Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-64880 Thu, 15 Aug 2019 15:26:28 GMT Tri-State Businesses Join Conga Line Of Businesses Fleeing To Florida http://implode-explode.com/viewnews/2019-08-15_TriStateBusinessesJoinCongaLineOfBusinessesFleeingToFlorida.html iehi-feed-64875 Fri, 09 Aug 2019 15:09:09 GMT Major Mortgage Servicers Rank At The Bottom Of JD Power Survey http://implode-explode.com/viewnews/2019-08-09_MajorMortgageServicersRankAtTheBottomOfJDPowerSurvey.html 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 iehi-feed-64869 Tue, 06 Aug 2019 22:53:08 GMT Today From the "What We All Already Knew" File: Jared Kushner Saw Trump Presidency As Chance to 'Dig Himself Out Of' Debt: Report http://implode-explode.com/viewnews/2019-08-06_TodayFromtheWhatWeAllAlreadyKnewFileJaredKushnerSawTrumpPresiden.html iehi-feed-64868 Tue, 06 Aug 2019 15:18:41 GMT Is a US Recession Coming? Yield Curve Loudest Warning Since 2007 http://implode-explode.com/viewnews/2019-08-06_IsaUSRecessionComingYieldCurveLoudestWarningSince2007.html iehi-feed-64866 Mon, 05 Aug 2019 14:23:24 GMT Equifax Victims Swarm To Collect Settlement Checks http://implode-explode.com/viewnews/2019-08-05_EquifaxVictimsSwarmToCollectSettlementChecks.html iehi-feed-64865 Sat, 03 Aug 2019 15:24:37 GMT Trump Administration Racism Now Kicking Down The Door At HUD http://implode-explode.com/viewnews/2019-08-03_TrumpAdministrationRacismNowKickingDownTheDoorAtHUD.html iehi-feed-64864 Sat, 03 Aug 2019 14:38:41 GMT MIT's AI Lab Analyzed 200,000 Bitcoin Transactions. Only 2% Were 'Illicit' http://implode-explode.com/viewnews/2019-08-03_MITsAILabAnalyzed200000BitcoinTransactionsOnly2WereIllicit.html Blockchain analytics firm Elliptic collaborated with researchers from the Massachusetts Institute of Technology (MIT) to publish a public dataset of bitcoin transactions associated with illicit activity... Only 2 percent of the 200,000 bitcoin transactions in the data set were deemed illicit as part of Eliptic's initial work. While 21 percent were identified as lawful, the vast majority of the transactions, roughly 77 percent, remained unclassified. (To date, there have been an estimated 440 million bitcoin transactions since the network's launch in 2009.)...

Sometimes, Robinson added, software was able to find patterns that would be difficult to describe yet still matched with known entities, based on pre-existing data from darknet markets, ransomware attacks and other criminal investigations.

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iehi-feed-64862 Fri, 02 Aug 2019 17:22:30 GMT Why Was Trumponomics a Flop? http://implode-explode.com/viewnews/2019-08-02_WhyWasTrumponomicsaFlop.html Obviously Powell couldn't say in so many words that Trumponomics has been a big flop, but that was the subtext of his remarks. And Trump's frantic efforts to bully the Fed into bigger cuts are an implicit admission of the same thing.

To be fair, the economy remains pretty strong, which isn't really a surprise given the G.O.P.'s willingness to run huge budget deficits as long as Democrats don't hold the White House. As I wrote three days after the 2016 election -- after the shock had worn off -- "It's at least possible that bigger budget deficits will, if anything, strengthen the economy briefly." And that's pretty much what happened: There was a bit of a bump in 2018, but at this point we've basically returned to pre-Trump rates of growth.

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And there's a good case to be made that Trump's tariffs have actually hurt U.S. manufacturing. For one thing, many of them have hit "intermediate goods," that is, stuff American companies use in their production processes, so the tariffs have raised costs.

Beyond that, the uncertainty created by Trump's policy by whim -- nobody knows what he'll hit next -- has surely deterred investment. Why build a manufacturing plant when, for all you know, next week a tweet will destroy your market, your supply chain, or both?

... think of the missed opportunities. Imagine how much better shape we'd be in if the hundreds of billions squandered on tax cuts for corporations had been used to rebuild our crumbling infrastructure. Imagine what we could have done with policies promoting jobs of the future in things like renewable energy, instead of trade wars that vainly attempt to recreate the manufacturing economy of the past.

... pundits who think that Trump will be able to win by touting a strong economy are almost surely wrong. He most likely won't face a recession (although who knows?), but he definitely hasn't made the economy great again. So he's probably going to have to do what he's already doing, and clearly wants to do: run on racism instead.

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iehi-feed-64859 Thu, 01 Aug 2019 21:18:32 GMT Manhattanites need to make $115K to afford the average 1BR rent in the borough: report http://implode-explode.com/viewnews/2019-08-01_Manhattanitesneedtomake115Ktoaffordtheaverage1BRrentintheborough.html As expected, several New York City neighborhoods are in the "Six-Figure Club," as residents would need to make six figures to be able to afford living in a one-bedroom there. In Manhattan, the neighborhoods where residents need to make the most are Tribeca at $171,800/year of gross income; Flatiron, $160,000/year; and Battery Park City, $152,000/year. Other neighborhoods that would require six digit incomes in the borough include Midtown South, Stuyvesant Town, and Chelsea. New additions to the six-digit list in Manhattan include the Lower East Side, where you now need to make $104,520/year.

Overall, Manhattanites living in a one-bedroom would need to make a gross income of $115,800--twice the NYC median of $57,782, to live comfortably in the borough, according to the report.

Yes, there's no inflation...

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iehi-feed-64856 Thu, 01 Aug 2019 19:37:14 GMT US Will Impose 10% Tariff On Chinese Goods Worth $300 Billion Sept. 1st http://implode-explode.com/viewnews/2019-08-01_USWillImpose10TariffOnChineseGoodsWorth300BillionSept1st.html iehi-feed-64855 Wed, 31 Jul 2019 22:55:07 GMT Jim Rickards on U.S. National Debt and Limits of MMT http://implode-explode.com/viewnews/2019-07-31_JimRickardsonUSNationalDebtandLimitsofMMT.html Data discredits the idea that we can grow our way out of our debt burden, he added, and we cannot borrow our way out of it either. The only solution becomes inflation, but the Fed has been trying to produce significant inflation for the last 10 years and has failed.

"What the MMT people are ignoring is the psychological limit, not the legal limit," Rickards said. "It is true that the Fed can borrow as much as it wants, but there's a psychological limit. This is what physicists call a critical threshold or a phase transition. ... I'm not saying inflation is an attractive option. I am saying it might be the only option and we can't get the inflation, so we're just heading for default with slow growth along the way to make it even worse."

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iehi-feed-64854 Wed, 31 Jul 2019 22:49:08 GMT Federal Reserve interest rate cuts: Markets fall on disappointment for future cutes http://implode-explode.com/viewnews/2019-07-31_FederalReserveinterestratecutsMarketsfallondisappointmentforfutu.html iehi-feed-64852 Tue, 30 Jul 2019 21:44:05 GMT The Coming Savings Writedowns - Michael Hudson http://implode-explode.com/viewnews/2019-07-30_TheComingSavingsWritedownsMichaelHudson.html Debts that can't be paid, won't be. That point inevitably arrives on the liabilities side of the economy's balance sheet.

But what of the asset side? One person's debt is a creditor's claim for payment. This is defined as "savings," even though banks simply create credit endogenously on their own computers without needing any prior savings. When debts can't be paid and debtors default, what happens to these creditors?

As President Obama showed, banks and bondholders can be bailed out by new Federal Reserve money creation. That is what the $4.6 trillion in Quantitative Easing since 2008 was all about. The Fed has spent the last few years supporting stock market prices (and holding down gold prices) by manipulating the forward option markets.

But this artificial life support to keep the debt overhead afloat is nearing the reality of the debt wall. The European Central Bank has almost run out of available euro-bonds to buy. The new fallback position to keep the increasingly zombified U.S. and Eurozone financial markets afloat is to experiment with negative interest rates.

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iehi-feed-64851 Tue, 30 Jul 2019 14:31:11 GMT Transgender Hacker Busted In Massive Capital One Hack http://implode-explode.com/viewnews/2019-07-30_TransgenderHackerBustedInMassiveCapitalOneHack.html iehi-feed-64850 Mon, 29 Jul 2019 22:46:02 GMT Why We Should Fear Easy Money - Ruchir Sharma http://implode-explode.com/viewnews/2019-07-29_WhyWeShouldFearEasyMoneyRuchirSharma.html As the Fed prepares to announce a decision this week, growing bipartisan support for a rate cut is fraught with irony. Slashing rates to avoid deflation made sense in the crisis atmosphere of 2008, and cutting again may seem like a logical response to weakening global growth now. But with the price of borrowing already so low, more easy money will raise a more serious threat.

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Many Western economies appeared to face a similar threat [as the Great Depression and Japanese deflation] following the global financial crisis of 2008. Since then, led by the Fed, central banks have responded aggressively to every hint of a downturn, making money ever cheaper and more plentiful to try to juice growth.

Yet, in this expansion, the United States economy has grown at half the pace of the postwar recoveries. Inflation has failed to rise to the Fed's target of a sustained 2 percent. Meanwhile, every new hint of easy money inspires fresh optimism in the financial markets, which have swollen to three times the size of the real economy.

In this environment, cutting rates could hasten exactly the outcome that the Fed is trying to avoid. By further driving up the prices of stocks, bonds and real estate, and encouraging risky borrowing, more easy money could set the stage for a collapse in the financial markets. And that could be followed by an economic downturn and falling prices -- much as in Japan in the 1990s. The more expensive these financial assets become, the more precarious the situation, and the more difficult it will be to defuse without setting off a downturn.

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Today, politicians on the right and left have come to embrace easy money, each camp for its own reasons, both ignoring the risks. President Trump has been pushing the Fed for a large rate cut to help him bring back the postwar miracle growth rates of 3 percent to 4 percent.

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By fueling a record bull run in the financial markets, easy money is increasing inequality, since the wealthy own the bulk of stocks and bonds. Research also shows that very low interest rates have helped large corporations increase their dominance across United States industries, squeezing out small companies and start-ups. Once seen as a threat only in Japan, zombie firms -- which don't earn enough profit to cover their interest payments -- have been rising in the United States, where they account for one in six publicly traded companies.

All these creatures of easy credit erode the economy's long-term growth potential by undermining productivity, and raise the risk of a global recession emanating from debt-soaked financial and housing markets. A 2015 study of 17 major economies showed that before World War II, about one in four recessions followed a collapse in stock or home prices (or both). Since the war, that number has jumped to roughly two out of three, including the economic meltdowns in Japan after 1990, Asia after 1998 and the world after 2008.

Recessions tend to be longer and deeper when the preceding boom was fueled by borrowing, because after the boom goes bust, flattened debtors struggle for years to dig out from under their loans. And lately, easy money has been enabling debt binges all over the world, particularly in corporate sectors.

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iehi-feed-64849 Mon, 29 Jul 2019 16:55:23 GMT Florida Reverse Mortgage Scam Alert! http://implode-explode.com/viewnews/2019-07-29_FloridaReverseMortgageScamAlert.html iehi-feed-64848 Mon, 29 Jul 2019 16:36:28 GMT New York Reverse Mortgage Scam Alert! http://implode-explode.com/viewnews/2019-07-29_NewYorkReverseMortgageScamAlert.html iehi-feed-64847 Mon, 29 Jul 2019 16:00:45 GMT Green cards: Foreign investors seeking EB-5 visas to pay more ($900k, up from $500k) http://implode-explode.com/viewnews/2019-07-29_GreencardsForeigninvestorsseekingEB5visastopaymore900kupfrom500k.html The EB-5 visa, created in 1990 to stimulate the economy through job creation and capital investment, will under the new rules require a minimum investment of $900,000 instead of the current $500,000, U.S. Citizenship and Immigration Services said. That minimum amount will be for investments in businesses in rural areas or regions of high unemployment. For investments in other areas, the minimum will be $1.8 million, compared to the current $1 million. Homeland Security had originally proposed a new minimum of $1.35 million.

The visa will still require creation of at least 10 full-time jobs but the new rule strips states of the ability to designate areas as rural or high-unemployment "Targeted Employment Areas" to qualify EB-5 applicants for the lower investment threshold. The U.S. Department of Homeland Security will make all such designations, according to the new rules.

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An industry has emerged around the EB-5 program, with developers marketing projects to foreign citizens, Wexler said. But because an investor's main priority is almost always getting a green card, returns on the investments have typically been less than 3 percent, he said.

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