Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-65997 Mon, 03 Jun 2024 13:03:24 GMT Zero-percent down mortgage makes a comeback. Here's how it works http://implode-explode.com/viewnews/2024-06-03_ZeropercentdownmortgagemakesacomebackHereshowitworks.html now it's the top ...]]> iehi-feed-65996 Sun, 02 Jun 2024 15:39:01 GMT High Rates and Prices Leave Many Stuck in a Starter Home http://implode-explode.com/viewnews/2024-06-02_HighRatesandPricesLeaveManyStuckinaStarterHome.html iehi-feed-65992 Mon, 13 May 2024 00:17:31 GMT Trump May Owe $100 Million From Double-Dip Tax Breaks, Audit Shows http://implode-explode.com/viewnews/2024-05-13_TrumpMayOwe100MillionFromDoubleDipTaxBreaksAuditShows.html ``When he filed his 2008 tax return, he declared business losses of $697 million. Tax records do not fully show which businesses generated that figure. But working with tax experts, The Times and ProPublica calculated that the Chicago worthlessness deduction could have been as high as $651 million, the value of Mr. Trump's stake in the partnership -- about $94 million he had invested and the $557 million loan balance reported on his tax returns that year.

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the core of the I.R.S.'s position is that Mr. Trump's 2010 merger violated a law meant to prevent double dipping on tax-reducing losses. If done properly, the merger would have accounted for the fact that Mr. Trump had already written off the full cost of the tower's construction with his worthlessness deduction.

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If the I.R.S. prevails, Mr. Trump's tax returns would look very different, especially those from 2011 to 2017. During those years, he reported $184 million in income from "The Apprentice" and agreements to license his name, along with $219 million from canceled debts. But he paid only $643,431 in income taxes thanks to huge losses on his businesses, including the Chicago tower. The revisions sought by the I.R.S. would require amending his tax returns to remove $146 million in losses and add as much as $218 million in income from condominium sales. That shift of up to $364 million could swing those years out of the red and well into positive territory, creating a tax bill that could easily exceed $100 million.

Well, of course Trump in effect generated a giant chunk of his latter-day fortune by harvesting bogus tax losses. On top of precedents such as the alleged tax dodges involved in the inheritance of his dad's estate, and the highly-questionable Seven Springs deductions, it's all likely par for the course for him. The only surprising thing is he might actually end up having to pay a big chunk of it back (apparently, only about half of the total value, since the IRS didn't react until tax year 2010, when it would have needed to go all the ways back to tax year 2008 to question the full breadth of the maneuver).

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iehi-feed-65982 Wed, 17 Apr 2024 00:17:36 GMT What If Fed Rate Hikes Are Actually Sparking US Economic Boom? http://implode-explode.com/viewnews/2024-04-17_WhatIfFedRateHikesAreActuallySparkingUSEconomicBoom.html What if, they ask, all those interest-rate hikes the past two years are actually boosting the economy? In other words, maybe the economy isn't booming despite higher rates but rather because of them.

It's an idea so radical that in mainstream academic and financial circles, it borders on heresy -- the sort of thing that in the past only Turkey's populist president, Recep Tayyip Erdogan, or the most zealous disciples of Modern Monetary Theory would dare utter publicly.

But the new converts -- along with a handful who confess to being at least curious about the idea -- say the economic evidence is becoming impossible to ignore.

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This is, the contrarians argue, because the jump in benchmark rates from 0% to over 5% is providing Americans with a significant stream of income from their bond investments and savings accounts for the first time in two decades. "The reality is people have more money," says Kevin Muir, a former derivatives trader at RBC Capital Markets who now writes an investing newsletter called The MacroTourist.

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Einhorn notes that US households receive income on more than $13 trillion of short-term interest-bearing assets, almost triple the $5 trillion in consumer debt, excluding mortgages, that they have to pay interest on. At today's rates, that translates to a net gain for households of some $400 billion a year, he estimates.

We would note also that present structural interest rates aren't actually "high" -- they're still historically a bit low (with the average prior to the QE era being around 6%). Money does need some time value for the economy to work properly, we've been saying around here for over 15 years...

We've suspected for a while that Jerome Powell secretly agrees with this stance, too.

(A final point, consumer interest rates have lost most coupling from the Funds rate and similar rates a long time ago. With usury laws buried, typical consumer credit card rates have been north of 22% for a long time. When the funds rate went up from 0% to 5%, these credit card rate levels bumped up to 25-30%. So what? That's just not a significant enough proportional change to make a difference. We just don't see many out there who would make different buying decisions on a 30% CC versus a 25% CC; and the population who would default at each rate level is probably the same. Therefore, overall, we would think that Einhorn's point about consumers ending up with more cash when structural interest rates go up as being on the balance, the prevailing factor.)

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iehi-feed-65981 Tue, 16 Apr 2024 18:44:37 GMT Is the Boom-and-Bust Business Cycle Dead? http://implode-explode.com/viewnews/2024-04-17_IstheBoomandBustBusinessCycleDead.html ... a brigade of academic economists and prominent voices on Wall Street are asking if the unruly business cycle they learned in school, and witnessed in practice, has fundamentally morphed into a tamer beast... "Financial reporters and market strategists often argue about whether we are ‘early-cycle,' ‘mid-cycle' or ‘late-cycle,'" David Kelly, the chief global strategist at J.P. Morgan Asset Management, wrote in a March 11 note to investors that closely aligned with Mr. Rieder's "satellite" thesis. "However, these perspectives are based on an outdated model of how the U.S. economy behaves."

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Yet Mr. Kelly of J.P. Morgan lists various reasons that periods of U.S. economic growth may be elongated and less chaotic going forward. Federal deposit insurance, introduced after the Depression, sharply reduced bank panics and failures. Vastly improved information on inventory levels among goods-producing businesses, he said, has "tamed" the inventory cycle, preventing mismatches between supply and demand that can cause mass layoffs.

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[But] Mr. Herndon noted the work of the 20th-century Polish economist Michal Kalecki, who argued that business leaders feel "undermined" by the maintenance of full employment. Using their substantial influence over policy, Kalecki argued, they can help institute restrictive economic policies that bring times of economic expansion to an end and reset them with softer, more tolerable labor power.

And Mr. Herndon said he thought old-fashioned "bubble" manias and "credit cycles" remained a danger, too.

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iehi-feed-65976 Sun, 10 Mar 2024 02:20:02 GMT The YIMBY movement: not just for liberals any more http://implode-explode.com/viewnews/2024-03-10_TheYIMBYmovementnotjustforliberalsanymore.html iehi-feed-65975 Sat, 02 Mar 2024 18:54:09 GMT It's Me, Hi, I'm the Problem. I'm 33 http://implode-explode.com/viewnews/2024-03-03_ItsMeHiImtheProblemIm33.html iehi-feed-65974 Sun, 11 Feb 2024 22:04:39 GMT White people's net worth outgrew Black Americans' by 30 percentage points in the pandemic, New York Fed study finds http://implode-explode.com/viewnews/2024-02-12_WhitepeoplesnetworthoutgrewBlackAmericansby30percentagepointsint.html While government support such as increased unemployment benefits and stimulus checks helped stave off a COVID-induced recession, financial asset prices rose so significantly with the reopening of the economy through 2021 that racial wealth disparities increased. And while those market-linked assets did fall in 2022 when the Federal Reserve rapidly increased interest rates, "those declines did not fully offset the earlier rises," according to the New York Fed.

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More than 50% of Black financial wealth is invested in pensions, the New York Fed found. Less than 20% of Black wealth is stored in private businesses, corporate equities, and mutual funds. In contrast, less than 30% of white financial wealth is invested in pensions, with about 50% invested in businesses, equities, and mutual funds.

"Black workers are still more likely to be unionized, which may play a part in the pension story," said Jones. "But how folks are exposed to the ability to invest in the stock market -- whether or not it's something they grow up doing -- we know that's different for white families than for people of color." Black family members are less likely to get an inheritance, she said.

During the pandemic, the real value of Black-held financial assets dropped in 2022 to below its 2019 level and continued to decline steadily, while the real value of Hispanic-held financial assets dipped below its 2019 level in 2022 and stagnated. Neither group's real financial assets have recovered to their 2019 values.

Owning a business is another component of financial wealth, and separate data show Black-owned businesses had a tougher time during the pandemic.

While less than 10% of all U.S. business owners are Black, Black-owned businesses were also more concentrated in industries hardest hit when COVID first spread, according to Economic Policy Institute analysis of government data. In April of 2020, more than 40% of Black business owners reported they were not working, compared with only 17% of white business owners.

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iehi-feed-65973 Sun, 11 Feb 2024 18:15:12 GMT China's property crisis is starting to ripple across the world http://implode-explode.com/viewnews/2024-02-12_Chinaspropertycrisisisstartingtorippleacrosstheworld.html iehi-feed-65969 Sun, 04 Feb 2024 17:07:31 GMT New data reveals the small-business boom from the pandemic has real-world legs http://implode-explode.com/viewnews/2024-02-05_Newdatarevealsthesmallbusinessboomfromthepandemichasrealworldleg.html iehi-feed-65968 Sun, 04 Feb 2024 17:05:13 GMT An affordability crisis is making some young Americans give up on ever owning a home http://implode-explode.com/viewnews/2024-02-05_AnaffordabilitycrisisismakingsomeyoungAmericansgiveuponeverownin.html Americans are living through the toughest housing market in a generation and, for some young people, the quintessential dream of owning a home is slipping away...

The sustainable solution is to make it easier to build housing. That way we can actually start heading in the right direction with affordability and have that be sustainable and not just a short-term interest rate phenomenon," Daryl Fairweather, Redfin's chief economist, told CNN

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iehi-feed-65967 Sun, 04 Feb 2024 04:18:53 GMT "We Can't Afford Anything Else": Woman Explains Why Young People Are Buying Lavish Items http://implode-explode.com/viewnews/2024-02-04_WeCantAffordAnythingElseWomanExplainsWhyYoungPeopleAreBuyingLavi.html iehi-feed-65965 Thu, 01 Feb 2024 14:17:15 GMT Why the US economy is doing so much better than the rest of the world http://implode-explode.com/viewnews/2024-02-01_WhytheUSeconomyisdoingsomuchbetterthantherestoftheworld.html ''Gross domestic product, the broadest measure of economic output, did slow last quarter to a 3.3% annualized rate. But make no mistake, as Larry David would say, that's prettaaay, prettaaay good.

It's remarkable given economists were expecting 1.5% annualized GDP growth last quarter. It's even more remarkable considering a year ago they were all but certain there'd be a recession by now and the economy would grow at a meager 0.2% rate

Wild idea -- what if the main cause is that the US has best normalized interest rates to a functional level? I.e. malinvestment at the top is curtailed, and people can accrue savings again. Just a thought.

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iehi-feed-65959 Tue, 23 Jan 2024 19:10:14 GMT Meet the housing market ‘hackers' who do not live in their homes http://implode-explode.com/viewnews/2024-01-24_Meetthehousingmarkethackerswhodonotliveintheirhomes.html iehi-feed-65957 Mon, 22 Jan 2024 14:08:59 GMT Renting a Downmarket Million-Dollar Home I Can't Buy http://implode-explode.com/viewnews/2024-01-22_RentingaDownmarketMillionDollarHomeICantBuy.html iehi-feed-65956 Sun, 21 Jan 2024 20:39:58 GMT Half of recent US inflation due to high corporate profits, report finds http://implode-explode.com/viewnews/2024-01-22_HalfofrecentUSinflationduetohighcorporateprofitsreportfinds.html

The report, compiled by the progressive Groundwork Collaborative thinktank, found corporate profits accounted for about 53% of inflation during last year's second and third quarters. Profits drove just 11% of price growth in the 40 years prior to the pandemic, according to the report.

Costs have come down substantially, and while corporations were quick to pass on their increased costs to consumers, they are surprisingly less quick to pass on their savings to consumers," Liz Pancotti, a Groundwork strategic adviser and paper co-author, said.

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iehi-feed-65949 Thu, 11 Jan 2024 01:54:40 GMT Forty-four of 50 US states worsen inequality with ‘upside-down' taxes http://implode-explode.com/viewnews/2024-01-11_Fortyfourof50USstatesworseninequalitywithupsidedowntaxes.html Only six states, plus the District of Columbia, have tax systems that reduce inequality rather than worsen it, with the poorest fifth of people paying a tax rate 60% higher, on average, than the top 1% of households.

The super-wealthy are treated particularly lightly by the tax system, with the top 1% paying less than every other income group across 42 states. In most states, 36 in all, the poorest residents are taxed at a higher rate than any other group.

The most regressive states in terms of taxation are, in order, Florida, Washington, Tennessee, Pennsylvania and Nevada. The least regressive jurisdictions are DC, Minnesota, Vermont, New York and New Jersey.

Various state-level policies, such as cutting taxes on the wealthy to supposedly drive economic activity, has worsened this situation, the report found.

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iehi-feed-65948 Mon, 08 Jan 2024 07:48:11 GMT New Revisionist Studies Attempting To Prove US Less Economically Unequal Don't Change The Underlying Reality http://implode-explode.com/viewnews/2024-01-08_NewRevisionistStudiesAttemptingToProveUSLessEconomicallyUnequalD.html iehi-feed-65939 Fri, 29 Dec 2023 00:51:46 GMT The Building Spree That Reshaped Manhattan's Skyline? It's Over. http://implode-explode.com/viewnews/2023-12-29_TheBuildingSpreeThatReshapedManhattansSkylineItsOver.html Manhattan is entering its most significant office construction drought since after the savings and loan crisis in the late 1980s and early '90s. Developers now concede that the next wave of large office towers may not open until the early 2030s, if not later.

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At the end of November, the average asking rent for Manhattan office spaces was $75 per square foot. With the higher interest rates and increased construction costs, developers would need to charge $200 to $300 per square foot for a future office high-rise to make financial sense, they said.

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iehi-feed-65928 Thu, 21 Dec 2023 09:38:12 GMT Rich Charlatan, Poor Readers http://implode-explode.com/viewnews/2023-12-21_RichCharlatanPoorReaders.html