Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-64217 Mon, 17 Sep 2018 14:07:13 GMT China reportedly says it won't just play defense in a trade war with the US http://implode-explode.com/viewnews/2018-09-17_ChinareportedlysaysitwontjustplaydefenseinatradewarwiththeUS.html Beijing has said it would retaliate to trade war escalation with tariffs of its own as well as qualitative measures, which it has not specified but are perceived within the U.S. business community as likely to include increased customs and regulatory scrutiny.

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Beijing may also decline to participate in the proposed trade talks with Washington later this month if the Trump administration goes ahead with the additional tariffs, The Wall Street Journal reported on Sunday, citing Chinese officials.

The Journal report quoted one senior Chinese advisory official saying China would not negotiate "with a gun pointed to its head".

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iehi-feed-64214 Sun, 16 Sep 2018 14:58:57 GMT Polarization in Poland: A Warning From Europe http://implode-explode.com/viewnews/2018-09-16_PolarizationinPolandAWarningFromEurope.html At that moment, when Poland was on the cusp of joining the West, it felt as if we were all on the same team. We agreed about democracy, about the road to prosperity, about the way things were going... That moment has passed. Nearly two decades later, I would now cross the street to avoid some of the people who were at my New Year's Eve party. They, in turn, would not only refuse to enter my house, they would be embarrassed to admit they had ever been there.

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Some of my New Year's Eve guests continued, as my husband and I did, to support the pro-European, pro-rule-of-law, pro-market center-right--remaining in political parties that aligned, more or less, with European Christian Democrats, with the liberal parties of Germany and the Netherlands, and with the Republican Party of John McCain. Some now consider themselves center-left. But others wound up in a different place, supporting a nativist party called Law and Justice--a party that has moved dramatically away from the positions it held when it first briefly ran the government, from 2005 to 2007, and when it occupied the presidency (not the same thing in Poland), from 2005 to 2010.

Since then, Law and Justice has embraced a new set of ideas, not just xenophobic and deeply suspicious of the rest of Europe but also openly authoritarian. After the party won a slim parliamentary majority in 2015, its leaders violated the constitution by appointing new judges to the constitutional court. Later, it used a similarly unconstitutional playbook to attempt to pack the Polish Supreme Court. It took over the state public broadcaster, Telewizja Polska; fired popular presenters; and began running unabashed propaganda, sprinkled with easily disprovable lies, at taxpayers' expense. The government earned international notoriety when it adopted a law curtailing public debate about the Holocaust. Although the law was eventually changed under American pressure, it enjoyed broad support by Law and Justice's ideological base--the journalists, writers, and thinkers, including some of my party guests, who believe anti-Polish forces seek to blame Poland for Auschwitz.

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iehi-feed-64211 Sun, 16 Sep 2018 14:02:22 GMT These countries are most vulnerable to the emerging market storm http://implode-explode.com/viewnews/2018-09-16_Thesecountriesaremostvulnerabletotheemergingmarketstorm.html iehi-feed-64199 Mon, 10 Sep 2018 04:09:30 GMT Chinese government invites top Wall Street bankers to Beijing (CIRCUMVENTING "GREAT WALL OF TRUMP"?) http://implode-explode.com/viewnews/2018-09-10_ChinesegovernmentinvitestopWallStreetbankerstoBeijingCIRCUMVENTI.html The Chinese government is inviting Wall Street's top bankers to a hastily arranged meeting in Beijing as US president Donald Trump threatens to impose punitive tariffs on all Chinese exports to the US worth an estimated $267 billion (€230 billion).

According to three people briefed on the initiative, Chinese Communist party officials have invited the heads of America's leading financial institutions to attend a "China-US Financial Roundtable" in Beijing on September 16th, followed by a meeting with Wang Qishan, vice-president of China.

Chinese officials hope the new group, which will be jointly chaired by Zhou Xiaochuan, a former Chinese central bank governor, and John Thornton, the former Goldman Sachs executive who now chairs mining group Barrick Gold, will meet every six months to discuss Sino-US relations and advise the Chinese government on financial and economic reforms.

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People briefed on the planning for the China-US Financial Roundtable said it reflected the Chinese government's frustrations in dealing with Mr Trump, who has refused to designate a point person for China relations and has increasingly deferred to the hawkish views of Robert Lighthizer, the US trade representative.

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iehi-feed-64198 Mon, 10 Sep 2018 04:05:41 GMT Cryptocurrency Is Not Conducive for Terrorism, Says Defense Expert to U.S. Congress http://implode-explode.com/viewnews/2018-09-10_CryptocurrencyIsNotConduciveforTerrorismSaysDefenseExperttoUSCon.html iehi-feed-64196 Sun, 09 Sep 2018 21:56:48 GMT In Charts: Disaster Is Inevitable When America's Stock Market Bubble Bursts http://implode-explode.com/viewnews/2018-09-10_InChartsDisasterIsInevitableWhenAmericasStockMarketBubbleBursts.html To keep it simple, the current U.S. stock market bubble will pop due to the ending of the conditions that created it in the first place: cheap credit/loose monetary conditions. The Federal Reserve inflated the stock market bubble via its record low Fed Funds Rate and quantitative easing programs, and the central bank is now raising interest rates and reversing its QE programs by shrinking its balance sheet. What the Fed giveth, the Fed taketh away.

The Fed claims to be able to engineer a "soft landing," but that virtually never happens in reality. It's even less likely to happen in this current bubble cycle because of how long it has gone on and how distorted the financial markets and economy have become due to ultra-cheap credit conditions.

I'm from the same school of thought as billionaire fund manager Jeff Gundlach, who believes that the Fed will keep hiking interest rates until "something breaks." In the last economic cycle from roughly 2002 to 2007, it was the subprime mortgage industry that broke first, and in the current cycle, I believe that corporate bonds are likely to break first, which would then spill over into the U.S. stock market.

... Because of the record debt burden in the U.S., interest rates do not have to rise nearly as high as in prior cycles to cause a recession or financial crisis this time around.

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iehi-feed-64188 Fri, 07 Sep 2018 23:49:34 GMT Trump threatens China with tariffs on $267B more goods http://implode-explode.com/viewnews/2018-09-08_TrumpthreatensChinawithtariffson267Bmoregoods.html President Donald Trump on Friday threatened to hit Beijing with tariffs on an additional $267 billion in goods, a move that would expand the growing trade war to cover virtually everything the United States imports from China.

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Those penalties, if applied, would come on top of tariffs the administration has already implemented on roughly $53 billion in Chinese imports and on another $200 billion that could be imposed in the coming days.

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Imposing tariffs on an additional $267 billion in goods from China -- on top of the roughly $253 billion that have already been imposed or are pending -- would mean virtually all current imports from China would be caught in the crossfire, including consumer goods like cellphones and televisions. Trump‘s comments Friday seemed to indicate that he was prepared to put in place the duties on the additional amount without any new public input or comment period.

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"The notion that the president is going to add an extra $267 billion worth of tariffs is grossly irresponsible and possibly illegal," Jose Castaneda, a spokesman for the Information Technology Industry Council, said in a statement. "While we cannot overstate the potential economic harm of such a decision, we also question whether the administration has done the necessary investigation of Chinese policies and practices to justify this level of tariffs under the Section 301 statute. We urge the administration to clearly explain how Section 301 allows it to take such action."

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iehi-feed-64186 Wed, 05 Sep 2018 16:24:37 GMT Doug Noland: Weekly Commentary: "Unassailable" (Market Bubble) http://implode-explode.com/viewnews/2018-09-06_DougNolandWeeklyCommentaryUnassailableMarketBubble.html Here in the U.S., the bullish consensus view holds that a faltering EM doesn't matter. The U.S. economy is strong and largely immune to global factors. Profits are booming. Prospects are unequivocally positive. The mindset is uncomfortably reminiscent of the "subprime doesn't matter" blather heading right into a devastating crisis. It's worth recalling that U.S. GDP exceeded 2% in 2007's 2nd, 3rd and 4th quarters, with Q4's 2.5% expansion the strongest in a year.

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Mr. Buffett, along with virtually everyone, was blindsided by the 2008 crisis. This should matter but doesn't. Amazingly, another crisis is viewed these days as an opportunity rather than a risk. Stocks, as they always do, will come roaring back. The last crisis was only an issue for those that lacked conviction and sold stocks in an irrational panic.

At this point, the bullish view that stocks must be bought and held for the long-term has surpassed rational. It's Unassailable. Your price entry point matters little - the global backdrop even less. Politics little, geopolitics less. Holding cash is stupid, shorting much worse. Indeed, to not bet confidently on the U.S. for the long-term is an act of self-destructive irrationality. A risk-based approach, to be sure, would lead to irrational decisions. It's been proven - repeatedly. Don't sell.

I believe we're nearing the end of an historic multi-decade Bubble. Risk is incredibly high, a view that has by now been thoroughly discredited. A key factor boosting risk is the overwhelming consensus view that risk is virtually nonexistent. In stark contrast, I believe this protracted period of serial boom and bust cycles has led to the accumulation of financial and economic distortions and deep structural impairment.

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iehi-feed-64185 Wed, 05 Sep 2018 15:59:52 GMT Venezuela: Life Without Water: Sweaty, Smelly, and Furious in Caracas http://implode-explode.com/viewnews/2018-09-05_VenezuelaLifeWithoutWaterSweatySmellyandFuriousinCaracas.html Dishes are brushed off and reused, and clothing is not something regularly laundered, though, personally, I draw the line at multiple wearings of underwear or socks. You ask friends whether it's okay to flush. You often do not. We're sweaty and, yes, smelly, especially in the rainy season when the humidity can top 80 percent. We're at risk, too, because water stagnating in the vessels that people stash around their homes attracts mosquitoes; malaria rates have soared.

The poorest, as usual, have it the worst, though no one is spared. Hospitals and schools, posh neighborhoods and slums, they all go without water--at times for weeks on end--making this man-made drought arguably the most equalizing disaster the socialist government has ever managed to engineer.

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iehi-feed-64182 Mon, 03 Sep 2018 15:48:44 GMT For Venezuelans fleeing economic catastrophe, Brazil has proven a tough place to land http://implode-explode.com/viewnews/2018-09-03_ForVenezuelansfleeingeconomiccatastropheBrazilhasprovenatoughpla.html iehi-feed-64176 Thu, 30 Aug 2018 16:45:00 GMT Trump's Mexico Trade Deal Looks Like a Lemon http://implode-explode.com/viewnews/2018-08-31_TrumpsMexicoTradeDealLooksLikeaLemon.html Based on the NHTSA's data, there are just three models made in Mexico that are currently exempt but would attract tariffs under the new regime: Nissan Motor Co.'s Versa Sedan, Audi AG's SQ5, and Fiat Chrysler Automobiles NV's Fiat 500. Of these, only the Versa sells more than a handful of models in the U.S., with 106,772 vehicles shipped in 2017.

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The wage rules are likely to be tougher, though even there the devil is in the detail. Almost all non-Nafta content in Mexican-made cars sold in the U.S. comes from Germany, Japan or South Korea, where total compensation typically takes pay well above $16 an hour. So unless the requirement relates solely to Nafta workers earning at least $16 per hour (full details haven't been released yet), the rules will only really affect vehicles that are at least 55 percent made in Mexico.

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iehi-feed-64168 Fri, 10 Aug 2018 21:09:57 GMT Turkish crisis littered with lessons for Trump, US economy http://implode-explode.com/viewnews/2018-08-10_TurkishcrisislitteredwithlessonsforTrumpUSeconomy.html Had global liquidity conditions not been as ample as they had been over the past several years, Turkey would not have been able to run the outsized external imbalances that it has managed to run, nor would its corporate sector have been able to incur as large a U.S. dollar denominated debt as its corporate sector has built up.

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Closer to home, Turkey's present economic debacle might remind us that there comes a day of reckoning for reckless macroeconomic policies. This would seem particularly pertinent in the current U.S. context where a massive unfunded tax cut together with public spending increases are expected to give rise to budget deficits in excess of 5 percent of GDP for as far as the eye can see.

It would be fanciful to think, as the Trump administration seems to do, that these budget deficits will not lead to a widening in the U.S. external current account deficit or that these deficits can be financed indefinitely without a dollar crisis at some point.''

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iehi-feed-64164 Fri, 10 Aug 2018 02:05:42 GMT Trump's In-Laws Get "Chain Migration" Citizenship http://implode-explode.com/viewnews/2018-08-09_TrumpsInLawsGetChainMigrationCitizenship.html iehi-feed-64163 Wed, 08 Aug 2018 17:57:48 GMT TV maker laying off most workers, blaming Trump tariffs http://implode-explode.com/viewnews/2018-08-08_TVmakerlayingoffmostworkersblamingTrumptariffs.html President Donald Trump's tariffs against China are causing a South Carolina television maker to lay off nearly all of its employees because of the sudden increase in the price of components for its products.

Element TV Company will let 126 workers go, most of them on Oct. 5, leaving behind a skeleton crew of eight employees to watch the Fairfield County plant in hopes it can reopen in three to six months, the company said in a letter to state employment officials Monday.

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The Element plant opened to huge fanfare about five years ago. Trump's current U.N. Ambassador, Nikki Haley, was South Carolina governor at the time. In August 2014, she did a live video feed from the plant beamed to a Walmart manufacturing summit, where she spoke about how to bring manufacturing jobs back to the U.S. by selling her state.

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Tariffs could lead to more job losses in the state, especially in the auto industry. Swedish carmaker Volvo has said tariffs could prevent it from reaching its goal of 4,000 workers by 2021 at its just opened plant near Charleston. BMW has warned Trump administration officials that some if not many of its 10,000 workers at its plant near Spartanburg could have their jobs at risk if tariffs continue.

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iehi-feed-64153 Sat, 28 Jul 2018 04:55:39 GMT Trump's 4+% Growth: Yet Another Scam http://implode-explode.com/viewnews/2018-07-28_Trumps4GrowthYetAnotherScam.html there's reason to think the forces driving last quarter's expansion lack staying power. A good chunk of the headline growth in the second quarter was boosted by a confluence of one-off and short-term measures by the US president.

Take trade, for example. Net exports contributed a whopping 1 percentage point to real GDP growth last quarter--the most since 2013. But there's fair reason to suspect that this isn't due to an out-of-the-blue resurgence of US manufacturing, particularly given that the dollar was fairly strong versus other major currencies during the quarter. Much of this could instead be a knock-on effect of Trump's trade war, as importers snapped up US goods before looming tariffs drove up prices. For example, soybean exports have jumped as buyers tried to get out ahead of the retaliatory tariffs on the agriculture product by China.

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overall investment fell versus Q1--meaning it dragged down last quarter's real GDP growth. Growth in equipment investment was feeble, suggesting that tax cuts haven't yet brought forth a US manufacturing revival. More ominously, residential investment--another big engine of US growth--fell by 1.1 percentage points, extending a slump in housing spending that began in Q2 2016.

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iehi-feed-64148 Tue, 24 Jul 2018 23:26:30 GMT Trump's trade war is economic suicide http://implode-explode.com/viewnews/2018-07-24_Trumpstradewariseconomicsuicide.html Trump has long made clear that he wants Americans to pay higher prices for cars coming into the nation. On the campaign trail, he promised a tariff of 35 percent on "every car, every truck, and every part manufactured in Ford's Mexico plant that comes across the border." This past March, he threatened to impose tariffs on Europe' automobile manufacturers.

But even cars produced domestically will rise in price thanks to the president's economically illiterate trade interventions. As raw materials such as steel and aluminum rise in price, the cost of manufacturing each vehicle will rise. Manufacturers will pass those higher costs on to consumers.

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The damage extends beyond our wallets and pocketbooks. As domestic manufacturing costs increase, the competitiveness of some American producers decreases. 

Consider American Keg Company of Pennsylvania. Already, the company laid off a third of its workers due to rising steel costs.  Or take General Motors. The automobile giant has announced it might have to lower wages and cut jobs. 

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iehi-feed-64147 Tue, 24 Jul 2018 23:21:23 GMT Trump To Shell Out $12 Billion To Bail Out Farmers http://implode-explode.com/viewnews/2018-07-24_TrumpToShellOut12BillionToBailOutFarmers.html The Trump administration on Tuesday announced up to $12 billion in emergency relief for farmers hurt by the president's trade war, moving to insulate food producers from looming financial losses that would be a direct result of President Trump's policies.

The aid to farmers, announced by the United States Department of Agriculture, will come through a direct assistance program, one designed to help with food purchase and distribution and one specifically geared toward promoting trade.

The move is an indication that Mr. Trump -- ignoring the concerns of farmers, their representatives in Congress, and even some of his own aides about the adverse consequences of a trade war he says he relishes -- plans to plow forward in escalating his tariff tit-for-tat around the world.

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The plan, first reported by The Washington Post, was met with swift condemnation from Republicans and trade groups, who said that Mr. Trump had devised an expensive and clunky solution to a crisis of Depression-era proportions.

"This trade war is cutting the legs out from under farmers and White House's `plan' is to spend $12 billion on gold crutches," said Senator Ben Sasse, Republican of Nebraska. "This administration's tariffs and bailouts aren't going to make America great again, they're just going to make it 1929 again."

One trade group leader said farmers need contracts, not aid, for stability.

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iehi-feed-64128 Wed, 18 Jul 2018 19:28:14 GMT Google's $5 billion fine: What you need to know http://implode-explode.com/viewnews/2018-07-18_Googles5billionfineWhatyouneedtoknow.html ``EU antitrust regulators ruled that the company, whose Android software powers more than 80 percent of the world's smartphones, pushed consumers to its search engine, further weakening rival search providers and app makers.

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Although Google offers the open source mobile software for free, the EU takes issue with the requirements placed on manufacturers to pre-install Google's search and Chrome browser apps if they want to license the Play app store. Google actually ties Play to a suite of 11 different apps, including Maps, Gmail and Docs, but the only ones that the EU has called for it to separate from Play are Chrome and Search.

The EU also says that it's illegal for Google to pay manufacturers and carriers to exclusively pre-install Google's search app on phones, which it says it did between 2011 and 2014, and to use so-called anti-fragmentation agreements to prevent phone makers from selling modified versions of Android.

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"So far, the Android business model has meant that we haven't had to charge phone makers for our technology, or depend on a tightly controlled distribution model," Pichai wrote.

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iehi-feed-64112 Fri, 13 Jul 2018 21:34:07 GMT Trump's Escalating Trade War With China Set to Backfire on Consumers http://implode-explode.com/viewnews/2018-07-13_TrumpsEscalatingTradeWarWithChinaSettoBackfireonConsumers.html China didn't take [Trump's initial] tariffs lying down... Instead, it responded by imposing tariffs on $34 billion worth of U.S. goods.That led to an even bigger retaliation by the White House. On Tuesday, Trump announced 10% tariffs on $200 billion worth of Chinese goods.

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China has vowed to "strike back hard, and launch comprehensive measures that match the U.S. move in quantity and quality." This means China could introduce more tariffs. It could also further devalue its currency to stay "competitive," which would encourage Trump to introduce even more tariffs.

In short, everyday goods could soon get a lot more expensive. And that's the last thing working-class Americans can afford... [And now] inflation is already creeping higher... We can see this in the Consumer Price Index (CPI), a broad measure of inflation. It's rising at its fastest pace since 2012.

The Producer Price Index (PPI), another popular measure of inflation, is also climbing fast. In fact, it just had the biggest yearly jump in nearly seven years.

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If the trade war escalates, other companies will have no choice but to [pass prices along to consumers]... And that could take a huge toll on consumer spending, which is by far the biggest segment of the U.S. economy.

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iehi-feed-64108 Fri, 13 Jul 2018 00:24:06 GMT NATO summit: all the lies Trump told about his performance in Brussels http://implode-explode.com/viewnews/2018-07-12_NATOsummitalltheliesTrumptoldabouthisperformanceinBrussels.html