Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-61275 Fri, 09 Dec 2016 17:28:02 GMT Behold, the ‘most frightening chart' that Albert Edwards wants investors to see http://implode-explode.com/viewnews/2016-12-09_BeholdthemostfrighteningchartthatAlbertEdwardswantsinvestorstose.html The chart by Guy Stear, head of emerging markets and credit research at Société Générale, shows credit spreads holding steady even as political uncertainty spikes to an unprecedented level... According to Edwards, that cognitive dissonance is all wrong.

"Markets shrugged off the Brexit vote in a couple of days. They shrugged off Donald Trump's election in a single day. They shrugged off the Italian referendum result in a couple of hours. Heck, in this mood they would shrug off an alien invasion of planet Earth," he said. "But global political risk is now at such elevated levels that investors must surely be on another planet."

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iehi-feed-61273 Fri, 09 Dec 2016 16:00:00 GMT Former bank boss David Murray warns of disastrous property crash (AU) http://implode-explode.com/viewnews/2016-12-09_FormerbankbossDavidMurraywarnsofdisastrouspropertycrashAU.html iehi-feed-61268 Fri, 09 Dec 2016 15:17:34 GMT It is almost certain that there will be another euro crisis in 2017 http://implode-explode.com/viewnews/2016-12-09_Itisalmostcertainthattherewillbeanothereurocrisisin2017.html So 2017 will be the year the British leave the EU, the year Italian banks go bust and Italy's new government is headed for the first time ever by people who want to break up the euro, and it could be the year that Le Pen wins in France.

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It was announced yesterday that Banca Monte dei Paschi di Siena, the world's oldest bank and the third largest lender in Italy, will be bailed out by the government this weekend.

This is the beginning. In fact, the Italian State may well have fired the gun for capital to leave the country and head to Germany.

Contagion will spread to France and it is against this background that France will host its presidential election.

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iehi-feed-61266 Thu, 08 Dec 2016 16:54:51 GMT Putting the Boot into Italy - Charles Gave http://implode-explode.com/viewnews/2016-12-08_PuttingtheBootintoItalyCharlesGave.html

The diagnosis is simply that Italy has become woefully uncompetitive, and as a result, is not solvent. This much is clear from the perilous state of its banking system, which is always the outcome when banks lend to firms that have been rendered uncompetitive by some reckless central banker. Short of imposing Greek-style slavery on Italy, there is not much hope of solving the problem, but I rather doubt that the Italian electorate will be as patient as its neighbours across the Ionian sea.

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Hence, an Italian sovereign default of some variety is now a near certainty. While a central bank can address a liquidity problem, it cannot fix a solvency issue, especially one as large as Italy's. The only remedial action that can now be taken is to throw good money after bad, which is exactly what I expect Mario Draghi to do, especially as he played such a key facilitators' role in getting Italy into the euro system in the first place. Such actions -- possibly to be announced on Thursday at the European Central Bank's policy setting meeting -- can of course merely postpone the day of reckoning, but will solve absolutely nothing.

The rational approach for investors is to shun Italian financial assets such as bank equities or government bonds until such time as exchange rates are once again market determined prices. This has to be the most well-telegraphed, and now inevitable, national bankruptcy that I have seen in my 45-year career. There is no reason to be dragged under the steam roller as there are many other markets and assets to play in.

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iehi-feed-61265 Thu, 08 Dec 2016 16:39:58 GMT As Beijing Battles to Keep Yuan at Home, Chinese Prepare to Sell http://implode-explode.com/viewnews/2016-12-08_AsBeijingBattlestoKeepYuanatHomeChinesePreparetoSell.html As Beijing struggles to slow the outflow of cash and an erosion in its stockpile of foreign currency, the clock is about to restart on individuals' annual foreign-exchange quotas, which is expected to set off a fresh gush of outflows. The foreign-exchange pile fell by almost $100 billion in January this year, after the quota reset.

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The pressure to get out of the yuan hasn't abated. Data from the People's Bank of China on Wednesday showed that China's currency holdings shrank by $69 billion in November to $3.052 trillion, the fifth straight month of declines and the worst month since January. The reserves are now at the lowest level since March 2011.

"Everybody is predicting more depreciation to come, so I'd better hurry," said Ms. Shen, who plans to use the dollars for overseas trips.

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Harrison Hu, China economist at Royal Bank of Scotland, predicted that a tightening of the reins on households' foreign-currency purchases is likely in the coming months. "Banks, under ‘window guidance,' may apply implicit quantity controls," Mr. Hu said, referring to possible instructions from regulators.

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The Institute of International Finance, a Washington-based group of global financial institutions, estimates net capital outflows of $530 billion from China in the first 10 months of the year. But some analysts say the amount could be even greater as more Chinese companies and individuals send or carry yuan funds offshore directly without converting them into dollars first.

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iehi-feed-61264 Thu, 08 Dec 2016 16:36:13 GMT Don't buy the lie that Obama's leaving behind a healthy economy http://implode-explode.com/viewnews/2016-12-08_DontbuytheliethatObamasleavingbehindahealthyeconomy.html These geniuses remind me of Mark Twain trying to palm off the idea that "Wagner's music is better than it sounds." If the economy is so all-fired ducky, how come Americans just tossed out the party that's claiming credit for it? The truth is that the Obama years have been among America's worst for the economy. His eight years will go down in history as the Great Recession, even though for much, even most, of the span, we weren't technically in a recession.

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Except for pumping up Wall Street and producing what Trump calls a "false economy." The recent declines in the unemployment rate are due less to the uptick in employed persons than to an increasing number of persons leaving the labor force.

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And the recent record Dow Jones average? It's pumped up by the Federal Reserve. It's nowhere near a record if the Dow is calculated in the most traditional measure of value. The gold value of the Dow peaked way back in 1999.

All this is why Bloomberg News has been reporting the "Rust Belt's transformation into the Trump Belt." It cites this week new research on "how bad things have become" in Michigan, Ohio, Pennsylvania and Wisconsin.

For older men in those states, Bloomberg reports, inflation-adjusted pay is below the level in -- wait for it -- 1979. That's two generations lost.

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iehi-feed-61263 Wed, 07 Dec 2016 23:01:52 GMT Message to Modi: Do No More Harm (INDIA CRACKS OPEN DOOR TO ARBITRARY GOLD CONFISCATION) http://implode-explode.com/viewnews/2016-12-07_MessagetoModiDoNoMoreHarmINDIACRACKSOPENDOORTOARBITRARYGOLDCONFI.html ... the idea of a war on unaccounted-for wealth remains central to demonetization's popular appeal, which means Modi will have to find other ways to keep that narrative going. So the government has now begun to push income-tax officials to conduct raids on those who might be concealing assets in forms other than cash, such as gold.

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What this means, unfortunately, is that India's income tax officers have just won the lottery. During a raid, they can, on the spot, decide whether or not to confiscate a family's gold holdings. And remember, India has an enormous amount of gold -- 20,000 metric tons, much of it inherited. (The rules governing simple searches are different, but few know that.) Rather than cleaning up tax administration, the government has handed tax officials more power than they've had for decades. The rich will pay what they need to escape harassment; the rest will suffer.

The worry is that the government, having committed itself to draconian measures to seize black money, will resort to more such attempts to live up to its promises. An India in which individuals are constantly concerned about their ability to explain their returns and their assets to powerful and poorly monitored tax officers is not one in which investment is likely to pick up. It fell another 5.6 percent in the latest GDP figures -- the third successive quarter it's dropped.

... many analysts agree with former Prime Minister Manmohan Singh, who's predicting the new policy will knock 2 percentage points off that world-beating GDP growth rate.

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iehi-feed-61260 Wed, 07 Dec 2016 21:44:19 GMT Trump picks Iowa Gov. Terry Branstad -- a `friend' of China's leader -- as Beijing ambassador http://implode-explode.com/viewnews/2016-12-07_TrumppicksIowaGovTerryBranstadafriendofChinasleaderasBeijingamba.html Branstad has extensive ties to China and a personal friendship with Chinese President Xi Jinping that dates back decades. If his nomination goes through, the move could help reassure China's leadership that Trump understands the importance of healthy relations with Beijing... China's Foreign Ministry did not confirm the report but reacted warmly.

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Under the Obama administration, experts say, the post of ambassador to Beijing had declined somewhat in importance. China policy was largely run out of the White House, with the president tending to immerse himself in many of the details.

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China has been a fast-growing market for Iowa's agriculture and processed food, with exports from the state up by a factor of 13 between 2000 and 2010 to $6.3 billion, according to Chinese state media.

That fact alone may reassure some people that Trump will not start a trade war with China, since retaliation from Beijing in the shape of reduced soybean and corn imports would hurt not only Iowa but also other Republican-controlled agricultural states.

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Branstad was a vocal backer of the Trans-Pacific Partnership, the 12-nation trade deal championed by the Obama administration that Trump has pledged to rip up on his first day in office. Branstad said his state's large agricultural industry would benefit from the accord, boosting exports of pork, corn and poultry and creating jobs.

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iehi-feed-61258 Wed, 07 Dec 2016 03:30:43 GMT Islamic finance set to change gold market http://implode-explode.com/viewnews/2016-12-06_Islamicfinancesettochangegoldmarket.html We don't have the full details of the guidelines but expect to find out more this week at the World Islamic Banking Conference. However, we do know three things that the new Shariah gold-standard will achieve: first, it will increase both the number and diversity of available Shariah-compliant gold investment products; second, it will place far greater emphasis on the role of physical gold in gold transactions; finally, it will give a greater role to Islamic finance in the setting of the gold price...

If Islamic Finance institutions were to allocate just one per cent of assets into new gold products then we would expect to see demand climb by about 500-1000 tonnes, per annum. Given that recent demand and supply figures showed a surplus of just 172 tonnes of gold in the market, we could begin to see some tightening with the increase of Shariah-compliant gold instruments, which will have a positive impact on the price.

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iehi-feed-61255 Tue, 06 Dec 2016 23:47:54 GMT Italian Bank Shares Slump as Renzi Loss Adds to Uncertainty http://implode-explode.com/viewnews/2016-12-06_ItalianBankSharesSlumpasRenziLossAddstoUncertainty.html UniCredit Group AG and Banca Monte dei Paschi di Siena SpA fell along with most Italian bank shares after Prime Minister Matteo Renzi's decision to resign added to uncertainty about their plans for shoring up their finances. Monte Paschi will decide within the next few days whether it will proceed with a planned capital increase, people with knowledge of the matter said.

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Monte Paschi is seeking as much as 5 billion euros by the end of the year to repair its buffers after selling 28 billion euros in bad loans at a loss. While the bank has persuaded investors to swap more than 1 billion euros of subordinated notes for shares, it has yet to announce a large-scale investor and any agreement with the banks that would underwrite a planned public share sale.

"The chances of a successful implementation of the capital plan within the original timeframe (before the end of the year) are slim," BNP Paribas analysts Geoffroy de Pellegars and Miguel Hernandez said on Monday. If the European Central Bank decides Monte Paschi needs to be recapitalized immediately, it could face a government-backed rescue that would impose losses on bondholders, they said. "The near-term outcome depends entirely on the ECB," according to the analysts.

See also Sources: Monte Paschi has apparently already requested a bailout.

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iehi-feed-61254 Tue, 06 Dec 2016 23:44:22 GMT Matteo Renzi's resignation temporarily 'frozen' by Italian president http://implode-explode.com/viewnews/2016-12-06_MatteoRenzisresignationtemporarilyfrozenbyItalianpresident.html Renzi met Sergio Mattarella on Monday at the presidential palace -- the Quirinale -- in order to formally submit his resignation following a stunning defeat in a referendum on Sunday. Renzi was expected to step down immediately but his departure could now be delayed until Christmas.

Mattarella signalled that he will not call snap elections in response to the referendum results, putting him on a collision course with populist and rightwing parties that want a new poll to be called right away.

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iehi-feed-61253 Tue, 06 Dec 2016 23:40:22 GMT Carrier Boss Suggests Consequence of Deal With Trump Will Be: More Robots http://implode-explode.com/viewnews/2016-12-06_CarrierBossSuggestsConsequenceofDealWithTrumpWillBeMoreRobots.html iehi-feed-61252 Tue, 06 Dec 2016 23:33:32 GMT The Deepening Deep State - KUNSTLER http://implode-explode.com/viewnews/2016-12-06_TheDeepeningDeepStateKUNSTLER.html A little paranoia about the growing fascist behavior of the US government is a useful corrective to trends that citizens ought to be concerned about -- for instance, the militarization of police; the outrageous "civil forfeiture" scam that allows police to steal citizens cash and property without any due process of law; the preferential application of law as seen in the handling of the Clinton Foundation activities and the misconduct of banking executives; the attempt to impose a "cashless society" that would herd all citizens into a financial surveillance hub and eliminate their economic liberty.

These matters are especially crucial as the nation stumbles into the next financial crisis and the Deep State becomes desperate to harvest every nickel it can to rescue itself plus the cast of "systemically important" (Too-Big-To-Fail) banks and related institutions like Fannie Mae and Freddie Mac, which are about to once again be left holding colossal bags of worthless non-performing mortgages, not to mention the pension funds and insurance companies that will also founder in the Great Unwind that is likely to commence as Trump hangs his golden logo over the White House portico.

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iehi-feed-61251 Tue, 06 Dec 2016 23:24:24 GMT Wells Fargo to Abused Customers: See You in Arbitration http://implode-explode.com/viewnews/2016-12-06_WellsFargotoAbusedCustomersSeeYouinArbitration.html On Nov. 23, the dishonored bank filed a motion to force its victims to stick to their word and honor the contract requiring arbitration. In Wells' world, playing by the rules is apparently only expected of the customer. Wells spokesman Jack Grone said the company declined to comment. If it wins, Wells will corral its victims into hearings before the American Arbitration Association, the forum it specified in its customer agreements.

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Financial companies and their lobbyists spend a lot of time talking about what a terrific, fair system arbitration is for the public. I'd love to have the chance to sit through some of those hearings and report back to you on how fair or unfair it might be. But reporters are not welcome.

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iehi-feed-61250 Tue, 06 Dec 2016 17:22:10 GMT Bigger trade deficit suggests trade will drag on growth http://implode-explode.com/viewnews/2016-12-06_Biggertradedeficitsuggeststradewilldragongrowth.html iehi-feed-61249 Tue, 06 Dec 2016 17:19:37 GMT Poll: Trump's Carrier deal is wildly popular http://implode-explode.com/viewnews/2016-12-06_PollTrumpsCarrierdealiswildlypopular.html iehi-feed-61248 Tue, 06 Dec 2016 17:15:15 GMT House G.O.P. Signals Break With Trump Over Tariff Threat http://implode-explode.com/viewnews/2016-12-06_HouseGOPSignalsBreakWithTrumpOverTariffThreat.html "I respect President-elect Trump for fulfilling his campaign promise to withdraw from TPP," Representative Kevin Brady, Republican of Texas and chairman of the powerful House Ways and Means Committee, said shortly after the election. "We can't abandon these markets to China and other competitors because American businesses and customers will lose out," he added.

... But massive tariffs appear too much to abide. Both Mr. Ryan and Senator Mitch McConnell, Republican of Kentucky and the majority leader, supported a bill that gave Mr. Obama and his successor special "fast track" authority to negotiate trade agreements, and are proponents of reducing tariff barriers.

"Tax cuts and deregulation will make the American economy great again, but tariffs and trade wars will make it tank again," said David McIntosh, president of the conservative group Club for Growth in a statement, adding, "The majority leader is right to caution against protectionism and to urge a robust debate on free markets and trade."

House leaders want to tackle the problem of companies moving operations overseas with a broad rewriting of the corporate tax code, which they say will make American manufacturing more competitive without resorting to punitive measures on individual companies.

"Tough talk plays well with his base and is arguably even long overdue," said Brian Walsh, a Republican consultant and former official at the National Republican Senatorial Committee. "But ultimately the legislative focus will be on tax reform and deregulation versus tariffs and trade wars. I don't believe Republicans will let a golden opportunity to finally pass comprehensive tax reform to fall victim to intraparty squabbling."

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iehi-feed-61247 Tue, 06 Dec 2016 17:13:47 GMT Donald Trump's Twitter Tirade Sparks Anger in China http://implode-explode.com/viewnews/2016-12-06_DonaldTrumpsTwitterTiradeSparksAngerinChina.html Mr. Trump's call with Ms. Tsai and subsequent tweets accusing China of currency manipulation, over-taxing U.S. imports and building "a massive military complex in the middle of the South China Sea" have generated a "tremendous amount of uncertainty" in Beijing, said David Dollar, the Treasury Department's economic and financial emissary to China during Mr. Obama's first term.

"Some of the issues with China are best settled quietly and confidentially," Mr. Dollar said. "If the whole policy is diplomacy-by-tweet, it's hard to think that's going to meet U.S. objectives."

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Stephen Yates, a former national security adviser to Vice President Dick Cheney who worked as a Mormon missionary in Taiwan, said that for at least a week Ms. Tsai's name was on Mr. Trump's list of foreign leaders whom he would speak with by phone.

"To my knowledge, Taiwan was on that list early, and it took some time to arrange," said Mr. Yates, who is seen as a candidate for a post on Mr. Trump's national security team. "It was a message in the sense that Donald Trump is not necessarily going to be told what he can or can't do because a foreign leader says so. That's exactly the kind of thing that millions of Americans detest about Washington," said Mr. Yates, who currently is visiting Taiwan for meetings with senior officials.

"If it's going to cause some pain, then so be it," he said.

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Mr. Trump used Twitter on Sunday to complain that China "heavily" taxes U.S. products entering their country, but that the U.S. doesn't tax Chinese imports. China does impose a tariff, a sort of import tax, ranging between 5% and 9.7%, on many products.

The U.S. in many cases charges a tariff on imports from China and many other countries, ranging between 2.5% and 2.9%. Mr. Trump has in the past floated the idea of imposing a tariff against China more than ten times larger.

While Mr. Trump has appeared to soften some of his other campaign stances, on issues such as climate change and torture of terrorism suspects, he has not backed off his calls to more aggressively challenge Beijing.

His approach in recent days "could force the Chinese to feel they have to respond," said Michael Auslin, a resident scholar in Asian Studies at the American Enterprise Institute. Mr. Auslin said China could decide to take any number of steps, including putting "another 1,000 missiles across the [Taiwan] strait." It also

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iehi-feed-61245 Tue, 06 Dec 2016 01:22:55 GMT Carney Lays Out Vision to Revive Benefits of Globalization http://implode-explode.com/viewnews/2016-12-05_CarneyLaysOutVisiontoReviveBenefitsofGlobalization.html Mark Carney launched a defense of globalization and set out a manifesto for central bankers and governments to boost growth and make the world economy more equal.

The Bank of England Governor said they must acknowledge that gains from trade and technology haven't been felt by all, improve the balance of monetary and fiscal policy, and move to a more inclusive model where "everyone has a stake in globalization."

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Carney also defended the central bank's current policy stance... "Low rates are not the caprice of central bankers, but rather the consequence of powerful global forces, including debt, demographics and distribution," he said, adding that they helped to prevent a deeper economic downturn.

So he wants to make the "fruits of globalization felt more equally", but wants to ignore the chief driver of the inequality... this pretty much sums of the establishment's "response" to the undeniable popular revolt going on now.

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iehi-feed-61243 Tue, 06 Dec 2016 00:54:36 GMT ECB Buys Record Amount of Debt as QE Frontloaded Before Holidays http://implode-explode.com/viewnews/2016-12-05_ECBBuysRecordAmountofDebtasQEFrontloadedBeforeHolidays.html