Energy Debt Getting Very Ugly

Hmmmm.

The Dallas Fed met with the banks a week ago and effectively suspended mark-to-market on energy debts and as a result no impairments are being written down. Furthermore, as we reported earlier this week when first nothing the rumor, the Fed indicated "under the table" that banks were to work with the energy companies on delivering without a markdown on worry that a backstop, or bail-in, was needed after reviewing loan losses would exceed the current tier 1 capital tranches. 

That's from ZeroHedge.

If you weren't paying attention during 2008, this is a re-run.  Loans to energy (petroleum) companies are going sour because those loans were predicated on a price of oil which is ......ahhhh......no longer operative.

Thus, banks holding those notes had to start writing them down ("mark to market") and throwing money into loan-loss reserves, reducing profits.  That is not good for the banks.

So the Fed simply told them 'fuggedaboutit.'  Don't "mark to market, just carry on."

Take that as a canary/coal mine thing, along with the surprise drop in the ISM (manufacturing) index of last month, the sickly GDP of last quarter, the not-very-good retail spending numbers announced last week....