Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-65343 Tue, 05 May 2020 00:38:21 GMT Negative Interest Rates: Will Donald Trump And The Fed Destroy The U.S. Banking System? http://implode-explode.com/viewnews/2020-05-04_NegativeInterestRatesWillDonaldTrumpAndTheFedDestroyTheUSBanking.html iehi-feed-65332 Thu, 30 Apr 2020 15:36:09 GMT Fed expanding the scope of Main Street lending program to include bigger businesses http://implode-explode.com/viewnews/2020-04-30_FedexpandingthescopeofMainStreetlendingprogramtoincludebiggerbus.html Touted as one of the cornerstone's the Fed's initiatives to get money to businesses and households in need, the Main Street program now will allow companies with up to 15,000 employees and $5 billion in revenue to apply for financing.

That's up from the previous limit of 10,000 workers and $2.5 billion in revenue for a program targeted at medium-sized firms whose operations have been hamstrung by the social distancing efforts put into place to limit the spread of the coronavirus.

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iehi-feed-65316 Mon, 20 Apr 2020 20:07:25 GMT ‘The world is more screwed up' than the stock market is currently reflecting, warns billionaire investor http://implode-explode.com/viewnews/2020-04-20_Theworldismorescrewedupthanthestockmarketiscurrentlyreflectingwa.html iehi-feed-65314 Mon, 20 Apr 2020 13:59:29 GMT The economic data is even worse than Wall Street feared: 'The economy is clearly in ruins here' http://implode-explode.com/viewnews/2020-04-20_TheeconomicdataisevenworsethanWallStreetfearedTheeconomyisclearl.html iehi-feed-65277 Fri, 03 Apr 2020 15:20:51 GMT The Virus Economic Response Is Already Being Botched http://implode-explode.com/viewnews/2020-04-03_TheVirusEconomicResponseIsAlreadyBeingBotched.html The good news is that the $2 trillion CARES Act (Coronavirus Aid, Relief, and Economic Security Act) Congress passed last week does, on paper, provide a lot of economic life support. The bad news is that it looks as if it could be weeks, maybe even months, before serious amounts of money flow to those who need aid right now.

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Both of these programs are very good ideas. The trouble is that both are having a hard time getting started -- and time is one thing millions of distressed Americans, many of whom were already living on the edge, don't have.

On unemployment benefits: State unemployment offices, already overwhelmed by the surge in applications, aren't ready to disburse these extra benefits, and may not be ready for quite a while -- a disastrous delay for families already in dire financial straits.

Small business loans are also facing a crippling lag in processing, with potential borrowers either unable to complete the forms or being told that they will have to wait three weeks. Furthermore, for some reason the federal government, instead of lending money directly, is channeling small-business lending through private banks -- and the banks are complaining that they have yet to receive crucial guidelines and that the administration is setting unworkable requirements.

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iehi-feed-65276 Thu, 02 Apr 2020 15:03:31 GMT US weekly jobless claims double to gargantuan 6.6 million http://implode-explode.com/viewnews/2020-04-02_USweeklyjoblessclaimsdoubletogargantuan66million.html The torrent of Americans filing for unemployment insurance skyrocketed last week as more than 6.6 million new claims were filed, the Labor Department reported Thursday. That brings to 10 million the total Americans who filed over the past two weeks.

Economists surveyed by Dow Jones had expected 3.1 million for last week, one week after 3.3 million filings in the first wave of what has been a record-shattering swelling of the jobless ranks. The previous week's total was revised higher by 24,000.

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"Sadly, this probably still underestimates the actual numbers because of the overload in the systems and not every call getting through," said Liz Ann Sonders, chief investment strategist at Charles Schwab. "Even if we're accurately calculating the numbers, we still likely have worse to come."

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the sudden shutdown from social distancing policies caused a cascade of joblessness unlike anything the nation has ever seen.

"Not only was the number worse than expected, but with lockdowns becoming stricter and being extended, we should anticipate further surges in jobless claims over the coming weeks," said Seema Shah, chief strategist at Principal Global Investors.

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iehi-feed-65275 Wed, 01 Apr 2020 20:07:18 GMT 40% of N.Y. Tenants May Not Pay Rent This Month. What Happens Then? http://implode-explode.com/viewnews/2020-04-01_40ofNYTenantsMayNotPayRentThisMonthWhatHappensThen.html ``No one knows for sure how many renters in New York City will have a hard time paying, but landlords and the real estate industry say they are bracing for perhaps as many as 40 percent of tenants, if not more, skipping their April payments.

... "I'm trying not to panic," said Christopher Athineos, whose family owns nine apartment buildings in Brooklyn with about 150 tenants. "In my lifetime and even my parents' and grandparents' lifetime, we have never seen anything like this."

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Gov. Andrew M. Cuomo of New York has ordered a 90-day moratorium on evictions, a lifeline to people who cannot pay rent and are worried about losing their homes during the crisis. Other states have followed New York State's lead, including California, which introduced a 60-day ban on evictions.

But that doesn't wipe away that rent from having to be paid later on.

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The current economic crisis has all the ingredients to cause a collapse in the New York City real estate market, said Joseph Strasburg, the president of the Rent Stabilization Association, which represents 25,000 landlords in New York City.

A significant drop in April rent payments would create an immediate domino effect and leave many landlords without enough money to pay their water and sewer bills for their properties, he said.

Rent payments could drop even more drastically in May, Mr. Strasburg s..

aid, when tenants who lost jobs in March may have even less money to pay that month's rent.

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Some landlords have worked out payment plans with tenants, while others have said they cannot offer concessions because they face their own challenges.

Mr. Strasburg said landlords who have first-floor commercial tenants, such as restaurants, fear that those tenants too will not be paying rent in April. Landlord representatives said property owners also deserve a lifeline, including the option to defer utility payments and their property taxes.

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The $2 trillion federal stimulus bill offers assistance specifically for renters and homeowners, though they are limited in most cases to people with federally backed or supported mortgages.

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iehi-feed-65265 Sun, 29 Mar 2020 20:22:26 GMT Market Panic: The Wild Hunt for 100-Ounce Gold Bars http://implode-explode.com/viewnews/2020-03-29_MarketPanicTheWildHuntfor100OunceGoldBars.html At the center of it all are a small band of traders who for years had cashed in on what had always been a sure-fire bet: shorting gold in the futures market. Usually, they'd ride the trade out till the end of the contract when they'd have a couple of options to get out without marking much, if any, loss.

But the virus, and the global economic collapse that it's sparking, have created such extreme price distortions that those easy-exit options disappeared on them. Which means that they suddenly faced the threat of having to deliver actual gold bars to the buyers of the contract upon maturity.

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Signs of distress picked up on Friday, March 20, when the cost to swap New York futures and spot physical gold in London -- the world's biggest market -- rose to about $2. Typically, this trade cost almost nothing. After the close of the next session on Monday, that premium had jumped further to $6.75.

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The spread between April and June futures contracts on Tuesday jumped to $20 an ounce, meaning it cost that much more to buy metal for April than it did for two months later. That signaled more near-term demand for bullion and the need to soon have physical supply in hand.

By the end of the week, though, the situation had flipped. The June contract cost almost $30 more than the April contract, suggesting that traders appetite for physical gold has subsided for now.

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iehi-feed-65254 Mon, 23 Mar 2020 00:58:57 GMT 'Unrecognizable': Experts warn of historic collapse in economic activity in wake of coronavirus http://implode-explode.com/viewnews/2020-03-22_UnrecognizableExpertswarnofhistoriccollapseineconomicactivityinw.html Because of the unprecedented nature and scale of what the world is facing, economists have struggled to model how badly things are getting.

"There is no blueprint for the current shock, and uncertainty about the extent of contagion and the economic consequences is overwhelming," Credit Suisse economist James Sweeney said.

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"We now guesstimate that second quarter GDP will drop at a 10% annualized rate, after a 2% fall in Q1," Shepherdson said. "We are pencilling in a 20% plunge in discretionary consumers' spending in the second quarter, enough alone to subtract some eight percentage points from GDP growth."''

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iehi-feed-65252 Sun, 22 Mar 2020 16:03:15 GMT Exclusive: Goldman injects $1 billion into own money-market funds after heavy withdrawals http://implode-explode.com/viewnews/2020-03-22_ExclusiveGoldmaninjects1billionintoownmoneymarketfundsafterheavy.html iehi-feed-65251 Sun, 22 Mar 2020 15:40:55 GMT Mnuchin: Coronavirus Financing efforts from Fed and Treasury could be $4 trillion http://implode-explode.com/viewnews/2020-03-22_MnuchinCoronavirusFinancingeffortsfromFedandTreasurycouldbe4tril.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.

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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.

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iehi-feed-65238 Wed, 18 Mar 2020 20:09:56 GMT Bill Ackman calls on Trump to 'shut down' the U.S. for the next 30 days http://implode-explode.com/viewnews/2020-03-18_BillAckmancallsonTrumptoshutdowntheUSforthenext30days.html 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."

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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.

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"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.

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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.

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iehi-feed-65228 Mon, 16 Mar 2020 00:38:48 GMT Federal reserve cuts target interest rate to zero to support economy during coronavirus pandemic http://implode-explode.com/viewnews/2020-03-15_Federalreservecutstargetinterestratetozerotosupporteconomyduring.html In a bold, emergency action to support the economy during the coronavirus pandemic, the Federal Reserve on Sunday announced it would cut its target interest rate near zero.

The swifter-than-expected rate cut is designed to prevent the kind of credit crunch and financial market disruptions that occurred the last time the Fed had to cut rates all the way to the bottom: The Fed last cut rates to zero during the global financial crisis just over a decade ago.

In addition to rate cuts, the Fed also said it would purchase another $700 billion worth of Treasury bonds and mortgage-backed securities. It also struck a deal with five other foreign central banks, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank, to lower their rates on currency swaps to keep the financial markets functioning normally.

The Fed last lowered currency swaps during the European debt crisis in 2011.

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iehi-feed-65227 Sun, 15 Mar 2020 14:47:08 GMT Forget the Dow. Credit Is the Real Wall Street Danger http://implode-explode.com/viewnews/2020-03-15_ForgettheDowCreditIstheRealWallStreetDanger.html iehi-feed-65224 Thu, 12 Mar 2020 19:44:35 GMT Something Weird Is Happening on Wall Street, and Not Just the Stock Sell-Off http://implode-explode.com/viewnews/2020-03-12_SomethingWeirdIsHappeningonWallStreetandNotJusttheStockSellOff.html Underneath the headline numbers were a series of movements that don't really make sense when lined up against one another. They amount to signs -- not definitive, but worrying -- that something is breaking down in the workings of the financial system, even if it's not totally clear what that is just yet.

Bond prices and stock prices were moving together, not in opposite directions as they usually do. On a day when major economic disruptions resulting from the coronavirus pandemic appeared to become likelier -- which might be expected to make typical market safe havens more popular -- many of them fell instead. That included bonds of all sorts and gold.

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All this suggests that major financial players are experiencing a cash crunch, and are selling whatever they can as a result. That would help explain the seeming contradiction of assets that should go up in value in a time of economic peril instead falling in value.

As the 2008 experience shows, it's also a type of problem that the Federal Reserve is relatively well positioned to understand and respond to. In its role as lender of last resort, the central bank's job is to try to prevent a cash crunch in the economy, even if it has to take unusual means to do that.

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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-65217 Tue, 10 Mar 2020 15:04:17 GMT Think it's bad now? Wait a month, says hedge-fund manager Kyle Bass http://implode-explode.com/viewnews/2020-03-10_ThinkitsbadnowWaitamonthsayshedgefundmanagerKyleBass.html