Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-61490 Sun, 15 Jan 2017 15:06:55 GMT The President Who Wasn't There: Barack Obama's Legacy of Impotence http://implode-explode.com/viewnews/2017-01-15_ThePresidentWhoWasntThereBarackObamasLegacyofImpotence.html Obama assumed the presidency at a moment when much of the nation seemed ready to confront the unwelcome fact that the American project had derailed.... Corporate capitalism just wasn't delivering the goods anymore. Not for the bottom 80 percent, any way. The economy was in ruins, mired in what appeared to be a permanent recession. The manufacturing sector had been killed from the inside-out, with millions of well-paying jobs outsourced and nothing but dreary service-sector positions to take their place. Chronic long-term unemployment hovered at more than 10 percent, worse, much worse, in black America. Those who clung to their jobs had seen their wages stagnate, their home values shrivel and were suffocating under merciless mounds of debt. Meanwhile, capital moved in ever-tightening circles among a new odious breed of super-rich, making sweat-free billions from the facile movement of money.

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With his sunny disposition and Prospero-like aptitude for mystification, Obama should have been able to convert [the discontented] or, at least, to roll over them. Instead, they kicked his ass. How? ... Obama's most grievous political wounds were self-inflicted, starting even before his election when he rushed back to Washington to help rescue Bush's Wall Street bailout. This was perhaps the first real indication that the luminous campaign speeches about generational and systemic change masked the servile psyche of a man who was desperately yearning to be embraced by the nation's political and financial elites.

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iehi-feed-61489 Sun, 15 Jan 2017 02:40:01 GMT Icahn Hedge Fund Loses 20% of Its Value in 2016 http://implode-explode.com/viewnews/2017-01-14_IcahnHedgeFundLoses20ofItsValuein2016.html Billionaire Carl Icahn is coming off another poor investment year as a nearly $6 billion hedge fund that he oversees suffered a loss of 20.3% in 2016 after a decline of 18% in 2015, according to a disclosure in a regulatory filing in conjunction with a bond deal and rights offering being made by Icahn Enterprises (ticker: IEP), a publicly traded limited partnership that is controlled by Icahn.

The weak 2016 performance reflected Icahn's bearish stance as the fund had a sizable short position in the U.S. equity market that hurt results as the S&P 500 index gained almost 10% last year. The Icahn fund had a net short position of 138% at the end of the third quarter--fourth quarter positioning has not yet been disclosed.

It's ironic that Icahn, one of the Wall Street's prominent supporters of president-elect Donald Trump, failed to capitalize on the postelection market rally in stocks.

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iehi-feed-61487 Sun, 15 Jan 2017 00:42:05 GMT Why DeLong, Summers, Bernanke, Krugman, Keen, Pettis, Edwards et al. Can't Figure Out "Secular Stagnation" http://implode-explode.com/viewnews/2017-01-14_WhyDeLongSummersBernankeKrugmanKeenPettisEdwardsetalCantFigureOu.html iehi-feed-61484 Sat, 14 Jan 2017 15:05:25 GMT Are Investors bracing for a massive stock-market selloff? http://implode-explode.com/viewnews/2017-01-14_AreInvestorsbracingforamassivestockmarketselloff.html Demand for one-month call options tied to the CBOE Volatility Index, a popular gauge of stock-market volatility, has spiked in the past week, a sign that some are bracing for a sharp downturn following the inauguration of President-elect Donald Trump.

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Since the beginning of the year, stock-market volatility has been relatively subdued despite increasing uncertainty surrounding the future direction of fiscal and monetary policy in the U.S. The Daily Shot, a popular market newsletter, illustrates this divergence in the chart below.

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iehi-feed-61480 Fri, 13 Jan 2017 19:41:52 GMT JPMorgan, BofA make out like a bandits on post-Trump market surge http://implode-explode.com/viewnews/2017-01-13_JPMorganBofAmakeoutlikeabanditsonpostTrumpmarketsurge.html JPMorgan Chase & Co reported a 24 percent rise in fourth-quarter profits on Friday, beating analyst expectations, as its Wall Street business benefited from a surge in trading activity following the U.S. election... [ex-tax adjustments] the bank earned $1.58 per share, well above the average analyst estimate of $1.44 per share...

Revenue from fixed-income trading -- JPMorgan's most volatile business -- rose 31 percent to $3.4 billion, while stock trading revenue increased 8 percent to $1.2 billion. Bank of America Corp (BAC.N), which reported results earlier on Friday, also said trading revenue surged last quarter.

Here's a piece on BofA, to the same effect.

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iehi-feed-61475 Fri, 13 Jan 2017 16:42:22 GMT Wells Fargo profit falls after sales scandal http://implode-explode.com/viewnews/2017-01-13_WellsFargoprofitfallsaftersalesscandal.html Wells Fargo & Co. reported a decline in fourth-quarter profit as moves in interest rates, a falloff in mortgage revenue and the bank's recent sales-tactics scandal weighed on the nation's third-largest bank.

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Since the scandal, new retail banking business such as customer checking account openings and credit card applications have fallen dramatically, including a drop of 40% and 43%, respectively, in December from a year ago.

Overall profits at Wells Fargo's community banking division, which includes the unit responsible for the questionable sales tactics, were $2.73 billion, a 15% decrease from the $3.3 billion it earned in the fourth quarter of 2015.

The scandal has boosted expenses, which are likely to remain high for some time. Wells Fargo CEO Timothy Sloan has said the bank expects to spend tens of millions of dollars to get through investigations and other regulatory matters related to its sales-practices scandal. Wells faces a spate of state and federal investigations, including by the Justice Department and the Securities and Exchange Commission.

Making matters worse, the higher costs come as interest rates remain at relatively low levels, despite a recent uptick. The result of this combination: Wells Fargo's return on equity continues to grind lower in the fourth quarter, at 10.94%, its lowest level in years.

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iehi-feed-61474 Fri, 13 Jan 2017 16:36:50 GMT Germany's Wolfgang Schaeuble urges ECB to start unwinding stimulus this year http://implode-explode.com/viewnews/2017-01-13_GermanysWolfgangSchaeubleurgesECBtostartunwindingstimulusthisyea.html The European Central Bank should start unwinding its ultra-loose monetary policy this year, German Finance Minister Wolfgang Schaeuble said in an interview to be published on Friday, adding that it would not be easy.

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He said forecasts that inflation could reach 3 percent in Germany this year would exacerbate concerns about current low interest rates.

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The conservative minister said it would take a great effort to convince German citizens that the common currency provided more employment, social and business benefits than risks and negative consequences.

To help Germany make the argument, he said it was essential that Italy and other countries stuck to the agreed rules.

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iehi-feed-61473 Fri, 13 Jan 2017 16:35:17 GMT Edwards: ‘Waste of time' to save Italian bank; Get Italy Out of Euro http://implode-explode.com/viewnews/2017-01-13_EdwardsWasteoftimetosaveItalianbankGetItalyOutofEuro.html iehi-feed-61472 Fri, 13 Jan 2017 16:30:55 GMT Mitchell Feierstein: Abolish central banks and slay the zombies http://implode-explode.com/viewnews/2017-01-13_MitchellFeiersteinAbolishcentralbanksandslaythezombies.html It's different this time -- or is it? The US Federal Reserve, the Bank of England and the European Central Bank have become gargantuan, out-of-control, rogue hedge funds. Global central banks have magicked up hundreds of trillions of dollars in debt and guarantees. Worldwide stock-market valuations are stratospheric -- buoyed by share buybacks, funded by record corporate debt and enabled by reckless central bank zero-interest-rate policies. The European Central Bank's purchase of massive amounts of corporate debt is pouring petrol on this blaze.

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As far as I'm concerned, Carney and former chancellor George Osborne used the levers of monetary policy to distort market-pricing mechanisms and normal price signals. As a result, insurance companies and pension-fund portfolios were loaded to the gills with "risky assets" that will bankrupt them when -- not if -- markets normalise.

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All of this has resulted in a UK commercial and residential property bubble that is ready to explode. In Chelsea and Kensington, property transaction volumes have plummeted. Prices collapsed nearly 15% in November as property agents quietly close shop and sack employees across London. 

Have the Bank-enabled grotesque bubbles in the bond, stock and property markets or the eight years of "temporary emergency measures" and zero-interest-rate policies created infrastructure investment? Job creation? Savings? No, no and no.

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JPMorgan, Deutsche and Nomura made a fortune -- and Monte's shareholders and depositors, and EU taxpayers, will get slammed with the massive bailout tab. The new normal is apparently a world of financial fraud where the only rules which apply are too big to fail, bail or jail and too connected to prosecute --steal all you can, while you can, with impunity.

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Capitalism without bankruptcy is like Catholicism without hell. And right now, we need to audit and abolish the Fed, the Bank and the ECB, which started this mess, and slay the zombies.

Desperate times call for desperate measures; we must create a "new global banking paradigm" -- pivoting far away from the West's broken models, which rely on the same PhD economists, academics and government bureaucrats who have destroyed our global financial system and capitalism, replacing it with a combination of Keynesian economic Kool-Aid and central bank "new normal" Marxism.

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iehi-feed-61468 Thu, 12 Jan 2017 15:41:47 GMT Central Bank Cites Security Threat in India Cash Ban Decision Mystery http://implode-explode.com/viewnews/2017-01-12_CentralBankCitesSecurityThreatinIndiaCashBanDecisionMystery.html The cloak of secrecy that has shrouded the currency ban decision is likely to bolster the view that authorities, both on Mint Street and in New Delhi, were not prepared for such a decision and the way it was announced. It risks undermining perceptions of the central bank's independence and raises questions about Modi's decision-making style and his communication with the RBI.

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The RBI also claimed exemptions on two questions seeking detail on its preparations for the demonetization and studies it used to forecast the impact of the move. Sharing these "sensitive matters" would endanger India's sovereignty, integrity and security, according to the RBI

The use of those specific exemptions are "perplexing," Capital Economics's Shah said. Shailesh Gandhi, a former bureaucrat with the Central Information Commission, told the FirstPost website on Dec. 31 that the RBI's attitude of stonewalling smacked of "sheer arrogance."

"What the RBI is doing by refusing to answer queries under RTI is denying citizens their fundamental rights," Gandhi said.

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The move to ban high currency bank notes was an economic disaster with the worst yet to come, Former Prime Minister Manmohan Singh told a gathering of opposition Congress Party workers yesterday.

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"The institutional identity of the RBI has been damaged," former Governor Yaga Venugopal Reddy told CNBC this week. Rahul Gandhi, a leader of the main opposition Congress party, repeated the accusation, attacking Modi for ruining the credibility of the central bank.

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iehi-feed-61464 Wed, 11 Jan 2017 23:17:10 GMT Mnuchin to Divest Stakes in 43 Investments to Avoid Conflict, But Already Talked Up Fannie/Freddie Holdings http://implode-explode.com/viewnews/2017-01-11_MnuchintoDivestStakesin43InvestmentstoAvoidConflictButAlreadyTal.html The disclosures reveal that Mnuchin may have benefited following his comments in a Nov. 30 interview that the government should exit control of Fannie Mae and Freddie Mac. The remarks sent shares of the mortgage-finance giants soaring. Mnuchin's filings show he's invested as much as $2 million in Paulson Advantage LP, which holds a stake in Fannie and Freddie.

The Paulson Advantage holdings are among 43 investments that he has pledged to divest within 90 days of being confirmed. The value of the divestitures is more than $75 million, based on Bloomberg calculations.

Some think Mnuchin won't get confirmed, and some think that Fannie and Freddie can't even be privatized. Interesting times!

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iehi-feed-61461 Wed, 11 Jan 2017 22:32:14 GMT Trump's Conflict-of-Interest Plan Won't Do Much To Prevent Conflicts of Interest http://implode-explode.com/viewnews/2017-01-11_TrumpsConflictofInterestPlanWontDoMuchToPreventConflictsofIntere.html

Trump's plan "did not screen all ‘emoluments ... of any kind whatever,' as required by the Constitution, but only some revenues, and only from his hotels," Eisen wrote over e-mail. He elaborated: "The Emoluments Clause doesn't only cover some hotel revenues, as the Trump team wrongly believes, but applies to a much broader range of foreign government benefits that Trump is collecting, and will continue to collect, from foreign governments. On January 20, that will be in direct violation of the Constitution."

We think it's impractical for Trump to sell all of his holdings into a blind trust -- direct holdings of real estate aren't very fungible, and the point of blind trusts isn't to impoverish onesself in a firesale (which isn't necessary when selling frequently-traded stocks, as in the typical case). However, more could undoubtedly be done -- like hiring unconnected outside executives to run the Trump organization(s).

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iehi-feed-61459 Wed, 11 Jan 2017 15:19:51 GMT Orban Plans Crackdown on All Soros-Funded NGOs in His Native Hungary http://implode-explode.com/viewnews/2017-01-11_OrbanPlansCrackdownonAllSorosFundedNGOsinHisNativeHungary.html iehi-feed-61456 Wed, 11 Jan 2017 15:11:49 GMT Dollar duds: Surging dollar may hurt consumer multinationals http://implode-explode.com/viewnews/2017-01-11_DollardudsSurgingdollarmayhurtconsumermultinationals.html iehi-feed-61454 Wed, 11 Jan 2017 01:06:43 GMT China's Banks More Squeezed Than You Think http://implode-explode.com/viewnews/2017-01-10_ChinasBanksMoreSqueezedThanYouThink.html Of late, however, liquidity in China has been a mere accounting artifact. Customers' deposits aren't sufficient to finance Bank of Jinzhou's 213 billion yuan in shadow loans, which are debt securities that the lender classifies as receivables. To make up the shortfall, it has borrowed 142 billion yuan from other financial institutions. Of this, as much as 78 percent is short-term financing.  After adjusting for shadow lending, S&P Global Ratings pegged Bank of Jinzhou's loan-to-deposit ratio at the end of 2015 at 153 percent.BANK OF JINZHOU SHADOW LOANS213 billion yuanBank of Jinzhou is hardly the only Chinese bank flirting with illiquidity: Almost all are sitting on a pile of debt masquerading as receivables.As a result, deposits required to sustain one bank's bloated assets aren't popping up at another lender. In S&P's estimates, for the banking system as a whole, the true loan-to-deposit ratio has increased to 80 percent, a 10 percentage-point jump since 2013.

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Doing nothing won't be much of an option, either. Let a liquidity problem fester, and before long it morphs into a solvency scare. China may yet sidestep a full-blown credit crisis, but not before missing customer deposits make their absence felt even more acutely.

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iehi-feed-61451 Wed, 11 Jan 2017 00:52:37 GMT Top Economists Grapple With Public Disdain for Initiatives They Championed (AND THEMSELVES) http://implode-explode.com/viewnews/2017-01-10_TopEconomistsGrappleWithPublicDisdainforInitiativesTheyChampione.html "The economic elite did many things to undermine their credibility while people's economic fortunes were taking a turn for the worse," said Steven Davis, an economist at the University of Chicago. But a road map for regaining trust is elusive. "I used to think facts and analysis will ultimately carry the day but now I'm not quite sure."

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Surveys from the Pew Research Center have documented dwindling support for free trade. In 2014, 60% of Democratic voters and 55% of Republican voters supported such trade agreements. In an October survey, however, support among Democrats had fallen to 56% and support among Republicans had nose-dived to 24%.

Over a billion people moved out of poverty in developing countries in the last 25 years, lifted in part by global trade and other economic prescriptions, but those same policies created winners and losers in the West. Another Pew study last year compared views of whether it was good for the U.S. to be so involved in the global economy: 86% of scholars said it was good, and just 2% bad. Among the general public, 49% thought it was bad, and just 44% good.

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The profession sees its successes as overlooked--the U.S. is wealthier than ever. The unemployment rate is below 5%. Challenges facing those who enjoyed little economic gain in recent years are among the topics economists are trying to diagnose and the subject of dozens of papers at this year's conference.

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Mr. Phelps said that neither the economic policies of Mr. Trump nor the left "can be expected to revitalize the West since neither serves to stimulate the business innovation that is essential for rapid economic growth."

... the profession may have brought this on itself, said Joseph Stiglitz, a Columbia professor and Nobel winner. Anger among voters was to be expected, because globalization in particular was sold in part with broken promises.

"The promise was that globalization, together with liberalization, lowering tax rates, and advances in technology, would make everyone better off," said Mr. Stiglitz. It was economists, not the economics, that over-promised, he said.

"In many ways, economic science was more honest," he said, referring to the fact that some would win but others could lose from free trade. "It only said that under certain conditions winners could compensate losers, not that they would."''

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iehi-feed-61449 Tue, 10 Jan 2017 15:12:17 GMT Money Supply Will Continue Rapid Growth Because Fed Is Loosening, Not Tightening - The Wall Street Examiner http://implode-explode.com/viewnews/2017-01-10_MoneySupplyWillContinueRapidGrowthBecauseFedIsLooseningNotTighte.html iehi-feed-61445 Sun, 08 Jan 2017 21:08:17 GMT Out of work for six months or more? Here's why you can't find a job (DESPITE "LOW UNEMPLOYMENT") http://implode-explode.com/viewnews/2017-01-08_OutofworkforsixmonthsormoreHereswhyyoucantfindajobDESPITELOWUNEM.html The labor market ended 2016 on a positive note. The unemployment rate is low at 4.7%. Employers are increasing wages to snag fewer available workers. That all sounds good, at least until you ask about 25% of Americans out of work... The number of people jobless six months or more may have fallen by 25,000 to 1.8 million in December and is down from 6.8 million in 2010. Yet they still represent a quarter of all those unemployed, about the same as a year ago and up from 18% before the recession began in late 2007.

... "It used to be jobs found me," says Brown, 46, who lives in Wheaton, Ill. "The world has definitely changed." He has learned, for example, that his diverse work history, which includes overseeing marketing, strategy, and mergers and acquisitions, is viewed as a negative by the many firms that seek in-depth experience in specific areas... Many businesses remain locked in a post-recession mindset ingrained by the downturn's severity and that's adding up to long-term frustration for workers on the sidelines for at least six months.

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Carl Van Horn, director of the Heidrich Center for Workforce Development at Rutgers University, rattles off the roadblocks faced by the long-term unemployed including having to explain large gaps on a resume and age discrimination. In 2015, about 36% of the long-term unemployed were 55 or older, Labor Department figures show. And some have seen their skills atrophy or have succumbed to depression, alcoholism or drug abuse, Van Horn says.

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iehi-feed-61444 Sun, 08 Jan 2017 21:05:00 GMT The Limited is closing ALL of its 250 stores; 4000 To Lose Jobs http://implode-explode.com/viewnews/2017-01-08_TheLimitedisclosingALLofits250stores4000ToLoseJobs.html iehi-feed-61443 Sun, 08 Jan 2017 21:01:16 GMT Peña Nieto Faces Unrest in Mexico as Gas Prices Climb and Trump Looms http://implode-explode.com/viewnews/2017-01-08_PeaNietoFacesUnrestinMexicoasGasPricesClimbandTrumpLooms.html Amid nationwide marches, highway blockades and looting stemming from widespread outrage over an increase in gas prices, President Enrique Peña Nieto of Mexico went on national television to appeal for understanding.

With international oil prices rising and Mexico dependent on gasoline imports, he argued in the speech on Thursday, the government had no alternative but to raise prices at the pump. "Here I ask you," he said, gesturing at the camera, "What would you have done?"

It did not take long for him to get an answer, as social media erupted with suggestions and disgust: Combat corruption and impunity. Eliminate gasoline vouchers for elected officials. Collect more taxes from multinational corporations. Cut the salaries and benefits of high-level government officials. Sell the presidential plane. Reduce the first lady's wardrobe spending. Resign.

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The unrest comes as Mexico braces for the administration of President-elect Donald J. Trump, who has threatened to introduce far more restrictive immigration and trade policies, including canceling the North American Free Trade Agreement, increasing deportations and building a wall on the southern border of the United States... in general the Peña Nieto administration seems to be struggling to figure out how to respond to Mr. Trump. Mexicans have been clamoring for a full-throated, chest-out defense of their country and sovereignty against Mr. Trump's threats, but many say they have yet to hear it.

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The gas price increases of about 20 percent are part of a broad overhaul that ends the state's monopoly over the energy industry. The government has long controlled and subsidized gasoline prices, but by the end of the year it will allow gas prices to fluctuate according to the market, a move intended to attract foreign investment to compete with the state oil company, Pemex.

The government has argued that ending fuel subsidies will help the country avoid spending cuts to social programs, and that the subsidies have disproportionately benefited wealthier Mexicans who own cars. But many fear that higher gasoline prices will increase prices for food and public transportation, hitting the pocketbooks of even the poorest Mexicans.

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