Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-61245 Tue, 06 Dec 2016 01:22:55 GMT Carney Lays Out Vision to Revive Benefits of Globalization http://implode-explode.com/viewnews/2016-12-05_CarneyLaysOutVisiontoReviveBenefitsofGlobalization.html Mark Carney launched a defense of globalization and set out a manifesto for central bankers and governments to boost growth and make the world economy more equal.

The Bank of England Governor said they must acknowledge that gains from trade and technology haven't been felt by all, improve the balance of monetary and fiscal policy, and move to a more inclusive model where "everyone has a stake in globalization."

...

Carney also defended the central bank's current policy stance... "Low rates are not the caprice of central bankers, but rather the consequence of powerful global forces, including debt, demographics and distribution," he said, adding that they helped to prevent a deeper economic downturn.

So he wants to make the "fruits of globalization felt more equally", but wants to ignore the chief driver of the inequality... this pretty much sums of the establishment's "response" to the undeniable popular revolt going on now.

]]>
iehi-feed-61244 Tue, 06 Dec 2016 01:04:30 GMT Dallas Mayor Sues to Stop Public Pension "Run On The Bank" http://implode-explode.com/viewnews/2016-12-05_DallasMayorSuestoStopPublicPensionRunOnTheBank.html The police and firefighters of Dallas have pulled more than $500 million out of their retirement savings plan since early August, worried that their pension fund could soon run out of money. Now, Dallas Mayor Mike Rawlings is suing to stop them.

The Dallas mayor said he is acting in his private capacity as a Dallas taxpayer and paying for the suit himself. In a Monday court filing, Mr. Rawlings asks a Dallas County judge for a restraining order that temporarily halts withdrawals from the Dallas Police and Fire Pension Fund.

The revolt by members of the $2.27 billion fund heightens the risk that a major U.S. pension fund could run out of money. It also offers an extreme case of what can happen when a pension wagers on lucrative returns to cover funding shortfalls.

Many pension funds took on more risk in recent years to fill mounting funding gaps, hurt in part by declining bond yields that damped returns. Between 2007 and 2015, the average percentage of assets large pension plans parked in alternative investments or real estate grew to 17.6% from 10.1%, according to the Wilshire Trust Universe Comparison Service.

But Dallas is in a class by itself. The withdrawals since August represent an 18% drop in the fund's total assets, seriously reducing the fund's ability to earn money through investment.

"This particular circumstance is more akin to runs on the bank that you saw at the beginning of the Depression because people were afraid they weren't going to get their money," said Robert Klausner, an attorney who represents public pension funds.

...

Officers say they are pulling their retirement savings because of concerns about the fund's finances. A series of aggressive real estate bets from Hawaii to Paris and a conflict over the value of those properties triggered more than $500 million in losses, leaving the fund with enough to pay just 45% of future benefits. Officials are warning the pension could go broke by 2027.

Dallas adopted its more aggressive strategy before the crisis, adding luxury homes and shopping centers in Hawaii, student housing in Texas, and raw land in Idaho and Colorado, records show.

The strategy appeared to be working, with Dallas returns often beating national medians. But that success received scrutiny in 2013 when the Dallas Morning News reported that many properties hadn't been appraised for years. Instead, certain holdings were valued based on their purchase price and in some cases by also adding development and operating expenses, said Chief Financial Officer Summer Loveland, who joined the fund in November 2013.

]]>
iehi-feed-61243 Tue, 06 Dec 2016 00:54:36 GMT ECB Buys Record Amount of Debt as QE Frontloaded Before Holidays http://implode-explode.com/viewnews/2016-12-05_ECBBuysRecordAmountofDebtasQEFrontloadedBeforeHolidays.html iehi-feed-61242 Mon, 05 Dec 2016 23:29:35 GMT Gold: While Investors Sell, Collectors Stocking Up On Real Metal http://implode-explode.com/viewnews/2016-12-05_GoldWhileInvestorsSellCollectorsStockingUpOnRealMetal.html Even though investors can't seem to unload gold fast enough, coin collectors are benefitting, reports Bloomberg.  U.S. Mint gold-coin sales jumped for a fourth straight month, the longest streak since 2003. And in India, despite the fall in sales of jewelry due to demonetization, gold imports remained stable at around 100 tonnes in November (from 97 tonnes in October).

According to Bloomberg Intelligence, the five-year average gold premium is typically around $5.50 an ounce in China, but has soared to almost $40 an ounce, as falling prices invite "bargain buying" among the Chinese. As the Financial Times reports, China has curbed gold imports as the government tries to clamp down on capital leaving the country, along with the yuan falling to its lowest against the U.S. dollar in eight years.

]]>
iehi-feed-61241 Mon, 05 Dec 2016 22:43:03 GMT A pensions time bomb spells disaster for the US economy http://implode-explode.com/viewnews/2016-12-05_ApensionstimebombspellsdisasterfortheUSeconomy.html With so few people privy to what little recovery we've had and given how stretched pensions are, checks are going to have to be written from Washington sooner than you think, DiMartino Booth told Real Vision TV in an interview.

...

"The average state pension in the last fiscal year returned something south of 1%. You cannot fill that gap with a bulldozer, impossible," DiMartino Booth said. "Anyone who knows their compounding tables knows you don't make that up. You don't get that back unless you get some miracle."

The last time we saw significant market weakness, the baby boomers pretty much accepted that they would be retiring at 70 instead of 65, she added. "Well, guess what? They're turning 71. And the physiological decision to stay in the workforce won't work for much longer. And that means that these pensions are going to come under tremendous amounts of pressure.

...

Huge withdrawals are now taking place, amid concerns over the future viability of the pension scheme, which commentators say could be flat broke in a little over ten years. "We're seeing this surge of people trying to retire early and take the money. Because they see it's not going to be there. And if that dynamic and that belief spreads-- forget all the other problems," DiMartino Booth said. "The pension fund -- underfunding is Ground Zero."

The gravity of the situation with the lack of returns is magnified by the fact that the underperformance has been going on for between ten and 15 years. Calpers, the California Public Employees' Retirement System is a case in point, amid reports that it returned just 0.6% last year compared with its long term target of 7.5%.

With the legal language tightly written on pensions like this across the country, such that states and municipalities won't be able to break free of their obligations, DiMartino Booth thinks the endgame will evoke memories of the Winter of Discontent in London in 1979 and more recently the riots in Athens as key public services are cut.

]]>
iehi-feed-61239 Mon, 05 Dec 2016 22:21:03 GMT Dow notches new record closing high as Street shrugs off Italian referendum http://implode-explode.com/viewnews/2016-12-05_DownotchesnewrecordclosinghighasStreetshrugsoffItalianreferendum.html U.S. equities closed higher on Monday, unfazed by a key vote in Italy which led to Prime Minister Matteo Renzi's resignation, as financials, technology and consumer discretionary stocks rose around 1 percent.

This is of course, self-perpetuating: if there's no crash, there's no reason to trade down. And the lack of any obvious market breakage after Brexit and Trump's victory has fed into that. But we expect the piper will yet be paid...

]]>
iehi-feed-61238 Mon, 05 Dec 2016 22:18:22 GMT Trump nominates Carson to lead U.S. housing, urban policy http://implode-explode.com/viewnews/2016-12-05_TrumpnominatesCarsontoleadUShousingurbanpolicy.html If confirmed by the Senate, Carson will be enlisted to serve as Trump's unofficial envoy to African Americans and to lead the charge to repair what Trump has described as America's blighted and dangerous inner cities, a dystopian, racially charged image criticized as frequently at odds with reality. He will also lead Trump's efforts in an arena where Trump and members of his family have been accused of flouting the law in their own business ventures.

...

Carson does not have specific experience with the activities of HUD, which manages low-income housing assistance, facilitates financing for homeownership and administers fair-housing programs. But he has a documented position on fair-housing policies that has advocates nervous about what protections a Trump administration might dismantle -- particularly for racial desegregation.

Last year, then-candidate Carson forcefully criticized an Obama administration rule requiring cities and towns to publicly report racial bias in their housing patterns, saying it would "fundamentally change" communities by requiring affordable housing to be built in wealthier neighborhoods.

"These government-engineered attempts to legislate racial equality create consequences that often make matters worse," Carson wrote in the Washington Times. "There are reasonable ways to use housing policy to enhance the opportunities available to lower-income citizens, but based on the history of failed socialist experiments in this country, entrusting the government to get it right can prove downright dangerous."

]]>
iehi-feed-61237 Mon, 05 Dec 2016 15:43:38 GMT Vancouver Housing Tax Pushes Chinese to $1 Million Seattle Homes http://implode-explode.com/viewnews/2016-12-05_VancouverHousingTaxPushesChineseto1MillionSeattleHomes.html Just a few days after Vancouver announced a tax on foreign property investors, Seattle real estate broker Lili Shang received a WeChat message from a wealthy Chinese businessman who wanted to sell a home in Canada and buy in her area.

After a week of showings, he purchased a $1 million property in Bellevue, across Lake Washington from Seattle. He soon returned to buy two more, including a $2.2 million house in Clyde Hill paid for with a single cashier's check.

...

Home-purchase inquiries from China have jumped in Seattle and Toronto since the Vancouver tax was announced, according to Juwai.com, the country's largest overseas property website.

...

About half of the homes sold in Seattle's suburbs are going to Chinese buyers, with many of the transactions requiring the use of interpreters, international banks and multiple escrow deposits, according to Dean Jones, chief executive officer of Realogics Sotheby's International Realty. That's up from about 30 percent last year, he said.

"This is Vancouver 2.0," said Jones, who lived in the Canadian city about two decades ago, when the capital flow from Asia started to accelerate. "A lot of the same motivations and goals are being replicated in Seattle."

]]>
iehi-feed-61236 Mon, 05 Dec 2016 15:39:09 GMT Money Laundering Explodes to Turn India's Black Money White http://implode-explode.com/viewnews/2016-12-05_MoneyLaunderingExplodestoTurnIndiasBlackMoneyWhite.html As Indians struggle with the chaos caused by last month's sudden banning of their 500 and 1,000 rupee notes, money-laundering networks are spreading across the country, seizing on a new market in helping people turn their cash hoards into legal tender.

...

Agents offering to launder money are using creative means, including flying banned cash by the planeload to northeastern states exempt from restrictions as well as connecting people to high-turnover businesses that can deem old cash as revenue, keep a portion of it, and return the rest, according to people involved in the networks. Premiums range from 10 percent to 50 percent, depending on the difficulty, they say. At least one property brokerage is offering to arrange the sale of apartments using banned money in an upscale suburb of Mumbai that's popular with Bollywood movie stars.

...

"The whales and sharks will break out of this net easily and find a way to pump their money back into system through organized networks," said C.H. Venkatachalam, general secretary of the All India Bank Employees Association, a union representing 500,000 bank personnel. "It is not easy to cull out the black money from India's economy, and the real big players are tough to touch. "

...

There's big risk in transporting currency notes. Apart from theft, income tax authorities or police officers could intercept mass cash transports and impound them. Yet the hawala system, at least, uses trust as a bedrock, and those involved honor their commitments or face repercussions, the lawyer said. The hawala network, a centuries-old system of moving cash around the Muslim world outside formal banking channels, has become active in India only in the past few decades.

People are also taking things into their own hands. They use household staff or people with little money to move their currency notes into bank accounts of multiple people below the 250,000 rupees limit that triggers inquiries from the tax department.

]]>
iehi-feed-61235 Mon, 05 Dec 2016 15:30:06 GMT Greece must reform or leave eurozone, says Germany's Schäuble http://implode-explode.com/viewnews/2016-12-05_GreecemustreformorleaveeurozonesaysGermanysSchuble.html ``"Athens must finally implement the needed reforms," he told the newspaper Bild am Sonntag in an interview published on Sunday. "If Greece wants to stay in the euro, there is no way around it -- in fact completely regardless of the debt level."

Asked if German voters should be prepared for the inevitability of debt relief in the run-up to national elections next year, Schäuble quipped: "That would not help Greece."''

]]>
iehi-feed-61233 Mon, 05 Dec 2016 15:16:42 GMT Italian vote against the elites could shatter Europe http://implode-explode.com/viewnews/2016-12-05_ItalianvoteagainsttheelitescouldshatterEurope.html The danger for Italy now is that a string of unpredictable outcomes -- ranging from a difficult-to-control euro decline to a run on troubled Italian banks and a further loss of credibility of the European Central Bank -- could ensue. With the main opposition parties that backed the "no" vote all declaring their wish to leave the euro , and antiestablishment groupings gaining ground in other important member countries including France, European fragmentation is plainly accelerating.

The Italian "no" could have a similar impact on Europe to that unleashed by President Charles de Gaulle's resignation in April 1969 when, in a referendum, voters turned down his plans for constitutional changes. De Gaulle's departure helped spark a chain of events that led to a devaluation of the French franc against the Deutsche mark, the entry of the U.K. into the European Economic Community, and the breakdown of the Bretton Woods system of fixed exchange rates.

]]>
iehi-feed-61232 Mon, 05 Dec 2016 15:10:35 GMT Crazy SF Real Estate Market Claims At Least 36 Lives; Burned Warehouse Was Fringe Living Space http://implode-explode.com/viewnews/2016-12-05_CrazySFRealEstateMarketClaimsAtLeast36LivesBurnedWarehouseWasFri.html iehi-feed-61231 Mon, 05 Dec 2016 00:39:23 GMT Italy's PM Renzi cedes defeat, plans to resign after decisive ‘No' vote in constitutional referendum http://implode-explode.com/viewnews/2016-12-04_ItalysPMRenzicedesdefeatplanstoresignafterdecisiveNovoteinconsti.html ``Italian Prime Minister Matteo Renzi says he takes full responsibility for the crashing defeat at the referendum he proposed, which would have reduced the powers of the Senate. Renzi intends to send in his resignation on Monday.

"The experience of my government ends here," Renzi said in a televised news conference, adding that his defeat was "extraordinary clear."

...

The European Central Bank also meets Thursday amid much speculation it will announce a six month extension of its asset buying program and widen the type of bonds it can purchase.

]]>
iehi-feed-61230 Mon, 05 Dec 2016 00:09:57 GMT Euro dives as Italy votes 'No' on reform, shares slip http://implode-explode.com/viewnews/2016-12-04_EurodivesasItalyvotesNoonreformsharesslip.html The euro sank to 20-months lows in Asia on Monday after Italian Prime Minister Matteo Renzi said he would resign in the wake of a stinging defeat on constitutional reform that could destabilize the country's shaky banking system... Ultimately, the danger is that Italy holds a vote on whether to leave the euro, possibly triggering a break up of the entire bloc.

...

The European Central Bank also meets Thursday amid much speculation it will announce a six month extension of its asset buying program and widen the type of bonds it can purchase.

]]>
iehi-feed-61229 Sun, 04 Dec 2016 23:56:11 GMT Report: Russian central bank hacked for $31 million http://implode-explode.com/viewnews/2016-12-04_ReportRussiancentralbankhackedfor31million.html iehi-feed-61228 Sun, 04 Dec 2016 23:44:58 GMT Larry Summers Blasts Trump's Carrier Deal As "Ad Hoc Deal Capitalism" http://implode-explode.com/viewnews/2016-12-04_LarrySummersBlastsTrumpsCarrierDealAsAdHocDealCapitalism.html wants banana republic-like tactics...]]> iehi-feed-61227 Sun, 04 Dec 2016 20:39:45 GMT Liberal Billionaire Buys The Bob Hope House In Palm Springs http://implode-explode.com/viewnews/2016-12-04_LiberalBillionaireBuysTheBobHopeHouseInPalmSprings.html iehi-feed-61226 Sun, 04 Dec 2016 20:30:55 GMT The Low Unemployment Rate Is A Momentary Calm Before The Coming Economic Storm http://implode-explode.com/viewnews/2016-12-04_TheLowUnemploymentRateIsAMomentaryCalmBeforeTheComingEconomicSto.html The full report does delve into most of these concerns. In fact, the broadest unemployment gauge, which includes part-time workers who'd prefer full-time work, dropped to 9.3% in November, having steadily improved since March 2010 when it was at 17.1%.

...

The troubling trend isn't the unemployment rate; it's the size of the labor force. Labor force participation has steadily declined from 66% to less than 63% over the past nine years, the lowest it's been since 1977. A record 95 million people are opting out of the workforce. ... Retiring baby boomers account for about half of the decline, but prime-age workers (i.e., ages 25-54) have been leaving the labor force, too, and the reasons aren't entirely clear.

]]>
iehi-feed-61225 Sun, 04 Dec 2016 19:28:02 GMT Far-right candidate concedes in Austria's presidential vote (ALL EYES TURN TO ITALY) http://implode-explode.com/viewnews/2016-12-04_FarrightcandidateconcedesinAustriaspresidentialvoteALLEYESTURNTO.html The center-left candidate handily defeated his far-right challenger in Austria's presidential election on Sunday, boosting the political establishment in Europe as it sought to contain the fallout of Donald Trump's victory in the United States and thwart the spread of nationalism.

The far-right Freedom Party's Norbert Hofer conceded defeat on his Facebook page less than 30 minutes after polls closed and following projections showing a surprisingly strong lead for Alexander Van der Bellen. The 72-year-old elder statesman and former Green Party politician was winning by 53.3 percent to 46.7 percent with nearly 100 percent of the votes counted.

The result was an unexpectedly clear victory for Austria's beleaguered political establishment -- one suggesting the aggressive tactics and Trump-style campaign deployed by the Austrian far-right may have hurt more than they helped.

...

Yet Europe's political establishment was not out of the woods yet. In Italy, voting continued on a reform referendum opposed by anti-establishment populists across the political spectrum. Center-left Prime Minister Matteo Renzi has vowed to resign should it fail -- a move that could plunge Europe's third largest economy into a new round of political chaos while fanning fresh concerns about the country's ailing banks. Opinion polls have suggested the result may be a nail biter.

]]>
iehi-feed-61224 Sun, 04 Dec 2016 19:21:23 GMT Will Trump's band of billionaires care about regular folk? http://implode-explode.com/viewnews/2016-12-04_WillTrumpsbandofbillionairescareaboutregularfolk.html Teena Colebrook is despondent that Trump has picked Steve Mnuchin for Treasury because Mnuchin was the head of a group of investors who owned OneWest, a bank that foreclosed on Colebrook's Los Angeles-area home.  She tried to work with the bank to modify her loan, she told the AP, but the bank lost some of her paperwork and was generally difficult to deal with. "I just wish that I had not voted," she said. "I have no faith in our government anymore at all. They all promise you the world at the end of a stick and take it away once they get in."

What fascinates me is why Colebrook ever believed that Trump's heart bleeds for struggling people.  Two years before the housing crash that eventually cost Colebrook her home, Trump  openly longed for the kind of housing crash that would cost people their homes.

...

Now, according to a Wednesday report in The Washington Post, Trump is putting together the "wealthiest administration in modern American history." People thought George W. Bush had a wealthy administration, the report says, but the Bush administration's combined net worth of about $250 million is "roughly one-tenth the wealth of Donald Trump's nominee for commerce secretary alone."

]]>