Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-59895 Sat, 28 May 2016 00:30:46 GMT The Great Race: USA, Germany, Japan All Have Negative Real 10 Year Sovereign Yields http://implode-explode.com/viewnews/2016-05-27_TheGreatRaceUSAGermanyJapanAllHaveNegativeReal10YearSovereignYie.html iehi-feed-59894 Fri, 27 May 2016 15:40:36 GMT Essence of BofA "Hustle" Ruling: Sign A Contract And LATER Decide To Commit Fraud, and It's Not Fraud http://implode-explode.com/viewnews/2016-05-27_EssenceofBofAHustleRulingSignAContractAndLATERDecideToCommitFrau.html The judges based their ruling on the contracts that Countrywide had reached with Fannie and Freddie, pledging to provide those government-sponsored firms with "investment quality" mortgages. There was no evidence, the appellate judges found, that the executives who signed those contracts intended at the time to stuff the pipeline with toxic junk. It just turned out that way. Because there was no intent to defraud when the contracts were signed, the judges ruled, this whole affair is merely a case of breach of contract, not fraud...

There are a few problems with this analysis. One was pointed out presciently by Judge Rakoff. In a 2013 ruling in the case, he observed that under the federal mail fraud statute, that limitation [of fraud needing to occur at the moment of contract signing] doesn't apply. In any event, the bank's misrepresentations were continuous and ongoing: every time it sold Fannie or Freddie a substandard loan, it was arguably lying... Judge Rakoff anticipated and rejected [the Appeals Court's] argument, and even pointed out that Congress closed the loophole by amending the mail fraud statute -- in 1909. It's also likely that the government will appeal the latest ruling to the full 2nd circuit court, and thence, if necessary, to the Supreme Court.

Yes, this will likely get reversed again. The ruling simply seems to be in error, aside from leading to nonsensical conclusions (i.e., that anyone can now defraud the government with abandon as long as they don't show any evidence of intent to defraud at the time they sign a contract or make covenants).

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iehi-feed-59893 Fri, 27 May 2016 14:40:20 GMT Japan "Already Doing Helicopter Money"; "Yen At Great Risk": Noguchi http://implode-explode.com/viewnews/2016-05-27_JapanAlreadyDoingHelicopterMoneyYenAtGreatRiskNoguchi.html iehi-feed-59892 Fri, 27 May 2016 14:32:05 GMT Gross Moving To Short Credit Stance http://implode-explode.com/viewnews/2016-05-27_GrossMovingToShortCreditStance.html iehi-feed-59891 Fri, 27 May 2016 14:30:26 GMT Duncan: China's Boom Ended in 2015; Protracted Slump Ahead (Video) http://implode-explode.com/viewnews/2016-05-27_DuncanChinasBoomEndedin2015ProtractedSlumpAheadVideo.html iehi-feed-59889 Fri, 27 May 2016 14:17:18 GMT Wells Fargo Reintroduces 3%-Down Mortgages http://implode-explode.com/viewnews/2016-05-27_WellsFargoReintroduces3DownMortgages.html After being called out for its deceptive practices, the bank has scaled back on FHA backed mortgage lending in recent years. Wells Fargo accounted for just 2.5% of total FHA mortgages in 2015, down from 13% in 2010, and ultimately coming to this end game where the bank has a path forward without the FHA... Wells' own mortgage origination pipeline has been slowing down in recent years, and as such the corner office of the country's largest mortgage originator is desperate to find new and innovative ways to boost lending.

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The new program partners with Fannie Mae in order to allow borrowers with credit scores as low as 620 to make as little as a 3% down payment and use income from family members or renters to qualify. Naturally, the intent is to make more loans to low and middle-income borrowers - in the process pushing up home prices countrywide - without going through the FHA.

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iehi-feed-59887 Thu, 26 May 2016 16:55:52 GMT HUD: For many poor families, housing costs are ‘out of reach' http://implode-explode.com/viewnews/2016-05-26_HUDFormanypoorfamilieshousingcostsareoutofreach.html The affordable housing situation is bleak. So bleak that "in no state, metropolitan area, or county can a full-time worker earning the prevailing minimum wage afford a modest two-bedroom apartment," according to the report.

To afford a two-bedroom apartment at the current federal minimum wage of $7.25 an hour, a worker would need to work 112 hours a week, every week, according to the report. That means workers "would have no remaining time during the week for anything other than working and sleeping."

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NLIHC proposes a formula reducing the mortgage interest tax deduction that benefits homeowners. For years, there have been various proposals to change the popular deduction. Whatever reform that might eventually be approved, the coalition wants a portion of the savings to go to affordable housing.

The main benefit of eliminating the mortgage interest tax deduction would actually be to allow home prices to fall to more affordable levels. Of course cutting a sacred "middle class" benefit (even if done so gradually that there'd be no nominal decline in home prices) is politically impossible.

Alternatively, they could make all consumer debt interest (i.e. credit card) tax-deductible. That would be fair.

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iehi-feed-59886 Thu, 26 May 2016 16:41:10 GMT Wall Street Crime: 7 Years, 156 Cases and Few Convictions http://implode-explode.com/viewnews/2016-05-26_WallStreetCrime7Years156CasesandFewConvictions.html The Wall Street Journal examined 156 criminal and civil cases brought by the Justice Department, Securities and Exchange Commission and Commodity Futures Trading Commission against 10 of the largest Wall Street banks since 2009. In 81% of those cases, individual employees were neither identified nor charged. A total of 47 bank employees were charged in relation to the cases. One was a boardroom-level executive, the Journal's analysis found.

The analysis shows not only the rarity of proceedings brought against individual bank employees, but also the difficulty authorities have had winning cases they do bring.

Most of the bankers who were charged pleaded guilty to criminal counts or agreed to settle a civil case, with those facing civil charges paying a median penalty of $61,000. Of the 11 people who went to trial or a hearing and had a ruling on their case, six were found not liable or had the case dismissed. That left a total of five bank employees at any level against whom the government won a contested case. They include Mr. Heinz, the former UBS employee.

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There are plenty of possible explanations for the small number of successful cases. For starters, much of the institutional conduct during and after the financial crisis didn't break the law, said law-enforcement officials. Even when the government has been able to prove illegal activity, it has rarely been traced to the upper echelons of big banks.

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The Journal's analysis found that about half of the 47 bank employees charged since 2009 held junior or midlevel jobs--vice presidents, financial advisers, private bankers and managing directors. Most had quit or been fired before the bank was charged, sometimes years earlier.

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In 2012, a New York jury convicted Mr. Heinz, now 43 years old, and two colleagues of rigging a bidding process in which banks competed for contracts to invest proceeds from bonds issued by towns and cities. Prosecutors said the three men steered financial contracts to their friends in exchange for kickbacks and other favors, resulting in cities and towns paying millions more for the deals than they needed to. Mr. Heinz, a vice president on UBS's municipal-bond reinvestment desk, was sentenced to 27 months in prison and ordered to pay a $400,000 fine.

His lawyer, Marc Mukasey of Greenberg Traurig LLP, said the government "tends to go after the low-hanging fruit, and they bully a lot of people into settlements or into testifying in a way that helps their case." He said Mr. Heinz had been doing his job in good faith, when the government "decided to criminalize something that had previously never been criminalized."

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iehi-feed-59885 Thu, 26 May 2016 14:55:28 GMT Bigger Than All The World's QE's Combined http://implode-explode.com/viewnews/2016-05-26_BiggerThanAllTheWorldsQEsCombined.html iehi-feed-59884 Thu, 26 May 2016 14:52:21 GMT Greece is Being Looted, Despite IMF "Agreement" - Paul Craig Roberts http://implode-explode.com/viewnews/2016-05-26_GreeceisBeingLootedDespiteIMFAgreementPaulCraigRoberts.html iehi-feed-59883 Thu, 26 May 2016 11:14:42 GMT IMF: No Cash Now for Greece Because Europe Hasn't Promised Debt Relief http://implode-explode.com/viewnews/2016-05-26_IMFNoCashNowforGreeceBecauseEuropeHasntPromisedDebtRelief.html A senior International Monetary Fund official Wednesday said it can't help Europe with fresh emergency financing for Greece because Athens's creditors haven't yet committed to detailed debt relief.

The comments show that the agreement touted by European finance ministers last night to release fresh bailout cash for Greece hasn't nailed down the key elements the IMF says are critical to finally return the debt-laden country to health. Rather, the IMF's reserved support for the deal has paved the way for Germany to approve new funds and sets the stage for more tough negotiations later this year.

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Many outside economists see the deal as papering over the differences and once again prolonging the crisis.

"Summary of Eurogroup: Germany always wins, IMF caves under pressure from Germany and U.S., no one does what's in Greece's best interests," said Megan Greene, chief economist at Manulife and John Hancock Asset Management, in a tweet.

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iehi-feed-59882 Thu, 26 May 2016 00:44:53 GMT The Fed Setting Up For A U.S. Dollar Collapse If No June Rate Hike http://implode-explode.com/viewnews/2016-05-25_TheFedSettingUpForAUSDollarCollapseIfNoJuneRateHike.html

The U.S. dollar index has bounced from its 15-month low on May 3, thanks to Fed officials talking up rate hikes and thereby propping up the U.S. dollar, referred to as a "Fed Dollar Put". The Fed may have already painted itself into a corner, even as job growth is decelerating, core inflation is trending downward, and the U.S. economy may be one step closer to a recession, as seen by the yield spread between the 10-year and 2-year U.S. Treasury Notes.

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Many economists may not be aware that the S&P 500 Utilities sector is now trading near its all-time high, as money has rotated into safe-havens. The last time Utilities outperformed the broader market, the U.S. economy entered into a recession 12 months later.

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iehi-feed-59881 Wed, 25 May 2016 23:56:47 GMT Fannie And Freddie Are Mega-Frauds; Still Have Not Digested Derivatives & Accounting Losses From Crash http://implode-explode.com/viewnews/2016-05-25_FannieAndFreddieAreMegaFraudsStillHaveNotDigestedDerivativesAcco.html iehi-feed-59880 Wed, 25 May 2016 23:35:59 GMT Precious Metals: Fake-Rally Ends, Hostage Markets Return http://implode-explode.com/viewnews/2016-05-25_PreciousMetalsFakeRallyEndsHostageMarketsReturn.html In the real world, the quantity of investment dollars going into silver is roughly parallel to the quantity of dollars going into gold. Had a similar ratio of investor dollars entered the bankers "paper bullion" markets the price of silver would have had to rise roughly 20 times faster/higher than the price of gold during this supposed rally.

The notion, in this "precious metals rally", that no one was buying silver is patently absurd. The price of silver during most of this fake-rally wasn't merely improbable, it was impossible.

... the Big Bank crime syndicate remains totally in control of what we call our "markets" (for lack of a better word). Currency prices remain fixed (rigged). Equity market prices remain fixed (rigged). Bond market prices remain fixed (rigged). Are we to believe that the banksters simply 'forgot' to continue their precious metals price-fixing -- even as the mainstream media was shouting the word "rally" at the top of its lungs?

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The current eight-year, bubble-and-crash cycle manufactured by the Big Banks is nearing its end. When this Next Crash is detonated, this crime syndicate obviously doesn't want precious metals to stand out as "safe havens" -- as all of their corrupt, paper assets are plunging in value. The problem: with gold and silver already at rock-bottom prices at the beginning of 2016, it would have been very difficult to crash those markets (along with everything else). Thus the banksters need to march gold and silver prices higher, to some modest level, before they were set up to be crashed along with all other asset classes.

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iehi-feed-59879 Wed, 25 May 2016 23:30:51 GMT DoubleLine's Gundlach: U.S. stock market is 'dead money' http://implode-explode.com/viewnews/2016-05-25_DoubleLinesGundlachUSstockmarketisdeadmoney.html iehi-feed-59878 Wed, 25 May 2016 16:48:05 GMT Eurozone hails 'breakthrough' with Greece, IMF debt deal http://implode-explode.com/viewnews/2016-05-25_EurozonehailsbreakthroughwithGreeceIMFdebtdeal.html The euro zone gave Greece its firmest offer yet of debt relief in what finance ministers called a breakthrough deal that won a commitment from the IMF finally to return to taking part in the bailout for Athens.

After talks that lasted into the small hours of Wednesday, the Eurogroup ministers gave a nod to releasing 10.3 billion euros (£8 billion) in new funds for Greece in recognition of painful fiscal reforms pushed through by Prime Minister Alexis Tsipras's leftist-led coalition, subject to some final technical tweaks.

But a bigger step forward was a deal by which the euro zone agreed to offer Athens debt relief in 2018 if that is necessary to meet agreed criteria on its payments burden. That was enough to secure an agreement from the International Monetary Fund to again join the euro zone in funding the bailout of Greece.

... the Fund made a big concession by agreeing that the debt relief would only be finally decided in 2018, rather than up-front, as was the IMF's initial position.

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iehi-feed-59877 Wed, 25 May 2016 16:41:06 GMT SWIFT Announces New Security Plan To Combat High-Level Bank Heists http://implode-explode.com/viewnews/2016-05-25_SWIFTAnnouncesNewSecurityPlanToCombatHighLevelBankHeists.html To help repair its damaged reputation, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) announced on Tuesday (May 24) that it plans to launch a new security plan to help combat ongoing bank heists.

Reuters reported that SWIFT CEO Gottfried Leibbrandt confirmed the global interbank messaging system will introduce a new five-point plan this week. During a financial services conference in Brussels, Leibbrandt also noted that the Bangladesh Bank heist was a "watershed event for the banking industry."

"There will be a before and an after Bangladesh. The Bangladesh fraud is not an isolated incident ... This is a big deal. And it gets to the heart of banking," he continued.''

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iehi-feed-59876 Wed, 25 May 2016 14:29:23 GMT Donald Trump is going to win: This is why Hillary Clinton can't defeat what Trump represents http://implode-explode.com/viewnews/2016-05-25_DonaldTrumpisgoingtowinThisiswhyHillaryClintoncantdefeatwhatTrum.html iehi-feed-59875 Wed, 25 May 2016 14:18:35 GMT For First Time in Modern Era, Living With Parents Edges Out Other Living Arrangements for 18- to 34-Year-Olds | Pew report http://implode-explode.com/viewnews/2016-05-25_ForFirstTimeinModernEraLivingWithParentsEdgesOutOtherLivingArran.html In 2014, for the first time in more than 130 years, adults ages 18 to 34 were slightly more likely to be living in their parents' home than they were to be living with a spouse or partner in their own household

... trends in both employment status and wages have likely contributed to the growing share of young adults who are living in the home of their parent(s), and this is especially true of young men. Employed young men are much less likely to live at home than young men without a job, and employment among young men has fallen significantly in recent decades. The share of young men with jobs peaked around 1960 at 84%. In 2014, only 71% of 18- to 34-year-old men were employed. Similarly with earnings, young men's wages (after adjusting for inflation) have been on a downward trajectory since 1970 and fell significantly from 2000 to 2010. As wages have fallen, the share of young men living in the home of their parent(s) has risen.

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iehi-feed-59874 Wed, 25 May 2016 01:15:20 GMT Mortgage Borrowers Are Likely "Self-Sidelining" http://implode-explode.com/viewnews/2016-05-24_MortgageBorrowersAreLikelySelfSidelining.html "Thus, the observed decline in originations could be a result of potential applicants being either too cautious or discouraged from applying, more so than tight underwriting as the culprit in lower mortgage activity."

She suggests that this caution results in "self-sidelining" that makes it appear that credit is tightening.  This means that the policy solutions are quite different than if the cause was credit tightening and that more consumer education could be more successful in raising originations levels than introducing new lending products with lower credit standards.  

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