Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-60733 Sat, 24 Sep 2016 16:19:52 GMT The Fed's Missed Window & Failed Realizations http://implode-explode.com/viewnews/2016-09-24_TheFedsMissedWindowFailedRealizations.html iehi-feed-60732 Sat, 24 Sep 2016 16:08:36 GMT Canadian Housing Bubble, Debt Stir Financial Crisis Fears http://implode-explode.com/viewnews/2016-09-24_CanadianHousingBubbleDebtStirFinancialCrisisFears.html iehi-feed-60731 Sat, 24 Sep 2016 16:01:21 GMT IMF on Greece: calls for more pension cuts, greater debt relief in report http://implode-explode.com/viewnews/2016-09-24_IMFonGreececallsformorepensioncutsgreaterdebtreliefinreport.html The International Monetary Fund called for Greece to cut pensions and taxes and for its lenders to provide significant debt relief in order for the country to make a convincing exit from the crisis.

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It argued that the pension system's deficit remains too high at 11 percent, compared to a 2.5 percent average in the eurozone, and that too much of a burden has been placed on Greeks currently in work, while existing pensioners have largely been protected.

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iehi-feed-60730 Fri, 23 Sep 2016 23:30:27 GMT Former Trader Jérôme Kerviel Ordered to Pay Only €1 mln in Damages to SocGen (WHICH NOW MAY BE ON THE JOOK FOR ANOTHER €2.2bln) http://implode-explode.com/viewnews/2016-09-23_FormerTraderJrmeKervielOrderedtoPayOnly1mlninDamagestoSocGenWHIC.html A French appeals court ruled Friday that former trader Jérôme Kerviel is only responsible for a sliver of the €4.9 billion ($5.47 billion) Société Générale SA lost after unwinding his trades, raising the possibility the government might reclaim a hefty tax rebate it granted the bank at the time.

Judges ordered Mr. Kerviel to pay €1 million to his former employer, overturning a previous ruling which ordering him to pay €4.9 billion to Société Générale.

The ruling is a qualified victory for Mr. Kerviel and a setback for Société Générale, because it establishes that responsibility for the lion's share of the losses ultimately lies with the French lender, not its former employee.

... the French government could reclaim a €2.2 billion tax deduction that the bank received after unwinding Mr. Kerviel's trade and posting a massive loss... Jean Veil, a lawyer for Société Générale, brushed off the idea saying he didn't believe that the government could claim the money back given that the bank hadn't committed a "deliberate" or "excessive" fault.

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iehi-feed-60729 Fri, 23 Sep 2016 22:58:13 GMT ECB Embarrassment: Each €18 In QE Generated Just €1 In GDP Growth http://implode-explode.com/viewnews/2016-09-23_ECBEmbarrassmentEach18InQEGeneratedJust1InGDPGrowth.html iehi-feed-60728 Fri, 23 Sep 2016 19:10:36 GMT Exclusive: Euro Regulators expect Monte dei Paschi to ask Italy for help http://implode-explode.com/viewnews/2016-09-23_ExclusiveEuroRegulatorsexpectMontedeiPaschitoaskItalyforhelp.html Now euro zone authorities are considering whether state support would have to be tapped after what bankers have described as slack interest in the bank's share offer.

"There is clearly an execution risk to the capital raising," said one official with knowledge of the rescue attempt, adding that the bank's value, about one ninth the size of the planned 5 billion euro cash call, would be a turn-off for investors.

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Reopening the question of state support, which had already been explored and dropped because of the losses it requires for bondholders under European bank crisis rules, is politically charged, and would reignite a dispute between Italy and Germany.

Berlin had objected to Rome's efforts to back the struggling bank without imposing a loss on its bondholders, according to another senior official.

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iehi-feed-60727 Fri, 23 Sep 2016 19:07:01 GMT You're Not as Rich as You Think - Satyajit Das http://implode-explode.com/viewnews/2016-09-23_YoureNotasRichasYouThinkSatyajitDas.html iehi-feed-60726 Fri, 23 Sep 2016 19:01:47 GMT World Trade Grinds Lower, Hits 2014 Levels http://implode-explode.com/viewnews/2016-09-23_WorldTradeGrindsLowerHits2014Levels.html The chart shows that merchandise world trade isn't falling off a cliff, as it had done during the financial crisis, when global supply chains suddenly froze up. But it's on a slow volatile grind lower. And compared to the fanciful growth after the Financial Crisis, it looks outright dismal...

Data point after data point document that the goods-based economy in the US is in trouble -- manufacturing, wholesale, retail... nothing is firing on all or even most cylinders.

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iehi-feed-60725 Fri, 23 Sep 2016 18:59:54 GMT Gallup: If small businesses keep dying "We'll lose the whole middle class" http://implode-explode.com/viewnews/2016-09-23_GallupIfsmallbusinesseskeepdyingWelllosethewholemiddleclass.html According to the U.S. Small Business Administration, 65% of all new jobs are created by small businesses, not large ones. Here's the crisis: The deaths of small businesses recently outnumbered the births of small businesses. The U.S. Census Bureau reports that the total number of business startups and business closures per year crossed for the first time in 2008

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Let's say someone has a good middle-class job that pays $65,000 a year. That job goes away in a changing, disrupted world, and his new full-time job pays $14 per hour -- or about $28,000 per year. That devastated American remains counted as "full-time employed" because he still has full-time work -- although with drastically reduced pay and benefits. He has fallen out of the middle class and is invisible in current reporting.

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iehi-feed-60724 Fri, 23 Sep 2016 15:13:46 GMT Saudis Said to Have Offered to Cut Oil Output; No Deal Reached http://implode-explode.com/viewnews/2016-09-23_SaudisSaidtoHaveOfferedtoCutOilOutputNoDealReached.html Saudi Arabia, the world's largest oil exporter, told Iran it would be willing to reduce its output -- which is close to a record 10.7 million barrels a day -- if its regional rival were to cap production at 3.6 million, according to two people familiar with the matter, who asked not to be identified because the talks were private. Other proposals were also discussed by oil officials from the countries at the headquarters of the Organization of Petroleum Exporting Countries in two-day talks that ended Thursday without a deal, one of the people said.

Oil-producer meetings from Vienna and Paris to Moscow have attempted to reach a consensus before talks in the Algerian capital next week.

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iehi-feed-60722 Fri, 23 Sep 2016 15:11:08 GMT The 9 Most Important Things You Need To Know About The Wells Fargo Fiasco http://implode-explode.com/viewnews/2016-09-23_The9MostImportantThingsYouNeedToKnowAboutTheWellsFargoFiasco.html Stumpf's mantra to employees was often "eight is great" meaning get eight Wells Fargo products into the hands of each customer. But this directive proved burdensome for bank employees as they struggled to meet demanding quotas and satisfy even more demanding managers. 

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Stumpf, however, is unlikely to lose his job. Analysts and investors on Wall Street are more forgiving of Stumpf than their Main Street and DC counterparts. Many are pointing to Wells Fargo's "superior" return in the market as reason Stumpf should stick around.

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iehi-feed-60720 Thu, 22 Sep 2016 19:42:08 GMT Taking Responsibility: Wells Fargo's Stumpf "Leads the Way" http://implode-explode.com/viewnews/2016-09-22_TakingResponsibilityWellsFargosStumpfLeadstheWay.html ... thousands of employees who engaged in the actual act of creating the fraudulent charge accounts have all been fired by the bank, no doubt at Stumpf's direction. They took a substantial paycut for their criminal behavior, which one might say is a kind of "taking responsibility" for what they did, though perhaps they didn't do it voluntarily.

But Stumpf? While he clearly turned a blind eye to the scam for five years until the federal authorities got wind of it, once it became public knowledge outside the bank, he stood up and said he "takes responsibility" for what happened. Not just that. He said he's "accountable" for it. Good man!''

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iehi-feed-60719 Thu, 22 Sep 2016 14:36:41 GMT With Mortgage Rates So Low, Why Are So Many People Still Renting? http://implode-explode.com/viewnews/2016-09-22_WithMortgageRatesSoLowWhyAreSoManyPeopleStillRenting.html iehi-feed-60718 Thu, 22 Sep 2016 14:35:15 GMT Study: Most Small Businesses Barely Staying Afloat http://implode-explode.com/viewnews/2016-09-22_StudyMostSmallBusinessesBarelyStayingAfloat.html iehi-feed-60717 Thu, 22 Sep 2016 14:32:35 GMT AEP: UN fears third leg of the global financial crisis - with prospect of epic debt defaults http://implode-explode.com/viewnews/2016-09-22_AEPUNfearsthirdlegoftheglobalfinancialcrisiswithprospectofepicde.html The third leg of the world's intractable depression is yet to come. If trade economists at the United Nations are right, the next traumatic episode may entail the greatest debt jubilee in history.

It may also prove to be the definitive crisis of globalized capitalism, the demise of the liberal free-market orthodoxies promoted for almost forty years by the Bretton Woods institutions, the OECD, and the Davos fraternity.

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We know already that the poisonous side-effect of zero rates and quantitative easing in the US, Europe, and Japan was to flood developing nations with cheap credit, upsetting their internal chemistry and drawing them into a snare. What is less understood is just how destructive this has been.

Much of the money was wasted, skewed towards "highly cyclical and rent-based sectors of limited strategic importance for catching up," it said.

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The extraordinary result is that some countries are slipping backwards, victims of "premature deindustrialisation". Many of them have fallen further behind the rich world than they were in 1980 despite opening up their economies and following the global policy script diligently.

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We are left with a world in a state of leaderless policy inertia, unable to escape slow suffocation. Trade is stagnant. Deflation is still knocking at the door a full seven-and-a-half years into the economic cycle, even with the monetary pedal pushed to the floor. The next downturn will test this regime to destruction.

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Its prescription is radical. The world must jettison neo-liberal ideology, and launch a "global new deal" with a blitz of investment on strategic sectors. It wants a return of the "developmental state", commanding a potent industrial policy, and backed by severe controls on capital flows.

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iehi-feed-60716 Thu, 22 Sep 2016 14:26:09 GMT House-Flippers Turn to the Crowd for Quick Cash. What Could Go Wrong? http://implode-explode.com/viewnews/2016-09-22_HouseFlippersTurntotheCrowdforQuickCashWhatCouldGoWrong.html iehi-feed-60715 Thu, 22 Sep 2016 14:21:24 GMT Wells Fargo too arrogant to own up to its fraudulent ways http://implode-explode.com/viewnews/2016-09-22_WellsFargotooarroganttoownuptoitsfraudulentways.html iehi-feed-60714 Thu, 22 Sep 2016 01:15:07 GMT No, the Fed Doesn't Have a Plan. Yes, It Really is Monetizing Government Debt http://implode-explode.com/viewnews/2016-09-21_NotheFedDoesntHaveaPlanYesItReallyisMonetizingGovernmentDebt.html And Fed critics have argued since 2008 that "normal" monetary policy would never return, that QE would never be unwound, and that artificially low (or even negative) interest rates were here to stay. In other words, that the Fed and its 300 Ivy League economists don't know what to do other than kick the can down the road another few months while hoping for a miraculous economic recovery.

Fast forward to today, and the recovery hasn't materialized. And Fed officials, current and former, are singing a different tune about ever restoring the balance sheet to pre-2008 levels.

... even progressive WaPo readers sense that the Fed is clueless, and that there are no brilliant people in Washington working on a "plan" to save us. Extraordinary monetary policy is the new normal, and all those pundits who assumed the Fed knew what it was doing were- and are- wrong.

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iehi-feed-60713 Wed, 21 Sep 2016 23:21:09 GMT At Wells Fargo, workers say, sales focus was all-consuming http://implode-explode.com/viewnews/2016-09-21_AtWellsFargoworkerssaysalesfocuswasallconsuming.html Employees at the bank known for its stagecoach logo say the immense pressure to sell, coming directly from top executives, spurred them to push products customers did not need nor want. Many are angry that Wells Fargo CEO John Stumpf, castigated Tuesday by the Senate Banking Committee, has put the blame on retail bank employees and that more than 5,300 employees have been fired since the bank started investigating.

"We had to meet sales goals every day or I could get written up," said Khalid Taha, who worked at a Wells Fargo branch in San Diego from 2013 until July 2016... While it varied by branch size and day of the week, a typical employee had to sell between 13 and 15 banking products a day -- a new account, a mortgage, a retirement account, or even online banking.

The targets were high even in small towns. Bankers in St. Helena, California, were ordered to open 3,000 checking accounts and sell 12,000 other bank products a year, according to a lawsuit filed against the bank in 2011. St. Helena and the surrounding towns in the picturesque Napa Valley wine country had a total population of roughly 11,500 people.

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Faced with the unrealistic sales expectations and close tracking of their sales by managers, employees looked for ways to manipulate Wells' sales system. Bankers in Minnesota, Pennsylvania and elsewhere described a sales culture where cheating the system was par the course.

Sounds familiar... surprised we haven't heard of any anecdotes about baseball-bats on desks....

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iehi-feed-60711 Wed, 21 Sep 2016 23:07:28 GMT Supreme Court Case Forces Cooperman Prosecutors to Halt Criminal Investigation http://implode-explode.com/viewnews/2016-09-21_SupremeCourtCaseForcesCoopermanProsecutorstoHaltCriminalInvestig.html The Supreme Court case, scheduled for arguments next month, could have wide-ranging implications for many insider-trading cases moving forward. The pivotal issue: Whether the government must prove the person who gave the inside tip received a benefit in providing it.

Bassam Salman, who brought the appeal to the Supreme Court, was convicted and sentenced to three years in prison for trading on inside information he received from his brother-in-law, a Citigroup Inc. investment banker. Mr. Salman and an associate brought in $1.7 million in trading profits based on tips from his brother-in-law about forthcoming acquisitions involving Citigroup clients, prosecutors said... Mr. Salman's lawyers are relying on a major 2014 decision by the New York-based Second U.S. Circuit Court of Appeals that limited insider-trading prosecutions.

In the New York case, U.S. v. Newman, the court said prosecutors had to prove a recipient of an inside tip knew the confidential information came from an insider and that the insider disclosed the information for a tangible benefit. That decision overturned the convictions of hedge-fund managers Todd Newman and Anthony Chiasson.

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The Justice Department unsuccessfully appealed the Newman decision and warned it would hamper their ability to pursue insider trading. The ruling also forced prosecutors to move to dismiss charges against former SAC Capital Advisors LP portfolio manager Michael Steinberg and six analysts, dealing a blow to what had been one of the most successful string of insider-trading prosecutions. Prosecutors in New York had won more than 80 convictions in such cases with only one acquittal in recent years.

Despite the uncertainty in the law, the SEC decided to move forward [in Cooperman's case] in a way that largely sidesteps the question at issue in the Salman case.

The SEC's civil case against Mr. Cooperman alleges he essentially stole the information from an executive at Atlas Pipeline Partners before purchasing securities in the company before the 2010 sale of its natural gas processing facility in Elk City, Okla. The SEC didn't allege Mr. Cooperman provided a benefit to the executive, but "breached a duty" he owed to the executive to keep it confidential and not use it to trade.

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