Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-61244 Tue, 06 Dec 2016 01:04:30 GMT Dallas Mayor Sues to Stop Public Pension "Run On The Bank" http://implode-explode.com/viewnews/2016-12-05_DallasMayorSuestoStopPublicPensionRunOnTheBank.html The police and firefighters of Dallas have pulled more than $500 million out of their retirement savings plan since early August, worried that their pension fund could soon run out of money. Now, Dallas Mayor Mike Rawlings is suing to stop them.

The Dallas mayor said he is acting in his private capacity as a Dallas taxpayer and paying for the suit himself. In a Monday court filing, Mr. Rawlings asks a Dallas County judge for a restraining order that temporarily halts withdrawals from the Dallas Police and Fire Pension Fund.

The revolt by members of the $2.27 billion fund heightens the risk that a major U.S. pension fund could run out of money. It also offers an extreme case of what can happen when a pension wagers on lucrative returns to cover funding shortfalls.

Many pension funds took on more risk in recent years to fill mounting funding gaps, hurt in part by declining bond yields that damped returns. Between 2007 and 2015, the average percentage of assets large pension plans parked in alternative investments or real estate grew to 17.6% from 10.1%, according to the Wilshire Trust Universe Comparison Service.

But Dallas is in a class by itself. The withdrawals since August represent an 18% drop in the fund's total assets, seriously reducing the fund's ability to earn money through investment.

"This particular circumstance is more akin to runs on the bank that you saw at the beginning of the Depression because people were afraid they weren't going to get their money," said Robert Klausner, an attorney who represents public pension funds.

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Officers say they are pulling their retirement savings because of concerns about the fund's finances. A series of aggressive real estate bets from Hawaii to Paris and a conflict over the value of those properties triggered more than $500 million in losses, leaving the fund with enough to pay just 45% of future benefits. Officials are warning the pension could go broke by 2027.

Dallas adopted its more aggressive strategy before the crisis, adding luxury homes and shopping centers in Hawaii, student housing in Texas, and raw land in Idaho and Colorado, records show.

The strategy appeared to be working, with Dallas returns often beating national medians. But that success received scrutiny in 2013 when the Dallas Morning News reported that many properties hadn't been appraised for years. Instead, certain holdings were valued based on their purchase price and in some cases by also adding development and operating expenses, said Chief Financial Officer Summer Loveland, who joined the fund in November 2013.

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iehi-feed-61243 Tue, 06 Dec 2016 00:54:36 GMT ECB Buys Record Amount of Debt as QE Frontloaded Before Holidays http://implode-explode.com/viewnews/2016-12-05_ECBBuysRecordAmountofDebtasQEFrontloadedBeforeHolidays.html iehi-feed-61242 Mon, 05 Dec 2016 23:29:35 GMT Gold: While Investors Sell, Collectors Stocking Up On Real Metal http://implode-explode.com/viewnews/2016-12-05_GoldWhileInvestorsSellCollectorsStockingUpOnRealMetal.html Even though investors can't seem to unload gold fast enough, coin collectors are benefitting, reports Bloomberg.  U.S. Mint gold-coin sales jumped for a fourth straight month, the longest streak since 2003. And in India, despite the fall in sales of jewelry due to demonetization, gold imports remained stable at around 100 tonnes in November (from 97 tonnes in October).

According to Bloomberg Intelligence, the five-year average gold premium is typically around $5.50 an ounce in China, but has soared to almost $40 an ounce, as falling prices invite "bargain buying" among the Chinese. As the Financial Times reports, China has curbed gold imports as the government tries to clamp down on capital leaving the country, along with the yuan falling to its lowest against the U.S. dollar in eight years.

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iehi-feed-61239 Mon, 05 Dec 2016 22:21:03 GMT Dow notches new record closing high as Street shrugs off Italian referendum http://implode-explode.com/viewnews/2016-12-05_DownotchesnewrecordclosinghighasStreetshrugsoffItalianreferendum.html U.S. equities closed higher on Monday, unfazed by a key vote in Italy which led to Prime Minister Matteo Renzi's resignation, as financials, technology and consumer discretionary stocks rose around 1 percent.

This is of course, self-perpetuating: if there's no crash, there's no reason to trade down. And the lack of any obvious market breakage after Brexit and Trump's victory has fed into that. But we expect the piper will yet be paid...

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iehi-feed-61235 Mon, 05 Dec 2016 15:30:06 GMT Greece must reform or leave eurozone, says Germany's Schäuble http://implode-explode.com/viewnews/2016-12-05_GreecemustreformorleaveeurozonesaysGermanysSchuble.html ``"Athens must finally implement the needed reforms," he told the newspaper Bild am Sonntag in an interview published on Sunday. "If Greece wants to stay in the euro, there is no way around it -- in fact completely regardless of the debt level."

Asked if German voters should be prepared for the inevitability of debt relief in the run-up to national elections next year, Schäuble quipped: "That would not help Greece."''

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iehi-feed-61233 Mon, 05 Dec 2016 15:16:42 GMT Italian vote against the elites could shatter Europe http://implode-explode.com/viewnews/2016-12-05_ItalianvoteagainsttheelitescouldshatterEurope.html The danger for Italy now is that a string of unpredictable outcomes -- ranging from a difficult-to-control euro decline to a run on troubled Italian banks and a further loss of credibility of the European Central Bank -- could ensue. With the main opposition parties that backed the "no" vote all declaring their wish to leave the euro , and antiestablishment groupings gaining ground in other important member countries including France, European fragmentation is plainly accelerating.

The Italian "no" could have a similar impact on Europe to that unleashed by President Charles de Gaulle's resignation in April 1969 when, in a referendum, voters turned down his plans for constitutional changes. De Gaulle's departure helped spark a chain of events that led to a devaluation of the French franc against the Deutsche mark, the entry of the U.K. into the European Economic Community, and the breakdown of the Bretton Woods system of fixed exchange rates.

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iehi-feed-61231 Mon, 05 Dec 2016 00:39:23 GMT Italy's PM Renzi cedes defeat, plans to resign after decisive ‘No' vote in constitutional referendum http://implode-explode.com/viewnews/2016-12-04_ItalysPMRenzicedesdefeatplanstoresignafterdecisiveNovoteinconsti.html ``Italian Prime Minister Matteo Renzi says he takes full responsibility for the crashing defeat at the referendum he proposed, which would have reduced the powers of the Senate. Renzi intends to send in his resignation on Monday.

"The experience of my government ends here," Renzi said in a televised news conference, adding that his defeat was "extraordinary clear."

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The European Central Bank also meets Thursday amid much speculation it will announce a six month extension of its asset buying program and widen the type of bonds it can purchase.

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iehi-feed-61230 Mon, 05 Dec 2016 00:09:57 GMT Euro dives as Italy votes 'No' on reform, shares slip http://implode-explode.com/viewnews/2016-12-04_EurodivesasItalyvotesNoonreformsharesslip.html The euro sank to 20-months lows in Asia on Monday after Italian Prime Minister Matteo Renzi said he would resign in the wake of a stinging defeat on constitutional reform that could destabilize the country's shaky banking system... Ultimately, the danger is that Italy holds a vote on whether to leave the euro, possibly triggering a break up of the entire bloc.

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The European Central Bank also meets Thursday amid much speculation it will announce a six month extension of its asset buying program and widen the type of bonds it can purchase.

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iehi-feed-61228 Sun, 04 Dec 2016 23:44:58 GMT Larry Summers Blasts Trump's Carrier Deal As "Ad Hoc Deal Capitalism" http://implode-explode.com/viewnews/2016-12-04_LarrySummersBlastsTrumpsCarrierDealAsAdHocDealCapitalism.html wants banana republic-like tactics...]]> iehi-feed-61225 Sun, 04 Dec 2016 19:28:02 GMT Far-right candidate concedes in Austria's presidential vote (ALL EYES TURN TO ITALY) http://implode-explode.com/viewnews/2016-12-04_FarrightcandidateconcedesinAustriaspresidentialvoteALLEYESTURNTO.html The center-left candidate handily defeated his far-right challenger in Austria's presidential election on Sunday, boosting the political establishment in Europe as it sought to contain the fallout of Donald Trump's victory in the United States and thwart the spread of nationalism.

The far-right Freedom Party's Norbert Hofer conceded defeat on his Facebook page less than 30 minutes after polls closed and following projections showing a surprisingly strong lead for Alexander Van der Bellen. The 72-year-old elder statesman and former Green Party politician was winning by 53.3 percent to 46.7 percent with nearly 100 percent of the votes counted.

The result was an unexpectedly clear victory for Austria's beleaguered political establishment -- one suggesting the aggressive tactics and Trump-style campaign deployed by the Austrian far-right may have hurt more than they helped.

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Yet Europe's political establishment was not out of the woods yet. In Italy, voting continued on a reform referendum opposed by anti-establishment populists across the political spectrum. Center-left Prime Minister Matteo Renzi has vowed to resign should it fail -- a move that could plunge Europe's third largest economy into a new round of political chaos while fanning fresh concerns about the country's ailing banks. Opinion polls have suggested the result may be a nail biter.

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iehi-feed-61224 Sun, 04 Dec 2016 19:21:23 GMT Will Trump's band of billionaires care about regular folk? http://implode-explode.com/viewnews/2016-12-04_WillTrumpsbandofbillionairescareaboutregularfolk.html Teena Colebrook is despondent that Trump has picked Steve Mnuchin for Treasury because Mnuchin was the head of a group of investors who owned OneWest, a bank that foreclosed on Colebrook's Los Angeles-area home.  She tried to work with the bank to modify her loan, she told the AP, but the bank lost some of her paperwork and was generally difficult to deal with. "I just wish that I had not voted," she said. "I have no faith in our government anymore at all. They all promise you the world at the end of a stick and take it away once they get in."

What fascinates me is why Colebrook ever believed that Trump's heart bleeds for struggling people.  Two years before the housing crash that eventually cost Colebrook her home, Trump  openly longed for the kind of housing crash that would cost people their homes.

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Now, according to a Wednesday report in The Washington Post, Trump is putting together the "wealthiest administration in modern American history." People thought George W. Bush had a wealthy administration, the report says, but the Bush administration's combined net worth of about $250 million is "roughly one-tenth the wealth of Donald Trump's nominee for commerce secretary alone."

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iehi-feed-61223 Sun, 04 Dec 2016 15:33:43 GMT Debunking GFMS' Gold Demand Statistics - Koos Jansen http://implode-explode.com/viewnews/2016-12-04_DebunkingGFMSGoldDemandStatisticsKoosJansen.html iehi-feed-61222 Sun, 04 Dec 2016 14:56:11 GMT A Big Swirling Italian Mess http://implode-explode.com/viewnews/2016-12-04_ABigSwirlingItalianMess.html Coming up with an answer isn't necessarily helpful when you can't even agree on the question. However Italians vote, it may take some time to figure out exactly what the result means to Italy, the Eurozone, the EU, and the global economy. I am fairly confident that the ultimate outcome won't be good, no matter what they choose. The problems are deeper than simple structural reform can cure.

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The entire Italian system is being propped up by the European Central Bank's (ECB) buying of Italy's bonds as part of its overall quantitative easing project. There is a significant revolt involving many members of the ECB who want to scale back if not all together halt the QE program. That would remove the prop from Italian bonds, and their yields would soar back to the 6 to 7% range.''

Good tour-de-force article by Mauldin.

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iehi-feed-61220 Sat, 03 Dec 2016 23:23:27 GMT No Overstatement: Structural Unemployment Is the Biggest Economic Threat http://implode-explode.com/viewnews/2016-12-03_NoOverstatementStructuralUnemploymentIstheBiggestEconomicThreat.html ``The fact that the labor force participation rate is falling at the same time the unemployment rate is falling indicates that that there is a structural problem in the economy... [the] process is accelerating as technological advances are enabling the replacement of all kinds of human labor at a faster rate than new job opportunities are being created.

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The net result is that an increasing percentage of the population is no longer economically viable. What's more, this condition is not going to be reversed by regulatory, tax, and fiscal policy changes at the federal level, intended to prevent domestic U.S. companies from offshoring jobs, as is being proposed by President-elect Trump.

... The trajectory I outlined for -- when the U.S. economic system can no longer function and thus collapses, which occurs when the percentage of the population that is employed in the private sector dips below 25% and is absolute at 20% -- has continued since then.

What we think analyses like these miss is that monetary dysfunction is as important -- if not more important -- than "accelerating technology" to the problem of an increasingly idle population. That is, the core gears of capitalism, and in particular, creative destruction, are gummed up (if not absent entirely), in our completely bizarre and dysfunctional monetary and banking system. If this were fixed, we might have little to no structural unemployment problem at all, as the market would be more able to create new opportunities. Regardless of how significantly this factor is, it seems virtually suicidal for an economy and society not to fix it before proceeding to more elaborate interventions.

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iehi-feed-61219 Sat, 03 Dec 2016 17:56:51 GMT Government Bond & Mortgage "Meltdown" Crushes NIRP http://implode-explode.com/viewnews/2016-12-03_GovernmentBondMortgageMeltdownCrushesNIRP.html While global stocks rallied in November, the gains -- $635 billion -- were outright puny compared to the $1.7 trillion wiped out in the much larger bond markets.

On Thursday it got worse. It started in Europe where government bonds got crushed after speculation surfaced that the ECB might not keep buying bonds until hell freezes over, that in fact it might begin tapering its QE program as soon as next year. The markets were aghast.

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In terms of dollars and cents, the CME CBOT 30-Year US Treasury Bond Price Index has now lost 8.5% since Election Day, and 14.8% since July. This is a bitterly ironic twist for those investors who consider them among the most conservative investments in the world...

This bond market "carnage" is accomplishing something else: It's gutting negative yields -- and all those who've bought these bonds when yields were at their most negative.

This post also excellently illustrates the "contagion" aspect -- the breakdowns are illustrating the disturbing extent that bond markets had also been all floating on the same pool of global QE/NIRP on the way up (as we've been pointing out on this site for years now), giving lie to the claim that one region and market is "doing fine" even with another region or two engaging aggressively in QE to keep the game going.

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iehi-feed-61217 Sat, 03 Dec 2016 17:13:08 GMT Deutsche Bank Pays $60 Million To Settle Gold-Manipulation Lawsuit http://implode-explode.com/viewnews/2016-12-03_DeutscheBankPays60MillionToSettleGoldManipulationLawsuit.html ... last night, two months after the silver settlement, Deutsche Bank agreed to pay another $60 million to settle the other side of the antitrust litigation: that of rigging the gold market... the preliminary settlement was filed on Friday with the U.S. District Court in Manhattan, and requires a judge's approval. As part of the settelement, Deutsche Bank has denied any wrongdoing, and with the two settlements, and some $98 million out of pocket, it is clear of any future liability regarding precious metals manipulation.

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As we reported previously, in an Oct. 3 decision, U.S. District Judge Valerie Caproni in Manhattan said investors could pursue much of their lawsuit against the other four banks named in the anti-trust lawsuit which include Barclays, Bank of Nova Scotia, HSBC and Societe Generale.

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iehi-feed-61216 Sat, 03 Dec 2016 15:45:04 GMT Italian bourse CEO says there are 'colossal' short positions on Italy in advance of referendum http://implode-explode.com/viewnews/2016-12-03_ItalianbourseCEOsaystherearecolossalshortpositionsonItalyinadvan.html iehi-feed-61211 Sat, 03 Dec 2016 00:24:57 GMT China, Grappling With Trump, Turns to ‘Old Friend' Kissinger http://implode-explode.com/viewnews/2016-12-02_ChinaGrapplingWithTrumpTurnstoOldFriendKissinger.html The 93-year-old former secretary of state, who secretly brokered President Richard Nixon's watershed visit in 1972, returned to Beijing to meet with state leaders Friday, just two weeks after huddling with Trump in New York. While little about Kissinger's closed-door talks has been disclosed, Chinese officials are trying to assess whether the incoming administration will prompt greater confrontation over trade and territory disputes, as Trump promised on the campaign trail.

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"The U.S. and China are going to have to establish some channels, but that is going to take time," said Tim Summers, a Hong Kong-based senior consulting fellow for Chatham House. Summers said that Xi, unlike Japanese Prime Minister Shinzo Abe, "is not going drop into Trump Tower en route somewhere else. So, we are in for a period of U.S.-china uncertainty, along with all the other issues up in the air at the moment."

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iehi-feed-61210 Fri, 02 Dec 2016 22:28:56 GMT Indian ‘Gold Ban' a Portent of Major Events? http://implode-explode.com/viewnews/2016-12-02_IndianGoldBanaPortentofMajorEvents.html iehi-feed-61209 Fri, 02 Dec 2016 18:26:27 GMT Americans Not In The Labor Force Soar To Record 95.1 Million, Driving Headline Unemployment Rate Fall http://implode-explode.com/viewnews/2016-12-02_AmericansNotInTheLaborForceSoarToRecord951MillionDrivingHeadline.html this report that average hourly earnings are actually slightly down on the month, belying alleged strength...)]]>