Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-60301 Tue, 26 Jul 2016 04:05:42 GMT Grant Williams on Peak Credit, Oil (Demand), and Gold (Supply); Trump and The Money Printing Endgame (Matterhorn Interview) http://implode-explode.com/viewnews/2016-07-26_GrantWilliamsonPeakCreditOilDemandandGoldSupplyTrumpandTheMoneyP.html Donald Trump is the self-professed king of debt, which is very apropos for the United States right now... He's come out and said, "No, no, no. We'll never have to default because we'll just print the money". This, to me, is something I've been waiting for, for quite some time now, and this is the fact that central banks have been able to print an extraordinary amount of money over the last eight years with optically no bad side effects. The inflation hasn't shown up that people were warning about price in the money printing game going. And my fear was always that that would embolden politicians who didn't really understand any of the nuance of this; they heard there was money printing going on, they were waiting for the bad effects to happen, they haven't seen them, so they think that this money printing thing works.

... Politicians don't understand these things for the most part. They're complicated ideas and they don't have demonstrable outcomes, the wheels that get set in motion when you do things like go to negative interest rates and print money start spinning very slowly and you don't really see what comes out of the machine for an indeterminate amount of time. We haven't seen it yet, but we will. There are no free lunches, but the very fact that the political class has seen this happen without any obvious ill effects has emboldened them and Trump... He thinks he understands debt and he will have no qualms about going deeper into debt.

At some point, however, the question of faith in the finances of the US Government, faith in the quality of the dollar are going to be raised again by the market in general, and when that time comes, it's very hard to see how there is a solution to calm any nervousness that people have around the dollar without some significant pain being felt. There is a storm coming. There is no two ways about it, and I think if people pay attention, you will have heard recently some really significant names starting to express the fears they have. Guys like Carl Icahn, guys like Stan Druckenmiller have been very outspoken about how concerned they are for what's happening. And if you listen to those things carefully and you understand that these guys are some of the smartest investors in the world, if guys like that are getting out of equities, getting into gold, getting into cash, there are very good reasons for that, and the average investor in the street should be listening to that and trying to understand why the smartest investors in the world are thinking that way because it's extremely important to try and understand.

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iehi-feed-60300 Tue, 26 Jul 2016 03:45:21 GMT Hillary Clinton Is In Deep Trouble: "Hordes Of Wall Street Executives" Descend Upon Philly http://implode-explode.com/viewnews/2016-07-25_HillaryClintonIsInDeepTroubleHordesOfWallStreetExecutivesDescend.html iehi-feed-60298 Tue, 26 Jul 2016 01:13:36 GMT Fed Readies Enforcement Action Against Goldman Sachs in Theft of Secrets http://implode-explode.com/viewnews/2016-07-25_FedReadiesEnforcementActionAgainstGoldmanSachsinTheftofSecrets.html The planned action, reported earlier by the New York Times, shows the Fed is advancing its own investigation into the incident, in which confidential regulatory materials were leaked to a Goldman staffer from one of his former colleagues at the Federal Reserve Bank of New York. The Fed last year permanently banned from the banking industry the former Goldman staffer who obtained the sensitive documents, and the central bank is now expected to pursue a similar ban for that staffer's former supervisor.

The leak was a black eye for the central bank because it raised fresh questions about the so-called revolving door between the regulator and Wall Street after much criticism in the wake of the financial crisis that the Fed was too lenient on big banks. Since the incident, the Fed has been weighing new measures to tighten the restraints it imposes on bank examiners who leave for jobs with financial institutions.

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The Fed is expected to seek to ban former Goldman executive Joseph Jiampietro from the banking industry. Mr. Jiampietro was fired by Goldman in October 2014, and his most recent role was as a managing director in the investment-banking division.

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A spokeswoman for Goldman said that when the firm discovered the sensitive documents had been obtained, it began its own investigation, terminated the employees implicated and changed its hiring practices for former government employees.

The Fed in November permanently banned from the industry Rohit Bansal, the Goldman employee who got the secrets while working under Mr. Jiampietro

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The Fed didn't fine Goldman when it discovered the theft, but the bank paid $50 million to settle charges last year from the New York State Department of Financial Services that it failed to properly supervise Mr. Bansal. A DFS spokesman declined to comment.

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iehi-feed-60297 Mon, 25 Jul 2016 19:17:30 GMT Risks to U.S. Financial Stability Increase After Brexit: FSOC Report http://implode-explode.com/viewnews/2016-07-25_RiskstoUSFinancialStabilityIncreaseAfterBrexitFSOCReport.html The U.K. decision to split from the 28-member bloc "surprised financial markets and was a negative shock to investor confidence," said Richard Berner, director of the Office of Financial Research, the research arm of the Financial Stability Oversight Council. He said the vote ushers in "months or years of uncertainty" over rules tied to the U.K.'s investment, financing and trade relations with Europe and the rest of the world.

Despite the ability of U.S. markets to recover from the initial shock of a market selloff, persistent concerns remain as the U.K. decides "if, how and when" to leave the EU, Mr. Berner said in a briefing with reporters. Possible spillover effects, he said, could jolt the broader financial system, including U.S. banks and nonbanks such as life insurers and broker-dealers.

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iehi-feed-60295 Mon, 25 Jul 2016 17:21:38 GMT IceCap Asks What Happens When The Bond Bubble Finally Pops http://implode-explode.com/viewnews/2016-07-25_IceCapAsksWhatHappensWhenTheBondBubbleFinallyPops.html iehi-feed-60292 Mon, 25 Jul 2016 15:19:21 GMT Italy insists there's 'no banking problem' as stress tests loom large http://implode-explode.com/viewnews/2016-07-25_Italyinsiststheresnobankingproblemasstresstestsloomlarge.html iehi-feed-60291 Mon, 25 Jul 2016 15:08:34 GMT Doug Noland - "Don't Mess with Turkey" http://implode-explode.com/viewnews/2016-07-25_DougNolandDontMesswithTurkey.html President Erdogan has championed Turkish economic renaissance, a powerful boom that has been fundamental to his popularity and ascending political power. Unfortunately, it morphed into a Credit-fueled Bubble, with all the associated financial, economic and social consequences. Turkish consumer debt has skyrocketed, fueled by aggressive bank lending. Meanwhile, Turkey's financial institutions have borrowed aggressively in global inter-bank markets, with much of this debt short-term and denominated in foreign currencies.

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The unfolding EM debacle is one of the saddest consequences arising from the U.S. mortgage finance Bubble - turned reflationary QE before transforming into the global government finance Bubble. Throw Trillions of loose finance at the emerging markets and rest assured there will be epic corruption, economic maladjustment and destabilizing social and geopolitical stress. As for corruption and malfeasance, China, Brazil, Russia, Turkey and Malaysia come quickly to mind. Yet it's systemic, the upshot from what has become a hopelessly dysfunctional global system. Indeed, EM these days has regressed into one big highly synchronized and vacillating Bubble. That EM could now somehow be experiencing record inflows in the face of such financial, economic and social instability is remarkable. There is precedent.

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iehi-feed-60290 Mon, 25 Jul 2016 14:44:41 GMT Vindicating GATA, academic study says central banks rig markets with gold lending http://implode-explode.com/viewnews/2016-07-25_VindicatingGATAacademicstudysayscentralbanksrigmarketswithgoldle.html iehi-feed-60289 Mon, 25 Jul 2016 14:18:14 GMT Inequality: the nexus of wealth and debt | Coppola http://implode-explode.com/viewnews/2016-07-25_InequalitythenexusofwealthanddebtCoppola.html Debt jubilee seems an attractive idea. Why not just write off all the debts, wipe the slate clean and start again?... even if the very rich could be soaked, there is a bigger problem. The rise of the middle class means that a majority now own some wealth. And they will not easily give it up. Middle class wealth owners fear loss far more than the very rich. And with reason. For them, a fall of -- say -- 30% in the value of their house is a considerable hit to their net worth, as argued by Atif Mian & Amir Sufi in their book House of Debt. It can completely wreck their plans

If we are serious about reducing wealth inequality, we could think about very high taxes on top incomes, and perhaps wealth taxes. And if we are serious about reducing income inequality -- from which wealth inequality ultimately stems -- we could think about a universal basic income coupled with a land value tax and a progressive income tax system. If we want to break the cycle of wealth inequality down the generations, we could impose very high inheritance taxes, perhaps as much as 100%, on unproductive assets such as residential property. And if we really want to end the dominance of debt in our monetary system, perhaps we should be looking at forms of money that are not backed by debt.

Coppola ends up focusing on the reform of the monetary system mentioned at the end. We agree... and its funny how no one seems to take note of the fact that, during the best exemplar period of Western civilization -- the post-WWII period in the US -- incomes were much more equal. This is irrespective of total wealth (of course, the Gini coefficient was much lower), it's that pre-tax income was more equal. In other words, progressive taxation was never responsible for income equality -- it must have been something else. And that "something else" was a less biased monetary system: hard asset backing, and lack of Federal reserve craziness in intervening to tilt access to capital to the rich...

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iehi-feed-60286 Sat, 23 Jul 2016 14:51:29 GMT Mexico May Be On Verge of Backing Peso With Silver: "Would Unleash a Global Power Shift" http://implode-explode.com/viewnews/2016-07-23_MexicoMayBeOnVergeofBackingPesoWithSilverWouldUnleashaGlobalPowe.html iehi-feed-60285 Sat, 23 Jul 2016 14:48:35 GMT Are Wall Street Banks in Trouble? You'd Never Know from the Headlines http://implode-explode.com/viewnews/2016-07-23_AreWallStreetBanksinTroubleYoudNeverKnowfromtheHeadlines.html One would never know by these headlines that big bank earnings were actually down year over year -- and in some cases, down dramatically. JPMorgan Chase earned $6.2 billion in the second quarter of 2016 versus $6.29 billion in the second quarter of 2015.

The news was far worse at Citigroup, despite the rosy headline at CNBC. Citigroup's second quarter profit fell 17.5 percent year over year, to $4 billion from $4.85 billion in the second quarter of 2015. Its revenues were the lowest in 14 years according to S&P Capital IQ.

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Now news of jobs cuts is spilling out with the Wall Street Journal reporting that Bank of America will make "$5 billion in annual cost cuts by 2018 as part of its strategy to deal with persistently low interest rates that are eating away at lenders' profitability."

The New York Post is calling job cuts at Goldman Sachs the worst since the financial crisis in 2008. Fortune's Stephen Gandel reported two days ago that Goldman had slashed a whopping "1,700 positions in the past three months."

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iehi-feed-60283 Sat, 23 Jul 2016 00:49:14 GMT Pension Funds Are Underwater And Taxpayers Along http://implode-explode.com/viewnews/2016-07-22_PensionFundsAreUnderwaterAndTaxpayersAlong.html iehi-feed-60281 Sat, 23 Jul 2016 00:46:42 GMT How Sub-Zero Government Bonds Turned the Hunt For Yield Upside Down http://implode-explode.com/viewnews/2016-07-22_HowSubZeroGovernmentBondsTurnedtheHuntForYieldUpsideDown.html iehi-feed-60280 Sat, 23 Jul 2016 00:37:35 GMT Japan joins China in opening a physical gold exchange, Amidst Japan Retail "Gold Rush" http://implode-explode.com/viewnews/2016-07-22_JapanjoinsChinainopeningaphysicalgoldexchangeAmidstJapanRetailGo.html The Tokyo Commodities Exchange (TOCOM) is joining with the Shanghai Gold Exchange (SGE) to become the second major physical gold market in Asia.  Beginning on July 25, the TOCOM will begin deliveries for spot contracts, and is the only gold exchange accepted for futures contracts in Japan.

Since Japanese bonds fell into negative yields, investors and consumers have been buying physical gold at incredible rates.  And now that their market will have an official gold exchange like the one that opened in Shanghai last year, the precious metal will become even more liquid and draw more customers into gold.

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iehi-feed-60278 Sat, 23 Jul 2016 00:30:26 GMT U.S. sides with HSBC to block release of money laundering report http://implode-explode.com/viewnews/2016-07-22_USsideswithHSBCtoblockreleaseofmoneylaunderingreport.html iehi-feed-60276 Fri, 22 Jul 2016 00:08:17 GMT Toga! Toga! Toga! - Jared Dillon http://implode-explode.com/viewnews/2016-07-21_TogaTogaTogaJaredDillon.html Both candidates for [U.S.] president have increasingly grandiose visions for the sorts of things government should do, and I don't see any scenario in 2017 where the deficit doesn't widen sharply.

... the debt problem is most acute in Japan, obviously, where debt to GDP is now about 240%. Japan was insolvent at a debt-to-GDP ratio of 120%, so the rest is just gravy... What if the Ministry of Finance simply defaults to the BOJ?... This is in fact being seriously considered... Think about it: back when we started doing QE, people were freaking out about what would happen when the Fed sold bonds back into the market. That was never going to happen--that was never the intent at all.

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So if debt doesn't matter and we're going to build roads and trains and bridges to nowhere, it means that shorting this market is a huge waste of time. It will end badly someday, but keep in mind that people have been predicting disaster for the last 45 years, when Nixon took us off gold. We could have 15 more years of this crap... The obvious trade here is gold...''

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iehi-feed-60275 Thu, 21 Jul 2016 23:08:09 GMT The Entire Market is Being Driven by a "Once in History" Asset Bubble About to Burst http://implode-explode.com/viewnews/2016-07-21_TheEntireMarketisBeingDrivenbyaOnceinHistoryAssetBubbleAbouttoBu.html iehi-feed-60274 Thu, 21 Jul 2016 23:05:45 GMT PulteGroup soars on activist deal, buybacks http://implode-explode.com/viewnews/2016-07-21_PulteGroupsoarsonactivistdealbuybacks.html PulteGroup got a big boost from a strong quarterly report and saw shareholders drive the stock up after news that it struck a deal with activist investor Paul Singer's Elliott Management.

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As the housing sector was battered in the global financial crisis, Pulte stock suffered and never regained losses. The company's shares are down more than 30 percent from the beginning of 2007, after hitting an all time high of more than $40 a share in 2005 and after paring gains in 2008, never touched those highs again.

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iehi-feed-60271 Thu, 21 Jul 2016 14:01:25 GMT 'Crexit' warning as corporate debt seen ballooning to $75 trillion (ZIRP+NIRP NEEDED FOREVER!!) http://implode-explode.com/viewnews/2016-07-21_Crexitwarningascorporatedebtseenballooningto75trillionZIRPNIRPNE.html By 2020, business debt likely will climb to $75 trillion from its current $51 trillion level, according to S&P Global Ratings. Under normal conditions, that wouldn't be a major problem so long as credit quality stays high, interest rates and inflation remain low, and there are economic growth persists. However, the alternative is less pleasant should those conditions not persist. Should interest rates rise and economic conditions worsen, corporate America could be facing a major problem as it seeks to manage that debt...

Close to half of companies outside the financial sector are considered "highly leveraged," which is the lowest category for risk, and up to 5 percent of that group has negative earnings or cash flows. There already have been 100 debt defaults in 2016, the most since the financial crisis for the period.

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iehi-feed-60270 Thu, 21 Jul 2016 13:42:34 GMT U.S. Links Malaysian Prime Minister to Millions Stolen From Development Fund http://implode-explode.com/viewnews/2016-07-21_USLinksMalaysianPrimeMinistertoMillionsStolenFromDevelopmentFund.html The Justice Department filed lawsuits Wednesday to seize assets that it said were the result of $3.5 billion that was misappropriated from 1Malaysia Development Bhd., or 1MDB, a fund set up by Prime Minister Najib Razak in 2009 to boost the Malaysian economy.

The move sets up a rare confrontation between U.S. prosecutors and an important partner in the fight against terrorism. The moderate Muslim nation is also a counterpoint to China's rising ambitions in Asia.

Among the Justice Department's assertions: That some $1 billion originating with 1MDB was plowed into hotels; luxury real estate in Manhattan, Beverly Hills and London; fine art; a private jet and the 2013 film "The Wolf of Wall Street." Among those behind the spending, the lawsuit alleges, was Riza Aziz, stepson of Mr. Najib.

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The complaint reveals previously unknown allegations about the money that flowed into Mr. Najib's accounts, such as how prosecutors believe a Saudi prince acted as an intermediary for some of the money and the exact circuit funds followed between a handful of key offshore companies.

Mr. Najib has been at the center of the scandal surrounding 1MDB since The Wall Street Journal reported more than a year ago that hundreds of millions of dollars that originated with 1MDB flowed into his personal bank account. Mr. Najib has said he had done nothing wrong and that any suggestions of wrongdoing were political smears.

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