Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-63546 Sun, 21 Jan 2018 19:20:35 GMT Shutdown Day 2: Congress Seems Far Apart on a Resolution http://implode-explode.com/viewnews/2018-01-21_ShutdownDay2CongressSeemsFarApartonaResolution.html Congress appeared to make little headway early Sunday toward ending a two-day-old government shutdown, trading blame as lawmakers reconvened for another rare weekend session to try to find a resolution before the workweek began.

With the Senate meeting at 1 p.m. and the House to follow at 2, lawmakers remained mired in partisan disputes. Senator Mitch McConnell of Kentucky, the majority leader, said he would move ahead with a vote on a temporary spending bill, which would occur by 1 a.m. Monday, unless Democrats allowed it to proceed sooner.

The best hope for a breakthrough appeared to reside with a group of about 20 moderate senators from both parties who met for much of Saturday to try to hammer out a compromise to present to Mr. McConnell and the Democratic leader, Senator Chuck Schumer of New York.

The group was considering various proposals, including one that would keep the government open through early February, provide disaster funding for states ravaged by last year's hurricanes and ensure long-term funding for the Children's Health Insurance Program. It would also include a promise of some sort to hold votes on an immigration deal in the coming weeks.

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iehi-feed-63545 Sun, 21 Jan 2018 14:45:14 GMT US shutdown: Senate in bid to end impasse http://implode-explode.com/viewnews/2018-01-21_USshutdownSenateinbidtoendimpasse.html iehi-feed-63542 Sat, 20 Jan 2018 15:13:23 GMT Government shutdown: Who is affected and what's next? http://implode-explode.com/viewnews/2018-01-20_GovernmentshutdownWhoisaffectedandwhatsnext.html iehi-feed-63541 Sat, 20 Jan 2018 01:41:53 GMT Kushner's Deutsche Bank-Backed Times Square Property Stung by Tenant Troubles http://implode-explode.com/viewnews/2018-01-19_KushnersDeutscheBankBackedTimesSquarePropertyStungbyTenantTroubl.html In a six-floor retail space near Times Square, the Guy Fieri restaurant has closed and construction hasn't begun on celebrity chef Todd English's food hall. A tourist attraction featuring a 1/87th scale model of New York City was behind on rent for two months as of December, according to loan documents. It wasn't supposed to be this way.

When Kushner Cos. bought the property for $296 million in 2015, then-Chief Executive Officer Jared Kushner had big plans to capitalize on the tens of millions of tourists who visit the area every year. Deutsche Bank AG financed the endeavor before selling most of the debt to investors across Wall Street a year ago. Those investors were shown disclosures describing the retail space as 100 percent occupied and estimating it would throw off $24 million of rent annually.

But Fieri, English and Gulliver's Gate, the operator of the miniature Manhattan, account for $9.9 million of that rent estimate, which underpinned a market-defying appraisal boost and helped justify $370 million of loans, the disclosures show. Problems with these spaces could make the economics challenging.

Last year, New York prosecutors requested documents from Deutsche Bank related to the property, where the Kushners used the debt to take out $59 million in cash. It isn't clear what prosecutors are looking for. But mortgages granted under generous financial assumptions then sold to others who will bear the risk have piqued their interest in other cases. A spokesman for the Brooklyn U.S. Attorney declined to comment, as did a spokesman for Deutsche Bank.

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Gulliver's Gate was cited due to a technicality and payments were only a few days late, she said. The company has a letter of intent for the Fieri space from a prestigious tenant at a higher rent, and the operator of the food hall is making final adjustments to its plan, she added, saying the changes are increasing the value of the property and will attract more visitors. A spokeswoman for Gulliver's Gate said that it "is up to date on their rent and paid in full on their lease" and there are "no concerns" about its future there.

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Even if they were brief, the missed payments by Gulliver's Gate, the second most lucrative tenant, triggered a clause in the Kushners' loan documents allowing creditors to demand any excess cash from the property until the problem was resolved, according to reports from debt servicers. Managers also put the retail space on watch lists for potentially troubled debt because it lost money for nine months through September 2017 after accounting for interest payments, the reports show. That's because new tenants were given millions in free rent, a common tactic used to fill store spaces. Kushner Cos. set aside $11 million of the loans for the free rent. Disclosures don't describe that figure as including funds for vacancies.

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In truth, maintaining full occupancy looked tough from the start. When the debt was sold to investors, the 500-seat Guy's American Kitchen & Bar had been beset by negative reviews, and Todd English and his partners hadn't yet taken possession of the space for his food hall. The chef, who has pulled out of another project, was scheduled to open for business there last April. Gulliver's Gate, reportedly a $40 million endeavor, had not yet opened and was an untried competitor amid the glitz of Times Square.

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When Kushner Cos. bought the property in 2015 from Africa-Israel, the distressed firm of Russian diamond magnate Lev Leviev, online retailers were ascendant, and the future of brick-and-mortar stores was uncertain. So filling the property with tenants offering experiences seemed smart.

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The expected surge in income preceded a new appraisal in October 2016 at $445 million plus additional cash in accounts, indicating a stunning growth in value that far outstripped the broader Manhattan retail market, which had suffered a slowdown. Against that valuation, the $370 million of loans represented only 83 percent of the value, the investor disclosures showed. But Moody's and Kroll, the risk-assessment firm, found in independent calculations that the loans exceeded the value.

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The situation might get worse before it gets better. In an October legal complaint against the Plaza Hotel, which contains a Todd English restaurant, the chef is accused of sexual harassment. In November, S&P downgraded the debt of another tenant, Guitar Center, saying it thought a potential debt restructuring could occur in the next six months, "a transaction that we would view as tantamount to a default." A Guitar Center spokeswoman declined to comment.

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iehi-feed-63540 Fri, 19 Jan 2018 23:05:56 GMT Trump and Senators Scramble to Avoid Midnight Government Shutdown http://implode-explode.com/viewnews/2018-01-19_TrumpandSenatorsScrambletoAvoidMidnightGovernmentShutdown.html By Friday afternoon, it appeared that only a last-minute congressional deal could stop what would be a rare shutdown of a federal government under one-party control. The House cleared stopgap spending legislation on Thursday night that would keep the government funded through Feb. 16, but Senate Democrats were intent on withholding their votes until they secured concessions that would protect from deportation young immigrants brought to the country illegally as children, increase domestic spending, aid Puerto Rico and bolster the government's response to the opioid epidemic.

Mr. Trump did not appear able or willing to suggest his own solution. Senator John Cornyn of Texas, the No. 2 Senate Republican, said the White House chief of staff, John F. Kelly, had told him "there were no agreements with Senator Schumer."

"The president told him to go back and talk to Paul Ryan and Mitch McConnell and work it out," Mr. Cornyn said, referring to the House speaker and Senate majority leader.''

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with the clock ticking, no votes were even scheduled before federal funds are to run out, and White House officials were not optimistic. Perhaps the best chance to avert a crisis lay in a proposal simply to keep the government open for another four or five days.

Are we a banana republic yet?

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iehi-feed-63538 Fri, 19 Jan 2018 22:36:35 GMT House Spending Bill Changes Law to Let Trump Administration Secretly Shift Intelligence Money http://implode-explode.com/viewnews/2018-01-19_HouseSpendingBillChangesLawtoLetTrumpAdministrationSecretlyShift.html iehi-feed-63537 Fri, 19 Jan 2018 15:01:32 GMT Jeddah Tower, the world's next tallest skyscraper, set to open in Saudi Arabia http://implode-explode.com/viewnews/2018-01-19_JeddahTowertheworldsnexttallestskyscrapersettoopeninSaudiArabia.html When the 3,280-feet-tall (1,000-meter-tall) Jeddah Tower, in Saudi Arabia, opens in 2020, it will knock Dubai's iconic Burj Khalifa off its throne as the tallest skyscraper in the world by 236 feet (72 meters). Construction of the landmark is estimated to cost $1.4 billion... While today the site is surrounded by desert, upon completion the tower will be the center of the Jeddah Economic City development... Jeddah Tower's construction fits into Saudi Vision 2030, a government plan that aims to diversify the economy in the kingdom and reduce its dependence on oil...

But the project hasn't been smooth sailing. There have been various delays since construction began in 2013. Since November 2017, two of the project's most prominent backers -- Saudi Arabia's Prince Al-Waleed bin Talal, a prolific investor and businessman, and Bakr Bin Laden, chairman of Jeddah Tower's construction company Bin Laden Group -- have been caught up in the kingdom's anti-corruption purge, which saw hundreds questioned on accusations of corruption.

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iehi-feed-63536 Fri, 19 Jan 2018 14:51:05 GMT Apple HQ2: Where Will the iPhone Maker's Second Campus Go? http://implode-explode.com/viewnews/2018-01-19_AppleHQ2WhereWilltheiPhoneMakersSecondCampusGo.html iehi-feed-63534 Thu, 18 Jan 2018 18:52:07 GMT Amazon narrows list of headquarters cities to 20 finalists http://implode-explode.com/viewnews/2018-01-18_Amazonnarrowslistofheadquarterscitiesto20finalists.html iehi-feed-63532 Wed, 17 Jan 2018 20:00:24 GMT Government shutdown watch: Are enough House Republicans on board? http://implode-explode.com/viewnews/2018-01-17_GovernmentshutdownwatchAreenoughHouseRepublicansonboard.html Republican leaders are full speed ahead on a short-term funding bill -- now they just need the votes for it. House GOP leaders are cautiously optimistic they can muster the votes for their short-term funding bill released Tuesday night.

Senate Republicans leaders have convinced themselves Democrats will have to peel off to support the spending package the House would send over. Senate Democrats, for their part, are still keeping their cards close to their chest.

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How does a deal to address the expiring Deferred Action for Childhood Arrivals program get done, asks one senior Republican aide. "No idea. Ask the President. Until he decides what he really wants, nothing moves."

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The Freedom Caucus is precisely why Senate Democrats were mostly keeping their powder dry on Tuesday regarding a possible shutdown. No sense in taking a hard position when, as one aide put it, "House Republicans have a history of stepping on their own rakes."

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iehi-feed-63527 Tue, 16 Jan 2018 16:10:08 GMT Bitcoin, rival cryptocurrencies plunge on crackdown fears http://implode-explode.com/viewnews/2018-01-16_Bitcoinrivalcryptocurrenciesplungeoncrackdownfears.html Bitcoin slid as much as 18 percent on Tuesday to a four-week low, as fears of a regulatory crackdown on the market spread after reports suggested it was still possible that South Korea could ban trading in cryptocurrencies.

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That came amid news that a senior Chinese central banker had said authorities should ban centralised trading of virtual currencies and prohibit individuals and businesses from providing related services.

China shut down exchanges operating on the mainland last year - a move that also sparked a selloff, though the market later recovered.

"It's mainly been regulatory issues which are haunting (bitcoin), with news around South Korea's further crackdown on trading the driver today," said Think Markets chief strategist Naeem Aslam, who holds what he described as "substantial" amounts of bitcoin, Ethereum and Ripple.

"But we maintain our stance. We do not think that the complete banning of cryptocurrencies is possible," he said.

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iehi-feed-63526 Tue, 16 Jan 2018 15:44:49 GMT Washington edges closer to a government shutdown http://implode-explode.com/viewnews/2018-01-16_Washingtonedgesclosertoagovernmentshutdown.html We've been here before -- Congress and the Trump White House facing a potential government shutdown -- and each time the major players have backed away from the brink. But this time feels different, with the government's funding expiring on Saturday.

...And maybe the biggest casualty here is the breakdown in trust -- between Trump and Durbin over the immigration profanity heard ‘round the world; between Sens. Tom Cotton and David Perdue (who denied Trump said the profanity) and everyone else who was in the room; and between Trump and Chief of Staff John Kelly and Stephen Miller, who believed Trump could be tricked on DACA. Without trust, you're not going to get a deal.

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iehi-feed-63525 Mon, 15 Jan 2018 20:06:17 GMT Blame the deluded board members for Carillion's collapse http://implode-explode.com/viewnews/2018-01-15_BlamethedeludedboardmembersforCarillionscollapse.html ... the hard fact is that Carillion directors were boasting in March last year of having "substantial liquidity with some £1.5bn of available funding" yet the company ran out of money 10 months later.

That suggests delusion in the boardroom on a grand scale. Hedge funds, looking from outside and betting on the shares going south, seem to have had a better grasp of Carillion's financial distress than the insiders.

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In the end, it comes down to judgments made in the boardroom. Carillion, outrageously, was declaring a fatter dividend for shareholders only last spring. Given what we know now, the correct action would have been to go to those investors and ask for a big injection of capital via a rights issue. Half the board would have had to resign, but an over-stretched balance sheet might have been repaired. Instead Carillion seems to have chosen to chase more low-margin contracts in a desperate attempt to keep its revenue line moving.

Regarding the point about this all being obvious to hedge fund short sellers, this article has more.

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iehi-feed-63524 Mon, 15 Jan 2018 19:56:39 GMT Three years on from currency shock, Swiss central bank can't get back to normal http://implode-explode.com/viewnews/2018-01-15_ThreeyearsonfromcurrencyshockSwisscentralbankcantgetbacktonormal.html If it raises rates, the Swiss franc strengthens. If it sells off its massive balance sheet, the Swiss franc strengthens. If a global crisis hits, the Swiss franc strengthens.

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"The SNB will most probably be one of the last central banks to change course, and it will take years or even decades for monetary policy to return to ‘normal'," said Daniel Rempfler, head of fixed income Switzerland at Swiss Life Asset Managers.

The Bank of Japan illustrated the problem of reducing expansive policy when a small cut to its regular bond purchases sent the yen and bond yields higher.

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"It is very difficult to say you are ready to intervene in the forex markets when you also winding down the balance sheet," said Florian Weber, an analyst at Bank J.Safra Sarasin.

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iehi-feed-63523 Mon, 15 Jan 2018 19:46:12 GMT Euro Resurgence and QE Wind-down, US Political Dysfunction Weigh on Dollar http://implode-explode.com/viewnews/2018-01-15_EuroResurgenceandQEWinddownUSPoliticalDysfunctionWeighonDollar.html ... the drop [in the dollar of 12% this year so far and last year] is a bit of a mystery because the Federal Reserve has been raising interest rates for the past year... Hussein Sayed, chief market strategist at FXTM, an online currency brokerage firm, wrote in a report Monday that signs of life in Europe's economy, particularly Germany and France, are causing some investors to flock to the euro instead of the dollar.

Sayed added that the resurgence in Europe even has more investors betting that the European Central Bank will unwind its massive bond-buying program, similar to the Fed's after the 2008 financial crisis, sooner than expected.

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But the dollar's slide can't be pinned entirely on what's happening overseas. Some analysts suggest that political dysfunction in the United States is also pushing the dollar down.

Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management, said in a report Monday that "there is more to dollar weakness than just the global feel-good story."

Schlossberg said more investors are starting to believe there is a real chance of a government shutdown in Washington later this week. That would happen Friday unless Congress passes a short-term funding resolution to keep the government open.''

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iehi-feed-63522 Mon, 15 Jan 2018 18:27:58 GMT Don't be fooled. Wall Street, not Main Street, is the big tax winner http://implode-explode.com/viewnews/2018-01-15_DontbefooledWallStreetnotMainStreetisthebigtaxwinner.html While Winer is skeptical about how much money will be used to reward workers, he's confident about one thing: Most of the tax savings will be lavished on shareholders through stock buybacks and dividends.

"It's far better for investors than it is for employees," he said.'

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It's true that personal income taxes are going down for many Americans. The White House has said that 90% of wage earners will likely take home more money as soon as February.

But it would be tough for those gains to offset the huge savings companies are guaranteed. The tax cuts are "skewed toward businesses and high-income earners," Beth Ann Bovino, S&P Global's chief U.S. economist, wrote in a report.

This doesn't even discuss the deficit effect. Guess who's going to pay for that (in the form of inflation)? Hint: the inflation measure for social security and other support payments was modified by this legislation to be even lower.

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iehi-feed-63521 Mon, 15 Jan 2018 18:25:25 GMT Britain's Carillion collapses after banks pull the plug http://implode-explode.com/viewnews/2018-01-15_BritainsCarillioncollapsesafterbankspulltheplug.html Carillion collapsed on Monday when its banks pulled the plug, triggering Britain's biggest corporate failure in a decade and forcing the government to step in to guarantee public services from school meals to roadworks.

The 200-year-old business went into compulsory liquidation at 0600 GMT after costly contract delays and a slump in new business left it swamped by debt and pensions liabilities of at least 2.2 billion pounds ($3 billion).

Its demise threatens to hurt smaller suppliers, merchants, rivals and Britain's biggest banks. The British government was left to ensure there was no disruption to public services... The government stopped short, however, of bailing out the company as it did with major banks during the 2007-09 financial crisis.

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Employing 43,000 people around the world, including 20,000 in Britain, Carillion has been fighting for survival since July, when it revealed it was losing cash on projects and had written down the value of its contract book by 845 million pounds.

With banks refusing in recent days to accept the latest restructuring plan, May's senior ministers met around the clock, under pressure from the Labour Party and unions not to use taxpayer money to prop up the failing company.

Ministers, top bankers and company bosses scrambled to find a way to save the company in last-ditch talks over the weekend.

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Spun out of Tarmac nearly 20 years ago and including construction names such as Wimpey and Alfred McAlpine, Carillion operates in Britain and Ireland, Canada, the Middle East and North Africa.

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iehi-feed-63517 Sun, 14 Jan 2018 14:45:54 GMT Mr. Amazon Steps Out - Jeff Bezos Goes Public http://implode-explode.com/viewnews/2018-01-14_MrAmazonStepsOutJeffBezosGoesPublic.html As he was shaping Amazon into one of the world's most valuable companies, Mr. Bezos developed a reputation as a brilliant but mysterious and coldblooded corporate titan. He preferred to hunker down in Amazon's hometown, Seattle, at least partly because he thought it was better for Amazon's growing business, largely avoiding public causes and the black-tie circuit.

But while Mr. Bezos -- who at 53 is the world's richest person, with a net worth of more than $100 billion -- can afford virtually any luxury, obscurity is no longer among them.

Amazon, now a behemoth valued at more than $600 billion, has become one of the faces of "big tech," along with Apple, Alphabet's Google and Facebook. These companies are facing a backlash. Amazon is under the microscope for what critics say is its corrosive effect on jobs and competition, and Mr. Bezos has become a bête noire for President Trump, who repeatedly singles out him and Amazon for scorn on Twitter.

"People are starting to get scared of Amazon," said Steve Case, a co-founder of America Online, who recently started an investment fund focused on start-ups in underserved areas, with Mr. Bezos among its contributors. "If Jeff continues to hang out in Seattle, he's going to get a lot more incoming. Even for just defense reasons, he has to now play offense."

Mr. Bezos' portfolio of other ventures has thrust him farther into the spotlight. Four years ago, he bought The Washington Post for $250 million, jump-starting a renaissance of the paper. In 2016, Mr. Bezos bought a $23 million home in Washington, one of the city's most expensive, which is undergoing extensive renovations to make it a suitable party spot for the city's political class. Nearby neighbors include former President Barack Obama and his family, and Mr. Trump's daughter Ivanka Trump and her husband, Jared Kushner.

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But for nearly two decades, he was adamant that the company should largely stay out of the political limelight and not make a stir in local communities. It also had a bare-bones lobbying operation.

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A turning point came for Mr. Bezos around 2011 when Amazon faced a public showdown with state governments.

At the time, legislators began hounding internet retailers like Amazon to collect sales tax. In California, Amazon initially campaigned to overturn a new law imposing an internet sales tax. But Mr. Bezos backed off after it became clear that Amazon's image could be tarnished, a former employee involved in the matter said.

Instead, Amazon began to make peace. In 2011, it signed an agreement with California to collect sales tax in the state, reaching numerous similar agreements around the same time.

As part of those state deals, Amazon began building warehouses across the country, which allowed Amazon to deliver orders more quickly and let local politicians trumpet the arrival of thousands of jobs.

Suddenly, a company that once refused to confirm how many employees it had at its Seattle headquarters could not stop talking about how many jobs it was creating. It now has 542,000 employees.

As Mr. Bezos and the company talked about creating jobs, though, he and Amazon faced a counternarrative from critics that the company was really a job-killing bully.

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iehi-feed-63516 Sun, 14 Jan 2018 14:33:34 GMT Courts Force DACA Re-start As Shutdown Budget Negotiations and Permanent Immigration Fix In Limbo http://implode-explode.com/viewnews/2018-01-14_CourtsForceDACARestartAsShutdownBudgetNegotiationsandPermanentIm.html Multiple groups in Congress are working on their own solutions for immigration as they race to pass a spending bill before the government runs out of funding Friday. And the issue of how to move forward on DACA in March is the primary sticking point holding up a funding package.

On Thursday, Trump rejected a pitch from a bipartisan team of senators on an immigration deal to protect DACA participants while increasing border security.

The proposal included a pathway to citizenship for undocumented immigrants who came to the US as children and $1.6 billion toward a border fence, two sources with direct knowledge told CNN.

But negotiations over a deal on the DACA program froze last week after Trump derided African nations as "shithole countries" and asked why more immigrants couldn't come from Norway during the Thursday's closed-door meeting with lawmakers.

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iehi-feed-63515 Sat, 13 Jan 2018 18:19:24 GMT Fed Pays Banks $30 Billion Risk-Free for 2017 http://implode-explode.com/viewnews/2018-01-13_FedPaysBanks30BillionRiskFreefor2017.html ... note how the surging interest payments to the banks slashed into the remittances to the Treasury. If the Fed hadn't decided to pay interest on excess reserves, to benefit the banks, it could remit this money to the Treasury. In other words, every dime the banks receive comes indirectly out of the pocket of taxpayers.

The Fed will likely raise rates further this year. There is talk of four rate hikes. This would push the rate on excess reserves to 2.5% by the end of the year. Excess reserves will likely shrink as QE is being unwound, but not fast enough. And the amount that the Fed pays the banks this year might surge to $40 billion or more -- a glorious and hidden subsidy extracted from taxpayer pockets.

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