Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-62319 Sun, 28 May 2017 17:42:46 GMT The Fed Will Blink http://implode-explode.com/viewnews/2017-05-28_TheFedWillBlink.html iehi-feed-62315 Sun, 28 May 2017 17:13:11 GMT Low Volatility Is Market's Most Significant Danger http://implode-explode.com/viewnews/2017-05-28_LowVolatilityIsMarketsMostSignificantDanger.html iehi-feed-62314 Sat, 27 May 2017 15:10:01 GMT Global Pension Underfunding Will Grow To $400 Trillion Over Next 30 Years: World Economic Forum http://implode-explode.com/viewnews/2017-05-27_GlobalPensionUnderfundingWillGrowTo400TrillionOverNext30YearsWor.html iehi-feed-62313 Sat, 27 May 2017 15:00:24 GMT UK retirement age could hit 80 as pensions deficit sets off time bomb http://implode-explode.com/viewnews/2017-05-27_UKretirementagecouldhit80aspensionsdeficitsetsofftimebomb.html The UK has been told to prepare for a workforce of 80-year-olds as the world's leading economies struggle to deal with a £54 trillion pensions time bomb. The amount could balloon to an astonishing £334 trillion by 2050 unless policymakers take urgent action, the World Economic Forum has warned.

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"Policymakers do need to be thinking now about how to integrate 75- and even 80-year-olds in the workplace," Michael Drexler, head of financial and infrastructure systems for the WEF told The Financial Times.

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iehi-feed-62309 Fri, 26 May 2017 16:12:51 GMT Japan, South Korea drive global bitcoin prices as retail investor pile in http://implode-explode.com/viewnews/2017-05-26_JapanSouthKoreadriveglobalbitcoinpricesasretailinvestorpilein.html Japanese and South Korean buying helped drive the price of bitcoin to an all-time high this week, with the digital currency more than doubling its value since the start of the year, analysts and market practitioners said on Friday.

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In Japan and South Korea, among the largest markets for bitcoin globally, bitcoin traded at a premium of more than $300 higher above the global average, according to CryptoCompare.com.

The rally appeared to have been driven by new buying from smaller retail investors, suggesting bitcoins are increasingly viewed among the general investing public as an alternative asset class much like gold, analysts said.

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iehi-feed-62308 Fri, 26 May 2017 16:09:55 GMT Fed faces a 'surprise' problem on U.S. inflation http://implode-explode.com/viewnews/2017-05-26_FedfacesasurpriseproblemonUSinflation.html iehi-feed-62306 Fri, 26 May 2017 14:51:30 GMT Not a little list: EU draws up Brexit bill http://implode-explode.com/viewnews/2017-05-26_NotalittlelistEUdrawsupBrexitbill.html iehi-feed-62305 Fri, 26 May 2017 14:37:11 GMT NYC Landlords Slash Retail  Rents to Ward Off Vacancies http://implode-explode.com/viewnews/2017-05-26_NYCLandlordsSlashRetailRentstoWardOffVacancies.html The REBNY Spring 2017 Manhattan Retail Report lists retail rental rates in 14 of Manhattan's 17 high profile shopping corridors have declined. The poshest parts of Bleecker Street between Seventh Avenue and Hudson Street have fared the worst of all the Manhattan markets. Rents there tumbled 27 percent from $513 per foot to $373 per foot since last spring, and nine vacancies remain.

On Broadway in the Flatiron, rents dropped 22 percent to $348 per foot, a decline that served to fill most of the vacancies. Rents also fell 18 percent in both Herald Square and the now less-pricey Times Square to $734 and $1,930 per foot, respectively.

In Tony Madison Avenue between 57th and 72nd Streets building owners lowered the asking rents by 12 percent to $1,446 per foot, down from $1,644 last spring. Nonetheless, there are still 33 vacancies in this area.

On Columbus Avenue rents plummeted 15 percent to $344 per foot, and the number of empty stores increased from 8 to 14. Third Avenue has also seen a jump in vacancies to 34 from 15 a year ago. Asking rents there are down only 4 percent to $356 per foot. On the West Side, in Broadway from 72nd to 86th streets, rents have fallen 12 percent since last spring to $315 per foot , with 21 vacancies. 

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iehi-feed-62304 Fri, 26 May 2017 14:18:50 GMT The investigation of Jared Kushner fits a very troubling pattern http://implode-explode.com/viewnews/2017-05-26_TheinvestigationofJaredKushnerfitsaverytroublingpattern.html iehi-feed-62303 Fri, 26 May 2017 00:34:13 GMT Trump's Budget Is a Waste of Everybody's Time http://implode-explode.com/viewnews/2017-05-25_TrumpsBudgetIsaWasteofEverybodysTime.html The Trump administration has until now said its planned tax cuts would pay for themselves by pushing economic growth to 3 percent a year -- a claim already seen as outlandish by every serious analyst, liberal and conservative alike. The budget appears to go one better: It says this boost in growth will be sufficient not just to maintain revenue (despite the cut in rates) but will actually raise revenue by $2 trillion over 10 years compared with current policy. Perhaps somebody just made a dumb mistake, counting the revenue from faster growth twice over. With this administration, it's wise not to rule it out.

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Trump's budget has been almost universally called dead on arrival. That may be an understatement. This plan, if you can call it that, was never capable of life. White House budgets are often set aside, yet still can guide deliberations in Congress, where tax and spending decisions actually get made. This budget serves no such purpose. It is simply an extended tweet, and a waste of everybody's time.

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iehi-feed-62302 Thu, 25 May 2017 22:53:51 GMT Paul Manafort's Lucrative Ukraine Years Are Central to the Russia Probe http://implode-explode.com/viewnews/2017-05-25_PaulManafortsLucrativeUkraineYearsAreCentraltotheRussiaProbe.html Until recently, Manafort had receded into the background as the uproar over Trump's firing of his national security adviser, Michael Flynn, and then the FBI director, James Comey, began to shake the White House.

But the Manafort story--a tale of pro-Russia players, political tradecraft and cunning financial maneuvers--has never gone away. The reason, in a word, is money. Manafort, who less than a year ago was playing a central role in the Trump campaign, made millions of dollars over a decade promoting Kremlin-friendly interests in Ukraine and beyond. No other Trump associate has profited as handsomely from ties to Russia-linked businessmen and politicians.

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Ukrainian prosecutors are investigating what they call a "criminal organization" set up by Yanukovych via bribes and theft of state assets before he fled to Moscow after the killing of more than 100 protesters in 2014, and they are looking at what role Manafort may have played in the suspected scheme. They've repeatedly asked the FBI for help to question Manafort as part of their inquiry into a New York law firm in connection to a report that largely defended the Tymoshenko prosecution.

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In the five-year period from 2007 to 2012, Manafort was paid at least $12.7 million, according to a handwritten Party of Regions ledger found later in its head office. Ukraine's anti-corruption bureau and the FBI are investigating whether the ledger reflected any illegal payments to Manafort and to others. Manafort's spokesman says that after being paid he had many expenses and so the payment figure does not represent profit. One payment to Manafort on the ledger matches an invoice he signed in 2009 to sell $750,000 of computers to a Belize-registered company called Neocom Systems Ltd., according to documents obtained by Leshchenko from Manafort's Kiev office.

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Even after Russia annexed Crimea in 2014 and Yanukovych fled to Russia, Manafort returned to Ukraine 17 times, earning at least $1 million to help reelect pro-Russia politicians, according to a party official who worked with him. Manafort's spokesman declined to comment on that payment.

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While working in Ukraine, Manafort earned millions from a side private equity fund with Deripaska, according to a lawsuit by Deripaska, who is suing Manafort in the Cayman Islands over the soured business partnership. Deripaska declined to comment.

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"He was going for visceral issues and an emotional reaction," says Kateryna Yushchenko, the American-born wife of former President Viktor Yushchenko and a onetime State Department and White House official. "When I confronted his people about it, they said, ‘That's politics.' I said this isn't like gun rights or abortion. Here it could lead to war."

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Within months of his victory, Yanukovych ordered criminal investigations into Tymoshenko, culminating in a sentence of seven years in jail. Condemned around the world, her prosecution would become a flashpoint in negotiations between Ukraine and the European Union on an association agreement.

Manafort was closely involved in recruiting the firm of Skadden Arps Slate Meagher & Flom LLC on behalf of the Ukrainian Justice Ministry to write a lengthy report on Tymoshenko's prosecution. He met with Justice Minister Oleksandr Lavrynovych to go over the contract with Skadden and emailed with Skadden partner Greg Craig, according to documents uncovered by Ukrainian prosecutors. The ministry agreed to pay Skadden a mere $12,000, just below the threshold requiring it to go to a public tender. But much more money was to come to Skadden.

Prosecutors believe Manafort drew up a six-page media strategy plan with FTI Consulting on how to use the Skadden report, based on documents they have examined. The report, released at the end of 2012, criticized some aspects of the case but concluded that the evidence supported her conviction and that her due process rights hadn't been violated. After the document's release, Skadden signed a new contract with the ministry in 2013 that envisaged "additional work" and paid the firm $1 million, the prosecutors say, noting that no additional work was done. FTI declined to comment.

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iehi-feed-62301 Thu, 25 May 2017 22:21:11 GMT For China Now, the Only Question Is the Size of the Bill http://implode-explode.com/viewnews/2017-05-25_ForChinaNowtheOnlyQuestionIstheSizeoftheBill.html iehi-feed-62299 Thu, 25 May 2017 17:08:38 GMT Fed Minutes Hint at Rate Hike in June, Slow Balance Sheet Unwind http://implode-explode.com/viewnews/2017-05-25_FedMinutesHintatRateHikeinJuneSlowBalanceSheetUnwind.html Minutes from the Federal Reserve's May 2-3 meeting showed that policymakers anticipate a rate hike soon, possibly in the central bank meeting next month. At the same time, by agreeing to shrink the balance sheet gradually over a number of years, the Federal Open Market Committee has minimized possibilities of market gyrations and its impact on economic growth.

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The Fed also moved toward a consensus on a proposal to gradually unwind the massive balance sheet built up over the course of the asset buying program that was the core of Fed's quantitative strategy... But the Fed does not want to reduce the massive $4.5 trillion balance sheet at one go. Rather, it plans to let it shrink as the securities mature. The Fed officials did agree to end the reinvestment of principal of maturing securities in slow but increasing stages. Such an approach will stay on auto-pilot, until and unless there is major deterioration in the domestic economic front.

Even a maturation-based unwind is going to be a lot for the market to swallow... it has become dependent upon the Fed soaking up a huge amount of issuance in the last 9 years...

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iehi-feed-62296 Thu, 25 May 2017 14:36:15 GMT Rickards: Signs of Bubble Capitulation Pile Up; Extent Exceeds 1929 http://implode-explode.com/viewnews/2017-05-25_RickardsSignsofBubbleCapitulationPileUpExtentExceeds1929.html iehi-feed-62294 Thu, 25 May 2017 14:26:16 GMT China "National Team" Rescues Stocks As Downgrade Crushes Commodities http://implode-explode.com/viewnews/2017-05-25_ChinaNationalTeamRescuesStocksAsDowngradeCrushesCommodities.html iehi-feed-62292 Thu, 25 May 2017 14:19:17 GMT China's Rating Cut Exposes Firms Hooked on Dollar Borrowing http://implode-explode.com/viewnews/2017-05-25_ChinasRatingCutExposesFirmsHookedonDollarBorrowing.html While Chinese companies' foreign-currency debt is only a fraction of the $9 trillion local bond market, China Inc. is on pace for record dollar bond sales this year after the authorities' crackdown on financial leverage drove up borrowing costs at home. Overseas borrowing has also been part of the government's strategy to encourage capital inflows in a bid to ease the depreciation pressure on the yuan.

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Moody's lowered China's rating to A1 from Aa3 on Wednesday, citing a worsening debt outlook. Moody's also downgraded the ratings of 26 non-financial corporate and infrastructure government-related issuers by one level. China's Finance Ministry blasted the move as "absolutely groundless," saying the ratings company has underestimated the capability of the government to deepen reform and boost demand.

"The economy is dependent on policy stimulus and with that comes higher leverage," Marie Diron, associate managing director, Moody's Sovereign Risk Group, said on Bloomberg Television after the announcement. "Corporate debt is really the big part."

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iehi-feed-62291 Wed, 24 May 2017 15:19:40 GMT Real Median Household Income Highest Since 2002 (But M2 Money Velocity Continues To Tank) http://implode-explode.com/viewnews/2017-05-24_RealMedianHouseholdIncomeHighestSince2002ButM2MoneyVelocityConti.html iehi-feed-62284 Tue, 23 May 2017 04:29:50 GMT Commodity Traders Have a Really Big Problem http://implode-explode.com/viewnews/2017-05-23_CommodityTradersHaveaReallyBigProblem.html Unlike the stock market in which transactions are typically based on information that's public, firms that buy and sell raw materials thrived for decades in an opaque world where their metier relied on knowledge privy only to a few. Now, technological development, expanding sources of data, more sophisticated producers and consumers as well as transparency surrounding deals are eroding their advantage.

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As market participants' access to information increases, the traders highlighted the need to more than simply buy and sell commodities as profits from arbitrage -- or gains made from a differential in prices -- shrinks. That means getting involved in the supply chain by potentially buying into infrastructure that's key to the production and distribution of raw materials, and also providing financing for the development of such assets.

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iehi-feed-62282 Mon, 22 May 2017 15:16:24 GMT Interest-only loans could be 'Australia's sub-prime' http://implode-explode.com/viewnews/2017-05-22_InterestonlyloanscouldbeAustraliassubprime.html High-risk mortgage loans to young families, professionals and other over-extended borrowers amounting to more than six times household incomes could wipe out 20 per cent of the major banks' equity base, institutional investment fund JCP Investment Partners has warned.

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In a proprietary study of the nation's record high-and-growing household debt mountain, the Melbourne-based fund said Irish-style housing losses for the bigger-than-recognised pool of riskier borrowers could wipe out half of the banks' equity capital.

Interest-only loans, said JCP -- which is one of three Australian equities managers appointed by the Future Fund -- could be "Australia's sub-prime".

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Among the biggest concerns is what may happen when households feel they can no longer service their loans, for instance, as borrowing costs are reset higher or those with interest only mortgages are forced to repay the principal as well.

That creates a negative feedback loop -- experienced by Ireland after the financial crisis -- in which stressed borrowers slash their spending, in turn crunching the economy, driving up unemployment and adding to downward pressure on house prices.

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The fund's senior researchers Matthew Wilson and Craig Shephard found that about half of all the nation's mortgage debt was in the hands of borrowers whose debt was more than four times larger than their gross income.

The same borrowers had paid off less than half of their loans, the team found, based on data from several official and private sector sources that adjusted for changes in incomes and the collateral values of their homes.

The average loan-to-income ratio of these heavily indebted households was 6.4, or more than double the old banking "rule of thumb" that mortgage managers didn't lend more than three times a household's income "unless they were doctors".

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JCP calculated how the banks' balance sheets would handle an 2008 Irish-style loss on the high risk loans. It estimated that 50 per cent of the equity of Australian banks would be destroyed by soured loans to these high-risk borrowers.

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iehi-feed-62281 Mon, 22 May 2017 14:58:37 GMT Car loans, low rates, second mortgages: all the ingredients for a new credit crunch (UK) http://implode-explode.com/viewnews/2017-05-22_Carloanslowratessecondmortgagesalltheingredientsforanewcreditcru.html A credit crunch is brewing and when it happens, the UK is going to get hurt. That is the message emerging from senior executives in the financial services industry, who do not think Britain has changed that much since the 2008 credit disaster and the devastating crash that followed. Three developments lie at the heart of this disturbing analysis: spectacular growth in the sale of second mortgages, car loans and credit cards.

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Officials at the Bank have a growing list of concerns. Not only is there the second mortgage problem and the number of car loans: figures show consumer spending on unsecured credit has also rocketed in the last year. In March alone, the amount UK consumers owed on loans and cards grew by £1.9bn, the highest figure in 11 years.

Households are known to have increased their reliance on short-term unsecured loans to buy cars and furniture, and to kit out new kitchens. Some use them to maintain their lifestyle in the face of a decade of flat wages. Unfortunately, another group use credit to pay the monthly rent.

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Try as they might, the UK's two big high street lenders cannot put the financial crisis behind them. Last week, when Lloyds Banking Group was congratulating itself over its return to the private sector, it was still being haunted by the fraud perpetrated at the Reading branch of HBOS, the hotshot lender it rescued in 2008. To add to the pressure, Noel Edmonds, the TV celebrity, is leading the campaign for compensation for the victims of the fraud which took place in the run-up to the financial crisis.

This week, Royal Bank of Scotland will be transported back to those calamitous days of 2008. A high court judge will begin hearing a claim for compensation from investors who backed a £12bn cash call by RBS in April 2008 -- only for the Edinburgh-based institution to be bailed out by taxpayers six months later.

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