Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-61720 Sat, 18 Feb 2017 16:49:36 GMT Bill Gates' Latest Odd (And Hypocritical) Idea - Let's Tax The Robots Stealing Our Jobs http://implode-explode.com/viewnews/2017-02-18_BillGatesLatestOddAndHypocriticalIdeaLetsTaxTheRobotsStealingOur.html iehi-feed-61719 Sat, 18 Feb 2017 02:08:10 GMT "Seriously Delinquent" Auto Loans Surge http://implode-explode.com/viewnews/2017-02-17_SeriouslyDelinquentAutoLoansSurge.html iehi-feed-61715 Fri, 17 Feb 2017 15:59:55 GMT Why So Many Families Are Feeling Extreme Financial Stress http://implode-explode.com/viewnews/2017-02-17_WhySoManyFamiliesAreFeelingExtremeFinancialStress.html ... our incomes have been incredibly stagnant.   In fact, we just learned that median household income did not go up at all during 2016. This is one of the reasons why we consistently see families fall out of the middle class month after month.  Even if you keep the same job year after year, your standard of living is going to steadily go down unless your pay goes up.

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And today we learned that the number of Americans refinancing their homes has fallen to the lowest level that we have seen since 2009... If you will remember, we also saw a slowdown in mortgage refinancing just before the great financial crisis of 2008. For mortgage applications overall, they are now down almost 31 percent from where they were a year ago... And we also learned this week that FHA mortgage delinquencies increased during the fourth quarter "for the first time since 2006″... If this continues, it won't be too long before everyone is talking about a new housing crash.

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iehi-feed-61708 Thu, 16 Feb 2017 20:42:45 GMT Four Signs U.S-China Relations Destined for Conflict http://implode-explode.com/viewnews/2017-02-16_FourSignsUSChinaRelationsDestinedforConflict.html iehi-feed-61705 Thu, 16 Feb 2017 18:42:06 GMT Inflation Alarms Expose Vulnerability in Richly Priced S&P 500 http://implode-explode.com/viewnews/2017-02-16_InflationAlarmsExposeVulnerabilityinRichlyPricedSP500.html Lower valuations don't always cause trouble for the stock market as long as profits grow faster. But for now, the earnings picture is not promising. S&P 500 companies just returned to growth after five quarters of declines. While analysts see income jumping 12 percent this year, the rate appears to be too optimistic given the economy is forecast to grow only 2.3 percent.

After living through years of deflation fear amid the slowest economic recovery from a recession since the World War II, investors are now embracing the prospect of faster growth and higher inflation, underpinned by Trump's pro-growth agenda. Money has flown to banks and companies most geared to an economic upswing in a rally that has added more than $2 trillion to stock value since the election.

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iehi-feed-61700 Wed, 15 Feb 2017 23:38:06 GMT Andrew Puzder withdraws as a labor secretary nominee http://implode-explode.com/viewnews/2017-02-15_AndrewPuzderwithdrawsasalaborsecretarynominee.html Puzder, the CEO of the company that owns the Hardee's and Carl's Jr. fast food chains, faced fierce opposition mostly from Democrats in part related to his position on labor issues as well as the fact that he employed an undocumented immigrant housekeeper.

But Republicans too had grown weary of the range of liabilities facing Puzder, and senior GOP officials informed the White House Tuesday night and Wednesday that Puzder lacked a viable path for confirmation.

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iehi-feed-61699 Wed, 15 Feb 2017 20:59:24 GMT Donald Trump's wounds are all self-inflicted http://implode-explode.com/viewnews/2017-02-15_DonaldTrumpswoundsareallselfinflicted.html The Muslim ban was just one of several ill-considered executive orders churned out by Trump (with Bannon's and Miller's close guidance). One edict from the Oval Office ordered that two regulations must be eliminated each time a government agency or department implements one new regulation. This gimmick is a simpleton's version of regulatory reform that ignores all sorts of complicated issues. It will prove to be unworkable and, probably, illegal. Another order Trump signed, reportedly without reading it closely, put Bannon on the National Security Council, thus sending a shock wave through the ranks of foreign relations specialists.

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Trump has a compliant, Republican-controlled Congress waiting to do his bidding. He has millions of supporters who dutifully give him the benefit of the doubt on any issue. He has inherited an economy that is chugging along nicely and an international scene without any immediate crisis. He could be enjoying a small honeymoon right now.

Instead, because of bizarre personnel choices (Flynn, Bannon, Miller, Conway), policy proposals based on falsehoods (there is no flood of poorly vetted terrorists), dumb campaign promises (there is no simple way to get rid of the Affordable Care Act), childish vendettas (picking a fight with Nordstrom for dropping daughter Ivanka's fashion products) and unrelenting lies (pick a day, any day), the Trump administration is mired in controversy and chaos. And Trump, who always finds someone to blame for everything, really has no one to blame but himself. 

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iehi-feed-61697 Wed, 15 Feb 2017 17:45:12 GMT The Political Assassination of Michael Flynn (THE DEEP STATE STRIKES BACK!) http://implode-explode.com/viewnews/2017-02-15_ThePoliticalAssassinationofMichaelFlynnTHEDEEPSTATESTRIKESBACK.html iehi-feed-61693 Tue, 14 Feb 2017 22:46:08 GMT Deflation and Gold: A Contrarian View http://implode-explode.com/viewnews/2017-02-14_DeflationandGoldAContrarianView.html Jastram examined three deflationary periods in history... So... How did gold do in these three deflationary periods stretching back 200 years? ... The chart below shows the nominal gold price rose over that period. But not nearly as much as its overall purchasing power.

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Gold's purchasing power rose during all three deflationary periods in question. Its nominal price may not have risen -- it fell between 1929 and 1933 -- but gold commanded more goods each time.

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iehi-feed-61687 Tue, 14 Feb 2017 16:32:57 GMT Made For Each Other - KUNSTLER http://implode-explode.com/viewnews/2017-02-14_MadeForEachOtherKUNSTLER.html iehi-feed-61686 Tue, 14 Feb 2017 16:30:05 GMT Is Trump the New Boris Yeltsin? http://implode-explode.com/viewnews/2017-02-14_IsTrumptheNewBorisYeltsin.html Today Trump fills the Yeltsin role in American politics. As Wall St. laughs, Trump begins the process of giving away (read: privatizing) America's assets to be owned by our new ruling kleptocracy. Inflation is coming...But not because wages go up, but because price gouging and monopoly pricing starts to dominate our everyday lives with no cheap substitutes coming from overseas due to an increasing global level of distrust and illiquidity among trading partners. Leveraged buyouts fueled by bailouts and free money from the central bankers will continue to kill competition in America. Media, energy, pharmaceutical, finance and agriculture will all be controlled by impregnable monopolies (and Warren Buffett).

It's a pitiful sham and a godawful shame -- a situation where Trump's supporters will, in the not too distant future, turn on him after they've had their illusions shattered -- but will it be too late?

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iehi-feed-61685 Tue, 14 Feb 2017 02:10:50 GMT Greece: the low-noise collapse of an entire country http://implode-explode.com/viewnews/2017-02-13_Greecethelownoisecollapseofanentirecountry.html The Greek crisis is still there. European officials and the IMF have issued a new ultimatum to Alexis Tsipras. He has three weeks to present new austerity measures. Exhausted, the country is on the verge of financial, economic and moral collapse. Syriza officials are talking about getting out of the euro.

... The vacuity of all this austerity policy determined by certain financial ratios is obvious. European officials may argue that their bailout is working, they welcome the recovery of Greece and the budget surpluses, but the situation is quite different: passively we are witnessing the low-noise collapse of a whole country.

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iehi-feed-61682 Mon, 13 Feb 2017 21:18:25 GMT Yellen must walk a fine line as GOP Congress prepares to grill her http://implode-explode.com/viewnews/2017-02-13_YellenmustwalkafinelineasGOPCongresspreparestogrillher.html As Yellen gives testimony on Tuesday and Wednesday, the first point of interest will be whether Yellen provides any more guidance on the possibility of a March rate hike. Markets have so far written off the chance, pricing in just an 18 percent probability of a quarter-point move, according to Thomson Reuters.

But many economists say that's too low, given that Yellen is likely to signal that the Fed is close to meeting its inflation and employment goals set by Congress.

The trouble for the market is this: Can Yellen hit just the right tone where she claws back some flexibility for the Fed to hike in March and yet not signal that it's a done deal? If so, Yellen will seek just the right hawkish language to bring that probability to just about 50 percent so she can leave it to the Federal Open Market Committee to make the actual decision.

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iehi-feed-61679 Mon, 13 Feb 2017 17:38:21 GMT Bank For International Settlements Warns Of Looming Debt Bubble http://implode-explode.com/viewnews/2017-02-13_BankForInternationalSettlementsWarnsOfLoomingDebtBubble.html iehi-feed-61678 Mon, 13 Feb 2017 04:35:01 GMT Fillon Scandal Injects Uncertainty into French Elections -- Can Anyone Stop Le Pen? http://implode-explode.com/viewnews/2017-02-12_FillonScandalInjectsUncertaintyintoFrenchElectionsCanAnyoneStopL.html Right from the get go, President François Hollande's disastrous showing in the polls prevented him, the incumbent, from running for re-election. His prime minister Manuel Valls, once one of the country's most popular politicians, also got derailed as the Socialist Party's replacement candidate in the primary. And "omnipresident" Nicolas Sarkozy fared equally poorly in the conservative party's primary. The early vote also wiped out the prospects of the man who had led all the polls: Alain Juppé, the aging mayor of Bordeaux, who at times looked almost like he already had one foot in the door at Élysée Palace, the French White House.

Now the slate of contenders, with or without Fillon, has completely changed and is considerably more exciting than what had been anticipated only a few short weeks ago. France's third most popular sport behind football and rugby -- that of calculating the probability of every possible (and impossible) post-election coalition -- has begun filling myriad columns and television programs.

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Now, even if Fillon survives as a candidate, he will be so damaged that he has virtually no chance of winning. Last week, in fact, his own party began discussing a "Plan B" so openly that it was almost disrespectful. Juppé is one possible replacement candidate being discussed, but the names of some young conservatives have also been circulating. Regardless, none of these alternatives would be as capable of taking voters away from Marine Le Pen and her project "Marine 2017" as the pre-scandal Fillon would have been.

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Still, it remains unlikely that Marine Le Pen will become France's president. The polls may show her making it into the second round of voting, but once there, the current data also shows that she would likely be defeated by an opposing candidate, no matter who it is. At the moment, for example, polls show Macron getting 65 percent of votes in a run-off against Le Pen. One of the certainties you can rely on in France is that Le Pen is constantly seen as the greater of two evils.

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iehi-feed-61677 Mon, 13 Feb 2017 04:24:19 GMT Greece says bailout disbursement deal close, Juncker says it's on shaky ground http://implode-explode.com/viewnews/2017-02-12_GreecesaysbailoutdisbursementdealcloseJunckersaysitsonshakygroun.html Reaching agreement would release another tranche of funds from its latest 86 billion euro bailout, and facilitate Greece making a major 7.2 billion euro debt repayment this summer.

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The European and IMF lenders want Greece to make 1.8 billion euros - or 1 percent of GDP - worth of new reforms by 2018 and another 1.8 billion euros after then and the measures would be focused on broadening the tax base and on pension cutbacks.

Note this isn't a new bailout deal -- just a deal to continue the deal that was already last agreed to. We suspect it won't be the last deal to continue a deal, or even deal to replace a deal...

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iehi-feed-61676 Sun, 12 Feb 2017 23:44:45 GMT Why Falling Home Prices Could Be a Good Thing http://implode-explode.com/viewnews/2017-02-12_WhyFallingHomePricesCouldBeaGoodThing.html Suppose there were a way to pump up the economy, reduce inequality and put an end to destructive housing bubbles like the one that contributed to the Great Recession. The idea would be simple, but not easy, requiring a wholesale reframing of the United States economy and housing market.

The solution: Americans, together and all at once, would have to stop thinking about their homes as an investment.

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People might expect home prices to go down instead of up. Homebuilders would probably spend more time talking about technology and design than financing options. Politicians might start talking about their plans to lower home prices further, as they often do with fuel prices.

In this thought experiment, housing prices would probably adjust. They would be somewhat cheaper in most places, where population is growing slowly. But they would be profoundly cheaper in places like super-expensive San Francisco.

That was the conclusion of a recent paper by the economists Ed Glaeser of Harvard and Joe Gyourko at the Wharton School of the University of Pennsylvania. The paper uses construction industry data to determine how much a house should cost to build if land-use regulation were drastically cut back. Since the cost of erecting a home varies little from state to state -- land is the main variable in housing costs -- their measure is the closest thing we have to a national home price.

According to them, a standard American home should cost around $200,000, a figure that includes the cost of construction, what land would cost in a lightly regulated market, and a modest profit for developers. In many places, that's what the prices roughly are. But for a few metropolitan areas like San Francisco and Boston, homes are wildly overpriced, leading to distortions in the economy and labor market.

... prices would still vary from place to place, based on demand and geography. It's easier to build in Phoenix (plenty of flat land), and harder in San Francisco (lots of hills and nearby water). But while building in the San Francisco metro area is more expensive than in other places, it's not that expensive. By the paper's calculations, a home in the San Francisco area should cost around $281,000.

The actual price for a standard home in the area is more like $800,000 (using 2013 data). The paper argues that most of that difference is caused by regulatory hurdles like design and environmental reviews that can add years to a project's timeline and suppress the overall housing supply. The result is overpayment on a grand scale for the few homes that do get built.

People are sure to quibble with the economists' calculations, but their general conclusion -- that an abundance of new homes would result in lower prices -- is not remotely controversial

Good article -- but not great (the reason being that the monetary-malfunction root of housing bubbles isn't discussed at all). Regardless, we've been making of the points in here for years; it's just interesting to see this sort of "anti-homeownership society" notion move more and more into the public consciousness.

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iehi-feed-61673 Sun, 12 Feb 2017 19:35:10 GMT William White: "Central banks cannot reverse" Massive QE; "Hyperinflation" Seems Unavoidable http://implode-explode.com/viewnews/2017-02-12_WilliamWhiteCentralbankscannotreverseMassiveQEHyperinflationSeem.html Is there a limit to increase central bank balance sheets?

There is no physical limit to it. A central bank can buy anything, even cars and cheese, and just pay for it, with a claim on its own balance sheet. Having said that, there are both theoretical and empirical reasons to think that there are limits.

What theory sees a limit to central bank balance sheet expansion?

The theoretical limit was discussed in a paper called «Some Unpleasant Monetarist Arithmetic» published by Thomas Sargent and Neil Wallace in 1981. Suppose a central bank is worried about rising inflation and decides to raise interest rates. But the government has a huge debt with a short maturity. By raising short term interest rates, the central bank raises the debt service burden for the government. At some point, people realise that the government can't support the debt burden without going back to the central bank to print more money. This is a tipping point. And then you are in hyperinflation.''

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iehi-feed-61672 Fri, 10 Feb 2017 15:00:00 GMT The Crash Will Be Violent - David Stockman http://implode-explode.com/viewnews/2017-02-10_TheCrashWillBeViolentDavidStockman.html ... never mind the fact that the ostensible reason for the post-election Sucker's Rally -- the mythical Trump Stimulus -- has already bitten the dust on Capitol Hill.

According to Speaker Ryan, they are not going to even take up tax reform until they dispose of the GOP's Obamacare "repeal and replace" pledge, but even Trump now says that may take until next year.

Likewise, any corporate tax reform that does happen will be done on a roughly deficit neutral basis, meaning that the average effective corporate tax rate is not going to change much at all.

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What will be coming soon, however, is the mother of all debt ceiling crises -- an eruption of beltway dysfunction that will finally demolish the notion that Trump is good for the economy and the stock market... the cash balance has run down from a peak of about $450 billion to just $304 billion as of last Friday. Unless reversed soon, this means that the Treasury will run out of cash by perhaps July 4th rather than Labor Day. After that, all hell will break loose.

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iehi-feed-61670 Fri, 10 Feb 2017 14:34:22 GMT Trump Capitulates on "One China" Policy http://implode-explode.com/viewnews/2017-02-10_TrumpCapitulatesonOneChinaPolicy.html Stung by an earlier, and unorthodox, telephone call between Mr. Trump and the president of Taiwan, Mr. Xi had not spoken to the American leader since Nov. 14, the week after he was elected. Administration officials had predicted a conversation would come only after Mr. Trump publicly committed to recognizing a single Chinese government in Beijing.

And so Mr. Trump, during what the White House called "a lengthy telephone conversation," formally and officially bent to Beijing.

"The two leaders discussed numerous topics and President Trump agreed, at the request of President Xi, to honor our One China policy," the White House said in a statement released late Thursday night. It said the discussion was "extremely cordial" and that the presidents "extended invitations to meet in their respective countries."

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On Thursday, Secretary of State Rex W. Tillerson was at the White House for meetings to discuss whether the White House should publicly reaffirm its commitment to the One China policy as a way of breaking the deadlock and getting the two presidents back on the phone.

Mr. Tillerson's involvement in the issue is noteworthy because he pledged, in written answers to questions after his Senate confirmation hearing, to uphold the One China policy. He specifically rejected the idea, advanced by Mr. Trump, that Taiwan be used as a bargaining chip in a broader negotiation with China on trade and other issues.

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Administration officials are also keenly aware that the Chinese will be closely watching the visit of Prime Minister Shinzo Abe of Japan, which begins here Friday with an Oval Office meeting, a White House lunch, and a joint news conference. Then Mr. Trump will take Mr. Abe to Palm Beach, Fla., on Air Force One, where the leaders plan to play golf at Mr. Trump's club. They and their wives will also have dinner at Mr. Trump's club, Mar-a-Lago.

To the status-conscious Chinese, this red-carpet treatment will not go unnoticed. Analysts say it may reinforce their suspicion that the Trump administration is making Japan the centerpiece of its Asia strategy.

He came out with guns blazing, but much for extracting concessions from the-"beating us" China. Now we may be in a worse position before, since the U.S. never previously "honored" the One China policy (as if it were a specific thing we established with China), but agreed to respect China's and Taiwan's position on the issue...

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