Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-59710 Thu, 05 May 2016 20:48:44 GMT L.A. sees another sharp rise in homelessness and tent, vehicle living http://implode-explode.com/viewnews/2016-05-05_LAseesanothersharpriseinhomelessnessandtentvehicleliving.html Homelessness increased in the last year in the city and county of Los Angeles, leaving nearly 47,000 people in the streets and shelters despite an intensive federal push that slashed the ranks of homeless veterans by nearly a third, according to figures released Wednesday by the Los Angeles Homeless Services Authority.

Nearly two-thirds of the homeless people tallied countywide, or 28,000, were in the city of Los Angeles, representing an 11% jump in January from a year earlier, a report from the agency stated. The county's homeless population grew 5.7%.

Homelessness has increased steadily since 2013, as local officials struggle to identify funding for billion-dollar plans they approved this year to solve one of the region's most intractable problems.

The number of homeless women across most of the county -- Long Beach, Glendale and Pasadena are counted separately -- has jumped 55% since 2013, to 14,461 from 9,348.

In that same area, the most visible form of homelessness -- tents, shantytowns and vehicles with people living in them -- climbed 20%, on top of an 85% jump in 2015... Garcetti called the increase in the "unsheltered" population -- homeless people living outdoors in tents, shanties, cars and RVs -- particularly worrisome.

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iehi-feed-59709 Thu, 05 May 2016 17:33:34 GMT Insurers Flee Hedge Funds Amid Slump http://implode-explode.com/viewnews/2016-05-05_InsurersFleeHedgeFundsAmidSlump.html The insurer is seeking to redeem $1.2 billion of the $1.8 billion in holdings, a process that may take a couple of years to complete, Chief Investment Officer Steven Goulart said Thursday in a conference call discussing first-quarter results at the New York-based company. The portfolio, which posted negative returns in the quarter, was cut by about $600 million in 2015, he said.

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"It's had up-and-down years and really it's just too inconsistent, we think, in actual performance," Goulart said. "What we'll be left with is a small portfolio of really our most consistently performing managers in hedge funds."

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Competitor American International Group Inc. is also shifting allocations after posting three straight unprofitable quarters. The company said Tuesday that it has submitted notices of redemption for $4.1 billion of hedge-fund holdings through March 31. Average invested assets in hedge funds at AIG were $10.1 billion for the first quarter.

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iehi-feed-59708 Thu, 05 May 2016 16:36:30 GMT It finally happened: 500 euro notes will no longer be produced http://implode-explode.com/viewnews/2016-05-05_Itfinallyhappened500euronoteswillnolongerbeproduced.html All of us law-abiding little people have no need for such high denomination cash. That's a very convenient view for the ECB to take given that they've led the crusade to make interest rates negative.

... To be clear, 500 euro notes are not ‘banned'. The ECB tells us that current 500 euro notes in circulation will still be honored as legal tender... The next step for them would be to quietly take these bills out of circulation until one day there's simply no more of them available. Then they can rinse and repeat with the 200 and 100 euro notes. All of this is tantamount to capital controls-- a way for central banks to trap your savings inside a worthless financial system.

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iehi-feed-59707 Thu, 05 May 2016 15:33:57 GMT Atlas Crumbles Under Weight of Italian Banks http://implode-explode.com/viewnews/2016-05-05_AtlasCrumblesUnderWeightofItalianBanks.html iehi-feed-59706 Thu, 05 May 2016 15:07:43 GMT U.N. Envoy Warns of New 400,000 Refugee Wave From Syria Amidst Renewed Conflict http://implode-explode.com/viewnews/2016-05-05_UNEnvoyWarnsofNew400000RefugeeWaveFromSyriaAmidstRenewedConflict.html A top United Nations official warned of a new tide of refugees from Syria if world powers didn't succeed in calming an outbreak of hostilities in and around the northern Syrian city of Aleppo.

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The talks come amid a renewed offensive by the Assad regime and its allies against rebel groups in and around Aleppo, which has been under intense bombardment and shelling.

Russia, which backs the Syrian government, said Wednesday that a 24-hour truce was planned for Aleppo province but couldn't be put in place because of attacks by a militant rebel group linked to al Qaeda, the Nusra Front.

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Short-term truces have been put into effect in northern parts of the western province of Latakia as well as parts of the capital, Damascus, to help buttress a nine-week cease-fire that is faltering across much of the country.

Russian and U.S. officials have been trying to arrange one in and around Aleppo. The U.S. has said talks were continuing.

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iehi-feed-59705 Thu, 05 May 2016 15:00:39 GMT For ‘Brexit,' Like ‘Grexit,' It's Not About Economics http://implode-explode.com/viewnews/2016-05-05_ForBrexitLikeGrexitItsNotAboutEconomics.html What explains both sentiments is that the European project has always been about more than economics. It also seeks "an ever closer union among the peoples of Europe," as the Treaty of Rome, its founding charter, declared in 1957.

"Closer union" with Europe deeply appeals to Greeks, whose own state has failed them so badly. But it repels many Britons, whose state works just fine and who want no part of a European political union. For them, the quagmire of the euro, which Britain hasn't adopted, is a cautionary tale of what such a union could bring. How they decide between the economic benefits and political risks of staying could determine whether Britain votes to leave the EU in a June 23 referendum.

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Greece's underdeveloped, overprotected economy was poorly prepared for life inside the EU. A study led by Nauro Campos of Brunel University concluded only Greece was poorer in 2008 for having joined the EU; Britain, they reckon, was 24% richer. Eurozone membership initially brought down Greek interest rates and unleashed a borrowing binge but resulted in crisis and a six-year depression.

Yet Greeks still don't want to give up the euro. "Anglo Saxons think the euro is only an economic and financial project," said Yannis Stournaras, governor of the Greek central bank, in an interview. "It's political as well. It's a means to an identity. We feel safer in the euro."

British considerations were just the opposite. A Conservative government took Britain into the EEC in 1973 largely for its trade benefits, a decision voters overwhelmingly approved in a 1975 referendum.

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iehi-feed-59704 Thu, 05 May 2016 14:55:13 GMT Even 'small crisis' enough to tear EU apart, Moody's warns http://implode-explode.com/viewnews/2016-05-05_EvensmallcrisisenoughtotearEUapartMoodyswarns.html In a stark warning, the rating agency said the "painful adjustment" faced by some countries in the eurozone meant the collapse of the single currency area and wider EU was believed by some to be a question of "when" not "if".

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However, it said endless austerity demands in return for bail-outs had fuelled deep resentment across the region, especially in countries weighed down by sky-high unemployment.

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[Mervyn] King said the single currency area would have to choose between an economic "depression" in the south, higher inflation in northern states like Germany, permanent fiscal transfers or a "change of composition of the euro area".

However, he told an audience in Frankfurt that there was "a limit to the economic pain that can be imposed in pursuit of a federal Europe without risking a political reaction.

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iehi-feed-59703 Thu, 05 May 2016 01:17:32 GMT U.S. Productivity Shrinks Again in First Quarter http://implode-explode.com/viewnews/2016-05-04_USProductivityShrinksAgaininFirstQuarter.html The current economic expansion, which wraps up its seventh year next month, has been driven largely by rising employment rather than gains in productivity. Since the economic recovery began in mid-2009, output per hour worked has expanded at an average annual rate of 1.3%. That was the worst performance over a seven-year stretch since the late-1970s to mid-1980s, which were marked by back-to-back recessions.

In the first quarter, the picture worsened: Productivity in the nonfarm business sector declined at a 1% seasonally adjusted annual rate, the Labor Department said Wednesday. From a year earlier, productivity was up just 0.6%. The quarterly drop marked the fourth decline in the past six quarters.

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Declining productivity growth means companies need more workers to keep up with demand and helps explain why millions of people have been able to rejoin the job market in recent years despite a slow-growing economy.

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iehi-feed-59702 Thu, 05 May 2016 00:53:13 GMT Wells Fargo problem loans jump 62 percent, driven by energy http://implode-explode.com/viewnews/2016-05-04_WellsFargoproblemloansjump62percentdrivenbyenergy.html iehi-feed-59701 Wed, 04 May 2016 16:31:30 GMT Why Cruz, and the G.O.P., Lost to Trump http://implode-explode.com/viewnews/2016-05-04_WhyCruzandtheGOPLosttoTrump.html There is a lot of anger in the electorate, which Trump's victory reflects. Yet one of the many problems that Cruz had in filling the stop-Trump role was that the anger he retailed came in packages of contempt that were too cunningly crafted and too widely strewn, like the mini-munitions in a cluster bomb, with too much indifference about whom he might hurt. Cruz's misanthropy doesn't seem to have been lost on voters. With his wife, Heidi, on one side, and Carly Fiorina, his play-acting running mate, on the other, Cruz ended his press conference by refusing to say whether he would support Trump as the nominee. They formed the same tableau a few hours later, when Cruz, in response to the Indiana results, unexpectedly stepped aside. He suspended, rather than ended, his campaign, and it's unclear what will happen to his delegates. But, at this point, any contested Convention would have to be premised on a gimmick--a rule change, for example--or a true upheaval in the Party. And the G.O.P. doesn't seem organized enough for that.

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The electoral map looks very good for the Democrats now, but complacency would be a mistake. Clinton lost Indiana to Bernie Sanders. Thanks to superdelegates, she still has a strong hold on her Party's nomination, but that doesn't remove the question of whether Sanders's endurance in the race points to unaddressed weaknesses in her candidacy, such as the way she talks about money. On Tuesday night, Sanders said that he would take the fight to the Convention, and also said that he wanted superdelegates to think hard about who would do better against Trump. They undoubtedly are, though it may lead not to support for Sanders but to more calls for him to get out of the race. The general election is going to be ugly, not easy, no matter how wide the final margin is. Those who wrote off Trump as a joke have, since the beginning, willfully ignored two factors that are, in retrospect, pretty obvious. First, Trump wants to be President. He has, in his way, imagined himself as a creature of politics for decades. Second, in order for him to lose, someone else had to beat him--and the Republican Party has failed to produce that person. If Jeb Bush doesn't become a byword for the collective delusions of a political class, then the lessons of this election won't have been learned.

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iehi-feed-59699 Wed, 04 May 2016 14:53:56 GMT AEP: US dollar plunges as world plays dangerous game of pass the parcel http://implode-explode.com/viewnews/2016-05-04_AEPUSdollarplungesasworldplaysdangerousgameofpasstheparcel.html The US dollar has plunged to a 16-month low in the latest wild move for the global financial system, tightening the currency noose on the eurozone and Japan as they struggle to break out of a debt-deflation trap.

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This is a massive shift in sentiment since the end of last year when investors were betting heavily that the US Federal Reserve was on track for a series of rate rises, which would draw a flood of capital into dollar assets. Markets have now largely discounted a rate rise in June, and are pricing in just a 68pc likelihood of any increases this year.

... it increases the pain for the eurozone and Japan as their currencies rocket. The world is in effect playing a high-stakes game of pass the parcel, with over-indebted countries desperately trying to export their deflationary problems to others by nudging down exchange rates.

... There is little that the Bank of Japan or the ECB can do to arrest this unwelcome appreciation. The Obama Administration warned them at the G20 summit in February that it any further use of negative interest rates would be regarded by Washington as covert devaluation, and would not be tolerated.

... Stephen Jen from SLJ Macro Partners said the Fed is pursuing a "weak dollar policy", reacting to global events in a radical new way. "They are forcing currency appreciation onto weaker economies. It is irrational," he said.

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iehi-feed-59695 Tue, 03 May 2016 20:23:47 GMT Q1 GDP Advance Estimate at 0.5%, Worse Than Mainstream Forecasts http://implode-explode.com/viewnews/2016-05-03_Q1GDPAdvanceEstimateat05WorseThanMainstreamForecasts.html iehi-feed-59694 Tue, 03 May 2016 19:33:55 GMT Freddie Mac posts $354M "Don't Worry, It's Just Derivatives" loss; Cuts Dividend; Won't Draw on Treasury http://implode-explode.com/viewnews/2016-05-03_FreddieMacposts354MDontWorryItsJustDerivativeslossCutsDividendWo.html Mortgage giant Freddie Mac reported a net loss of $354 million for the first quarter, mostly due to losses it sustained on the investments it uses to hedge against swings in interest rates. The government-controlled company said Tuesday the January-through-March loss mainly reflected accounting measures, while its business remained strong. The loss compared with net income of $524 million in the same period of 2015.

As a result of the loss the company, based in McLean, Va., is skipping paying a quarterly dividend to the U.S. Treasury next month. Freddie previously has paid $98.2 billion in dividends, exceeding its government bailout of $71 billion.

Freddie also sustained a loss in the third quarter of last year, $475 million, also largely due to losses on derivatives used to hedge against interest-rate swings. While Freddie and Fannie have shown volatility in their quarterly earnings, the housing market's gradual recovery in recent years has made them profitable again.

Regarding the latter point from the title, see Freddie Mac: No Draw on Treasury for Now, But. . .

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iehi-feed-59693 Tue, 03 May 2016 19:30:41 GMT NYC Icon Fairway Falls to Private Equity, Hip New Grocer Competition http://implode-explode.com/viewnews/2016-05-03_NYCIconFairwayFallstoPrivateEquityHipNewGrocerCompetition.html New York City supermarket Fairway, an icon of the Upper West Side of Manhattan, known for its meats, cheeses and smoked fish, in addition to its branded black & white cookies, has filed for bankruptcy. The grocer's downfall can be traced to a 2007 sale of the company from the founding Glickberg family to private equity firm Sterling Investment Partners, and a recent expansion from its flagship on 74th street and Broadway across the tri-state area.

Sterling Partners listed Fairway on the Nasdaq at a $536 million valuation three years ago, raising$177 million for a nationwide expansion. However, Fairway struggled on public markets, saddled with hundreds of millions of dollars in debt and rising competition in its New York City backyard from the likes of Trader Joe's , Whole Foods, West Side Market, and Eataly.

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iehi-feed-59691 Tue, 03 May 2016 17:10:59 GMT EU states face charge for refusing refugees http://implode-explode.com/viewnews/2016-05-03_EUstatesfacechargeforrefusingrefugees.html European countries that refuse to share the burden of high immigration will face a financial charge of about €250,000 per refugee, according to Brussels' plans to overhaul the bloc's asylum rules. 

The punitive financial pay-off clause is one of the most contentious parts of the European Commission's proposed revision of the so-called Dublin asylum regulation, due to be revealed on Wednesday. 

It represents the EU's most concerted attempt to salvage an asylum system that collapsed under the weight of a million-strong migration to Europe last year, endangering the principle of passport-free travel in the Schengen area.

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"The size of the contribution may change but the idea is to make it appear like a sanction," said one official who has seen the proposal. Another diplomat said in any event the price of refusing to host a refugee would be "hundreds of thousands of euros".

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These financial contributions are in part designed to fix incentives around migrant quotas, which have badly failed and proved almost impossible to implement even once agreed in law. The commission proposal builds on the EU's flagship emergency scheme to relocate 160,000 refugees, which has barely redistributed 1 per cent of its target since it was agreed last year.

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iehi-feed-59689 Tue, 03 May 2016 14:32:22 GMT The US public pensions crisis ‘is really hard to fix' http://implode-explode.com/viewnews/2016-05-03_TheUSpublicpensionscrisisisreallyhardtofix.html Few public pension plans are fully funded, meaning they do not have enough money to pay current and future retirees. And the situation is getting worse.

According to Wilshire Consulting, an investment advisory company, state-sponsored pension plans in the US had just 73 per cent of the assets they needed in mid-2015, down from 77 per cent in 2014. Turbulent market conditions in the latter part of 2015 and early 2016 probably made this number even worse.

The scale of this pension crisis, as it has been dubbed, is huge. The Hoover Institution, a think-tank at Stanford University, estimates that US public pensions collectively have a $3.4tn funding hole. More conservative numbers put the funding gap at around $1tn.

... fixing the schemes will require a lot of work and is likely to have unpleasant consequences for retirees, employees, taxpayers and politicians... But higher taxes or the issuance of bonds, another option used by local governments to raise money in order to reduce pension deficits, often proves unpopular with taxpayers.

... Unions, public sector employees and retirees do not want to give up the benefits promised to them, politicians do not want to impose tax hikes that could cost them votes, and taxpayers are reluctant to part with more cash to prop up the system.

... Public plans typically have high return targets of between 7 and 8 per cent, which are used to forecast how much money a pension fund will need to pay current and future retirees. Private sector pension plans, in contrast, typically use lower rates of 2.5 per cent on average to calculate future liabilities, says Ms Mitchell... An ageing public sector population is not helping matters. "There is no young blood coming in to keep their plans going," says Ms Mitchell.

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iehi-feed-59688 Tue, 03 May 2016 02:04:23 GMT Amazon Steps Up Blockchain Commitment With Digital Currency Group Partnership http://implode-explode.com/viewnews/2016-05-02_AmazonStepsUpBlockchainCommitmentWithDigitalCurrencyGroupPartner.html Amazon Web Services announces Monday that it will collaborate with New York City-based Digital Currency Group, one of the biggest investors in blockchain firms, to provide such a service so the blockchain providers in DCG's portfolio can work in a secure environment with clients who include financial institutions, insurance companies and enterprise technology companies.

A blockchain -- often called a distributed ledger -- is essentially a tamper-proof ledger, copies of which are held on multiple computers, that enables transactions to occur securely and quickly. It promises to make financial services more efficient, as well as cut costs and potentially shrink the industry as the software conducts functions currently executed by middlemen.

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The AWS announcement comes on the heels of a partnership between Microsoft and R3CEV, a consortium of 44 banks working to create standards for distributed ledger technology, for Microsoft to offer "blockchain as a service" via the cloud. IBM, which also offers a cloud-based blockchain, Friday released a framework for running blockchain networks securely, enabling enterprise players in industries such as financial services, healthcare and government conduct work on a blockchain while remaining compliant with relevant data security regulations.

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iehi-feed-59687 Tue, 03 May 2016 01:10:28 GMT Puerto Rico's Debt Crisis Deepens as Government Misses Payment http://implode-explode.com/viewnews/2016-05-02_PuertoRicosDebtCrisisDeepensasGovernmentMissesPayment.html Puerto Rico's debt crisis moved into a more perilous phase for residents, lawmakers and bondholders Monday after the Government Development Bank failed to repay almost $400 million.

The missed principal payment, the largest so far by the island, is widely viewed on Wall Street as foreshadowing additional defaults this summer, when more than $2 billion in bills are due.

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While Monday's default had been expected, it creates new complications for the local government. Its agencies maintain their bank accounts at the GDB, which serves as the government's fiscal agent and financial adviser and backs loans to private enterprises. The government had already passed legislation to limit withdrawals from the agency to avoid a potential bank run, and the commonwealth's treasurer last month began opening accounts at private banks.

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The default could mark a turning point after weeks of negotiations on Capitol Hill. House Republicans are completing legislation to create a federal oversight board for Puerto Rico with the power to sign off on local budgets and to authorize a court-supervised debt restructuring. The bill wouldn't commit U.S. taxpayer funds, but some creditors have described it as a bailout because they say it might violate existing contracts.

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Puerto Rico's debt crisis isn't seen as likely to spill into the U.S. economy or the broader $3.7 trillion municipal bond market because the island's troubles make it something of an outlier.

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iehi-feed-59686 Mon, 02 May 2016 21:24:02 GMT Treasury's Lew To Congress "Rescue Puerto Rico" Or Face "Cascading Defaults" http://implode-explode.com/viewnews/2016-05-02_TreasurysLewToCongressRescuePuertoRicoOrFaceCascadingDefaults.html iehi-feed-59685 Mon, 02 May 2016 19:21:10 GMT Craig Wright revealed as Bitcoin creator Satoshi Nakamoto http://implode-explode.com/viewnews/2016-05-02_CraigWrightrevealedasBitcoincreatorSatoshiNakamoto.html