Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-62291 Wed, 24 May 2017 15:19:40 GMT Real Median Household Income Highest Since 2002 (But M2 Money Velocity Continues To Tank) http://implode-explode.com/viewnews/2017-05-24_RealMedianHouseholdIncomeHighestSince2002ButM2MoneyVelocityConti.html iehi-feed-62290 Wed, 24 May 2017 15:11:00 GMT Home sales fall as tight supply boosts prices http://implode-explode.com/viewnews/2017-05-24_Homesalesfallastightsupplyboostsprices.html iehi-feed-62287 Tue, 23 May 2017 15:57:39 GMT Even some Republicans balk at Trump's plan for steep budget cuts http://implode-explode.com/viewnews/2017-05-23_EvensomeRepublicansbalkatTrumpsplanforsteepbudgetcuts.html Although it is not uncommon for members of a president's own party to criticize some elements of a White House budget blueprint, Trump's first attempt fell flat with congressional budget experts and conservatives alike. Among the criticism was that Trump had betrayed some of his populist campaign promises, notably to protect Medicaid spending.

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Any attempt to write the 13 annual spending bills to match Trump's request would be a recipe for failure, Cole said. Even those spending measures that could get enough GOP support to pass the House would be doomed in the Senate, where Republicans hold a slim 52-48 majority and must turn to Democrats to come up with 60 votes necessary to pass most legislation.

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iehi-feed-62284 Tue, 23 May 2017 04:29:50 GMT Commodity Traders Have a Really Big Problem http://implode-explode.com/viewnews/2017-05-23_CommodityTradersHaveaReallyBigProblem.html Unlike the stock market in which transactions are typically based on information that's public, firms that buy and sell raw materials thrived for decades in an opaque world where their metier relied on knowledge privy only to a few. Now, technological development, expanding sources of data, more sophisticated producers and consumers as well as transparency surrounding deals are eroding their advantage.

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As market participants' access to information increases, the traders highlighted the need to more than simply buy and sell commodities as profits from arbitrage -- or gains made from a differential in prices -- shrinks. That means getting involved in the supply chain by potentially buying into infrastructure that's key to the production and distribution of raw materials, and also providing financing for the development of such assets.

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iehi-feed-62282 Mon, 22 May 2017 15:16:24 GMT Interest-only loans could be 'Australia's sub-prime' http://implode-explode.com/viewnews/2017-05-22_InterestonlyloanscouldbeAustraliassubprime.html High-risk mortgage loans to young families, professionals and other over-extended borrowers amounting to more than six times household incomes could wipe out 20 per cent of the major banks' equity base, institutional investment fund JCP Investment Partners has warned.

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In a proprietary study of the nation's record high-and-growing household debt mountain, the Melbourne-based fund said Irish-style housing losses for the bigger-than-recognised pool of riskier borrowers could wipe out half of the banks' equity capital.

Interest-only loans, said JCP -- which is one of three Australian equities managers appointed by the Future Fund -- could be "Australia's sub-prime".

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Among the biggest concerns is what may happen when households feel they can no longer service their loans, for instance, as borrowing costs are reset higher or those with interest only mortgages are forced to repay the principal as well.

That creates a negative feedback loop -- experienced by Ireland after the financial crisis -- in which stressed borrowers slash their spending, in turn crunching the economy, driving up unemployment and adding to downward pressure on house prices.

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The fund's senior researchers Matthew Wilson and Craig Shephard found that about half of all the nation's mortgage debt was in the hands of borrowers whose debt was more than four times larger than their gross income.

The same borrowers had paid off less than half of their loans, the team found, based on data from several official and private sector sources that adjusted for changes in incomes and the collateral values of their homes.

The average loan-to-income ratio of these heavily indebted households was 6.4, or more than double the old banking "rule of thumb" that mortgage managers didn't lend more than three times a household's income "unless they were doctors".

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JCP calculated how the banks' balance sheets would handle an 2008 Irish-style loss on the high risk loans. It estimated that 50 per cent of the equity of Australian banks would be destroyed by soured loans to these high-risk borrowers.

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iehi-feed-62281 Mon, 22 May 2017 14:58:37 GMT Car loans, low rates, second mortgages: all the ingredients for a new credit crunch (UK) http://implode-explode.com/viewnews/2017-05-22_Carloanslowratessecondmortgagesalltheingredientsforanewcreditcru.html A credit crunch is brewing and when it happens, the UK is going to get hurt. That is the message emerging from senior executives in the financial services industry, who do not think Britain has changed that much since the 2008 credit disaster and the devastating crash that followed. Three developments lie at the heart of this disturbing analysis: spectacular growth in the sale of second mortgages, car loans and credit cards.

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Officials at the Bank have a growing list of concerns. Not only is there the second mortgage problem and the number of car loans: figures show consumer spending on unsecured credit has also rocketed in the last year. In March alone, the amount UK consumers owed on loans and cards grew by £1.9bn, the highest figure in 11 years.

Households are known to have increased their reliance on short-term unsecured loans to buy cars and furniture, and to kit out new kitchens. Some use them to maintain their lifestyle in the face of a decade of flat wages. Unfortunately, another group use credit to pay the monthly rent.

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Try as they might, the UK's two big high street lenders cannot put the financial crisis behind them. Last week, when Lloyds Banking Group was congratulating itself over its return to the private sector, it was still being haunted by the fraud perpetrated at the Reading branch of HBOS, the hotshot lender it rescued in 2008. To add to the pressure, Noel Edmonds, the TV celebrity, is leading the campaign for compensation for the victims of the fraud which took place in the run-up to the financial crisis.

This week, Royal Bank of Scotland will be transported back to those calamitous days of 2008. A high court judge will begin hearing a claim for compensation from investors who backed a £12bn cash call by RBS in April 2008 -- only for the Edinburgh-based institution to be bailed out by taxpayers six months later.

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iehi-feed-62279 Sun, 21 May 2017 20:36:18 GMT May school lunch cut ‘would hit 900,000 children of struggling families' (UK) http://implode-explode.com/viewnews/2017-05-21_Mayschoollunchcutwouldhit900000childrenofstrugglingfamiliesUK.html iehi-feed-62278 Sun, 21 May 2017 18:07:08 GMT Trump's weapons deal ratifies US support for Yemen war http://implode-explode.com/viewnews/2017-05-21_TrumpsweaponsdealratifiesUSsupportforYemenwar.html Saudi Arabia, armed with American weapons, fought a proxy war with Iran in Yemen, where the government was overthrown by a rebel group tied to the Iranians. Allegations that Saudi Arabia has bombed civilians and committed other human rights abuses compromised what would otherwise tend to be unanimous U.S. support for the conflict. A $1.15 billion arms deal last year turned controversial, but that pact is dwarfed by the $110 billion pact signed Saturday.

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Sen. Todd Young, R-Ind., wanted Tillerson to make a series of demands on the Saudis designed to ease civilian suffering in Yemen, such as ending delays on humanitarian aid at a port city held by the rebels.

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Instead, Tillerson's counterpart rebuffed any charges of humanitarian abuses, denying that the Saudis carried out airstrikes against civilians and blaming the rebels for humanitarian aid delays at the port.

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iehi-feed-62277 Sun, 21 May 2017 18:02:38 GMT A Quarter Of American Adults Can't Pay All Their Monthly Bills; 44% Have Less Than $400 In Cash http://implode-explode.com/viewnews/2017-05-21_AQuarterOfAmericanAdultsCantPayAllTheirMonthlyBills44HaveLessTha.html iehi-feed-62276 Sun, 21 May 2017 17:59:45 GMT U.K. Threatens to Quit Brexit Talks If It Faces Massive Bill http://implode-explode.com/viewnews/2017-05-21_UKThreatenstoQuitBrexitTalksIfItFacesMassiveBill.html The U.K. will quit talks on leaving the European Union unless the bloc drops its demands for a divorce payment as high as 100 billion euros ($112 billion), Brexit Secretary David Davis said.

Britain's negotiations would otherwise be plunged into "chaos," and even a 1 billion-pound settlement would be "a lot of money," Davis said in an interview published in the Sunday Times.

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Davis also said the negotiations, which are expected to begin on June 19, will be "fairly turbulent" and that he would reject any blueprint for discussions that requires the issues of the divorce bill, EU citizens' rights and Northern Ireland's border to be solved before talks can begin on future trade.

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iehi-feed-62275 Sat, 20 May 2017 19:30:34 GMT Home ownership among young families halves in 20 years (UK) http://implode-explode.com/viewnews/2017-05-20_Homeownershipamongyoungfamilieshalvesin20yearsUK.html iehi-feed-62274 Sat, 20 May 2017 14:35:02 GMT The Housing Moment Investors Dread Is Here http://implode-explode.com/viewnews/2017-05-20_TheHousingMomentInvestorsDreadIsHere.html The May University of Michigan Consumer Sentiment survey showed a six-year low among those who think it's a good time to buy a house and a 12-year high among those who say it's a good time to sell. Disparities of this breadth tend to coincide with break points and that's just where we've landed in the cycle.

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The silver lining in the dynamic that's just beginning to play out is what pricing pressures on the home front imply for the future of household finances -- that is after the recession comes and goes. The cost to rent and buy has never been as high as it is today for the average working young American. The preponderance of apartments constructed in the current cycle has been luxury units. At the same time, private equity investors with deep pockets swooped in and bid up the price of rental homes, leaving many would-be first-time homebuyers and renters alike with no choice but to remain at home with their parents after graduating from college.

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iehi-feed-62273 Fri, 19 May 2017 22:54:53 GMT Manafort's Real-Estate Deals Said to Be Probed by N.Y.'s Top Cop, Manhattan DA http://implode-explode.com/viewnews/2017-05-19_ManafortsRealEstateDealsSaidtoBeProbedbyNYsTopCopManhattanDA.html The probe by New York Attorney General Eric Schneiderman, one of the most outspoken critics of the president, is in a preliminary stage, according to a person familiar with the matter who asked not to be named because the investigation isn't public. Manafort, who ran Trump's campaign from April to August last year, has owned property in the Hamptons and Trump Tower in Manhattan.

Manhattan District Attorney Cyrus Vance Jr. is also in the early stages of an investigation into Manafort's transactions, a person familiar with that probe said. Representatives for Schneiderman and Vance declined to comment.

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The inquiries by the two Democrats could pose added legal peril for Manafort if investigators find evidence of a crime. Unlike a probe by the U.S. Justice Department and FBI, the president and Attorney General Jeff Sessions have no authority over New York state investigators scrutinizing whether Manafort broke state laws. Schneiderman is responsible for enforcing New York's securities laws under the Martin Act, which gives him broad powers to pursue white-collar crime.

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Manafort's business dealings have featured prominently in discussions of links between the Trump campaign and Russia. He used Cypriot bank accounts to receive money from Russian tycoon Oleg Deripaska and Ukrainian clients, according to court records and former executives at the bank where the accounts were kept. Manafort and Deripaska have said the accounts were opened for legitimate business transactions.

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iehi-feed-62272 Fri, 19 May 2017 22:47:09 GMT Get Ready for "Quantitative Tightening" http://implode-explode.com/viewnews/2017-05-19_GetReadyforQuantitativeTightening.html iehi-feed-62271 Fri, 19 May 2017 17:56:43 GMT Trump Admin's Mnuchin Backtracks on Glass-Steagall http://implode-explode.com/viewnews/2017-05-19_TrumpAdminsMnuchinBacktracksonGlassSteagall.html iehi-feed-62270 Fri, 19 May 2017 17:50:24 GMT ECB Tapering May Trigger "Disorderly Restructuring" of Italian Debt, Return to National Currency http://implode-explode.com/viewnews/2017-05-19_ECBTaperingMayTriggerDisorderlyRestructuringofItalianDebtReturnt.html Since 2008, 88% of government debt net issuance has been acquired by the ECB and Italian Banks. At current government debt net issuance rates and announced QE levels, the ECB will have been responsible for financing 100% of Italy's deficits from 2014 to 2019. But now there's a snag... The ECB has already reduced the rate of purchases to €60 billion a month. And it plans to further withdraw from the super-expansionary monetary policy.

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Astellon Capital's report on Italy's dependence on ECB bond purchases poses the question: If the ECB tapers its purchase of Italian bonds further, who would pick up the slack?... According to Astellon , the only long-term solution to this problem is to carry out an orderly restructuring of Italian debt. In fact, by this stage in proceedings, the stark choice is between an orderly or disorderly restructuring of Italy's debt... [the latter] would significantly increase the likelihood of an Italian exit from the Eurozone.

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iehi-feed-62269 Thu, 18 May 2017 14:41:12 GMT Households owe record amount, topping pre-recession peak http://implode-explode.com/viewnews/2017-05-18_Householdsowerecordamounttoppingprerecessionpeak.html The Federal Reserve Bank of New York said Wednesday that household debt, which also includes home equity lines of credit, stood at $12.73 trillion in the first quarter. That's above the $12.68 trillion outstanding in the fall of 2008, the previous record. The figure isn't adjusted for inflation or population size.

Even with debt levels back to record heights, analysts note that household borrowing appears more sustainable now than it did nearly a decade ago. Interest rates are lower, and lenders are much more focused on credit-worthy borrowers.

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iehi-feed-62267 Thu, 18 May 2017 14:12:18 GMT Banks Tighten Auto Lending as More Borrowers Fall Into Default http://implode-explode.com/viewnews/2017-05-18_BanksTightenAutoLendingasMoreBorrowersFallIntoDefault.html iehi-feed-62266 Wed, 17 May 2017 20:56:19 GMT Turmoil over recent Trump controversies triggers the Dow's biggest losses since September http://implode-explode.com/viewnews/2017-05-17_TurmoiloverrecentTrumpcontroversiestriggerstheDowsbiggestlossess.html iehi-feed-62265 Wed, 17 May 2017 14:21:49 GMT Jack Welch: Impeachment of Trump would 'blow the market away' http://implode-explode.com/viewnews/2017-05-17_JackWelchImpeachmentofTrumpwouldblowthemarketaway.html