Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-63308 Sat, 18 Nov 2017 18:28:33 GMT House GOP tax plan: I'm a conservative and I see three major flaws http://implode-explode.com/viewnews/2017-11-18_HouseGOPtaxplanImaconservativeandIseethreemajorflaws.html iehi-feed-63307 Sat, 18 Nov 2017 18:23:42 GMT Paradise Papers Show How Misguided the G.O.P. Is on Taxes http://implode-explode.com/viewnews/2017-11-18_ParadisePapersShowHowMisguidedtheGOPIsonTaxes.html The economist Gabriel Zucman and his colleagues have spent years estimating how much wealth is stashed in low-tax havens and what that means for government coffers. He's found that 63 percent of foreign profits made by American multinational corporations are stuffed in these subsidiaries and accounts, depriving the country of about $70 billion in tax revenue each year.

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We worry a lot about the cost of social programs in this country, saying we simply can't afford many things that we know could bring big rewards. But that missing $70 billion from corporate offshore tax avoidance would go a long way... Senator Bernie Sanders's College for All Act doesn't even require the federal government to cover the entire $70 billion cost of public college tuition, but it could if this money were available to the government

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None of these provisions go after wealthy individuals who keep their money in offshore accounts to avoid paying taxes. Instead, the House package hands these same people a variety of giveaways: an enormous loophole via a lower tax rate on pass-through businesses; the elimination of the alternative minimum tax that ensures they have to pay at least something; and the eradication of the tax on the wealthiest estates.

The groups that are already dodging taxes through offshore accounting are the ones that make out with the biggest benefits. According to an analysis by the conservative Committee for a Responsible Federal Budget, $1 trillion of the overall $1.5 trillion cost is from cuts for businesses. According to the Tax Policy Center, the highest-income families can expect the biggest reward. The richest 0.1 percent of Americans will get an average $278,370 reduction in their tax bill by 2027, while the poorest two-fifths of the country get around $25.

In isolation, there are some good ideas in the reforms -- but the way they are being put together, the overall result is truly horrid.

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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-63302 Sat, 18 Nov 2017 00:09:40 GMT How racist official housing policies supercharged today's US wealth gap http://implode-explode.com/viewnews/2017-11-17_HowracistofficialhousingpoliciessuperchargedtodaysUSwealthgap.html In the postwar period, white Americans were given attractive, government-subsidized mortgages to move to all-white suburbs, the best known of which was New York's Levittown, that were not accessible to blacks and other minority groups. That helped white families that benefited from those mortgages to build housing wealth.

The Federal Housing Administration at the time not only "refused to insure mortgages in predominantly African American neighborhoods" but also actively subsidized "the movement of white families out of cities into single-family homes in the suburbs," Rothstein said.

Racial segregation was built into public-housing policy. Contracts in suburban subdivisions were made with an FHA subsidy that explicitly required that no blacks be allowed to move in, either initially or through future sales.

All those policy decisions led directly to the race gaps we see now. "Without federal government policy of this kind we would not have the kind of segregation in any metropolitan area today," Rothstein said.

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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-63300 Sat, 18 Nov 2017 00:01:17 GMT Wall St. traders secretly used chat rooms to rig Treasury bond prices: suit http://implode-explode.com/viewnews/2017-11-17_WallSttraderssecretlyusedchatroomstorigTreasurybondpricessuit.html The new accusations, leveled by several pension funds and wealthy individual investors, are contained in an expanded class-action suit originally filed in July 2015 -- and include an unusual twist: Some of the evidence came from confidential informants and one of the banks sued in the earlier action.

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The funds, representing retirees and public workers, also claim the banks conspired to rig the secondary Treasury markets beginning in the 1990s through tightly controlled electronic platforms that inhibited more competitive trading -- a new allegation that wasn't in the original suit but mirrors similar complaints filed against banks in other markets, like stock loans.

The amended suit tightens its focus on a select number of banks, naming Goldman Sachs, Morgan Stanley, the Royal Bank of Scotland, BNP Paribas, and UBS, among others, as the firms behind the rigging, which they allege occurred from Jan. 1, 2007, to mid-2015.

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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-63296 Fri, 17 Nov 2017 21:29:06 GMT Trump Organization worth one tenth of value previously reported http://implode-explode.com/viewnews/2017-11-17_TrumpOrganizationworthonetenthofvaluepreviouslyreported.html The Trump Organization in New York is reportedly worth one tenth of the value it previously claimed. 

Donald Trump's family business had previously ranked near the top of Crain's New York Business' list of largest privately held companies.

But this year it has fallen from number three to number 40 after the President disclosed the organisation's revenue to federal regulators. 

While the Trump Organization claimed $9.5bn (£7.2bn) in sales last year, Mr Trump's public filings suggest revenues of less than a tenth of that amount, between $600m (£450m) and $700m (£530m).

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"It was obviously important to Donald to have his company at the top of the list and I don't know why he felt that way but the numbers that he presented are just flagrantly untrue," Aaron Elstein said.

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iehi-feed-63294 Thu, 16 Nov 2017 20:07:04 GMT House passes sweeping tax bill; Teeing Senate Up For Battle http://implode-explode.com/viewnews/2017-11-16_HousepassessweepingtaxbillTeeingSenateUpForBattle.html The House on Thursday passed legislation to overhaul the tax code, moving Republicans one step closer to achieving the top item on their legislative agenda. 

The measure was approved by a vote of 227-205. No Democrats voted for the bill, while 13 Republicans broke ranks to oppose it.  

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Senate Republicans have their own tax bill, which is currently being considered by the chamber's tax-writing committee.

The Senate legislation differs from the House's in a number of ways. Unlike the House bill, the Senate bill fully repeals the state and local tax deduction, delays the corporate tax cut until 2019 and repeals ObamaCare's individual mandate. 

The Senate's bill also sunsets tax cuts for individuals after 2025, in order to comply with the "Byrd rule" that the measure can't increase the deficit after 10 years if it is to pass with a simple majority.

No more than two Senate Republicans can vote against their bill if Democrats are united in opposition to it. Already, Sen. Ron Johnson (R-Wis.) has said he doesn't support either the House or the Senate bills because they provide more of a benefit to corporations than to other types of businesses. Sen. Susan Collins (R-Maine) has expressed concerns about including repeal of the individual mandate, but has not taken a hard stance yet on the measure.''

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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-63292 Thu, 16 Nov 2017 15:20:56 GMT Dumb and Dumber(er): The GOP Tax Plan Will Destroy Graduate Education http://implode-explode.com/viewnews/2017-11-16_DumbandDumbererTheGOPTaxPlanWillDestroyGraduateEducation.html Despite earning $23,000/year [as a stipend], you'd pay taxes on $40,520 or $57,914 at a public University [including waived tuition], and despite earning $32,500, you'd pay taxes on $81,440 at a private University. For this last figure, this would result in a higher tax rate than anyone else in the nation pays. These numbers represent increases in taxes of $2,628, $6,193, and $10,650, respectively, on these hypothetical graduate students.

One could hardly cook up a worse provision for killing what is left of STEM higher education and hence technical advance in this country. The article doesn't even mention the point that the waived tuitions are funny-money numbers in the first place, so if students have to pay taxes on them, they are basically being taxed on made-up-numbers to ensure the comfort of schools, thus resembling indentured servitude and even some forms of slavery.

Indeed, we should probably go the other way -- make grad students (up to a certain earnings level) completely exempt from taxes...

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iehi-feed-63291 Thu, 16 Nov 2017 00:12:43 GMT Tax Bill Thrown Into Uncertainty as First G.O.P. Senator Comes Out Against It http://implode-explode.com/viewnews/2017-11-15_TaxBillThrownIntoUncertaintyasFirstGOPSenatorComesOutAgainstIt.html Senator Ron Johnson, Republican of Wisconsin, came out against both chambers' tax plans on Wednesday, deploring the hurried process and saying that the bills favored corporations over small businesses and other so-called pass-through entities, whose owners pay taxes on profits through the tax code for individuals.

"These businesses truly are the engines of innovation and job creation throughout our economy, and they should not be left behind," he said in a statement. "Unfortunately, neither the House nor Senate bill provide fair treatment, so I do not support either in their current versions."

Senators Susan Collins of Maine, Bob Corker of Tennessee and John McCain of Arizona have voiced their own concerns and refused to say whether they would ultimately vote for the tax bill.

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"I want to see the whole package before I make a decision," Mr. McCain said.

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iehi-feed-63290 Wed, 15 Nov 2017 18:39:51 GMT Richard Cordray is stepping down as head of CFPB (RESTORATION OF BANKSTERS IS COMPLETE!) http://implode-explode.com/viewnews/2017-11-15_RichardCordrayissteppingdownasheadofCFPBRESTORATIONOFBANKSTERSIS.html Richard Cordray, one of the few remaining Obama-era banking regulators, said on Wednesday that he plans to step down as head of the Consumer Financial Protection Bureau by the end of the month, clearing the way for President Trump to remake a watchdog agency loathed by Republicans and Wall Street.

Cordray's decision comes just a month after the CFPB suffered a major rebuke from Republicans in Congress who took the unusual step of blocking an agency rule that would have allowed consumers to sue their banks for the first time. Cordray appealed to President Trump directly not to sign the legislation but was rebuffed.

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With Cordray's departure, the aggressive regulatory structure put in place by the Obama administration in the wake of the global financial crisis has been nearly entirely replaced. The head of the Securities and Exchange Commission has been replaced by a former Wall Street lawyer and the Senate is moving to approve Trump's pick to lead the Office of the Comptroller of the Currency, another important banking regulator. The head of the Federal Deposit Insurance Corp., Martin Gruenberg, has said he will step down at the end of the month.

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The agency has been controversial among Republicans since its inception. Critics complain that CFPB has made it more difficult for people to get a mortgage loan and has overstepped its power to regulate some industries, including auto loans.

More difficult to get a mortgage?! How horrible. It's not like that was ever needed in our recent past (oh, 2007, you say? That's like, a million years ago...)

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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-63286 Tue, 14 Nov 2017 20:57:38 GMT After periodic drops of 20 percent, bitcoin tends to come back even stronger http://implode-explode.com/viewnews/2017-11-14_Afterperiodicdropsof20percentbitcointendstocomebackevenstronger.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-63284 Tue, 14 Nov 2017 19:59:00 GMT Ray Dalio Buys $500 Million In Gold EFTs In Q3 http://implode-explode.com/viewnews/2017-11-14_RayDalioBuys500MillionInGoldEFTsInQ3.html