Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-59863 Mon, 23 May 2016 17:43:21 GMT Bank of America wins reversal of $1.27 billion penalty in Countrywide "Hustle" mortgage case http://implode-explode.com/viewnews/2016-05-23_BankofAmericawinsreversalof127billionpenaltyinCountrywideHustlem.html A U.S. appeals court on Monday overturned a jury's finding that Bank of America Corp was liable for mortgage fraud leading up to the 2008 financial crisis, tossing a $1.27 billion penalty and dealing the U.S. Justice Department a major setback.

The 2nd U.S. Circuit Court of Appeals in New York ruled that the proof was insufficient under federal fraud statutes to establish liability in connection with a mortgage program called "Hustle" run by the former Countrywide Financial Corp.

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But U.S. Circuit Judge Richard Wesley said the evidence at most showed Countrywide breached contracts to sell Fannie and Freddie loans of a specified quality, but that no proof existed to show it intended to deceive the buyers when those contracts were executed.

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The Justice Department contended the program rewarded staff for generating more mortgages and emphasizing speed over quality and resulted in Fannie Mae and Freddie Mac being lied to about the quality of loans they bought.

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iehi-feed-59861 Mon, 23 May 2016 16:57:57 GMT R.I.P., GOP: How Trump Is Killing the Republican Party | Matt Taibbi http://implode-explode.com/viewnews/2016-05-23_RIPGOPHowTrumpIsKillingtheRepublicanPartyMattTaibbi.html One could say this was just a calamitous strategic misread on the part of the Koch-brothers types. But another way to look at it is that this was the inevitable consequence of the basic dynamic of the party, which by the end was little more than a collection plate for global business interests that were, if not foreign exactly, certainly nationless.

There was a time in this country -- and many voters in places like Indiana and Michigan and Pennsylvania are old enough to remember it -- when business leaders felt a patriotic responsibility to protect American jobs and communities... That sense of noblesse oblige disappeared somewhere during the past generation, when the newly global employer class cut regular working stiffs loose, forcing them to compete with billions of foreigners without rights or political power who would eat toxic waste for five cents a day.

Then they hired politicians and intellectuals to sell the peasants in places like America on why this was the natural order of things. Unfortunately, the only people fit for this kind of work were mean, traitorous scum, the kind of people who in the military are always eventually bayoneted by their own troops. This is what happened to the Republicans, and even though the cost was a potential Trump presidency, man, was it something to watch.

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There never was any real connection between the George Wills, Andrew Sullivans and David Brookses and the gun-toting, Jesus-loving ex-middle-class voters they claimed to embrace. All those intellectuals ever did for Middle America was cook up a sales pitch designed to get them to vote for politicians who would instantly betray them to business interests eager to ship their jobs off to China and India. The most successful trick was linking the corporate mantra of profit without responsibility to the concept of individual liberty.

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iehi-feed-59860 Mon, 23 May 2016 15:01:46 GMT Switzerland To Vote on 2500 franc/mo Basic Income http://implode-explode.com/viewnews/2016-05-23_SwitzerlandToVoteon2500francmoBasicIncome.html iehi-feed-59859 Mon, 23 May 2016 14:38:15 GMT Why The Flyover Zone Is Hurting: Bubble Finance Is Strictly For The Bicoastal Elites | Stockman http://implode-explode.com/viewnews/2016-05-23_WhyTheFlyoverZoneIsHurtingBubbleFinanceIsStrictlyForTheBicoastal.html iehi-feed-59857 Mon, 23 May 2016 14:30:19 GMT PIMCO: Fed Should Buy Gold At $5000/oz To Jumpstart Inflation http://implode-explode.com/viewnews/2016-05-23_PIMCOFedShouldBuyGoldAt5000ozToJumpstartInflation.html iehi-feed-59856 Mon, 23 May 2016 14:25:40 GMT Das: The global economy is no Lazarus -- the outlook is bleak http://implode-explode.com/viewnews/2016-05-23_DasTheglobaleconomyisnoLazarustheoutlookisbleak.html The fact that current policies have not led to a recovery after six years suggests that they are ineffective. A general lack of demand combined with demographics, slower improvements in productivity, reduced rates of innovation, resource constraints, environmental factors and rising inequality is likely to constrain growth. Overcapacity, technological improvements, competitive devaluations and a lack of pricing power is likely to keep inflation low, despite loose monetary conditions.

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The final scenario is the mother of all crashes. Financial system failures occur as a significant number of sovereigns, corporate and households are unable to service their debt. Defaults trigger problems in the banking system which leads to a major liquidity contraction, which in turn feeds back into real economic activity.

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Some historians view World War II as a continuation of World War I with an interval. Any new crisis is likely to be a further phase of the 2008 crisis, reflecting the fact that the causes remain largely unresolved. But a future downturn will exacerbated by several factors.

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iehi-feed-59851 Sun, 22 May 2016 15:52:16 GMT Greece Braces for More Austerity Amid EU-IMF Quarrel About Debt http://implode-explode.com/viewnews/2016-05-22_GreeceBracesforMoreAusterityAmidEUIMFQuarrelAboutDebt.html Greek Prime Minister Alexis Tsipras braces for yet another vote on additional austerity measures, as European creditors remain at loggerheads with the International Monetary Fund about how much debt relief the country will get for its pain... The Washington-based IMF proposed that interest and principal payments on Greece's European bailout loans be deferred until 2040, and that maturities on those loans will be extended to 2080, according to a document obtained by Bloomberg News. Even though European counter-proposals acknowledge that current Greek debt dynamics are unsustainable, they fall short of what the IMF wants, according to people familiar with the discussions that took place between government officials over the past week. Instead, the euro area expects Greece to maintain a budget surplus level which the IMF has said is a "far-fetched fantasy."

In the quarrel between creditors, Tsipras's government has sided with the euro area, and the measures being put to vote on Sunday assume that Greece will achieve a surplus before interest payments equal to 3.5 percent of gross domestic product by 2018. "Despite the fact the IMF has been pushing for debt relief for Greece, they are still perceived by the Greek public as austerity hawks," Eurasia Group analyst Mujtaba Rahman said in a note to clients on May 19.

After legislating fiscal measures equal to 1.7 percent of Greek GDP last summer, coalition lawmakers are being asked to approve another 3 percent of GDP in tax hikes and pension cuts this month, as well as an additional 2 percent of GDP in contingency measures, which will only be triggered if the country misses certain budget targets. Sunday's package includes among others:

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iehi-feed-59850 Sun, 22 May 2016 15:48:13 GMT Not Just Glyphosate: Monsanto's Roundup Contains Toxic Soup of Secret Ingredients http://implode-explode.com/viewnews/2016-05-22_NotJustGlyphosateMonsantosRoundupContainsToxicSoupofSecretIngred.html iehi-feed-59849 Sun, 22 May 2016 13:48:18 GMT The New Abnormal: "Disequilibrium Flirting with Deflationary Depression" http://implode-explode.com/viewnews/2016-05-22_TheNewAbnormalDisequilibriumFlirtingwithDeflationaryDepression.html iehi-feed-59848 Sat, 21 May 2016 22:09:34 GMT Fannie, Freddie and the Secrets of a Bailout With No Exit http://implode-explode.com/viewnews/2016-05-21_FannieFreddieandtheSecretsofaBailoutWithNoExit.html with the unsealing of documents this week that were produced as part of a lawsuit filed against the government, new evidence is coming to light on how intimately the White House was involved in the Treasury's decision in August 2012 to keep all the companies' profits for the government. That move effectively maintained Fannie's and Freddie's status as wards of the state.

The newly released documents go beyond previous disclosures in the case and make clear that the Obama administration never had any intention of restoring Fannie and Freddie, which enjoyed implicit backing from the government before the takeover, to their status as stand-alone entities.

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The new materials cast further doubt on arguments made in court by government lawyers that the profit sweep came about because Fannie and Freddie were in a death spiral and taxpayers needed protection from future losses. Documents unsealed last month also served to undermine that legal stance.

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Preventing the companies from using their profits to rebuild a strong capital position was an explicit goal of the Obama administration, the newly unsealed materials show. In an email sent the day the profit sweep was announced, Mr. Parrott said diverting Fannie's and Freddie's profits would eliminate "the possibility that they ever go (pretend) private again."

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The unsealed documents indicate an intense desire to get rid of Fannie and Freddie as independent entities once and for all. They do not show any concern among Treasury officials that their actions on the profit sweep might violate the law.

Another way to view this is that the Treasury simply knew it needed whatever subsidy it could squeeze out of F&F....

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iehi-feed-59846 Sat, 21 May 2016 16:16:21 GMT Cameron Narrowly Avoids Being Ousted From Office For Supporting TTIP (UK) http://implode-explode.com/viewnews/2016-05-21_CameronNarrowlyAvoidsBeingOustedFromOfficeForSupportingTTIPUK.html The prime minister has repeatedly told MPs that TTIP poses no threat to the NHS. Yet to avoid the abyss, his government has supported an amendment contrary to these assertions.

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TTIP started out as an obscure trade agreement that would create the world's biggest "free trade zone" between the US and EU, and received little media coverage or parliamentary debate. Two years ago very few politicians or journalists had even heard of it. Yet a movement has built against this deal, one that has stunned the negotiators and forced the EU trade commissioner to call TTIP "the most toxic acronym in Europe". That's because TTIP has little to do with selling more products. It's a charter for deregulation, which threatens to change the way we make decisions about laws. It even gives foreign business special "courts" through which they can sue governments for many decisions they don't like.

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Cameron is firmly pushing forward with the most extreme version of TTIP imaginable. But the ground is moving under him, and all the other politicians who can't break with the neoliberal orthodoxy of the last 40 years.

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iehi-feed-59840 Fri, 20 May 2016 21:22:19 GMT Britain is Posterchild for Manufacturing Neglect Leading to Economic Malaise http://implode-explode.com/viewnews/2016-05-20_BritainisPosterchildforManufacturingNeglectLeadingtoEconomicMala.html It's being blamed on the Brexit jitters. But the weakness in the UK economy that the latest figures reveal is actually a symptom of a much deeper malaise. Britain has never properly recovered from the 2008 financial crisis. At the end of 2015, inflation-adjusted income per capita in the UK was only 0.2% higher than its 2007 peak. This translates into an annual growth rate of 0.025% per year. How pathetic this performance is can be put into perspective by recalling that Japan's per capita income during its so-called "lost two decades" between 1990 and 2010 grew at 1% a year.

At the root of this inability to stage a real recovery is the serious imbalance that has developed in the past few decades -- namely, the over-development of the UK financial sector and the atrophy of manufacturing.

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This is remarkable, given that the value of sterling has fallen by around 30% since the crisis. In any other country a currency devaluation of this magnitude would have generated an export boom in manufactured goods, leading to an expansion of the sector.

... despite the relative increase in the importance of services, the manufacturing sector is still -- and will always be -- the main source of productivity growth and economic prosperity. It is a sector that is most open to the use of machines and chemical processes, which raises productivity. It is also where most research and development, which generates new technologies, is done.

Moreover, it is a sector that produces inputs that raise productivity in other sectors. For example, the recent rise in productivity in the service sector has happened mainly because it is using more advanced inputs produced in the manufacturing sector -- computers, fibre-optic cables, routers, GPS machines, more fuel-efficient cars, mechanised warehouses and so on.

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iehi-feed-59839 Fri, 20 May 2016 21:19:02 GMT Lacking new ideas, G7 deafults to 'go-your-own-way' approach http://implode-explode.com/viewnews/2016-05-20_LackingnewideasG7deafultstogoyourownwayapproach.html iehi-feed-59837 Fri, 20 May 2016 17:19:26 GMT SaxoBank CIO Warns "Central Banks Can Do Nothing" http://implode-explode.com/viewnews/2016-05-20_SaxoBankCIOWarnsCentralBanksCanDoNothing.html iehi-feed-59836 Fri, 20 May 2016 17:18:28 GMT Germany Strives to Avoid Housing Bubble by Forming New Policies http://implode-explode.com/viewnews/2016-05-20_GermanyStrivestoAvoidHousingBubblebyFormingNewPolicies.html iehi-feed-59835 Fri, 20 May 2016 16:41:34 GMT Japan and the U.S. are headed for a showdown over currency manipulation http://implode-explode.com/viewnews/2016-05-20_JapanandtheUSareheadedforashowdownovercurrencymanipulation.html iehi-feed-59834 Fri, 20 May 2016 16:36:54 GMT Temer Orders Military to Surround Residence of Dilma Rousseff http://implode-explode.com/viewnews/2016-05-20_TemerOrdersMilitarytoSurroundResidenceofDilmaRousseff.html iehi-feed-59833 Fri, 20 May 2016 15:00:54 GMT Study links student loans with lower net worth, housing values after college http://implode-explode.com/viewnews/2016-05-20_Studylinksstudentloanswithlowernetworthhousingvaluesaftercollege.html iehi-feed-59832 Fri, 20 May 2016 00:58:14 GMT Study Fuels Corporate "Double Tax" Reform Momentum, But Retirement Plans, Small Biz May Lose Out http://implode-explode.com/viewnews/2016-05-19_StudyFuelsCorporateDoubleTaxReformMomentumButRetirementPlansSmal.html ``The specter of double taxation, which animates complaints about today's U.S. corporate tax code, is receding, according to a new study from the Tax Policy Center. Tax-exempt and tax-preferred entities--such as 401(k) plans and other retirement accounts--own more than 75% of U.S. corporate stock, nearly opposite the prevailing pattern from 50 years ago, the study said.

The study is emboldening Senate Finance Chairman Orrin Hatch (R., Utah), who says he is within weeks of releasing a proposal that would largely end the remaining double taxation of corporate dividends by shifting the burden from highly mobile corporations to less mobile shareholders.

Sen. Hatch's plan would let companies deduct dividends, lowering their effective corporate tax rate as a backdoor way to reduce the U.S.'s world-high top statutory tax rate of 35%. Individual taxable shareholders' dividends would be taxed as ordinary income instead of at lower capital-gains rates. Those taxes would be directly withheld by companies when they pay dividends to investors.

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From 2010 to 2014, public companies with positive domestic pretax book income paid 32.2% of that income as dividends and another 43.4% as share repurchases, according to Mr. Merrill. Under Mr. Hatch's plan, companies would have greater incentives to increase dividends and substitute payouts for buybacks.

Mr. Hatch would also lessen or eliminate the tax code's bias toward debt financing, because companies can deduct interest payments to bondholders but not dividends to shareholders. To keep the plan from increasing budget deficits, Mr. Hatch may include a tax on interest paid to foreigners and tax-exempt entities to make sure someone pays tax on that business income.

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Dealing with tax-deferred investors--such as owners of 401(k) plans--is trickier. Sen. Ron Wyden (D., Ore.) said he was concerned about who might pay more. "This proposal looks like it could go from double-taxing corporate income to double-taxing retirement plans," he said.

This looks mostly good, assuming they fix the deferred-tax retirement plans issue. And what's not mentioned in here is the impact on small businesspersons -- i.e. those running S-corps, who currently benefit from the lower dividend tax rates on dividends they pay themselves. So a change could conceivably kill some significant number of small businesses. Considering these "losers", it's certainly strange we don't see a lot of discussion of keeping deductions/lower tax rates under a certain individual income cap...

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iehi-feed-59829 Thu, 19 May 2016 23:06:42 GMT Why Venezuela Could Be on the Brink of Collapse http://implode-explode.com/viewnews/2016-05-19_WhyVenezuelaCouldBeontheBrinkofCollapse.html