Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-64643 Sun, 24 Mar 2019 19:16:16 GMT "Is the world running out of gold?" - Mainstream Catching On http://implode-explode.com/viewnews/2019-03-24_IstheworldrunningoutofgoldMainstreamCatchingOn.html The murmurs that the world is running out of gold deposits have grown louder in the past two years... Gold production reaching its peak levels is nothing new. The production of the yellow metal has reached its highest levels on at least four occasions in the past before witnessing sharp declines.

But many say there is something that makes the current gold peak stand out: There is simply no new major gold deposit left to be discovered.

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Gold has been hovering around the psychological level of $1,300 an ounce since the beginning of this year -- a far cry from the highs of $1,800 an ounce witnessed in 2011-12. Analysts estimate that a minimum price of $1,500 per ounce is needed to maintain current production levels.

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The prospective impact of a lack of "world class" discoveries on future gold production can be gauged from the fact that such mines account for nearly half of the global gold production today.

The average grade of the new gold deposits -- the amount of gold that can be extracted per ton -- has also been declining. The average mine grade has fallen from over 10 gram per ton in the early 1970s to around 1.4 grams per ton today, according to Metals Focus, a precious metals consultancy.

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Analysts expect gold prices to rise in the longer term as gold mine supply struggles to expand. High prices and technological advancements are expected to push miners to explore new frontiers for the precious metal, including the seabed and possibly even asteroids.

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"In future most of the gold supply will come from recycling and not mining," Miller said.

The World Gold Council expects the demand for gold in jewelry to increase over the next 30 years "in a richer, more middle-class, connected world."

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iehi-feed-64642 Fri, 22 Mar 2019 20:28:14 GMT U.S. Treasury Yield Curve Inverts for First Time Since 2007 http://implode-explode.com/viewnews/2019-03-22_USTreasuryYieldCurveInvertsforFirstTimeSince2007.html The Treasury yield curve inverted for the first time since the last crisis Friday, triggering the first reliable market signal of an impending recession and rate-cutting cycle.

The gap between the three-month and 10-year yields vanished as a surge of buying pushed the latter to a 14-month low of 2.416 percent. Inversion is considered a reliable harbinger of recession in the U.S., within roughly the next 18 months.

Demand for government bonds gained momentum Wednesday, when U.S. central bank policy makers lowered both their growth projections and their interest-rate outlook. The majority of officials now envisage no hikes this year, down from a median call of two at their December meeting. Traders took that dovish shift as their cue to dig into positions for a Fed easing cycle, pricing in a cut by the end of 2020 and a one-in-two chance of a reduction as soon as this year.

"It looks like the global slowdown worries have been confirmed and the market is beginning to price in Fed easing, potential recession down the road," said Kathy Jones, chief fixed-income strategist at Charles Schwab & Co.

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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.

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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."

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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?

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iehi-feed-64632 Wed, 13 Mar 2019 22:10:54 GMT The housing market is turning: Millennials unhappy with purchases; CA supply at highest since 2012 http://implode-explode.com/viewnews/2019-03-13_ThehousingmarketisturningMillennialsunhappywithpurchasesCAsupply.html iehi-feed-64628 Sun, 10 Mar 2019 00:10:38 GMT Colorado Joins Wyoming With New Securities-Exempt Digital Blockchain Token Law http://implode-explode.com/viewnews/2019-03-09_ColoradoJoinsWyomingWithNewSecuritiesExemptDigitalBlockchainToke.html iehi-feed-64622 Mon, 04 Mar 2019 21:52:10 GMT Major US Grocery Chain Kroger Ditches Visa, In Discussions With Bitcoin Lightning http://implode-explode.com/viewnews/2019-03-04_MajorUSGroceryChainKrogerDitchesVisaInDiscussionsWithBitcoinLigh.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."

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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

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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.

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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.

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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.

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iehi-feed-64602 Sun, 24 Feb 2019 00:07:09 GMT American Workers -- Even Well-To-Do Ones -- Increasingly Miserable http://implode-explode.com/viewnews/2019-02-23_AmericanWorkersEvenWellToDoOnesIncreasinglyMiserable.html even in a boom economy, a surprising portion of Americans are professionally miserable right now. In the mid-1980s, roughly 61 percent of workers told pollsters they were satisfied with their jobs. Since then, that number has declined substantially, hovering around half; the low point was in 2010, when only 43 percent of workers were satisfied, according to data collected by the Conference Board, a nonprofit research organization. The rest said they were unhappy, or at best neutral, about how they spent the bulk of their days. Even among professionals given to lofty self-images, like those in medicine and law, other studies have noted a rise in discontent. Why? Based on my own conversations with classmates and the research I began reviewing, the answer comes down to oppressive hours, political infighting, increased competition sparked by globalization, an "always-on culture" bred by the internet -- but also something that's hard for these professionals to put their finger on, an underlying sense that their work isn't worth the grueling effort they're putting into it.

This wave of dissatisfaction is especially perverse because corporations now have access to decades of scientific research about how to make jobs better. "We have so much evidence about what people need," says Adam Grant, a professor of management and psychology at the University of Pennsylvania (and a contributing opinion writer at The Times). Basic financial security, of course, is critical -- as is a sense that your job won't disappear unexpectedly. What's interesting, however, is that once you can provide financially for yourself and your family, according to studies, additional salary and benefits don't reliably contribute to worker satisfaction. Much more important are things like whether a job provides a sense of autonomy -- the ability to control your time and the authority to act on your unique expertise. People want to work alongside others whom they respect (and, optimally, enjoy spending time with) and who seem to respect them in return.

And finally, workers want to feel that their labors are meaningful. "You don't have to be curing cancer," says Barry Schwartz, a visiting professor of management at the University of California, Berkeley. We want to feel that we're making the world better, even if it's as small a matter as helping a shopper find the right product at the grocery store. "You can be a salesperson, or a toll collector, but if you see your goal as solving people's problems, then each day presents 100 opportunities to improve someone's life, and your satisfaction increases dramatically," Schwartz says.

This was a predictable consequence of an increasingly unstable, insecure economy. There is really no refuge from it; even the rich know they have to always be searching for the next "score" (the middle class and below obviously have it even worse -- but with the meso-rich feeling the pain, at least the problem is becoming impossible to ignore). At this site, this is the sort of thing we've expected as a consequence of the long-run gutting of the financial economy, with low interest rates and disincentives to save and invest in long-term, stable enterprises (VC money and credit cards are NOT a suitable substitute for traditional commercial and merchant banking).

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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.

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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.''

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iehi-feed-64595 Wed, 20 Feb 2019 20:54:34 GMT Supreme Court Puts Limits on Police Power to Seize Private Property http://implode-explode.com/viewnews/2019-02-20_SupremeCourtPutsLimitsonPolicePowertoSeizePrivateProperty.html The Supreme Court has ruled that the Eighth Amendment, which bars "excessive fines," limits the ability of the federal government to seize property. On Wednesday, the court ruled that the clause also applies to the states.

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The case concerned Tyson Timbs, who pleaded guilty to selling $225 of heroin to undercover police officers. He was sentenced to one year of house arrest and five years of probation, and he was ordered to pay $1,200 in fees and fines.

State officials also seized Mr. Timbs's vehicle, which he had bought with the proceeds of his father's life insurance policy; authorities said he had used it to commit crimes. Justice Ginsburg wrote that the vehicle was worth "more than four times the maximum $10,000 monetary fine assessable against him for his drug conviction."

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iehi-feed-64588 Sun, 17 Feb 2019 19:07:37 GMT JPMorgan Has Its Own Cryptocurrency http://implode-explode.com/viewnews/2019-02-17_JPMorganHasItsOwnCryptocurrency.html JPMorgan Chase this morning announced the first cryptocurrency to be rolled out by a major U.S. bank. How will it be used? The new tokens, each of which represents a U.S. dollar, will help settle some payments between the bank's clients. CNBC reports that the new digital coin will enter testing "in a few months." It will facilitate a "tiny fraction" of its wholesale payments business.

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The bank has come a long way on crypto. Its C.E.O., Jamie Dimon, famously declared Bitcoin a "fraud" in 2017 and said he would fire any employee caught trading it. (He later regretted his comments and added that he believed in the value of blockchain, the technology behind cryptocurrencies.)

Some 17 days before this news came out, JP Morgan was saying that cryptocurrencies would only be useful in a "dystopia" outcome (we wonder if it occurred to them that we may already be in a sufficiently-dystopic scenario...)

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iehi-feed-64582 Wed, 13 Feb 2019 00:03:52 GMT Bill Gates: Alexandria Ocasio-Cortez wealth tax idea misses the point (+SICK MMT BURN) http://implode-explode.com/viewnews/2019-02-12_BillGatesAlexandriaOcasioCortezwealthtaxideamissesthepointSICKMM.html Instead, he said, lawmakers should focus on things like the estate tax, taxes on capital and Social Security. His view may be more closely aligned with Sen. Elizabeth Warren's proposed tax policy that focuses on taxing net worth on households worth more than $50 million.

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Gates.. also ripped the increasingly popular modern monetary theory... The theory, also known as MMT, dismisses concerns about sovereign debt since countries that print their own currency can't really run out of money. "That is some crazy talk," Gates told The Verge.

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iehi-feed-64579 Tue, 12 Feb 2019 09:28:22 GMT Reason #437 to own gold: The Fed wants Negative Interest Rates http://implode-explode.com/viewnews/2019-02-12_Reason437toowngoldTheFedwantsNegativeInterestRates.html ... after a 20% drop in US stocks, the Fed has taken its foot off the pedal. But the people still want more... Both the European Central Bank and the Bank of Japan were supposed to start tightening policy and raising rates... now, they are both considering cutting interest rates even deeper into negative territory.

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The President of the Federal Reserve Bank of St. Louis thinks current interest rates are "too restrictive." He too wants lower rates.

The San Francisco Fed agrees -- they were singing the praises of negative interest rates in a recent research paper, saying they would have helped the economy recover even faster after 2008.

And SocGen economist Albert Edwards thinks the US will see negative interest rates and helicopter money (meaning central banks will print money and give it directly to the people) during the next recession.

Now that the public is once again being reminded that the Fed and its cohorts have no credibility, let's see if hard assets come back, as they should...

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iehi-feed-64570 Mon, 04 Feb 2019 00:36:57 GMT Democrats Push Plan to Increase Social Security Benefits and Solvency http://implode-explode.com/viewnews/2019-02-03_DemocratsPushPlantoIncreaseSocialSecurityBenefitsandSolvency.html The Social Security 2100 Act, which was introduced this past week in the House and the Senate, represents a sea change after decades dominated by concern that aging baby boomers would bankrupt the government as they begin drawing benefits from Social Security and other entitlement programs.

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The bill would provide an across-the-board benefit increase equivalent to about 2 percent of the average Social Security benefit. It would raise the annual cost-of-living adjustment to reflect the fact that older Americans tend to use more of some services like health care. And it would increase the minimum benefit to ensure that workers with many years of low earnings do not retire into poverty.

The bill would cut federal income taxes on Social Security benefits for about 12 million middle-income people while raising taxes elsewhere. The payroll tax rate would rise to 14.8 percent over the next 24 years, from 12.4 percent, and the payroll tax would be imposed on earnings over $400,000 a year.

The maximum amount of earnings subject to the Social Security payroll tax this year is $132,900. The proposal would, in effect, create a doughnut hole, where earnings from $132,900 to $400,000 would not be taxed.

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Nonpartisan actuaries at the Social Security Administration say that the program will soon be spending more than it takes in and that the trust funds for retirement and disability benefits will be depleted by 2034 if Congress makes no changes.

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Of all the money raised by the bill, about one-fourth would be used to increase benefits, and the rest would cover projected deficits in the Social Security trust over the next 75 years.

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Andrew G. Biggs, a Republican who was the principal deputy commissioner of Social Security under President George W. Bush, praised some features of Mr. Larson's bill.

"It doesn't just fix Social Security for 75 years," Mr. Biggs said. "It would keep the system permanently solvent. That's a real plus."

On the other hand, Mr. Biggs said: "The bill would give a lot of money to middle- and upper-income retirees who are already doing well. And it would significantly increase payroll taxes on workers."

Ruh-roh -- so the Dems are snatching the mantle of the party that wants to propose realistic reform to make SS more fair and solvent, and not be just a sop to the financial industry... this is quite a jiu-jitsu move!

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iehi-feed-64560 Thu, 31 Jan 2019 23:26:18 GMT These billionaires are issuing terrifying warnings about debt levels http://implode-explode.com/viewnews/2019-01-31_Thesebillionairesareissuingterrifyingwarningsaboutdebtlevels.html In 2018, the federal government's deficit hit $1 trillion. But these are "good times," with soaring asset prices, solid corporate profits and record-low unemployment. What happens when a recession inevitably occurs. Our friend Jim Grant of Grant's Interest Rate Observer, says the deficit will blow out to $2 trillion.

So, $22 trillion in the whole and a $1 trillion deficit in a good year. Not to mention, interest rates are rising, which means all of this debt is just getting more expensive. Eventually, people will simply refuse to lend Uncle Sam any more money... because they know there's no way they'll be repaid.

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According to the Wall Street Journal, in the first eight months of 2018, overseas buyers of US Treasurys only bought half the amount they did over the same period in 2017.

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We don't know when this monetary experiment will end. The European Central Bank and Bank of Japan both essentially reneged on their plans to start tightening monetary policy. And yesterday, the Federal Reserve has signaled it will stop hiking rates. Global central banks, it seems, have already given up on their weak attempts to tighten... fearing the economy wouldn't hold up.

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iehi-feed-64559 Thu, 31 Jan 2019 23:23:50 GMT Central Banks Are Buying Gold at the Fastest Clip Since 1971 http://implode-explode.com/viewnews/2019-01-31_CentralBanksAreBuyingGoldattheFastestClipSince1971.html Central banks bought more bullion last year than anytime since 1971, when the U.S. ended the gold standard.Governments added 651.5 tons of gold to their coffers in 2018, a 74 percent increase from the previous year, according to a report from the World Gold Council.

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Central banks are expected to acquire an additional 600 tons this year, according to the consulting firm Metals Focus Ltd. The buys, which will help the banks diversify their foreign-exchange assets in a time of extraordinary political volatility, signal a growing confidence in the metal's value moving forward.

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The banks "were not net buyers even a decade ago," said Juan Carlos Artigas, director of investment research at the WGC, in a telephone interview. "As their foreign reserves expand, they are increasingly diversifying away from pure dollar exposure."

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iehi-feed-64558 Thu, 31 Jan 2019 23:22:20 GMT Fed Signals End of Interest Rate Increases http://implode-explode.com/viewnews/2019-01-31_FedSignalsEndofInterestRateIncreases.html Jared Bernstein, an economist at the left-leaning Center on Budget and Policy Priorities, summarized the Fed's new policy stance as "Don't just do something, stand there!" He added that the new approach "seems right to me." Mr. Bernstein said domestic growth was under pressure from tighter financial conditions, the slowdown in global growth and what he called "Trumpian chaos."

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For the last several years, the Fed said consistently that it planned to keep raising interest rates. The pace was uncertain, but the direction was clear. Wednesday's statement omitted previous language indicating that "some further gradual increases" would be warranted. Instead, it said the Fed would be "patient" in evaluating the health of the economy. And it suggested the Fed stood ready either to raise or to cut rates, depending on economic conditions.

Reinforcing this more cautious tone, the Fed also announced in a separate statement that it was prepared to slow or even reverse the steady slimming of its bond portfolio. This, too, was a striking shift. The Fed said in December that it was committed to steadily reducing its holdings of Treasuries and mortgage bonds, which it amassed during the financial crisis to help bolster the economy.

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While the Fed is pausing for now, Mr. Powell said he believed the central bank had raised rates to an appropriate level and had not overtightened. "I think our policy stance today is appropriate for the state of the economy," he said. "That's my feeling."

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iehi-feed-64557 Wed, 30 Jan 2019 23:35:57 GMT EU rejects Theresa May's plans to change Brexit deal http://implode-explode.com/viewnews/2019-01-30_EUrejectsTheresaMaysplanstochangeBrexitdeal.html "The Withdrawal Agreement is not open for renegotiation," said European Council President Donald Tusk. "Yesterday, we found out what the UK doesn't want. But we still don't know what the UK does want."

Other frustrated EU officials, including Brexit negotiator Michel Barnier, insisted the remaining 27 EU members were united and determined not to abandon the backstop they believe is key to maintaining peace on the border.

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Under the terms of the withdrawal agreement, the whole of the UK will remain in a customs union in relation to trade in goods with the EU "unless and until" the bloc agrees there is no prospect of a return to a hard border, while Northern Ireland will also conform to some rules of the European single market.

UK legislators critical of the clause say it threatens the integrity of the the UK's borders and could even lead to the UK staying within the EU customs union permanently.

Critics have argued for the inclusion of a mechanism to allow either side to withdraw from the backstop or a limit to how long it can last.

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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...

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iehi-feed-64553 Tue, 29 Jan 2019 23:46:44 GMT Brexit: What just happened and what happens next? http://implode-explode.com/viewnews/2019-01-29_BrexitWhatjusthappenedandwhathappensnext.html