out of her life when she was 18': My estranged daughter, 29, misuses drugs. Should I leave her my Roth IRA? 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