Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-64051 Fri, 22 Jun 2018 22:34:53 GMT China Just Handed the World a 111-Million-Ton Trash Problem http://implode-explode.com/viewnews/2018-06-22_ChinaJustHandedtheWorlda111MillionTonTrashProblem.html By 2030, an estimated 111 million metric tons of used plastic will need to be buried or recycled somewhere else--or not manufactured at all. That's the conclusion of a new analysis of UN global trade data by University of Georgia researchers.

Everyone's bottles, bags and food packages add up. Factories have churned out a cumulative 8.3 billion metric tons of new plastic as of 2017

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The world's plastic problem has been building for decades. Since mass production began in the early 1950s, annual output has grown from about 2 million tons to 322 million produced in 2015, the authors said. Current production rates are exceeding our ability to dispose of the stuff effectively--and supply is expected only to grow. "Without bold new ideas and management strategies, current recycling rates will no longer be met, and ambitious goals and timelines for future recycling growth will be insurmountable," they wrote.

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As the industry matured and the negative effects on public health and the environment became clear, China got more selective about the materials it was willing to buy. A "Green Fence" law enacted in 2013 kept out materials mixed with food, metals or other contaminants. Exports consequently dropped off from 2012 to 2013, a trend that continued until last year, when the world's biggest buyer warned that its scrap plastic purchases would stop altogether.

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iehi-feed-64048 Fri, 22 Jun 2018 17:19:11 GMT Fed Rate Cuts and QE Will Resume Soon http://implode-explode.com/viewnews/2018-06-22_FedRateCutsandQEWillResumeSoon.html Those who have openly subscribed in recent months to the robust-growth and higher-rates view include JPMorgan Chase CEO Jamie Dimon[marketwatch.com] and Morgan Stanley CEO James Gorman, and investors Paul Tudor Jones and Jeffrey Gundlach. There are many others.

In my view, this widely held wisdom is based on a profound misreading of economic and political reality and trends in the U.S. and around the world. I believe that a looming global recession and fear of deflation will lead the Fed to cut rates instead and reinstate quantitative easing, or QE, causing U.S. bond yields to fall.

First, it is important to understand that the 2008 financial crisis was never resolved. Aggressive fiscal- and monetary-policy tools--extremely low rates and multitrillion-dollar bond-buying programs--helped contain the crisis. But they didn't fix the problem. The global economy has been stabilized, but fundamental weaknesses remain.

An economic reckoning may surface as soon as the next few months.

In the U.S., second-quarter economic data look strong. But that is misleading. There are plenty of indications of weakness, including slowing sales of cars and houses, and a decline in mortgage refinancing. The cumulative effect of interest-rate hikes, frozen levels of real income, and rising oil prices will also weigh on the public's buying power.

In the corporate sphere, the boom in stock buybacks, which in May reached an astounding $174 billion, comes directly at the expense of capital investment that would boost economic growth. A potential global trade war is also detrimental; the U.S. dollar's weakness in 2017, combined with reinvigorated economies throughout the world, contributed immensely to U.S. exports...

June's interest-rate hike was most likely the last in the current cycle. The next major move by the Fed could be to lower rates, followed by more QE. The realization that this is happening will bring about a dramatic change in investors' views and will return U.S. bond yields to the 1.5%-2% level. The development, I believe, will be rapid and surprise a financial system dramatically underweight long-term bonds.

As we say, "happy times are here again" -- almost nonstop since 2009. So this editorial is bold call -- but it has really been a "bipolar" economy since the 2008 crisis; with every person able to see whatever they want to see in the mixed data... at some point, a clear trend will likely manifest...

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iehi-feed-64043 Wed, 20 Jun 2018 00:43:37 GMT Beijing has tactics besides just tariffs to hurt the U.S. in a trade war http://implode-explode.com/viewnews/2018-06-19_BeijinghastacticsbesidesjusttariffstohurttheUSinatradewar.html "It's true that the base on which they can put on additional tariffs is much narrow than the U.S.," said Ludovic Subran, global head of macroeconomic research at Allianz and chief economist at Euler Hermes.

But Subran and other international trade experts warn not to count China out too quickly.

"The first thing to observe here is that China is not a country of laws -- it's an authoritarian dictatorship... so from that opening point, China is potentially able to play much, much dirtier than the United States," said Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics, who warned that American businesses could take the punishment for Trump's antagonism.

"He will essentially force the Chinese government to retaliate in other ways -- and those other ways can be much more costly to American firms," he said. "That belief is premised on a fundamentally erroneous assumption about how the modern economy works... and a lack of concern with how engaged American businesses are involved already in China."

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iehi-feed-64039 Mon, 18 Jun 2018 23:16:55 GMT Senate rejects Trump's rescue of Chinese firm ZTE http://implode-explode.com/viewnews/2018-06-18_SenaterejectsTrumpsrescueofChinesefirmZTE.html The Senate voted Monday to reimpose the U.S. ban on Chinese telecom giant ZTE, in a rebuke to President Donald Trump and his efforts to keep the company in business.

The provision targeting ZTE was part of the National Defense Authorization Act, a must-pass defense spending bill that cleared the Senate by a vote of 85-10. It must now be reconciled with the House version of the measure, which takes a narrower approach to ZTE.

The vote raises the stakes in Congress' brewing confrontation with Trump over the Chinese company, which lawmakers of both parties consider a national security threat to U.S. networks.

In a sign of the broad backing for the effort, Republican Sens. Tom Cotton of Arkansas and Marco Rubio of Florida as well as Democrats like Minority Leader Chuck Schumer of New York and Elizabeth Warren of Massachusetts pushed for the ZTE ban to be included in the defense bill.

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The Senate's ZTE provision would force Trump to certify that Chinese telecoms have not violated U.S. law for a full year and are cooperating with U.S. investigators before any lifting of civil penalties. It would also prevent the U.S. government from purchasing or subsidizing equipment from ZTE and Huawei.

Despite Monday's overwhelming Senate passage, the ZTE ban could still be stripped from the defense bill or modified during the conference process between the Senate and House, which did not push back as aggressively in its own version of the legislation. House lawmakers did include a provision that would bar ZTE and Huawei from entering into U.S. government contracts.

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iehi-feed-64038 Mon, 18 Jun 2018 19:00:38 GMT Debt Clock Ticking | Mauldin http://implode-explode.com/viewnews/2018-06-18_DebtClockTickingMauldin.html Moody's has issued a statement that CMBS loans are now almost as risky as in 2007 because 75% of them are interest only, and the interest only period is now 6 years, up from 2.2 years just a few years ago. In addition, they are becoming much more covenant light, and are at higher leverage. All of this is a red flag since these things create much more risk of serious problems when the recession hits. There is also a bigger concentration of single tenant properties, which, as we have seen in retail, can be deadly in a recession. Asset and sponsor quality is also deteriorating. There is now so much competition to put out loans by so many non-bank sources, that borrowers can get lenders to compete, which always means lower quality underwriting. Far too much capital chasing too few good deals.

Underwriting is not nearly as bad as in 2006--2007 yet, but it appears the trend is what it always has been, when the economy is strong and there is too much capital, underwriting standards fall down, and then the stage is set for a bad outcome when the economy goes bad. It is typically 10--12 years between collapse of the last crash and then credit quality deterioration and the next credit collapse. We are at 10 years. Dodd Frank had rules to try to avoid a replay of 2008 in CMBS, but a lot of loans now are made by private equity funds that are not subject to these regulations.

One thing that is immutable is that as each generation comes into Wall Street, they think they know better how to do it, and they eventually do the same dumb loans in pursuit of profits and bonuses. It has never been different. We are not about to have a major crash again, but CMBS loan quality is deteriorating now, and one day in the next 2--3 years, it will be a bad problem. When they start doing a lot of CDOs and virtual CMBS pools with derivatives, then that is a sure sign the end is near.

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iehi-feed-64035 Sun, 17 Jun 2018 18:34:06 GMT Trade Acrimony With Canada -- Yes, It Can Flare Up Into Full-Scale Trade War http://implode-explode.com/viewnews/2018-06-17_TradeAcrimonyWithCanadaYesItCanFlareUpIntoFullScaleTradeWar.html iehi-feed-64034 Sun, 17 Jun 2018 18:30:57 GMT Venezuela Orders Government Services to Accept Any Cryptocurrency http://implode-explode.com/viewnews/2018-06-17_VenezuelaOrdersGovernmentServicestoAcceptAnyCryptocurrency.html iehi-feed-64031 Sat, 16 Jun 2018 14:51:46 GMT Here's how the ECB just breathed new life into the dollar rally, analysts say http://implode-explode.com/viewnews/2018-06-16_HereshowtheECBjustbreathednewlifeintothedollarrallyanalystssay.html By guaranteeing that it will sit on its hands for at least a year when it comes to raising interest rates, the European Central Bank sank the euro Thursday and potentially gave the dollar fuel for a long-running rally, analysts said.

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And this might just be the opening act for a theme that could endure for at least 12 months. While the Fed is expected to deliver up to two more rate increases in 2018 and further hikes next year, the ECB just ensured it won't move until the latter half of next year at the earliest.

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iehi-feed-64025 Fri, 15 Jun 2018 22:43:58 GMT Wall St ends high-volume session lower on trade jitters http://implode-explode.com/viewnews/2018-06-15_WallStendshighvolumesessionlowerontradejitters.html iehi-feed-64023 Fri, 15 Jun 2018 14:10:12 GMT Trump Hits China With Tariffs On $50 Billion Of Goods; China Says It Will Retaliate http://implode-explode.com/viewnews/2018-06-15_TrumpHitsChinaWithTariffsOn50BillionOfGoodsChinaSaysItWillRetali.html iehi-feed-64022 Fri, 15 Jun 2018 00:51:12 GMT Why the World's Most Expensive City Is Running to Bitcoin http://implode-explode.com/viewnews/2018-06-14_WhytheWorldsMostExpensiveCityIsRunningtoBitcoin.html On Monday, the National Assembly said that inflation in Venezuela is now running at nearly 24,600% per year... [and] bitcoin trading volume in Venezuela has exploded, up 211% this year alone.

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Venezuela could emerge as the first country where a cryptocurrency effectively replaces a government-controlled paper currency. And that would encourage other people around the world to also seek shelter in bitcoin.

... [but] Venezuela isn't the only country with major money problems.Just look at Argentina. Last year, its official inflation rate hit 25%. The year before, it was 37%. This means that everyday goods and services in the country are 71% more expensive than they were at the start of 2016.

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iehi-feed-64011 Sun, 10 Jun 2018 17:30:34 GMT Trump Dynamites G7 Meeting in 11th Hour (SO MUCH FOR TARIFF-FREE G7!!) http://implode-explode.com/viewnews/2018-06-10_TrumpDynamitesG7Meetingin11thHourSOMUCHFORTARIFFFREEG7.html The president's outburst had been foreshadowed for days leading up to the Canada summit, with Mr. Trump and his counterparts trading sharp-edged barbs that included threats of punches and counterpunches on tariffs. President Emmanuel Macron of France accused Mr. Trump of being willing to remain isolated from the world.

That was followed by 48 hours of tense and often confrontational closed-door discussions between Mr. Trump and the leaders of America's closest allies -- France, Britain, Canada, Japan, Italy and Germany -- in the hopes of resolving a brewing trade war among friends.

Instead, the gathering apparently served to further inflame Mr. Trump's belief that the United States is being treated unfairly by countries with which prior presidents had long ago negotiated trade agreements for the flow of goods and services.

The result was a slow-rolling collapse of the fragile alliances that officials at the summit -- and even Mr. Tump's own White House advisers -- insisted throughout the day could be maintained in the face of fundamental disagreements.

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Earlier in the day, before Mr. Trump left the summit, he brought up the dramatic prospect of completely eliminating tariffs on goods and services, even as he threatened to end all trade with them if they didn't stop what he said were unfair trade practices.

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iehi-feed-64006 Fri, 08 Jun 2018 22:00:32 GMT China's ZTE apologizes, pledges reboot after agreeing to pay $1 billion fine to US http://implode-explode.com/viewnews/2018-06-08_ChinasZTEapologizespledgesrebootafteragreeingtopay1billionfineto.html ZTE pleaded guilty last year to conspiring to evade U.S. embargoes by buying U.S. components, incorporating them into ZTE equipment and illegally shipping them to Iran, paying nearly $900 million in fines. The latest sanction in April was because ZTE lied about disciplining some executives responsible for the original violations.

The ban on ZTE became a key focus in crunch trade talks between Washington and Beijing, and a deal to lift it was struck as U.S. President Donald Trump seeks trade concessions from China and negotiations continue to avoid a trade war between the world's two largest economies.

Under the deal, ZTE will change its board and management within 30 days, pay the $1 billion fine and put an additional $400 million in escrow. The deal also includes a new 10-year ban that is suspended unless there are future violations.

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iehi-feed-64005 Fri, 08 Jun 2018 21:57:52 GMT The Swiss are voting on the radical concept of "sovereign money" http://implode-explode.com/viewnews/2018-06-08_TheSwissarevotingontheradicalconceptofsovereignmoney.html Another response to crisis has been to give even more power and responsibility to a centralized authority. Switzerland's "sovereign money" referendum fits into this category. On Sunday (June 10), Swiss voters will decide whether to ditch the fractional-reserve banking system (pdf), in which banks create money as a byproduct of extending credit, lending out far more than they hold in deposits. The radical reform, called Vollgeld, would give the Swiss National Bank a monopoly over this power, and require commercial banks to lend only what they have on hand.

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It feels less revolutionary--maybe because I write so many bitcoin stories--but it's arguable that centralization has been a bigger force following the financial crash than a push towards the stateless, decentralized power promoted by the crypto crowd. There are fewer banks than before, and they're bigger and more profitable. Ordinary fiat bank deposits are growing. The US and Europe enacted sweeping regulatory overhauls that gave regulators more heft. The Swiss initiative, in fact, would give officials power that they don't even want.

The original title of this article calls the concept "the anti-bitcoin" -- but that's ridiculous, since any lending based on cryptocurrencies is also (by default) 100%-reserved.

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iehi-feed-64004 Fri, 08 Jun 2018 21:52:45 GMT Binance, NEO Lead $12 Million Investment In AngelList Spin-Off To Scale Up Crypto Fundraising http://implode-explode.com/viewnews/2018-06-08_BinanceNEOLead12MillionInvestmentInAngelListSpinOffToScaleUpCryp.html Revealed exclusively to CoinDesk, Republic, a crowdequity platform that can help ICO issuers manage token sales that was spun out of AngelList, has raised $12 million in commitments for a token presale.

Led by Binance Labs, the investing division of cryptocurrency exchange provider Binance, and NEO Global Capital, an affiliate of the public blockchain project of the same name, the round also drew support from East Chain Co., Jeffrey Tarrant and Passport Capital. (Investors purchased both the new crypto token and equity in the company.)

Looking ahead, the initial raise is part of Republic's interest in ultimately raising as much as $92 million total selling its crypto token, with a yet to be announced public sale.

According to Republic co-founder Kendrick Nguyen, the token will be used to incentivize users to take an active interest in their investments, by allowing Republic to potentially provide access to ICO deals and offer a share in the revenue earned by the company as it grows.

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"We will be doing a combination of Reg D, Reg S and Reg A+ to make sure our tokens are widely available, irrespective of income or net worth in the U.S. and beyond," Nguyen said, adding:

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iehi-feed-64003 Fri, 08 Jun 2018 21:47:51 GMT As U.S. Flexes Its Muscles On Trade, Other Countries Are Beginning To Push Back http://implode-explode.com/viewnews/2018-06-08_AsUSFlexesItsMusclesOnTradeOtherCountriesAreBeginningToPushBack.html iehi-feed-63994 Wed, 06 Jun 2018 21:42:13 GMT Is It Time To Start Worrying About China's Debt Default Avalanche? http://implode-explode.com/viewnews/2018-06-06_IsItTimeToStartWorryingAboutChinasDebtDefaultAvalanche.html ... China's four largest banks held about 4.1 trillion yuan in bonds issued by companies and other financial institutions at the end of 2017, nearly 20% below 5.1 trillion yuan a year earlier; all Chinese banks held about 12 trillion yuan of corporate bonds on or off their balances sheets, some 70% of outstanding issuance, according to Citic.

It is therefore hardly surprising to see that Chinese corporate bonds, especially riskier issues, have been getting slammed in recent weeks... the yield premium of three-year AA- rated bonds over similar-maturity AAA notes has blown out 72 bps since March to 225 basis points, the highest level since August 2016, an indication of the recent pressures on weaker firms. One can imagine what is going on with deep junk-rated corps.

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The recent blow out in Chinese corporate bond spooked none other than the PBOC, which last last Friday announced that it will accept lower-rated corporate bonds as collateral for a major liquidity management tool in a move that analysts see as designed in part to restore confidence in the country's corporate bond market.

Specifically, the central bank said that it had decided to expand the collateral pool for the medium-term lending facility (MLF) to include corporate bonds rated AA+ or AA by domestic rating agencies.  The central bank also added as collateral financial bonds rated AA and above with proceeds to support rural development, small enterprises and green projects, as well as high-quality loans supporting green projects and small enterprises, the PBoC said in a statement posted on its website.

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while the PBOC intervention may delay the moment of reckoning for the world's most indebted corporate sector, it will not eliminate it. One potential catalyst: Chinese companies have to repay a total of 2.7 trillion yuan of bonds in the onshore and offshore market in the second half of this year, and together with another 3.3 trillion yuan of trust products set to mature in the second half, the funding problems will get worse. As already more than eight high-yield trust products have delayed payments so far this year.

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iehi-feed-63993 Wed, 06 Jun 2018 21:29:15 GMT How Greece's Busiest Port Reveals the Perils of Privatization http://implode-explode.com/viewnews/2018-06-06_HowGreecesBusiestPortRevealsthePerilsofPrivatization.html In 2015, as a condition of the $100 billion European Union bailout that followed the 2008 financial crisis, the Greek government agreed to privatize a number of state-held assets including the Piraeus Port Authority, which manages the port's container and passenger terminals. The Greek state sold a majority stake for $330 million to COSCO. For the Chinese company, the purchase had a clear financial logic. About 80 percent of China's imports and exports to and from Europe are transported by sea, and by avoiding the need to sail to busy Northern European ports like Rotterdam or Hamburg, COSCO could offload containers in Piraeus, reducing the time it takes cargo to get to Europe by nearly a week. Plus, by owning the port authority, COSCO could help determine how much its own ships would have to pay itself in port fees.

As part of the deal, COSCO pledged to participate in financing $410 million worth of investment in the port, including a repair of port equipment and the dredging of Piraeus's central port. Supporters of privatization argue these improvements signal a coming maritime renaissance at Piraeus--already the busiest port in the eastern Mediterranean. Nektarios Demenopolous, the deputy manager for investor relations at Piraeus Port Authority, told me, "There are 300 million euros [$350 million] of investment to come in the next five years, followed by another 50 million. Privatization has made the port much more dynamic and will reboot activities at the port like ship repair that have been in recession. It will be remembered as a success story."

But a "success story" for whom? The dockworkers of Piraeus say they and their families have seen little of the alleged gains brought by COSCO. As Piraeus Port Authority boasts of widening profit margins and increasing maritime traffic, wages for dockworkers haven't budged since they were slashed from 1500 euros ($1,750) per month to 600 euros after the financial crisis. Beyond that, COSCO now hires few dockworkers as full-time employees, and tends to enlist unskilled laborers for complex container unloading. COSCO also primarily remunerates people on an ad hoc basis as subcontractors, leaving dockworkers and their families entirely dependent on the ebb and flow of traffic into Piraeus. It also means their traditional retirement benefits have disappeared.

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iehi-feed-63987 Sat, 02 Jun 2018 14:41:50 GMT The US economy suddenly looks like it's unstoppable (BUT TRADE IS THE SPECTRE THAT HAUNTS...) http://implode-explode.com/viewnews/2018-06-02_TheUSeconomysuddenlylookslikeitsunstoppableBUTTRADEISTHESPECTRET.html The White House's decision this week to forge ahead with steel and aluminum tariffs stoked fears that the administration could be its own worst enemy on the road to 3 percent-plus growth. While the tariffs themselves are expected to have minimal economic impact on their own, fears remain that they could spark retaliatory measures and, ultimately, an all-out trade war.

Exports make up just 12.4 percent of the U.S. economy, but S&P 500 companies generate about 43 percent of their sales internationally. That's why markets tend to recoil every time the administration saber rattles about tariffs.

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iehi-feed-63985 Sat, 02 Jun 2018 11:50:40 GMT Trump May Have Brokered Massive, Sanctions-Violating Oil Deal In Russian Quid-Pro-Quo http://implode-explode.com/viewnews/2018-06-02_TrumpMayHaveBrokeredMassiveSanctionsViolatingOilDealInRussianQui.html Evidence strongly indicates that President Donald J. Trump and his campaign associates brokered a massive oil privatization deal, where his Organization facilitated a global financial transaction to sell Russian Oil stock to its Syrian War adversary, the Emirate of Qatar... The end result allowed Russia to trade stolen emails to help to Donald Trump's election campaign (as well as that of many Republican Congressmen), in exchange for help circumventing American sanctions to transact the sale of Rosneft, which Putin desperately needed to finance his budget deficit.

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Carter Page met with Rosneft in December to assist with the deal, and he's on the record admitting it but claims he didn't meet Igor Sechin," said Dworkin incredulously... mighty brokerage fee to one of the Trump campaign advisors, Moscow-based investment banker Carter Page, is highlighted in the former MI-6 operative's report.

Theoretically, the former Merrill Lynch investment banker, Page, may have only been the "bag man" or go-between and someone else is the recipient of the cash premium in the dossier. Five hundred million dollars is a lot of money, and conceivably, many members of the Trump Organization, or family, could be involved in a deal of that scope.

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Nineteen and a half percent of Rosneft's stock was agreed to be transferred on December 7th, before the board was informed of the transaction's terms only after it took place.

The "matryoshka" (named after the famous nesting dolls) or complex deal structure is most likely designed to avoid American sanctions imposed over the Ukraine invasion against Rosneft, its CEO Igor Sechin, and its parent company Gazprom.

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