Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-62791 Wed, 16 Aug 2017 00:47:21 GMT Ten years after the crash, there's barely suppressed civil war in Britain http://implode-explode.com/viewnews/2017-08-15_TenyearsafterthecrashtheresbarelysuppressedcivilwarinBritain.html One truism of this era is that the average British worker earns less after inflation than they did when RBS nearly died. Most of us have seen not a recovery, but a ripping up of our social contract -- so that over 7 million Britons are now in precarious employment. But the highest earners are way ahead of where they were in 2008. Finance-sector bonuses are as generous as they were during the boom, while a bad year for the average FTSE boss is one in which he or she pulls in a mere £4.53m.

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The banks got bailed out. Their bosses still get paid out. The rest of us get austerity. Whatever technical reforms have followed on from the crash, the economic and business model that created it remains intact. We could have used the nationalised banks to direct credit to strategic industries and regions; instead, Labour and the Tories insisted on treating them as if they were still private sector industries. We could have used the crash to make Britain a far more equal and democratic society. Instead, the UK is still grossly unequal.

And so we remain reliant on debt -- aptly termed "the raw material for bubbles and crashes" by Daniel Mügge at the University of Amsterdam. According to the Bank for International Settlements, the UK is far deeper in the red now than it was when Northern Rock collapsed. Government debt has shot up under the Conservatives, but so too has household borrowing. Were the UK to crash again, its government no longer has the political capital nor the fiscal headroom to save the financial system. And with interest rates scraping along the bottom, the Bank of England has barely any firepower left. Ten years of political fudge and failed austerity has left Britain's state machinery tapped out.

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iehi-feed-62790 Wed, 16 Aug 2017 00:37:40 GMT China Imposes Ban on Imports From North Korea, Heeding Trump's Calls http://implode-explode.com/viewnews/2017-08-15_ChinaImposesBanonImportsFromNorthKoreaHeedingTrumpsCalls.html iehi-feed-62788 Wed, 16 Aug 2017 00:05:12 GMT Rogoff, Orwell and Kafka http://implode-explode.com/viewnews/2017-08-15_RogoffOrwellandKafka.html iehi-feed-62787 Tue, 15 Aug 2017 22:57:11 GMT "Ignorance, indifference or utter disregard of the law" - Kushner Companies hit with rent-stabilization lawsuit in Brooklyn Heights http://implode-explode.com/viewnews/2017-08-15_IgnoranceindifferenceorutterdisregardofthelawKushnerCompanieshit.html iehi-feed-62786 Tue, 15 Aug 2017 21:52:38 GMT Trump Financial Regulatory Rollback Proceeds http://implode-explode.com/viewnews/2017-08-15_TrumpFinancialRegulatoryRollbackProceeds.html iehi-feed-62785 Tue, 15 Aug 2017 19:56:52 GMT Looming housing slowdown clouds Home Depot's strong results http://implode-explode.com/viewnews/2017-08-15_LoominghousingslowdowncloudsHomeDepotsstrongresults.html iehi-feed-62784 Tue, 15 Aug 2017 19:39:21 GMT Is FOMO (Fear of Missing Out) Driving Up Consumer Debt? http://implode-explode.com/viewnews/2017-08-15_IsFOMOFearofMissingOutDrivingUpConsumerDebt.html iehi-feed-62783 Tue, 15 Aug 2017 17:55:28 GMT Fifth leader resigns from Trump's manufacturing council http://implode-explode.com/viewnews/2017-08-15_FifthleaderresignsfromTrumpsmanufacturingcouncil.html iehi-feed-62782 Tue, 15 Aug 2017 15:46:06 GMT The Next Tech Crash Could Delay Your Retirement By A Decade http://implode-explode.com/viewnews/2017-08-15_TheNextTechCrashCouldDelayYourRetirementByADecade.html DOT COM Bubble Do-Over?.]]> iehi-feed-62781 Tue, 15 Aug 2017 15:39:30 GMT Hartford, CT, With Its Finances in Disarray, Veers Toward Bankruptcy http://implode-explode.com/viewnews/2017-08-15_HartfordCTWithItsFinancesinDisarrayVeersTowardBankruptcy.html ... the state capital is teetering on the brink of bankruptcy, and the turbulence rocking Hartford has served as a stark reminder of the gulf between the affluent enclaves that drive Connecticut's wealth and its larger cities that have long grappled with high crime, underperforming schools and unsure financial footing.

The problems in Hartford are similar to some other cities across the United States that have sought relief through bankruptcy: its tax base and population have shrunk and its pension obligations and debts have piled up. City officials, who are confronting a budget deficit approaching $50 million, have already made deep cuts in services, sought concessions from labor unions representing public employees and have taken steps, such as hiring lawyers, to position the city to be able to file for bankruptcy.

At the same time, Hartford has looked to the state for help, only to find that financial situation is also in disarray. The state, which has a deficit of about $3.5 billion, started the fiscal year on July 1 without a budget after months of wrangling in the State Legislature and a resolution could be weeks away.

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Connecticut has the greatest degree of income inequality of any state, according to Daphne A. Kenyon, an economist who studies local taxation at the Lincoln Institute of Land Policy, a research institute in Cambridge, Mass. That, she said, has translated into an extreme in "haves" and "have-nots" among its municipalities.

Cities and towns in Connecticut rely to an unusual degree on property taxes to finance their operations, a system that works well for more affluent communities, like Greenwich and Darien. But it is proving disastrous for a city like Hartford, which has one of the highest property tax rates in the state, but still cannot raise enough money to pay for basic government operations. Last year, state grants and assistance covered about half of the city's $566 million budget.

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Beyond the city's core, blocks are dotted with blighted buildings, some appearing to be overtaken by nature. Residents complain of parks that are poorly maintained and have expressed concern over violent crime. The Police Department is significantly understaffed, officials said, having lost more than 100 officers in recent years. The city's library system recently announced the closure of three of its branches and other cuts have threatened community events, like parades and festivals.

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Hartford also has a fundamental tax problem: It is home to government buildings and other properties it has no power to tax, making up just over half the real estate in the city. Connecticut accounts for that by promising to compensate the capital for the forgone property taxes, but in practice, the flow of money has been unreliable. The mayor described the city as being in a situation that forces an urban center to operate with a tax base similar to that of a suburb. "And it's a structure not built to work," Mr. Bronin said.

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In July, Moody's Investors Service downgraded Hartford's debt after the city disclosed that it had hired a law firm to advise it on a possible debt restructuring. Both Moody's and Standard & Poor's now rate Hartford's debt in the junk range, signaling a greater likelihood of some sort of default on bond payments.... Some contend that filing for bankruptcy is inevitable and is the city's best option. But there is also a pervasive sense in the city, especially among public employee labor unions, that bankruptcy could have devastating consequences and should be vigorously avoided.

... Hartford would be the first state capital to file under Chapter 9 of the federal bankruptcy code. (Harrisburg, the Pennsylvania capital, tried to declare bankruptcy in 2011, but state lawmakers there passed a bill to thwart the case from proceeding.)

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iehi-feed-62780 Tue, 15 Aug 2017 13:32:11 GMT Taibbi: Is LIBOR, Crucial Financial Benchmark, a Complete Fabrication? http://implode-explode.com/viewnews/2017-08-15_TaibbiIsLIBORCrucialFinancialBenchmarkaCompleteFabrication.html It... makes sense in theory to use LIBOR as a benchmark for borrowing rates on car loans or mortgages or even credit cards. But that's only true if LIBOR is actually measuring something... Theoretically, a fine system. Measuring how scared banks are to lend to each other should be a good way to gauge market stability. Except for one thing: banks haven't been lending to each other for decades.

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For decades now, the world's biggest banks have been dutifully reporting a whole range of numbers every morning at 11 a.m. London time -- the six-month Swiss franc rate, the three-month yen, the one-month dollar, etc. And none of it seems to have been real.

These numbers, even when sociopathic lunatics weren't fixing them, were arbitrary calculations based on previous, similarly arbitrary calculations -- a rolling fantasy that has been gathering speed for decades.

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Since we now know those rates are not based on reality -- there isn't a funding market -- that means hundreds of trillions of dollars of transactions have been based upon a fraud. Some canny law firm somewhere is going to figure this out, sooner rather than later, and devise the world's largest and most lucrative class-action lawsuit: Earth v. Banks.

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iehi-feed-62779 Mon, 14 Aug 2017 18:17:10 GMT Bitcoin Surges Past $4,000 on Speed Breakthrough http://implode-explode.com/viewnews/2017-08-14_BitcoinSurgesPast4000onSpeedBreakthrough.html "Up until now a lot of people didn't really believe bitcoin could go any higher until the scaling issue is resolved," said Arthur Hayes, Hong Kong-based founder of bitcoin exchange BitMEX. "With this actually being implemented on protocol, theoretically the amount of transactions that can be processed at a reasonable speed is going to be much higher, so a lot of people are very bullish about bitcoin now."

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The cryptocurrency's staggering price surge has bolstered related businesses. Digital currency exchange Coinbase Inc. announced Thursday it's received a $100 million investment. The supply of bitcoin is capped at 21 million, compared with 16.5 million that had been mined as of Saturday, according to blockchain.info.

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iehi-feed-62778 Mon, 14 Aug 2017 16:47:29 GMT Fighting Unfair Student Loan Collection Practices http://implode-explode.com/viewnews/2017-08-14_FightingUnfairStudentLoanCollectionPractices.html iehi-feed-62777 Mon, 14 Aug 2017 15:02:20 GMT Worst Restaurant Recession since 2009 Digs Inflation http://implode-explode.com/viewnews/2017-08-14_WorstRestaurantRecessionsince2009DigsInflation.html iehi-feed-62772 Sun, 13 Aug 2017 18:01:17 GMT The Euro Area Is Due for a Reboot. Here's What Is Being Proposed http://implode-explode.com/viewnews/2017-08-13_TheEuroAreaIsDueforaRebootHeresWhatIsBeingProposed.html The French president is pushing for greater fiscal integration among the 19 nations that now use the euro as a way to address at least some of those shortcomings. With Germany indicating an openness to Macron's calls, the political stars may be aligning to overhaul the euro, and so reboot the European Union.

On the table are: a common budget, a single finance minister, debt sharing (commonly-guaranteed debt), a European monetary fund (built out of the ESM), and a full banking union (common deposit-guarantee).

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iehi-feed-62770 Sun, 13 Aug 2017 17:30:53 GMT Italy's Midsummer Dream: Shaking Off Sick Man of Europe Label http://implode-explode.com/viewnews/2017-08-13_ItalysMidsummerDreamShakingOffSickManofEuropeLabel.html Finance Minister Pier Carlo Padoan has downplayed the effect of less expansionary monetary conditions, telling SkyTg24 television on Aug. 3 that the economy is strong enough to withstand higher interest rates and bond yields.

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The summer season had opened with Prime Minister Paolo Gentiloni's government orchestrating the rescue of three lenders, including the world's oldest, Banca Monte dei Paschi di Siena SpA, that required months of negotiations with European Union authorities. The moves will alleviate another burden on the nation's economy.

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Consumer confidence remains a dark spot in a generally improving economic picture. Household morale has been on a downward trend since November 2015, in contrast to an improvement in the manufacturing confidence index that matched the highest in almost a decade last month.

That's because, according to the IMF, average Italians still earn less than they did two decades ago.

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iehi-feed-62769 Sun, 13 Aug 2017 17:24:49 GMT Greece seen needing credit line to exit program http://implode-explode.com/viewnews/2017-08-13_Greeceseenneedingcreditlinetoexitprogram.html For Greece to make a clean exit from its program, it needs the full confidence of the markets so that it can borrow at a reasonable rate. Sources on the institutions' side do not believe this will be possible. The credit line would provide some security, helping secure better borrowing terms from the market. Exactly what will happen, though, is still under discussion.

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The government does not expect the review to be a walk in the park. In fact, sources suggest that Finance Ministry officials expect several issues, such as a cuts to benefits, will be tricky. Nevertheless, Athens aims to complete the review by the end of the year. This will involve wrapping up 90 out of 113 prior actions, sources say.

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iehi-feed-62768 Sun, 13 Aug 2017 17:13:26 GMT China Takes On State-Owned Firms http://implode-explode.com/viewnews/2017-08-13_ChinaTakesOnStateOwnedFirms.html A little-noticed statement last week could portend the next big battle in China's effort to control its debt. On Aug. 2, the finance ministry issued directives that state-owned companies improve returns, control risks and make sure that "projects are financially viable before decisions are made."

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SOEs are huge, and so are their liabilities. They're responsible for non-financial corporate debt equal to 90 percent of gross domestic product. Facing limited competitive pressure, they've driven the worst of China's debt-led excess: Return on assets for these firms in 2016 was a paltry 2.9 percent, compared to 10.2 percent in the private sector.

One reason is that China's banking industry, which is itself almost exclusively state-owned, channels loans to SOEs in the expectation that they'll have an implicit government guarantee. SOEs provide only 16 percent of China's jobs and less than a third of its output, but they receive an astonishing 30 percent of all loans. With credit so easily available, they have little incentive to economize.

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iehi-feed-62767 Sun, 13 Aug 2017 13:53:46 GMT Trump opens door to investigating China's ‘theft' of US intellectual property http://implode-explode.com/viewnews/2017-08-13_TrumpopensdoortoinvestigatingChinastheftofUSintellectualproperty.html Trump advisers said the president on Monday plans to sign an executive memorandum, which is a step below an executive order, directing trade officials to investigate China's "acts, policies or practices" that violate international protections for American intellectual property, innovations and technology.

In related matters, Chinese leader Xi Jinping urged restraint in a phone call with Trump on Saturday, warning that "concerned parties" should avoid "remarks and actions" that could escalate tensions on the Korean peninsula.

Maybe if China just calms Trump down, that will constitute "help on North Korea" ...

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iehi-feed-62764 Sun, 13 Aug 2017 04:35:47 GMT Battle of the Behemoths - Kunstler http://implode-explode.com/viewnews/2017-08-13_BattleoftheBehemothsKunstler.html