Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-64821 Fri, 19 Jul 2019 17:51:25 GMT Fed Vacillates As It Toys With Kind-of Promising A Rate Cut But Not Really http://implode-explode.com/viewnews/2019-07-19_FedVacillatesAsItToysWithKindofPromisingARateCutButNotReally.html On Thursday, investors got excited about the possibility of a bigger-than-expected interest rate cut. New York Fed President John Williams on Thursday said policy makers should take preventative measures at the first signs of economic slowdowns. The market took this to mean that a bigger interest rate cut was on the way.

Expectations of a half-percentage-point cut at the Fed's next meeting in two weeks more than doubled to 60% in response. Treasury yields and the US dollar slipped. But then a spokesperson clarified that Williams wasn't making any predictions about the Fed's monetary policy update due in two weeks. Expectations for a half-point cut retreated to 41% on Friday, although that was still more elevated than just two days ago.

In the latest attack on Fed policy, President Donald Trump tweeted that he preferred Williams first statement, calling it "100% correct that the Fed 'raised' far too fast and too early."

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iehi-feed-64820 Fri, 19 Jul 2019 17:48:28 GMT BlackRock: CEOs pulling supply chains out of China http://implode-explode.com/viewnews/2019-07-19_BlackRockCEOspullingsupplychainsoutofChina.html "We're hearing from CEOs that more and more supply chains are moving out of China right now, " Fink said on "Squawk Box." "People are not waiting, companies are not waiting to see what the outcome is."

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``More than 50 multinational companies are moving production out of China, including Apple, Nintendo and Dell, CNBC previously reported. Companies began announcing in May that they would move from China to Vietnam, as China and the U.S. stepped up tit-for-tat duties.

Brooks Running -- which is part of Warren Buffett's Berkshire Hathaway -- said in May it would be "predominantly in Vietnam by the end of the year," adding that about 8,000 jobs will move there from China.

Vietnam! So much better.

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iehi-feed-64815 Wed, 17 Jul 2019 21:39:29 GMT Foreign purchases of American homes plunge 36% as Chinese buyers flee http://implode-explode.com/viewnews/2019-07-17_ForeignpurchasesofAmericanhomesplunge36asChinesebuyersflee.html Challenging conditions in the U.S. housing market, along with tighter currency controls by the Chinese government, caused a stunning drop in foreign demand for American homes.

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The decline was due to a drop in the number and average price of purchases. Foreigners bought 183,100 properties with a total value of about $77.9 billion, down from 266,800 valued at $121 billion in the previous period.

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The Chinese were the leading buyers for the seventh consecutive year, purchasing an estimated $13.4 billion worth of residential property. Yet that was a 56% decline from the previous 12 months and comparatively the biggest percentage drop of all foreign buyers.

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iehi-feed-64813 Tue, 16 Jul 2019 23:25:16 GMT NY Landlords Strike Back, Suing to Dismantle Rent Regulation System http://implode-explode.com/viewnews/2019-07-16_NYLandlordsStrikeBackSuingtoDismantleRentRegulationSystem.html The first notable constitutional challenge to rent controls came after Washington, D.C., and New York City adopted them following World War I. Since then, numerous suits have challenged regulations across the country, but the Supreme Court has ultimately upheld rent regulations.

The plaintiffs, however, have their sights on taking the suit to the Supreme Court, where they hope a new conservative majority will rule in their favor and recent rulings will buttress their case.

The suit has also been fast-tracked because of a Supreme Court ruling last month that allows plaintiffs to sue in federal court as soon as state and local governments take property without just compensation. An earlier ruling had required plaintiffs to sue in state court.

Still, reaching the Supreme Court could take years and chances are slim: The court accepts 100 to 150 of the more than 7,000 cases it is asked to review each year.

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Rent stabilization has been in effect for over half a century with the purpose of providing affordable housing and alleviating New York's housing crisis.

But the suit says the rent-stabilized system was unconstitutional even before the new laws were signed, calling it arbitrary and irrational, and a burden on the rights of property owners.

It says that rent regulations exacerbate the city's housing shortage and that, because there are no restrictions on the incomes of rent-regulated tenants, the system allows wealthy New Yorkers to benefit unfairly.

Economically, the landlords are absolutely correct (it's pretty obvious that rent regulation has just exacerbated the underlying problem over time), but there is a weak basis to roll back anything except the recent changes, unless the entire regulatory deference standard since the late 19th-century is to be overturned.

Also ironic that the only reason a suit like this even has a shot is because Trump and the repubs cheated and put an extra water-carrying justice on the Supreme Court -- doubly-ironic with Trump himself standing to benefit as a landlord.

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iehi-feed-64808 Fri, 12 Jul 2019 15:28:42 GMT Trump Reveals Himself Banksters' Water-Carrier On Cryptos http://implode-explode.com/viewnews/2019-07-12_TrumpRevealsHimselfBankstersWaterCarrierOnCryptos.html iehi-feed-64807 Fri, 12 Jul 2019 12:33:32 GMT Facebook's Libra cryptocurrency project branded of ‘serious concern' by Federal Reserve http://implode-explode.com/viewnews/2019-07-12_FacebooksLibracryptocurrencyprojectbrandedofseriousconcernbyFede.html The social networking giant wants to debut the coin in 2020 once financial partnerships are cemented in place and the proposed wallets used to store Libra are established with the same security measures as today's traditional bank accounts.

However, the US Federal Reserve wants Facebook to put its foot on the brake until a number of concerns have been addressed.

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"Facebook has a couple billion-plus users, so I think you have for the first time the possibility of very broad adoption," Powell said. "It needs a careful look, so I strongly believe we all need to be taking our time with this."

Singapore, too, has concerns over the Libra project. Earlier this week, officials demanded that Facebook provide a more thorough explanation of Libra in order for the country to decide whether regulators need to investigate the proposal. 

However, Singapore's Monetary Authority of Singapore (MAS) said it is "open" to financial innovation, on the proviso that Facebook does not pose a threat to the local financial ecosystem.

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iehi-feed-64804 Thu, 11 Jul 2019 20:33:26 GMT Why Sex Offender Jeffrey Epstein Is Not A Billionaire http://implode-explode.com/viewnews/2019-07-11_WhySexOffenderJeffreyEpsteinIsNotABillionaire.html iehi-feed-64797 Tue, 09 Jul 2019 21:14:17 GMT This journalist has seen Trump's tax returns and says he's not as rich as he claims http://implode-explode.com/viewnews/2019-07-09_ThisjournalisthasseenTrumpstaxreturnsandsayshesnotasrichasheclai.html So in the context of a lawsuit that was specifically about the question of whether Trump was as rich as he said he was, the lawyers arguing that he wasn't as rich as he said he was wanted to see the tax returns and Trump did not want to hand them over.

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[In a deposition related to the lawsuit, Trump was asked] "Have you always been completely truthful in your public statements about your net worth," my attorneys asked Donald. "I try," was his reply. When they asked him about how he calculated his net worth, he noted that the figure "goes up and down with markets and with attitudes and with feelings, even my own feelings." Later he added that "even my own feelings affect my value to myself."

Boy, that final quote sounds a lot like some kind of snowflake!

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iehi-feed-64787 Tue, 02 Jul 2019 21:46:11 GMT House Files Lawsuit Seeking Disclosure of Trump Tax Returns http://implode-explode.com/viewnews/2019-07-02_HouseFilesLawsuitSeekingDisclosureofTrumpTaxReturns.html The House's tax-writing committee sued the Treasury Department and Internal Revenue Service on Tuesday demanding access to President Trump's tax returns, escalating a fight with an administration that has repeatedly dismissed as illegitimate the Democrats' attempt to obtain Mr. Trump's financial records.

The lawsuit moves the dispute into federal courts after months of sniping between the Democratic-led House Ways and Means Committee, which requested and then subpoenaed the returns, and the Treasury secretary, Steven Mnuchin. The outcome is likely to determine whether financial information that Mr. Trump -- breaking with longstanding tradition -- has kept closely guarded as a candidate and as president will be viewed by Congress and, ultimately, by the public.

In Tuesday's filing, the House argued that the administration's defiance of its request amounted to "an extraordinary attack on the authority of Congress to obtain information needed to conduct oversight of Treasury, the I.R.S., and the tax laws on behalf of the American people."

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The same dispute is at the center of a pair of lawsuits over subpoenas to accounting and banking firms for other financial records involving the Trump Organization. So far, two Federal District Court judges have rejected the argument offered by Mr. Trump's private legal team that those requests did not carry legitimate legislative purposes. Mr. Trump has taken those losses to appeals courts.

A ruling by a federal court on the merits of the recurring dispute could shift the balance of power between the two branches and impact the authority of Congress to conduct oversight over not just Mr. Trump but presidents for years to come.

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iehi-feed-64785 Mon, 01 Jul 2019 21:29:11 GMT Why Wall Street Owes Every U.S. Taxpayer $35,460 http://implode-explode.com/viewnews/2019-07-01_WhyWallStreetOwesEveryUSTaxpayer35460.html ... the average U.S. household has lost an estimated $4,236 in interest income due to the Fed's low interest rates (as opposed to a "normal" rate environment). In total, this has funneled $51.8 billion from the pockets of American savers into the coffers of Wall Street banks.

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According to a report from the People's Policy Project think tank, the wealth of the bottom 50% is down $900 billion over the past 30 years.

Meanwhile, the wealth of the top 1% has increased by $21 trillion. Digging deeper, we found that at least $5 trillion of this was taken away from average investors, like you and your fellow readers.

Without getting too deep into how this "theft" occurred, I can tell you that the financial elites created a private investment market. Then they restricted access to this massive market to only themselves... cutting the rest of America out of the deal.

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iehi-feed-64781 Sun, 30 Jun 2019 17:27:25 GMT Central bank plans to create digital currencies receive BIS endorsement http://implode-explode.com/viewnews/2019-06-30_CentralbankplanstocreatedigitalcurrenciesreceiveBISendorsement.html Global central banks may have to issue their own digital currencies sooner than expected, the general manager of the Bank for International Settlements has said, after Facebook recently unveiled plans to create its own stablecoin.

Agustín Carstens, who heads the BIS, known as the central bankers' bank, told the Financial Times that the organisation supported the efforts of the world's central banks in creating digital versions of state currencies.

"Many central banks are working on it; we are working on it, supporting them," Mr Carstens told the Financial Times. "And it might be that it is sooner than we think that there is a market and we need to be able to provide central bank digital currencies."

A number of central banks, including Sweden's Riksbank, are working on their own versions of digital currencies, which would work by offering the public direct access to central bank money. At present, only private sector lenders can borrow directly from monetary authorities.

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Facebook's plans to create Libra -- a stablecoin with its value pegged to a basket of as yet unspecified currencies backed by as yet unspecified assets -- have attracted attention from officials, including at the Basel-based BIS.

The BIS said in an extract on digital currencies, taken from its annual report, that coins backed by tech giants could "rapidly establish a dominant position" in global finance and pose a potential threat to competition, stability and social welfare.

"The issue is how will the currency be used? Will there be discovery of information, or data that can be used in credit provision and how will data privacy be protected?" Mr Carstens said. "A very simple way to regulate this is to start with anti-money laundering rules. That is a very immediate and very obvious concern."

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iehi-feed-64780 Fri, 28 Jun 2019 19:02:01 GMT Zimbabwe Bans All Foreign Currency, De-Dollarizes, Returns To Dreaded Zim http://implode-explode.com/viewnews/2019-06-28_ZimbabweBansAllForeignCurrencyDeDollarizesReturnsToDreadedZim.html Zimbabwe's government has taken the controversial decision to ban local trading in foreign currencies, including the US dollar, with immediate effect.

It has also reintroduced the Zimbabwe dollar, which was abandoned because of hyperinflation in 2009 when the country mainly adopted the US dollar and the South African rand.

The move has shocked Zimbabweans, who have little faith in a local currency - the exchange rate when the Zimbabwe dollar was scrapped was Z$35 quadrillion to $1.

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iehi-feed-64778 Wed, 19 Jun 2019 22:40:51 GMT Fed Holds Rates, But Signals Readiness To Cut (UNDER RELENTLESS TRUMP INTERFERENCE) http://implode-explode.com/viewnews/2019-06-19_FedHoldsRatesButSignalsReadinessToCutUNDERRELENTLESSTRUMPINTERFE.html "My colleagues and I have one overarching goal, to sustain the economic expansion," Powell told a press conference following the decision. He noted that apparent progress on trade talks had "turned to greater uncertainty" and many Fed officials "now see that the case for somewhat more accommodative policy has strengthened."

The shift followed attacks on the Fed by President Donald Trump for not doing more to bolster the economy and Tuesday's report by Bloomberg News that the president asked White House lawyers earlier this year to explore options for demoting Powell from the chairmanship.

Asked about the criticism, Powell said he thinks "the law is clear that I have a four-year term and I fully intend to serve it."

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iehi-feed-64773 Sun, 16 Jun 2019 15:50:56 GMT Minneapolis Leads The Way By Abolishing Single Family Home Zoning http://implode-explode.com/viewnews/2019-06-16_MinneapolisLeadsTheWayByAbolishingSingleFamilyHomeZoning.html Don't be misled by the construction cranes that punctuate city skylines. The number of housing units completed in the United States last year, adjusted for the size of the population, was lower than in any year between 1968 and 2008. And the problem is most acute in major urban areas along the east and west coasts. Housing prices, and homelessness, are rising across the country because there is not enough housing.

Increasing the supply of urban housing would help to address a number of the problems plaguing the United States. Construction could increase economic growth and create blue-collar jobs. Allowing more people to live in cities could mitigate inequality and reduce carbon emissions. Yet in most places, housing construction remains wildly unpopular. People who think of themselves as progressives, environmentalists and egalitarians fight fiercely against urban development, complaining about traffic and shadows and the sanctity of lawns.

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What went right in Minneapolis? The story begins with a crop of young politicians who want more housing: The city is conducting an early experiment in government by and for millennials. For the first time in the city's modern history, more than half of its residents are renters, including Mayor Frey. Many residents -- again, younger people in particular -- also describe density as a necessary response to climate change. Environmentalism, which began as an effort to protect people from cities, is increasingly embracing cities as the best way to protect the planet from people.

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All of this deserves wide emulation by other American cities. But Minneapolis has an important advantage: Its housing prices still are relatively modest, so its population includes a lot of middle-class families. Housing debates in coastal cities pit the wealthy against the poor, and middle ground has been hard to find.

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iehi-feed-64770 Thu, 13 Jun 2019 16:42:43 GMT THIS TIME ISN'T DIFFERENT: Billionaire investor warns lazy thinking is taking over markets http://implode-explode.com/viewnews/2019-06-13_THISTIMEISNTDIFFERENTBillionaireinvestorwarnslazythinkingistakin.html He continued: "Are recessions really avoidable or merely postponable? And if the latter, is it better for them to occur naturally or be postponed unnaturally? Might efforts to postpone them create undue faith in the power and intentions of the Fed, and thus return of moral hazard? And if the Fed wards off a series of little recessions, mightn't that just mean that, when the ability to keep doing so reaches its limit, the one that finally arrives will be a doozy? "

Such skepticism comes in stark contrast to the confidence exuded by the likes of venture capitalist Chamath Palihapitiya. An early Facebook stakeholder and investing presence across several industries, Palihapitiya told CNBC at the time that entities like the Fed have used tools like quantitative easing to orchestrate a pacified economy.

"I don't see a world in which we have any form of meaningful contraction nor any form of meaningful expansion," he told CNBC in April. "We have completely taken away the toolkit of how normal economies should work when we started with QE. I mean, the odds that there's a recession anymore in any Western country of the world is almost next to impossible now, save a complete financial externality that we can't forecast."

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iehi-feed-64769 Thu, 13 Jun 2019 16:11:29 GMT Japan Un-Publishes Government Report That Admitted Demographic and Pension Disaster http://implode-explode.com/viewnews/2019-06-13_JapanUnPublishesGovernmentReportThatAdmittedDemographicandPensio.html This year's ‘Annual Report on Ageing Society' plainly stated this reality; it was a brutally honest assessment of Japan's underfunded pension program.

The report went on to tell people that they needed to save their own money for retirement because the pension fund wouldn't be able to make ends meet.

This terrified a lot of Japanese workers and pensioners.

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Prime Minister Shinzo Abe apologized for the report, calling it "inaccurate and misleading."

And Finance Minister Taro Aso-- himself a pensioner at age 78 (though in typical Japanese form he looks like he's 45)-- simply un-published the report.

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iehi-feed-64768 Thu, 13 Jun 2019 13:37:03 GMT With One Move, New York Cuts Sprint and T-Mobile Down to Size http://implode-explode.com/viewnews/2019-06-13_WithOneMoveNewYorkCutsSprintandTMobileDowntoSize.html In December 2016, Masayoshi Son, the billionaire owner of Sprint, paid a visit to Trump Tower to meet the president-elect. Afterward, the two announced that Mr. Son had spontaneously decided to invest $50 billion in the United States and create 50,000 jobs. There was an unspoken but widely understood quid pro quo. The Trump administration would finally agree to do what the Obama administration had refused: allow a giant, anticompetitive merger of Sprint with T-Mobile, leaving just three gigantic wireless carriers in the country.

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But President Trump and Mr. Son had made a giant miscalculation, one the business press also missed. They forgot about the states.

This week, nine states and the District of Columbia, led by New York's attorney general, Letitia James, filed suit in federal court in New York to block the merger... if the states win in court, as they seem likely to, the merger is dead. Inadvertently, this corporate blunder has created a new role for the states in merger review: acting as a backstop in cases of gross dereliction of duty by the federal government.

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Companies tend to act in their financial self-interest, and where there is less competition, they feel much less need to invest money to keep customers (ask your local cable company). And internal documents, referred to in a partly redacted complaint filed as part of the lawsuit, appear to confirm that the carriers saw the merger less as an opportunity to do battle with China (always an unclear mission for a domestic phone company) but rather as an opportunity to raise prices. The companies' own economists predict the merger will cost subscribers at least $4.5 billion a year.

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iehi-feed-64762 Tue, 04 Jun 2019 23:43:21 GMT The shadow banks are back with another big bad credit bubble http://implode-explode.com/viewnews/2019-06-04_Theshadowbanksarebackwithanotherbigbadcreditbubble.html Middle-market lending, of course, is just part of the biggest expansion in corporate borrowing the U.S. economy has ever seen, a result of eight years of cheap and easy money engineered by the Fed and other central banks after the 2008 financial crisis.

The ratio of corporate borrowing to a variety of metrics -- profits and assets, book value or the size of the overall economy -- is at or near an all-time high. So is the riskiness of the loans, reflecting the amount of debt companies have taken on, the absence of covenants and the rosy assumptions made about the amount of cash flow companies will have to cover debt service.

Meanwhile, the difference in interest rates between the safest loans and the riskiest -- in financial jargon, the "spread" -- is at historically low levels, a reliable indication of too much money chasing too few good lending opportunities. According to the latest "financial stability" reports from the Federal Reserve and the International Monetary Fund, all of these measures have gotten worse in the last two years, with many flashing yellow and red on their dashboards of systemic financial risk.

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If all this newly borrowed money were being used to create new technology or enhance productivity, piling up all this debt might be a risk worth taking. But the evidence suggests that what it is mostly doing is artificially stimulating the economy. Companies have used much of this newly borrowed money to buy back their own shares, pay special dividends to private equity investors and acquire other companies, all of which have the effect of inflating stock prices. The recent wave of richly priced mergers and overpriced stock offerings, and the declining returns offered by recent commercial real estate deals, are all good indications of a credit bubble waiting to burst.

So, is this a replay of 2008?

... as before, this excess of supply relative to demand has led to a deterioration of lending standards that started in the shadow banking system and has now spread to regulated banks anxious about a further reduction in their market share. (My favorite stat: During the first three months of this year, according to Trepp, a data company, interest-only loans -- loans requiring no payback of principal until the loan is due -- accounted for three-quarters of all new commercial real estate loans.)

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Perhaps the biggest similarity between the previous credit bubble and this one, however, is the stubborn reluctance of regulators to let some of the air out of the credit bubble before it bursts.

... The [Financial Stability Oversight] Council is headed by Treasury Secretary Stephen Mnuchin, a former Goldman Sachs investment banker who eventually made more than $10 million buying and selling -- with partners -- a California bank that, after engaging in aggressive mortgage lending, failed during the last housing crisis.

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Powell, Quarles and Mnuchin are overconfident for the same reason Fed chairmen Alan Greenspan and Ben Bernanke and Treasury Secretary Henry Paulson were overconfident during the Bush years.

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iehi-feed-64761 Tue, 04 Jun 2019 21:30:13 GMT GOP lawmakers discuss vote to block Trump's new tariffs on Mexico, in what would be its first real act of defiance http://implode-explode.com/viewnews/2019-06-04_GOPlawmakersdiscussvotetoblockTrumpsnewtariffsonMexicoinwhatwoul.html ``Congressional Republicans have begun discussing whether they may have to vote to block President Trump's planned new tariffs on Mexico, potentially igniting a second standoff this year over Trump's use of executive powers to circumvent Congress, people familiar with the talks said.

The vote, which would be the GOP's most dramatic act of defiance since Trump took office, could also have the effect of blocking billions of dollars in border wall funding that the president had announced in February when he declared a national emergency at the southern border, said the people, who spoke on the condition of anonymity because the talks are private.

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Trump's plans to impose tariffs on Mexico -- with which the United States has a free-trade agreement -- rely on the president's declaration of a national emergency at the border... Congress passed [a blocking] resolution in March after Trump reallocated the border wall funds, but he vetoed it. Now, as frustration on Capitol Hill grows over Trump's latest tariff threat, a second vote could potentially command a veto-proof majority to nullify the national emergency, which in turn could undercut both the border-wall effort and the new tariffs.

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iehi-feed-64760 Tue, 04 Jun 2019 21:28:00 GMT Cuba travel ban redux: Trump admin. halts cruise ships, group tours from visiting http://implode-explode.com/viewnews/2019-06-04_CubatravelbanreduxTrumpadminhaltscruiseshipsgrouptoursfromvisiti.html The Trump administration on Tuesday ended the most popular forms of U.S. travel to Cuba, banning cruise ships and a heavily used category of educational travel in an attempt to cut off cash to the island's communist government.

Cruise travel from the U.S. to Cuba began in May 2016 during President Barack Obama's opening with the island. It has become the most popular form of U.S. leisure travel to the island, bringing 142,721 people in the first four months of the year, a more than 300% increase over the same period last year. For travelers confused about the thicket of federal regulations governing travel to Cuba, cruises offered a simple, one-stop, guaranteed-legal way to travel.

That now appears to be over.

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Collin Laverty, head of Cuba Educational Travel, one of the largest Cuba travel companies in the U.S., called the new measures "political grandstanding aimed at Florida in the run up to the 2020 elections."

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