Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-60550 Mon, 29 Aug 2016 18:50:27 GMT Jack Lew Fails to Squelch European Commission Tax Ruling And "Multi Billions" EUR Fine Against Apple http://implode-explode.com/viewnews/2016-08-29_JackLewFailstoSquelchEuropeanCommissionTaxRulingAndMultiBillions.html iehi-feed-60549 Mon, 29 Aug 2016 15:09:32 GMT Health Insurers' Pullback Threatens to Create Monopolies http://implode-explode.com/viewnews/2016-08-29_HealthInsurersPullbackThreatenstoCreateMonopolies.html Nearly a third of the nation's counties look likely to have just a single insurer offering health plans on the Affordable Care Act's exchanges next year, according to a new analysis, an industry pullback that adds to the challenges facing the law.

The new study, by the nonpartisan Kaiser Family Foundation, suggests there could be just one option for coverage in 31% of counties in 2017, and there might be only two in another 31%. That would give exchange customers in large swaths of the U.S. far less choice than they had this year, when 7% of counties had one insurer and 29% had two.

Many insurers are losing money on the health plans they sell through the exchanges, and the fallout is coming into focus. Companies including UnitedHealth Group Inc., Humana Inc. and Aetna Inc. have cited their losses in withdrawing from ACA marketplaces, as have smaller insurers that have been retreating, or even shutting down.

The insurers that remain are in some cases seeking sharp premium increases for next year, trying to get back in the black amid higher-than-expected costs.

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iehi-feed-60548 Mon, 29 Aug 2016 15:05:07 GMT Was Brexit fear a giant hoax or is this the calm before the next storm? AEP http://implode-explode.com/viewnews/2016-08-29_WasBrexitfearagianthoaxoristhisthecalmbeforethenextstormAEP.html More worrying is what S&P also said: that debt coming due over the next 12 months is 755pc of Britain's external receipts and large sums have to be rolled over continuously. This is the highest for all 131 rated states, thanks to London's role as a global financial hub. We will not know whether there is any mismatch, either in currencies or maturities, until the repayment deadlines hit and the skeletons come out of the closet. The test lies ahead.

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Morgan Stanley says [Eurocrats] need to wake up. It warns that the eurozone will suffer almost as much damage as Britain in a 'high stress scenario', and so do others. Danske Bank says the UK and the eurozone will both crash into recession later this year.

If so - and that is not yet clear - it is hard to see how the eurozone could withstand such a shock, given the levels of unemployment and the debt-deflation dynamics of southern Europe, and given the intesity of political revolt in Italy and France.

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iehi-feed-60547 Mon, 29 Aug 2016 14:55:14 GMT Finance is Not the Economy - Bezemer & Hudson http://implode-explode.com/viewnews/2016-08-29_FinanceisNottheEconomyBezemerHudson.html Can debt-financed rising asset prices make economies richer on a sustainable basis? If the aim of raising asset prices is to increase the capitalization rate of rents and profits by lowering interest rates, can pension funds, insurance companies, and retirees save enough for their retirement out of current earnings, or can they live by capital gains alone?

Asset prices can rise only by debt creation or by diverting current income. The recognition that such debt-fueled inflation of asset prices is a form of rent extraction is central to our analysis of its unsustainability... Just as a Ponzi scheme must collapse with mathematical certainty (even though the timing of the collapse is uncertain), so it is with asset markets that expand faster than income growth. The divergence between income growth and rent extraction (asset price growth and financial transfers) is unsustainable, although, by going global, asset markets can be kept inflated over decades.

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iehi-feed-60546 Mon, 29 Aug 2016 14:50:50 GMT Michigan sets parole for robo-signer ‘Linda Green' http://implode-explode.com/viewnews/2016-08-29_MichigansetsparoleforrobosignerLindaGreen.html iehi-feed-60545 Mon, 29 Aug 2016 14:44:51 GMT Chinese Endgame: Gold for SDR and Blockchain for Trade? http://implode-explode.com/viewnews/2016-08-29_ChineseEndgameGoldforSDRandBlockchainforTrade.html iehi-feed-60544 Mon, 29 Aug 2016 03:45:58 GMT Cloud Computing Brings Sprawling Centers, but Few Jobs, to Small Towns http://implode-explode.com/viewnews/2016-08-28_CloudComputingBringsSprawlingCentersbutFewJobstoSmallTowns.html The companies come to places like Boydton for basics like land, water and electricity. Even with low local wages, people are a high-cost item. As small as the staffs at these mammoth facilities are, companies say, perhaps a third of the company jobs will eventually be filled by robots.

Google started building in eastern Oregon to be near cheap hydroelectric power on the Columbia River, and most recently it has focused on Iowa, Alabama and Tennessee. Microsoft has a center in Wyoming, and it bought a nine-hole golf course as part of a complex near West Des Moines, Iowa. Amazon recently built similar giant facilities on the outer reaches of Columbus, Ohio, and Dulles, Va.

"A lot of this stuff is put in rural parts of the country that used to be part of a manufacturing economy" that has gone overseas, said Bill Coughran, a partner at the venture investment firm Sequoia Capital who ran much of Google's big engineering for eight years. "Textiles and furniture created a big power grid in the south. Then those jobs went away."

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Microsoft did not dispute reports that it would spend $1.1 billion on the Boydton data center, and said that "on average, data centers employ tens to several dozen people," in a mixture of corporate and contracted positions. It declined to let a reporter tour the site.

"They talked about 100 jobs, but it's a slow process," said Thomas C. Coleman III, the mayor of Boydton. So far, he says, the biggest impact "has been a couple of lunch tables at the Triangle gas station."... Microsoft initially came to a couple of town meetings, and it seemed to offer a way Boydton could come back. "Now they're off by themselves," she said. "We hear they have a really nice Starbucks machine."

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iehi-feed-60543 Mon, 29 Aug 2016 03:19:54 GMT Mishandled Brexit may send EU 'down the drain' - German vice chancellor http://implode-explode.com/viewnews/2016-08-28_MishandledBrexitmaysendEUdownthedrainGermanvicechancellor.html iehi-feed-60541 Sun, 28 Aug 2016 15:28:57 GMT New York's Storefronts Disappear Amidst Rent Hikes http://implode-explode.com/viewnews/2016-08-28_NewYorksStorefrontsDisappearAmidstRentHikes.html Suddenly, I saw another downside to the city's real estate boom. It's driving away the unique, friendly places that make living in the city worth the effort.

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It's not a new problem... but it seems to be picking up speed. In the last few weeks, by my count, about a dozen institutions have disappeared. Some of them sold things you simply cannot get anywhere else.

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The wave is lapping beyond Manhattan, too -- deep into Brooklyn, patrons mourned when Rocco's Calamari, an Italian cafeteria that, despite its name, served much more than fried squid, closed its doors.

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It's not just a matter of my personal convenience or quirky shopping habits. The usually well-paying, stable jobs lost when family-owned shops close will not be replaced if chain stores with fast-changing work forces come in. And since many chains are already here, a lot of shop fronts will remain empty, producing no revenue -- and no street life -- at all.

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"The tax and regulatory climate for a small business is nothing short of punishing. At some point, why bother?" [says the investment adviser Frazer Rice].

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iehi-feed-60540 Sat, 27 Aug 2016 16:58:04 GMT Former Fed Governor Warsh Blasts Central Bank For "Manipulation"; Broken Policy http://implode-explode.com/viewnews/2016-08-27_FormerFedGovernorWarshBlastsCentralBankForManipulationBrokenPoli.html iehi-feed-60538 Sat, 27 Aug 2016 03:50:30 GMT The Global Real Estate Bubble Is OFFICIALY Bursting http://implode-explode.com/viewnews/2016-08-26_TheGlobalRealEstateBubbleIsOFFICIALYBursting.html iehi-feed-60537 Sat, 27 Aug 2016 01:58:03 GMT Drug companies spend millions to keep charging high prices http://implode-explode.com/viewnews/2016-08-26_Drugcompaniesspendmillionstokeepcharginghighprices.html The Drug Price Relief Act would make prescription drugs more affordable for people in Medi-Cal and other state programs by requiring that California pay no more than what's paid for the same drugs by the U.S. Department of Veterans Affairs. It would, in other words, protect state taxpayers from being ripped off.

Industry donations to crush the Drug Price Relief Act "will top $100 million by the election, I'm quite certain of it," said Michael Weinstein, president of the AIDS Healthcare Foundation and a leading backer of the state measure, also known as Proposition 61. "They see this as the apocalypse for their business model."

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It probably would make more sense if Medicare, with more than 55 million beneficiaries, served in that federal capacity rather than the VA. But Big Pharma, abetted by the industry's Republican cronies, has consistently blocked efforts to allow Medicare to negotiate drug prices. The VA has no such constraint.

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iehi-feed-60536 Fri, 26 Aug 2016 20:14:24 GMT Today's Federal Deficit Report Hints at Looming Financial Crisis in the U.S. http://implode-explode.com/viewnews/2016-08-26_TodaysFederalDeficitReportHintsatLoomingFinancialCrisisintheUS.html exiting what little "recovery" we had since the 2008 crash...]]> iehi-feed-60535 Fri, 26 Aug 2016 20:08:42 GMT U.S. Stocks Slip as Investors Ramp Bets for Rate Hike This Year http://implode-explode.com/viewnews/2016-08-26_USStocksSlipasInvestorsRampBetsforRateHikeThisYear.html U.S. stocks slipped in a volatile session, as remarks from Federal Reserve officials lifted optimism on the economy while also bolstering speculation interest rates could rise as soon as next month.

A speech by Fed Chair Janet Yellen sparked an early surge in equities amid a bullish economic assessment, which included a lack of clear guidance on when a rate boost may come. Equities then tumbled after Vice Chairman Stanley Fischer said Yellen's comments were consistent with a possible September increase, only to recover most of their losses in a final-hour rebound...

Expectations for a rate increase climbed after Fischer spoke, with traders pricing in a 42 percent probability of a move next month, from 32 percent after Yellen's remarks. Odds are now nearly 63 percent the central bank will act by December, up from 42 percent two weeks ago, based on fed fund futures data compiled by Bloomberg.

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iehi-feed-60534 Fri, 26 Aug 2016 20:03:49 GMT China Has Returned to Reform Mode; Next Up: State-Backed Dinosaurs http://implode-explode.com/viewnews/2016-08-26_ChinaHasReturnedtoReformModeNextUpStateBackedDinosaurs.html This week, plans have been unveiled to quicken the clean-up of excess capacity in state-backed companies, level the playing field for private and foreign investors with new access to previously off-limit sectors, and take the next step in a long-awaited fiscal shake up.

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Chinese leaders in 2013 charted an ambitious plan to add market forces in the economy, with reform measures aimed at doubling the size of the economy by 2020 from 2010's level. Progress has been made in some areas, such as the scrapping of the one-child policy and interest-rate liberalization, and slower in others, with bloated state-owned enterprises still having advantages over private players in many sectors.

Almost three years since the Third Plenum overhaul was laid out, the government has to quicken the pace of change or reforms won't be wrapped up in time, said Mizuho's Shen.

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iehi-feed-60533 Fri, 26 Aug 2016 18:13:38 GMT "QE-Infinity" Is Grinding the Global Economy to a Halt http://implode-explode.com/viewnews/2016-08-26_QEInfinityIsGrindingtheGlobalEconomytoaHalt.html Alberto Gallo, head of macro strategies and manager of the Algebris Macro Credit Fund, describes this paradox as "QE infinity," whereby low rates and seemingly endless rounds of bond-buying programs encourage cheap borrowing, and investment in financial markets -- but not in the real economy.'

"The problem is rising debt and monetary easing comes with many collateral effects. One is the distortion of asset prices, leading to asset bubbles," Gallo explained on his website.

"Asset price distortion also has a ripple effect on wealth distribution, increasing inequality by benefitting the already-wealthy who are more likely to hold financial assets. Over time, low rates and QE can also encourage misallocation of resources to leverage-sensitive sectors, including real estate and construction."

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iehi-feed-60532 Fri, 26 Aug 2016 15:04:35 GMT Broken Chessboard: Brzezinski Gives Up on Empire http://implode-explode.com/viewnews/2016-08-26_BrokenChessboardBrzezinskiGivesUponEmpire.html The main architect of Washington's plan to rule the world has abandoned the scheme and called for the forging of ties with Russia and China. While Zbigniew Brzezinski's article in The American Interest titled "Towards a Global Realignment" has largely been ignored by the media, it shows that powerful members of the policymaking establishment no longer believe that Washington will prevail in its quest to extent US hegemony across the Middle East and Asia. Brzezinski, who was the main proponent of this idea and who drew up the blueprint for imperial expansion in his 1997 book The Grand Chessboard: American Primacy and Its Geostrategic Imperatives, has done an about-face and called for a dramatic revising of the strategy.

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Naturally, in a short 1,500-word article, Brzezniski can't cover all the challenges (or threats) the US might face in the future. But it's clear that what he's most worried about is the strengthening of economic, political and military ties between Russia, China, Iran, Turkey and the other Central Asian states.

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iehi-feed-60531 Fri, 26 Aug 2016 15:02:03 GMT Portugal Gets EU Approval to Inject $5 bln Into Ailing Bank http://implode-explode.com/viewnews/2016-08-26_PortugalGetsEUApprovaltoInject5blnIntoAilingBank.html Portugal's plan to pump nearly 5 billion euros ($5.6 billion) into its biggest bank by assets is "another big step towards the stabilization of the Portuguese financial system," the country's financial minister told CNBC on Thursday.

The European Commission (the executive wing of the EU, of which Portugal is a member) and Portugal have agreed in principle to the recapitalization of state-owned Caixa Geral de Depósitos.

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The plan was agreed late on Tuesday afternoon. It would see Portugal pump up to 2.7 billion euros of state funds into Caixa, transfer 500 million euros of its ParCaixa shares to Caixa and convert 960 million euros of contingent convertible bonds into equity.

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Meanwhile, Caixa will issue highly subordinated debt worth around 1.0 billion euros that will be compliant with regulatory capital ratios designed to bolster banks' ability to withstand financial shocks.

This follows negotiations with Brussels officials, aimed at ensuring the plan is not viewed as state-aid to the bank, which would add to Portugal's problematically high budget deficit.

Although the government would put money into the bank, the hope is that the returns for the state would outweigh the cash injection.

Uh-huh. Since now we're obviously about to go into an economic boom period, we're sure the Portugese government will make money on this definitely-not-a-bailout cash injection...

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iehi-feed-60530 Fri, 26 Aug 2016 14:56:01 GMT Why are America's suburbs getting poorer? http://implode-explode.com/viewnews/2016-08-26_WhyareAmericassuburbsgettingpoorer.html Atlanta has seen a big rise in suburban poverty. Between 2000 and 2012 the rate increased by 159% in Atlanta's suburbs. But the region is not alone. For instance, in Denver the rate rose by 131% and in Portland by 98%.

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Rents, even in the suburbs, are rising and many of the best rental homes in suburban Atlanta are owned by private equity firms. Many of these firms swooped into the market during the recession, buying up foreclosed homes and fixing them up for renters. These houses are typically well-maintained, but come with higher monthly rents and higher credit requirements.

These are standards many in the region are struggling to meet. It's forced some to take up long-term residence in local motels that don't check credit and others to move several generations of a family into one home.

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iehi-feed-60529 Fri, 26 Aug 2016 14:50:26 GMT Yellen Says Rate-Hike Case ‘Has Strengthened in Recent Months' http://implode-explode.com/viewnews/2016-08-26_YellenSaysRateHikeCaseHasStrengthenedinRecentMonths.html "In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months," she said in the text of a speech Friday to central bankers and economists in Jackson Hole, Wyoming.

She also said the economy is "nearing" the Fed's goals of full employment and stable prices. The Fed chair didn't discuss the specific timing of a rate move in her first public comments since June.

It's pretty clear that Yellen wants to re-claim some of the Fed's "ammunition" to be able to respond to the next (coming soon) crisis. However, the Fed has rewired the central banking system so that the Fed funds market is now almost completely bypassed, rendering any such "aid" the Fed could offer by lowering rates (or, "tightening" due to raising them) nearly meaningless -- more a matter of "perception management". The only real constraint or impact is the exchange rate impact of nominally higher or lower dollar rates. And ultimately, the Fed is constrained not to step too far out of line of the global pack, or risk too much dollar appreciation.

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