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-64638 Mon, 18 Mar 2019 21:24:20 GMT The Fed has exacerbated America's new housing bubble: FT http://implode-explode.com/viewnews/2019-03-18_TheFedhasexacerbatedAmericasnewhousingbubbleFT.html Hyman Minsky would have had a field day with last week's US inflation numbers. One of the key points in the late, great economist's Financial Instability Hypothesis was that there are two kinds of prices -- prices for goods and services, and asset prices. Inflation in the two areas should, as a result, differ. And indeed they have, quite markedly. The latest Consumer Price Index figures show that almost all core inflation, which was weaker than expected, was in rent or the owner's equivalent of rent (up 0.3 per cent). Core goods inflation, meanwhile, was down 0.2 per cent. Very simply, this means that the housing market is once again completely out of sync with the rest of the economy.

A decade on from the subprime bubble, housing, which is not only shelter but also the biggest financial asset for most Americans, is the only major component of the CPI with a national inflation rate that is consistently above the overall number. Why is this? Because, just as Minsky would have predicted, loose monetary policy over the past several years buoyed assets, but didn't create meaningful new supply or, consequently, enough demand in construction and other home-related areas. The point is illustrated in an academic paper, "What the Federal Reserve got totally wrong about inflation and interest rate policy" from the Mario Einaudi Center for International Studies at Cornell University. As its author Daniel Alpert says: "What we have now is a form of inflation that's never been seen before -- it's all concentrated in housing."

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iehi-feed-64637 Sun, 17 Mar 2019 21:32:53 GMT NYC's Hudson Yards Is a Billionaire's Fantasy City http://implode-explode.com/viewnews/2019-03-17_NYCsHudsonYardsIsaBillionairesFantasyCity.html Architecture, like politics and war, springs from a million separate decisions made within the context of vast historical forces, decisions that can seem freer or more meaningful than they really are. At Hudson Yards, the path to the ribbon-cutting followed an inexorable trajectory based on impregnable financial logic. Underutilized space must be reclaimed for its highest and best use. The MTA needed cash. Costs were high, so potential profits had to be too. The most efficient way to finance and engineer the project was to hand it off to a single developer, who was only ever going to build a city as a luxury product. Each decision made the next one essentially foreordained.

At times, that relentless march of circumstance can produce results that look insane or visionary, depending on the month. Conceived in the wake of the 2008 recession and executed during the boom that followed, the megadevelopment opens onto a troubling future. The market for ultradeluxe condos is sagging, and we'll see whether that's one of the shocks that Hudson Yards is built to withstand. A dozen years ago, it seemed obvious that retail would prop up a shaky market for office space. Now the opposite is true. The 720,000-square-foot mall comes online even as storefronts are shuttering all over New York and Amazon threatens the whole concept of entering a shop with money and walking out with a shopping bag. On the other hand, businesses that were once squeamish about relocating to an uncertain frontier zone are now gobbling up square footage. Companies like Coach, L'Oréal, Warner Media, Wells Fargo, and Boston Consulting Group will cohabit with creations of the millennial boom like Stonepeak, and the demand for office space seems likely to outpace the current glut.

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iehi-feed-64636 Sun, 17 Mar 2019 17:03:11 GMT The Most Splendid Housing Bubbles in Canada Deflate | Wolf Street http://implode-explode.com/viewnews/2019-03-17_TheMostSplendidHousingBubblesinCanadaDeflateWolfStreet.html iehi-feed-64633 Fri, 15 Mar 2019 15:34:05 GMT Lawmakers Support Special Tax on Multimillion Dollar Second Homes in NYC http://implode-explode.com/viewnews/2019-03-15_LawmakersSupportSpecialTaxonMultimillionDollarSecondHomesinNYC.html There's speculation that after Kenneth C. Griffin, the hedge fund multibillionaire, bought a Central Park South apartment for $238 million, it became a little more feasible to suggest that maybe people worth $10 billion could afford to pay a little more in taxes so the roads, bridges, and mass transit systems that keep the cities and their businesses running can be fixed in the supposedly greatest city in the world in the country of American Exceptionalism

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The New York Times explains why the tax makes sense in these cases and how the city is hurt right now without it. "The $238 million record purchase was a visceral reminder that when wealthy buyers like Mr. Griffin purchase expensive apartments as second homes or investments, New York City and the state get less financial benefits than if the home was owned as a primary residence. If the buyers live out of state, they are not subject to state or city income taxes, and do not pay New York sales tax while outside the state."

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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-64627 Sat, 09 Mar 2019 15:54:34 GMT Iconic Chrysler Building sold at a huge loss http://implode-explode.com/viewnews/2019-03-09_IconicChryslerBuildingsoldatahugeloss.html The Chrysler Building, the famous art deco New York skyscraper, will be sold for a small fraction of its previous sales price. The deal, first reported by The Real Deal, was for $150 million, according to a source familiar with the deal.

Mubadala, an Abu Dhabi investment fund, purchased 90% of the building for $800 million in 2008. Real estate firm Tishman Speyer had owned the other 10%.

The buyer is RFR Holding, a New York real estate company. Officials with Tishman and RFR did not immediately respond to a request for comments.

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The incentive to sell the building at such a huge loss was due to the soaring rent the owners pay to Cooper Union, a New York college, for the land under the building. The rent is rising from $7.75 million last year to $32.5 million this year to $41 million in 2028.

Meantime, rents in the building itself are not rising nearly that fast. While the building is an iconic landmark in the New York skyline, it is competing against newer office towers with large floor-to-ceiling windows and all the modern amenities.

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iehi-feed-64624 Thu, 07 Mar 2019 15:05:39 GMT Theresa May's Brexit vote is 'on a knife edge': Here's what experts predict http://implode-explode.com/viewnews/2019-03-07_TheresaMaysBrexitvoteisonaknifeedgeHereswhatexpertspredict.html U.K. Prime Minister Theresa May is facing a crunch series of votes this week that will determine the immediate course of Brexit and the U.K.'s relationship with the EU.

On Tuesday, lawmakers will vote for a second time on May's Brexit deal after initially rejecting it in January. If a simple majority of them don't approve the deal, they will then vote on whether they want to leave the 28-member bloc without a deal.

If they vote against a "no-deal" Brexit, they'll then have a vote on whether to extend Article 50 (which sets out the departure process) and delay Britain's departure which is currently set to take place on March 29.

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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-64620 Mon, 04 Mar 2019 14:27:26 GMT Neighbors bash Emily Ratajkowski, hubby for 'dodging rent' http://implode-explode.com/viewnews/2019-03-04_NeighborsbashEmilyRatajkowskihubbyfordodgingrent.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."

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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-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-64611 Thu, 28 Feb 2019 01:30:00 GMT The Religion of Workism Is Making Americans Miserable http://implode-explode.com/viewnews/2019-02-27_TheReligionofWorkismIsMakingAmericansMiserable.html There is something slyly dystopian about an economic system that has convinced the most indebted generation in American history to put purpose over paycheck. Indeed, if you were designing a Black Mirror labor force that encouraged overwork without higher wages, what might you do? Perhaps you'd persuade educated young people that income comes second; that no job is just a job; and that the only real reward from work is the ineffable glow of purpose. It is a diabolical game that creates a prize so tantalizing yet rare that almost nobody wins, but everybody feels obligated to play forever.

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Workism offers a perilous trade-off. On the one hand, Americans' high regard for hard work may be responsible for its special place in world history and its reputation as the global capital of start-up success. A culture that worships the pursuit of extreme success will likely produce some of it. But extreme success is a falsifiable god, which rejects the vast majority of its worshippers. Our jobs were never meant to shoulder the burdens of a faith, and they are buckling under the weight. A staggering 87 percent of employees are not engaged at their job, according to Gallup. That number is rising by the year.

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One solution to this epidemic of disengagement would be to make work less awful. But maybe the better prescription is to make work less central... This can start with public policy. There is new enthusiasm for universal policies--like universal basic income, parental leave, subsidized child care, and a child allowance--which would make long working hours less necessary for all Americans. These changes alone might not be enough to reduce Americans' devotion to work for work's sake, since it's the rich who are most devoted. But they would spare the vast majority of the public from the pathological workaholism that grips today's elites, and perhaps create a bottom-up movement to displace work as the centerpiece of the secular American identity.

On a deeper level, Americans have forgotten an old-fashioned goal of working: It's about buying free time...

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iehi-feed-64607 Wed, 27 Feb 2019 01:32:37 GMT Musk Riles the SEC Again: Here's what could happen next http://implode-explode.com/viewnews/2019-02-26_MuskRilestheSECAgainHereswhatcouldhappennext.html Musk's latest run-in with the SEC stems from a tweet he sent a week ago, on February 19: "Tesla made 0 cars in 2011, but will make around 500k in 2019." Hours later, Musk sent a follow-up tweet indicating that the company will actually deliver just 400,000 cars this year.

Although Musk corrected his mistake, regulators berated Musk for once again publishing "inaccurate and material information about Tesla to his over 24 million Twitter followers." The SEC said Musk had not asked for or received company approval before sending the tweet, as required by the settlement.

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If Nathan does side with the SEC and rules that Musk was in contempt for violating the settlement deal, she'll have a range of options to punish Musk and dissuade him from breaking the agreement again. Consequences could range from a fine, to limiting further social media use, to his removal as CEO.

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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-64603 Sun, 24 Feb 2019 00:39:36 GMT Buffett's Berkshire, hurt by Kraft Heinz, posts massive quarterly loss (+FINDS NO FAIR-PRICED BUYOUT TARGETS) http://implode-explode.com/viewnews/2019-02-23_BuffettsBerkshirehurtbyKraftHeinzpostsmassivequarterlylossFINDSN.html A rough ride for the stock markets at the end of last year battered Warren Buffett's Berkshire Hathaway: It posted a rare net loss of $25 billion for the fourth quarter.

Troubles at Kraft Heinz also cut deeply into the investing giant's bottom line. In his annual letter to investors posted Saturday, Buffett said the company took a $3 billion write down last year "arising almost entirely from our equity interest in Kraft Heinz.

The loss was driven by big price declines in Berkshire's investment portfolio, including Apple, which remains its largest holding.

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Buffett said Berkshire does not see any potential takeover targets in the coming year -- but the firm is hungry to make an "elephant-sized acquisition."

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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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