Implode-Explode Heavy Industries news feed

NY Fed found serious problems at Deutsche Bank's U.S. arms

Wed, 23 Jul 2014 01:45:36 GMT

``In a letter to the German lender's executives last December, a senior official with the New York Fed described financial reports produced by some of the bank's U.S. arms as "low quality, inaccurate and unreliable," the report said. "The size and breadth of errors strongly suggest that the firm's entire U.S. regulatory reporting structure requires wide-ranging remedial action," the Journal said, quoting documents reviewed by it.''

German Economy Hit by US, EU Sanctions on Russia

Tue, 22 Jul 2014 14:33:11 GMT

Even prior to the sanctions, the Russian economy had been struggling. Now, though, the Ukraine crisis is beginning to make itself felt in Germany as well. German industry's Committee on Eastern European Economic Relations believes that the crisis could endanger up to 25,000 jobs in Germany. Were a broad recession to befall Russia, German growth could sink by 0.5 percent, according to a Deutsche Bank study.
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The most recent US sanctions, warns Eckhard Cordes, head of the Committee on Eastern European Economic Relations, have placed an additional strain "on the general investment climate." Particularly, he adds, because European companies have to conform to the American penalties.

China's meaningless GDP figures

Tue, 22 Jul 2014 14:30:24 GMT

``Instead of embarking on much debated reform, China just can't resist another helping of easy money. In such circumstances, we should not be monitoring an enlarged waistline every quarter as a sign of progress, but rather as sign of further fragility as more debt is piled on.''

Flint manager warns of bankruptcy over retiree costs

Tue, 22 Jul 2014 14:29:31 GMT

``Flint may be Michigan's second city to plunge into bankruptcy unless retirees accept cuts in health benefits that threaten to unravel a balanced budget, Emergency Manager Darnell Earley said.''

Report: Drastic fall in new gold discoveries

Tue, 22 Jul 2014 14:26:11 GMT

``Research points to a dramatic fall in new gold discoveries which are falling well behind global production levels. This will have a significant impact on gold supply ahead.''

Juncker faces political test as fines loom on illegal German trade surplus

Tue, 22 Jul 2014 14:22:43 GMT

``The headline surplus will be 7pc of GDP this year, well above the 6pc limit set by Brussels the under the EU's new Macroeconomic Imbalance Procedure. The Commission caused fury in Germany last year by threatening Berlin with sanctions if it failed to do its "homework", chiefly by taking steps to wean its economy off reliance on foreign markets. The issue is highly sensitive for Mr Juncker. He must choose whether to set the sanctions machinery in motions and provoke a showdown with Germany -- the country that pushed hardest for his nomination -- or turn a blind eye and risk the accusation that EMU rules are enforced only against the weaker countries.''

The dollar's 70-year dominance is coming to an end

Tue, 22 Jul 2014 14:19:33 GMT

``Although the dollar's reserve status won't end overnight, the global payments system is now moving inexorably towards that outcome. The US currency accounted for just 33pc of all foreign exchange holdings in 2013, on IMF numbers, down from 55pc in 2001. Within a decade or so, a "reserve currency basket" may emerge, with central banks storing wealth in a mix of dollars, yuan, rupee, reals and roubles, as well as precious metals. Perhaps some kind of synthetic bundle of the world's leading currencies will be developed, with emphasis placed, after years of western money-printing, on assets backed by commodities and other tangibles.''

‘BRICS Bank capital might not be held in US dollars'

Tue, 22 Jul 2014 01:06:05 GMT

``"If you convert rand to US dollars and then to yuan there are costs involved, so if we convert rand directly into yuan that will reduce costs," he said.''

Wall Street Adapts to New Regulatory Regime Under Dodd-Frank

Mon, 21 Jul 2014 21:05:32 GMT

"Dodd-Frank certainly catalyzed substantial amounts of simplification, and we're moving well beyond that through our own initiatives," said James Mahoney, a Bank of America spokesman.
The new regulatory regime is also prompting banks to add thousands of staffers to help ensure compliance. By the end of this year, J.P. Morgan Chase JPM 0.00% & Co. expects to have added 13,000 employees focused on regulatory, compliance and control efforts, Chief Executive Officer James Dimon said in his annual shareholder letter. John Gerspach, Citigroup's chief financial officer, told investors Monday the company will likely end the year with 30,000 people dedicated to regulatory and compliance efforts, a 33% increase from 2011, even as Citigroup cuts its overall headcount.

Bank regulators point to the changes on Wall Street as evidence their efforts to suck risk out of the financial system are working. "Really we're in a substantially different place, and a much improved place," said Thomas Curry, comptroller of the currency.

But the banks' efforts are not enough to damp worries among some policymakers and lawmakers that the broader economy remains vulnerable to the potential collapse of a large, interconnected financial firm. Banks' are getting hungrier for risk as they try to compensate for sluggish economic growth, ultra-low interest rates and higher regulatory costs though appetites remain subdued compared to pre-crisis levels.

U.S. leveraged syndicated lending totaled $1.244 trillion in deal volume in 2013, up from $893 million in 2012 and surpassing the 2007 peak of $1.191 trillion, according to data from Dealogic. Banks provide the vast majority of the leveraged loans to fund buyouts.''

The Subprime Auto Loan Bubble Bursts

Mon, 21 Jul 2014 13:40:38 GMT

`` Orders to invest in the $390 million debt deal were four times greater than the amount of available securities. What is backing many of these securities? Auto loans made to people who have been in bankruptcy. The average interest rate on loans bundled into Prestige's latest offering, for example, is 18.6 percent, up slightly from a similar offering rolled out a year earlier. Since 2009, total auto loan securitizations have surged 150 percent, to $17.6 billion last year, though some estimates have put the total volume even higher.''

UBS Warns Everything Is Overpriced, Prepares For Sell-Off

Mon, 21 Jul 2014 13:36:12 GMT

``When the largest player in the wealth management industry warns that all asset classes are overpriced and too risky and that it's time to reduce exposure across the "full spectrum of assets," and if in fact it starts selling some of its $1.7 trillion in wealth management assets in a market that is already lacking liquidity -- that act in itself can trigger the very sell-off it is warning about. So fasten your seatbelts.''

The BRICS Don't Like the Dollar-Dominated World Economy, but They're Stuck With It [For Now]

Mon, 21 Jul 2014 13:34:18 GMT

``Research firm Capital Economics estimates that the New Development Bank, with initial capital approved at only $100 billion, could offer loans of $5 billion to $10 billion a year over the next decade. Though that's not an insignificant amount, it's far lower than the $32 billion the World Bank made available last year. The situation is the same with the currency swaps. Set at a total size of $100 billion, the funds available would be a fraction of those the IMF can muster... Still, the steps taken during this latest BRICS summit point to what may be the future of the global economy. Though their initiatives may be small and tentative now, they signal an intent to remake the global financial system in their own interest as they continue to grow in economic power.''

The inflection point has arrived in Southern California real estate

Mon, 21 Jul 2014 13:13:09 GMT

``Big money is slowly starting to pull away from the real estate market. We are seeing this in dramatic fashion in Arizona and Nevada... We are seeing ... action happening in places like the Inland Empire and Central Valley where inventory is certainly up and prices are hitting plateaus. The momentum from 2013 is now running on fumes. We also have certain cities being dominated by investors and in many cases money is coming directly from China. Hot money is finding a home in the oddest of places. Yet one thing is certain and that is SoCal real estate is now entering into an inflection point. As this turn unfolds we are going to find out what areas are truly prime and what other areas are all hat with no cattle.''

America's lost oomph | The Economist

Sun, 20 Jul 2014 22:38:25 GMT

Sadly, the New Economy is no more. The recovery from the recession of 2008-09 has been the weakest of the post-war era, and evidence is mounting that America's potential growth rate has plummeted. Its two big determinants, the supply of workers and the rise in their productivity, have both fallen short. Performance in the past year has been particularly feeble: America's labour force has not grown at all and output per hour worked has fallen. The IMF recently cut its estimate of the country's potential rate of growth to 2%. Other economists put it as low as 1.75%
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Obamacare, though good in other respects, tends to shrink the labour force because it helps people get health care without working. There is less to be said for the outdated social safety net, which manages both to be stingy and to discourage work. America spends a smaller proportion of its GDP than other rich countries on retraining the jobless and helping them find work. It has not raised the retirement age and it has allowed its disability-insurance system to become an ersatz welfare scheme. The number of workers on disability, hardly any of whom will work again, has doubled since 1997 to 9m. For once, Europe could teach America some labour-market lessons: thanks to welfare reforms, the proportion of Europeans in the workforce is now rising.

Banks urged to warn mortgage borrowers to look at how higher interest rates will affect them (UK)

Sun, 20 Jul 2014 22:34:49 GMT

``The Bank is set to raise base rates gradually to 3% over the next couple of years, after keeping them at a historically low 0.5% since 2009. The report will warn that borrowers across the UK need to brace themselves for the end of this unprecedented "holiday period". ''

The Ongoing Rot in the Economy

Sun, 20 Jul 2014 21:57:36 GMT

``Five years into this so-called economic recovery, on average 40% of the poorest U.S. households still spend more than they earn (including government transfers) for basic necessities!'' -- There are some shocking statistics in this, MUST READ.

IF THIS KEEPS UP, THEY WILL HAVE TO START PUTTING ARMED GUARDS ON FOOD TRUCKS

Sun, 20 Jul 2014 10:29:25 GMT

On Wednesday, Robert Wenzel of the Economic Policy Journal shared some new data that has just been released by the federal government about food inflation over the past year. Without a doubt, these numbers are quite startling...

INSIDER TRADING AND FINANCIAL TERRORISM ON COMEX

Sun, 20 Jul 2014 10:26:23 GMT

the price of gold is not determined in markets where physical gold is bought and sold but in the paper futures market where contracts trade and speculators place bets on the price of gold. Most of the contracts traded on the Comex futures market are settled in cash. The value of the contracts used to short gold and drive down the price is well in excess of the actual amount of physical gold that is kept on the Comex and available for delivery. One might think that regulators would pay attention to a market in which the value of contracts outstanding exceeds by several multiples the amount of physical gold available for delivery.

Rickards: Stock market reality check

Sat, 19 Jul 2014 17:01:44 GMT

``Not surprisingly, this triple-whammy of declining full-time jobs, declining productivity and slowing capital investment means that real wages are stagnant. If workers can't make more, they can't spend more without borrowing. Borrowing is more difficult because home equity has not recovered from the 2007 housing crash and lending standards are the most stringent in years. Companies won't invest in equipment if consumers can't spend... The result is a death spiral of lower consumption, lower investment, declining productivity, stagnant wages, and underemployment all feeding on each other and making the overall economy weaker... the conundrum is complete. Stock indices march to all-time highs while economic fundamentals fall apart. The two will be reconciled either with a spectacular turnaround in growth or a spectacular collapse in stock prices. ''

Perfect Pilfering: A detailed exposé on how the market is rigged from a data-centric approach

Sat, 19 Jul 2014 16:58:49 GMT

``This is just beautifully done. clean, simple, irrefutable. i hope it gets read far and wide.'' --Michael Lewis after reading this article