Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-65266 Mon, 30 Mar 2020 15:30:26 GMT Facing Coronavirus, America Chose Mass Unemployment http://implode-explode.com/viewnews/2020-03-30_FacingCoronavirusAmericaChoseMassUnemployment.html [Our political leaders] appear to regard mass unemployment as an unfortunate but unavoidable symptom of the coronavirus. "It's nobody's fault, certainly not in this country," President Trump said Thursday. The federal government's primary response is a bill that passed the Senate late Wednesday night that would provide larger cash payments to those who have lost their jobs.

But the sudden collapse of employment was not inevitable. It is instead a disastrous failure of public policy that has caused immediate harm to the lives of millions of Americans, and that is likely to leave a lasting mark on their future, on the economy and on our society.

...

A number of European countries, after similarly failing to control the spread of the virus, and thus being forced to lock down large parts of their economies, have chosen to protect jobs. Denmark has agreed to compensate Danish employers for up to 90 percent of their workers' salaries. In the Netherlands, companies facing a loss of at least 20 percent of their revenue can similarly apply for the government to cover 90 percent of payroll. And the United Kingdom announced that it would pay up to 80 percent of the wage bill for as many companies as needed the help, with no cap on the total amount of public spending.

]]>
iehi-feed-65248 Sat, 21 Mar 2020 21:15:05 GMT Covid-19 Divides U.S. Society by Race, Class and Age http://implode-explode.com/viewnews/2020-03-21_Covid19DividesUSSocietybyRaceClassandAge.html iehi-feed-65247 Fri, 20 Mar 2020 20:27:39 GMT The Republican plan to mail checks to everyone: still screwing the poor http://implode-explode.com/viewnews/2020-03-20_TheRepublicanplantomailcheckstoeveryonestillscrewingthepoor.html Limiting these payments for the upper middle class and up is defensible, even if it irritates commentators who'd prefer a more comprehensive approach that mimics a universal basic income. Penalizing the poor during a pandemic, however, is beyond the pale. We're in the midst of a planned shutdown of the economy that will disproportionately harm low-wage service workers, yet Republicans are concerned about properly rewarding people for work. It is a crass joke.

It's worth emphasizing that the GOP's new plan only calls for a single payment. The Trump administration had said its plan called for up to two, with the first arriving on April 6 and a second landing in mid-May if the crisis continued. This is not a proposal designed to provide ongoing support during an extended downturn--it's essentially just a somewhat larger version of the tax rebate George W. Bush passed in his 2008 stimulus package. The bill does include a large loan program aimed at helping small businesses keep their workers on payroll, which, if successful, could reduce the number of Americans who end up under financial stress. But the bill is, overall, fairly stingy with direct support for workers.

]]>
iehi-feed-65245 Fri, 20 Mar 2020 03:17:46 GMT Cuban: No More Bailing Out Only The Rich http://implode-explode.com/viewnews/2020-03-19_CubanNoMoreBailingOutOnlyTheRich.html iehi-feed-65242 Thu, 19 Mar 2020 02:21:08 GMT Coronavirus Recession Is Already Causing Staggering Job Losses http://implode-explode.com/viewnews/2020-03-18_CoronavirusRecessionIsAlreadyCausingStaggeringJobLosses.html [based on preliminary data], for the U.S. as whole, total initial claims for unemployment insurance for this week could spike to over 2 million. During the worst week of the Great Recession, the last week of March 2009, claims reached 665,000.

... The first month of major job losses during the Great Recession was February 2008, when the economy shed 906,000 jobs. The effect rippled throughout 2009, and during the entirety of the Great Recession about 8.5 million jobs were lost. A similar multiplier would place total job losses from the current recession at ... 37 million... using back-of-the-envelope math, that implies a rise in the unemployment rate to about 27% -- even higher than the 20% Treasury Secretary Steven Mnuchin has warned as possible. It would exceed the highest unemployment on record, 24.9%, set during the Great Depression. To repeat: These are rough estimates based on early data.

]]>
iehi-feed-65241 Wed, 18 Mar 2020 22:42:21 GMT Opinion: Bitcoin Just Proved Itself to Be The Perfect Asset In A Financial Crisis http://implode-explode.com/viewnews/2020-03-18_OpinionBitcoinJustProvedItselftoBeThePerfectAssetInAFinancialCri.html The bitcoin sell-off looked much worse than how equities fared, but that's just an illusion. You see, Bitcoin consolidated and rallied like equities Friday. But without the benefit of $1.5 trillion pumped into money markets by the Federal Reserve. Without a half percent interest rate cut by the Fed earlier this month. And without the president teasing massive tax relief.

Isn't it obvious by now? Bitcoin is the only free-market currency of its size in the world. And it has stood up under this crisis of confidence, this absolute maelstrom of FUD, on its own two legs. That's what a really strong currency looks like. And those with eyes to see it have not missed what just happened.

]]>
iehi-feed-65235 Wed, 18 Mar 2020 02:04:59 GMT How ugly could it get? Trump faces echoes of 1929 in coronavirus crisis. http://implode-explode.com/viewnews/2020-03-17_HowuglycoulditgetTrumpfacesechoesof1929incoronaviruscrisis.html The early signals from the coronavirus crisis point to a scale of damage unseen in the modern U.S. economy: the potential for millions of jobs lost in a single month, a historic and sudden plunge in economic activity across the nation and a pace of sharp market swings not seen since the Great Depression.

As the coronavirus outbreak ravages a paralyzed nation, Wall Street suffered another brutal bloodbath on Monday with the Dow Jones Industrial Average diving around 13 percent in its worst percentage loss since 1987's "Black Monday" crash. A reading on business conditions in the New York area plunged a record 34.4 points to -21.5 in March, suggesting a recession is underway that could be sharp and deep as revenue quickly bleeds out of major industries from airlines to hotels, restaurants, bars and sports leagues.

...

The massive sell-offs have led to suggestions by market professionals that regulators may have to take dramatic steps seen during the Great Depression and after the 9/11 terrorist attacks. That could include shuttering Wall Street -- perhaps for days -- until more is known about the direction of the coronavirus spread in the United States and until Washington comes up with a massive, bipartisan policy response to shore up flagging industries and direct money straight into the pockets of American citizens losing work as they remain shuttered in their homes at the direction of the government officials.

]]>
iehi-feed-65229 Mon, 16 Mar 2020 15:43:47 GMT Fed is ‘throwing money in the wrong place,' says Sheila Bair, former top banking regulator http://implode-explode.com/viewnews/2020-03-16_FedisthrowingmoneyinthewrongplacesaysSheilaBairformertopbankingr.html ``"Lowering interest rates to zero doesn't help if businesses can't pay their loans back and they don't have cash flow," she said. "We need to get help out there, especially to small businesses and people already losing their jobs."

...

While preventing the implosion of big banks and the American auto industry were an immediate focus of rescue programs more than a decade ago, relief was less comprehensive and slower to reach U.S. households, which the Brookings Institution estimates led to the loss of 8.7 million jobs, more than 8 million home foreclosures and the shuttering of more than 500 community banks.

...

"Forget this 2008 financial crisis playbook," Bair said. "We never focused enough on the real problem in 2008, which was homeowners," she said, adding that she "loves the idea" of recent proposals that aim to get cash straight into the hands of households who are grappling with shuttered schools, businesses and more.

...

Specifically, the Fed can invoke section 13-3 of the Federal Reserve Act, she said, which covers emergency lending programs, and was revised under the 2010 Dodd-Frank Act to make sure that the government targets relief toward industries, not individual companies, threatened by collapse.

]]>
iehi-feed-65226 Fri, 13 Mar 2020 19:34:25 GMT The Trump Presidency Is Over http://implode-explode.com/viewnews/2020-03-13_TheTrumpPresidencyIsOver.html It has taken a good deal longer than it should have, but Americans have now seen the con man behind the curtain. The president, enraged for having been unmasked, will become more desperate, more embittered, more unhinged. He knows nothing will be the same. His administration may stagger on, but it will be only a hollow shell. The Trump presidency is over.

... in some respects, the avalanche of false information from the president has been most alarming of all. It's been one rock slide after another, the likes of which we have never seen. Day after day after day he brazenly denied reality, in an effort to blunt the economic and political harm he faced. But Trump is in the process of discovering that he can't spin or tweet his way out of a pandemic. There is no one who can do to the coronavirus what Attorney General William Barr did to the Mueller report: lie about it and get away with it.

The president's misinformation and mendacity about the coronavirus are head-snapping. He claimed that it was contained in America when it was actually spreading. He claimed that we had "shut it down" when we had not. He claimed that testing was available when it wasn't. He claimed that the coronavirus will one day disappear "like a miracle"; it won't. He claimed that a vaccine would be available in months; Fauci says it will not be available for a year or more.

...

Taken together, this is a massive failure in leadership that stems from a massive defect in character. Trump is such a habitual liar that he is incapable of being honest, even when being honest would serve his interests. He is so impulsive, shortsighted, and undisciplined that he is unable to plan or even think beyond the moment. He is such a divisive and polarizing figure that he long ago lost the ability to unite the nation under any circumstances and for any cause. And he is so narcissistic and unreflective that he is completely incapable of learning from his mistakes. The president's disordered personality makes him as ill-equipped to deal with a crisis as any president has ever been. With few exceptions, what Trump has said is not just useless; it is downright injurious.

]]>
iehi-feed-65225 Thu, 12 Mar 2020 19:59:32 GMT Trump has lost the majority of his stock market gains amid equity rout http://implode-explode.com/viewnews/2020-03-12_Trumphaslostthemajorityofhisstockmarketgainsamidequityrout.html What was once a 61% Dow gain since the election on Feb. 12 has evaporated to far thinner 18.2% rally as the index fell from 29,568 to around 21,654.

...

By one measure, the sell-off has erased all of U.S. market cap gains since Election Day 2016, wiping out more than $11 trillion in value in less than one month as measured by the Russell 3000 index, according to Bespoke Investment Group.

On Feb. 19, total U.S. market value was just over $35 trillion, but it's since fallen to $23.8 trillion -- the same as it was on Nov. 8, 2016, according to Bespoke.

]]>
iehi-feed-65223 Thu, 12 Mar 2020 14:29:55 GMT This plunge looks a lot like the ones that rocked stocks in 1929, 1987 and 2008 -- if it keeps tracking, look out http://implode-explode.com/viewnews/2020-03-12_Thisplungelooksalotliketheonesthatrockedstocksin19291987and2008i.html iehi-feed-65216 Tue, 10 Mar 2020 14:57:22 GMT "No Longer Tethered to the Fundamentals": A Nassim Taleb Protégé on How to Prepare for the Coming Market Crash http://implode-explode.com/viewnews/2020-03-10_NoLongerTetheredtotheFundamentalsANassimTalebProtgonHowtoPrepare.html "When the stock market is no longer tethered to fundamentals--that's the distorted environment we live in, that's just where we are--when that happens, any price can print," he says. "Any price can print. We shouldn't be surprised by anything on the upside at this point because what's tethering the markets? People need yield and when they pursue yield because of the momentum that we have in the markets today, anything is possible."

He thinks the yield hunger games, as I like to call what's been happening for the last decade, "makes people take crazy risks" because "interest rates and prices are wrong" and "otherwise wouldn't even clear the market. They are just absolutely wrong. But of course, central bankers think they know what the natural rate is and that it will all be fine. They think they've got it all figured out."

...

He also thinks central bankers don't know how to stop the monster they have created. "I do not think that central bankers will ever be able to pull away from this," he explains. "They will never be able to ‘normalize' rates. In our lifetime, recessions and stock market crashes really have been instigated or started by central banks sort of pulling away the punch bowl. They raise rates and that has led to a slow down and ultimately has led to these crashes that we see. Every single one, that's how it's happened. But we've gone so far down the rabbit hole this time, I am absolutely convinced that that is not even on the table this time." He thinks central bankers are just testing the market when they suggest--as Jerome Powell, the chairman of the Federal Reserve, did throughout 2018 when he raised short-term interest rates four times--that they wanted to try to return to letting supply and demand set the price of money, a position that he reversed in 2019 when he pivoted and then lowered interest rates. "They're not stupid," he says of central bankers. "They are reckless. But they are not stupid. And they realize that global economies are in a situation now where central banks can't pull away. And they're bluffing if they say they can."

]]>
iehi-feed-65213 Sun, 08 Mar 2020 21:23:19 GMT Trump, His Eye on the Border, Overlooked the Coronavirus Threat http://implode-explode.com/viewnews/2020-03-08_TrumpHisEyeontheBorderOverlookedtheCoronavirusThreat.html Pretending we could wall out the virus not only gave the public a false sense of security, it also left the United States unready for the threat it now faces. Robust overseas containment was a defensible first step -- travel restrictions can delay the arrival and spread of an outbreak by a few weeks. Paired with the draconian measures imposed by China, this might have extended the window for strengthening domestic preparedness. But buying time only matters if it is linked to a clear plan for enhancing readiness and a reliable surveillance strategy to signal whether containment is working. Neither of those things happened.

American hospital capacity is lean. The 46,500 beds in intensive care in the United States are mostly occupied. Covid-19, if uncontrolled, might lead to up to 1.9 million I.C.U. admissions, according to projections presented to the American Hospital Association.

]]>
iehi-feed-65212 Sun, 08 Mar 2020 20:58:47 GMT A $60 Billion Housing Grab by Wall Street (ESPECIALLY TRUMP'S INNER CIRCLE) http://implode-explode.com/viewnews/2020-03-08_A60BillionHousingGrabbyWallStreetESPECIALLYTRUMPSINNERCIRCLE.html Strategic Acquisitions was but one of several companies in Los Angeles County, and one of dozens in the United States, that hit on the same idea after the financial crisis: load up on foreclosed properties at a discount of 30 to 50 percent and rent them out. Rather than protecting communities and making it easy for homeowners to restructure bad mortgages or repair their credit after succumbing to predatory loans, the government facilitated the transfer of wealth from people to private-equity firms. By 2016, 95 percent of the distressed mortgages on Fannie Mae and Freddie Mac's books were auctioned off to Wall Street investors without any meaningful stipulations, and private-equity firms had acquired more than 200,000 homes in desirable cities and middle-class suburban neighborhoods, creating a tantalizing new asset class: the single-family-rental home. The companies would make money on rising home values while tenants covered the mortgages. When Ellingwood reached out to Strategic Acquisitions in the winter of 2013 to buy his house, it was no longer interested in selling. Ellingwood asked again a year later; the company didn't reply.

Strategic Acquisitions was but one of several companies in Los Angeles County, and one of dozens in the United States, that hit on the same idea after the financial crisis: load up on foreclosed properties at a discount of 30 to 50 percent and rent them out. Rather than protecting communities and making it easy for homeowners to restructure bad mortgages or repair their credit after succumbing to predatory loans, the government facilitated the transfer of wealth from people to private-equity firms. By 2016, 95 percent of the distressed mortgages on Fannie Mae and Freddie Mac's books were auctioned off to Wall Street investors without any meaningful stipulations, and private-equity firms had acquired more than 200,000 homes in desirable cities and middle-class suburban neighborhoods, creating a tantalizing new asset class: the single-family-rental home. The companies would make money on rising home values while tenants covered the mortgages. When Ellingwood reached out to Strategic Acquisitions in the winter of 2013 to buy his house, it was no longer interested in selling. Ellingwood asked again a year later; the company didn't reply.

...

Wall Street's latest real estate grab has ballooned to roughly $60 billion, representing hundreds of thousands of properties. In some communities, it has fundamentally altered housing ecosystems in ways we're only now beginning to understand, fueling a housing recovery without a homeowner recovery. "That's the big downside," says Daniel Immergluck, a professor of urban studies at Georgia State University. "During one of the greatest recoveries of land value in the history of the country, from 2010 and 2011 at the bottom of the crisis to now, we've seen huge gains in property values, especially in suburbs, and instead of that accruing to many moderate-income and middle-income homeowners, many of whom were pushed out of the homeownership market during the crisis, that land value has accrued to these big companies and their shareholders."

...

"Neighborhoods that were formerly ownership neighborhoods that were one of the few ways that working-class families and communities of color could build wealth and gain stability are being slowly, or not so slowly, turned into renter communities, and not renter communities owned by mom-and-pop landlords but by some of the biggest private-equity firms in the world," says Peter Kuhns, the former Los Angeles director of the activist group Alliance of Californians for Community Empowerment. Around Los Angeles, the companies scooped up properties in the majority-minority areas of South Los Angeles, the San Gabriel Valley, the San Fernando Valley and Riverside.

Landlords can be rapacious creatures, but this new breed of private-equity landlord has proved itself to be particularly so, many experts say. That's partly because of the imperative for growth: Private-equity firms chase double-digit returns within 10 years. To get that, they need credit: The more borrowed, the higher the returns.

...

On yet another sunny Los Angeles day in late April, I drove inland to meet Chisholm [who runs an Invitation Homes consumer group Facebook] at a Panda Express on the side of Interstate 5. She is an anti-abortion, Trump-loving conservative Christian who prays every day for the demise of Invitation Homes. She wore a purple shirt, a flowing purple skirt and a silver cross toe ring. "Send" and "Me" -- representing Isaiah 6:8 -- were tattooed on her heels. "I am the biggest Trump supporter you are ever going to meet," she told me. "But this is one area he's furiously failing at. It's not like he doesn't know." Stephen Schwarzman, Blackstone's chief executive, was once the chairman of the president's economic advisory council and remains a close adviser. The chief executive of Colony Capital, Thomas Barrack, was not only among the largest donors to President Trump's campaign but also served as chairman of his inaugural committee. Steven Mnuchin, now the Treasury secretary, bought the toxic debt of the failed California bank Indy­Mac with several other investors and, as chief executive and chairman, renamed the bank One­West and then foreclosed on more than 35,000 Californians, reaping government subsidies on nearly every one.

]]>
iehi-feed-65208 Thu, 05 Mar 2020 02:01:36 GMT Negative interest rates in the US are virtually guaranteed now http://implode-explode.com/viewnews/2020-03-04_NegativeinterestratesintheUSarevirtuallyguaranteednow.html ... [the March 3, 2020] interest rate cut caused investors to panic even more. After the Fed made its announcement, the Dow Jones Industrial Average plummeted another 800 points. It's as if the entire market collectively thought, "Holy cow, if the Fed is taking EMERGENCY action, things must be even worse than we thought." So the rate cut had the opposite effect as intended.

The Fed also managed to confuse the hell out of everyone... which is something they've been doing a lot of lately. Last year, for example, even when they insisted that the US economy was booming and the unemployment rate was at a record low, they still cut rates by 0.75%... which is typically something they would only do when there's economic weakness.

And then, yesterday at 10am, the Fed announced that "the fundamentals of the US economy remain strong. . ." But just an hour later they changed their tune and said, "risks to the US outlook have changed materially." Go figure, the market tanked even more...

So the Fed basically blew a 0.50% rate cut and has absolutely nothing to show for it... as of yesterday morning, the Fed's benchmark interest was just 1.75%... This gives them VERY little room to cut rates further when the US economy enters recession, virtually guaranteeing that interest rates in the Land of the Free will go negative.

]]>
iehi-feed-65207 Tue, 03 Mar 2020 22:43:55 GMT Borrowing From Third-World Kleptocracies, Trump "Buys" Loyal Campaign Apparatchiks With Pardons http://implode-explode.com/viewnews/2020-03-03_BorrowingFromThirdWorldKleptocraciesTrumpBuysLoyalCampaignAppara.html Even a cursory look at the list of Trump's February 19 beneficiaries suggests that his aim was not to right the wrong of prosecutorial overreach, but to send a similar message to his network--to reinforce and perhaps expand it. More than 2 million people are incarcerated across the United States. By a very rough estimate extrapolated from federal numbers (statistics of any kind on this topic are hard to find), well less than 7 percent of them were convicted of corruption or significant white-collar crimes. Yet no fewer than eight of Trump's 11 boons went to perpetrators of this stripe: committers of tax fraud, of orchestrating a giant scheme to cheat Medicare, of multiple violations of securities law while creating a speculative bubble in junk bonds (which crashed in 1989 to widespread devastation) (Milken), or of extorting a children's hospital and trying to sell the Senate seat Barack Obama left vacant when he was elected president (Blagojeveich).

Another tell is that Trump's clemency came not at the end of his time in office, as is sometimes the case with such favors bestowed on cronies and swindlers, but well before that--indeed, ahead of an election in which he is running. The gesture was not a guilty half-secret, but a promise. It was meant to show that the guarantee of impunity for choice members of America's corrupt networks is an ongoing principle.

For this message to be delivered with the utmost clarity, the pardons and commutations had to be seen as the work of Trump himself. They could not result or even appear to result from a formal process carried out by the Department of Justice and the White House, as is normally the case. Pay attention is the point being driven home: The network and its chief are what count, not the government as an impartial institution.

...

Blagojevich's case provides other insights into the workings of corrupt systems. As he pointed out, he was not a member of Trump's political party. The kleptocratic networks I have examined weave across the bitter identity divides that pit their victims at one another's throats, weakening opposition. And the crimes that sent the former governor to jail are hallmarks of kleptocracies everywhere: seeking to sell a public office; wielding the power of his own office to extort payments. By commuting Blagojevich's sentence, Trump moved toward destigmatizing such behavior, normalizing it, even.

]]>
iehi-feed-65206 Tue, 03 Mar 2020 15:55:10 GMT Coronavirus Gives Fed Excuse To Deliver Trump's Demanded "Re-Election Rate Cut" http://implode-explode.com/viewnews/2020-03-03_CoronavirusGivesFedExcuseToDeliverTrumpsDemandedReElectionRateCu.html The Federal Reserve slashed interest rates by half a percentage point on Tuesday in the wake of concerns that the coronavirus outbreak could damage the US economy.

It's the first unscheduled, emergency rate cut since 2008, and it also marks the biggest one-time cut since then. The new benchmark interest rate is 1% to 1.25%.

Market expectations for a half-percentage point cut for the Fed's March 18 meeting were 100% as of Tuesday morning.

]]>
iehi-feed-65199 Mon, 24 Feb 2020 15:58:09 GMT Trump's Seedy & Dysfunctional Relationship With Deutsche Bank: Over $1.7bln In Defaults--$1bln To Outside Bond Investors http://implode-explode.com/viewnews/2020-02-24_TrumpsSeedyDysfunctionalRelationshipWithDeutscheBankOver17blnInD.html iehi-feed-65197 Sun, 23 Feb 2020 22:16:08 GMT Why EVERY Attorney Needs to Know What HECM Means  | Mandelman Matters http://implode-explode.com/viewnews/2020-02-23_WhyEVERYAttorneyNeedstoKnowWhatHECMMeansMandelmanMatters.html What if you had an Uncle Hecm.  And he told you that he'd be willing to loan you say $200,000, at a relatively low interest rate, like 5%... and you wouldn't have to make any payments until you either died or sold your home.  What could you use that money for?  Anything, right?

You could use that money to start a business.  You could use it to consolidate debt or payoff student loans.  You could use it to buy a second home or maybe a motorhome.  You could use it to pay capital gains taxes... or settle a lawsuit. You could use it for absolutely anything.

Who wouldn't want an Uncle Hecm?  The answer is no one.

See also HELOCs Are Bad for Older Homeowners. Better Options Exist.

]]>
iehi-feed-65194 Thu, 20 Feb 2020 16:54:47 GMT Rhode Island Property Preservationist Gets 8 Years In Prison http://implode-explode.com/viewnews/2020-02-20_RhodeIslandPropertyPreservationistGets8YearsInPrison.html