Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-64641 Thu, 21 Mar 2019 19:20:56 GMT Jared and Ivanka: Cashing in on Power http://implode-explode.com/viewnews/2019-03-21_JaredandIvankaCashinginonPower.html Ward's book ["Kushner, Inc."] suggests that the search for someone who would bail out 666 Fifth Avenue has played a significant role in American foreign policy during the Trump administration. And since the completion of her book, we've learned that Trump overrode intelligence officials, who were concerned about Kushner and his family's ties to foreign investors, to give Kushner a security clearance.

In the end, the Kushner family seems to have gotten what it wanted. Last year, Brookfield Asset Management, which has substantial investment from the government of Qatar's sovereign wealth fund, came to the Kushners' rescue. (The Qataris have denied any advance knowledge of the deal.)

"You'll notice that the U.S. position toward Qatar changes when the Qataris bail out 666 Fifth Avenue," said Ward, adding, "We look like a banana republic." Maybe that's why Jared and Ivanka appear so blithely confident. As public servants, they're obviously way out of their depth. But as self-dealing scions of a gaudy autocracy? They're naturals.

]]>
iehi-feed-64639 Wed, 20 Mar 2019 00:02:34 GMT Wall Street's Latest Love Affair With Risky Repackaged Debt http://implode-explode.com/viewnews/2019-03-19_WallStreetsLatestLoveAffairWithRiskyRepackagedDebt.html Just as they did in much of 2007 and 2008, before the markets exploded in a crisis of epic proportions, investors in the debt market, which is even larger than the equity market, are feverishly chasing higher yields and are too eagerly buying up the risky securities that will deliver those yields without demanding the proper premium for the risks being taken. A decade ago, the high-yield investment du jour pushed by Wall Street was mortgage-backed securities -- home mortgages that had been packaged up and sold as "safe" investments all over the world. Nowadays bankers and traders are pushing another form of supposedly "safe" investment, the "collateralized loan obligation," or C.L.O.

...

C.L.O.s are nothing more than a package of risky corporate loans made to companies with less than stellar credit. The big Wall Street banks make these loans to their corporate clients and then seek to move them off their balance sheets as quickly as possible, in the same way that a decade ago they packaged up and offloaded risky mortgage securities. Just as with mortgage-backed securities, to move the loans out the door the banks have been counting on the nearly insatiable demand for higher yields ... This is not a tiny slice of the market. Of the trillions of dollars of corporate loans outstanding in the United States, roughly $1.2 trillion of them are considered "leveraged loans," or loans to companies considered bigger credit risks.

In a speech before the Economic Club of New York in November, Mr. Powell said he thought that investors in C.L.O.s would bear the brunt of an uptick in corporate bankruptcies, rather than the big Wall Street banks. Those investors include Japanese banks as well as investors in hedge funds, mutual funds and pension funds (in other words, you and me).

Janet Yellen, Mr. Powell's predecessor, aired the same concern in December, in a conversation with the Times columnist Paul Krugman. Ms. Yellen said she worried that corporate indebtedness was "quite high": it's now more than $9 trillion, up from $4.9 trillion, in 2006, according to the Securities Industry and Financial Markets Association. "I think a lot of the underwriting of that debt is weak," she said. "I think investors hold it in packages like the subprime packages," which became so popular before the 2008 crisis. "The same thing has happened. It's called C.L.O.s, or collateralized loan obligations."

...

After a brief moment of sanity in December, the loopy demand for high-risk debt has once again heated up. More than $13 billion of leveraged loans were sold in February, and they will soon worm their way into the financial markets as C.L.O.s. The existential question remains: Why do investors fail to learn the harsh lessons about risk, even though the consequences of them still remain so fresh?

]]>
iehi-feed-64625 Fri, 08 Mar 2019 05:44:13 GMT Paul Manafort's 'Otherwise Blamess Life' of Crime http://implode-explode.com/viewnews/2019-03-08_PaulManafortsOtherwiseBlamessLifeofCrime.html iehi-feed-64618 Sat, 02 Mar 2019 22:48:59 GMT Why Trump Remains On the Grift So Hard: "His AGI Is Under $500k Per Year" - David Cay Johnston http://implode-explode.com/viewnews/2019-03-02_WhyTrumpRemainsOntheGriftSoHardHisAGIIsUnder500kPerYearDavidCayJ.html iehi-feed-64616 Sat, 02 Mar 2019 15:36:53 GMT The New 30-Something: On The Umbilical To Boomer Parents http://implode-explode.com/viewnews/2019-03-02_TheNew30SomethingOnTheUmbilicalToBoomerParents.html Hold the eye roll and exasperation about millennials and their failure to launch or the gushing of financial resentment for a moment, and consider the unforgiving economics of trying to make it in this country today. Wages have stagnated, while real-estate, medical and child care costs have skyrocketed. As one economic analysis concluded recently: "For Americans under the age of 40, the 21st century has resembled one long recession."

...

More than half (53 percent) of Americans aged 21 to 37 have received some form of financial assistance from a parent, guardian or family member since turning 21, according to a 2018 report by Country Financial, a financial services firm in Bloomington, Ill. This may include paying bills for a cellphone (41 percent), groceries and gas (32 percent), rent (40 percent) or health insurance (32 percent).

Then there are the free services. Ms. Palmer, who is 39 and lives near Washington, D.C., said that the free 20 to 25 hours of child care she receives every month from her parents contributed to her family's decision to have a third child

...

On average, each millennial parent receives $11,011 per year in combined financial support and unpaid labor, the 2017 TD Ameritrade Millennial Parents Survey found, for an annual total of $253 billion in America.

...

Those who do not have parental assistance in their 30s, however, continue to be at a disadvantage. "They are grappling with paying off student-loan debt, their savings might not be as strong because of that, and many are taking care of other family members," said Iimay Ho, 32, the executive director at Resource Generation, an organization that works with people age 18 to 35 with wealth or class privilege to engage on issues of inequality.

...

Evidence suggests that purchasing a home, a life event that many hope to reach in their 30s and one of the primary ways people build wealth, is essentially out of reach in most major cities unless your family has generated a good deal of wealth. (Nationally, homeownership rates are falling for millennials, and only two in 10 have a mortgage or home loan.)

The "21st century as one long recession" comment is dead-on.

]]>
iehi-feed-64612 Thu, 28 Feb 2019 03:02:29 GMT Alexandria Ocasio-Cortez lays groundwork for Democrats to subpoena Trump's tax returns at Michael Cohen hearing http://implode-explode.com/viewnews/2019-02-27_AlexandriaOcasioCortezlaysgroundworkforDemocratstosubpoenaTrumps.html iehi-feed-64606 Mon, 25 Feb 2019 20:16:55 GMT The Truly Awful Idea Behind Buffett's $4.2B KraftHeinz Wipeout http://implode-explode.com/viewnews/2019-02-25_TheTrulyAwfulIdeaBehindBuffetts42BKraftHeinzWipeout.html iehi-feed-64601 Sat, 23 Feb 2019 23:57:37 GMT Inside Elizabeth Holmes' Chilling Final Days at Theranos http://implode-explode.com/viewnews/2019-02-23_InsideElizabethHolmesChillingFinalDaysatTheranos.html Yet through [the collapse of Theranos], former employees of the company have told me, Holmes had a bizarre way of acting like nothing was wrong. Even more peculiarly, she appeared happy."The company is falling apart, there are countless indictments piling up, employees are leaving in droves, and Elizabeth is just weirdly chipper," a former senior executive told me. One former board member also noted that Holmes would come to board meetings "chirpy"; and acting as if everything was "great." She would walk up to people in the office who could have just testified in front of the S.E.C., or been questioned by lawyers at the F.D.A., and she would give them a hug and ask how they were doing.

...

Was she just a young person who got in over her head? Or, more dramatically, is something more serious afoot. Is she a sociopath? "I'll leave it to the psychologists to decide whether Holmes fits the clinical profile," he writes, "but there's no question that her moral compass was badly askew." Former employees raise this question with frequency. One pointed to a formative experience: Holmes's father, Christian, was an executive at Enron, and the family's finances were affected by its collapse. Did Holmes, scarred by this experience, vow to revive the family's fortunes at all cost? Was she a hustler or a con artist, or merely a staggering Mr. Ripley?

]]>
iehi-feed-64596 Wed, 20 Feb 2019 21:13:05 GMT Fed loses last shreds of credibility as it throws in towel on balance sheet reduction http://implode-explode.com/viewnews/2019-02-20_Fedloseslastshredsofcredibilityasitthrowsintowelonbalancesheetre.html Federal Reserve officials discussed at their meeting three weeks ago ending the reduction of bonds on the central bank's balance sheet before the end of 2019, according to minutes released Wednesday.

...

The minutes showed extensive discussion of market conditions, particularly on the emphasis that Fed actions were having on prices of risky assets like stocks and corporate bonds.

"Bottom line, while the Fed I believe clearly had room for the current pause because of the economic slowdown going on overseas, it should also be clear to everyone that they are mostly beholden to asset prices, both the stock market and credit spreads with that driving policy," Peter Boockvar, chief investment officer at Bleakley Advisory Group, said in a note.''

]]>
iehi-feed-64593 Tue, 19 Feb 2019 21:16:40 GMT Worried about Costs & Slowdown? Amazon Scuttles HQ2 Altogether, Plunges NY City Real Estate Industry "Into Despair" | Wolf Street http://implode-explode.com/viewnews/2019-02-19_WorriedaboutCostsSlowdownAmazonScuttlesHQ2AltogetherPlungesNYCit.html [Not renewing the HQ2 search] means that Amazon has decided it didn't really need this big facility. Is it worried about retail sales not holding up? Is it fretting about competition from the biggest retailers in the US and elsewhere as they catch the drift of e-commerce? Is it worried about a slowdown at AWS, its big data-center money maker, now that the exuberance about the "cloud" is waning? Is it worried that in the future, investors will once again hound it about ballooning expenses, and hammer its stock price to smithereens? This was a move designed to keep operating expenses and capital expenditures from ballooning further. Laying off people is one thing when push comes to shove, but getting rid of a monstrous multi-billion-dollar HQ2 is another.

...

Forget soaring rents for apartments, forget higher home prices, and surging rents for office and industrial space, forget booming commissions. That whole dream went up in smoke today -- in a market that has already come under pressure.

]]>
iehi-feed-64581 Tue, 12 Feb 2019 23:54:29 GMT Trump made $5.7 billion synonymous with border security. That was a mistake. (NOW MUST TAKE 1/20th ORIG. OFFER) http://implode-explode.com/viewnews/2019-02-12_Trumpmade57billionsynonymouswithbordersecurityThatwasamistakeNOW.html He refused to support a bipartisan compromise in February 2018 that would have given him $25 billion over 10 years, including $2.5 billion that year. Trump then rejected a stopgap spending bill in December that would have prevented a shutdown and left more time for lawmakers to reach a deal.

...

Now, with the deadline to fund the government coming up once again, lawmakers on Monday night worked out a compromise to avert another painful and wasteful shutdown.

That deal would keep the government open and give Trump a chunk of money, $1.375 billion to be precise, for his border wall. It's certainly not what the White House wanted, but it would prevent another costly shut down and get some of his wall built.

Trump should take it while he can. He should make a show of accepting the compromise, hold himself up as a leader, and then do a nice photo op as soon as construction starts at the border.

]]>
iehi-feed-64569 Mon, 04 Feb 2019 00:03:47 GMT Delayed, not saved: Foxconn's Wisconsin http://implode-explode.com/viewnews/2019-02-03_DelayednotsavedFoxconnsWisconsin.html The factory is not back on. LCDs are pure commodities, among the lowest-margin components, and about to be made obsolete by OLEDs. There is zero business-case for building these outside of Asia-Pacific. It was a stunt, it was always a stunt, just like it was a stunt all the other times they did it.

The reason for the announcement is that Donald Trump called them up and asked them to announce that the factory would be built. Donald Trump will be president for two or fewer years, during which time Foxconn can dither and dick around and do very little, and then they can announce that the factory is off. This news will be welcomed by Trump's successor, from either party, as a way to further discredit him.

]]>
iehi-feed-64555 Wed, 30 Jan 2019 21:27:01 GMT Fed Chair Powell: Maintaining rates was not a response to Donald Trump http://implode-explode.com/viewnews/2019-01-30_FedChairPowellMaintainingrateswasnotaresponsetoDonaldTrump.html Federal Reserve Chairman Jerome Powell said the central bank did not take "political considerations" into account when deciding on Wednesday to take a much more patient tact with interest rates. President Donald Trump has repeatedly attacked the Fed for raising rates.

Stocks surged after the Fed decided to hold interests rates in a range between 2.25 percent and 2.5 percent and said in a statement it will be more "patient" in assessing future rate hikes. The bank also put out a separate statement to ease concerns about its balance sheet unwind, something which Trump has specifically attacked.

They don't THINK they did it because of Trump -- but it's not clear he didn't get to them...

]]>
iehi-feed-64538 Wed, 16 Jan 2019 22:13:37 GMT Anxiety and burnout: I work with kids. Here's why they're consumed with worry. http://implode-explode.com/viewnews/2019-01-16_AnxietyandburnoutIworkwithkidsHereswhytheyreconsumedwithworry.html Kids today have to constantly consider the perils of work and career with enough specificity to worry about it. At the same time that they stress about the future that's so very far off, they live with technology that keeps that anxiety consistently in the front of their minds.

... I rarely heard them frame any of this work and stress in terms of future success or even just stability. They usually didn't talk about their lives according to the myth so many parents, teachers, and community members raised Gen X and millennials with, the one that promises that if you work hard, you'll get a good job and have a nice, stable life or at least do better than your parents did. When they brought up their futures, if they weren't talking about careers, they understood that student debt was inevitable.

It later dawned on me: Why would they believe this myth? People in their 20s, 30s, and 40s teach and raise these kids. Those generations now know from experience that the idea that hard work and a little luck pays off isn't true. Between 30 years of stagnant wages, the rising costs of housing, health care, and education, and a recession just as many of us graduated from college, it's no wonder that millennials are on course to do financially worse than previous generations, just as Gen X did before us.

]]>
iehi-feed-64533 Wed, 16 Jan 2019 02:40:29 GMT A-La Its Marijuana Stance, Justice Department Unilaterally Decides To Block Virtually All Online Wagering http://implode-explode.com/viewnews/2019-01-15_ALaItsMarijuanaStanceJusticeDepartmentUnilaterallyDecidesToBlock.html The U.S. now says the U.S. Wire Act bars all internet gambling that involves interstate transactions, reversing its position from 2011 that only sports betting was prohibited under the law passed 50 years earlier.

While the federal law specifically prohibits transmission of wagers and related information across state lines, the Justice Department's new interpretation will impact all online gambling because as a practical matter it's difficult to guarantee that no payments are routed through other states, said Aaron Swerdlow, an attorney with Glaser Weil Fink Howard Avchen & Shapiro LLP in Los Angeles.

...

The businesses that will be most directly affected are interstate lotteries that have become well established after 2011, said Dennis Gutwald, an attorney with McDonald Carano LLP in Las Vegas. The Justice Department's new reading of the law won't affect intrastate online wagering, where patrons bet only from within a single state.

...

Online poker and blackjack operations are much less developed than the lotteries, but they will have to examine how they can continue to be run in light of the Justice Department's opinion, according to Gutwald.

]]>
iehi-feed-64519 Sat, 05 Jan 2019 02:46:10 GMT A Trump County Confronts the Administration Amid a Rash of Child Cancers http://implode-explode.com/viewnews/2019-01-04_ATrumpCountyConfrontstheAdministrationAmidaRashofChildCancers.html There are conflicting views in Johnson County of the administration's environmental rollbacks. There is talk that the federal government should get out of people's lives, even as local officials have called on the E.P.A. to take over the response to the contamination.

"When it comes to public health, we can go against party lines. And I don't agree with trying to roll back the E.P.A.'s role," said Steve Barnett, Franklin's mayor and a Republican. "Back in the day, there weren't any rules. That's why there was so much contamination," he said.

Many members of If It Was Your Child in the Franklin area play down the politics, noting that both parties have let the cleanup fall by the wayside. Nevertheless, their demands come at a time when the Trump administration has weakened the very rules that could prevent another Franklin.

"We should not have to fight Republicans or Democrats to save our children. It's not a political fight for us," said Stacie Davidson, a Trump voter who co-founded the parents' group with Mrs. Rhinehart (who didn't vote for Mr. Trump).

Mrs. Davidson said, "His loosening of E.P.A. regulations, it's infuriating." She added, "We're ruining the environment for money."

Mrs. Davidson learned in 2014 that her stepson, Zane, who was 10 at the time, had a rare form of leukemia. He is now in remission. She has traveled to Washington to speak in favor of stronger TCE regulations. "What we're fighting for is seemingly being undone right now," she said.

Still, she said, she did not regret her vote. "Trump's a businessman. There are great things he can do for our country. But he's used to building high rises for money," she said. "He's not as environmentally savvy. Our hope is that he surrounds himself with people who are more knowledgeable."

...

Despite the emergence of alternatives to TCE, the Trump administration has stalled action on restricting its use. "There have been greener alternatives to TCE for years," said Tom Forsythe, an executive vice president at Kyzen, a Tennessee cleaning-materials company, who joined E.P.A. officials in a conference call in August 2017 to lay out other options.

...

"I see good things that Trump has done," said Mr. Barnett, the mayor, emphasizing his town's future. "The economy's good. There's been a lot of investment into our city."

So sad to see kids literally poisoned to death because Trump panders to support from business and industry, meanwhile, the effected communities make excuses for Trump based on fictions of all the good he's doing. (Were these same people praising Obama for "surrounding himself with knowledgeable people", or the "economy doing well" on his watch? Our money's on "probably not"...)

]]>
iehi-feed-64514 Fri, 04 Jan 2019 00:16:15 GMT Dow slides after Apple delivers bombshell China warning; ISM Plunges http://implode-explode.com/viewnews/2019-01-03_DowslidesafterAppledeliversbombshellChinawarningISMPlunges.html Apple, among the world's most widely held stocks, plummeted 10% in its darkest day in six years. The former king of the stock market fell to the fourth-biggest public company, behind Amazon, Microsoft and Alphabet.

The news sent shudders through global markets. The Nasdaq plunged 3%, closing back in bear market territory. The S&P 500 shed 2.5%, led lower by tech and industrial stocks. The market ended near the lows of the day.

...

Beyond Apple, investors were also rattled by the biggest one-month decline in US factory activity since the Great Recession. The closely-watched ISM manufacturing index tumbled to a two-year low, providing further evidence of slowing growth and pain from the US-China trade war. ISM said manufacturing activity is still growing, but suffered a "sharp decline" last month.

"Awful, and worse to come," Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote to clients on Thursday. "Trade wars are not easy to win."

The "since the Great Recession/2008" comparables are coming at an increasing pace...

]]>
iehi-feed-64511 Thu, 03 Jan 2019 01:24:31 GMT Apple being investigated by investor rights law firm for ‘potential securities fraud' related to China http://implode-explode.com/viewnews/2019-01-02_Applebeinginvestigatedbyinvestorrightslawfirmforpotentialsecurit.html iehi-feed-64501 Sun, 30 Dec 2018 19:16:22 GMT Trump on the Fed: 2015 and 2016 vs. Now http://implode-explode.com/viewnews/2018-12-30_TrumpontheFed2015and2016vsNow.html "We have a big, fat bubble coming up, you watch. We have artificially induced low interest rates," Trump told MSNBC's "Morning Joe" two days after announcing his candidacy in 2015. "I borrow money . . . you pay like nothing; they give you free money. Now that's bad, that's not good."

This month, Trump asked advisers about firing Fed Chairman Jerome Powell over rate increases, even after he baselessly accused President Barack Obama of forcing the Fed to keep rates low two years prior (Trump "now realizes he does not have the authority" to fire Powell, acting White House chief of staff Mick Mulvaney said Sunday).

"The interest rates are kept down by President Obama; I have no doubt that that's the reason they are being kept down," Trump told CNBC on Sept. 12, 2016. "I used to hope that the Fed was independent, and the Fed is obviously not independent. It's obviously not even close to being independent."

]]>
iehi-feed-64499 Sun, 30 Dec 2018 03:11:05 GMT Wells Fargo to Pay States $575 Million Over Sales Practices http://implode-explode.com/viewnews/2018-12-29_WellsFargotoPayStates575MillionOverSalesPractices.html The settlement with 50 states and the District of Columbia announced Friday resolves state investigations into Wells Fargo's practices from 2002 to 2017. The practices, which have previously been disclosed, include opening bogus accounts, charging improper mortgage rate-lock extension fees and forcing insurance policies on auto-lending customers.

Wells Fargo's expenses surged over the past two years, driven by fines and legal costs as investigations multiplied across business lines. Following the 2016 revelation that bank employees opened as many as 3.5 million accounts without customer approval in order to meet sales goals, issues have emerged in the bank's consumer-lending, wholesale and wealth-management arms.

]]>