Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-62468 Sun, 25 Jun 2017 14:08:37 GMT One57 ("Billionaire's Tower") could set NYC foreclosure record http://implode-explode.com/viewnews/2017-06-25_One57BillionairesTowercouldsetNYCforeclosurerecord.html previous foreclosure.]]> iehi-feed-62459 Fri, 23 Jun 2017 21:01:34 GMT Economists draw mixed conclusions over May new home sales report http://implode-explode.com/viewnews/2017-06-23_EconomistsdrawmixedconclusionsoverMaynewhomesalesreport.html "Despite May's good news, new home sales still have a long way to go to reach historic norms," Trulia Chief Economist Ralph McLaughlin said. "When taking into account the U.S. population, new home sales are still about 69% of the long-run average."

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"Ultimately this report is a disappointment for those looking to builders to meaningfully help solve the pressing supply issues in the market overall, especially for entry-level buyers," Zillow Chief Economist Svenja Gudell said. "The median price of a new home sold in May was close to $350,000, by far the highest it's ever been and likely well beyond the budget of younger, first-time buyers that make up a sizable portion of the market right now."

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iehi-feed-62436 Tue, 20 Jun 2017 21:11:47 GMT Fed is Careening Into Housing and Stock Bubble... Look Out Below! - Ben Hunt http://implode-explode.com/viewnews/2017-06-20_FedisCareeningIntoHousingandStockBubbleLookOutBelowBenHunt.html What has happened (and apologies for the ten dollar words) is that the Fed's reaction function has flipped 180 degrees since the Trump election. Today the Fed is looking for excuses to tighten monetary policy, not excuses to weaken. So long as the unemployment rate is on the cusp of "instability", that's the only thing that really matters to the Fed (for reasons discussed below). Every other data point, including a market sell-off or a flat yield curve or a bad CPI number -- data points that used to be front and center in Fed thinking -- is now in the backseat.

I'm not the only one saying this about the Fed's reaction function. Far more influential Missionaries than me, people like Jeff Gundlach and Mohamed El-Erian, are saying the same thing. If you think that this Fed still has your back, Mr. Investor, the way they had your back in 2009 and 2010 and 2011 and 2012 and 2013 and 2014 and 2015 and 2016 ... well, I think you are mistaken. I think Janet Yellen broke up with you this week.

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iehi-feed-62435 Tue, 20 Jun 2017 17:49:33 GMT San Francisco and tech driven housing mania: The median home in San Francisco reaches a new high of $1.5M http://implode-explode.com/viewnews/2017-06-20_SanFranciscoandtechdrivenhousingmaniaThemedianhomeinSanFrancisco.html iehi-feed-62434 Tue, 20 Jun 2017 15:21:14 GMT Carrington Mortgage To Throw Korean War Hero To The Street http://implode-explode.com/viewnews/2017-06-20_CarringtonMortgageToThrowKoreanWarHeroToTheStreet.html iehi-feed-62432 Tue, 20 Jun 2017 14:23:43 GMT China's "Ghost Collateral" Arrives In Canada, "Heralding A Crisis" http://implode-explode.com/viewnews/2017-06-20_ChinasGhostCollateralArrivesInCanadaHeraldingACrisis.html ... the stunner: "Postmedia confirmed that Canadian banks are allowed by the federal regulator, the Office of the Superintendent of Financial Institutions, to accept collateral from China to secure real estate mortgages in B.C."

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The Vancouver Sun adds that as a result of tighter federal lending rules, borrowers trying to buy million-dollar-plus properties in Vancouver's market "are increasingly taking out dangerous loans from shadow bankers in a fast-growing and poorly regulated financial market."

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"These properties in Vancouver are so expensive that you need people either laundering money or loan fraud or people borrowing such large amounts of money that should never be allowed, in order to keep it going," MacBeth said. "If everyone is reporting their incomes honestly in Vancouver, there is no way that housing prices can stay where they are.

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iehi-feed-62427 Mon, 19 Jun 2017 16:31:43 GMT Ten years since the global financial crisis, world still suffers 'debt overhang' http://implode-explode.com/viewnews/2017-06-19_Tenyearssincetheglobalfinancialcrisisworldstillsuffersdebtoverha.html Today, the scars of the global financial crisis remain. There have been trillions of dollars in losses. And in a world of subpar economic growth, even optimists are downbeat about whether the economic medicine has been taken...

Firstly, excessive debt. In the aftermath of the world market crash, rather than pushing for debt destruction, world leaders used fiscal and monetary policy to fan demand. Global debt now stands at a staggering US$215 trillion.

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iehi-feed-62425 Mon, 19 Jun 2017 16:11:22 GMT Fed Losing Control: 100% Proof That A Massive Economic Meltdown Is Closer Than You Think http://implode-explode.com/viewnews/2017-06-19_FedLosingControl100ProofThatAMassiveEconomicMeltdownIsCloserThan.html This past Wednesday we heard from the Federal Reserve with regard to monetary policy, and as I predicted they did raise the federal funds rate 25 basis points however, instead of yields rising, they are dropping.

More than a year and a half ago I had said publicly that the Federal Reserve's attempt at trying to normalize bond yields would backfire-and this is exactly what is happening. It is clear to me that the Federal Reserve has absolutely lost control of what is occurring in the bond market.

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The yield curve as seen in the picture above continues to flatten out, and this trend will continue until the curve inverts. The last time the yield curve inverted, the 2008 economic meltdown occurred, and the time before that we suffered the.com bubble meltdown.

The fact is we are existing in a multiple bubble economy at this time, worse, and unlike anything which has ever been seen before. The reason why these bubbles exist is simple: the Federal Reserve has not allowed the market to do its one and only job, and that is to determine fair value.

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iehi-feed-62420 Sat, 17 Jun 2017 17:14:25 GMT Small and midsized banks could get regulatory relief from Senate. Wall Street? Probably not http://implode-explode.com/viewnews/2017-06-17_SmallandmidsizedbankscouldgetregulatoryrelieffromSenateWallStree.html House Republicans and the Trump administration want a major rollback of the 2010 Dodd-Frank financial reform law, including changes that would help the nation's largest banks. But as debate shifts to the Senate, those changes are likely to be scaled back significantly because Republicans lack the votes to push many of them through.

"We will have an easier time getting bipartisan agreement at the smaller size level of institution," Senate Banking Committee Chairman Mike Crapo (R-Idaho) told an industry trade group this week. "As you move up the size level for institutions, the ability to get bipartisan agreement diminishes. But it doesn't go away."

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One of the key targets of the House bill and the Treasury report is the Consumer Financial Protection Bureau, which would have its authority gutted.

The changes include making its director subject to removal by the president for any reason, eliminating the independent funding stream so Congress could reduce its budget, and stripping the agency of its ability to send supervisors into banks to make sure they are complying with consumer protection laws.

For [Sen. Sherrod] Brown and Senate Democrats, changes like that amount to a poison pill for any legislation.

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iehi-feed-62419 Fri, 16 Jun 2017 23:59:21 GMT Higher prices squeezing renters, would-be homeowners, study finds http://implode-explode.com/viewnews/2017-06-16_Higherpricessqueezingrenterswouldbehomeownersstudyfinds.html A diminished supply of available homes is swelling prices in large U.S. metro areas from New York to Miami to Los Angeles, squeezing out would-be buyers and pushing up rents as more people are forced to remain tenants.

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The tight supply of homes and a shortage of affordable rental housing have improved little in recent years for a variety of reasons. Among the key factors is that construction has yet to regain the pace of homebuilding that predated the bust.

"As the economy continues to recover, as income picks up as household formations pick up, it's not spurring a supply response," said Chris Herbert, managing director of Harvard's Joint Center for Housing Studies. "It's a worsening of the situation that was evident last year."

The real fascinating thing is the "not spurring a supply response" part. That suggests to us that there's a huge amount of corporate trepidation about the economy (and at this point, namely, that it's about to fall off a cliff...)

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iehi-feed-62403 Wed, 14 Jun 2017 21:03:02 GMT Markets doubt future rate hikes and unwinding; disagree with Fed's glass-half-full view of economy http://implode-explode.com/viewnews/2017-06-14_MarketsdoubtfutureratehikesandunwindingdisagreewithFedsglasshalf.html Doubting the Federal Reserve's ability to hike rates as forecast, markets are wrestling with the central bank over whether the economy reflects a glass half empty or half full.

The Fed hiked interest rates Wednesday by a quarter point and spelled out how it hopes to begin winding down its balance sheet this year. The Fed acknowledged low levels of inflation in the near term but expects inflation to stabilize in the medium term. The Fed also stuck to its forecast for three interest rate hikes this year, and it raised 2017 GDP to 2.2 percent from 2.1 percent.

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Stocks waffled after the Fed's 2 p.m. announcement and were trading at lower levels, as Federal Reserve Chairwoman Janet Yellen held a briefing after the decision.

"What the markets are doing is basically ignoring the Fed, whatever they say. They are basically going off the data and they know eventually the Fed will get around to being sensitive of the data, that will be the driver," said Memani.

Treasury yields, which move opposite prices, had fallen sharply Wednesday after core consumer price index inflation came in weaker than forecast for a third month. The decline in year-over-year inflation to 1.7 percent spooked the market and raised more doubts over whether the Fed can hike rates as it forecasts. Retail sales data was also weak.

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"The Fed pointed to a somewhat strengthening consumer," Keon said. "They're just not looking at the same numbers that I'm looking at, which seem to be coming in a tad weaker. Comparing Q1 to Q2 may look like it's getting a little stronger, but I'm not sure I see consumption accelerating."

What a farce -- the Fed's hikes aren't "real" (since, as we've discussed here umpteen times, no one uses the Fed funds market anymore) -- but the Fed feels it has to hike anyways to preserve "dry powder". But the inflation data (and most data beyond that, really) doesn't justify it. And the "dry powder" would only be perceptual anyways (we wonder if it would really have much effect, with the market catching on that changes in the Fed funds market have little attachment to reality).

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iehi-feed-62400 Wed, 14 Jun 2017 16:51:15 GMT Greeks Promised Economic Boost Despair of Seeing Debt Deal http://implode-explode.com/viewnews/2017-06-14_GreeksPromisedEconomicBoostDespairofSeeingDebtDeal.html

Across the country in places like Corinth, an industrial hub about 80 kilometers west of Athens, Greeks have spent years treading water as news bulletins bombard them daily with reports of meetings and decisions in Brussels and Frankfurt that will determine their economic future. In the meantime, as the ECB's stimulus measures -- including its asset-purchase program -- buoy the rest of the euro-area economy, Greece's output has been stagnant, leaving its people the most pessimistic in the region.

Yet the ECB remains unlikely to include Greek bonds in its QE program in the foreseeable future, according to a person familiar with the matter. That's because a meeting on Thursday of euro-area finance ministers, whose electorates are leery of debt relief, looks like delivering another fudge. There may be agreement to disburse more bailout loans but without easing repayment terms enough to satisfy the ECB and International Monetary Fund.

That would leave Tsipras high and dry. The debt has acted as a brake on growth at a time when Greeks should have the chance to rebuild their lives, he wrote in an article published in Le Monde and Die Welt on Wednesday.

See also this article on a greater-than-60% spike in foreign buying of Greek properties.

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iehi-feed-62399 Wed, 14 Jun 2017 14:31:31 GMT 1031 Exchange, a Cherished Real Estate Tax Break, Faces Extinction http://implode-explode.com/viewnews/2017-06-14_1031ExchangeaCherishedRealEstateTaxBreakFacesExtinction.html A much-loved tax advantage in the commercial real-estate industry is on the chopping block even as chances dim for the passage of a broad federal tax overhaul this year. Why? If a sweeping bill doesn't get traction in Congress, there is still a decent chance a narrower tax rate cut will get passed, according to lobbyists and Capitol Hill officials working on tax legislation.''

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The 1031 exchange could effectively have ended as part of the tax-overhaul plan proposed last year by House Republicans, which gained traction after Donald Trump was elected President. But that plan--named "Better Way"--would have included other provisions that would have made it more palatable for the real-estate industry.

Now real estate lobbyists say the Better Way plan is getting bogged down and it is looking like the real-estate industry might have to take the medicine without the spoon of sugar to help it go down even though they would benefit from the lower rates.

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real estate executives say getting rid of 1031 exchanges would be devastating for the economy as well as their industry. Like-kind exchanges are used in 10% to 20% of commercial real-estate transactions, according to Green Street.

They also have sparked the creation of a cottage industry of firms that pool 1031 exchange investments for smaller investors. If the provision is eliminated, "it would cause a lot of transactions not to occur," said Jeffrey DeBoer, chief executive of the Real Estate Roundtable.

The economic impact would ripple throughout the economy because investors who acquire real estate through 1031 exchanges are more likely to invest in those properties than those that pay cash. In such trades, they typically don't have to reach into their pockets, Mr. DeBoer explained.

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The 1031 provision of federal tax law applies to a wide range of assets--including cars, planes and patent rights. Real estate accounts for 36% of the exchanges, according to Ernst & Young LLP. In 2014, the Joint Committee on Taxation estimated that repealing like-kind exchanges would raise $40.6 billion in additional tax revenue over one decade.

Seems like another force that could cause the RE bubble to be pricked even further...

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iehi-feed-62398 Tue, 13 Jun 2017 23:29:06 GMT Trump's power broker (not Kushner -- the other one) resigns and sells stock one day after exposé reveals he's a massive slumlord (not Kushner -- the other one) http://implode-explode.com/viewnews/2017-06-13_TrumpspowerbrokernotKushnertheotheroneresignsandsellsstockoneday.html The story reported on how Barrack was able to wholesale being a scumbag landlord to 31,000 homes under his Colony Starwood Homes. The news began to get picked up and lo and behold, Mr. Barrack decided to cut and run.

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Over the next seven days before Christmas [1994], Barrack and his lieutenant, Bill Rogers, would jet from New York to Los Angeles, Taiwan, London and Saudi Arabia, begging billionaires to buy the loans and keep the bankers from Trump's throat... Rogers says now, recounting the frenzied middle-of-the-night flights that kept the $4.5 billion West Side Railyards site from being Trump's burial ground.

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That was back in 1994 when bankers wanted to be done with one of New York's worst businessmen, Donald Trump. Sadly, scumbags like Trump tend to get buoyed by other scumbags like Barrack. On Thursday, June 8, Reveal News published an exposé by Aaron Glanz that revealed how Thomas J. Barrack had created one of the largest scumlord rental schemes in the United States..

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iehi-feed-62397 Tue, 13 Jun 2017 19:06:45 GMT The Mall of the Future Will Have No Stores http://implode-explode.com/viewnews/2017-06-13_TheMalloftheFutureWillHaveNoStores.html Some landlords plug empty spaces with churches, for-profit schools and random enterprises while they figure out a long-term plan. Others see a future in mixed-use real estate, converting malls into streetscapes with restaurants, offices and housing. And some are razing properties altogether and turning them into entertainment or industrial parks.

Ford's 10-year lease at Fairlane Town Center [in Michigan] "brought 1,800 to 2,000 employed people to our property, people with a paycheck," said Mr. Powers. The mall, which is still anchored by Macy's , J.C. Penney and Sears, is currently 91% leased, he said, and its food operators are doing better in the daytime than they did before, as Ford workers pile in for lunch.

Ford liked the mall's proximity to its main facility in Dearborn, which is being rebuilt over the next 10 years, and its wide open spaces.

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In all, retailers have announced 2,880 store closings from January to April 6 of this year, more than twice as many as in the same period a year earlier, according to Credit Suisse . For the full year, the investment bank anticipates more than 8,600 stores to close. Analysts predict that 400 or so of the roughly 1,100 malls in the U.S. will close in the coming years.

Many mall owners are trying to liven up the experience, bringing more dining and entertainment tenants and eschewing the traditional mix of middling food courts, fashion retailers and department stores.

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One strategy is to convert enclosed malls into open-air properties that landlords call "lifestyle centers," with apartments, theaters, grocery stores, medical offices and other conveniences--and much less retail.

The Columbus Commons in downtown Columbus, Ohio, was previously home to a 1.25-million-square-foot mall. The park has spurred development around its perimeter, mostly office and residential.

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In Arlington, Va., landlord Forest City Realty Trust is redeveloping Ballston Common Mall by knocking down the main entrance to create a plaza, removing two-thirds of the roof and installing more windows to create wider vistas of open spaces. The Cleveland-based real-estate investment trust is also building 406 apartments linked to the mall.

"We're turning the mall inside out," said Will Voegele, senior vice president at Forest City Realty Trust. "We don't want a building with its back turned to the street."

The firm is converting what was once Macy's furniture store on the third level of the mall into a gathering space for residents, including outdoor patios, seating and landscaping. Its tenant mix will feature more food options and street-facing retail.

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[Columbus, Ohio] "surgically demolished" the [City Center Mall] over a two-year period to retain the underground parking structure, which was still used by workers downtown. In 2011, Columbus Downtown opened a park in its place called Columbus Commons, which has a performance space, two cafes, a carousel and bocce courts.

The park has spurred development around its perimeter, mostly office and residential, and hosts more than 200 events annually. The flagship Lazarus department store, which had been linked to the mall, is now an office building.

Taking some inspiration from parks and high-street retail in New York City, Mr. Worley said Columbus Downtown is looking to add restaurants and art galleries along the streets a block away from the park, preferring to keep the park-facing buildings for residential use.

While there have been no pure retail property projects around Columbus Commons, some retail stores are coming onboard that are "more organic, not national retailers," he added.

"Retail is coming back," he said, "but it's following residential."

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iehi-feed-62396 Tue, 13 Jun 2017 14:35:56 GMT Broadway's empty storefronts total almost 200, borough president says http://implode-explode.com/viewnews/2017-06-13_Broadwaysemptystorefrontstotalalmost200boroughpresidentsays.html Manhattan Borough President Gale Brewer announced Monday that her office tallied 188 vacant storefronts on the iconic thoroughfare, thanks to volunteers who helped survey storefronts along the avenue's entire span in Manhattan last month.

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Retail experts cited several factors hindering the industry: people purchasing items online rather than in brick-and-mortar shops, demographic shifts that have flooded areas with newcomers who eschew former mainstays, and a rental market in flux.

"You're seeing the highest vacancy [rate] in Manhattan, at least, in history," said Scott Plasky, a retail specialist in Marcus & Millichap's Manhattan office. "They have opportunities to rent those spaces. There are tenants that want to be here: this is New York. But these guys either are unwilling or unable to lease at what the marketplace is telling them they're worth."

Plasky said some landlords are clinging to outdated expectations of how much rent they can collect because retail rents rose 90% in Manhattan between 2012 and 2014. They have since fallen nearly 21% as the retail industry continues to shut stores across the country, he said.

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iehi-feed-62393 Tue, 13 Jun 2017 13:50:16 GMT Things To Come - Kunstler http://implode-explode.com/viewnews/2017-06-13_ThingsToComeKunstler.html iehi-feed-62382 Sun, 11 Jun 2017 18:17:38 GMT Parents Of Casey Anthony Facing Foreclosure http://implode-explode.com/viewnews/2017-06-11_ParentsOfCaseyAnthonyFacingForeclosure.html iehi-feed-62379 Sun, 11 Jun 2017 14:10:42 GMT Is Another Spanish Bank about to Bite the Dust? http://implode-explode.com/viewnews/2017-06-11_IsAnotherSpanishBankabouttoBitetheDust.html After its most tumultuous week since the bailout days of 2012, Spain's banking system is gripped by a climate of fear, uncertainty and distrust. Rather than allaying investor nerves, the shotgun bail-in and sale of Banco Popular to Santander on Tuesday has merely intensified them.

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... The fear has now spread to Spain's eighth largest lender, Liberbank, a mini-Bankia that was spawned in 2011 from the forced marriage of three failed cajas (savings banks), Cajastur, Caja de Extremadura and Caja Cantabria... In the last three weeks a whole year's worth of steadily rising gains on the stock market have been completely wiped out. The main causes of concern are the bank's high risk profile and low coverage rate. By the close of the first quarter of 2017, Liberbank's default rate had reached 13%, over three percentage points higher than the national average (9.8%), while its unproductive asset coverage rate was just 42.1%, compared to 47% for Banco Sabadell, 48% for Bankia, 50% for CaixaBank and 55% for Unicaja.

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Liberbank's management has responded the only way it can -- with a slew of denials. The bank is nothing like Popular, it says. It is solidly solvent and its deposits are safe, which is probably true: even the deposits of Popular's customers are now safe despite the fact the bank had hemmorhaged €18 billion of deposits in the last few weeks of its truncated existence. It was this frantic run on deposits that ultimately sealed its fate, prompting the ECB to conclude that the bank was "failing or likely to fail."

Banco Popular's demise is a stark reminder that Europe's banking woes are far from resolved, despite the trillions of euros thrown at them. "The message the market is sending is that you have to buy solvent banks and stay away from those that pose high risks," said Rafael Alonso, an analyst at Bankinter, one of Spain's more solvent banks.

Another Spanish bank that could be considered to pose high risks is Unicaja, the product of another merger of failed cajas that is (or at least was) scheduled to launch its IPO some time in June or July. As things currently stand, the timing could not be worse.

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iehi-feed-62372 Fri, 09 Jun 2017 22:46:20 GMT Rogers: The worst crash in our lifetime is coming in the next year http://implode-explode.com/viewnews/2017-06-09_RogersTheworstcrashinourlifetimeiscominginthenextyear.html