Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-65073 Tue, 12 Nov 2019 20:54:12 GMT Trump, In Foamy-Mouthed Rant, Calls For Negative Interest Rates To "Boost Stock Market Another 25%" http://implode-explode.com/viewnews/2019-11-12_TrumpInFoamyMouthedRantCallsForNegativeInterestRatesToBoostStock.html iehi-feed-65072 Mon, 11 Nov 2019 15:05:25 GMT Warren Would Take Billionaires Down a Few Billion Pegs http://implode-explode.com/viewnews/2019-11-11_WarrenWouldTakeBillionairesDownaFewBillionPegs.html Forbes counts 607 American billionaires. A handful have stated that they support a moderate wealth tax. George Soros, Liesel Pritzker Simmons, Ian Simmons, Chris Hughes, Nick Hanauer and 13 other wealthy individuals signed a letter over the summer in support of such a tax.

"I definitely understand how that would make lots and lots of extremely rich people uncomfortable," said Mr. Hanauer, co-founder of a Seattle-based venture capital firm and an early investor in Amazon. "But I'm more worried about our democracy."

"Don't get me wrong," he added. "I would prefer 3 percent." But even at 6 percent, he said, "we would all survive and continue to be rich and fly around in our planes."

He pointed out that most Americans had been living with meager income growth for decades, while the silk-thin layer at the top shoveled in enormous gains, cumulatively more than 400 percent since 1980.

"All you're doing is saying to the richest percent of Americans that the rate of growth of your assets and wealth will now match what has happened to other Americans over the last 40 years," Mr. Hanauer said.

]]>
iehi-feed-65068 Thu, 07 Nov 2019 23:29:23 GMT Donald Trump to pay $2 million to settle Trump Foundation "personal piggybank" case http://implode-explode.com/viewnews/2019-11-07_DonaldTrumptopay2milliontosettleTrumpFoundationpersonalpiggybank.html iehi-feed-65065 Wed, 06 Nov 2019 23:47:20 GMT Founder of world's biggest hedge fund says ‘world has gone mad' with easy money and ‘system is broken' http://implode-explode.com/viewnews/2019-11-06_Founderofworldsbiggesthedgefundsaysworldhasgonemadwitheasymoneya.html iehi-feed-65061 Tue, 05 Nov 2019 19:00:06 GMT Worst May Be Over for Global Economy Amid Signs of Stabilization http://implode-explode.com/viewnews/2019-11-05_WorstMayBeOverforGlobalEconomyAmidSignsofStabilization.html One key reason for the potential turn is the wave of interest-rate cuts from global central banks. Of the 57 institutions monitored by Bloomberg, more than half cut borrowing costs this year with the Fed doing so three times and the European Central Bank pushing its deposit rate further into negative territory. Rate cuts also operate with a lag so the positive effects of easier monetary policy have yet to fully flow through, meaning a further impulse likely awaits.

...

Also driving sentiment is that President Donald Trump and President Xi Jinping are on the cusp of signing "phase one" on a trade deal, which could be enough for global commerce to find a footing. China is reviewing locations in the U.S. where Xi would be willing to meet with Trump to sign a pact.

...

"If the U.S.-Chinese trade escalates again, or if the U.S. starts a new trade war against the only other economy of almost equal size, the EU, it could all still go wrong," said Holger Schmieding, chief economist at Berenberg Bank. "But in the absence of such new political shocks, chances are that the global downturn could peter out in early 2020 and make way for a modest upturn thereafter."

Back on the "no recession ever" yellow brick road... all it takes is financial meltdown-level central bank intervention...

]]>
iehi-feed-65053 Sat, 02 Nov 2019 23:08:47 GMT Lots of Job Hunting, but No Job, Despite Low Unemployment http://implode-explode.com/viewnews/2019-11-02_LotsofJobHuntingbutNoJobDespiteLowUnemployment.html Beneath the clear benefits of the economic expansion, however, there is an undertow of anxiety, heightened recently by fears of slowing growth around the globe and in the United States.

"We're not focusing enough on the people who have continued to be left behind by this recovery," said Martha Gimbel, a manager of economic research at Schmidt Futures, a philanthropic initiative. "We have not talked enough about the workers who are still stuck even in a labor market that is this competitive."

Most of these people do not show up in the stunningly low official unemployment rate, which was 3.6 percent in October. Working even one hour during the week when the Labor Department does its employment survey keeps you out of the jobless category.

We love statements like this last part. The "3.6% unemployment rate" isn't "stunning" if it is juiced with people working 1 hour per week. This is why we've long considered the headline unemployment rate around here near-meaningless, and advocate that it should be weighted by fractional percentage of full time positions. I.e., it should take 40 people working 1 hour per week to equal one "employed" person, for the purposes of calculating the headline rate. But this is unlikely to change, since every politician who gets into power (including the current "populist") has an overwhelming incentive to use the current, bogus statistics for preening...

there are also many others, like Ms. Ward, who work temporary jobs for months at a time and are not necessarily captured in either measure. And millions of contract workers -- freelancers, consultants, Lyft drivers -- lack benefits, regular schedules and job security. They have found a foothold, but it rests on loose rock.

A recent survey by Gallup found that a majority of Americans do not consider themselves to be in a "good job."

Appealing to "Americans on the sidelines" and those who had not benefited from the "so-called recovery" was a key element of Donald Trump's presidential campaign in 2016. Now, Democratic presidential contenders like Elizabeth Warren and Bernie Sanders are arguing that American workers have barely shared in the economy's gains.

And they have bypassed benchmark statistics like the unemployment rate, and focused instead on the system's fundamental unfairness, highlighting stark income inequality and worker rights.

]]>
iehi-feed-65048 Thu, 31 Oct 2019 19:38:50 GMT Fed Unveils Plan to Expand Balance Sheet In New "I Can't Believe It's Not QE(TM)" Program http://implode-explode.com/viewnews/2019-10-31_FedUnveilsPlantoExpandBalanceSheetInNewICantBelieveItsNotQETMPro.html While the amount could change, buying $60 billion in Treasury bills over a month is substantial, even by the Fed's standards. For context, the Fed bought about $85 billion in bonds each month during its final round of quantitative easing, which started in 2012.

Yet the new purchases are different from those postcrisis packages.

...

Mr. Powell and his colleagues have repeated, time and again, that the current balance sheet expansion should not be confused with quantitative easing.

...

To drive home the point that there is no broader policy signal this time, officials made the new package look unique. The Fed is buying only Treasury bills, for one thing. The Fed's recession-era buying focused on bonds, in a bid to make mortgages and car loans cheaper by pushing down longer-term interest rates. By concentrating this effort on short-term debt, the Fed is forgoing that sort of stimulus.

...

Still, some onlookers were skeptical that the Fed would manage to convince investors that this was not an attempt to bolster the economy, given the size of the purchases.

"When it swims like a duck and quacks like a duck, it's hard to prove your intentions aren't fowl," Paul Ashworth, chief economist at Capital Economics, wrote in research note.

...

It is important that the Fed's message sticks. The Fed will be short on room to cut interest rates when the next recession hits, because they are already at just 2 percent -- leaving the central bank with far less than the five percentage points of cuts it made in the 2007 to 2009 downturn. That means bond-buying will be an essential part of the Fed's future easing packages, and one to be used in case of emergency.

"They want to keep Q.E. as something special," said Laura Rosner, a co-founder of MacroPolicy Perspectives. "I don't think they want to send a signal that things are bad."

...

Officials had decided this year that they wanted to continue setting interest rates in what they called an "ample reserve" framework. In such an approach, the central bank keeps its balance sheet holdings big enough to leave plenty of cash in the financial system. Banks keep their extra cash on deposit at the central bank, and the Fed adjusts interest rates by changing how it pays on those excess holdings, commonly called reserves.

]]>
iehi-feed-65041 Sun, 27 Oct 2019 20:37:08 GMT Lebanon Banks' Shutdown Is `Most Potent Case' for Crypto: Nassim Taleb http://implode-explode.com/viewnews/2019-10-27_LebanonBanksShutdownIsMostPotentCaseforCryptoNassimTaleb.html In an ongoing Twitter debate which began on Oct. 24, commentators vented anger on behalf of Lebanon's population, which has been without banking services for more than a week.

Following civil unrest, banks everywhere closed their doors. Six working days later, a senior banking executive said the status quo would continue until conditions improved.

...

For well-known Lebanese statistician, former trader and author of "The Black Swan," Nassim Nicholas Taleb, the government's policy was enough to directly endorse cryptocurrencies such as Bitcoin. "The most potent case for cryptocurrencies: banks are never there when you need them," he summarized in a tweet.

]]>
iehi-feed-65032 Thu, 24 Oct 2019 20:40:09 GMT Fed repo bailout: Overnight operations level to increase to $120 billion http://implode-explode.com/viewnews/2019-10-24_FedrepobailoutOvernightoperationsleveltoincreaseto120billion.html iehi-feed-65031 Thu, 24 Oct 2019 20:37:26 GMT Fed repos: Worries continue over the efforts to fix funding issues http://implode-explode.com/viewnews/2019-10-24_FedreposWorriescontinueovertheeffortstofixfundingissues.html "The repo market has been drugged into submission by the Fed," said Jim Bianco, head of Bianco Research. "That's fine for a while. But what I am getting concerned about is that they're not figuring a way to get it off the drug and get it back to normal, and that will be a problem longer term for them."

...

Market pros worry that a confluence of factors will make the Fed's market balancing act difficult.

Bianco insists that the Fed is not being discerning enough about credit quality in providing cash in exchange for collateral; others are concerned with what happens as the year draws to a close and banks are more focused on shoring up their liquidity mandates than keeping cash flowing in the overnight markets.

]]>
iehi-feed-65026 Tue, 22 Oct 2019 14:31:45 GMT McKinsey: Over half of the world's banks could fail in a downturn http://implode-explode.com/viewnews/2019-10-22_McKinseyOverhalfoftheworldsbankscouldfailinadownturn.html A majority of banks around the world may not be economically viable if the global economy falters, according to a new study by McKinsey & Company.

Return on equity has fallen below their costs for nearly 60 percent of banks, which is financially unsustainable in the long run. A downturn in the economy, or even a spread of negative interest rates around the world, could make things even worse.

And banks face new competition from all corners, from fintech start-ups with lower costs to tech giants muscling into lucrative banking activities.

"We believe we're in the late economic cycle and banks need to make bold moves now because they are not in great shape," Kausik Rajgopal, a McKinsey senior partner, told Bloomberg. "In the late cycle, nobody can afford to rest on their laurels."

]]>
iehi-feed-65024 Mon, 21 Oct 2019 13:47:08 GMT Cum-ex: German tax case could ripple through the finance industry http://implode-explode.com/viewnews/2019-10-21_CumexGermantaxcasecouldripplethroughthefinanceindustry.html

In cum-ex trades, shares with and without dividend rights were quickly traded between various market participants just before the payout date for the dividend, allowing traders to reclaim double the taxes...

The cum-ex deals orchestrated by the two British bankers on trial in Bonn eventually led to a tax loss of 400 million euros ($443 million).

However, the wider scheme carried out in the first decade of the 21st century, and unearthed in 2017, is thought to have cost state coffers across Europe, including at least 10 countries outside Germany, over $60 billion.

Nearly 500 cum-ex deals worth around 5.5 billion euros are being investigated in Germany, according to the German Finance Ministry. Around 2.4 billion euros has already been recovered by the tax authorities.

]]>
iehi-feed-65021 Sun, 20 Oct 2019 18:20:53 GMT Trump's (Now-Cancelled) Doral G7 Move, Even if Gratis, Would Have Likely Boosted Ailing Property http://implode-explode.com/viewnews/2019-10-20_TrumpsNowCancelledDoralG7MoveEvenifGratisWouldHaveLikelyBoostedA.html iehi-feed-65019 Sun, 20 Oct 2019 15:34:34 GMT Brexit vote postponed: Here's what could happen now http://implode-explode.com/viewnews/2019-10-20_BrexitvotepostponedHereswhatcouldhappennow.html U.K. Prime Minister Boris Johnson was thwarted by a cross-party group of politicians who voted to postpone the "meaningful vote" on his new divorce deal and force him to ask Brussels for an extension to the current Oct. 31 Brexit deadline. The developments in Parliament set up a complicated week with just 11 days left until the U.K. is still due to leave the world's largest trading bloc.

...

Johnson grudgingly asked for an extension to the deadline late on Saturday night, but EU leaders don't necessarily have to accept it. Some have ruled out giving Britain more time, piling pressure on U.K. lawmakers to accept the current deal. But it's unlikely they would want a no-deal scenario and the potential economic hit it could mean for both sides of the English Channel.

]]>
iehi-feed-65016 Sun, 20 Oct 2019 14:57:37 GMT Libor rigging inquiry shut down by Serious Fraud Office http://implode-explode.com/viewnews/2019-10-20_LiborrigginginquiryshutdownbySeriousFraudOffice.html The decision comes despite evidence that implicates the Bank of England. It means no one will now be prosecuted in the UK for so-called "low-balling", where banks understate interest rates they pay to borrow cash. The Serious Fraud Office (SFO) said its decision followed a detailed review of the evidence.

...

A further 11 traders have been prosecuting for manipulating Euribor, the eurozone equivalent of Libor. The SFO said aspects of its Euribor investigation remain open.

]]>
iehi-feed-65015 Fri, 18 Oct 2019 21:11:47 GMT Ray Dalio says the world is in a 'great sag' and echoes the 1930s http://implode-explode.com/viewnews/2019-10-18_RayDaliosaystheworldisinagreatsagandechoesthe1930s.html "This cycle is fading, we are now in the world in what I would call a ‘great sag'," said Dalio, adding that monetary policy, and especially interest rate reductions, were unlikely to offer much stimulus.

"Europe is at the limitation of that, Japan is (too) and the U.S. doesn't have much to go on for that," he told CNBC's Geoff Cutmore.

Dalio said the world was also experiencing the biggest wealth gap since the 1930s and that was creating political stress.

]]>
iehi-feed-65014 Fri, 18 Oct 2019 21:03:43 GMT American Youth Impoverished and Disenfranchised: Solutions http://implode-explode.com/viewnews/2019-10-18_AmericanYouthImpoverishedandDisenfranchisedSolutions.html The geographically based idiosyncrasies of American democracy that the founders put in place compound the problem. On average, ballots cast by older people hold more weight and are less frequently "wasted" than those of the young. (Wasted votes are those garnered in excess of what a candidate needs to win; in our winner-take-all systems that means anything over 50 percent.) Clustered in sparsely populated states and counties, voters who are older, whiter and wealthier get a boost: Older Americans wield disproportionate sway over the Electoral College, the Senate and a gerrymandered Congress.

Migration patterns worsen these trends. A growing percentage of young people now dream of city life, but their preferences inadvertently reduce their political clout: "18 percent of rural residents are 65 or older versus 15 percent in suburban and small metro counties and 13 percent in cities," the Pew Research Center reported last year. Millennials, concentrated in metropolitan areas, are the predominant generation of potential voters in only 86 congressional districts, while boomer voters predominate in 341. By 2040, 70 percent of Americans are expected to live in the 15 most populous states; that would mean that 70 percent of America will be represented by only 30 senators.

...

The other critical divide is the economy. The boomers who came of age in the 1950s and '60s benefited from boom times while millennials and Generation Z have been dogged by the aftermath of the mortgage meltdown, an underwhelming recovery and Gilded Age levels of inequality. One generation enjoyed a comparatively high minimum wage, affordable college tuition and reasonable costs of living; for everyone after, stagnating wages, ballooning student debt and unaffordable housing have become the norm.

"Millennials are less well off than members of earlier generations when they were young," a 2018 report by economists from the Federal Reserve Board bluntly states. Other economists have shown that a household headed by someone born in 1970 has a quarter less income and 40 percent less wealth than one headed by a comparable person born in 1940. In contrast, between 1989 and 2013, only the cohort of families headed by people at least 62 saw an increase in median wealth. Older people are more likely to own property, stocks and other assets -- and, consequently, to prefer policies that will keep the values of those assets high. No wonder so many young people have pivoted left, rejecting conventional wisdom about the virtues of unfettered capitalism.

]]>
iehi-feed-65012 Thu, 17 Oct 2019 22:19:09 GMT Holding G-7 at Trump's Doral resort is shameless - The Washington Examiner http://implode-explode.com/viewnews/2019-10-17_HoldingG7atTrumpsDoralresortisshamelessTheWashingtonExaminer.html iehi-feed-65002 Tue, 15 Oct 2019 17:45:56 GMT Articles on the Fed's Secret Trillions in Loans to Wall Street During '08 Crisis Have Fallen Into Bloomberg's "Memory Hole" http://implode-explode.com/viewnews/2019-10-15_ArticlesontheFedsSecretTrillionsinLoanstoWallStreetDuring08Crisi.html At the time of Pittman's death, the Fed was still refusing to release the details of its secret loans, despite losing its court battle at the Federal District Court. The appellate court decision against the Fed would not come until March 19, 2010, four months after Pittman's death. Even then, the Fed did not release the data. First it asked for a rehearing by the Second Circuit Court of Appeals. When that was rejected, a Wall Street consortium of banks, that were the recipients of the trillions of dollars in secret loans, appealed the case to the U.S. Supreme Court. That appeal failed as well and the Fed was forced to release its data in 2011. When all of its bailout programs were tallied up, the tab came to a staggering, cumulative $29 trillion -- all transacted without the involvement or awareness of anyone elected to office by the American people. Congress remained in the dark throughout this period as trillions of dollars were sluiced to Wall Street, foreign banks, insolvent banks, even hedge funds that were shorting (betting against) the market.

Now the Fed has turned on its unaccountable money spigot to Wall Street once again and is attempting to pass it off as part of its normal open market operations --  keeping Congress and the American people in the dark. To date, the Fed has refused to name which Wall Street firms are taking the hundreds of billions of dollars in revolving loans and how much each is receiving.

... To our shock and dismay, many of Pittman's articles that we found referenced in academic journals about the Fed have been purged from Bloomberg News. (We asked Bloomberg via email to explain its removal of these articles but have yet to hear back. We'll update this article should we receive a response.)

]]>
iehi-feed-64997 Fri, 11 Oct 2019 20:42:09 GMT Treasury will again borrow $1 trillion to pay for tax cuts, spending http://implode-explode.com/viewnews/2019-10-11_Treasurywillagainborrow1trilliontopayfortaxcutsspending.html For the second straight year, the Treasury Department will have to borrow $1 trillion to pay for the government's growing budget deficit, a consequence of juiced government spending and smaller revenues as a result of the late 2017 tax cuts, Bloomberg reports.

The big picture: Treasury borrowing surpassed $1 trillion during President Obama's first term as government spending soared amid the stimulus to combat the 2008 financial crisis, but it has steadily declined in the years since, settling down to $519 billion in 2017 before nearly doubling last year.

]]>