Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-61945 Fri, 24 Mar 2017 03:00:52 GMT Sovereign Debt Crises Simmer At Opposite Ends of the Global Pecking Order: The U.S., and Greece http://implode-explode.com/viewnews/2017-03-23_SovereignDebtCrisesSimmerAtOppositeEndsoftheGlobalPeckingOrderTh.html On one side of the Atlantic, we have the United States of America, which triggered yet another debt ceiling disaster last Thursday when the US government's maximum allowable debt reset to just over $20 trillion. Of course, the US national debt is pretty much already at $20 trillion... It's a repeat of what happened in 2015. And 2013. And 2011. Pretty amazing to consider that the "richest" country in the world has to plunder retirement funds in order to keep the lights on.

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Greece has had nine different governments since 2009. At least thirteen austerity measures. Multiple bailouts. Severe capital controls. And a full-out debt restructuring in which creditors accepted a 50% loss. Yet despite all these measures GREECE IS STILL IN A DEBT CRISIS.

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iehi-feed-61944 Thu, 23 Mar 2017 21:17:34 GMT Not enough votes: House delays health care bill to Friday http://implode-explode.com/viewnews/2017-03-23_NotenoughvotesHousedelayshealthcarebilltoFriday.html iehi-feed-61943 Thu, 23 Mar 2017 21:09:28 GMT Lavish EU 60th Celebration Will Skirt Issues in Stumbling Italy, the Host Country http://implode-explode.com/viewnews/2017-03-23_LavishEU60thCelebrationWillSkirtIssuesinStumblingItalytheHostCou.html "Italy was until very recently at the forefront of the European integration process," Luigi Zingales, professor of finance at University of Chicago Booth School of Business, said in an interview. "Today it's undoubtedly Europe's weakest link."

The economy grew just 0.9 percent last year, below the euro area's 1.7 percent, and unemployment is at 11.9 percent. A recent EU poll put Italy as the monetary union's second-most euro-skeptic state after Cyprus with only 41 percent saying the single currency is "a good thing." The average in the 19-member euro area is 56 percent.

That widespread disenchantment may be felt at elections due in about one year. A poll published on Tuesday by Corriere della Sera put support for the Five Star Movement, which calls for a referendum to ditch the euro, at a record 32.3 percent, well ahead of the ruling Democratic Party. Summit host Prime Minister Paolo Gentiloni has only been in power since December, when Matteo Renzi resigned after losing a constitutional reform referendum.

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iehi-feed-61942 Thu, 23 Mar 2017 20:59:46 GMT A Fake $3.6 Trillion Deal Is Easy to Sneak Past the SEC http://implode-explode.com/viewnews/2017-03-23_AFake36TrillionDealIsEasytoSneakPasttheSEC.html The 32-year-old painter said Google's parent, Alphabet Inc., had bought his art company in exchange for a chunk of stock that made him wealthier than Microsoft Corp. co-founder Bill Gates, Berkshire Hathaway Inc.'s Warren Buffett and Amazon.com Inc.'s Jeff Bezos -- combined.

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For more than three decades, the SEC has accepted online submissions of regulatory filings -- basically, no questions asked. As many as 800,000 forms are filed each year, or about 3,000 per weekday. But, in a little known vulnerability at the heart of American capitalism, the government doesn't vet them, and rarely even takes down those known to be shams.

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iehi-feed-61941 Thu, 23 Mar 2017 20:53:03 GMT Renters Now Rule Over Half of U.S. Cities http://implode-explode.com/viewnews/2017-03-23_RentersNowRuleOverHalfofUSCities.html iehi-feed-61940 Thu, 23 Mar 2017 20:49:19 GMT Auto-loan quality to deteriorate further, forcing tighter underwriting http://implode-explode.com/viewnews/2017-03-23_Autoloanqualitytodeterioratefurtherforcingtighterunderwriting.html "Subprime credit losses are accelerating faster than the prime segment, and this trend is likely to continue as a result of looser underwriting standards by lenders in recent years," said Michael Taiano, a director at the credit-ratings agency.

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"The tightening of underwriting standards is likely a response to expected deterioration in used vehicle prices and the weaker credit performance experienced in the subprime segment," added Taiano.

Used-car price declines have accelerated more recently, which will likely pressure recovery values on defaulted loans and lease residuals, the analysts said.

One measure, NADA's Used-Vehicle Price Index, tracking wholesale prices of used vehicles up to eight years old, declined over 6% in 2016 and was down 8% year over year in February 2017, marking the eighth consecutive monthly decline.

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iehi-feed-61937 Thu, 23 Mar 2017 16:31:33 GMT Trump Faces Bitter Defeat [Today]- The Wall Street Examiner http://implode-explode.com/viewnews/2017-03-23_TrumpFacesBitterDefeatTodayTheWallStreetExaminer.html iehi-feed-61936 Thu, 23 Mar 2017 15:26:54 GMT Landmark Times Square Building Forecloses, As Latecomer Owners "Waste Away In Margaritavile" of RE Downturn http://implode-explode.com/viewnews/2017-03-23_LandmarkTimesSquareBuildingForeclosesAsLatecomerOwnersWasteAwayI.html A unit of Brookfield Asset Management foreclosed on a $60 million mezzanine loan after owners of the former music industry mecca [The Brill Building] failed to make a $5.6 million payment in November.

The owners -- including Allied Partners, Brickman & Associates, Israeli pension fund Halman-Aldubi and New York's Conway Capital -- got steamrolled by the weak retail leasing market. They'd hoped to cash in, or out, on the 180,000-square-foot landmark's 40,000 square feet of store space. But a possible deal with Jimmy Buffett's theme restaurant, Margaritaville, fell through.''

The below (courtesy of B.D.) is an excerpt of a July 2016 article, from when the new owners bought a $295 million stake in the building (it's not clear how large a share that represents). Regardless, this all sure looks "peaky" to us...

Brill Holdings, a partnership of real estate investment firm B+B Capital, Israel-based fashion chain Fox-Wizel and landlords Conway Capital and Schottenstein Realty, has bought into the landmarked Brill Building for $295 million, Commercial Observer has learned.

CO reported in August 2015 that the 175,000-square-foot building at 1619 Broadway between West 49th and West 50th Streets was in contract and as of today, Allied Partners and Brickman are co-owners of the 11-story building with Brill Holdings.

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iehi-feed-61935 Thu, 23 Mar 2017 00:08:39 GMT Matt Taibbi: Trump the Destroyer http://implode-explode.com/viewnews/2017-03-22_MattTaibbiTrumptheDestroyer.html Just a month or so into Trump's administration, one of the central promises of his campaign -- the killing off of the Affordable Care Act -- is in trouble. Trump's inability to hold coalitions together, or really do much of anything beyond generate TV ratings, is already showing. But just as it was last year when the punditocracy told him he'd made himself unelectable, Trump's ace in the hole may be that he doesn't care. His history is that when the playing field doesn't work for him, he moves it. The Framers may have designed the government to withstand bouts of popular madness, but there are no checks and balances against the power of celebrity. A president who is both a tyrant and disinterested in governance would have blown their minds.

"At some point, he just stopped appointing people," says an incredulous Hauser, the capital watchdog, at the end of February. "He's only made 30 appointments. That means he's still got over 1,000 empty posts. Nearly 200 ambassador posts are in limbo. He named Neil Gorsuch to the Supreme Court, but not a single judge beyond that -- with over 100 empty federal seats to be filled. Nobody knows what the hell is going on."

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iehi-feed-61933 Wed, 22 Mar 2017 15:17:14 GMT Trump's Hard Sell on Health Care Hasn't Worked http://implode-explode.com/viewnews/2017-03-22_TrumpsHardSellonHealthCareHasntWorked.html iehi-feed-61931 Wed, 22 Mar 2017 14:42:18 GMT US "Too Big To Fail" Banks Top $1 Trillion - What Happens Next? http://implode-explode.com/viewnews/2017-03-22_USTooBigToFailBanksTop1TrillionWhatHappensNext.html iehi-feed-61929 Wed, 22 Mar 2017 00:26:11 GMT How Long Can Stocks' P/E-Multiple Expansion Outlive Declining Earnings and Companies' Financial Engineering? http://implode-explode.com/viewnews/2017-03-21_HowLongCanStocksPEMultipleExpansionOutliveDecliningEarningsandCo.html ... stocks have soared despite these miserable growth fundamentals. So what gives in this no-earnings-growth environment? Turns out the only thing that has soared is the price-earnings multiple. Over the three-plus years, it expanded by 47% from a P/E ratio of 18.15 on January 1, 2014, to P/E ratio of 26.64 today

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This combination of flat earnings and soaring stock prices, and thus expanding P/E ratios, is not uncommon. It comes in cycles: periods of multiple expansion are followed by periods of multiple compression. The current cycle of year-over-year multiple expansion has lasted for 57 months, the longest on record. The prior three record cycles -- which ended in 1987, 2000, and 2009 -- turned into periods of multiple compression associated with blistering crashes.

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iehi-feed-61928 Tue, 21 Mar 2017 15:31:34 GMT H-1B Visa Reform Actually Needed... But Trump Looks Set To Punt It http://implode-explode.com/viewnews/2017-03-21_H1BVisaReformActuallyNeededButTrumpLooksSetToPuntIt.html As Bloomberg describes tonight, H-1B visa applications are due at the beginning of April, so if the Trump Administration fails to implement its fixes by then, it's at least a year before they'll have any effect. Moreover, the lack of apparent momentum on this front does not bode well for meaningful changes.

... the program has moved almost entirely away from its original goals. One aim was to import workers when employers couldn't find qualified Americans. The second was to cap the number of H-1B holders, since both the bill's drafters and industry lobbyists wanted companies to bring in "talent" via green cards and help them become citizens, rather than rent them.

The result instead has been the creation of a large industry of foreign workers who largely work abroad. Not only do they undercut US wages and eliminate entry-level jobs, meaning the US is no longer developing its own tech professionals, but the fact that much of the work is done overseas also results in reduced taxes to states and municipalities.

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In the U.S., outsourcers bring staffers into the country on work visas, train them in the tech departments of leading corporations and then rotate them back to India where pay and living costs are lower. Outsourcing companies now get far more visas than traditional technology companies, according to data collected by Howard University's Ron Hira through Freedom of Information Act requests.

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iehi-feed-61926 Tue, 21 Mar 2017 15:13:03 GMT I attended the top of the Canadian Housing Market, so you didn't have http://implode-explode.com/viewnews/2017-03-21_IattendedthetopoftheCanadianHousingMarketsoyoudidnthave.html The second important factor in real estate is financing.  Not everyone has money, so what can they do?  The answers were shocking.  Be ‘creative' was the first response.  Pool your money, borrow from friends and family, own just 5% of a house, get the money however you can and just do it - remember, it only goes up.  Other financing suggestions were get cozy with a lender and they will ‘bend the rules' for you!  The fact that the biggest condo developer in Canada (Brad Lamb) said lenders will bend (but not break, apparently) rules to get you financing in front of 15k people with most people smiling and nodding was shocking.  

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Plenty of "high double-digit monthly yields", retire early with real estate, "everyone needs a place to live - buy apartments" type messages. Almost all of these pitches were second lien lending. Most offered yields in the 8 to 10% range. The presentations all suggested that you can borrow money, if you don't have it, at 4% and then buy these investments at 10% - easy money.

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The Paramount Equity pitch was also interesting and stated in all caps "HIGH DOUBLE-DIGIT RETURNS ON YOUR CASH, RRSP". This product pays monthly, is a second lien mortgage, with a one year term and LTV <85%. Paramount uses clever language that states they cover the cost of defaults. By that they mean they pay some of the fees, not the default risk itself.

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iehi-feed-61925 Tue, 21 Mar 2017 15:07:42 GMT Why Trump will have to trash the dollar to create jobs http://implode-explode.com/viewnews/2017-03-21_WhyTrumpwillhavetotrashthedollartocreatejobs.html Trump may just be blowing smoke when he talks about tariffs and border-adjustment taxes.

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The collapse of American manufacturing towns, and the old industrial middle class, has gone hand in hand with a staggering 40-year rise in the dollar, Klody observed. It is standard economics that as your currency rises, your exports become more expensive and less competitive in foreign markets.

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Klody noted that since the mid-1970s, the U.S. dollar has quadrupled in price -- yes, really -- when measured against the Federal Reserve's broad basket of foreign currencies.

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Since the early 1990s, the Mexican peso has collapsed from 32 U.S. cents to only 5 cents. That's a huge windfall to Mexican manufacturers -- far greater, one suspects, than NAFTA's reduction in tariffs. During that time, the price in dollars of the Vietnamese currency, the dong, has nearly halved. The Indian rupee has more than halved. And so on.

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iehi-feed-61924 Tue, 21 Mar 2017 14:56:55 GMT While Nobody's Watching, Paul Ryan Is Taking A Sledgehammer To Medicaid's Promise To Seniors http://implode-explode.com/viewnews/2017-03-21_WhileNobodysWatchingPaulRyanIsTakingASledgehammerToMedicaidsProm.html iehi-feed-61923 Tue, 21 Mar 2017 00:12:49 GMT Chinese Home Prices Heat Up Again, As Government Gets Cold Feet http://implode-explode.com/viewnews/2017-03-20_ChineseHomePricesHeatUpAgainAsGovernmentGetsColdFeet.html On month-over-month basis, house price growth diverged among different city tiers. Home price inflation decelerated in tier-1 cities, but home price inflation in tier 2/3/4 cities was steady or accelerated, which goes back to the core issue discussed last Friday: for all the talk about moderating home prices, China is first and foremost focused on preserving the wealth effect, which a sharp drop in home prices would crush.

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In short, China evaluted the risk of a potential housing bubble burst, and deciding that - at least for the time being - it is not worth the threat of losing a third of Chinese GDP in "wealth effect", got cold feet.

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iehi-feed-61922 Tue, 21 Mar 2017 00:07:43 GMT Central Bank Shell Game: What Sweden's Negative Interest Rates Do to Consumers http://implode-explode.com/viewnews/2017-03-20_CentralBankShellGameWhatSwedensNegativeInterestRatesDotoConsumer.html the "Swedish Model" is under attack. The egalitarian underpinnings, unwinding with the negative rates, are driving a wedge into Swedish society, creating extremes on both sides of the economic spectrum. The rampant consumerism, encouraged by artificially low rates, continues to widen the wealth gap. Coincidentally, the middle class deteriorated the most between 2014 and 2015: the same time that deposit rates took a dive. Furthermore, the negative savings rates are driving the average person to "gamble" on speculative investments instead of saving and building a future over the long term.

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Recently, inflation has been heating up. Near zero from 2013 to 2015, it edged up to almost 1% in 2016, and printed 1.8% in February. Much of it is supply driven: rising import prices attributed to a falling SEK. The real interest rates fell to negative -2.3% (Repo Rate minus Inflation) last month. At some point, Riksbank will either have to raise rates or the government will have to intervene to avert a currency crisis.

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It is clear that the negative rate experiment is neither sustainable nor helpful to economic growth. It only inflates bubbles while widening the wealth gap in Swedish society. A once prudent and financially conservative people are now getting drunk on debt, wrecking their future. The very premise of Swedish society is under attack. Nevertheless, it does not appear that this policy will abate anytime soon.

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iehi-feed-61921 Mon, 20 Mar 2017 16:11:35 GMT The Fed's Global Dollar Problem http://implode-explode.com/viewnews/2017-03-20_TheFedsGlobalDollarProblem.html iehi-feed-61920 Mon, 20 Mar 2017 16:09:58 GMT Euro zone's Jeroen Dijsselbloem calls for ESM to be turned into a European IMF http://implode-explode.com/viewnews/2017-03-20_EurozonesJeroenDijsselbloemcallsforESMtobeturnedintoaEuropeanIMF.html The European Stability Mechanism (ESM) - the euro zone's bailout fund - should ultimately be turned into a European version of the International Monetary Fund, the head of euro zone finance ministers told a German newspaper.

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He said that would also mean that Greece's current "troika" of lenders -- the European Commission, European Central Bank and the IMF -- would need to be broken up in the longer term.

"The ECB feels increasingly uncomfortable in its troika role, and rightly so I think," Dijsselbloem said, adding that the European Commission had other "important tasks" that it should concentrate on.He said the ESM should "build up the technical expertise that only the IMF has at the moment".

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