Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-63993 Wed, 06 Jun 2018 21:29:15 GMT How Greece's Busiest Port Reveals the Perils of Privatization http://implode-explode.com/viewnews/2018-06-06_HowGreecesBusiestPortRevealsthePerilsofPrivatization.html In 2015, as a condition of the $100 billion European Union bailout that followed the 2008 financial crisis, the Greek government agreed to privatize a number of state-held assets including the Piraeus Port Authority, which manages the port's container and passenger terminals. The Greek state sold a majority stake for $330 million to COSCO. For the Chinese company, the purchase had a clear financial logic. About 80 percent of China's imports and exports to and from Europe are transported by sea, and by avoiding the need to sail to busy Northern European ports like Rotterdam or Hamburg, COSCO could offload containers in Piraeus, reducing the time it takes cargo to get to Europe by nearly a week. Plus, by owning the port authority, COSCO could help determine how much its own ships would have to pay itself in port fees.

As part of the deal, COSCO pledged to participate in financing $410 million worth of investment in the port, including a repair of port equipment and the dredging of Piraeus's central port. Supporters of privatization argue these improvements signal a coming maritime renaissance at Piraeus--already the busiest port in the eastern Mediterranean. Nektarios Demenopolous, the deputy manager for investor relations at Piraeus Port Authority, told me, "There are 300 million euros [$350 million] of investment to come in the next five years, followed by another 50 million. Privatization has made the port much more dynamic and will reboot activities at the port like ship repair that have been in recession. It will be remembered as a success story."

But a "success story" for whom? The dockworkers of Piraeus say they and their families have seen little of the alleged gains brought by COSCO. As Piraeus Port Authority boasts of widening profit margins and increasing maritime traffic, wages for dockworkers haven't budged since they were slashed from 1500 euros ($1,750) per month to 600 euros after the financial crisis. Beyond that, COSCO now hires few dockworkers as full-time employees, and tends to enlist unskilled laborers for complex container unloading. COSCO also primarily remunerates people on an ad hoc basis as subcontractors, leaving dockworkers and their families entirely dependent on the ebb and flow of traffic into Piraeus. It also means their traditional retirement benefits have disappeared.

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iehi-feed-63888 Sun, 22 Apr 2018 17:07:52 GMT The Pension Time Bomb, $400 Trillion by 2050 http://implode-explode.com/viewnews/2018-04-22_ThePensionTimeBomb400Trillionby2050.html According to an analysis by the World Economic Forum (WEF), there was a combined retirement savings gap in excess of $70 trillion in 2015, spread between eight major economies..

The WEF says the deficit is growing by $28 billion every 24 hours -- and if nothing is done to slow the growth rate, the deficit will reach $400 trillion by 2050, or about five times the size of the global economy today.

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This problem is amplified by the size of generations and fertility rates. The population of retirees globally is expected to grow from 1.5 billion to 2.1 billion between 2017-2050, while the number of workers for each retiree is expected to halve from eight to four over the same timeframe.

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iehi-feed-63882 Thu, 19 Apr 2018 00:09:45 GMT World debt hits record $164 trillion as crisis hangover lingers http://implode-explode.com/viewnews/2018-04-18_Worlddebthitsrecord164trillionascrisishangoverlingers.html The world's debt load has ballooned to a record $164 trillion, a trend that could make it harder for countries to respond to the next recession and pay off debts if financing conditions tighten, the International Monetary Fund said.

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The global debt burden clouded the IMF's otherwise upbeat outlook of the world economy, which is in its strongest upswing since 2011. The fund on Tuesday forecast expansion of 3.9 per cent in 2018 and 2019, while saying in subsequent years the global economy could be impacted by tighter monetary policy and the fading effects of U.S. fiscal stimulus.

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The IMF figures bare the scale of the debt hangover from which the world is still recovering from a decade after the financial crisis pushed the global banking system to the brink, and tipped the world economy into recession. Governments increased spending to boost growth, while central banks resorted to unconventional methods to ease financing conditions, such as buying bonds.

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iehi-feed-63880 Wed, 18 Apr 2018 19:30:17 GMT U.S. Debt Load Seen Worse Than Italy's by 2023, IMF Predicts http://implode-explode.com/viewnews/2018-04-18_USDebtLoadSeenWorseThanItalysby2023IMFPredicts.html iehi-feed-63797 Mon, 26 Mar 2018 14:50:24 GMT Wall Street Bonus Pool Dwarfs 'Tax Reform Bonuses' and Minimum Wage Earnings While Contributing to Gender Inequality http://implode-explode.com/viewnews/2018-03-26_WallStreetBonusPoolDwarfsTaxReformBonusesandMinimumWageEarningsW.html iehi-feed-63784 Thu, 22 Mar 2018 13:56:59 GMT 66% Of Working Millennials Have Nothing Saved For Retirement http://implode-explode.com/viewnews/2018-03-22_66OfWorkingMillennialsHaveNothingSavedForRetirement.html iehi-feed-63776 Wed, 21 Mar 2018 18:52:42 GMT Congress quietly formed a committee to bail out 200 pension funds http://implode-explode.com/viewnews/2018-03-21_Congressquietlyformedacommitteetobailout200pensionfunds.html As the government was working on the recent, new budget deal and subsequent boost in government spending, Congress quietly snuck in a provision that forms a committee which would use federal funds to bail out as many as 200 "multiemployer" pension plans -- where employers and labor unions jointly provide retirement benefits to employees.

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But Congress' committee, assuming it works, wouldn't even rescue the red zone plans, much less the remaining 1,200. And it doesn't even begin to address the real problem -- the $7 trillion funding gap faced by the government's own pensions.

Congress is stepping in because the Pension Benefit Guaranty Corporation (PBGC) -- the pension equivalent to the Federal Deposit Insurance Corporation (FDIC) -- is completely insolvent.

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iehi-feed-63773 Tue, 20 Mar 2018 19:26:51 GMT Japan is so broke that its prisons are full of 80+ year old ‘felons' http://implode-explode.com/viewnews/2018-03-20_Japanissobrokethatitsprisonsarefullof80yearoldfelons.html One in five female prisoners in Japan is senior, almost all of whom have been convicted of petty crimes like shoplifting. This is no accident. Elderly women in Japan are economically vulnerable. Half live below the poverty line. Many live by themselves and have no one to turn to for help. So there's a growing trend in Japan of elderly women deliberately committing petty crimes-- hoping to get caught so that they'll be sent to prison.

In prison, of course, they're fed, clothed, housed, and even have their health care covered by the state. It's a pitiful, last resort form of welfare that's likely going to become worse as Japan's already elderly population continues to age.

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[Yet,] everything that Japan did back in the 70s and 80s to cause these long-term social and economic problems is EXACTLY what most of the West is doing now: printing money, keeping rates too low, inflating asset bubbles, going into debt, and acting like the good times will last forever.

It would be utterly foolish to believe that this time is different.

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iehi-feed-63699 Fri, 02 Mar 2018 02:42:50 GMT Debt (Still) on Track to Destroy The American Middle Class http://implode-explode.com/viewnews/2018-03-01_DebtStillonTracktoDestroyTheAmericanMiddleClass.html iehi-feed-63698 Fri, 02 Mar 2018 02:40:56 GMT The Economy Looks Good Today, But the Next Debt Crisis Is on the Horizon http://implode-explode.com/viewnews/2018-03-01_TheEconomyLooksGoodTodayButtheNextDebtCrisisIsontheHorizon.html We can't ignore the enduring problem of unemployment and underemployment. While the Bureau of Labor Statistics lists the unemployment rate at 4.1%--a 17-year low--the seasonally adjusted U6 unemployment rate, which takes into account eligible workers who can't find full-time jobs and those who have given up trying altogether, stands at 8.2%. The fact is that automation and other technological innovations are accelerating job displacement, reducing costs, and increasing corporate margins and profits. This benefits investors with the liquidity available to participate in financial markets, but certainly not average families living from paycheck to paycheck, or without a paycheck at all.

While Fed policies helped household balance sheets to deleverage after the 2008 financial crisis, they did so by effectively transferring household debt to corporate and sovereign balance sheets, paving the way for higher interest rates. Outstanding non-mortgage consumer credit has risen by 45% since its previous peak in 2008, now approaching $4 trillion. Global nonfinancial corporate debt increased to 96% of global GDP between 2011 and 2017, with some 37% of global companies now deemed to be "highly leveraged," (meaning they have a debt-to-earnings ratio above five-to-one) up from 32% in 2007, according to Standard & Poor's. And the level of margin debt used to buy securities has doubled since 2011, to a new all-time high of $643 billion. Nearly one in five American companies now qualify as "zombies," meaning that earnings before interest and taxes don't cover interest expenses.

All of this suggests a new cycle of distressed corporate credit looks to be just around the corner, and recent tax reforms limiting corporate interest deductibility won't help.

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iehi-feed-63677 Sun, 25 Feb 2018 14:43:07 GMT Mass Exodus Of NYPD And FDNY Fleeing Monroe, New York http://implode-explode.com/viewnews/2018-02-25_MassExodusOfNYPDAndFDNYFleeingMonroeNewYork.html iehi-feed-63611 Tue, 06 Feb 2018 01:00:11 GMT Trump often takes credit for stock market rise; Will he own the falls too? http://implode-explode.com/viewnews/2018-02-05_TrumpoftentakescreditforstockmarketriseWillheownthefallstoo.html iehi-feed-63511 Fri, 12 Jan 2018 15:58:38 GMT Greece to Remain Under Lenders' Supervision Until 2059 http://implode-explode.com/viewnews/2018-01-12_GreecetoRemainUnderLendersSupervisionUntil2059.html iehi-feed-63454 Tue, 26 Dec 2017 15:52:53 GMT Scotland united in curiosity as councils trial universal basic income http://implode-explode.com/viewnews/2017-12-26_Scotlandunitedincuriosityascouncilstrialuniversalbasicincome.html ... it is in Scotland that four councils face the task of turning basic income from a utopian fantasy to contemporary reality as they build the first pilot schemes in the UK, with the support of a £250,000 grant announced by the Scottish government last month and the explicit support of Nicola Sturgeon.

The concept of a universal basic income revolves around the idea of offering every individual, regardless of their existing benefit entitlement or earned income, a non-conditional flat-rate payment, with any income earned above that taxed progressively. The intention is to replace the welfare safety net with a platform on which people can build their lives, whether they choose to earn, learn, care or set up a business.

The idea has its roots in 16th-century humanist philosophy. The political theorist Thomas Paine advocated a citizen's dividend. But there has been a groundswell of interest over the past decade not only among lateral thinkers but also anti-poverty groups, which see it as a means of changing the relationship between people and state, and between workers and the gig economy.

In Scotland, a country wearily familiar with divisions of a constitutional nature, the concept of a basic income is almost unique in enjoying multi-party favour. Across the four areas currently designing basic income pilots -- Glasgow, Edinburgh, Fife and North Ayrshire -- the projects have variously been championed by Labour, SNP, Green and, in one case, Conservative councillors.

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iehi-feed-63406 Thu, 14 Dec 2017 22:58:44 GMT Rubio to vote against GOP tax bill unless tax credit for working poor is expanded http://implode-explode.com/viewnews/2017-12-14_RubiotovoteagainstGOPtaxbillunlesstaxcreditforworkingpoorisexpan.html Sen. Marco Rubio informed Senate leaders Thursday he intends to vote against Republicans' $1.5 trillion tax plan unless it includes a larger expansion of a child tax credit. "... given all the other changes made in the tax code leading into it, I can't in good conscience support it unless we are able to increase [the child tax credit], and there's ways to do it and we'll be very reasonable about it."

Sen. Mike Lee (R-Utah), Rubio's partner in pushing for the expanded child tax credit, is undecided on whether to support the Republicans' final tax bill, according to a Lee spokesman.

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Rubio and Lee want to allow millions of families who pay payroll taxes but do not earn enough to pay income taxes to claim the expanded credit. The change they are now pushing would expand the credit by $80 billion over 10 years, a smaller change than they proposed for the Senate bill.

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iehi-feed-63383 Sun, 10 Dec 2017 20:07:23 GMT How the GOP tax cut could take money away from most Americans http://implode-explode.com/viewnews/2017-12-10_HowtheGOPtaxcutcouldtakemoneyawayfrommostAmericans.html If President Donald Trump and congressional Republicans end up paying for their proposed $1.4 trillion tax cut by reducing spending or raising taxes later on, most Americans making less than $86,000 would be worse off, according to a new report by the Tax Policy Center, a nonpartisan think tank.

Republicans have yet to say how they intend to pay for the tax cut. Originally, Treasury Secretary Steven Mnuchin argued the tax cut would completely pay for itself because the economy would grow substantially faster, a claim that has not been backed up by independent research. Congress' official scorekeepers estimate that the tax cut would add $1 trillion to the federal deficit, even after taking into account some additional economic growth.

At some point, that will have to be paid for, and top Republican lawmakers, including House Speaker Paul Ryan, R-Wis., have indicated they plan to take a hard look at welfare spending and other safety net programs for potential trimming.

The Tax Policy Center warns in its "Winners and Losers" report released Friday that paying for the tax cut by reducing programs that help the poor and lower middle class would leave many Americans in the bottom 60 percent in a worse spot than they would have been without the GOP tax bill.

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The House bill would cut taxes for 76 percent of Americans next year and raise taxes on just 7 percent, according to the Tax Policy Center. But those numbers look substantially different once the think tank factored in how to pay for the bill. If every household were required to pay the same amount to fund the tax cuts - roughly $1,200 - in 2018, then only 27 percent of Americans would get a cut and 73 percent of Americans would essentially be getting a tax hike. The vast majority of the families that would be worse off would be in the low and middle class.

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Critics of the report say the Tax Policy Center is running hypothetical scenarios. There are no proposals on the table to make draconian cuts or to make every American pay a fee or tax... But the Tax Policy Center says this is actually a pretty similar scenario to what the Trump budget proposed earlier this year with its cuts to various welfare and safety net programs that mostly impact moderate-income households. The Tax Policy Center is also assuming a modest increase on higher-income households.

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iehi-feed-63357 Sun, 03 Dec 2017 01:13:40 GMT ‘This is class warfare': Tax vote sparks political brawl over populism that will carry into 2018 elections http://implode-explode.com/viewnews/2017-12-02_ThisisclasswarfareTaxvotesparkspoliticalbrawloverpopulismthatwil.html Democrats see an opening for an attack on President Trump and Republicans as allies of the wealthy and Wall Street interests. Republicans, who watched Trump capture an antiestablishment populist mood in 2016, may find it difficult to sell a tax bill that was underwater in polls even before the mostly party-line vote on the Senate measure.

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Veterans of President Barack Obama's administration, with memories of how Republicans attacked the passage of the Affordable Care Act, argued that Republicans overly optimistic and had misread the national mood. Republicans were "deluding themselves," said former Obama strategist David Axelrod, to think that voters would reward them for a tax cut.

"There are two categories of people who will benefit here -- wealthy, corporate interests, of course, who scored a bonanza, and Democratic ad-makers, who have been handed a treasure trove of egregious targets and tawdry, swamp-like images with which to work," Axelrod said.

The bill's progress has not much resembled Washington's last raids on the tax code. President Ronald Reagan's 1981 tax cut passed by super-majorities in the House and the Senate, while President George W. Bush's 2001 tax cut -- sold at first as a way to spend a surplus, then as a way to combat a recession -- attracted 13 Democratic votes in the House and 12 in the Senate. In 2010, an even larger number of Democrats voted to extend the Bush-era tax rates for people making less than $400,000, fearful that cutting them back would lengthen the Great Recession.

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iehi-feed-63350 Sat, 02 Dec 2017 01:35:12 GMT government-spending-deficits-soar-everywhere http://implode-explode.com/viewnews/2017-12-01_governmentspendingdeficitssoareverywhere.html iehi-feed-63349 Sat, 02 Dec 2017 01:32:55 GMT US Household Debt Is Rising 60% Faster Than Wages http://implode-explode.com/viewnews/2017-12-01_USHouseholdDebtIsRising60FasterThanWages.html iehi-feed-63336 Tue, 28 Nov 2017 20:57:33 GMT The chained CPI: Another secret tax hike for the middle class slipped into the GOP tax bills http://implode-explode.com/viewnews/2017-11-28_ThechainedCPIAnothersecrettaxhikeforthemiddleclassslippedintothe.html What Republicans really like about the chained CPI is that it tends to show a lower inflation rate than the alternative, typically by 0.3 percentage point a year. The difference pencils out to significant dollars: Changing the inflation index immediately would raise about $125 billion over the next decade and nearly $500 billion in the decade after that, according to the Tax Policy Center.

Most of that money would come out of the pockets of middle- and working-class taxpayers. Most important, it would slow inflation adjustments to tax brackets. This would hurt those taxpayers because more of them would move into higher tax brackets purely because of inflation in their wages. High-income taxpayers who already pay the top tax rate wouldn't be affected the same way.

The chained CPI also would reduce inflation increases in provisions such as the standard deduction, personal exemption, earned income tax credit and the alternative minimum tax. Personal exemptions and the AMT are marked for repeal in the GOP tax bills, but if they survive or are supplanted by other inflation-indexed provisions, the chained CPI would represent a tax increase on their users. In any event, as Howard Gleckman of the Tax Policy Center recently observed, the Republican plan is to replace the inflation-indexed personal exemption with a larger but non-indexed child tax credit. Leaving the latter unindexed would erode its value over time.

What's insidious about the chained CPI is that its effect is modest at first, but compounds over time. After 10 years the shortfall compared with the standard CPI is more than three percentage points; after 20 years, more than six.

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One other thing: Inserting the chained CPI into the tax code could be a Trojan horse to infiltrate other government programs, notably Social Security. But that would be only the start. The Congressional Budget Office noted in a 2010 report that the federal poverty level is indexed to a standard CPI; changing that to the chained CPI would affect all programs whose budgets or benefits are keyed to the poverty level, including Head Start, food stamps and "the National School Lunch Program, the Low-Income Home Energy Assistance Program, the Children's Health Insurance Program, and parts of Medicaid." Republicans already have their daggers out for some of these programs; the chained CPI would represent just the first prick.

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