Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-60737 Sun, 25 Sep 2016 18:03:36 GMT Whistleblowing Wells Fargo loan officer describes years of fraudulent, criminal culture in the bank http://implode-explode.com/viewnews/2016-09-25_WhistleblowingWellsFargoloanofficerdescribesyearsoffraudulentcri.html iehi-feed-60735 Sun, 25 Sep 2016 17:43:30 GMT China Continues to Battle Massive Capital Flight Problem http://implode-explode.com/viewnews/2016-09-25_ChinaContinuestoBattleMassiveCapitalFlightProblem.html Any way you do the math, capital outflows from China continue to be massive. A large current account surplus continues to cushion a potential fall in reserves, but more seems to be happening for reserves to be stable. Looking deeper into the nature of outflows, one has to conclude that the situation remains fragile. It is still residents driving the outflows and they do not seem to be a "good cholesterol" type (i.e. repayment of debt or purchases of assets abroad).

Meanwhile, China hasn't fully resolved its balance-of-payments problem. The reserves are massive, but so are the "bad cholesterol" outflows. It is time to go to the doctor and increase the return on assets for capital to be willing to come back. Unfortunately, the Chinese authorities seem to be heading in the opposite direction, with increasingly lower interest rates and a lack of real reform for state-owned enterprises.

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iehi-feed-60734 Sun, 25 Sep 2016 17:39:19 GMT Merkel Says No Aid for Deutsche Bank; Derivatives And Fines Loom -- Depositor Bail-In Inevitable? http://implode-explode.com/viewnews/2016-09-25_MerkelSaysNoAidforDeutscheBankDerivativesAndFinesLoomDepositorBa.html iehi-feed-60733 Sat, 24 Sep 2016 16:19:52 GMT The Fed's Missed Window & Failed Realizations http://implode-explode.com/viewnews/2016-09-24_TheFedsMissedWindowFailedRealizations.html iehi-feed-60731 Sat, 24 Sep 2016 16:01:21 GMT IMF on Greece: calls for more pension cuts, greater debt relief in report http://implode-explode.com/viewnews/2016-09-24_IMFonGreececallsformorepensioncutsgreaterdebtreliefinreport.html The International Monetary Fund called for Greece to cut pensions and taxes and for its lenders to provide significant debt relief in order for the country to make a convincing exit from the crisis.

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It argued that the pension system's deficit remains too high at 11 percent, compared to a 2.5 percent average in the eurozone, and that too much of a burden has been placed on Greeks currently in work, while existing pensioners have largely been protected.

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iehi-feed-60730 Fri, 23 Sep 2016 23:30:27 GMT Former Trader Jérôme Kerviel Ordered to Pay Only €1 mln in Damages to SocGen (WHICH NOW MAY BE ON THE JOOK FOR ANOTHER €2.2bln) http://implode-explode.com/viewnews/2016-09-23_FormerTraderJrmeKervielOrderedtoPayOnly1mlninDamagestoSocGenWHIC.html A French appeals court ruled Friday that former trader Jérôme Kerviel is only responsible for a sliver of the €4.9 billion ($5.47 billion) Société Générale SA lost after unwinding his trades, raising the possibility the government might reclaim a hefty tax rebate it granted the bank at the time.

Judges ordered Mr. Kerviel to pay €1 million to his former employer, overturning a previous ruling which ordering him to pay €4.9 billion to Société Générale.

The ruling is a qualified victory for Mr. Kerviel and a setback for Société Générale, because it establishes that responsibility for the lion's share of the losses ultimately lies with the French lender, not its former employee.

... the French government could reclaim a €2.2 billion tax deduction that the bank received after unwinding Mr. Kerviel's trade and posting a massive loss... Jean Veil, a lawyer for Société Générale, brushed off the idea saying he didn't believe that the government could claim the money back given that the bank hadn't committed a "deliberate" or "excessive" fault.

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iehi-feed-60729 Fri, 23 Sep 2016 22:58:13 GMT ECB Embarrassment: Each €18 In QE Generated Just €1 In GDP Growth http://implode-explode.com/viewnews/2016-09-23_ECBEmbarrassmentEach18InQEGeneratedJust1InGDPGrowth.html iehi-feed-60728 Fri, 23 Sep 2016 19:10:36 GMT Exclusive: Euro Regulators expect Monte dei Paschi to ask Italy for help http://implode-explode.com/viewnews/2016-09-23_ExclusiveEuroRegulatorsexpectMontedeiPaschitoaskItalyforhelp.html Now euro zone authorities are considering whether state support would have to be tapped after what bankers have described as slack interest in the bank's share offer.

"There is clearly an execution risk to the capital raising," said one official with knowledge of the rescue attempt, adding that the bank's value, about one ninth the size of the planned 5 billion euro cash call, would be a turn-off for investors.

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Reopening the question of state support, which had already been explored and dropped because of the losses it requires for bondholders under European bank crisis rules, is politically charged, and would reignite a dispute between Italy and Germany.

Berlin had objected to Rome's efforts to back the struggling bank without imposing a loss on its bondholders, according to another senior official.

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iehi-feed-60727 Fri, 23 Sep 2016 19:07:01 GMT You're Not as Rich as You Think - Satyajit Das http://implode-explode.com/viewnews/2016-09-23_YoureNotasRichasYouThinkSatyajitDas.html iehi-feed-60726 Fri, 23 Sep 2016 19:01:47 GMT World Trade Grinds Lower, Hits 2014 Levels http://implode-explode.com/viewnews/2016-09-23_WorldTradeGrindsLowerHits2014Levels.html The chart shows that merchandise world trade isn't falling off a cliff, as it had done during the financial crisis, when global supply chains suddenly froze up. But it's on a slow volatile grind lower. And compared to the fanciful growth after the Financial Crisis, it looks outright dismal...

Data point after data point document that the goods-based economy in the US is in trouble -- manufacturing, wholesale, retail... nothing is firing on all or even most cylinders.

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iehi-feed-60725 Fri, 23 Sep 2016 18:59:54 GMT Gallup: If small businesses keep dying "We'll lose the whole middle class" http://implode-explode.com/viewnews/2016-09-23_GallupIfsmallbusinesseskeepdyingWelllosethewholemiddleclass.html According to the U.S. Small Business Administration, 65% of all new jobs are created by small businesses, not large ones. Here's the crisis: The deaths of small businesses recently outnumbered the births of small businesses. The U.S. Census Bureau reports that the total number of business startups and business closures per year crossed for the first time in 2008

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Let's say someone has a good middle-class job that pays $65,000 a year. That job goes away in a changing, disrupted world, and his new full-time job pays $14 per hour -- or about $28,000 per year. That devastated American remains counted as "full-time employed" because he still has full-time work -- although with drastically reduced pay and benefits. He has fallen out of the middle class and is invisible in current reporting.

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iehi-feed-60724 Fri, 23 Sep 2016 15:13:46 GMT Saudis Said to Have Offered to Cut Oil Output; No Deal Reached http://implode-explode.com/viewnews/2016-09-23_SaudisSaidtoHaveOfferedtoCutOilOutputNoDealReached.html Saudi Arabia, the world's largest oil exporter, told Iran it would be willing to reduce its output -- which is close to a record 10.7 million barrels a day -- if its regional rival were to cap production at 3.6 million, according to two people familiar with the matter, who asked not to be identified because the talks were private. Other proposals were also discussed by oil officials from the countries at the headquarters of the Organization of Petroleum Exporting Countries in two-day talks that ended Thursday without a deal, one of the people said.

Oil-producer meetings from Vienna and Paris to Moscow have attempted to reach a consensus before talks in the Algerian capital next week.

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iehi-feed-60723 Fri, 23 Sep 2016 15:12:42 GMT Trump's campaign paid his businesses $8.2 million (SO FAR) http://implode-explode.com/viewnews/2016-09-23_Trumpscampaignpaidhisbusinesses82millionSOFAR.html iehi-feed-60718 Thu, 22 Sep 2016 14:35:15 GMT Study: Most Small Businesses Barely Staying Afloat http://implode-explode.com/viewnews/2016-09-22_StudyMostSmallBusinessesBarelyStayingAfloat.html iehi-feed-60717 Thu, 22 Sep 2016 14:32:35 GMT AEP: UN fears third leg of the global financial crisis - with prospect of epic debt defaults http://implode-explode.com/viewnews/2016-09-22_AEPUNfearsthirdlegoftheglobalfinancialcrisiswithprospectofepicde.html The third leg of the world's intractable depression is yet to come. If trade economists at the United Nations are right, the next traumatic episode may entail the greatest debt jubilee in history.

It may also prove to be the definitive crisis of globalized capitalism, the demise of the liberal free-market orthodoxies promoted for almost forty years by the Bretton Woods institutions, the OECD, and the Davos fraternity.

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We know already that the poisonous side-effect of zero rates and quantitative easing in the US, Europe, and Japan was to flood developing nations with cheap credit, upsetting their internal chemistry and drawing them into a snare. What is less understood is just how destructive this has been.

Much of the money was wasted, skewed towards "highly cyclical and rent-based sectors of limited strategic importance for catching up," it said.

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The extraordinary result is that some countries are slipping backwards, victims of "premature deindustrialisation". Many of them have fallen further behind the rich world than they were in 1980 despite opening up their economies and following the global policy script diligently.

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We are left with a world in a state of leaderless policy inertia, unable to escape slow suffocation. Trade is stagnant. Deflation is still knocking at the door a full seven-and-a-half years into the economic cycle, even with the monetary pedal pushed to the floor. The next downturn will test this regime to destruction.

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Its prescription is radical. The world must jettison neo-liberal ideology, and launch a "global new deal" with a blitz of investment on strategic sectors. It wants a return of the "developmental state", commanding a potent industrial policy, and backed by severe controls on capital flows.

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iehi-feed-60714 Thu, 22 Sep 2016 01:15:07 GMT No, the Fed Doesn't Have a Plan. Yes, It Really is Monetizing Government Debt http://implode-explode.com/viewnews/2016-09-21_NotheFedDoesntHaveaPlanYesItReallyisMonetizingGovernmentDebt.html And Fed critics have argued since 2008 that "normal" monetary policy would never return, that QE would never be unwound, and that artificially low (or even negative) interest rates were here to stay. In other words, that the Fed and its 300 Ivy League economists don't know what to do other than kick the can down the road another few months while hoping for a miraculous economic recovery.

Fast forward to today, and the recovery hasn't materialized. And Fed officials, current and former, are singing a different tune about ever restoring the balance sheet to pre-2008 levels.

... even progressive WaPo readers sense that the Fed is clueless, and that there are no brilliant people in Washington working on a "plan" to save us. Extraordinary monetary policy is the new normal, and all those pundits who assumed the Fed knew what it was doing were- and are- wrong.

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iehi-feed-60712 Wed, 21 Sep 2016 23:16:34 GMT About That OTHER Presidential Candidate Operating a Charity For Personal Benefit... http://implode-explode.com/viewnews/2016-09-21_AboutThatOTHERPresidentialCandidateOperatingaCharityForPersonalB.html iehi-feed-60709 Wed, 21 Sep 2016 22:32:41 GMT Yellen Rebuffs Pressure to Hike as Fed "Gives Economy Room to Run" http://implode-explode.com/viewnews/2016-09-21_YellenRebuffsPressuretoHikeasFedGivesEconomyRoomtoRun.html Federal Reserve Chair Janet Yellen braved mounting opposition inside and outside the U.S. central bank and delayed an interest-rate increase again to give the economy more room to run.

While agreeing that the case for a rate rise had strengthened, Yellen on Wednesday argued that it made sense to put off a move for now amid signs that discouraged Americans who dropped out of the labor market are returning and looking for work.

Look at that; the Fed found an excuse... quelle suprise!! Gold and silver blasted off in response (and if there was less manipulation, they'd be up considerably more, just to preserve their pre-hike-headfake momentum...)

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iehi-feed-60708 Tue, 20 Sep 2016 23:00:51 GMT Would Germany Bail Deutsche Bank Out? http://implode-explode.com/viewnews/2016-09-20_WouldGermanyBailDeutscheBankOut.html Deutsche cannot pay $14 billion without raising a great deal of cash. Deutsche has put aside $5.5 billion for paying fines. A mere 9 billion short. So could Deutsche go down? Financially yes it could. But politically, I doubt it. And it's the tension between these two answers, between the parlous financial state and the huge political significance of Deutsche, that I find interesting.

Deutsche is Germany's only G-SIB (Global Systemically Important Bank).   Deutsche is Germany's financial flag carrier. It stands at the centre of Germany's long held desire to have Frankfurt eclipse London as Europe's financial centre... France has three G-SIBs. The balance between France and Germany within Europe would shift. Maintaining that balance between France and Germany, at the heart of Europe, has been critical in European affairs since WWI.

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iehi-feed-60704 Tue, 20 Sep 2016 13:54:01 GMT Slowly, Then All at Once - Kunstler http://implode-explode.com/viewnews/2016-09-20_SlowlyThenAllatOnceKunstler.html