Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-63311 Sun, 19 Nov 2017 04:42:13 GMT Trump's Saudi Scheme Unravels http://implode-explode.com/viewnews/2017-11-18_TrumpsSaudiSchemeUnravels.html Why did Trump gamble so heavily on the inexperienced Kushner and the impulsive MbS? Well, of course, if such a "grand plan" had indeed worked out, it would have been a major foreign policy coup -- and one done over the heads of the professional foreign policy and defense echelon who were excluded from it. Trump then would have felt himself freer to ascend above the Establishment tentacles: to attain a certain elevated independence and freedom from his "minders." He would have achieved his coup through family channels, rather than be officially advised.

But, if it sinks into farce, and MbS becomes regarded in the U.S. as a maverick, rather than a Machiavelli, the (slighted) "system" will exact its revenge: presidential judgments will stand devalued -- and ever more in need of justification and "minding."

MbS (and Kushner) may have hurt President Trump in a much wider way therefore: the failed bet on the untried MbS may leach into other spheres -- such as, in consequence, U.S. allies' openly questioning the soundness of Trump's North Korea judgments. In short, the U.S. President's credibility will bear the consequences for his falling for MbS' spin.

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iehi-feed-63304 Sat, 18 Nov 2017 15:52:50 GMT The Questionable Math Behind Manafort's Extravagant Home Renovations http://implode-explode.com/viewnews/2017-11-18_TheQuestionableMathBehindManafortsExtravagantHomeRenovations.html There were the Oriental rugs worth $934,000, the four Range Rovers, the antiques--even $1.37 million in clothes. The federal indictment of Paul Manafort, President Donald Trump's former campaign chairman, accuses him of laundering millions in foreign payments to pursue a "lavish lifestyle" in the U.S., especially in the Hamptons, where he has a house.

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Special Counsel Robert Mueller, in his indictment, says that a Hamptons firm got $5.4 million in wire transfers from Cyprus over 71 payments. But building permits over the same period examined by Bloomberg show that renovations by Manafort's Hamptons' contractor were estimated to cost $1.2 million. That's less than a quarter of what was ultimately sent--an apparent discrepancy that could draw scrutiny from investigators.

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iehi-feed-63303 Sat, 18 Nov 2017 00:41:13 GMT How Corporate Zombies Are Threatening The Eurozone Economy http://implode-explode.com/viewnews/2017-11-17_HowCorporateZombiesAreThreateningTheEurozoneEconomy.html ``The Bank for International Settlements, the Basel-based central bank for central banks, defines a zombie as any firm which is at least 10 years old, publicly traded and has interest expenses that exceed the company's earnings before interest and taxes. Other organizations use different criteria. About 10% of the companies in six eurozone countries, including France, Germany, Italy and Spain are zombies, according to the central bank's latest data. The percentage is up sharply from 5.5% in 2007. In Italy and Spain, the percentage of zombie companies has tripled since 2007, the Organization for Economic Cooperation and Development estimated in January. Italy's zombies employed about 10% of all workers and gobbled up nearly 20% of all the capital invested in 2013, the latest year for which figures are available.''

The WSJ explains how the ECB's negative interest rate policy and corporate bond buying are keeping a chunk of the corporate sector, especially in southern Europe on life support. In some cases, even the life support of low rates and debt restructuring is not preventing further deterioration in their metrics. These are the true "Zombie" companies who will probably never come back from being "undead"...

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iehi-feed-63301 Sat, 18 Nov 2017 00:04:43 GMT Fed Hints During Next Recession It Will Roll Out Income Targeting, NIRP http://implode-explode.com/viewnews/2017-11-17_FedHintsDuringNextRecessionItWillRollOutIncomeTargetingNIRP.html On Thursday afternoon, in a stark warning of what's to come, San Francisco Fed President John Williams confirmed our suspicions when he said that to fight the next recession, global central bankers will be forced to come up with a whole new toolkit of "solutions", as simply cutting interest rates won't well, cut it anymore, and in addition to more QE and forward guidance - both of which were used widely in the last recession - the Fed may have to use negative interest rates, as well as untried tools including so-called price-level targeting or nominal-income targeting.

[This] is a tacit admission that as a result of the aging workforce and the dramatic slack which still remains in the labor force, the US central bank will have to take drastic steps to preserve social order and cohesion.

According to Williams', Reuters reports, central bankers should take this moment of "relative economic calm" to rethink their approach to monetary policy. Others have echoed Williams' implicit admission that as a result of 9 years of Fed attempts to stimulate the economy - yet merely ending up with the biggest asset bubble in history - the US finds itself in a dead economic end, such as Chicago Fed Bank President Charles Evans, who recently urged a strategy review at the Fed, but Williams' call for a worldwide review is considerably more ambitious.

...Meanwhile, the idea of Fed targeting, or funding, "income" is hardly new: back in July, Deutsche Bank was the first institution to admit that the Fed has created "universal basic income for the rich"...

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iehi-feed-63299 Fri, 17 Nov 2017 23:58:30 GMT Saudi Arabia Offers Arrested Royals A Deal: Your Freedom For Lots Of Cash http://implode-explode.com/viewnews/2017-11-17_SaudiArabiaOffersArrestedRoyalsADealYourFreedomForLotsOfCash.html Saudi authorities are negotiating settlements with princes and businessmen held over allegations of corruption, offering deals for the detainees to pay for their freedom, people briefed on the discussions say.

 

In some cases the government is seeking to appropriate as much as 70 per cent of suspects' wealth, two of the people said, in a bid to channel hundreds of billions of dollars into depleted state coffers.

 

The arrangements, which have already seen some assets and funds handed over to the state, provide an insight into the strategy behind Crown Prince Mohammed bin Salman's dramatic corruption purge.

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Regular Saudis, who've seen their benefits cut and some of their jobs taken away, support MbS's decision. "Why should the poor take all the pain of austerity," said one Saudi academic. "The rich need to pay their way too."

In Saudi Arabia, they are about to do just that.

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iehi-feed-63298 Fri, 17 Nov 2017 23:54:15 GMT Taxpayers have paid dearly for 720-mln-euro ‘social dividend' (Greece) http://implode-explode.com/viewnews/2017-11-17_Taxpayershavepaiddearlyfor720mlneurosocialdividendGreece.html iehi-feed-63297 Fri, 17 Nov 2017 23:52:43 GMT EU handling of Greek bailouts only partial success, say EU auditors http://implode-explode.com/viewnews/2017-11-17_EUhandlingofGreekbailoutsonlypartialsuccesssayEUauditors.html The ECA [European Court of Auditors] report, which focused on the work of the European Commission, said the programs "only helped Greece to recover to a limited extent."

The European Central Bank, which together with eurozone states and the International Monetary Fund contributed to the programs, was not assessed because it declined to provide data, questioning the auditors' mandate to ask for it, ECA said.

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"... the Commission did not comprehensively consider Greece's implementation capacity in the design process and thus did not adapt the scope and timing accordingly," [the ECA] said.

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iehi-feed-63293 Thu, 16 Nov 2017 17:11:03 GMT The Shock of Sweden's Housing Market is Hitting the Country's Currency http://implode-explode.com/viewnews/2017-11-16_TheShockofSwedensHousingMarketisHittingtheCountrysCurrency.html Can a central bank steer the housing market? Not so long ago, Sweden's Riksbank decided: no. Now, there's a risk that decision may backfire as the biggest property market in Scandinavia risks sinking into a correction.

The evidence of price declines was so worrying on Tuesday that it contributed to a 1.5 percent slump in the krona against the euro. A weak currency puts the Riksbank's inflation target at risk. So should it be looking at the housing market more closely?

Developments in Sweden's housing market "could spark some doubts at the Riksbank as it may affect the overall economic outlook and inflation," Nordea analyst Andreas Wallstrom said in a note.

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iehi-feed-63287 Wed, 15 Nov 2017 17:32:48 GMT Richest 1% own over half the world's wealth http://implode-explode.com/viewnews/2017-11-15_Richest1ownoverhalftheworldswealth.html iehi-feed-63285 Tue, 14 Nov 2017 20:54:24 GMT Venezuela's Bondholder Meeting Is a Bust as S&P Declares Default http://implode-explode.com/viewnews/2017-11-14_VenezuelasBondholderMeetingIsaBustasSPDeclaresDefault.html Venezuela's grand gathering with creditors Monday lasted all of 30 minutes and didn't produce anything of substance. To make matters worse, S&P Global Ratings declared the country in default while Fitch Ratings cited missed payments by the state oil company prompting a fresh selloff in the nation's bonds.

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Very little was announced and nothing was resolved, according to attendees who said they left just as confused about the government's intentions as they were going in. Vice President Tareck El Aissami was the only official to speak, and devoted most of his prepared remarks to railing against Donald Trump and global financiers who he said have conspired to keep the country from making debt payments on time. He pledged the nation would continue to honor its obligations and work with bondholders to find new ways to get them their money, but offered no concrete proposals for restructuring.

President Nicolas Maduro had summoned holders of some $60 billion of bonds issued by the government and state oil company Petroleos de Venezuela SA to begin a renegotiation as the nation's cash crunch worsens, sanctions make it difficult to transfer money and delayed payments pile up.

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The nation, home to the world's largest oil reserves, owed investors about $200 million and failed to make those payments by the end of a 30-day grace period, S&P said in the statement in which it lowered the country's rating to SD. Plagued with payment delays and running low on cash -- and with most of its debt trading near 30 cents on the dollar -- it's the first time in recent years the government has exceeded the buffer period on its bonds.

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Investors in Venezuela's $5 billion of bonds maturing in 2019 and 2024 can organize to demand that the nation immediately pay back all they're owed, and down the line, holders of the nation's other debt, which have cross-default provisions, could choose to do the same... they risk setting off what could be the start of one of the messiest debt restructurings ever. S&P said there was a 50 percent chance Venezuela will default again within the next three months.

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iehi-feed-63280 Sun, 12 Nov 2017 19:44:55 GMT Debt swap problems pile up in China http://implode-explode.com/viewnews/2017-11-12_DebtswapproblemspileupinChina.html iehi-feed-63274 Fri, 10 Nov 2017 15:38:58 GMT China Makes Historic Move to Open Market for Financial Firms http://implode-explode.com/viewnews/2017-11-10_ChinaMakesHistoricMovetoOpenMarketforFinancialFirms.html ``China took a major step toward the long-awaited opening of its financial system, saying it will remove foreign ownership limits on banks while allowing overseas firms to take majority stakes in local securities ventures, fund managers and insurers.''

Here's a summary:

  1. Foreign firms will be allowed to own stakes of up to 51 percent in securities ventures; China will scrap foreign ownership limits for securities companies three years after the new rules are effective
  2. The country will lift the foreign ownership cap to 51 percent for life insurance companies after three years and remove the limit after five years
  3. Limits on ownership of fund management companies will be raised to 51 percent, then completely removed in three years
  4. Banks and so-called asset-management companies will have their ownership limits scrapped
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iehi-feed-63272 Fri, 10 Nov 2017 15:16:02 GMT Irish Border Throws Unexpected Hurdle Into Brexit Talks http://implode-explode.com/viewnews/2017-11-10_IrishBorderThrowsUnexpectedHurdleIntoBrexitTalks.html The future of the Irish border erupted unexpectedly into Brexit talks this week, as the European Union made new demands on Britain that risk distracting from efforts to push negotiations to a breakthrough by year-end.

The EU circulated a document to a meeting of EU diplomats Wednesday that called for Northern Ireland to maintain the rules of the customs union and single market after Brexit. The EU calls for no hard frontier on the island, meaning that regulations have to be the same on each side of the line that will become the U.K.'s only land border with the EU after Brexit.

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Ireland is aware that it essentially has veto power now, and once talks move on to trade it will be just one of 27 countries fighting to get its voice heard. It has been considering seeking explicit guarantees on the border as a condition for progress in talks.

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What the EU is demanding is all but impossible for Britain, unless the whole U.K. stays in the customs union, which Prime Minister Theresa May has ruled out. Allowing Northern Ireland to stay in the customs union would mean putting a border between Northern Ireland and mainland Britain. That's unthinkable for the U.K., and more so at a time when the Conservative government is propped up by the pro-U.K. Democratic Unionist Party from Northern Ireland.

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iehi-feed-63264 Thu, 09 Nov 2017 17:51:31 GMT Dissecting the "$250 Billion" China Deals Trump Got for U.S. http://implode-explode.com/viewnews/2017-11-09_Dissectingthe250BillionChinaDealsTrumpGotforUS.html The White House has unveiled a slew of agreements with China as President Donald Trump seeks to address an imbalance in trade. While Commerce Secretary Wilbur Ross boasted a total of $250 billion in business deals, getting to that figure may require some fuzzy math. 

Many of the deals weren't broken out into separate valuations, while a large number were in the form of non-binding memoranda of understanding or involved agreements with existing Chinese partners.

Boeing Co.'s $37 billion aircraft order consists mostly of previously agreed deals, according to officials with knowledge of the matter. An agreement involving Cheniere Energy Inc. was presented at the signing ceremony as worth $11 billion, though neither company involved announced the value. Other pacts are stretched over lengthy periods, such as a 20-year shale gas and chemical project in West Virginia.

Still, the wave of deals signals the potential for an easing of tensions between the two countries, in addition to an increase in trade for products ranging from helicopters to beef...

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iehi-feed-63261 Wed, 08 Nov 2017 23:08:35 GMT Suburban Swing Centrists Rebel Against Trump, Threatening Republicans in Congress http://implode-explode.com/viewnews/2017-11-08_SuburbanSwingCentristsRebelAgainstTrumpThreateningRepublicansinC.html The American suburbs appear to be in revolt against President Trump after a muscular coalition of college-educated voters and racial and ethnic minorities on Tuesday dealt the Republican Party a thumping rejection and propelled a diverse class of Democrats into office.

From the tax-obsessed suburbs of New York City to high-tech neighborhoods outside Seattle to the sprawling, polyglot developments of Fairfax and Prince William County, Va., voters shunned Republicans up and down the ballot in off-year elections. Leaders in both parties said the elections were an unmistakable alarm bell for Republicans ahead of the 2018 campaign, when the party's grip on the House of Representatives may hinge on the socially moderate, multiethnic communities surrounding major cities.

"Voters are taking their anger out at the president, and the only way they can do that is by going after Republicans on the ballot," said Representative Charlie Dent, Republican of Pennsylvania. "If this isn't a wake-up call, I don't know what is."

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iehi-feed-63259 Mon, 06 Nov 2017 19:55:43 GMT China's Central Bank Chief Warns of ‘Sudden, Contagious and Hazardous' Financial Risks http://implode-explode.com/viewnews/2017-11-06_ChinasCentralBankChiefWarnsofSuddenContagiousandHazardousFinanci.html China's financial system is becoming significantly more vulnerable due to high leverage, according to central bank governor Zhou Xiaochuan, who has made a series of blunt warnings in recent weeks about debt levels in the world's second-largest economy.

Latent risks are accumulating, including some that are "hidden, complex, sudden, contagious and hazardous," even as the overall health of the financial system remains good, Zhou wrote in a lengthy article published on the People's Bank of China's website late Saturday.

The nation should toughen regulation and let markets serve the real economy better, according to Zhou. The government should also open up markets by relaxing capital controls and reducing restrictions on non-Chinese financial institutions that want to operate on the mainland, he wrote.

"High leverage is the ultimate origin of macro financial vulnerability," wrote Zhou, 69, who is widely expected to retire soon after a record 15-year tenure. "In sectors of the real economy, this is reflected as excessive debt, and in the financial system, this is reflected as credit that has been expanding too quickly."

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iehi-feed-63258 Mon, 06 Nov 2017 19:50:14 GMT Paradise Papers: Apple's (new) secret tax bolthole revealed http://implode-explode.com/viewnews/2017-11-06_ParadisePapersApplesnewsecrettaxboltholerevealed.html The world's most profitable firm has a secretive new structure that would enable it to continue avoiding billions in taxes, the Paradise Papers show.

They reveal how Apple sidestepped a 2013 crackdown on its controversial Irish tax practices by actively shopping around for a tax haven.

It then moved the firm holding most of its untaxed offshore cash, now $252bn, to the Channel Island of Jersey....

Up until 2014, the tech company had been exploiting a loophole in tax laws in the US and the Republic of Ireland known as the "double Irish".

This allowed Apple to funnel all its sales outside of the Americas - currently about 55% of its revenue - through Irish subsidiaries that were effectively stateless for taxation purposes, and so incurred hardly any tax.

Instead of paying Irish corporation tax of 12.5%, or the US rate of 35%, Apple's avoidance structure helped it reduce its tax rate on profits outside of the US to the extent that its foreign tax payments rarely amounted to more than 5% of its foreign profits, and in some years dipped below 2%.

The European Commission calculated the rate of tax for one of Apple's Irish companies for one year had been just 0.005%.

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After the EU announced in 2013 that it was investigating Apple's Irish arrangement, the Irish government decided that firms incorporated there could no longer be stateless for tax purposes.

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Paradise Papers documents show Apple's two key Irish subsidiaries, Apple Operations International (AOI), believed to hold most of Apple's massive $252bn overseas cash hoard, and Apple Sales International (ASI), were managed from Appleby's office in Jersey from the start of 2015 until early 2016.

This would have enabled Apple to continue avoiding billions in tax around the world.

Apple's 2017 accounts showed they made $44.7bn outside the US and paid just $1.65bn in taxes to foreign governments, a rate of around 3.7%. That is less than a sixth of the average rate of corporation tax in the world.

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Leaked emails also make it clear that Apple wanted to keep the move secret.

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iehi-feed-63257 Mon, 06 Nov 2017 17:44:17 GMT Paradise Papers leak reveals secrets of the world elite's hidden wealth http://implode-explode.com/viewnews/2017-11-06_ParadisePapersleakrevealssecretsoftheworldeliteshiddenwealth.html The material, which has come from two offshore service providers and the company registries of 19 tax havens, was obtained by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists with partners including the Guardian, the BBC and the New York Times.

The project has been called the Paradise Papers. It reveals... Millions of pounds from the Queen's private estate has been invested in a Cayman Islands fund -- and some of her money went to a retailer accused of exploiting poor families and vulnerable people.

Extensive offshore dealings by Donald Trump's cabinet members, advisers and donors, including substantial payments from a firm co-owned by Vladimir Putin's son-in-law to the shipping group of the US commerce secretary, Wilbur Ross.

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"Tax havens are one of the key engines of the rise in global inequality," he said. "As inequality rises, offshore tax evasion is becoming an elite sport."

At the centre of the leak is Appleby, a law firm with outposts in Bermuda, the Cayman Islands, the British Virgin Islands, the Isle of Man, Jersey and Guernsey. In contrast to Mossack Fonseca, the discredited firm at the centre of last year's Panama Papers investigation, Appleby prides itself on being a leading member of the "magic circle" of top-ranking offshore service providers.

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Appleby says it has investigated all the allegations, and found "there is no evidence of any wrongdoing, either on the part of ourselves or our clients", adding: "We are a law firm which advises clients on legitimate and lawful ways to conduct their business. We do not tolerate illegal behaviour."

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iehi-feed-63256 Mon, 06 Nov 2017 14:58:44 GMT Puigdemont bailed pending Brussels ruling http://implode-explode.com/viewnews/2017-11-06_PuigdemontbailedpendingBrusselsruling.html The court must decide within 15 days whether the European arrest warrant issued by the Spanish government shall be executed, after which there are series of avenues for appeal for the five politicians to take.

From arrest to extradition, the entire process could take up to three months to complete, including time for likely appeals.

Such a delay would give Puigdemont the opportunity to participate in the snap regional election called by Spain's government for Catalonia on 21 December.

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iehi-feed-63255 Mon, 06 Nov 2017 14:55:05 GMT Leaks: Commerce Secretary's Offshore Ties to Putin ‘Cronies' http://implode-explode.com/viewnews/2017-11-06_LeaksCommerceSecretarysOffshoreTiestoPutinCronies.html After becoming commerce secretary, Wilbur L. Ross Jr. retained investments in a shipping firm he once controlled that has significant business ties to a Russian oligarch subject to American sanctions and President Vladimir V. Putin's son-in-law, according to newly disclosed documents.

The shipper, Navigator Holdings, earns millions of dollars a year transporting gas for one of its top clients, a giant Russian energy company called Sibur, whose owners include the oligarch and Mr. Putin's family member. Despite selling off numerous other holdings to join the Trump administration and spearhead its "America first" trade policy, Mr. Ross kept an investment in Navigator, which increased its business dealings with Sibur even as the West sought to punish Russia's energy sector over Mr. Putin's incursions into Ukraine.

Partnerships used by Mr. Ross, whose private equity firm has long been the biggest shareholder in Navigator, have a 31 percent stake in the company. Though his personal share of that stake was reduced as he took office in February, he retained an investment in the partnerships valued between $2 million and $10 million, and stood to earn a higher share of profits as a general partner, according to his government ethics disclosure and securities filings.

Mr. Ross's stake in Navigator has been held by a chain of companies in the Cayman Islands, one of several tax havens where much of his wealth, estimated at more than $2 billion, has been tied to similar investment vehicles. Details of these arrangements surfaced in a cache of leaked files from Appleby, one of the world's largest offshore law firms, which administered some 50 companies and partnerships in the Caymans and elsewhere connected to Mr. Ross.

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