Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-60279 Sat, 23 Jul 2016 00:32:15 GMT Denmark Faces ‘Out of Control' Housing Market http://implode-explode.com/viewnews/2016-07-22_DenmarkFacesOutofControlHousingMarket.html Denmark's biggest mortgage bank is warning there's a risk the housing market may get "out of control," especially around cities, as long-term negative interest rates make borrowers complacent.

"To be concrete, there is a danger that Danes go blind to the risk of rates ever rising again," Tore Stramer, chief analyst at Nykredit in Copenhagen, said in an e-mail. "That raises the risk of a major housing price decline, when rates at some point or other start to rise again."

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With no other country on the planet having experienced negative rates longer than Denmark, the distortions the policy is wreaking may provide a preview of what other economies face should they go down a similar path. Danes can get short-term mortgages at negative interest rates, and pay less to borrow for 30 years than the U.S. government.

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iehi-feed-60274 Thu, 21 Jul 2016 23:05:45 GMT PulteGroup soars on activist deal, buybacks http://implode-explode.com/viewnews/2016-07-21_PulteGroupsoarsonactivistdealbuybacks.html PulteGroup got a big boost from a strong quarterly report and saw shareholders drive the stock up after news that it struck a deal with activist investor Paul Singer's Elliott Management.

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As the housing sector was battered in the global financial crisis, Pulte stock suffered and never regained losses. The company's shares are down more than 30 percent from the beginning of 2007, after hitting an all time high of more than $40 a share in 2005 and after paring gains in 2008, never touched those highs again.

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iehi-feed-60223 Fri, 15 Jul 2016 14:04:18 GMT Canada new home prices grow at fastest pace in nearly 9 years thanks to booming Toronto, Vancouver http://implode-explode.com/viewnews/2016-07-15_Canadanewhomepricesgrowatfastestpaceinnearly9yearsthankstoboomin.html iehi-feed-60214 Thu, 14 Jul 2016 16:22:10 GMT Australia Insolvencies +14%, Debt Agreements +25%, Bankruptcies +7% http://implode-explode.com/viewnews/2016-07-14_AustraliaInsolvencies14DebtAgreements25Bankruptcies7.html iehi-feed-60195 Tue, 12 Jul 2016 14:30:05 GMT In New York, a Falling Market for Trophy Homes in the Sky http://implode-explode.com/viewnews/2016-07-12_InNewYorkaFallingMarketforTrophyHomesintheSky.html today a four-year construction boom aimed at buyers willing to spend $10 million or more has flooded the top of the market just as global market turmoil has caused wealthy investors to pull back and the federal government has moved to scrutinize some all-cash transactions.

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At 432 Park Avenue, the tallest residential tower in the Western Hemisphere, full-floor apartments originally listed for $78 million to $85 million have been split in two and priced at approximately $40 million each.

In and around West 57th Street, known as Billionaires' Row, "it's not just slow -- it's come to a complete halt," said Dolly Lenz, a broker to the superrich. She attributed the lack of activity along the Midtown corridor to oversupply, little differentiation among glassy ultraluxury units and peak pricing. "That's a death knell," she said.

New York is not alone. After the global financial crisis hit in 2008, investors turned to high-end real estate around the world as a safe place to park their millions. But since the middle of 2014, prime property values have dropped in Paris, Singapore, London, Moscow and Dubai, said Yolande Barnes, director of world research at Savills, a global real estate firm. "These cities have acted as a store of wealth," said Ms. Barnes, who sees the current decline in values as "an inevitable setback that you get after a long bull run."

Though the market still has a long way to go before fire-sale pricing sets in, the declines may indicate that a ceiling has been reached. And even as sales over $10 million drop off in Manhattan, the bulk of the market remains robust, with competition particularly heated for homes priced for less than $3 million.

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iehi-feed-60187 Mon, 11 Jul 2016 15:16:09 GMT Contagion worries rise over property fund suspensions http://implode-explode.com/viewnews/2016-07-11_Contagionworriesriseoverpropertyfundsuspensions.html The risk of contagion from last week's property fund suspensions is much greater than first feared, with detailed analysis showing that a wide pool of funds have been caught up in the gates imposed on investors withdrawing cash.

Eight companies, including Standard Life, Henderson and M&G, barred investors from selling out of their property funds amid fears about falling commercial real estate values following Britain's vote to leave the EU.

Many of those investment companies, however, operate separate products that are also invested in the funds now closed to investor redemptions, and could block investors from pulling their money... The worry is that this will trigger systemic problems for the marketplace, which is already reeling from the UK's decision last month to end its membership of the EU.

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iehi-feed-60183 Mon, 11 Jul 2016 14:52:21 GMT NZ Politicos Resist Housing Price Declines As Obvious Solution To Affordability Crisis http://implode-explode.com/viewnews/2016-07-11_NZPoliticosResistHousingPriceDeclinesAsObviousSolutionToAffordab.html Former Reserve Bank Chairman Arthur Grimes essentially undressed our politicians in front of us this week when he challenged them to embrace a 40 per cent fall in Auckland house prices. He exposed them as emperors without clothes.

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"And not one of them has been able to answer that very simple question," Grimes said this week. He was talking about the extraordinary response to his suggestion 150,000 houses be built in six years to push Auckland prices down.

Prime Minister John Key's response was immediate - and betrayed where he stands on the issue of using a supply shock to make housing affordable. It was "crazy", would leave people in the market with huge losses and put pressure on developers.''

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iehi-feed-60182 Mon, 11 Jul 2016 14:48:25 GMT First-home buyers hit lowest level in a decade, price falls ‘needed' (AU) http://implode-explode.com/viewnews/2016-07-11_FirsthomebuyershitlowestlevelinadecadepricefallsneededAU.html iehi-feed-60153 Wed, 06 Jul 2016 23:13:36 GMT Hyperloop One 'proves' it's cheaper than high-speed rail http://implode-explode.com/viewnews/2016-07-06_HyperloopOneprovesitscheaperthanhighspeedrail.html iehi-feed-60145 Wed, 06 Jul 2016 13:31:54 GMT U.S. home refinancing hits highest in one-and-a-half years as rates drop http://implode-explode.com/viewnews/2016-07-06_UShomerefinancinghitshighestinoneandahalfyearsasratesdrop.html iehi-feed-60098 Tue, 28 Jun 2016 14:43:10 GMT U.S. Home Prices Continued Strong Growth in April, Case-Shiller Says http://implode-explode.com/viewnews/2016-06-28_USHomePricesContinuedStrongGrowthinAprilCaseShillerSays.html iehi-feed-60097 Tue, 28 Jun 2016 14:41:34 GMT Rent Freeze Approved For Second Consecutive Year In Historic Vote (NYC) http://implode-explode.com/viewnews/2016-06-28_RentFreezeApprovedForSecondConsecutiveYearInHistoricVoteNYC.html iehi-feed-60059 Thu, 23 Jun 2016 18:40:10 GMT Credit Suisse Tries to Overhaul Its Image, but Problems Remain http://implode-explode.com/viewnews/2016-06-23_CreditSuisseTriestoOverhaulItsImagebutProblemsRemain.html In March, in an effort to right the ship on the credit side of the investment bank, Credit Suisse named Brian Chin, the chief of structured finance, and David Miller, the chief of credit products, to be co-chiefs of Credit Suisse's global markets credit division. This is yet another big job for Mr. Miller, with lots of responsibility and high pay, but his appointment sends exactly the wrong message about the values and behavior that a Wall Street bank should be rewarding.

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Mr. Miller, you may recall, was the bank's architect, starting in 2004, of a new syndicated loan product -- called a dividend recapitalization loan -- that allowed big-time real estate developers in the Western half of the United States to borrow based on the inflated valuation of their projects, pocket hundreds of millions of dollars in the form of dividends and lay the risk at the doorstep of new investors whom Mr. Miller and his team had lined up.

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In the end, all of the loans blew up, and investors lost billions. Soured deals include $375 million in loans to the Yellowstone Club, an hour outside of Bozeman, Mont.; $250 million to the Tamarack Resort in Idaho; $540 million to Lake Las Vegas, a 3,592-acre golf community in Nevada; $275 million to Promontory, a 10-square-mile second-home resort outside Park City, Utah; $400 million to the Turtle Bay Resort in Hawaii; and $675 million to the Ginn resorts in Port St. Lucie, Fla.; Naples, Fla.; Boone, N.C.; and the Bahamas.

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After each of the developments ended up in Bankruptcy Court, a federal bankruptcy judge admonished the Credit Suisse bankers by calling the loans "doomed to failure" from the outset... In September, Highland Capital won a $287.5 million judgment against Credit Suisse related to losses stemming from its participation in a refinancing of Lake Las Vegas before it went into bankruptcy; Credit Suisse is appealing the ruling, and the judgment has not yet been paid pending the appeal. Highland Capital affiliates are also suing Credit Suisse in New York State over additional losses related to other deals.

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iehi-feed-60056 Thu, 23 Jun 2016 15:38:18 GMT Homeownership slumps, remains elusive for many Americans, study finds http://implode-explode.com/viewnews/2016-06-23_HomeownershipslumpsremainselusiveformanyAmericansstudyfinds.html Homeowners who lost their homes to foreclosure are still struggling to clear their credit records so they can buy another home. Meanwhile, some big banks have moved away from offering subprime and government-backed loans and have significantly tightened credit requirements despite low mortgage rates, making it that much harder for some potential homebuyers to get their foot in the door. "How much house can I afford?" is no longer the main question potential homebuyers need to consider; it's "How will I afford it?"

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Although mortgage rates have remained well under 4% this year, it's not enough to drive homebuying to the levels that industry analysts had predicted. A shortage in inventory, tightened lending requirements and slow income growth are keeping many potential homebuyers on the sidelines, Zigas says, adding that high levels of student debt and a challenging job market for young people are dragging on demand for homes.

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iehi-feed-60052 Thu, 23 Jun 2016 01:01:49 GMT Fed Warns on Commercial Real Estate, Stock Valuations http://implode-explode.com/viewnews/2016-06-22_FedWarnsonCommercialRealEstateStockValuations.html iehi-feed-60048 Thu, 23 Jun 2016 00:48:33 GMT In Amsterdam, the Housing Market Is Showing Signs of Overheating http://implode-explode.com/viewnews/2016-06-22_InAmsterdamtheHousingMarketIsShowingSignsofOverheating.html The Netherlands, the nation of tulipmania almost 400 years ago, saw prices in its capital city surge almost 21 percent in the first quarter. While the blame partly falls on a simple supply-and-demand imbalance, the signs are pointing to a potential squeeze...

In a market where almost half of properties are owned by non-profit corporations, mainly for social housing, there's just not enough coming on to the market to satisfy buyers. After falling about 14 percent in five years, prices have rebounded recently and are now above pre-crisis levels.

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Another reason prices continue to skyrocket is that the Netherlands is relatively unique in still allowing buyers to borrow more than the value of the house -- no down payment necessary. That means as prices rise, buyers have less of a barrier to entry than in other markets, like London, where the size of a cash down payment is increasingly pushing first-time buyers out of the market.

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iehi-feed-60038 Mon, 20 Jun 2016 14:29:51 GMT Economic Gauges Raise Specter of Recession http://implode-explode.com/viewnews/2016-06-20_EconomicGaugesRaiseSpecterofRecession.html Gut-wrenching gyrations in financial markets early in the year helped summon the specter of a new recession. Now, warning signs are coming mostly from the U.S. economy itself.

Hiring is slowing, auto sales are slipping and business investment is dropping. America's factories remain weak and corporate profits are under pressure. All are classic signs of an economic downturn, and forecasters have certainly noticed. In a Wall Street Journal survey this month, economists pegged the probability of a recession starting within the next year at 21%, up from just 10% a year earlier. Some economists think the risk is even higher.

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Quarterly U.S. corporate profits have been declining on a year-to-year basis since late last year, according to the Commerce Department. The continuing balance-sheet squeeze is one reason Joshua Shapiro, chief U.S. economist at consultancy MFR Inc., pegs the odds of a recession in the next year at 50%.

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The factory sector remains a special source of weakness. Overall industrial production, as tracked by the Federal Reserve, has declined on a year-to-year basis for the past nine months... since 1919, industrial production has never fallen for so long without an accompanying recession.

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iehi-feed-60034 Mon, 20 Jun 2016 14:11:44 GMT Australia Slaps Chinese Home Buyers With New Taxes http://implode-explode.com/viewnews/2016-06-20_AustraliaSlapsChineseHomeBuyersWithNewTaxes.html As AFP notes, last year, leading apartment developer Lend Lease sold out more than Aus$600 million (US$445 million) worth of new units in Sydney's Darling Harbour in under five hours, with the Australian Financial Review reporting that one-third of buyers were foreign. Lend Lease said the sale broke local records but such reports have also fuelled calls for government action to protect Australian buyers.

Prior to Sydney's move, other Austrlian states had already implemented protections and in response to China's unprecedented influx of cash, the New South Wales, Victoria and Queensland state governments have introduced or are set to slap new property and land taxes on foreign buyers, sparking an outcry from developers fearful that they will flee to other markets such as New Zealand and Canada. "It is very bad. Without the Chinese nothing would ever get built," the country's richest man and head of prominent developer Meriton, "high-rise" Harry Triguboff told the Australian Financial Review last week.

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iehi-feed-60024 Sat, 18 Jun 2016 01:12:11 GMT Angelo Mozilo Will Not Face U.S. Charges for Mortgage Fraud http://implode-explode.com/viewnews/2016-06-17_AngeloMoziloWillNotFaceUSChargesforMortgageFraud.html The Justice Department's pursuit of Angelo R. Mozilo, one of Wall Street's most recognizable names tied to the subprime mortgage crisis, is ending with a whimper.

After dropping a criminal investigation of Mr. Mozilo earlier, federal prosecutors recently decided against filing a civil fraud case against him, his lawyer, David Siegel, confirmed on Friday.

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The decision by federal prosecutors to not proceed with a civil fraud case under the Financial Institutions Reform, Recovery and Enforcement Act is not too surprising, given the length of the review process.

The possibility of the Justice Department filing a so-called Firrea lawsuit against Mr. Mozilo came to light when Bank of America reached a $16.65 billion settlement of its own Firrea case in August 2014. The inquiry by the Justice Department of Mr. Mozilo was seen by some legal critics as a way for prosecutors to address complaints that little had been done to hold individuals accountable for the financial crisis.

Bank of America acquired Countrywide and assumed its liabilities in 2008, as the financial crisis erupted.

But lawyers for Mr. Mozilo argued a civil fraud case would duplicate the efforts of the Securities and Exchange Commission, which sued Mr. Mozilo and two other former Countrywide executives in 2009. On the eve of the trial in 2010, Mr. Mozilo and the other defendants reached a settlement that required the mortgage financier to pay $67.5 million in fines and restitution.

Over the last few years, federal prosecutors used the threat of a Firrea civil fraud lawsuit to extract tens of billions of dollars in settlements from other big banks. The law proved to a be a useful tool for prosecutors because of its 10-year statute of limitations for bringing a case -- much longer than the standard three- or five-year statute of limitations for most civil fraud lawsuits.

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iehi-feed-60019 Fri, 17 Jun 2016 14:16:46 GMT America's Dying Shopping Malls Have Billions in Debt Coming Due http://implode-explode.com/viewnews/2016-06-17_AmericasDyingShoppingMallsHaveBillionsinDebtComingDue.html