Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-64948 Tue, 17 Sep 2019 22:42:42 GMT Trump to revoke California's authority over car emissions http://implode-explode.com/viewnews/2019-09-17_TrumptorevokeCaliforniasauthorityovercaremissions.html President Trump is expected Wednesday to revoke a decades-old rule that empowers California to set tougher car emissions standards than those required by the federal government -- putting the state and the administration on a path to years of fighting in court.Hanging in the balance is whether California will continue to serve as a laboratory for tough new auto pollution rules and whether its regulations requiring automakers to sell more zero-emission vehicles and plug-in hybrids will survive. The state's goal is to have more than 1 million of these vehicles on the road by 2025.

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California's special authority to go further than the federal government in regulating auto pollution dates back to the 1960s, when Los Angeles was enveloped in a thick layer of smog that state officials came to see as a public health crisis. By the time the 1970 federal Clean Air Act took effect, the state had already enacted its own tailpipe emission controls.

Concerned that each state would pass different regulations, Congress decided that the EPA would set vehicle pollution standards for the nation. But it carved out an exception for California, saying that the EPA would be required to grant the state a waiver to set its own rules, provided they were at least as stringent as the federal ones. Other states could choose to follow either California's regulations or those set by the EPA.

The rule change to try to end that authority comes a few months after California spurned the White House by secretly negotiating a deal with four major automakers. As part of the pact, the car manufacturers -- Ford, Honda, Volkswagen and BMW -- agreed to voluntarily abide by California's rules and increase fuel efficiency and reduce emissions, essentially ignoring the Trump administration's plans to roll back tailpipe pollution standards.

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Dan Becker, director of the Washington-based Safe Climate Campaign, said, "Trump has married his administration-wide hostility to the environment to his personal vendetta against California."

Let's see if everyone rejoices that a state cannot set more ambitious pollution controls than the federal government. This issue pits states' rights and the "laboratories of democracy" principles against the supremacy clause and the commerce clause. (Ironic, though, how in most other contexts, the federal government and the Supreme Court no longer care much about the commerce clause, or its inverse).

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iehi-feed-64944 Mon, 16 Sep 2019 22:24:18 GMT Donald Trump is a deeply stupid man who routinely gets his ass kicked on the world stage http://implode-explode.com/viewnews/2019-09-16_DonaldTrumpisadeeplystupidmanwhoroutinelygetshisasskickedonthewo.html Trump wanted a trade war with China. Because he thought he could bluster and bully and get his way. But like the rest of the world, China is laughing at Trump, when they're not scratching their heads because Trump is so deeply stupid, and his administration so profoundly incompetent that China doesn't even know with whom to negotiate. But Trump got his trade war. Which he is losing. Because he is a deeply stupid man.

Trump's trade war already has cost 300,000 American jobs. And every time he opens his mouth about China, the American stock markets get spooked. And then after threatening to escalate his trade war, Trump backed down, and now desperately wants to find a way out of yet another crisis that is entirely of his own making. Because he has no idea what he's doing. Because he is a deeply stupid man who routinely gets his ass kicked on the world stage.

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iehi-feed-64941 Sun, 15 Sep 2019 23:24:23 GMT The Trump Admin's Fannie and Freddie "Reform" Plan is A Cronyism Rehash http://implode-explode.com/viewnews/2019-09-15_TheTrumpAdminsFannieandFreddieReformPlanisACronyismRehash.html It's official: The Trump administration has a plan to deal with mortgage giants Fannie Mae and Freddie Mac -- by returning them to the same quasi-governmental form that set them up for failure in the 2008 financial crisis. If executed, it's likely to be a win for a small coterie of hedge funds, and a big loss for everybody else.

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There are better options. For example, Fannie Mae and Freddie Mac could be merged into a single, fully government-owned corporation that would transfer most of its credit risk to private investors, retaining just the catastrophic risk that only the government can bear. This would get private capital involved without letting it so easily shift risk to taxpayers. Pricing the guarantee correctly would be easier. This in turn would promote more competition from completely private lending channels. As it happens, Fannie Mae and Freddie Mac have already been moving in this direction, issuing special credit-risk-transfer securities and creating a common mortgage-securitization platform.

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iehi-feed-64938 Fri, 13 Sep 2019 22:35:16 GMT $1 Billion in Suspicious Sackler Family Wire Transfers; Anonymous Corporate Shells and Trusts Discovered http://implode-explode.com/viewnews/2019-09-13_1BillioninSuspiciousSacklerFamilyWireTransfersAnonymousCorporate.html Earlier this week, thousands of municipal governments and nearly two dozen states tentatively reached a settlement with the Sackler family and the company it owns, Purdue Pharma, maker of OxyContin. But the attorneys general of a majority of states, including New York and Massachusetts, are balking at the proposed deal, contending that the Sackler family has siphoned off company profits that should be used to pay for the billions of dollars in damage caused by opioids.

The wire transfers are part of a lawsuit against Purdue and individual Sacklers in New York. Letitia James, now the state's attorney general, had issued subpoenas last month to 33 financial institutions and investment advisers with ties to the Sacklers in an effort to trace the full measure of the family's wealth.

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Forbes has estimated that the family fortune is worth $13 billion, a figure the family has not disputed, but many state attorneys general believe that the family has far more hidden away, as a safeguard against the cascade of litigation.

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In addition to the thousands of lawsuits in state and federal court aimed at Purdue itself, some 26 states have named the Sacklers individually, with more, most recently North Carolina, having announced they are about to pursue family members as well.

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A series of transfers involving Mortimer D.A. Sackler, a former Purdue board member, was highlighted in the filings. In one case, $64 million was transferred in 2009 from a previously unknown trust called Purdue Pharma Trust MDAS, through a Swiss bank account, and then to Mr. Sackler, the filing said.

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In a letter to the court Friday, a lawyer in the attorney general's office, David E. Nachman, wrote: "Already, these records have allowed the state to identify previously unknown shell companies that one of the Sackler defendants used to shift Purdue money through accounts around the world and then conceal it in at least two separate multimillion-dollar real estate investments back here in New York, sanitized (until now) of any readily detectable connections to the Sackler family."

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iehi-feed-64935 Fri, 13 Sep 2019 15:56:05 GMT Gold tallies a back-to-back gain after ECB unleashes basket of easy-money measures; Fed under pressure http://implode-explode.com/viewnews/2019-09-13_GoldtalliesabacktobackgainafterECBunleashesbasketofeasymoneymeas.html Gold futures marked a second consecutive gain Thursday after the European Central Bank cut eurozone interest rates and delivered a batch of measures intended to boost the region's sluggish economy -- bullish moves for bullion. The ECB cut its deposit rate further into negative territory, decreasing it by 10 basis points to negative 0.5%, while also announcing it would restart its monthly bond-buying program as it attempts to juice inflation and European expansion.

"Gold certainly welcomed the ECB stimulus," said Craig Erlam, a senior market analyst at Oanda. "Ultimately, global easing like we're seeing now has been bullish for gold and that's exactly what we're seeing right now."

December gold on Comex gained $4.20 an ounce, or 0.3%, to settle at $1,507.40 an ounce ... Silver for December delivery, meanwhile, added nearly a penny, or 0.04%, at $18.177 an ounce...

"Central banks around the world have been easing, and will continue to do so, and that's why gold has been making such strides higher with only modest corrections along the way," Erlam said in a market update.

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iehi-feed-64934 Fri, 13 Sep 2019 15:25:57 GMT Trump Is Pushing the U.S. Toward Negative Interest Rates http://implode-explode.com/viewnews/2019-09-13_TrumpIsPushingtheUSTowardNegativeInterestRates.html ... what Trump is saying is, "Boneheads, lower the interest rates down to zero so that we can refinance the United States' debt and feel wealthier. In fact, lower the rate down to negative." So that's his whole purpose first of all. Treasury debt under Trump has grown by around $2.6 trillion already.

You might know that I have an opinion that under every eight-year president in the United States, the national debt doubles. It's been that way roughly back to Reagan. So we'll see if that holds true with Trump. He's well on his way

... the interest rate should compensate you for the risk of loaning to the nation. And now those rewards for loaning money have gone down so low that they've actually gone negative where it's a privilege to loan money to a country.

I'm not so sure that in the long run that holds up. But it is the case right now. And I think the U.S. is going to be the next one to follow.''

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iehi-feed-64930 Thu, 12 Sep 2019 15:11:53 GMT ECB Blinks; Revives QE and Cuts Rates Deeper Below Zero http://implode-explode.com/viewnews/2019-09-12_ECBBlinksRevivesQEandCutsRatesDeeperBelowZero.html The European Central Bank cut interest rates further below zero and revived bond purchases after President Mario Draghi overcame critics of his stimulus policies to make a final run at reflating the euro-area economy.

The ECB reduced the deposit rate to minus 0.5% from minus 0.4%, and said it'll buy debt from Nov. 1 at a pace of 20 billion euros ($22 billion) a month for as long as necessary to hit its inflation goal.

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The ECB changed its guidance on interest rates to say they'll stay at present or lower levels until the outlook for inflation "robustly" converges to its goal of just below 2%. It previously expected borrowing costs to stay unchanged until mid-2020. It also scrapped a 10-basis point rate premium previously attached to its long-term loan program.

The actions prompted U.S. President Donald Trump to tweet that the ECB is "acting quickly" while the Federal Reserve "sits, and sits, and sits." That's in line with his strategy of calling on the Fed to cut rates aggressively. The Fed is likely to lower borrowing costs next week for the second time this year, as central banks around the world ease to combat the spreading weakness.

Apparently no recessions will be allowed. Astounding.

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iehi-feed-64921 Thu, 05 Sep 2019 20:01:11 GMT Alan Greenspan says negative rates will spread to US; Hat-tips Gold http://implode-explode.com/viewnews/2019-09-05_AlanGreenspansaysnegativerateswillspreadtoUSHattipsGold.html It will not be long before the spread of negative interest rates reaches the U.S., former Federal Reserve Chairman Alan Greenspan said.

"You're seeing it pretty much throughout the world. It's only a matter of time before it's more in the United States," Greenspan told CNBC's "Squawk on the Street" on Wednesday, adding investors should watch the 30-year Treasury yield.

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He added that gold prices have been surging recently because people are looking for "hard" assets they know are going to have value down the road as the population ages. Gold futures are up more than 21% in 2019 and are trading around levels not seen since 2013.

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iehi-feed-64917 Wed, 04 Sep 2019 21:04:13 GMT Blackstone Keeps Some Regulated Apartments Empty At Biggest NYC Complex To Strike Back At New Tenant-Friendly Law http://implode-explode.com/viewnews/2019-09-04_BlackstoneKeepsSomeRegulatedApartmentsEmptyAtBiggestNYCComplexTo.html In what appears to be one of the most dramatic steps taken by apartment building owners in the wake of the overhaul of state rent laws, the landlord of Stuyvesant Town-Peter Cooper Village has opted to keep some of its regulated units vacant rather than potentially lock-in tenants under significantly curtailed rents.

Last week The Real Deal reported that private equity group Blackstone was "warehousing" vacated apartments and that the issue had prompted the city's housing preservation and development to review its 2015 regulatory agreement with the landlord. As part of that landmark deal, the city provided the owner with $220 million in subsidies, and in return, Blackstone agreed to keep 5,000 of the roughly 11,200 units affordable for a 20-year-span ending in 2035.

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State Assemblymember Harvey Epstein, who represents Stuy Town's district, said he had asked Blackstone about the units and said there was nothing illegal about its actions. He said he believed Blackstone officials were weighing the risk of waiting--perhaps in the hope of a change to the rent laws--versus renting the units now.

"They are making an economic calculation," he said. Nevertheless, he said that given the affordable housing crisis, the city should not allow landlords to keep units off the market.  

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iehi-feed-64914 Wed, 04 Sep 2019 14:58:28 GMT Does CBD Work? Health Benefits Unproven But Sales Climb http://implode-explode.com/viewnews/2019-09-04_DoesCBDWorkHealthBenefitsUnprovenButSalesClimb.html Researchers haven't been able to pinpoint the exact physiological mechanism that makes CBD "work" so well for so many issues, explains Flávio Kapczinski, MD, PhD, professor of psychiatry at St. Joseph's Healthcare Hamilton McMaster University. In simplest terms, it's thought that CBD acts by modulating the endocannabinoid system, which is a complex network that's responsible for maintaining bodily homeostasis and modulating pain and inflammation. Cannabinoids, such as CBD, can bind to specific endocannabinoid receptors and make you feel different ways. "There are a lot of expectations about the therapeutic effects of cannabinoids," Dr. Kapczinski says. "These expectations are probably inflated right now."

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These sales are climbing mainly due to millennials and Gen Z, who are buying and using CBD with great fervor and reporting even greater success. In the end, in today's hectic and manic world, it simply makes them feel better. That there's little scientific proof to back up their own experiences is irrelevant. These demos will only get older and develop more ailments that'll need some sort of treatment. For now, CBD seems to fit that bill.

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iehi-feed-64913 Wed, 04 Sep 2019 14:36:16 GMT Panic Sweeps Argentine Pampas as Farmers' Old Nemesis Returns http://implode-explode.com/viewnews/2019-09-04_PanicSweepsArgentinePampasasFarmersOldNemesisReturns.html Mauricio Macri, the man who championed the cause of the Argentine farmer, is almost certain to lose his re-election bid in October and will hand back the presidency to the leftist party that tormented the region for years. A primary vote held a few weeks ago made that clear...

Times were tough for growers and ranchers under Cristina Fernandez de Kirchner, Fernandez's running mate who was president between 2007 and 2015, when Macri took over.

She curbed exports, capped domestic prices and demonized farmers, grouping them with what she depicted as a greedy clique of businessmen who imperiled her leftist reforms. Her first term was marred by huge protests over taxes on crop shipments.

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Reumann has taken other steps to safeguard his finances. One is conventional enough. He's trying to lock in prices now with buyers for wheat he put in the ground this past winter.

The other appears more unusual, almost desperate. He's only applying a small dose of fertilizer to the wheat. Whatever grows will grow, he figures, but he's not going to spend more money on a crop that Alberto Fernandez, Macri's rival in the Oct. 27 vote, could force him to sell at deeply discounted prices.

"If Fernandez the populist governs, farmers will produce just to subsist," said Juan Ouwerkerk, president of Alfa, a farmers' cooperative in southern Buenos Aires province, Argentina's bread basket. "It could be a train wreck."''

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iehi-feed-64911 Wed, 04 Sep 2019 14:26:14 GMT US manufacturing contracts for the first time in three years amid China trade war http://implode-explode.com/viewnews/2019-09-04_USmanufacturingcontractsforthefirsttimeinthreeyearsamidChinatrad.html iehi-feed-64902 Wed, 28 Aug 2019 22:13:48 GMT What Trump Secrets Are Hiding Inside Deutsche Bank? http://implode-explode.com/viewnews/2019-08-28_WhatTrumpSecretsAreHidingInsideDeutscheBank.html Deutsche Bank's disclosure on Tuesday that it has tax returns related to President Trump's family or business set off a frenzy of speculation about what those materials might reveal.

But a trove of other data and documents that his longtime lender is sitting on might prove more revelatory to investigators digging into Mr. Trump's finances. That includes records of how Mr. Trump made his money, whom he has partnered with, the terms of his extensive borrowings and what transactions he has engaged in with Russians or other foreign nationals.

For nearly two decades, Deutsche Bank was the only mainstream financial institution consistently willing to do business with Mr. Trump, who had a long record of defaulting on loans. The bank over the years collected reams of his personal and corporate information.

Two congressional committees have subpoenaed Deutsche Bank for a vast array of records related to Mr. Trump -- including any tax returns since 2010. The investigators are hoping the materials will shed light not only on the president's finances but also on any links he has had to foreign governments and whether he or his companies were involved in any illegal activity, such as money laundering for people overseas.

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iehi-feed-64898 Tue, 27 Aug 2019 02:10:58 GMT The Next Recession Will Destroy Millennials http://implode-explode.com/viewnews/2019-08-26_TheNextRecessionWillDestroyMillennials.html Cost pressures have also made it difficult or impossible for Millennials to save or invest. The share of Americans under the age of 35 who own stocks has meandered down from 55 percent in 2001 to 37 percent in 2018, in part because employers are less likely to offer retirement-savings plans and in part because Millennials have nothing left over at the end of the month to put away. Virtually all members of the cohort are "not saving adequately," experts warn, and two-thirds of Millennials have zero retirement savings. This means that Millennials have benefited not a bit from the decade-long boom in stock prices, as their parents and grandparents have.

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The next recession--this year, next year, whenever it comes--will likely make that Millennial disadvantage even worse. Already, Millennials have put off saving and buying homes, as well as getting married and having babies, because of their crummy jobs and weighty student loans. A downturn that leads to higher unemployment and lower wages will force Millennials to wait even longer to start accumulating wealth, making it far harder for them to accumulate any wealth at all. (Compound interest is magic, after all.) Their trajectory, already terrible, might get even worse.

And Millennial suffering won't just hurt Millennials. There is accumulating evidence that the economy is more sclerotic and slower-growing than it might be if the Millennials were able to buy homes, have families, start businesses, and spend like other generations--if the young were not existing just to pump up asset values for the old. Which reminds me--there's one generation that might fare even worse than Millennials: Generation Z.

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iehi-feed-64894 Fri, 23 Aug 2019 22:14:38 GMT Negative interest rates are coming and they are downright terrifying http://implode-explode.com/viewnews/2019-08-23_Negativeinterestratesarecomingandtheyaredownrightterrifying.html ... negative rates are being normalized by economists, bankers, and commentators. Worst, I have a funny feeling this will end badly. Negative interest rates have all the hallmarks of serious trouble for the financial markets; an anomaly growing in scale which seemingly came out of nowhere that is under-recognized, poorly understood and dismissed as not consequential. (Flashing red lights here.)

In the U.S. we aren't particularly aware of negative rates because they haven't made their way to our shores ... perhaps yet.

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in Europe, it was postulated that negative rates would never fly in the consumer sphere in terms of banks paying back depositors less than they put in their savings accounts, but that's now changing. Banks in Denmark and Switzerland are now charging customers to hold deposits. And on the flip side, and also in Denmark, mortgages with negative rates are available. That's right, you get a mortgage from the bank, and the bank essentially pays you each month. A three-year adjustable rate mortgage priced at negative .28% there recently.

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What would happen if rates go negative in the U.S.? Who knows. Allianz Chief Economic Adviser Mohamed El-Erian, for one, says he would sound the alarm if treasury yields dip into negative territory. "If we do I'm going to be really worried because negative yields in the U.S., the world's biggest financial market, will break things," he told Yahoo Finance.

... [and] there are some pretty serious negatives, certainly from the standpoint of uncertainty. A recent note by JPMorgan lays out nine unintended consequences; including lower bank profitability, lower credit creation, paradoxically higher rates in some instances (banks need to make up for lower income), reduced liquidity and functionality of credit markets, increased deficits in pension funds, and even exacerbation of wealth and income inequality.

A negative-yielding mortgage -- sounds kind of nice, until you realize that with such a positive-feedback loop for borrowing to buy property, that will tend to blow insane housing bubbles...

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iehi-feed-64891 Fri, 23 Aug 2019 20:20:41 GMT Donald Trump can't just 'hereby order' whatever he wants http://implode-explode.com/viewnews/2019-08-23_DonaldTrumpcantjustherebyorderwhateverhewants.html Donald Trump can't order American business to do anything. There's a reason the business world is known as the "private sector" -- because it's not owned or controlled by the government (aka the "public sector.") We don't have state-run industry (or media). The President of the United States can't "order" privately held business to do, well, much of anything.

Now, that doesn't mean that Trump can't have any influence. Every CEO will be apprised of Trump's tweets -- if they haven't already been -- and some, in an effort to cozy up to Trump or because they agree with him about the threat posed by China, will look for ways to divest in the country.

But that's very different than companies having to look for alternatives to China because the President said so. They, uh, don't.

It's not immediately clear -- to me at least -- if Trump understands that. Throughout his presidency, he has marveled at the total control that authoritarian rulers -- in places like Russia and China -- exert over their countries and publicly wished he had control like that.

Around here, we long have criticized the lopsided economic relationship with China; but simplistic and hasty responses are not the answer.

Also, we should respond to Donald Trump's presidency by enumerating a non-exhaustive list of automatically impeachable offenses, one of which being attempting to issue orders grossly outside of the president's constitutional power.

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iehi-feed-64889 Fri, 23 Aug 2019 18:28:03 GMT After Trump broke his promise to eliminate the national debt, GOP senators say ‘next term' http://implode-explode.com/viewnews/2019-08-23_AfterTrumpbrokehispromisetoeliminatethenationaldebtGOPsenatorssa.html iehi-feed-64888 Fri, 23 Aug 2019 14:54:22 GMT China retaliates with tariffs on $75 billion of US goods http://implode-explode.com/viewnews/2019-08-23_Chinaretaliateswithtariffson75billionofUSgoods.html The US-China trade war ratcheted up yet again on Friday, with Beijing unveiling a new round of retaliatory tariffs on about $75 billion worth of US goods.

China will place tariffs of 5% or 10% on US imports starting on September 1st, according to a statement posted by China's Finance Ministry.

The Ministry also announced plans to resume tariffs on US imports of automobiles and automobile parts. The tariffs would be 25% or 5%, and would take effect on December 15th.

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iehi-feed-64874 Thu, 08 Aug 2019 21:42:24 GMT Is Pimco Right That Negative Yields Make Sense? http://implode-explode.com/viewnews/2019-08-08_IsPimcoRightThatNegativeYieldsMakeSense.html ``It's still too soon to say his final conclusion -- that people are "willing to accept a negative interest rate" to transfer purchasing power to the future -- will stand the test of time. It's true that bonds with sub-zero yields have been around for years and that the pile has now grown to a staggering $15 trillion. But as I wrote recently, much of that debt was issued with a positive interest rate, and those buyers have seen sharp price appreciation as a result. The true test is still to come when countries and even companies try to sell securities that pay no interest at a price above face value, guaranteeing a loss if held to maturity.''

This argument is logical in the sense that, with financial economies so unstable, people might actually be able to pay a premium to "transfer purchasing power into the future". After all, that's pretty much the same as paying the carrying costs to hold cash (i.e., a bank account fee on a zero-yield checking account, or vault fees for cash), or storage fees for gold that, on average "goes nowhere". But what about inflation? This all assumes there's no inflation -- but at a minimum, the premium people are willing to pay implicitly must have an inflation rate subtracted from it. So if one is willing to take a 2% negative interest rate, one is likely assuming 0% inflation (or perhaps one would really be willing to pay a 4% negative interest rate, if it were not for 2% assumed inflation). The point being: if inflation really starts heating up in a general sense, these consumer-accepted negative interest rates will disappear real fast.

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iehi-feed-64871 Wed, 07 Aug 2019 00:21:17 GMT Can the Fed Prop Up The "Everything Bubble" Forever? http://implode-explode.com/viewnews/2019-08-06_CantheFedPropUpTheEverythingBubbleForever.html