IEHI Feed: The Hedge Fund Implode-o-Meter http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-59895 Sat, 28 May 2016 00:30:46 GMT The Great Race: USA, Germany, Japan All Have Negative Real 10 Year Sovereign Yields http://hf-implode.com/viewnews/2016-05-27_TheGreatRaceUSAGermanyJapanAllHaveNegativeReal10YearSovereignYie.html iehi-feed-59894 Fri, 27 May 2016 15:40:36 GMT Essence of BofA "Hustle" Ruling: Sign A Contract And LATER Decide To Commit Fraud, and It's Not Fraud http://hf-implode.com/viewnews/2016-05-27_EssenceofBofAHustleRulingSignAContractAndLATERDecideToCommitFrau.html The judges based their ruling on the contracts that Countrywide had reached with Fannie and Freddie, pledging to provide those government-sponsored firms with "investment quality" mortgages. There was no evidence, the appellate judges found, that the executives who signed those contracts intended at the time to stuff the pipeline with toxic junk. It just turned out that way. Because there was no intent to defraud when the contracts were signed, the judges ruled, this whole affair is merely a case of breach of contract, not fraud...

There are a few problems with this analysis. One was pointed out presciently by Judge Rakoff. In a 2013 ruling in the case, he observed that under the federal mail fraud statute, that limitation [of fraud needing to occur at the moment of contract signing] doesn't apply. In any event, the bank's misrepresentations were continuous and ongoing: every time it sold Fannie or Freddie a substandard loan, it was arguably lying... Judge Rakoff anticipated and rejected [the Appeals Court's] argument, and even pointed out that Congress closed the loophole by amending the mail fraud statute -- in 1909. It's also likely that the government will appeal the latest ruling to the full 2nd circuit court, and thence, if necessary, to the Supreme Court.

Yes, this will likely get reversed again. The ruling simply seems to be in error, aside from leading to nonsensical conclusions (i.e., that anyone can now defraud the government with abandon as long as they don't show any evidence of intent to defraud at the time they sign a contract or make covenants).

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iehi-feed-59893 Fri, 27 May 2016 14:40:20 GMT Japan "Already Doing Helicopter Money"; "Yen At Great Risk": Noguchi http://hf-implode.com/viewnews/2016-05-27_JapanAlreadyDoingHelicopterMoneyYenAtGreatRiskNoguchi.html iehi-feed-59892 Fri, 27 May 2016 14:32:05 GMT Gross Moving To Short Credit Stance http://hf-implode.com/viewnews/2016-05-27_GrossMovingToShortCreditStance.html iehi-feed-59891 Fri, 27 May 2016 14:30:26 GMT Duncan: China's Boom Ended in 2015; Protracted Slump Ahead (Video) http://hf-implode.com/viewnews/2016-05-27_DuncanChinasBoomEndedin2015ProtractedSlumpAheadVideo.html iehi-feed-59886 Thu, 26 May 2016 16:41:10 GMT Wall Street Crime: 7 Years, 156 Cases and Few Convictions http://hf-implode.com/viewnews/2016-05-26_WallStreetCrime7Years156CasesandFewConvictions.html The Wall Street Journal examined 156 criminal and civil cases brought by the Justice Department, Securities and Exchange Commission and Commodity Futures Trading Commission against 10 of the largest Wall Street banks since 2009. In 81% of those cases, individual employees were neither identified nor charged. A total of 47 bank employees were charged in relation to the cases. One was a boardroom-level executive, the Journal's analysis found.

The analysis shows not only the rarity of proceedings brought against individual bank employees, but also the difficulty authorities have had winning cases they do bring.

Most of the bankers who were charged pleaded guilty to criminal counts or agreed to settle a civil case, with those facing civil charges paying a median penalty of $61,000. Of the 11 people who went to trial or a hearing and had a ruling on their case, six were found not liable or had the case dismissed. That left a total of five bank employees at any level against whom the government won a contested case. They include Mr. Heinz, the former UBS employee.

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There are plenty of possible explanations for the small number of successful cases. For starters, much of the institutional conduct during and after the financial crisis didn't break the law, said law-enforcement officials. Even when the government has been able to prove illegal activity, it has rarely been traced to the upper echelons of big banks.

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The Journal's analysis found that about half of the 47 bank employees charged since 2009 held junior or midlevel jobs--vice presidents, financial advisers, private bankers and managing directors. Most had quit or been fired before the bank was charged, sometimes years earlier.

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In 2012, a New York jury convicted Mr. Heinz, now 43 years old, and two colleagues of rigging a bidding process in which banks competed for contracts to invest proceeds from bonds issued by towns and cities. Prosecutors said the three men steered financial contracts to their friends in exchange for kickbacks and other favors, resulting in cities and towns paying millions more for the deals than they needed to. Mr. Heinz, a vice president on UBS's municipal-bond reinvestment desk, was sentenced to 27 months in prison and ordered to pay a $400,000 fine.

His lawyer, Marc Mukasey of Greenberg Traurig LLP, said the government "tends to go after the low-hanging fruit, and they bully a lot of people into settlements or into testifying in a way that helps their case." He said Mr. Heinz had been doing his job in good faith, when the government "decided to criminalize something that had previously never been criminalized."

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iehi-feed-59885 Thu, 26 May 2016 14:55:28 GMT Bigger Than All The World's QE's Combined http://hf-implode.com/viewnews/2016-05-26_BiggerThanAllTheWorldsQEsCombined.html iehi-feed-59884 Thu, 26 May 2016 14:52:21 GMT Greece is Being Looted, Despite IMF "Agreement" - Paul Craig Roberts http://hf-implode.com/viewnews/2016-05-26_GreeceisBeingLootedDespiteIMFAgreementPaulCraigRoberts.html iehi-feed-59883 Thu, 26 May 2016 11:14:42 GMT IMF: No Cash Now for Greece Because Europe Hasn't Promised Debt Relief http://hf-implode.com/viewnews/2016-05-26_IMFNoCashNowforGreeceBecauseEuropeHasntPromisedDebtRelief.html A senior International Monetary Fund official Wednesday said it can't help Europe with fresh emergency financing for Greece because Athens's creditors haven't yet committed to detailed debt relief.

The comments show that the agreement touted by European finance ministers last night to release fresh bailout cash for Greece hasn't nailed down the key elements the IMF says are critical to finally return the debt-laden country to health. Rather, the IMF's reserved support for the deal has paved the way for Germany to approve new funds and sets the stage for more tough negotiations later this year.

...

Many outside economists see the deal as papering over the differences and once again prolonging the crisis.

"Summary of Eurogroup: Germany always wins, IMF caves under pressure from Germany and U.S., no one does what's in Greece's best interests," said Megan Greene, chief economist at Manulife and John Hancock Asset Management, in a tweet.

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iehi-feed-59882 Thu, 26 May 2016 00:44:53 GMT The Fed Setting Up For A U.S. Dollar Collapse If No June Rate Hike http://hf-implode.com/viewnews/2016-05-25_TheFedSettingUpForAUSDollarCollapseIfNoJuneRateHike.html

The U.S. dollar index has bounced from its 15-month low on May 3, thanks to Fed officials talking up rate hikes and thereby propping up the U.S. dollar, referred to as a "Fed Dollar Put". The Fed may have already painted itself into a corner, even as job growth is decelerating, core inflation is trending downward, and the U.S. economy may be one step closer to a recession, as seen by the yield spread between the 10-year and 2-year U.S. Treasury Notes.

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Many economists may not be aware that the S&P 500 Utilities sector is now trading near its all-time high, as money has rotated into safe-havens. The last time Utilities outperformed the broader market, the U.S. economy entered into a recession 12 months later.

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iehi-feed-59881 Wed, 25 May 2016 23:56:47 GMT Fannie And Freddie Are Mega-Frauds; Still Have Not Digested Derivatives & Accounting Losses From Crash http://hf-implode.com/viewnews/2016-05-25_FannieAndFreddieAreMegaFraudsStillHaveNotDigestedDerivativesAcco.html iehi-feed-59880 Wed, 25 May 2016 23:35:59 GMT Precious Metals: Fake-Rally Ends, Hostage Markets Return http://hf-implode.com/viewnews/2016-05-25_PreciousMetalsFakeRallyEndsHostageMarketsReturn.html In the real world, the quantity of investment dollars going into silver is roughly parallel to the quantity of dollars going into gold. Had a similar ratio of investor dollars entered the bankers "paper bullion" markets the price of silver would have had to rise roughly 20 times faster/higher than the price of gold during this supposed rally.

The notion, in this "precious metals rally", that no one was buying silver is patently absurd. The price of silver during most of this fake-rally wasn't merely improbable, it was impossible.

... the Big Bank crime syndicate remains totally in control of what we call our "markets" (for lack of a better word). Currency prices remain fixed (rigged). Equity market prices remain fixed (rigged). Bond market prices remain fixed (rigged). Are we to believe that the banksters simply 'forgot' to continue their precious metals price-fixing -- even as the mainstream media was shouting the word "rally" at the top of its lungs?

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The current eight-year, bubble-and-crash cycle manufactured by the Big Banks is nearing its end. When this Next Crash is detonated, this crime syndicate obviously doesn't want precious metals to stand out as "safe havens" -- as all of their corrupt, paper assets are plunging in value. The problem: with gold and silver already at rock-bottom prices at the beginning of 2016, it would have been very difficult to crash those markets (along with everything else). Thus the banksters need to march gold and silver prices higher, to some modest level, before they were set up to be crashed along with all other asset classes.

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iehi-feed-59879 Wed, 25 May 2016 23:30:51 GMT DoubleLine's Gundlach: U.S. stock market is 'dead money' http://hf-implode.com/viewnews/2016-05-25_DoubleLinesGundlachUSstockmarketisdeadmoney.html iehi-feed-59878 Wed, 25 May 2016 16:48:05 GMT Eurozone hails 'breakthrough' with Greece, IMF debt deal http://hf-implode.com/viewnews/2016-05-25_EurozonehailsbreakthroughwithGreeceIMFdebtdeal.html The euro zone gave Greece its firmest offer yet of debt relief in what finance ministers called a breakthrough deal that won a commitment from the IMF finally to return to taking part in the bailout for Athens.

After talks that lasted into the small hours of Wednesday, the Eurogroup ministers gave a nod to releasing 10.3 billion euros (£8 billion) in new funds for Greece in recognition of painful fiscal reforms pushed through by Prime Minister Alexis Tsipras's leftist-led coalition, subject to some final technical tweaks.

But a bigger step forward was a deal by which the euro zone agreed to offer Athens debt relief in 2018 if that is necessary to meet agreed criteria on its payments burden. That was enough to secure an agreement from the International Monetary Fund to again join the euro zone in funding the bailout of Greece.

... the Fund made a big concession by agreeing that the debt relief would only be finally decided in 2018, rather than up-front, as was the IMF's initial position.

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iehi-feed-59876 Wed, 25 May 2016 14:29:23 GMT Donald Trump is going to win: This is why Hillary Clinton can't defeat what Trump represents http://hf-implode.com/viewnews/2016-05-25_DonaldTrumpisgoingtowinThisiswhyHillaryClintoncantdefeatwhatTrum.html iehi-feed-59873 Tue, 24 May 2016 17:55:52 GMT US court re-opens door to private Libor claims http://hf-implode.com/viewnews/2016-05-24_UScourtreopensdoortoprivateLiborclaims.html US appeals court has opened the door for more claims against the big banks for rigging benchmark interest rates, by overturning a three-year-old ruling which threw out a host of private antitrust-related lawsuits.

Monday's decision by the 2nd US Circuit Court of Appeals in Manhattan could be a setback for the likes of Bank of America, JPMorgan Chase and Citigroup, which had hoped that most of the wave of post-crisis litigation was behind them.

The decision reverses a lower court decision from 2013, in which US District Judge Naomi Reice Buchwald dismissed claims on the grounds that the plaintiffs had failed to plead antitrust injury.

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The lawsuits had accused 16 major banks of collusion in manipulating the London interbank offered rate, or Libor, which approximates the average rate at which a select group of banks can borrow money. Beginning in 2007, the plaintiffs argued, the banks engaged in a horizontal price-fixing conspiracy, with each submitting an artificially low cost of borrowing US dollars in order to drive Libor down.

... the appeals court on Monday disagreed and sent the case back to the lower court for further proceedings. A three-judge panel found that price-fixing was an antitrust violation in itself, and therefore needed no separate plea of harm.

...

In its verdict, the appeals court panel made use of damning extracts from banks' chat rooms, which emerged as evidence collected in governmental investigations. In one, one RBS trader gloated: "It's just amazing how Libor fixing can make you that much money . . . it's a cartel now in London."

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iehi-feed-59869 Tue, 24 May 2016 16:17:22 GMT Negative Rates Prompt Japan Banks to Seek Protection Via Derivatives http://hf-implode.com/viewnews/2016-05-24_NegativeRatesPromptJapanBankstoSeekProtectionViaDerivatives.html Japanese banks are getting hurt as the negative-rate policy compresses their lending margins, with the top-three firms including Mitsubishi UFJ Financial Group Inc. forecasting this month that net income will fall a combined 5.2 percent in the year started April 1. The BOJ's radical stimulus has already dragged yields on more than 70 percent of Japanese government bonds to below zero, meaning that investors will have to effectively pay a fee to hold such debt to maturity.

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Companies that borrow at floating rates may also be able to use floor options to ensure that interest-rate swaps they use to hedge against rising rates don't end up costing them due to negative rates, Takahashi said. Actual trades of such derivatives are still not that common because the contracts are expensive to buy now, he said.

"It will be hard to price these options unless we get more liquidity," said Tateo Komatsu, a deputy general manager of global markets at Sumitomo Mitsui Trust Bank Ltd. "It will take time for the market to get used to minus rates."

There's no free lunch, so it's not exactly clear how these options will spare banks the pain. After all, options cost something.

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iehi-feed-59867 Tue, 24 May 2016 16:12:33 GMT Coppola: IMF Predicts Unemployment In Greece Will Fall To 12 Percent....By 2040 http://hf-implode.com/viewnews/2016-05-24_CoppolaIMFPredictsUnemploymentInGreeceWillFallTo12PercentBy2040.html iehi-feed-59866 Tue, 24 May 2016 15:58:37 GMT Bitcoin Catches On With Gold Bugs http://hf-implode.com/viewnews/2016-05-24_BitcoinCatchesOnWithGoldBugs.html Bitcoin has become "a store of value for those concerned about other asset classes," said Gil Luria, head of technology research at Wedbush Securities. "Gold used to be the only refuge for those who have grave concerns over the global economy and monetary system."

...

Some are more bullish on the technology that underpins bitcoin than the digital asset itself. Peter Grosskopf, chief executive of Sprott Inc., said the blockchain system--a data structure that makes it possible to create and share a digital ledger of transactions--behind cryptocurrencies has the potential to improve gold transactions. But he doesn't see any tangible value in bitcoin.

"We will invest in the digitization of gold, but we're going to stick with gold," Mr. Grosskopf said.

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Murray Stahl, chief investment officer of Horizon Kinetics, which manages $6 billion in assets, said as bitcoin becomes more established, he plans to buy more cryptocurrencies in place of gold.

Horizon Kinetics holds shares of Bitcoin Investment Trust, the first publicly traded bitcoin investment vehicle. Mr. Stahl said his exposure to bitcoin comprises between 0.5% and 1% in several portfolios, compared with 3% to 4% holdings in gold-related securities.

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iehi-feed-59865 Tue, 24 May 2016 15:56:29 GMT The IMF and calling Berlin's bluff over Greece http://hf-implode.com/viewnews/2016-05-24_TheIMFandcallingBerlinsbluffoverGreece.html Pepare for some tense moments in the next few weeks and months as Greece and its creditors struggle to agree the first review of last year's bailout... The International Monetary Fund has concluded that Greek public debt, at 180 per cent of gross domestic product, is unsustainable; as is the agreed annual primary budget surplus, before interest payments, of 3.5 per cent of GDP. The fund insists on debt relief, but Germany resists.

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In private, senior German government officials agree that Athens needs debt relief. They are not blind. But they are trapped in the lie that Greece is solvent, which is what their own backbenchers were told. Without that lie, Greece would no longer be a eurozone member. But the lie cannot be sustained.

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[The IMF] wants to come clean now; or as an official recently told me it wants to regain its lost virginity. In doing so, it would restore its reputation and call Berlin's bluff. There is, of course, a risk this stand-off would trigger another euro­zone crisis. Ms Merkel has good reason not to let the situation escalate.

A Greek debt writedown might not be popular in the Bundestag but another eurozone crisis would be a political disaster for her. It would expose the dishonesty of her eurozone rescue strategy. I see no chance of her risking a Grexit at a point when her deal with Turkey to host refugees who reach Greece is on the verge of collapse.

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My conclusion is that a credible threat by the IMF to pull the plug on its participation in a Greek bailout could force the Europeans, and the Germans in particular, to come clean.

If the Europeans want to continue their path of "extend and pretend", extending the loans and pretending Greece is solvent, so be it. But it should at least be their own money they pour in. In this case they should buy out the IMF bailout loans to Athens, which means taking over the fund's credits to Greece.

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