Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-61226 Sun, 04 Dec 2016 20:30:55 GMT The Low Unemployment Rate Is A Momentary Calm Before The Coming Economic Storm http://implode-explode.com/viewnews/2016-12-04_TheLowUnemploymentRateIsAMomentaryCalmBeforeTheComingEconomicSto.html The full report does delve into most of these concerns. In fact, the broadest unemployment gauge, which includes part-time workers who'd prefer full-time work, dropped to 9.3% in November, having steadily improved since March 2010 when it was at 17.1%.

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The troubling trend isn't the unemployment rate; it's the size of the labor force. Labor force participation has steadily declined from 66% to less than 63% over the past nine years, the lowest it's been since 1977. A record 95 million people are opting out of the workforce. ... Retiring baby boomers account for about half of the decline, but prime-age workers (i.e., ages 25-54) have been leaving the labor force, too, and the reasons aren't entirely clear.

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iehi-feed-61224 Sun, 04 Dec 2016 19:21:23 GMT Will Trump's band of billionaires care about regular folk? http://implode-explode.com/viewnews/2016-12-04_WillTrumpsbandofbillionairescareaboutregularfolk.html Teena Colebrook is despondent that Trump has picked Steve Mnuchin for Treasury because Mnuchin was the head of a group of investors who owned OneWest, a bank that foreclosed on Colebrook's Los Angeles-area home.  She tried to work with the bank to modify her loan, she told the AP, but the bank lost some of her paperwork and was generally difficult to deal with. "I just wish that I had not voted," she said. "I have no faith in our government anymore at all. They all promise you the world at the end of a stick and take it away once they get in."

What fascinates me is why Colebrook ever believed that Trump's heart bleeds for struggling people.  Two years before the housing crash that eventually cost Colebrook her home, Trump  openly longed for the kind of housing crash that would cost people their homes.

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Now, according to a Wednesday report in The Washington Post, Trump is putting together the "wealthiest administration in modern American history." People thought George W. Bush had a wealthy administration, the report says, but the Bush administration's combined net worth of about $250 million is "roughly one-tenth the wealth of Donald Trump's nominee for commerce secretary alone."

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iehi-feed-61223 Sun, 04 Dec 2016 15:33:43 GMT Debunking GFMS' Gold Demand Statistics - Koos Jansen http://implode-explode.com/viewnews/2016-12-04_DebunkingGFMSGoldDemandStatisticsKoosJansen.html iehi-feed-61222 Sun, 04 Dec 2016 14:56:11 GMT A Big Swirling Italian Mess http://implode-explode.com/viewnews/2016-12-04_ABigSwirlingItalianMess.html Coming up with an answer isn't necessarily helpful when you can't even agree on the question. However Italians vote, it may take some time to figure out exactly what the result means to Italy, the Eurozone, the EU, and the global economy. I am fairly confident that the ultimate outcome won't be good, no matter what they choose. The problems are deeper than simple structural reform can cure.

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The entire Italian system is being propped up by the European Central Bank's (ECB) buying of Italy's bonds as part of its overall quantitative easing project. There is a significant revolt involving many members of the ECB who want to scale back if not all together halt the QE program. That would remove the prop from Italian bonds, and their yields would soar back to the 6 to 7% range.''

Good tour-de-force article by Mauldin.

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iehi-feed-61221 Sun, 04 Dec 2016 01:36:19 GMT 'Washington Post' 'Blacklist' Story Is Shameful, Disgusting - Matt Taibbi http://implode-explode.com/viewnews/2016-12-03_WashingtonPostBlacklistStoryIsShamefulDisgustingMattTaibbi.html iehi-feed-61220 Sat, 03 Dec 2016 23:23:27 GMT No Overstatement: Structural Unemployment Is the Biggest Economic Threat http://implode-explode.com/viewnews/2016-12-03_NoOverstatementStructuralUnemploymentIstheBiggestEconomicThreat.html ``The fact that the labor force participation rate is falling at the same time the unemployment rate is falling indicates that that there is a structural problem in the economy... [the] process is accelerating as technological advances are enabling the replacement of all kinds of human labor at a faster rate than new job opportunities are being created.

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The net result is that an increasing percentage of the population is no longer economically viable. What's more, this condition is not going to be reversed by regulatory, tax, and fiscal policy changes at the federal level, intended to prevent domestic U.S. companies from offshoring jobs, as is being proposed by President-elect Trump.

... The trajectory I outlined for -- when the U.S. economic system can no longer function and thus collapses, which occurs when the percentage of the population that is employed in the private sector dips below 25% and is absolute at 20% -- has continued since then.

What we think analyses like these miss is that monetary dysfunction is as important -- if not more important -- than "accelerating technology" to the problem of an increasingly idle population. That is, the core gears of capitalism, and in particular, creative destruction, are gummed up (if not absent entirely), in our completely bizarre and dysfunctional monetary and banking system. If this were fixed, we might have little to no structural unemployment problem at all, as the market would be more able to create new opportunities. Regardless of how significantly this factor is, it seems virtually suicidal for an economy and society not to fix it before proceeding to more elaborate interventions.

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iehi-feed-61219 Sat, 03 Dec 2016 17:56:51 GMT Government Bond & Mortgage "Meltdown" Crushes NIRP http://implode-explode.com/viewnews/2016-12-03_GovernmentBondMortgageMeltdownCrushesNIRP.html While global stocks rallied in November, the gains -- $635 billion -- were outright puny compared to the $1.7 trillion wiped out in the much larger bond markets.

On Thursday it got worse. It started in Europe where government bonds got crushed after speculation surfaced that the ECB might not keep buying bonds until hell freezes over, that in fact it might begin tapering its QE program as soon as next year. The markets were aghast.

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In terms of dollars and cents, the CME CBOT 30-Year US Treasury Bond Price Index has now lost 8.5% since Election Day, and 14.8% since July. This is a bitterly ironic twist for those investors who consider them among the most conservative investments in the world...

This bond market "carnage" is accomplishing something else: It's gutting negative yields -- and all those who've bought these bonds when yields were at their most negative.

This post also excellently illustrates the "contagion" aspect -- the breakdowns are illustrating the disturbing extent that bond markets had also been all floating on the same pool of global QE/NIRP on the way up (as we've been pointing out on this site for years now), giving lie to the claim that one region and market is "doing fine" even with another region or two engaging aggressively in QE to keep the game going.

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iehi-feed-61214 Sat, 03 Dec 2016 14:53:25 GMT The Great Unwind Unravels Hottest Rental Markets in the US http://implode-explode.com/viewnews/2016-12-03_TheGreatUnwindUnravelsHottestRentalMarketsintheUS.html ... averages can cover up more than they reveal. On a city-by-city basis, a different scenario emerges, with rents going totally crazy in some la-la lands, as if it were still the summer of 2015, and in other cities, including the three most expensive rental markets in the US, rents are coming down hard.

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Asking rent for a median one-bedroom fell to $3,330. That's still a lot of moolah: $40,000 a year for a small, very average apartment. But that's down 9.3% from the peak of the rental bubble in October 2015.

The median asking rent for a two-bedroom dropped to $4,500. So $54,000 a year. That's down 6.8% from a year ago, and down 10% from the October 2015 peak...

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iehi-feed-61213 Sat, 03 Dec 2016 00:29:00 GMT False Narratives, Not ‘Fake News,' Are the Real "New Cold-War" Problem - Stephen Cohen http://implode-explode.com/viewnews/2016-12-02_FalseNarrativesNotFakeNewsAretheRealNewColdWarProblemStephenCohe.html iehi-feed-61210 Fri, 02 Dec 2016 22:28:56 GMT Indian ‘Gold Ban' a Portent of Major Events? http://implode-explode.com/viewnews/2016-12-02_IndianGoldBanaPortentofMajorEvents.html iehi-feed-61209 Fri, 02 Dec 2016 18:26:27 GMT Americans Not In The Labor Force Soar To Record 95.1 Million, Driving Headline Unemployment Rate Fall http://implode-explode.com/viewnews/2016-12-02_AmericansNotInTheLaborForceSoarToRecord951MillionDrivingHeadline.html this report that average hourly earnings are actually slightly down on the month, belying alleged strength...)]]> iehi-feed-61208 Fri, 02 Dec 2016 16:05:41 GMT Gross Warns That Trump Rally Built on False Promise of Growth http://implode-explode.com/viewnews/2016-12-02_GrossWarnsThatTrumpRallyBuiltonFalsePromiseofGrowth.html iehi-feed-61206 Fri, 02 Dec 2016 02:25:02 GMT Largest US Bitcoin Exchange Ordered To Disclose Three Years Of User Data To IRS http://implode-explode.com/viewnews/2016-12-01_LargestUSBitcoinExchangeOrderedToDiscloseThreeYearsOfUserDataToI.html Despite the order, Coinbase has vowed to continue the fight: "We look forward to opposing the DOJ's request in court after Coinbase is served with a subpoena," a spokesman for the San Francisco-based company said in an email to Reuters.

Coinbase remains concerned with its U.S. customers' privacy rights in the face of the government's request, he added, although he is likely far less concerned than any people who used Coinbase from 2013 to 2015, and who may soon be getting a visit from the taxman, even if they have done nothing illegal. As for the myth that trading bitcoin by ordinary Americans provides some additional layer of privacy, that is about to be thoroughly debunked.

This order is almost unbelievably broad -- it's comparable to an order demanding bank client identities and transactions because the transactions might entail unreported taxable gains (of course, there are already other forms of regulatory surveillance on banks). The until-recently-ongoing NSA warrantless wiretapping program revealed by Snowden is the closest parallel we can think of.

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iehi-feed-61203 Thu, 01 Dec 2016 22:58:35 GMT Sanders: Donald Trump 'Has Endangered' U.S. Jobs With Carrier Deal http://implode-explode.com/viewnews/2016-12-01_SandersDonaldTrumpHasEndangeredUSJobsWithCarrierDeal.html The former Democratic presidential candidate ripped the apparent terms of the deal in an op-ed for The Washington Post. "Trump has endangered the jobs of workers who were previously safe in the United States," Sanders wrote. "Why? Because he has signaled to every corporation in America that they can threaten to offshore jobs in exchange for business-friendly tax benefits and incentives."

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Trump's deal apparently saves less than half of the total jobs, the rest of which will still be going to Mexico.

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And as Sanders noted in the op-ed, Trump promised during the campaign to threaten Carrier with tariffs on products it would import into the United States as a way of dissuading them from offshoring the jobs ― rather than giving them tax relief as an incentive to stay.

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iehi-feed-61201 Thu, 01 Dec 2016 22:47:27 GMT Trump's Tax Cut Means Billion-Dollar Writedowns for U.S. Banks http://implode-explode.com/viewnews/2016-12-01_TrumpsTaxCutMeansBillionDollarWritedownsforUSBanks.html Donald Trump's planned U.S. corporate tax cuts could translate to a big one-time earnings hit for many of the biggest U.S. banks, thanks to tax benefits they generated during the 2008 financial crisis... The banks might have to write down deferred tax assets, which often pile up when a company loses money and can't immediately enjoy the tax benefits of those losses.

... Citigroup Inc. would take the deepest earnings hit -- perhaps $12 billion or more, according to recent estimates by the bank's chief financial officer and several banking analysts. Mark Costiglio, a Citigroup spokesman, declined to comment. Others, including Bank of America Corp. and Wells Fargo & Co. could face multibillion-dollar writedowns.

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At a 25 percent rate, Citigroup would be required to lower its earnings by $6 billion to reflect the reduced value of its tax-deferred assets, John Gerspach, the bank's chief financial officer, told investors at a conference hosted by Bank of America on Nov. 16.

But that could change if a Republican call for exempting overseas corporate earnings from U.S. taxation is enacted as part of the tax overhaul. Under that scenario, Gerspach said, Citigroup would have to write down as much as $12 billion -- because a large part of its deferred tax assets consist of unused foreign tax credits.

Calculations by Brian Kleinhanzl, a financial-sector analyst at KBW, show that at a 25 percent corporate tax rate, Bank of America would face a $6.6 billion writedown, while Wells Fargo's would be $4 billion. Goldman Sachs Group Inc.'s would be $1.6 billion, according to KBW's estimates.

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The implications might also reach mortgage giants Fannie Mae and Freddie Mac, which could see write downs of $10 billion and $5.4 billion respectively, according to a Nov. 27 KBW research note. Those hits would be large enough to potentially require both of them to seek a new infusion of money from the Treasury Department, the note said.

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iehi-feed-61200 Thu, 01 Dec 2016 22:37:09 GMT Carrier deal shows Trump understands the politics of jobs http://implode-explode.com/viewnews/2016-12-01_CarrierdealshowsTrumpunderstandsthepoliticsofjobs.html Trump has focused much of his economic messaging on one correct core idea: What most people want is to be able to comfortably support themselves and their families with the income from a job that pays steadily rising wages. And he'll work hard to make that goal a reality for more Americans -- including by bullying and bribing companies into keeping jobs in America.

The idea that good-paying jobs are the central goal of economic policy may sound uncontroversial, even trite -- but it's a significant departure from standard Republican and Democratic messaging on the economy.

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President George W. Bush promoted an "ownership society" in which ordinary people got to enjoy the rising fortunes of capital through their ownership of assets. The problem with this idea was that most people are not rich and therefore cannot derive a large share of their income from returns to capital. They have to work for a living.

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Of course, Democrats talk constantly about the importance of creating good, middle-class jobs. But over the past eight years, their economic agenda has focused much more on uplifting the poor than on strengthening and employing the middle class.

... I think the likely wage effects of Trump's economic policy suite are more uncertain than his detractors want to admit. In particular, a lot of economic research on the effects of trade on wages has been turned on its head in recent years. My confidence in the economics consensus that immigration does not depress native-born workers' wages is relatedly low.

... Trump's public jawboning of Carrier has been treated as extraordinary, but it doesn't strike me as all that different from the Obama administration's shaming of Pfizer out of pursuing a tax-inversion transaction with Allergan. The main difference is the government's goal was job location rather than tax receipts.

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iehi-feed-61198 Thu, 01 Dec 2016 17:09:20 GMT Greece Isn't 'Crying Wolf' on Debt Relief http://implode-explode.com/viewnews/2016-12-01_GreeceIsntCryingWolfonDebtRelief.html This isn't just your standard tale of a bondholder trying to boost the value of his investments by talking his book. What Kazarian has tried to do for the past four years is treat the sovereign nation of Greece the same way he might a private company he'd taken over: by detailing its assets and liabilities, looking for ways to enhance asset value while reducing liabilities, and, most importantly, seeking to install his own managers to take charge. The more you reflect on that latter notion, the more disturbing Kazarian's larger-than-life presence on the Greek financial scene becomes.

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Give or take, everyone else agrees that Greece's debts are equal to about 170 percent of its gross domestic product... But Kazarian says people who arrive at that number are suffering from "a major, major, major, major flaw in their model." He gets to a much more manageable (or downright virtuous) debt ratio of 45 percent by accounting for every previous restructuring as a debt cancellation, and treating all of the supposed assets of the country as if they were the factories, inventory and intellectual property of a company.

... there's a crucial, insurmountable difference between a bust company and a bankrupt nation: In the latter, the creditors don't (and indeed shouldn't) get to decide who's in charge.

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After shrinking this year and last year, economists are forecasting growth of just 1 percent in 2017 (lower than the official forecast). Sympathizers ranging from the IMF to President Barack Obama remain convinced that Greece cannot escape its doldrums without a further reduction in the debt burden. EU minister say they will discuss the issue when they meet next week. Investors may currently be fixated on Italian politics, but Greece's problems could also boil over.

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iehi-feed-61195 Thu, 01 Dec 2016 14:52:38 GMT Where Are We In The Business Cycle: A Troubling Chart From Morgan Stanley http://implode-explode.com/viewnews/2016-12-01_WhereAreWeInTheBusinessCycleATroublingChartFromMorganStanley.html iehi-feed-61192 Thu, 01 Dec 2016 00:55:37 GMT Bombshell: OPEC+Russia Agree to Historic Oil Production Cut, Price Spikes 10% http://implode-explode.com/viewnews/2016-11-30_BombshellOPECRussiaAgreetoHistoricOilProductionCutPriceSpikes10.html OPEC confounded its doubters and sent crude oil prices soaring by agreeing to its first production cuts in eight years. The deal, designed to drain record global oil inventories, overcame disagreements between the group's three largest producers -- Saudi Arabia, Iran and Iraq -- and ended a flirtation with free markets that started in 2014. It was also broader than many had expected, extending beyond OPEC. Most strikingly, Russia agreed to unprecedented cuts to its own output.

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The impact on the energy world was immediate: benchmark oil prices gained as much as 10 percent in New York and the share prices of energy companies around the globe jumped alongside the currencies of large exporters. Whether that's sustained will depend on how strictly members of the Organization of Petroleum Exporting Countries stick to the agreement, something they haven't always done in the past.

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iehi-feed-61191 Thu, 01 Dec 2016 00:49:52 GMT Manhattan Homeowners Looking for 40%+ 5-Year Returns Are Responsible For Market Freeze http://implode-explode.com/viewnews/2016-11-30_ManhattanHomeownersLookingfor405YearReturnsAreResponsibleForMark.html This year through September, sellers listing apartments priced at $3 million or less that were bought in 2010 sought a median of 47 percent more than their purchase price, data compiled by StreetEasy show. Owners who bought in 2011 have returned homes to the market for a median 42 percent markup, and buyers from 2012 listed for 35 percent more, according to the real estate website.

"That detachment from the market, from what the value actually is, is a big part of why sales are down," said Jonathan Miller, president of appraiser Miller Samuel Inc... "In my experience, it takes sellers a good one to two and a half years to believe in the new market," Miller said. "The buyers are with the program immediately."

... Growth in actual transaction prices hasn't matched sellers' aspirations. The median for all Manhattan resales in the third quarter was $950,000, or 11 percent more than in the same period of 2011, according to Miller Samuel.

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