Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-61979 Wed, 29 Mar 2017 21:31:40 GMT U.S. pending home sales surge to ten-month high ahead of spring http://implode-explode.com/viewnews/2017-03-29_USpendinghomesalessurgetotenmonthhighaheadofspring.html iehi-feed-61975 Wed, 29 Mar 2017 17:13:06 GMT "Men Without Work" http://implode-explode.com/viewnews/2017-03-29_MenWithoutWork.html iehi-feed-61971 Tue, 28 Mar 2017 22:35:21 GMT In Another Blow, Wells Fargo Faulted for `Extensive' Discrimination in Review http://implode-explode.com/viewnews/2017-03-28_InAnotherBlowWellsFargoFaultedforExtensiveDiscriminationinReview.html Wells Fargo & Co. engaged in an "extensive and pervasive pattern" of discriminatory and illegal lending practices for years, a U.S. regulator said in slashing a key rating of how the bank serves communities, triggering restrictions that may hamper its growth.

While examiners credited Wells Fargo for "excellent responsiveness" in meeting customers' credit needs, 10 government inquiries over the past decade prompted the Office of the Comptroller of the Currency to lower its overall score of the company's compliance with community banking laws to "needs to improve." Enforcement cases cited by the OCC faulted the bank's treatment of minority neighborhoods, military personnel and women who had recently given birth.

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The findings risk further damage to Wells Fargo's reputation as executives try to rebuild customer and investor trust in the wake of an account scandal that rocked the company and its stock price last year. Yet, many of the cases cited by the OCC already were announced years ago in settlements, including some misconduct that predated the 2008 financial crisis.

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iehi-feed-61967 Tue, 28 Mar 2017 18:54:31 GMT How middle-class and even "wealthy" American families are sliding inexorably into the red http://implode-explode.com/viewnews/2017-03-28_HowmiddleclassandevenwealthyAmericanfamiliesareslidinginexorably.html iehi-feed-61966 Tue, 28 Mar 2017 18:50:18 GMT Manhattan Landlords Are Offering Massive Giveaways to Lure Retail Clients (IN LIEU OF MUCH-NEEDED PRICE CUTS) http://implode-explode.com/viewnews/2017-03-28_ManhattanLandlordsAreOfferingMassiveGiveawaystoLureRetailClients.html Tenant-improvement allowances haven't been typical in the Manhattan retail market. But now the concessions, which can pay for anything from lighting and displays to a complete overhaul, are becoming a key component in some new leases, particularly for large, flagship stores in high-profile areas, such as Madison Avenue and Fifth Avenue, according to Steve Soutendijk, an executive director at brokerage Cushman & Wakefield Inc. 

"We're seeing tenant-improvement and concession packages that retail landlords never, ever contemplated before," he said.

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The details of leases in Manhattan are often closely guarded secrets, making it difficult to quantify the incentives retailers are receiving. Landlords have a lot of ways to cut a deal without lowering asking rents, such as paying the construction contractor, offering an extended period of free rent or simply writing a check for the tenant to use at their discretion.

... Tepid demand for luxury goods and a stronger U.S. dollar that's crimped spending by tourists have particularly hurt Fifth Avenue, where the space-availability rate was at a record 15.9 percent in fourth quarter, up from 10.1 percent a year earlier, Cushman data show. The average rent on the stretch from 49th to 60th streets reached a record $3,213 a square foot in the third quarter before dropping in the last three months of the year to $2,985.

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iehi-feed-61957 Sun, 26 Mar 2017 16:07:58 GMT Condo Flippers in Miami-Dade Left Twisting in the Wind http://implode-explode.com/viewnews/2017-03-26_CondoFlippersinMiamiDadeLeftTwistingintheWind.html Miami-Dade's spectacular condo flipping mania is in turmoil, with sales plunging, inventory-for-sale soaring, and new supply flooding the market... In February, existing home sales of all types fell 10% year-over-year, to 1,835 homes. These sales "do not include Miami's multi-billion dollar new construction condo market," the Miami Association of Realtors clarified in its report on March 23.

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[The current high] inventory [which is 2x the level in 2013] understates the total number of condos for sale. It only includes units listed for sale on the Multiple Listing Service (MLS). But developers normally don't list their new units on the MLS, and thus they're not included in the above chart.

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iehi-feed-61955 Sun, 26 Mar 2017 15:49:20 GMT Bridgewater Releases Report on Populism http://implode-explode.com/viewnews/2017-03-26_BridgewaterReleasesReportonPopulism.html iehi-feed-61949 Sat, 25 Mar 2017 15:19:22 GMT A ‘deaths of despair' crisis is gripping America http://implode-explode.com/viewnews/2017-03-25_AdeathsofdespaircrisisisgrippingAmerica.html The Americans we are talking about are white and middle class. They are aged 45-55. They are losing the battle against heart disease and cancer, and they are succumbing to drugs, alcohol and suicide at rates unseen in modern history or in other developed countries.

"The combined effect means that mortality rates of whites with no more than a high school degree, which were around 30 percent lower than mortality rates of blacks in 1999, grew to be 30 percent higher than blacks by 2015," Case and Deaton wrote.

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iehi-feed-61947 Sat, 25 Mar 2017 15:10:42 GMT Death of the American Dream? Life In Post-Crisis America http://implode-explode.com/viewnews/2017-03-25_DeathoftheAmericanDreamLifeInPostCrisisAmerica.html iehi-feed-61946 Sat, 25 Mar 2017 15:03:10 GMT Why the Retail Apocalypse Has Only Just Begun... http://implode-explode.com/viewnews/2017-03-25_WhytheRetailApocalypseHasOnlyJustBegun.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-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-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-61932 Wed, 22 Mar 2017 14:58:27 GMT Existing home sales fall from 10-year high http://implode-explode.com/viewnews/2017-03-22_Existinghomesalesfallfrom10yearhigh.html January's sales pace was unrevised at 5.69 million units, which was the highest level since February 2007. Economists polled by Reuters had forecast sales decreasing 2.0 percent to a pace of 5.57 million units last month.

"Realtors are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that's pushing up price growth and pressuring the budgets of prospective buyers," said Lawrence Yun, the NAR's chief economist.

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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-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-61914 Sun, 19 Mar 2017 01:35:48 GMT Deepening EU Banking Crisis Meets Euro-TARP, Taxpayers http://implode-explode.com/viewnews/2017-03-18_DeepeningEUBankingCrisisMeetsEuroTARPTaxpayers.html ... the European banking sector may face even higher bad loan risks if the ECB begins to scale back its monetary stimulus programs, something it has already begun, albeit extremely tentatively. The total stock of non-performing loans (NPL) in the EU is estimated at over €1 trillion, or 5.4% of total loans, a ratio three times higher than in other major regions of the world.

... someone else must step in, and soon. And that someone is almost certain to be the European taxpayer.

In February ECB Vice President Vitor Constancio called for the creation of a whole new class of government-backed "bad banks" to help buy some of the €1 trillion of bad loans putrefying on bank balance sheets. Constancio's idea bore a striking resemblance to a formal proposal put forward by the European Banking Authority (EBA) for the creation of a massive EU-wide bad bank that, in the words of EBA president Andrea Enria, would "make it much easier to achieve critical mass and to create a well functioning market for (impaired) assets."

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iehi-feed-61913 Sat, 18 Mar 2017 23:53:03 GMT World Out Of Whack: What's Next For Global Real Estate? http://implode-explode.com/viewnews/2017-03-18_WorldOutOfWhackWhatsNextForGlobalRealEstate.html iehi-feed-61881 Tue, 14 Mar 2017 14:59:56 GMT Why the Real Estate Market Is Imploding Again... http://implode-explode.com/viewnews/2017-03-14_WhytheRealEstateMarketIsImplodingAgain.html I'm not talking about the housing market. I'm talking about retail real estate... 334 malls are "at high risk of closing." That's about a third of the nation's malls.

... The world's biggest REIT is in trouble. Today's chart shows the performance of Simon Property Group (SPG). Simon owns or has an ownership interest in 190 million square feet of mall floor space. You can see its stock has plunged 26% since August. It's now trading at its lowest level since October 2014.

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iehi-feed-61875 Mon, 13 Mar 2017 19:44:40 GMT Preet Bharara Had It Out For Greenwich... Not So Much Wall Street http://implode-explode.com/viewnews/2017-03-13_PreetBhararaHadItOutForGreenwichNotSoMuchWallStreet.html Hedge funds are safer targets. The firms aren't enmeshed in the global financial markets in the way that giant banks are. Insider trading cases are relatively easy to win and don't address systemic abuses that helped bring down the financial system.

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Present and former prosecutors say Bharara did not give much emphasis to investigations arising from the financial meltdown, an approach shared by his boss, Attorney General Eric Holder. Justice Department insiders say many of those inquiries withered not because they were unpromising, but because they had little support.

Bharara missed an opportunity by not bringing any significant criminal charges against individuals in the wake of the collapses of Lehman, investment bank Merrill Lynch, the insurer AIG, the mortgage securities and collateralized debt obligation businesses, or the myriad public misrepresentations from bank CEOs about their finances.

Bharara and senior officials in Washington argue that there were no criminal cases to file after the 2008 crisis. But the U.S. attorney's office in Manhattan did pursue significant civil cases against the banks for their mortgage activities, cases that had to proove misconduct by the "preponderance of the evidence." And DOJ did win guilty pleas from the banks themselves, an indication that prosecutors might have been able to charge individuals for their part in crimes their institutions had acknowledged. Academics who studied those years, including Columbia's Tomasz Piskorski and James Witkin and Chicago's Amit Seru found widespread patterns of fraud in the mortgage business.

The exception makes this failure all the more puzzling. As I detailed in 2014, Bharara's office brought one case for misconduct during the financial crisis -- against a mid-level banker. Prosecutors charged Kareem Serageldin of Credit Suisse with overseeing traders who knowingly misrepresented the value of mortgage securities. Serageldin pleaded guilty and went to prison.

Serageldin's colleagues in the industry and others familiar with Credit Suisse found it hard to believe that he was the only person involved in that particular fraud.

Bharara's reluctance to pursue senior executives was seen in other investigations of big banks. His office wrested a $1.7 billion fine from JPMorgan Chase over its complicity in the Bernie Madoff Ponzi scheme, but it brought no charges against individual bankers.

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