Implode-Explode Heavy Industries news feed Tracking the many faces of the global credit implosion. en-us iehi-feed-60749 Tue, 27 Sep 2016 03:15:42 GMT Fact-Checking the First Presidential Debate iehi-feed-60743 Mon, 26 Sep 2016 14:27:34 GMT A Weaker Currency Is No Longer Economic Elixir It Once Was Just look at Japan, where the yen plunged 28 percent in the two years through 2014, yet net exports to America still fell by 10 percent. Or at the U.K., where the pound's 19 percent tumble in the two years through 2009 couldn't stave off a 26 percent decline in shipments to the U.S. In fact, since the turn of the century, the ability of exchange-rate movements to affect trade and growth in major economies has fallen by more than half, according to Goldman Sachs Group Inc.

The findings suggest that weaker currencies may not provide much assistance to officials in countries like Japan and the U.K. that are relying on unprecedented easy-money policies to help boost tenuous growth and inflation. On the flip side, the data also indicate that concerns the U.S. recovery will be derailed as rising interest rates drive investors into the dollar are also overblown. A shift in the structure of advanced-economy trade to less price-elastic goods and services, combined with the prolonged effects of the financial crisis, have stunted the sensitivity of trade volumes relative to global exchange rates, according to Goldman Sachs analysts led by Jari Stehn.

iehi-feed-60741 Mon, 26 Sep 2016 14:23:44 GMT Cracks showing in Germany's fragile truce with the ECB "The big challenge for Mario Draghi will be to prepare the Bundestag and German public for a further easing of monetary policy," said Marcel Fratzscher, head of the DIW economic institute and a former senior official at the ECB.

That message is unlikely to go down well in Berlin. In addition to concerns about the distorting effects of QE on financial markets and the impact of low interest rates on German savers and insurers, the political landscape in Germany has become decidedly more toxic for the ECB over the past months.

With one year to go until the next federal election, the AfD has risen to a record high of 16 percent in national polls. On the defensive, Merkel's conservatives are desperate to shift the debate away from her increasingly unpopular stance on refugees.

iehi-feed-60740 Mon, 26 Sep 2016 14:21:47 GMT Clueless Janet Paves the Way for Bigger Crash iehi-feed-60737 Sun, 25 Sep 2016 18:03:36 GMT Whistleblowing Wells Fargo loan officer describes years of fraudulent, criminal culture in the bank iehi-feed-60735 Sun, 25 Sep 2016 17:43:30 GMT China Continues to Battle Massive Capital Flight Problem Any way you do the math, capital outflows from China continue to be massive. A large current account surplus continues to cushion a potential fall in reserves, but more seems to be happening for reserves to be stable. Looking deeper into the nature of outflows, one has to conclude that the situation remains fragile. It is still residents driving the outflows and they do not seem to be a "good cholesterol" type (i.e. repayment of debt or purchases of assets abroad).

Meanwhile, China hasn't fully resolved its balance-of-payments problem. The reserves are massive, but so are the "bad cholesterol" outflows. It is time to go to the doctor and increase the return on assets for capital to be willing to come back. Unfortunately, the Chinese authorities seem to be heading in the opposite direction, with increasingly lower interest rates and a lack of real reform for state-owned enterprises.

iehi-feed-60734 Sun, 25 Sep 2016 17:39:19 GMT Merkel Says No Aid for Deutsche Bank; Derivatives And Fines Loom -- Depositor Bail-In Inevitable? iehi-feed-60733 Sat, 24 Sep 2016 16:19:52 GMT The Fed's Missed Window & Failed Realizations iehi-feed-60731 Sat, 24 Sep 2016 16:01:21 GMT IMF on Greece: calls for more pension cuts, greater debt relief in report The International Monetary Fund called for Greece to cut pensions and taxes and for its lenders to provide significant debt relief in order for the country to make a convincing exit from the crisis.


It argued that the pension system's deficit remains too high at 11 percent, compared to a 2.5 percent average in the eurozone, and that too much of a burden has been placed on Greeks currently in work, while existing pensioners have largely been protected.

iehi-feed-60730 Fri, 23 Sep 2016 23:30:27 GMT Former Trader Jérôme Kerviel Ordered to Pay Only €1 mln in Damages to SocGen (WHICH NOW MAY BE ON THE JOOK FOR ANOTHER €2.2bln) A French appeals court ruled Friday that former trader Jérôme Kerviel is only responsible for a sliver of the €4.9 billion ($5.47 billion) Société Générale SA lost after unwinding his trades, raising the possibility the government might reclaim a hefty tax rebate it granted the bank at the time.

Judges ordered Mr. Kerviel to pay €1 million to his former employer, overturning a previous ruling which ordering him to pay €4.9 billion to Société Générale.

The ruling is a qualified victory for Mr. Kerviel and a setback for Société Générale, because it establishes that responsibility for the lion's share of the losses ultimately lies with the French lender, not its former employee.

... the French government could reclaim a €2.2 billion tax deduction that the bank received after unwinding Mr. Kerviel's trade and posting a massive loss... Jean Veil, a lawyer for Société Générale, brushed off the idea saying he didn't believe that the government could claim the money back given that the bank hadn't committed a "deliberate" or "excessive" fault.

iehi-feed-60729 Fri, 23 Sep 2016 22:58:13 GMT ECB Embarrassment: Each €18 In QE Generated Just €1 In GDP Growth iehi-feed-60728 Fri, 23 Sep 2016 19:10:36 GMT Exclusive: Euro Regulators expect Monte dei Paschi to ask Italy for help Now euro zone authorities are considering whether state support would have to be tapped after what bankers have described as slack interest in the bank's share offer.

"There is clearly an execution risk to the capital raising," said one official with knowledge of the rescue attempt, adding that the bank's value, about one ninth the size of the planned 5 billion euro cash call, would be a turn-off for investors.


Reopening the question of state support, which had already been explored and dropped because of the losses it requires for bondholders under European bank crisis rules, is politically charged, and would reignite a dispute between Italy and Germany.

Berlin had objected to Rome's efforts to back the struggling bank without imposing a loss on its bondholders, according to another senior official.

iehi-feed-60724 Fri, 23 Sep 2016 15:13:46 GMT Saudis Said to Have Offered to Cut Oil Output; No Deal Reached Saudi Arabia, the world's largest oil exporter, told Iran it would be willing to reduce its output -- which is close to a record 10.7 million barrels a day -- if its regional rival were to cap production at 3.6 million, according to two people familiar with the matter, who asked not to be identified because the talks were private. Other proposals were also discussed by oil officials from the countries at the headquarters of the Organization of Petroleum Exporting Countries in two-day talks that ended Thursday without a deal, one of the people said.

Oil-producer meetings from Vienna and Paris to Moscow have attempted to reach a consensus before talks in the Algerian capital next week.

iehi-feed-60714 Thu, 22 Sep 2016 01:15:07 GMT No, the Fed Doesn't Have a Plan. Yes, It Really is Monetizing Government Debt And Fed critics have argued since 2008 that "normal" monetary policy would never return, that QE would never be unwound, and that artificially low (or even negative) interest rates were here to stay. In other words, that the Fed and its 300 Ivy League economists don't know what to do other than kick the can down the road another few months while hoping for a miraculous economic recovery.

Fast forward to today, and the recovery hasn't materialized. And Fed officials, current and former, are singing a different tune about ever restoring the balance sheet to pre-2008 levels.

... even progressive WaPo readers sense that the Fed is clueless, and that there are no brilliant people in Washington working on a "plan" to save us. Extraordinary monetary policy is the new normal, and all those pundits who assumed the Fed knew what it was doing were- and are- wrong.

iehi-feed-60711 Wed, 21 Sep 2016 23:07:28 GMT Supreme Court Case Forces Cooperman Prosecutors to Halt Criminal Investigation The Supreme Court case, scheduled for arguments next month, could have wide-ranging implications for many insider-trading cases moving forward. The pivotal issue: Whether the government must prove the person who gave the inside tip received a benefit in providing it.

Bassam Salman, who brought the appeal to the Supreme Court, was convicted and sentenced to three years in prison for trading on inside information he received from his brother-in-law, a Citigroup Inc. investment banker. Mr. Salman and an associate brought in $1.7 million in trading profits based on tips from his brother-in-law about forthcoming acquisitions involving Citigroup clients, prosecutors said... Mr. Salman's lawyers are relying on a major 2014 decision by the New York-based Second U.S. Circuit Court of Appeals that limited insider-trading prosecutions.

In the New York case, U.S. v. Newman, the court said prosecutors had to prove a recipient of an inside tip knew the confidential information came from an insider and that the insider disclosed the information for a tangible benefit. That decision overturned the convictions of hedge-fund managers Todd Newman and Anthony Chiasson.


The Justice Department unsuccessfully appealed the Newman decision and warned it would hamper their ability to pursue insider trading. The ruling also forced prosecutors to move to dismiss charges against former SAC Capital Advisors LP portfolio manager Michael Steinberg and six analysts, dealing a blow to what had been one of the most successful string of insider-trading prosecutions. Prosecutors in New York had won more than 80 convictions in such cases with only one acquittal in recent years.

Despite the uncertainty in the law, the SEC decided to move forward [in Cooperman's case] in a way that largely sidesteps the question at issue in the Salman case.

The SEC's civil case against Mr. Cooperman alleges he essentially stole the information from an executive at Atlas Pipeline Partners before purchasing securities in the company before the 2010 sale of its natural gas processing facility in Elk City, Okla. The SEC didn't allege Mr. Cooperman provided a benefit to the executive, but "breached a duty" he owed to the executive to keep it confidential and not use it to trade.

iehi-feed-60709 Wed, 21 Sep 2016 22:32:41 GMT Yellen Rebuffs Pressure to Hike as Fed "Gives Economy Room to Run" Federal Reserve Chair Janet Yellen braved mounting opposition inside and outside the U.S. central bank and delayed an interest-rate increase again to give the economy more room to run.

While agreeing that the case for a rate rise had strengthened, Yellen on Wednesday argued that it made sense to put off a move for now amid signs that discouraged Americans who dropped out of the labor market are returning and looking for work.

Look at that; the Fed found an excuse... quelle suprise!! Gold and silver blasted off in response (and if there was less manipulation, they'd be up considerably more, just to preserve their pre-hike-headfake momentum...)

iehi-feed-60708 Tue, 20 Sep 2016 23:00:51 GMT Would Germany Bail Deutsche Bank Out? Deutsche cannot pay $14 billion without raising a great deal of cash. Deutsche has put aside $5.5 billion for paying fines. A mere 9 billion short. So could Deutsche go down? Financially yes it could. But politically, I doubt it. And it's the tension between these two answers, between the parlous financial state and the huge political significance of Deutsche, that I find interesting.

Deutsche is Germany's only G-SIB (Global Systemically Important Bank).   Deutsche is Germany's financial flag carrier. It stands at the centre of Germany's long held desire to have Frankfurt eclipse London as Europe's financial centre... France has three G-SIBs. The balance between France and Germany within Europe would shift. Maintaining that balance between France and Germany, at the heart of Europe, has been critical in European affairs since WWI.

iehi-feed-60707 Tue, 20 Sep 2016 14:03:45 GMT Chinese farmers take over former white-owned farms in Zimbabwe to cash in on tobacco Farms that were badly managed for nearly 20 years, after Robert Mugabe's mass seizure of white-owned land, are now being worked again in the hope of reaping a  potentially huge reward.

At least five farms have attracted Chinese investment in Mashonaland Central, a region to the north-west of Harare, that was traditionally one of the country's best tobacco-producing areas.

Safe in the knowledge that Mr Mugabe's policy of strengthening ties with China will offer a degree of protection, they have poured money into machinery and are taking advice from international experts.

iehi-feed-60706 Tue, 20 Sep 2016 14:01:38 GMT China Rich Help Europe Banks Raise $14 Billion Since August Asia's high net-worth individuals, whose wealth has surpassed counterparts in North America, have been major investors in regional bank bonds, slashing yields. They are turning to Europe even as a rout in shares of lenders including Deutsche Bank AG worsens. Hybrid issues with low, fixed coupons face downside risk from rising U.S. Treasury yields, according to JPMorgan Chase & Co.

"Asian investors tend to be more yield hungry and willing to take higher risks," said Ben Sy, the head of fixed income, currencies and commodities at the private banking arm of JPMorgan in Hong Kong. While they tend to focus on European banks with strong retail franchises, they "are getting complacent" when it comes to insurer bonds, he said.


Noah Holdings Ltd. said wealthy Chinese investors' demand for overseas assets may grow as much as 20 percent next year as they diversify from a yuan that dropped 4.6 percent in the past year. Australian issuers such as Westpac Banking Corp. are also making Asian investors their first ports of call.

iehi-feed-60704 Tue, 20 Sep 2016 13:54:01 GMT Slowly, Then All at Once - Kunstler