Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-59723 Fri, 06 May 2016 20:32:27 GMT Panama Papers alleged source breaks silence, denies being a spy http://implode-explode.com/viewnews/2016-05-06_PanamaPapersallegedsourcebreakssilencedeniesbeingaspy.html iehi-feed-59718 Fri, 06 May 2016 18:10:38 GMT Showdown! In Leaked Letter IMF Tells Germany "Debt Relief for Greece or IMF Drops Out" http://implode-explode.com/viewnews/2016-05-06_ShowdownInLeakedLetterIMFTellsGermanyDebtReliefforGreeceorIMFDro.html In a letter to all 19 ministers sent on Thursday night and obtained by the Financial Times, Christine Lagarde, the IMF chief, said stalemated talks with Athens to find €3bn in "contingency" budget cuts, which have gone on for a month, had become fruitless and that debt relief must be put on the table immediately, or risk losing IMF participation in the programme.

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Ms Lagarde stuck by the IMF's assessment that such reforms would only produce a primary surplus of 1.5 per cent in 2018 -- not the 3.5 per cent the EU has mandated.

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iehi-feed-59716 Fri, 06 May 2016 16:20:58 GMT Donald Trump just threatened to cause an unprecedented global financial crisis http://implode-explode.com/viewnews/2016-05-06_DonaldTrumpjustthreatenedtocauseanunprecedentedglobalfinancialcr.html In an interview Thursday on CNBC, Donald Trump broke with tired clichés about the evils of federal debt accumulation. "I am the king of debt," he said. "I love debt. I love playing with it." But he replaced fearmongering about debt with an even more alarming notion -- a bankruptcy of the United States federal government that would incinerate the world economy.

"I would borrow, knowing that if the economy crashed, you could make a deal," Trump said. "And if the economy was good, it was good. So therefore, you can't lose."

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The government doesn't work like [a business]. Right now, people and companies all around the world treat US government bonds as the least risky financial asset in the universe. If the government defaults and banks fail as a result, the government needs to clean up the mess. And if risk-free federal bonds turn out to be risky, then every other financial asset becomes riskier. The interest rate charged on state and local government debt, on corporate debt, and on home loans will spike. Savings will evaporate, and liquidity will vanish as everyone tries to hold on to their cash until they can figure out what's going on.

Hilarious -- The Donald has gotten closer to speaking the truth here than anyone else, but doesn't seem quite to grasp how intentionally breaking this "taboo" could cause the illusion that keeps the monetary order chugging right along to prematurely implode.

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iehi-feed-59712 Thu, 05 May 2016 23:42:03 GMT Here's one way to escape America's high college costs: Leave the country http://implode-explode.com/viewnews/2016-05-05_HeresonewaytoescapeAmericashighcollegecostsLeavethecountry.html iehi-feed-59707 Thu, 05 May 2016 15:33:57 GMT Atlas Crumbles Under Weight of Italian Banks http://implode-explode.com/viewnews/2016-05-05_AtlasCrumblesUnderWeightofItalianBanks.html iehi-feed-59706 Thu, 05 May 2016 15:07:43 GMT U.N. Envoy Warns of New 400,000 Refugee Wave From Syria Amidst Renewed Conflict http://implode-explode.com/viewnews/2016-05-05_UNEnvoyWarnsofNew400000RefugeeWaveFromSyriaAmidstRenewedConflict.html A top United Nations official warned of a new tide of refugees from Syria if world powers didn't succeed in calming an outbreak of hostilities in and around the northern Syrian city of Aleppo.

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The talks come amid a renewed offensive by the Assad regime and its allies against rebel groups in and around Aleppo, which has been under intense bombardment and shelling.

Russia, which backs the Syrian government, said Wednesday that a 24-hour truce was planned for Aleppo province but couldn't be put in place because of attacks by a militant rebel group linked to al Qaeda, the Nusra Front.

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Short-term truces have been put into effect in northern parts of the western province of Latakia as well as parts of the capital, Damascus, to help buttress a nine-week cease-fire that is faltering across much of the country.

Russian and U.S. officials have been trying to arrange one in and around Aleppo. The U.S. has said talks were continuing.

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iehi-feed-59705 Thu, 05 May 2016 15:00:39 GMT For ‘Brexit,' Like ‘Grexit,' It's Not About Economics http://implode-explode.com/viewnews/2016-05-05_ForBrexitLikeGrexitItsNotAboutEconomics.html What explains both sentiments is that the European project has always been about more than economics. It also seeks "an ever closer union among the peoples of Europe," as the Treaty of Rome, its founding charter, declared in 1957.

"Closer union" with Europe deeply appeals to Greeks, whose own state has failed them so badly. But it repels many Britons, whose state works just fine and who want no part of a European political union. For them, the quagmire of the euro, which Britain hasn't adopted, is a cautionary tale of what such a union could bring. How they decide between the economic benefits and political risks of staying could determine whether Britain votes to leave the EU in a June 23 referendum.

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Greece's underdeveloped, overprotected economy was poorly prepared for life inside the EU. A study led by Nauro Campos of Brunel University concluded only Greece was poorer in 2008 for having joined the EU; Britain, they reckon, was 24% richer. Eurozone membership initially brought down Greek interest rates and unleashed a borrowing binge but resulted in crisis and a six-year depression.

Yet Greeks still don't want to give up the euro. "Anglo Saxons think the euro is only an economic and financial project," said Yannis Stournaras, governor of the Greek central bank, in an interview. "It's political as well. It's a means to an identity. We feel safer in the euro."

British considerations were just the opposite. A Conservative government took Britain into the EEC in 1973 largely for its trade benefits, a decision voters overwhelmingly approved in a 1975 referendum.

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iehi-feed-59704 Thu, 05 May 2016 14:55:13 GMT Even 'small crisis' enough to tear EU apart, Moody's warns http://implode-explode.com/viewnews/2016-05-05_EvensmallcrisisenoughtotearEUapartMoodyswarns.html In a stark warning, the rating agency said the "painful adjustment" faced by some countries in the eurozone meant the collapse of the single currency area and wider EU was believed by some to be a question of "when" not "if".

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However, it said endless austerity demands in return for bail-outs had fuelled deep resentment across the region, especially in countries weighed down by sky-high unemployment.

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[Mervyn] King said the single currency area would have to choose between an economic "depression" in the south, higher inflation in northern states like Germany, permanent fiscal transfers or a "change of composition of the euro area".

However, he told an audience in Frankfurt that there was "a limit to the economic pain that can be imposed in pursuit of a federal Europe without risking a political reaction.

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iehi-feed-59703 Thu, 05 May 2016 01:17:32 GMT U.S. Productivity Shrinks Again in First Quarter http://implode-explode.com/viewnews/2016-05-04_USProductivityShrinksAgaininFirstQuarter.html The current economic expansion, which wraps up its seventh year next month, has been driven largely by rising employment rather than gains in productivity. Since the economic recovery began in mid-2009, output per hour worked has expanded at an average annual rate of 1.3%. That was the worst performance over a seven-year stretch since the late-1970s to mid-1980s, which were marked by back-to-back recessions.

In the first quarter, the picture worsened: Productivity in the nonfarm business sector declined at a 1% seasonally adjusted annual rate, the Labor Department said Wednesday. From a year earlier, productivity was up just 0.6%. The quarterly drop marked the fourth decline in the past six quarters.

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Declining productivity growth means companies need more workers to keep up with demand and helps explain why millions of people have been able to rejoin the job market in recent years despite a slow-growing economy.

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iehi-feed-59701 Wed, 04 May 2016 16:31:30 GMT Why Cruz, and the G.O.P., Lost to Trump http://implode-explode.com/viewnews/2016-05-04_WhyCruzandtheGOPLosttoTrump.html There is a lot of anger in the electorate, which Trump's victory reflects. Yet one of the many problems that Cruz had in filling the stop-Trump role was that the anger he retailed came in packages of contempt that were too cunningly crafted and too widely strewn, like the mini-munitions in a cluster bomb, with too much indifference about whom he might hurt. Cruz's misanthropy doesn't seem to have been lost on voters. With his wife, Heidi, on one side, and Carly Fiorina, his play-acting running mate, on the other, Cruz ended his press conference by refusing to say whether he would support Trump as the nominee. They formed the same tableau a few hours later, when Cruz, in response to the Indiana results, unexpectedly stepped aside. He suspended, rather than ended, his campaign, and it's unclear what will happen to his delegates. But, at this point, any contested Convention would have to be premised on a gimmick--a rule change, for example--or a true upheaval in the Party. And the G.O.P. doesn't seem organized enough for that.

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The electoral map looks very good for the Democrats now, but complacency would be a mistake. Clinton lost Indiana to Bernie Sanders. Thanks to superdelegates, she still has a strong hold on her Party's nomination, but that doesn't remove the question of whether Sanders's endurance in the race points to unaddressed weaknesses in her candidacy, such as the way she talks about money. On Tuesday night, Sanders said that he would take the fight to the Convention, and also said that he wanted superdelegates to think hard about who would do better against Trump. They undoubtedly are, though it may lead not to support for Sanders but to more calls for him to get out of the race. The general election is going to be ugly, not easy, no matter how wide the final margin is. Those who wrote off Trump as a joke have, since the beginning, willfully ignored two factors that are, in retrospect, pretty obvious. First, Trump wants to be President. He has, in his way, imagined himself as a creature of politics for decades. Second, in order for him to lose, someone else had to beat him--and the Republican Party has failed to produce that person. If Jeb Bush doesn't become a byword for the collective delusions of a political class, then the lessons of this election won't have been learned.

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iehi-feed-59700 Wed, 04 May 2016 16:15:05 GMT India's Silver Imports Up Almost 200% In March http://implode-explode.com/viewnews/2016-05-04_IndiasSilverImportsUpAlmost200InMarch.html iehi-feed-59699 Wed, 04 May 2016 14:53:56 GMT AEP: US dollar plunges as world plays dangerous game of pass the parcel http://implode-explode.com/viewnews/2016-05-04_AEPUSdollarplungesasworldplaysdangerousgameofpasstheparcel.html The US dollar has plunged to a 16-month low in the latest wild move for the global financial system, tightening the currency noose on the eurozone and Japan as they struggle to break out of a debt-deflation trap.

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This is a massive shift in sentiment since the end of last year when investors were betting heavily that the US Federal Reserve was on track for a series of rate rises, which would draw a flood of capital into dollar assets. Markets have now largely discounted a rate rise in June, and are pricing in just a 68pc likelihood of any increases this year.

... it increases the pain for the eurozone and Japan as their currencies rocket. The world is in effect playing a high-stakes game of pass the parcel, with over-indebted countries desperately trying to export their deflationary problems to others by nudging down exchange rates.

... There is little that the Bank of Japan or the ECB can do to arrest this unwelcome appreciation. The Obama Administration warned them at the G20 summit in February that it any further use of negative interest rates would be regarded by Washington as covert devaluation, and would not be tolerated.

... Stephen Jen from SLJ Macro Partners said the Fed is pursuing a "weak dollar policy", reacting to global events in a radical new way. "They are forcing currency appreciation onto weaker economies. It is irrational," he said.

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iehi-feed-59697 Wed, 04 May 2016 14:44:28 GMT Doubts rise over TTIP as France threatens to block EU-US dea http://implode-explode.com/viewnews/2016-05-04_DoubtsriseoverTTIPasFrancethreatenstoblockEUUSdea.html François Hollande said on Tuesday he would reject the Transatlantic Trade and Investment Partnership "at this stage" because France was opposed to unregulated free trade.

Earlier, France's lead trade negotiator had warned that a halt in TTIP talks "is the most probable option". Matthias Fekl, the minister responsible for representing France in TTIP talks, blamed Washington for the impasse. He said Europe had offered a lot but had received little in return. He added: "There cannot be an agreement without France and much less against France."

All 28 EU member states and the European parliament will have to ratify TTIP before it comes into force. But that day seems further away than ever, with talks bogged down after 13 rounds of negotiations spread over nearly three years.

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iehi-feed-59692 Tue, 03 May 2016 17:16:43 GMT China Caixin manufacturing PMI contracts in April http://implode-explode.com/viewnews/2016-05-03_ChinaCaixinmanufacturingPMIcontractsinApril.html iehi-feed-59691 Tue, 03 May 2016 17:10:59 GMT EU states face charge for refusing refugees http://implode-explode.com/viewnews/2016-05-03_EUstatesfacechargeforrefusingrefugees.html European countries that refuse to share the burden of high immigration will face a financial charge of about €250,000 per refugee, according to Brussels' plans to overhaul the bloc's asylum rules. 

The punitive financial pay-off clause is one of the most contentious parts of the European Commission's proposed revision of the so-called Dublin asylum regulation, due to be revealed on Wednesday. 

It represents the EU's most concerted attempt to salvage an asylum system that collapsed under the weight of a million-strong migration to Europe last year, endangering the principle of passport-free travel in the Schengen area.

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"The size of the contribution may change but the idea is to make it appear like a sanction," said one official who has seen the proposal. Another diplomat said in any event the price of refusing to host a refugee would be "hundreds of thousands of euros".

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These financial contributions are in part designed to fix incentives around migrant quotas, which have badly failed and proved almost impossible to implement even once agreed in law. The commission proposal builds on the EU's flagship emergency scheme to relocate 160,000 refugees, which has barely redistributed 1 per cent of its target since it was agreed last year.

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iehi-feed-59690 Tue, 03 May 2016 17:08:42 GMT Germany wants to extend border controls for another 6 months http://implode-explode.com/viewnews/2016-05-03_Germanywantstoextendbordercontrolsforanother6months.html iehi-feed-59687 Tue, 03 May 2016 01:10:28 GMT Puerto Rico's Debt Crisis Deepens as Government Misses Payment http://implode-explode.com/viewnews/2016-05-02_PuertoRicosDebtCrisisDeepensasGovernmentMissesPayment.html Puerto Rico's debt crisis moved into a more perilous phase for residents, lawmakers and bondholders Monday after the Government Development Bank failed to repay almost $400 million.

The missed principal payment, the largest so far by the island, is widely viewed on Wall Street as foreshadowing additional defaults this summer, when more than $2 billion in bills are due.

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While Monday's default had been expected, it creates new complications for the local government. Its agencies maintain their bank accounts at the GDB, which serves as the government's fiscal agent and financial adviser and backs loans to private enterprises. The government had already passed legislation to limit withdrawals from the agency to avoid a potential bank run, and the commonwealth's treasurer last month began opening accounts at private banks.

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The default could mark a turning point after weeks of negotiations on Capitol Hill. House Republicans are completing legislation to create a federal oversight board for Puerto Rico with the power to sign off on local budgets and to authorize a court-supervised debt restructuring. The bill wouldn't commit U.S. taxpayer funds, but some creditors have described it as a bailout because they say it might violate existing contracts.

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Puerto Rico's debt crisis isn't seen as likely to spill into the U.S. economy or the broader $3.7 trillion municipal bond market because the island's troubles make it something of an outlier.

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iehi-feed-59686 Mon, 02 May 2016 21:24:02 GMT Treasury's Lew To Congress "Rescue Puerto Rico" Or Face "Cascading Defaults" http://implode-explode.com/viewnews/2016-05-02_TreasurysLewToCongressRescuePuertoRicoOrFaceCascadingDefaults.html iehi-feed-59682 Mon, 02 May 2016 14:56:39 GMT Leaked TTIP documents cast doubt on EU-US trade deal http://implode-explode.com/viewnews/2016-05-02_LeakedTTIPdocumentscastdoubtonEUUStradedeal.html Talks for a free trade deal between Europe and the US face a serious impasse with "irreconcilable" differences in some areas, according to leaked negotiating texts. The two sides are also at odds over US demands that would require the EU to break promises it has made on environmental protection.

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The public document offers a robust defence of the EU's right to regulate and create a court-like system for disputes, unlike the internal note, which does not mention them.

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US proposals include an obligation on the EU to inform its industries of any planned regulations in advance, and to allow them the same input into EU regulatory processes as European firms.

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US proposals include an obligation on the EU to inform its industries of any planned regulations in advance, and to allow them the same input into EU regulatory processes as European firms... "Before the EU could even pass a regulation, it would have to go through a gruelling impact assessment process in which the bloc would have to show interested US parties that no voluntary measures, or less exacting regulatory ones, were possible," Riss said.

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GM foods could also find a widening window into Europe, with the US pushing for a working group to adopt a "low level presence initiative". This would allow the import of cargo containing traces of unauthorised GM strains. The EU currently blocks these because of food safety and cross-pollination concerns.

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iehi-feed-59681 Mon, 02 May 2016 14:49:45 GMT World's Longest Negative Rate Experiment Shows Destruction of Savings & Investment Machinery http://implode-explode.com/viewnews/2016-05-02_WorldsLongestNegativeRateExperimentShowsDestructionofSavingsInve.html In Denmark, where rates have been below zero longer than anywhere else on the planet, the private sector is saving more than it did when rates were positive (before 2012). Private investment is down and the economy is in a "low-growth crisis," to quote Handelsbanken. The latest inflation data show prices have stagnated...

Denmark has about $600 billion in pension and investment savings. The people who help oversee those funds say the logic of cheap money fueling investment doesn't hold once rates drop below zero. That's because consumers and businesses interpret such extreme policy as a sign of crisis with no predictable outcome.

The problem here is really quite obvious: when you peg rates at negative, the result is only "simulative" from the perspective of people borrowing from the central bank. All other borrowing and lending in the economy (which is supposed to be the main part of it) becomes anti-stimulative, because who wants to lend at negative rates (i.e., be guaranteed to lose money)? Thus you get a snake-eating-its-own-tail effect as central bank forced-lending consumes the market, while the overall financial market continues to shrink amidst the contrary incentives, leading to more of the same.

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