Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-62473 Sun, 25 Jun 2017 20:45:11 GMT Contagion from the 2 Friday-Night Bank Collapses in Italy? http://implode-explode.com/viewnews/2017-06-25_Contagionfromthe2FridayNightBankCollapsesinItaly.html ... two of the private investors -- hedge funds Fortress and Elliott -- walked away from the negotiating table [for the bailout of Monte Paschi] in "a dispute over the sales terms," which likely means that even an 80% mark down on MPS' non-performing loans may not be enough to attract private investors. If they don't come back, Monte dei Paschi will have only one willing investor to turn to: Atlante. In other words, back to square one.

The hedge funds' withdrawal prompted fears that it could jeopardize not only the government's efforts to save Monte dei Paschi but also Banca Popolare di Vicenza and Veneto Banca. That has now happened. Contagion at work. And the risk of contagion is still huge.

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iehi-feed-62472 Sun, 25 Jun 2017 19:30:04 GMT How Greece Became A Guinea Pig For A Cashless And Controlled Society http://implode-explode.com/viewnews/2017-06-25_HowGreeceBecameAGuineaPigForACashlessAndControlledSociety.html The International Monetary Fund (IMF), which day after day is busy "saving" economically suffering countries such as Greece, also happens to agree with this brave new worldview. In a working paper titled "The Macroeconomics of De-Cashing," which the IMF claims does not necessarily represent its official views, the fund nevertheless provides a blueprint with which governments around the world could begin to phase out cash...

Beginning July 27, dozens of categories of businesses in Greece will be required to install aptly-acronymized "POS" (point-of-sale) card readers and to accept payments by card. Businesses are also required to post a notice, typically by the entrance or point of sale, stating whether card payments are accepted or not. Another new piece of legislation, in effect as of June 1, requires salaries to be paid via direct electronic transfers to bank accounts. Furthermore, cash transactions of over 500 euros have been outlawed.

In Greece, where in the eyes of the state citizens are guilty even if proven innocent, capital controls have been implemented preventing ATM cash withdrawals of over 840 euros every two weeks. These capital controls, in varying forms, have been in place for two years with no end in sight, choking small businesses that are already suffering.

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The irony that [Greek pensioners, abiding by the new rules] were paying by card to avoid taxation themselves was lost on them--as is the fact that the otherwise fiscally responsible Germany, whose government never misses an opportunity to lecture the "spendthrift" and "irresponsible" Greeks, has the largest black market in Europe (exceeding 100 billion euros annually), ranks first in Europe in financial fraud, is the eighth-largest tax haven worldwide, and one of the top tax-evading countries in Europe.

Also lost on these otherwise elderly gentlemen was a fact not included in the official propaganda campaign: Germans happen to love their cash, as evidenced by the fierce opposition that met a government plan to outlaw cash payments of 5,000 euros or more. In addition, about 80 percent of transactions in Germany are still conducted in cash. The German tabloid Bild went as far as to publish an op-ed titled "Hands off our cash" in response to the proposed measure.

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iehi-feed-62471 Sun, 25 Jun 2017 19:26:17 GMT Doug Noland: Washington Finance and Bubble Illusion http://implode-explode.com/viewnews/2017-06-25_DougNolandWashingtonFinanceandBubbleIllusion.html The current debate, focusing simplistically on interest rates and the level consumer price inflation, misses the overarching issue. U.S. and global central banking shifted to an untested and radical regime of directly inflating securities prices. No longer do central banks attempt to loosen or tighten bank lending through subtle changes in reserve holdings and interbank lending rates. Why not just purchase securities, supporting prices while injecting liquidity directly into the marketplace?

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Central banks should not be in the business of favoring individual asset classes, sectors or groups in society. Never should a small group of unelected officials have such discretion to create Trillions of "money" and allocate wealth. After all, if "printing" Trillions to buy marketable debt was such a fine idea, why did central bankers wait until deep crisis to implement such a doctrine?

The new regime that developed specifically favored securities markets, Wall Street and the wealthy. It has fancied the financial speculator at the expense of the saver. The new regime favored financial engineering to productive investment -- the white collar to the blue collar. There was no problem seen with deindustrialization and persistent huge Current Account Deficits. No issue whatsoever exchanging new financial claims for Chinese imports.

The new regime has spurred wealth redistribution that is at the root of a divided country, political dysfunction and escalating geopolitical risk. And there is little mystery surrounding weak economic underpinnings, dismal productivity trends and stagnant wages and living standards. Contemporary finance has proven itself especially deficient in allocating resources throughout the economy. Markets have been over-liquefied, too distorted, grossly speculative and too monstrous to be an effective mechanism for resource allocation.

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iehi-feed-62469 Sun, 25 Jun 2017 14:31:19 GMT Stocks to plummet 40% or more, warns Marc 'Dr. Doom' Faber http://implode-explode.com/viewnews/2017-06-25_Stockstoplummet40ormorewarnsMarcDrDoomFaber.html "We've had more than eight years of a bull market. The Nasdaq is being driven by very few stocks," said Faber on Friday's "Trading Nation." That rally "is not a particularly healthy sign from a technical point of view, and valuations are very high," the investor added.

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Faber is deeply concerned that wealth has flowed to big corporations and affluent people. He believes the imbalance could eventually disrupt the markets as we know it.

"Either people with money will be taxed heavily ... or we'll have a massive deflation in asset prices -- I repeat: massive," he warned. "Eventually the system will break."

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iehi-feed-62468 Sun, 25 Jun 2017 14:08:37 GMT One57 ("Billionaire's Tower") could set NYC foreclosure record http://implode-explode.com/viewnews/2017-06-25_One57BillionairesTowercouldsetNYCforeclosurerecord.html previous foreclosure.]]> iehi-feed-62465 Sat, 24 Jun 2017 14:08:17 GMT The Insanity of 100-Year Bonds http://implode-explode.com/viewnews/2017-06-24_TheInsanityof100YearBonds.html iehi-feed-62464 Sat, 24 Jun 2017 02:48:49 GMT Brexit forever or Brexit never? http://implode-explode.com/viewnews/2017-06-23_BrexitforeverorBrexitnever.html While both May's Conservatives and the opposition Labour Party now explicitly support leaving the club the United Kingdom joined in 1973, some of the Union's most powerful politicians have raised the possibility of Britain cancelling Brexit.

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With her authority so weakened, May will have to gauge whether she can get a deal from the EU that she can sell at home.

If she thinks she will fail to get a Brexit deal through parliament, some business leaders fear she will allow talks with the EU to collapse and take Britain out with no deal.

A disorderly Brexit could spook financial markets, tarnish London's reputation as one of the world's top two financial centers and sow chaos through the economies of Britain and the EU by dislocating trading relationships.

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iehi-feed-62462 Sat, 24 Jun 2017 01:50:04 GMT Trump joins the effort to pass a health-care bill, but another GOP senator is opposed http://implode-explode.com/viewnews/2017-06-23_TrumpjoinstheefforttopassahealthcarebillbutanotherGOPsenatorisop.html Heller is seen as a bellwether for how the bill is perceived across the country. He is facing reelection next year in a swing state where Democrat Hillary Clinton defeated Trump but where there is also an active Republican base, which turned out overwhelmingly for Trump during the battle for the GOP presidential nomination. Nevada is among 31 states and the District of Columbia that expanded Medicaid under the ACA.

"I cannot support a piece of legislation that takes away insurance from tens of millions of Americans and hundreds of thousands of Nevadans," Heller said at a news conference in his home state Friday, where he was joined by Republican Gov. Brian Sandoval.

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[Trump] can afford to lose only two votes from the pool of 52 GOP senators, with all Democrats united against it and Vice President Pence ready to break a 50-50 tie.

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iehi-feed-62458 Fri, 23 Jun 2017 20:58:31 GMT McDonalds Is Replacing 2,500 Human Cashiers With Digital Kiosks: Here Is Its Math http://implode-explode.com/viewnews/2017-06-23_McDonaldsIsReplacing2500HumanCashiersWithDigitalKiosksHereIsItsM.html iehi-feed-62457 Fri, 23 Jun 2017 16:41:02 GMT Trump visited this Boeing factory to celebrate jobs -- It just announced layoffs http://implode-explode.com/viewnews/2017-06-23_TrumpvisitedthisBoeingfactorytocelebratejobsItjustannouncedlayof.html On Thursday, workers at the North Charleston plant learned they'd soon face layoffs. The airplane manufacturer announced it would be cutting "fewer than 200 people" at the 787 Dreamliner campus and other facilities in the city.

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"Our competition is relentless, and that has made clear our need as a company to reduce cost to be more competitive," Boeing said in a statement. "We are offering resources to those affected by layoffs to help them in finding other employment and ease their transition as much as possible."

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In December, Boeing said it planned to cut jobs this year because of a dropping demand for new planes. The company revealed it would decrease production of the Boeing 777 by 40 percent in 2017.

By March, the company had accepted about 1,880 voluntary layoffs from employees in Washington state. Then nearly 500 workers near Seattle received involuntary layoff notices in April, according to the Seattle Times

Jonathan Battaglia, representative for the Machinists Union, which the Boeing employees in North Charleston voted not to join in February, said about 700 people in South Carolina have taken buyouts over the past year. The coming wave of layoffs at the North Charleston campus are the first involuntary dismissals to hit its South Carolina workforce.

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iehi-feed-62456 Fri, 23 Jun 2017 16:39:18 GMT An Overview of the New Senate Health Care Bill: Rich To Get Tax Relief; Poor and Middle Class to Face Higher Burden http://implode-explode.com/viewnews/2017-06-23_AnOverviewoftheNewSenateHealthCareBillRichToGetTaxReliefPoorandM.html The Affordable Care Act gave health insurance to millions of Americans by shifting resources from the wealthy to the poor and by moving oversight from states to the federal government. The Senate bill introduced Thursday pushes back forcefully on both dimensions.

The bill is aligned with long-held Republican values, advancing states' rights and paring back growing entitlement programs, while freeing individuals from requirements that they have insurance and emphasizing personal responsibility. Obamacare raised taxes on high earners and the health care industry, and essentially redistributed that income -- in the form of health insurance or insurance subsidies -- to many of the groups that have fared poorly over the last few decades.

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Like a House version of the legislation, the bill would fundamentally change the structure of Medicaid, which provides health insurance to 74 million disabled or poor Americans, including nearly 40 percent of all children. Instead of open-ended payments, the federal government would give states a maximum payment for nearly every individual enrolled in the program. The Senate version of the bill would increase that allotment every year by a formula that is expected to grow substantially more slowly than the average increase in medical costs.

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States would continue to receive extra funding for Obamacare's expansion of Medicaid to more poor adults, but only temporarily. After several years, states wishing to cover that population would be expected to pay a much greater share of the bill, even as they adjust to leaner federal funding for other Medicaid beneficiaries -- disabled children, nursing home residents -- who are more vulnerable.

High-income earners would get substantial tax cuts on payroll and investment income. Subsidies for those low-income Americans who buy their own insurance would decline compared with current law. Low-income Americans who currently buy their own insurance would also lose federal help in paying their deductibles and co-payments.

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States could get rid of the online marketplaces that help consumers compare similar health plans, and make a variety of other changes to the health insurance system. The standards for approval are quite permissive. Not every state would choose to eliminate such rules, of course. But several might.

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Americans with pre-existing conditions would continue to enjoy protection from discrimination: In contrast with the House health bill, insurers would not be allowed to charge higher prices to customers with a history of illness, even in states that wish to loosen insurance regulations.

But patients with serious illnesses may still face skimpier, less useful coverage. States may waive benefit requirements and allow insurers to charge customers more. Someone seriously ill who buys a plan that does not cover prescription drugs, for example, may not find it very valuable.

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But because federal subsidies would also decline, only a fraction of people buying their own insurance would enjoy the benefits of lower prices. Many middle-income Americans would be expected to pay a larger share of their income to purchase health insurance that covers a smaller share of their care.

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The reforms are unlikely to drive down out-of-pocket spending, another perennial complaint of the bill's authors, and a central critique by President Trump of the current system. He often likes to say that Obamacare plans come with deductibles so high that they are unusable. Subsidies under the bill would help middle-income consumers buy insurance that pays 58 percent of the average patient's medical costs, down from 70 percent under Obamacare; it would also remove a different type of subsidy designed to lower deductibles further for Americans earning less than around $30,000 a year.

What a mess. It's doubtful these tweaks will come even close to bringing our health care system back to solvency; and they'll go a long way to pissing off (and making life harder for) the lower 75% of Americans economically. However, we will point out: the part about the rich getting tax "breaks" is disingenuous; the investment and payroll surcharge taxes that would be removed were actually only just recently added by Obamacare. We're also glad to see the individual mandate go -- there's no way this mandate ever did much to make the system solvent (since those who would face a meaningful penalty could also comfortably afford insurance), so it will just remove an arguably-unconstitutional (SCOTUS ruling notwithstanding) intrusion of the government into our lives.

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iehi-feed-62454 Fri, 23 Jun 2017 15:29:26 GMT Merkel Says May's Brexit Proposals 'Not the Breakthrough' http://implode-explode.com/viewnews/2017-06-23_MerkelSaysMaysBrexitProposalsNottheBreakthrough.html German Chancellor Angela Merkel said at the end of an EU summit in Brussels on Friday that proposals from British Prime Minister Theresa May on preserving the rights of EU citizens after Brexit were "not the breakthrough".

Speaking at a joint news conference with French President Emmanuel Macron, Merkel said: "It was a good start but it was also not the breakthrough, to put it conservatively."

"It became clear during the discussion last night that we have a long path ahead of us. And the 27 (other EU countries), especially Germany and France, will be well prepared, we will not allow ourselves to be divided.

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iehi-feed-62451 Thu, 22 Jun 2017 23:23:18 GMT China Bad Debt Prices Up 30% as New Gold Rush Gets Under Way http://implode-explode.com/viewnews/2017-06-22_ChinaBadDebtPricesUp30asNewGoldRushGetsUnderWay.html Bad loans are rapidly becoming the latest hot commodity in China as more domestic and foreign investors rush into the market and bid up prices.

Non-performing loan prices have risen more than 30 percent this year, according to distressed investor Belos Capital Asia Ltd. The average selling price of NPLs has climbed to around 50 cents on the dollar in the past two years, from 30 cents, said Victor Jong, a partner in the deals and business recovery services unit of PricewaterhouseCoopers LLP in Shanghai. Such a high level is "very rare" in international markets, Jong said.

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Distressed investors are increasing as Chinese authorities encourage market-oriented ways to resolve lenders' mounting piles of non-performing debt amid slowing economic growth. A jump in valuations of real estate, which often act as underlying assets for secured loans, has boosted the debt's recovery prospects. Combined with a surge in money supply, this has lifted bad-loan prices even in some less-developed regions of China, according to domestic distressed debt investor Bald Eagle Asset Management.

What could possib-lie go wrong?

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iehi-feed-62450 Thu, 22 Jun 2017 20:41:49 GMT The Little Putsch That Could Beget a Great Big Coup - David Stockman http://implode-explode.com/viewnews/2017-06-22_TheLittlePutschThatCouldBegetaGreatBigCoupDavidStockman.html iehi-feed-62449 Thu, 22 Jun 2017 20:40:36 GMT The Rise of a Prince Ends Doubts Over Saudi Arabia's Direction (BUT RAISES DOUBTS OVER ITS INT'L STRATEGY) http://implode-explode.com/viewnews/2017-06-22_TheRiseofaPrinceEndsDoubtsOverSaudiArabiasDirectionBUTRAISESDOUB.html iehi-feed-62448 Thu, 22 Jun 2017 20:36:03 GMT The Wheels Come Off Uber http://implode-explode.com/viewnews/2017-06-22_TheWheelsComeOffUber.html Not surprisingly, the financial press has been all agog about the drama of Travis Kalanick's forced departure from Uber's CEO position yesterday, fixated on salacious insider details.

That means journalists largely have ignored what ought to be the real story, which is whether Uber has any future. I anticipate that Hubert Horan will offer a longer-form treatment of this topic. Hubert had already documented, in considerable detail in his ten-part series, how Uber has no conceivable path to profitability.

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Uber's managerial upheaval of the last few months mean its decay path is sure to accelerate. I've been following the business press for over 30 years. I can't think of a single case where even an established, profitable business with an solid franchise has had so many top level positions vacant, and for such bad reasons. As reader vidimi quipped, "With no CEO, CFO, COO, and CIO, uber is coming very close to becoming a self-driving company." And that's not even a full list.

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And in a scandal that will have a much longer tail, Uber's former head of its Waymo driverless car unit, Anthony Levandowski, has had his case involving alleged theft of intellectual property from Google referred to the Department of Justice. Kalanick was deeply involved in Levandowski's sudden exodus from Google. It seems implausible that Kalanick didn't know Levandowski was making off with boatloads of files. If the case does lead to a criminal prosecution, it is hard to see how Kalanick could escape scrutiny as a potential criminal co-conspirator.

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Some of the top executive departures, such as of its recently hired COO, brought it to help the company grow up, its CFO and its head of communications, were voluntary. That's not what you see in Silicon Valley stars on a winning path. Confirming that picture are rumors of insiders being cashed out at valuations well below that of recent fundraisings.

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And particularly worrisome is the resignation of Uber's chief financial officer, Gautam Gupta, at the end of May, when Uber announced $708 million in quarterly losses... A CFO departure is often a red flag, particularly when it is abrupt and mysterious.

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The wee problem is it will prove impossible to effect anything resembling a turnaround at Uber. As Hubert Horan pointed out, the very culture that made Uber a success is now its biggest liability. And as a result, investors don't appear to have a plan for how to straighten out Uber.

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iehi-feed-62447 Thu, 22 Jun 2017 03:35:08 GMT America Is Now a ‘Second Tier' Country: Report http://implode-explode.com/viewnews/2017-06-21_AmericaIsNowaSecondTierCountryReport.html The results of the group's annual survey, which ranks nations based on 50 metrics, call to mind other reviews of national well-being... The Social Progress Index released this week is compiled from social and environmental data that come as close as possible to revealing how people live. "We want to measure a country's health and wellness achieved, not how much effort is expended, nor how much the country spends on healthcare," the report states. Scandinavia walked away with the top four of 128 slots. Denmark scored the highest. America came in at 18...

Of course it's easy enough to dismiss or belittle these occasional reports, each with their unique methodologies and almost identical conclusions. Another approach, however, would be to look at them all together and conclude that they represent "mounting evidence." In that case, Houston (and Dallas, New Orleans, Tulsa, St. Louis, Baltimore, Chicago, and New York), we have a problem.''

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iehi-feed-62444 Wed, 21 Jun 2017 21:10:51 GMT High-Yield Carnage Stays Contained for Now - Bloomberg http://implode-explode.com/viewnews/2017-06-21_HighYieldCarnageStaysContainedforNowBloomberg.html Oil's latest foray into a bear market has left the world's biggest junk bond ETF mostly unscathed, with the damage so far contained to the energy sector.

Investors still aren't demanding higher overall premiums for the riskiest corporate debt and the $18.4 billion iShares iBoxx High Yield Corporate Bond ETF has gained 3.9 percent this year, even as credit spreads for energy companies widened to the highest since September after crude slid below $43 a barrel. 

"There may be more pain on the way" for the energy patch, warns Bloomberg Intelligence senior credit analyst Spencer Cutter.

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In 2015, "there was a significant lag between oil really cratering and credit catching up," writes Peter Tchir, head of macro strategy at Brean Capital LLC. "While I think the energy related credit selling was overdone by late 2015, it seems to me that we have hit a point yet again where the lag effect has to start kicking in -- credit can't ignore ongoing weakness for so long."

Yeah, everything bad is "contained" and will remain so, and everything bullish will continue forever... don't you just love it when we reach the point in market/crisis cycles that the word "contained" has to be trotted out? We're certainly reassured...

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iehi-feed-62440 Wed, 21 Jun 2017 13:48:47 GMT The Data Says: 100% Chance of Recession Within 7 Months http://implode-explode.com/viewnews/2017-06-21_TheDataSays100ChanceofRecessionWithin7Months.html iehi-feed-62439 Wed, 21 Jun 2017 13:39:30 GMT Britain charges Barclays, ex-bosses over 2008 Qatari deal http://implode-explode.com/viewnews/2017-06-21_BritainchargesBarclaysexbossesover2008Qatarideal.html Barclays and four former top executives were charged with fraud on Tuesday over undisclosed payments to Qatari investors as part of a 12 billion pound ($15 billion) emergency fundraising during the financial crisis in 2008.

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The case centers on agreements between Barclays and Qatari investors during two fundraisings in June and October 2008.

Qatar Holding, part of the Qatar Investment Authority sovereign wealth fund, and Challenger, an investment vehicle of former Qatari prime minister Sheikh Hamad bin Jassim bin Jabr al-Thani, invested around 5.3 billion pounds in Barclays.

Authorities have examined whether payments from Barclays to Qatar at the same time, such as around 322 million pounds in "advisory services agreements" (ASA), alongside the $3 billion loan, were honest and properly disclosed.

Wonder why this is being brought now... perhaps because Qatar "funds terrorism" (while Saudi Arabia doesn't)?

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