Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us 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-62453 Fri, 23 Jun 2017 14:50:54 GMT Sears Holdings to close 20 more stores as retail crisis continues http://implode-explode.com/viewnews/2017-06-23_SearsHoldingstoclose20morestoresasretailcrisiscontinues.html iehi-feed-62452 Fri, 23 Jun 2017 14:47:10 GMT Senate GOP Health Bill Will Change Obamacare, Not Repeal It http://implode-explode.com/viewnews/2017-06-23_SenateGOPHealthBillWillChangeObamacareNotRepealIt.html Lost in the roiling debate over health care over the last several weeks is that Republicans have all but given up on their longstanding repeal-and-replace pledge. The slogan lives on in the rhetoric used by many GOP lawmakers and the Trump White House but not in the legislation the party is advancing.

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"We're amending Obamacare. We're not killing it," a frustrated Jason Pye of the conservative group FreedomWorks told me earlier this month as the murky outlines of the Senate proposal were beginning to emerge.

Like the House bill, the Senate plan is expected to repeal the ACA's employer and individual insurance mandates and most if not all of the tax increases Democrats levied to pay for new programs and benefits. But the Senate bill likely will only begin a years-long phase-out of the ACA's Medicaid expansion in 2020 rather than end it as the House measure does.

The Senate also is expected to include more generous tax credits than the House bill that more closely resemble the system already in place under Obamacare. But the funding levels would still be lower than the current law.

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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-62445 Thu, 22 Jun 2017 00:35:13 GMT After Georgia Loss, Dems Take Heat on Economic Message (OR LACK THEREOF) http://implode-explode.com/viewnews/2017-06-21_AfterGeorgiaLossDemsTakeHeatonEconomicMessageORLACKTHEREOF.html Democrats scrambled to regroup on Wednesday after a disappointing special election defeat in Georgia, with lawmakers, activists and labor leaders speaking out in public and private to demand a more forceful economic message heading into the 2018 elections.

Among Democrats in Washington, the setback in Georgia revived or deepened a host of existing grievances about the party, accentuating tensions between moderate lawmakers and liberal activists and prompting some Democrats to question the leadership and political strategy of Nancy Pelosi, the House minority leader.

A small group of Democrats who have been critical of Ms. Pelosi in the past again pressed her to step down on Wednesday. And in a private meeting of Democratic lawmakers, Representative Tony Cárdenas of California, Ms. Pelosi's home state, suggested the party should have a more open conversation about her effect on its political fortunes.

But the most acute and widely expressed concerns were economic. Speaking after a meeting of the Democratic caucus on Wednesday morning, Representative Hakeem Jeffries of New York said the party was preparing to be "aggressively focused on job creation and economic growth." And Representative Jim Himes of Connecticut, who represents an affluent district near New York City, said Democrats must do more to compete with what he described as expansive and unrealistic promises by President Trump.

"It's not enough to say, ‘I want jobs,'" Mr. Himes said. "You need more than that, particularly when you're competing with a guy who is telling fantasies."

Amazing that the Dems still don't see fit to abandon the "the economy was GREAT under Obama" message -- even as it's still killing them.

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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-62443 Wed, 21 Jun 2017 14:16:01 GMT Trump Still Making Millions As De Facto-Slumlord of Massive Brooklyn Housing Complex; But Will It Lose HUD Status With Carson As Boss? http://implode-explode.com/viewnews/2017-06-21_TrumpStillMakingMillionsAsDeFactoSlumlordofMassiveBrooklynHousin.html Starrett City, a sprawling complex of 46 buildings and 5,881 apartments that sits far out in Brooklyn on the edge of the Belt Parkway, is the nation's biggest federally subsidized apartment development.

U.S. Department of Housing & Urban Development officials say Starrett City has received $491.7 million in federal subsidies since May 2013, including $76.8 million last year and $38.3 million so far this year.

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The [HUD inspection score] drop from 89 to 70 put Starrett City closer to the score of 60 HUD deems unacceptable. HUD can terminate a contract with a landlord with two scores of 60.

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The difference from past inspections is that HUD is now run by Trump's appointee, Ben Carson.

The drop from 89 to 70 put Starrett City closer to the score of 60 HUD deems unacceptable. HUD can terminate a contract with a landlord with two scores of 60.

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Complex spokesman Bob Liff emphasized that Trump plays no role in managing the complex. Trump's father, Fred, was a limited partner when it was built in 1974 and Trump and his siblings inherited that interest when his father died.

The 4% stake Trump holds was placed in a trust shortly before he became President Jan. 20.

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Trump's receipt of income from Starrett City creates a potential conflict for Carson, who will have ultimate say over HUD's next score of the complex.

During his confirmation hearing, Carson wouldn't answer directly when asked if he would make sure Trump and his family didn't make any money via his agency.

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iehi-feed-62441 Wed, 21 Jun 2017 14:05:36 GMT Ford To Move Focus Production From Michigan To China, After All (TARIFFS BE DAMNED) http://implode-explode.com/viewnews/2017-06-21_FordToMoveFocusProductionFromMichiganToChinaAfterAllTARIFFSBEDAM.html On Tuesday, Ford announced it will shift its Michigan production of the Focus to China. According to Bloomberg, the automaker plans to then sell those made-in-China vehicles to the U.S. market. Once this transition is completed, the Focus will reportedly be the biggest automotive export ever from China to the U.S.

Joe Hinrichs, Ford's head of global operations, cited lower costs as the reason to outsource production to China. The company will save $1 billion by building the Focus in China instead of Mexico, he said.

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He said the savings would be so significant that even if Congress slapped tariffs on foreign-made imports, the change would still make financial sense.

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Ford stressed that no American jobs would be lost in the China move. Starting in late 2018, its Michigan plant will simply focus on making bigger, more profitable vehicles, including the Ranger midsize pickup truck. The automaker also announced on Tuesday that it will invest $900 million in a Kentucky factory to build big SUVs, like the Lincoln Navigator, which would secure 1,000 jobs at the plant.

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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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iehi-feed-62437 Tue, 20 Jun 2017 21:13:55 GMT Charles Hugh Smith: We're in a Boiling-Point Crisis of Exploitive Elites http://implode-explode.com/viewnews/2017-06-20_CharlesHughSmithWereinaBoilingPointCrisisofExploitiveElites.html Which brings us to the present-day Crisis of Exploitive Elites. The "fixes" to the stagnation of postwar Elite/state-dominated Capitalism in the 1970s were financialization, globalism, and the sustained expansion of debt in all sectors--state, corporate and household.

Now all three engines of "growth" have run out of steam. All three greatly exacerbated wealth and income inequality... The Exploitive Elites cannot turn back the tides of history, but they can immiserate millions. That seems to be "solution" enough for them, but you cannot destroy rising moral revulsion to soaring inequality and the abject failure of debt-based global capitalism with mere media propaganda.

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iehi-feed-62436 Tue, 20 Jun 2017 21:11:47 GMT Fed is Careening Into Housing and Stock Bubble... Look Out Below! - Ben Hunt http://implode-explode.com/viewnews/2017-06-20_FedisCareeningIntoHousingandStockBubbleLookOutBelowBenHunt.html What has happened (and apologies for the ten dollar words) is that the Fed's reaction function has flipped 180 degrees since the Trump election. Today the Fed is looking for excuses to tighten monetary policy, not excuses to weaken. So long as the unemployment rate is on the cusp of "instability", that's the only thing that really matters to the Fed (for reasons discussed below). Every other data point, including a market sell-off or a flat yield curve or a bad CPI number -- data points that used to be front and center in Fed thinking -- is now in the backseat.

I'm not the only one saying this about the Fed's reaction function. Far more influential Missionaries than me, people like Jeff Gundlach and Mohamed El-Erian, are saying the same thing. If you think that this Fed still has your back, Mr. Investor, the way they had your back in 2009 and 2010 and 2011 and 2012 and 2013 and 2014 and 2015 and 2016 ... well, I think you are mistaken. I think Janet Yellen broke up with you this week.

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iehi-feed-62435 Tue, 20 Jun 2017 17:49:33 GMT San Francisco and tech driven housing mania: The median home in San Francisco reaches a new high of $1.5M http://implode-explode.com/viewnews/2017-06-20_SanFranciscoandtechdrivenhousingmaniaThemedianhomeinSanFrancisco.html iehi-feed-62433 Tue, 20 Jun 2017 15:13:16 GMT Absent Without Leave - Kunstler http://implode-explode.com/viewnews/2017-06-20_AbsentWithoutLeaveKunstler.html Perhaps you also didn't notice the news item over the weekend that a US-led fighter plane coalition shot down a Syrian air force plane in Syrian airspace. In an earlier era that could easily be construed as an act of war. Who gave the order for that, you have to wonder. And what will the consequences be? Reasonable people might also ask: haven't we already made enough deadly mischief in that part of the world?

With the US military gone rogue in foreign lands, and the intelligence community off-the-reservation at home, and the Trump White House all gummed up in the tarbaby of RussiaGate, and the House and Senate lost in the shuffle, you also have to wonder what anybody is going to do about the imminent technical bankruptcy of the USA as the Treasury Department spends down its dwindling fund of remaining cash money to pay ongoing expenses...

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iehi-feed-62432 Tue, 20 Jun 2017 14:23:43 GMT China's "Ghost Collateral" Arrives In Canada, "Heralding A Crisis" http://implode-explode.com/viewnews/2017-06-20_ChinasGhostCollateralArrivesInCanadaHeraldingACrisis.html ... the stunner: "Postmedia confirmed that Canadian banks are allowed by the federal regulator, the Office of the Superintendent of Financial Institutions, to accept collateral from China to secure real estate mortgages in B.C."

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The Vancouver Sun adds that as a result of tighter federal lending rules, borrowers trying to buy million-dollar-plus properties in Vancouver's market "are increasingly taking out dangerous loans from shadow bankers in a fast-growing and poorly regulated financial market."

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"These properties in Vancouver are so expensive that you need people either laundering money or loan fraud or people borrowing such large amounts of money that should never be allowed, in order to keep it going," MacBeth said. "If everyone is reporting their incomes honestly in Vancouver, there is no way that housing prices can stay where they are.

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