Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-63390 Mon, 11 Dec 2017 20:55:36 GMT Bitcoin Futures Deliver Wild Ride as Debut Brings Rally, Halts http://implode-explode.com/viewnews/2017-12-11_BitcoinFuturesDeliverWildRideasDebutBringsRallyHalts.html ``Futures on the world's most popular cryptocurrency surged as much as 26 percent in their debut session on Cboe Global Markets Inc.'s exchange, triggering two temporary trading halts designed to calm the market. Initial volume exceeded dealers' expectations, while traffic on Cboe's website was so heavy that it caused delays and temporary outages. The website's problems had no impact on trading systems, Cboe said. Bitcoin's spot price rose.

"It is rare that you see something more volatile than bitcoin, but we found it: bitcoin futures," said Zennon Kapron, managing director of Shanghai-based consulting firm Kapronasia.

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"It was smooth, and bitcoin traders don't seem to be put off by futures," said Craig Erlam, senior market analyst in London at online trading firm Oanda. "There was a fear that short selling would have an adverse impact on price, but we haven't seen that yet."

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The roughly $1,300 difference reflects not only the novelty of the asset but also the difficulty of using the cash-settled futures to trade against the spot, strategists said.

"In a normal, functioning market, good old arbitrage would settle this," Ole Hansen, head of commodity strategy at Saxo Bank A/S in Hellerup, Denmark, said by email. "If they were deliverable you could arbitrage the life out of it."

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iehi-feed-63379 Sun, 10 Dec 2017 15:18:05 GMT Living in cars, working for Amazon: meet America's new nomads http://implode-explode.com/viewnews/2017-12-10_LivingincarsworkingforAmazonmeetAmericasnewnomads.html Despite a lack of hard numbers, anecdotal evidence suggests the ranks of American itinerants started to boom after the housing collapse and have kept growing.

The cause of the unmanageable household math that drives some people to become nomads is no secret.

Federal minimum wage is stalled at $7.25 an hour. The cost of shelter continues to climb. There are now only a dozen counties and one metro area where a full-time minimum-wage worker can afford a one-bedroom apartment at fair market rent.

At the same time, the top 1% now makes 81 times more than those in the bottom half do, when you compare average earnings. For American adults on the lower half of the income ladder -- some 117 million of them -- earnings haven't changed since the 1970s. This is not a wage gap -- it's a chasm.

The most widely accepted measure for calculating income inequality is a century-old formula called the Gini coefficient. What it reveals is startling. Today the United States has the most unequal society of all developed nations. America's level of inequality is comparable to that of Russia, China, Argentina and the war-torn Democratic Republic of the Congo.''

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iehi-feed-63377 Fri, 08 Dec 2017 21:57:50 GMT Dollar stores are booming because people are getting poorer http://implode-explode.com/viewnews/2017-12-08_Dollarstoresareboomingbecausepeoplearegettingpoorer.html As more and more US department stores close and malls are mothballed, Amazon is being blamed for the "retail apocalypse". But there's another dynamic crippling American retailers--a shrinking middle class exacerbated by a widening inequality gap. Between 1971 and 2015, the share of US income held by America's middle earners has contracted from 61% to 50%, according to Pew Research. Wealthy families had three times as much wealth as middle-income families in 1983; by 2013, they had seven times as much.

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In response to their own economic woes, middle-class consumers have shifted away towards discount retailers. The fastest-expanding retailers in the US are cheap, "fast-fashion" brands like Zara and H&M--and dollar stores. While the revenue of department stores in those malls is declining, Dollar General and Dollar Tree are growing at 6.4% and 7.5%, respectively. And investors have noticed, sending Dollar General's and Dollar Tree's stock up 23% and 36%, respectively, this year while the S&P Retail Index has been flat.

[The typical Dollar General customer profile is:] [The Customer] lives in a two-income household, making $40,000 per year before taxes; Employment has been stable but wage growth has been choppy. This year, her disposable income is around 2%, so $800 per year; This is well below her 20-year average of 3.5-3.8% and she is sensitive to price changes, by as little as a dime...

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iehi-feed-63353 Sat, 02 Dec 2017 16:19:55 GMT Brexit May Leave Banks on the Hook for Impossible Contracts http://implode-explode.com/viewnews/2017-12-02_BrexitMayLeaveBanksontheHookforImpossibleContracts.html A week ago, data from the European Banking Authority showed the scope of the issue, and that money is already on the move partly for this reason. European banks have slashed their U.K. assets by $425 billion, driven by a 35 percent drop in derivatives exposures. Insurance policies are affected too, with Carney saying that about 20 billion pounds ($26.9 billion) of insurance liabilities in Britain could be affected without swift action.

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"A bank which enters into a contract which becomes illegal to perform by reason of Brexit may well be liable in damages for its non-performance to the counterparty," said Gleeson. "Dealing with this is so much in everyone's interest that I'm amazed it hasn't been addressed."

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iehi-feed-63348 Sat, 02 Dec 2017 00:34:19 GMT Regulator allows bitcoin futures trading on major U.S. exchange starting this month http://implode-explode.com/viewnews/2017-12-01_RegulatorallowsbitcoinfuturestradingonmajorUSexchangestartingthi.html A federal regulator [the CFTC] gave the go-ahead on Friday to the CME Group to start trading bitcoin futures later this month, the first time the digital currency will be traded on a Wall Street exchange and subject to federal oversight.

CME, which owns the Chicago Mercantile Exchange, will start trading bitcoin futures Dec. 18, the company said. The Commodities Futures Trading Commission, the primary regulator for exchanges like the CME, gave approval for the exchange to create bitcoin futures after six weeks of talks.

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The price of bitcoin futures will be based on the price the digital currency is going for on its major exchanges -- Bitstamp, GDAX, itBit and Kraken. Due to volatility, the futures will have higher margin levels and intraday price limits, CME said.

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iehi-feed-63336 Tue, 28 Nov 2017 20:57:33 GMT The chained CPI: Another secret tax hike for the middle class slipped into the GOP tax bills http://implode-explode.com/viewnews/2017-11-28_ThechainedCPIAnothersecrettaxhikeforthemiddleclassslippedintothe.html What Republicans really like about the chained CPI is that it tends to show a lower inflation rate than the alternative, typically by 0.3 percentage point a year. The difference pencils out to significant dollars: Changing the inflation index immediately would raise about $125 billion over the next decade and nearly $500 billion in the decade after that, according to the Tax Policy Center.

Most of that money would come out of the pockets of middle- and working-class taxpayers. Most important, it would slow inflation adjustments to tax brackets. This would hurt those taxpayers because more of them would move into higher tax brackets purely because of inflation in their wages. High-income taxpayers who already pay the top tax rate wouldn't be affected the same way.

The chained CPI also would reduce inflation increases in provisions such as the standard deduction, personal exemption, earned income tax credit and the alternative minimum tax. Personal exemptions and the AMT are marked for repeal in the GOP tax bills, but if they survive or are supplanted by other inflation-indexed provisions, the chained CPI would represent a tax increase on their users. In any event, as Howard Gleckman of the Tax Policy Center recently observed, the Republican plan is to replace the inflation-indexed personal exemption with a larger but non-indexed child tax credit. Leaving the latter unindexed would erode its value over time.

What's insidious about the chained CPI is that its effect is modest at first, but compounds over time. After 10 years the shortfall compared with the standard CPI is more than three percentage points; after 20 years, more than six.

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One other thing: Inserting the chained CPI into the tax code could be a Trojan horse to infiltrate other government programs, notably Social Security. But that would be only the start. The Congressional Budget Office noted in a 2010 report that the federal poverty level is indexed to a standard CPI; changing that to the chained CPI would affect all programs whose budgets or benefits are keyed to the poverty level, including Head Start, food stamps and "the National School Lunch Program, the Low-Income Home Energy Assistance Program, the Children's Health Insurance Program, and parts of Medicaid." Republicans already have their daggers out for some of these programs; the chained CPI would represent just the first prick.

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iehi-feed-63311 Sun, 19 Nov 2017 04:42:13 GMT Trump's Saudi Scheme Unravels http://implode-explode.com/viewnews/2017-11-18_TrumpsSaudiSchemeUnravels.html Why did Trump gamble so heavily on the inexperienced Kushner and the impulsive MbS? Well, of course, if such a "grand plan" had indeed worked out, it would have been a major foreign policy coup -- and one done over the heads of the professional foreign policy and defense echelon who were excluded from it. Trump then would have felt himself freer to ascend above the Establishment tentacles: to attain a certain elevated independence and freedom from his "minders." He would have achieved his coup through family channels, rather than be officially advised.

But, if it sinks into farce, and MbS becomes regarded in the U.S. as a maverick, rather than a Machiavelli, the (slighted) "system" will exact its revenge: presidential judgments will stand devalued -- and ever more in need of justification and "minding."

MbS (and Kushner) may have hurt President Trump in a much wider way therefore: the failed bet on the untried MbS may leach into other spheres -- such as, in consequence, U.S. allies' openly questioning the soundness of Trump's North Korea judgments. In short, the U.S. President's credibility will bear the consequences for his falling for MbS' spin.

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iehi-feed-63300 Sat, 18 Nov 2017 00:01:17 GMT Wall St. traders secretly used chat rooms to rig Treasury bond prices: suit http://implode-explode.com/viewnews/2017-11-17_WallSttraderssecretlyusedchatroomstorigTreasurybondpricessuit.html The new accusations, leveled by several pension funds and wealthy individual investors, are contained in an expanded class-action suit originally filed in July 2015 -- and include an unusual twist: Some of the evidence came from confidential informants and one of the banks sued in the earlier action.

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The funds, representing retirees and public workers, also claim the banks conspired to rig the secondary Treasury markets beginning in the 1990s through tightly controlled electronic platforms that inhibited more competitive trading -- a new allegation that wasn't in the original suit but mirrors similar complaints filed against banks in other markets, like stock loans.

The amended suit tightens its focus on a select number of banks, naming Goldman Sachs, Morgan Stanley, the Royal Bank of Scotland, BNP Paribas, and UBS, among others, as the firms behind the rigging, which they allege occurred from Jan. 1, 2007, to mid-2015.

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iehi-feed-63299 Fri, 17 Nov 2017 23:58:30 GMT Saudi Arabia Offers Arrested Royals A Deal: Your Freedom For Lots Of Cash http://implode-explode.com/viewnews/2017-11-17_SaudiArabiaOffersArrestedRoyalsADealYourFreedomForLotsOfCash.html Saudi authorities are negotiating settlements with princes and businessmen held over allegations of corruption, offering deals for the detainees to pay for their freedom, people briefed on the discussions say.

 

In some cases the government is seeking to appropriate as much as 70 per cent of suspects' wealth, two of the people said, in a bid to channel hundreds of billions of dollars into depleted state coffers.

 

The arrangements, which have already seen some assets and funds handed over to the state, provide an insight into the strategy behind Crown Prince Mohammed bin Salman's dramatic corruption purge.

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Regular Saudis, who've seen their benefits cut and some of their jobs taken away, support MbS's decision. "Why should the poor take all the pain of austerity," said one Saudi academic. "The rich need to pay their way too."

In Saudi Arabia, they are about to do just that.

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iehi-feed-63285 Tue, 14 Nov 2017 20:54:24 GMT Venezuela's Bondholder Meeting Is a Bust as S&P Declares Default http://implode-explode.com/viewnews/2017-11-14_VenezuelasBondholderMeetingIsaBustasSPDeclaresDefault.html Venezuela's grand gathering with creditors Monday lasted all of 30 minutes and didn't produce anything of substance. To make matters worse, S&P Global Ratings declared the country in default while Fitch Ratings cited missed payments by the state oil company prompting a fresh selloff in the nation's bonds.

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Very little was announced and nothing was resolved, according to attendees who said they left just as confused about the government's intentions as they were going in. Vice President Tareck El Aissami was the only official to speak, and devoted most of his prepared remarks to railing against Donald Trump and global financiers who he said have conspired to keep the country from making debt payments on time. He pledged the nation would continue to honor its obligations and work with bondholders to find new ways to get them their money, but offered no concrete proposals for restructuring.

President Nicolas Maduro had summoned holders of some $60 billion of bonds issued by the government and state oil company Petroleos de Venezuela SA to begin a renegotiation as the nation's cash crunch worsens, sanctions make it difficult to transfer money and delayed payments pile up.

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The nation, home to the world's largest oil reserves, owed investors about $200 million and failed to make those payments by the end of a 30-day grace period, S&P said in the statement in which it lowered the country's rating to SD. Plagued with payment delays and running low on cash -- and with most of its debt trading near 30 cents on the dollar -- it's the first time in recent years the government has exceeded the buffer period on its bonds.

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Investors in Venezuela's $5 billion of bonds maturing in 2019 and 2024 can organize to demand that the nation immediately pay back all they're owed, and down the line, holders of the nation's other debt, which have cross-default provisions, could choose to do the same... they risk setting off what could be the start of one of the messiest debt restructurings ever. S&P said there was a 50 percent chance Venezuela will default again within the next three months.

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iehi-feed-63284 Tue, 14 Nov 2017 19:59:00 GMT Ray Dalio Buys $500 Million In Gold EFTs In Q3 http://implode-explode.com/viewnews/2017-11-14_RayDalioBuys500MillionInGoldEFTsInQ3.html iehi-feed-63264 Thu, 09 Nov 2017 17:51:31 GMT Dissecting the "$250 Billion" China Deals Trump Got for U.S. http://implode-explode.com/viewnews/2017-11-09_Dissectingthe250BillionChinaDealsTrumpGotforUS.html The White House has unveiled a slew of agreements with China as President Donald Trump seeks to address an imbalance in trade. While Commerce Secretary Wilbur Ross boasted a total of $250 billion in business deals, getting to that figure may require some fuzzy math. 

Many of the deals weren't broken out into separate valuations, while a large number were in the form of non-binding memoranda of understanding or involved agreements with existing Chinese partners.

Boeing Co.'s $37 billion aircraft order consists mostly of previously agreed deals, according to officials with knowledge of the matter. An agreement involving Cheniere Energy Inc. was presented at the signing ceremony as worth $11 billion, though neither company involved announced the value. Other pacts are stretched over lengthy periods, such as a 20-year shale gas and chemical project in West Virginia.

Still, the wave of deals signals the potential for an easing of tensions between the two countries, in addition to an increase in trade for products ranging from helicopters to beef...

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iehi-feed-63263 Thu, 09 Nov 2017 17:50:18 GMT Bitcoin Fork Called Off: Prices Soar After SegWit2X Fails http://implode-explode.com/viewnews/2017-11-09_BitcoinForkCalledOffPricesSoarAfterSegWit2XFails.html The price of a bitcoin went on a tear on Wednesday in response to news that proponents of a controversial "hard fork" had suspended their plans to create a parallel version of the digital currency.

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If the controversy had not been resolved, the world's most famous cryptocurrency faced the very real possibility of splitting in two--with no clear consensus on which version was the "real" bitcoin. (You can read all the details about the proposed fork here).

In their email, the SegWit2X advocates said they still believed bitcoin needed to redesign its software to accommodate larger transaction blocks. (The controversy turned on whether bitcoin blocks should increase from 1MB to 2MB.)

But they feared the fight over the fork had become disruptive...

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iehi-feed-63252 Sun, 05 Nov 2017 17:15:07 GMT Bitcoin $11,000 and Official, Blockchain-Based Gold Trading Soon http://implode-explode.com/viewnews/2017-11-05_Bitcoin11000andOfficialBlockchainBasedGoldTradingSoon.html iehi-feed-63251 Sun, 05 Nov 2017 17:12:48 GMT What Happened in Saudi Arabia Last Night -- And How Washington Corruption Enabled It http://implode-explode.com/viewnews/2017-11-05_WhatHappenedinSaudiArabiaLastNightAndHowWashingtonCorruptionEnab.html The move marks a moment of reckoning for Washington's foreign policy establishment, which struck a bargain of sorts with the Crown Prince Mohammed bin Salman, known as MBS, and Yousef Al Otaiba, the United Arab Emirates ambassador to the U.S. who has been MBS's leading advocate in Washington. The unspoken arrangement was clear: The UAE and Saudi Arabia would pump millions into Washington's political ecosystem while mouthing a belief in "reform," and Washington would pretend to believe that they meant it. MBS has won praise for some policies, like an openness to reconsidering Saudi Arabia's ban on women drivers.

Meanwhile, however, the 32-year-old MBS has been pursuing a dangerously impulsive and aggressive regional policy, which has included a heightening of tensions with Iran, a catastrophic war on Yemen, and a blockade of ostensible ally Qatar. Those regional policies have been disasters for the millions who have suffered the consequences, including the starving people of Yemen, as well as for Saudi Arabia, but MBS has dug in harder and harder. And his supporters in Washington have not blinked.

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iehi-feed-63250 Sun, 05 Nov 2017 15:41:23 GMT Noland: "Non-ideologue Powell Could Be A Benefit At Fed" http://implode-explode.com/viewnews/2017-11-05_NolandNonideologuePowellCouldBeABenefitAtFed.html

Bloomberg's Tom Keene: "Ellen Zentner at Morgan Stanley writes a detailed note about what we would expect from chairman Powell. She mentions that there's a mystery here over chairman Powell and core economics, including NAIRU [non-accelerating inflation rate of unemployment]... Does it matter that chairman Powell maybe has a little fuzzy knowledge of NAIRU like mere mortals like me?"

Former Minneapolis Fed President Gary Stern: "No. And, in fact, I might view that as an advantage. Because that framework is frayed at best, it seems to me given our economic performance over the past "X" years -- and "X" is not a small number. So, I think some open-mindedness on that framework is a distinct positive. And I think it would be worthwhile for a fair amount of resources to be devoted to a pretty thorough review of some of the critical macroeconomic issues and frameworks of the day, because they have not all served policymakers well; they have not all served commentators well; they have not all served the Street well. And I think it would be a good idea to open some of that up."

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iehi-feed-63249 Sun, 05 Nov 2017 05:23:48 GMT In Apparent Purge, Saudi King Arrests Billionaire Prince Bin Talal, Dozens Of Others In Cabinet Crackdown http://implode-explode.com/viewnews/2017-11-05_InApparentPurgeSaudiKingArrestsBillionairePrinceBinTalalDozensOf.html iehi-feed-63247 Sat, 04 Nov 2017 14:49:19 GMT 'No deal' Brexit could add £930 a year to UK shopping bills, say experts http://implode-explode.com/viewnews/2017-11-04_NodealBrexitcouldadd930ayeartoUKshoppingbillssayexperts.html iehi-feed-63245 Sat, 04 Nov 2017 14:33:46 GMT Lobbying Frenzy Begins on Tax Bill; Party-Line Vote Ability In Doubt http://implode-explode.com/viewnews/2017-11-04_LobbyingFrenzyBeginsonTaxBillPartyLineVoteAbilityInDoubt.html The Republican tax rewrite unveiled on Thursday has set off a scramble among lobbyists and interest groups desperate to preserve prized tax breaks that are suddenly at risk in the sweeping bill moving through the House.

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The rapid pace set out by Republican leaders is by design: They want to prevent the kind of arm-twisting that has long bedeviled previous tax overhaul efforts by leaving little time for outside groups to blitz lawmakers with concerns. Several consultants and lobbyists said on Friday that individual companies were just beginning to digest how the 400-plus page bill, which drastically changes how American businesses are taxed at home and abroad, would affect their bottom lines.

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The groups pushing back the hardest on Friday included those in the real estate industry. Some of them had raised concerns before the bill was released, only to discover their biggest fears realized in the draft legislation. The bill includes several measures long opposed by those groups, including a limit on interest deductions for new home purchases of $500,000 or more and an expansion of the standard deduction.

The Mortgage Bankers Association plans conference calls and discussions with members of Congress throughout the weekend, said David Stevens, the group's president. Realtors are running online ads raising concerns over those provisions.

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Representative Kevin Brady of Texas, the chairman of the House Ways and Means Committee, said no decision had been made about whether to include repeal of the so-called individual mandate. But he said Mr. Trump wants its inclusion, and he indicated that Republicans wanted to evaluate the fiscal effects of taking that step. Senate Republicans may not be as enthused about its inclusion.

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[However, a Tax Foundation] analysis found that the draft legislation would cost too much to survive the budgetary requirements needed to pass the Senate on a party-line vote -- a sign that Republicans will almost certainly need to rework it in order to keep their hopes alive for delivering a bill to Mr. Trump's desk by December.

The analysis found that the bill would add $2 trillion to the federal budget deficit over the next decade, an amount that shrinks to $1 trillion even when additional economic growth effects from the bill are factored in.

"This does not pay for itself," said Scott Greenberg, a senior analyst at the Tax Foundation.

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iehi-feed-63235 Thu, 02 Nov 2017 17:57:39 GMT Bitcoin blasts past $7,000 to reach another record high in 2017 http://implode-explode.com/viewnews/2017-11-02_Bitcoinblastspast7000toreachanotherrecordhighin2017.html