Implode-Explode Heavy Industries news feed Tracking the many faces of the global credit implosion. en-us iehi-feed-58316 Sun, 29 Nov 2015 02:18:29 GMT Florida Statute Of Limitations Law Cited In 5th DCA Ruling iehi-feed-58292 Mon, 23 Nov 2015 18:50:54 GMT Tight inventories, rising prices hurt U.S. home sales iehi-feed-58290 Mon, 23 Nov 2015 14:06:09 GMT Speculators test Saudi currency as oil crisis deepens Saudi Arabia's currency regime is at risk of blowing up if oil prices fall further and the US dollar spikes higher, Bank of America has warned. The Saudi strategy of flooding the world with oil in a bid to drive out rivals may be hard to square with the country's fixed dollar-peg, which is increasingly under scrutiny by currency traders as the US Federal Reserve prepares to raise interest rates.

... Mr Blanch said a devaluation by China would leave the Saudis badly exposed and might ultimately force their hand. "A de-peg of the Saudi riyal is our number one ‘black-swan' event for oil in 2016," he said.

The 30-year old dollar peg is the weak link in Saudi strategy. It matters more than dissent within OPEC as the cartel prepares for a stormy meeting in Vienna on December 4. To varying degrees, Algeria, Venezuela, Nigeria, Iraq, and Iran all want production cuts to stabilize the market.

iehi-feed-58281 Sat, 21 Nov 2015 16:52:28 GMT Surge in Subprime Auto Lending Draws Attention Subprime auto lending is shifting into higher gear, raising some concerns in Washington where top financial regulators have sounded alarms about this category of loans. Over the six months through September, more than $110 billion of auto loans have been originated to borrowers with credit scores below 660, the bottom cutoff for having a credit score generally considered "good," according to a report Thursday from the Federal Reserve Bank of New York. Of that sum, about $70 billion went to borrowers with credit scores below 620, scored that are considered "bad."

... The sum in that category has nearly reached the same level as in 2006, raising questions about the health of the nation's auto-lending portfolio and drawing uncomfortable comparisons to the rise in subprime mortgages that helped fuel the housing collapse, financial crisis and recession.

There are now more subprime auto loans than there were subprime mortgage loans in the last crisis (though the total dollar value is of course much lower).

iehi-feed-58272 Fri, 20 Nov 2015 23:16:39 GMT Fat Lady Sings In Ted Visner's Wagnarian Opera iehi-feed-58265 Thu, 19 Nov 2015 20:42:40 GMT Is A Detroit Law Firm Bilking Deutsche Bank Bondholders? iehi-feed-58238 Sun, 15 Nov 2015 16:00:53 GMT Whistleblower at HBOS attacks ‘ludicrously bad' City regulation Earlier evidence Moore had given to the Treasury select committee in 2009 had been so damning it led to a fresh examination of the role of Crosby, and forced his resignation as deputy chairman of the then City regulator, the Financial Services Authority.

When Moore's allegations were first aired at the select committee, Crosby had insisted there was no substance to them. A report -- commissioned from the bank's auditors, KPMG -- concluded that he lost his job because of personality clashes inside the lender and not that Crosby sacked him because of warnings that HBOS was "going too fast". Crosby has since handed back his knighthood and 30% of his pension, and keeps out of the public eye.


But [Moore's] ire is not only aimed at HBOS officials and non-executive directors. John Griffith-Jones, the boss of the Financial Conduct Authority, the current City watchdog, should quit, he says, because he was formerly chairman of KPMG, auditor of HBOS, as well as a string of other banks.

iehi-feed-58235 Fri, 13 Nov 2015 22:03:40 GMT Big Consumer Disappointment #2: New Home Buyer Recovery Fails To Materialize A quarter of first-time buyers said their biggest challenge was saving for a down payment. Of those, a majority said student loans were the main obstacle... although lenders are loosening home-loan requirements, some are still eschewing borrowers who would qualify under the mortgage-finance company's guidelines but are on the riskier end of the credit spectrum.. [also,] a large number of first-time buyers and other borrowers aren't applying for loans because they don't think they would qualify, even if they are likely to get approved.

"Among millennials and people generally, folks are living more conservatively than they did in the past. They are managing their affairs in a very cautious way," [Fannie Mae's] Mayopoulos said. "What we're experiencing is a little bit of a natural reaction to this very difficult economic period that we went through."

Economists also said rents, which have jumped 20% over the last five years, have made it difficult for younger households to put money aside [, plus] tenants ... are paying rents "considered commensurate with a mortgage payment" to live near good restaurants, shorten their commutes and enjoy amenities such as having their trash picked up right outside their doors.''

But the following is the most hilarious, schadenfreude-stoking part, for us:

Many economists predicted 2015 would be the year when first-time buyers would finally make a comeback, as job and income growth accelerated, mortgage rates remained low and the memory of seeing relatives battered by the housing bust started to fade.

"I thought we would see some pick up in the first-time buyers given that the economy has been expanding for years," said Lawrence Yun, NAR's chief economist. But "there are some hurdles to overcome."

Yes, you read that right: NAR cheerleader (woops, sorry, cheer-conomist) Lawrence Yun is stumped -- STUMPED -- that the foundation of the housing market has not come roaring back from the great recession. Well, maybe he should have spent a little of the past seven years forcing himself, Clockwork Orange-style, to read ML-Implode occasionally, and he would have known that the foundation of the economy simply has not come back -- and probably never will, until our monetary and banking system are up-ended. Had he noted this simple truth (which many other, actually-competent economists have noted), he would not be surprised that first time home buyers have not swooped in and played their part getting the housing market "animal spirits" flowing again...

iehi-feed-58221 Thu, 12 Nov 2015 14:49:59 GMT Deutsche Bank Forced To Pay $2M To Homeowner iehi-feed-58215 Wed, 11 Nov 2015 18:31:51 GMT Crackpot Squattor Ted Visner Found Guilty In 20 Minutes By Jury iehi-feed-58162 Wed, 04 Nov 2015 14:54:06 GMT In Mortgages, Here We Go Again? Not Quite iehi-feed-58158 Wed, 04 Nov 2015 00:52:51 GMT Did Wells Fargo Employee Steal $16,700 from Customer? iehi-feed-58157 Tue, 03 Nov 2015 22:46:58 GMT Family Convicted in $3.8M Straw Borrower Scheme iehi-feed-58138 Sun, 01 Nov 2015 19:04:16 GMT BAC Settles MERS Lawsuit With Bond Holders iehi-feed-58137 Sun, 01 Nov 2015 16:22:56 GMT Black Business Owners Purged From Michigan Bank iehi-feed-58130 Sun, 01 Nov 2015 01:46:59 GMT New 15-Year Mortgage "Makes Downpayment Unnecessary" ``But isn't it risky for the Wealth Building Home Loan to allow for a zero percent down payment? Within 10 months, a Wealth Building Home Loan with a zero down payment has a lower loan-to-value ratio than an FHA loan with 5 percent down. After the 41st month, the Wealth Building Home Loan drops below 80 percent loan-to-value ratio even without any house price appreciation, while the loan-to-value ratio on the FHA loan is still over 90 percent. The 15-year loan is an equity generating machine, which makes a down payment unnecessary -- the funds are better used to fund the interest rate buydown.''

Interesting idea, but of course, you need to be able to afford to pay a larger monthly payment, or equivalently, can only buy a more modest property, so the applicability of this is limited (the idea is described in more detail here, where they claim "90% of the buying power is preserved", but we don't see how that happy result is modeled...). We also wonder about their risk provisioning, as even more is riding on not having early payment defaults (and it's not as if those didn't trigger a mortgage meltdown before...)

iehi-feed-58122 Fri, 30 Oct 2015 14:59:09 GMT Ocwen Shares Continue To Plummet iehi-feed-58115 Thu, 29 Oct 2015 17:47:39 GMT Pending Sales of Previously Owned U.S. Homes Unexpectedly Fall iehi-feed-58096 Tue, 27 Oct 2015 18:49:41 GMT Miami-Dade Cop sentenced to 48 months in federal prison iehi-feed-58077 Sun, 25 Oct 2015 16:19:10 GMT Steve Keen: "Listen - is that the sound of a bubble bursting Down Under? "