Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-57626 Thu, 03 Sep 2015 09:39:48 GMT Say Goodbye to Normal | KUNSTLER http://implode-explode.com/viewnews/2015-09-03_SayGoodbyetoNormalKUNSTLER.html iehi-feed-57580 Fri, 28 Aug 2015 01:40:20 GMT Oil Industry Needs Half a Trillion Dollars to Endure Price Slump http://implode-explode.com/viewnews/2015-08-27_OilIndustryNeedsHalfaTrillionDollarstoEndurePriceSlump.html iehi-feed-57539 Sun, 23 Aug 2015 16:45:59 GMT Why It Really All Comes Down To The Death Of The Petrodollar http://implode-explode.com/viewnews/2015-08-23_WhyItReallyAllComesDownToTheDeathOfThePetrodollar.html iehi-feed-57507 Wed, 19 Aug 2015 20:41:37 GMT Oil Goes Down, Bankruptcies Go Up - These 5 Frackers Could Be Next To Fall http://implode-explode.com/viewnews/2015-08-19_OilGoesDownBankruptciesGoUpThese5FrackersCouldBeNextToFall.html So who will be next to fall? The list of troubled companies slumping toward Chapter 11 is growing. SandRidge Energy, Goodrich GR +% Petroleum, Swift Energy, Energy XXI, and Halcon Resources have all lost more than 90% of their market value since 2014, are larded up with too much debt, and would be lucky to survive the bust.

Shalemageddon is coming, albeit delayed a bit, a-la bank extend-and-pretend, 2007-crash style. This part of the article is especially funny to us:

Samson is the biggest bankruptcy of the oil bust so far, and a huge black eye to private equity giant KKR, which in 2011 led a $7.2 billion leveraged buyout of the company. The deal was a classic LBO: about $3 billion in equity backed by more than $4 billion in debt. It seemed like a good idea at the time... The sophisticated KKR team assumed it could squeeze a lot of value out of Samson, which since Schusterman's death in 2001 had been run by his daughter Stacy. Charles would be proud of her for inking the deal of a lifetime, selling the family jewels at what turned out to be the top of the market for shale-y acreage. It didn't take long for KKR and its equity partners to realize they had overpaid tremendously. The pain has been spread around. Japan's Itochu Corp. put up $1 billion in the LBO for a 25% equity stake. Two months ago it sold back its shares to Samson for $1.

Guess Itochu was ... [wait for it...] ... doing their part to spend spend spend for Abenomics! ;)

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iehi-feed-57506 Wed, 19 Aug 2015 20:34:32 GMT Brace for more dividend cuts as Canada's oilpatch runs out of cash http://implode-explode.com/viewnews/2015-08-19_BraceformoredividendcutsasCanadasoilpatchrunsoutofcash.html iehi-feed-57492 Tue, 18 Aug 2015 15:46:38 GMT Exclusive: U.S. graft probes may cost Petrobras record $1.6 billion or more http://implode-explode.com/viewnews/2015-08-18_ExclusiveUSgraftprobesmaycostPetrobrasrecord16billionormore.html iehi-feed-57483 Mon, 17 Aug 2015 16:02:34 GMT Doomsday clock for global market crash strikes one minute to midnight as central banks lose control http://implode-explode.com/viewnews/2015-08-17_Doomsdayclockforglobalmarketcrashstrikesoneminutetomidnightascen.html Time is now rapidly running out. From China to Brazil, the central banks have lost control and at the same time the global economy is grinding to a halt. It is only a matter of time before stock markets collapse under the weight of their lofty expectations and record valuations.

...

The great props to the world economy are now beginning to fall. China is going into reverse. And the emerging markets that consumed so many of our products are crippled by currency devaluation. The famed Brics of Brazil, Russia, India, China and South Africa, to whom the West was supposed to pass on the torch of economic growth, are in varying states of disarray.

...

As central banks run out of silver bullets then, credit markets are desperately seeking to reprice risk. The London Interbank Offered Rate (Libor), a guide to how worried UK banks are about lending to each other, has been steadily rising during the past 12 months. Part of this process is a healthy return to normal pricing of risk after six years of extraordinary monetary stimulus. However, as the essential transmission systems of lending between banks begin to take the strain, it is quite possible that six years of reliance on central banks for funds has left the credit system unable to cope.

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iehi-feed-57475 Sun, 16 Aug 2015 13:51:43 GMT Billionaire Soros Sells Most of Alibaba, Reduces Its Oil Stocks http://implode-explode.com/viewnews/2015-08-16_BillionaireSorosSellsMostofAlibabaReducesItsOilStocks.html iehi-feed-57465 Fri, 14 Aug 2015 19:02:34 GMT China's economic mandarins are proving to be human after all http://implode-explode.com/viewnews/2015-08-14_Chinaseconomicmandarinsareprovingtobehumanafterall.html iehi-feed-57443 Wed, 12 Aug 2015 15:27:04 GMT US's Saudi Oil Deal from Win-Win to Mega-Lose http://implode-explode.com/viewnews/2015-08-12_USsSaudiOilDealfromWinWintoMegaLose.html

Not only are the Saudis unhappy with the US shale oil intrusion on their oily Kingdom. They are more than upset with the recent deal the Obama Administration made with Iran that will likely lead in several months to lifting Iran economic sanctions... This has all added up to an iron Saudi determination, aided by close Gulf Arab allies, to further crash oil prices until the expected wave of shale oil company bankruptcies--that was halted in January by Washington and Wall Street manipulations--finishes off the US shale oil competition. That day may come soon, but with unintended consequences for the entire global financial system at a time such consequences can ill be afforded.

...

October is the next key point for bank decisions to roll-over US shale company loans or to keep extending credit on the (until now) hope that prices will slowly recover. If as strongly hinted, the Federal Reserve hikes US interest rates in September for the first time in the eight years since the global financial crisis erupted in the US real estate market in 2007, the highly-indebted US shale oil producers face disaster of a new scale. Until the past few weeks the volume of US shale oil production has remained at the maximum as shale producers desperately try to maximize cash flow, ironically, laying the seeds of the oil glut globally that will be their demise.

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iehi-feed-57418 Sun, 09 Aug 2015 14:37:41 GMT Petrobras Oil Scandal Leaves Brazilians Lamenting a Lost Dream http://implode-explode.com/viewnews/2015-08-09_PetrobrasOilScandalLeavesBraziliansLamentingaLostDream.html As one of the world's largest oil companies, Petrobras spends more than $20 billion a year expanding its capacity, building new plants and servicing facilities. That means huge sums of money are spent on a variety of work, much of it subcontracted to companies that have long fought one another for the business.

But about a decade ago, according to prosecutors, these companies stopped competing and started to collaborate. They formed a cartel and decided, in advance, which of them would win a particular deal. A charade competition was orchestrated, and the anointed winner could charge vastly more than it would in a free market.

The cartel called itself "the club," according to depositions and documents submitted to the court. It had 16 members by 2006, including blue-chip behemoths like Odebrecht and Camargo Corrêa.

From 1 to 5 percent of the value of a given contract was diverted to those on the receiving end of the scheme, a group that included 50 politicians from six parties, according to prosecutors.

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iehi-feed-57416 Sun, 09 Aug 2015 14:14:57 GMT Be Afraid: Japan Is About To Do Something That's Never Been Done Before http://implode-explode.com/viewnews/2015-08-09_BeAfraidJapanIsAboutToDoSomethingThatsNeverBeenDoneBefore.html iehi-feed-57413 Sat, 08 Aug 2015 18:09:08 GMT The Great Unwind Has Begun, Bankruptcies Soar, Junk Bonds on Chopping Block http://implode-explode.com/viewnews/2015-08-08_TheGreatUnwindHasBegunBankruptciesSoarJunkBondsonChoppingBlock.html The Fed hasn't even raised interest rates yet, and the largest credit bubble in history continues to inflate. But it has begun to hiss hot air at the margins where the riskiest junk bonds, rated CCC or below, have plunged in value and where average yields have soared from a ludicrous low of 8% a year ago to over 13% now. That rout is far from over.

No matter how terrible and obvious the risks, fund managers, driven to near insanity by the Fed's zero-interest-rate policy, held their noses and closed their eyes and picked up the worst junk, thus continuing to fund over-leveraged, money-losing, cash-flow negative companies that should have been restructured or liquidated years ago.

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iehi-feed-57404 Fri, 07 Aug 2015 14:15:10 GMT Oil Prices: Shale Producers Face Reality http://implode-explode.com/viewnews/2015-08-07_OilPricesShaleProducersFaceReality.html iehi-feed-57394 Thu, 06 Aug 2015 18:10:11 GMT Saudi Arabia to tap markets for $US27b as low oil strains finance http://implode-explode.com/viewnews/2015-08-06_SaudiArabiatotapmarketsforUS27baslowoilstrainsfinance.html iehi-feed-57388 Thu, 06 Aug 2015 12:36:32 GMT Saudi Arabia may go broke before the US oil industry buckles http://implode-explode.com/viewnews/2015-08-06_SaudiArabiamaygobrokebeforetheUSoilindustrybuckles.html If the aim was to choke the US shale industry, the Saudis have misjudged badly, just as they misjudged the growing shale threat at every stage for eight years. "It is becoming apparent that non-OPEC producers are not as responsive to low oil prices as had been thought, at least in the short-run," said the Saudi central bank in its latest stability report.

"The main impact has been to cut back on developmental drilling of new oil wells, rather than slowing the flow of oil from existing wells. This requires more patience," it said.

One Saudi expert was blunter. "The policy hasn't worked and it will never work," he said.

...

In hindsight, it was a strategic error to hold prices so high, for so long, allowing shale frackers - and the solar industry - to come of age. The genie cannot be put back in the bottle.

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iehi-feed-57382 Wed, 05 Aug 2015 16:06:37 GMT 'Perfect Storm' Engulfing Canada's Economy Perfectly Predictable http://implode-explode.com/viewnews/2015-08-05_PerfectStormEngulfingCanadasEconomyPerfectlyPredictable.html iehi-feed-57378 Wed, 05 Aug 2015 15:53:30 GMT Oil Re-Bloodies the "Smart Money" in "Liquidity Death Spiral" http://implode-explode.com/viewnews/2015-08-05_OilReBloodiestheSmartMoneyinLiquidityDeathSpiral.html iehi-feed-57331 Fri, 31 Jul 2015 20:25:41 GMT Societe Generale's Albert Edwards: Get ready to relive the 2008 crisis http://implode-explode.com/viewnews/2015-07-31_SocieteGeneralesAlbertEdwardsGetreadytorelivethe2008crisis.html In a research note on Thursday, Edwards said that China's intervention to stabilize its volatile stock market was part of a larger global story, in which "rock bottom" interest rates and large fiscal deficits in the western world were pushing the global economy towards a fall.

"QE (quantitative easing) will be stepped up to such a pace that you will hear the roar of the printing presses from Mars," Edwards said. "I have not one scintilla of doubt that the western central banks have set us up for an even bigger version of the 2008 Great Financial Crisis."

... Given his forecast step up in money-printing, Edwards said that gold, which tends to perform well during periods of high inflation, was a "must-have" safe-haven investment.

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iehi-feed-57318 Wed, 29 Jul 2015 22:57:50 GMT US, EU May 'Give Up' Ukraine to Seek Russian Political Support http://implode-explode.com/viewnews/2015-07-29_USEUMayGiveUpUkrainetoSeekRussianPoliticalSupport.html