Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-65190 Sun, 16 Feb 2020 23:37:40 GMT Economists Finally Tackle Gentrification: Find Mixed (But Overall Good) Effect of Adding Supply http://implode-explode.com/viewnews/2020-02-16_EconomistsFinallyTackleGentrificationFindMixedButOverallGoodEffe.html Neighbors may assume that the high-rises cause the high rents. That's plausible if new buildings attract much wealthier residents, who in turn attract higher-end amenities that make a neighborhood more desirable... [NYU researcher Xiaodi Li] finds in New York that new buildings do attract more restaurants and cafes nearby. But she concludes that any effect those amenities have pushing up local rents is swamped by the power of new supply to push rents down. On net, she finds, for every 10 percent increase in housing supply, rents for properties within 500 feet drop by 1 percent, relative to other high-demand areas.

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"Wealthy people are already looking to move into the neighborhood," Mr. Mast said of how he would explain his findings to a heated public meeting over such a proposal. "So we can build this building that will give them the sort of unit that they want to live in. Or if we don't, they'll take a unit nearby and renovate it."

That logic may be little comfort to longtime residents, particularly those concerned about neighborhood changes that go beyond rent prices. But it addresses at least one argument against new housing.

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One caution comes from research by Anthony Damiano and Chris Frenier, doctoral candidates at the University of Minnesota who looked at new large-scale buildings built across Minneapolis. Like Mr. Mast and Ms. Li, they find that new supply helped ease rent pressure for higher-end units nearby. But at the bottom third of the market, they concluded that new buildings had the opposite effect, accelerating rents.

It's possible in some contexts that new market-rate apartments could cause one set of nearby landlords to curb their rents even as it causes another set to reassess how cheap their rents have been. It's even possible that lower-income renters may feel a bite from new construction at first, even if they may benefit from it over the long run

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iehi-feed-65186 Tue, 11 Feb 2020 13:50:07 GMT Deadbeat Dad Bernie Sanders Never Paid Child Support http://implode-explode.com/viewnews/2020-02-11_DeadbeatDadBernieSandersNeverPaidChildSupport.html iehi-feed-65185 Mon, 10 Feb 2020 04:20:48 GMT Real pay data show Trump's 'blue collar boom' is more of a bust for US workers: in 3 charts http://implode-explode.com/viewnews/2020-02-09_RealpaydatashowTrumpsbluecollarboomismoreofabustforUSworkersin3c.html iehi-feed-65184 Sun, 09 Feb 2020 14:55:48 GMT Foreclosure Horror Stories: 4 Bizarre Foreclosure Stories http://implode-explode.com/viewnews/2020-02-09_ForeclosureHorrorStories4BizarreForeclosureStories.html iehi-feed-65182 Fri, 07 Feb 2020 15:34:19 GMT FT Report: $2B of "Middle Eastern" Money Lies in Kushner Bailout With Secretive Behemoth Brookfield http://implode-explode.com/viewnews/2020-02-07_FTReport2BofMiddleEasternMoneyLiesinKushnerBailoutWithSecretiveB.html On a busy stretch of Manhattan's Fifth Avenue a few blocks south of Trump Tower, a decaying skyscraper stands as a rebuke to the $1.8bn deal that Jared Kushner helped his family sign a decade ago, at the age of 26. It was the most expensive New York office purchase in history, and for a time it looked likely to sink the Kushners' business. Steve Roth, the billionaire who co-owned 666 Fifth Avenue, lamented it would "be worth a lot more if it was just dirt".By 2016, Mr Kushner was searching for a way out. Destined for a top job in his father-in-law's White House the following year, he found plenty of people to talk to, but no one who was buying. Discussions with Anbang, the Chinese insurance group, came to a halt some time before its flashy chairman Wu Xiaohui landed in a Chinese jail. The Qatari finance minister Ali Shareef al-Emadi met Mr Kushner's father in 2017, although Charles Kushner has said he took the appointment "out of respect" and stressed there could be no deal.Then, with months to go before $1.2bn of mortgage payments fell due in February 2019, the Kushners won a reprieve -- one that looked nothing like a favour from a foreign state. It was an investment from financial group Brookfield, which leased the building whole, paying nearly a century of rent in advance.

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To unpack the Canadian group's accounts is to discover not so much a company as a giant, triangular jigsaw board that spreads across the world and covers assets worth $500bn. The pieces are hundreds of corporate entities, all locked together by elaborate contracts, which give 40 people at the top the right to rule huge sections of the puzzle almost as if it were their own. Those insiders wield such power that the companies below them could face risks similar to those of "pyramid control companies", according to a draft investor disclosure that Brookfield filed with the Securities and Exchange Commission in 2013. (The final version warned instead of risks "associated with a separation of economic interest from control".)

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The known links between Qatar and Brookfield all converge on the investment group's listed property fund BPY. About one-tenth of the fund's assets are tied up in skyscrapers in Canary Wharf and Manhattan that are co-owned by Qatar, but the connection goes further. Through a sovereign wealth fund, Doha is one of BPY's biggest investors, holding $1.8bn worth of BPY preferred equity. The securities have a debtlike quality, and Qatar can force BAM to buy them back for $1.8bn over the next six years.In theory, Qatar has significant influence over BPY. It is entitled to choose one person to sit on BPY's board, and to receive confidential information that other investors never see. Brookfield says the kingdom has never exercised either of those rights. (The Qatar Investment Authority declined to comment.) Both sides have previously indicated that, when Brookfield was negotiating a $1.3bn lease on 666 Fifth Avenue, a building that Charles Kushner had discussed with the Qataris the previous year, the kingdom was not involved.No matter who made the decision or knew about it, rescuing the Kushners strikes some real estate investors as ill-advised.

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In the public accounts of BPY, the listed property fund that received Qatari investment, 666 Fifth Avenue has already all but disappeared. Last January, BPY lost control of BSREP III, the private vehicle that owns the building, after reducing its stake to $1bn. New investors piled in, each taking a piece of the Kushner tower, and lifting the private fund's firepower to $15bn.That influx of cash has not made the tower's ownership any more transparent. A handful of US pension funds have acknowledged their participation, but few other investors have been identified publicly. Knowledgeable people insist that no Qatari money is involved. Materials reviewed by the FT show that about $3bn of the total comes from sovereign governments, although they do not specify which ones, and $2bn of it from the Middle East, although the document does not say exactly where.

So, despite claims to the contrary, Qatari money was indeed involved in "bootstrapping" the Kushner bailout (based on God knows what geopolitical pressure). Now a bunch of other anonymous investors have taken their place and piled on, but admittedly, as $3 bln from sovereign governments, $2 bln from the Middle East. The potential conflicts of interest with US foreign policy are unknown (and, given recent experiences with the Trump administration, constitute a realistic, if not critical, concern).

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iehi-feed-65181 Fri, 07 Feb 2020 14:28:05 GMT Lender moves to foreclose on site of NYC hotel linked to Adam Neumann, Mexican magnate http://implode-explode.com/viewnews/2020-02-07_LendermovestoforecloseonsiteofNYChotellinkedtoAdamNeumannMexican.html East West Bank is moving to foreclose on the loans secured by the Selina Chelsea NYC property, citing a missed payment last monthly.

In a complaint filed in state court Monday, the bank said it issued two mortgages totaling $31 million in 2013, but the borrower -- a limited liability company led by Mexican hotel magnate Moises Micha -- is in default.

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Just last month, the owner of the Blakely Hotel on West 55th Street told staff he was shutting down his operation because of financial pressures, a move he said was symptomatic of wider problems across the industry

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iehi-feed-65179 Wed, 05 Feb 2020 16:57:57 GMT Former Porn Lawyer Off To Federal Prison For Mortgage Fraud http://implode-explode.com/viewnews/2020-02-05_FormerPornLawyerOffToFederalPrisonForMortgageFraud.html iehi-feed-65178 Tue, 04 Feb 2020 23:43:54 GMT Macy's to close 125 stores, cut 2,000 corporate jobs, in hunt for growth http://implode-explode.com/viewnews/2020-02-04_Macystoclose125storescut2000corporatejobsinhuntforgrowth.html The company has lost market share in core categories like apparel, and its profits have been pressured, as fewer shoppers take trips to malls, and instead are buying on Amazon and other online retailers.

The steps Macy's is taking are expected to generate annual gross savings of about $1.5 billion, which will be fully realized by the end of 2022. This year, Macy's expects to save roughly $600 million.

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iehi-feed-65177 Tue, 04 Feb 2020 19:43:20 GMT New York Zombie Foreclosure Warning: Second Lien Holders Are Coming! http://implode-explode.com/viewnews/2020-02-04_NewYorkZombieForeclosureWarningSecondLienHoldersAreComing.html iehi-feed-65176 Sun, 02 Feb 2020 17:12:51 GMT Slow GDP Growth Undermines Trump "Success" Claims http://implode-explode.com/viewnews/2020-02-02_SlowGDPGrowthUnderminesTrumpSuccessClaims.html iehi-feed-65174 Fri, 31 Jan 2020 22:23:13 GMT The U.S. Housing Affordability Crisis Is Making Its Way to the Heartland http://implode-explode.com/viewnews/2020-01-31_TheUSHousingAffordabilityCrisisIsMakingItsWaytotheHeartland.html Earning $40,000 a year in Omaha used to be enough to make rent comfortably. Not anymore. Housing costs are slipping out of reach for the middle class in smaller and medium-size cities across the U.S., the latest sign that the affordability crisis that started on the coasts is moving inland, according to research released on Friday by the Harvard Joint Center for Housing Studies. From 2011 to 2018, the proportion of households making $30,000 to $45,000 a year that were "cost-burdened" -- paying more than 30% of their income on rent -- soared the most in metros including Nashville, Tennessee; Greenville, South Carolina; and McAllen, Texas.

The data highlight a harsh reality of the U.S. economy a decade into the longest expansion on record: For people who don't make big salaries, there are fewer and fewer affordable places to go.

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Wage growth has been lackluster in recent years compared with previous periods of economic expansion, and has failed to keep pace with rental costs. The consumer price index for rent rose an average 3.2% year-over-year from 2011 through 2019, Bureau of Labor Statistics data show. That outpaced average yearly earnings growth over the period of 2.4%.

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The share of low-cost units in the national rental stock shrank to 25% in 2017 from 33% in 2012 -- with the biggest declines in Iowa, Montana, Nebraska, North Dakota, Oklahoma, and Texas.

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iehi-feed-65173 Fri, 31 Jan 2020 01:19:35 GMT "Opportunity Zones" Tax Break Being Investigated For Sweetheart Approvals To Trump Allies http://implode-explode.com/viewnews/2020-01-30_OpportunityZonesTaxBreakBeingInvestigatedForSweetheartApprovalsT.html A federal tax break meant to help poor communities that became a windfall for wealthy investors is being investigated by the Treasury Department, the agency's deputy inspector general said on Wednesday.

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The legislation, part of the 2017 tax overhaul, is supposed to encourage new investment in poor neighborhoods, leading to new housing, businesses and jobs. However, wealthy investors are piling into the initiative, including developers with ties to the Trump administration.

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In October, The Times described how the financier Michael Milken stood to benefit from a move the Treasury Department made over the objections of some agency officials to permit a census tract in Nevada to qualify for the Opportunity Zone tax break. Mr. Milken is a longtime friend of Treasury Secretary Steven Mnuchin's.

"Despite these warnings from staff, Secretary Mnuchin instructed Treasury officials to allow the otherwise ineligible tract to qualify for the incentive," the lawmakers wrote in seeking the inquiry. "If the Treasury Department provided a stamp of approval as a political favor, it is not only unacceptable, but in complete violation of the congressional intent of the Opportunity Zones."

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Other potential beneficiaries of the Opportunity Zone tax break, The Times reported last year, were billionaire financiers like Leon Cooperman; Chris Christie, the former New Jersey governor; Richard LeFrak, a New York real estate titan who is close to the president; and the family of Jared Kushner, Mr. Trump's son-in-law and senior adviser.

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iehi-feed-65172 Thu, 30 Jan 2020 01:25:36 GMT Rebuffing Trump, Fed Chairman says he will 'avoid' negative interest rates http://implode-explode.com/viewnews/2020-01-29_RebuffingTrumpFedChairmansayshewillavoidnegativeinterestrates.html In spite of numerous criticisms from President Donald Trump, the Federal Reserve has stayed away from the negative interest rates that have characterized many other central bank approaches to monetary policy, and Powell indicated this wouldn't change anytime soon, explaining that low interest rates could become a self-fulfilling cycle from which economies can struggle to emerge. "We're determined to avoid it here in the United States," he said.

"It's become very clear that inflation is the problem that central banks can solve," Battifarano said, but he pointed to Japan's prolonged economic slump as a cautionary tale of how negative interest rates can play out long-term. "Not only does it not work, it's damaging to banks' traditional spread-lending mode," he said.

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iehi-feed-65170 Tue, 28 Jan 2020 16:55:04 GMT Former Wells Fargo CEO Fined $17.5 Million For Fake Accounts Fiasco http://implode-explode.com/viewnews/2020-01-28_FormerWellsFargoCEOFined175MillionForFakeAccountsFiasco.html iehi-feed-65167 Fri, 24 Jan 2020 21:52:07 GMT JPMorgan Chase Alert! Can JPM-Chase Validate Your Mortgage? http://implode-explode.com/viewnews/2020-01-24_JPMorganChaseAlertCanJPMChaseValidateYourMortgage.html iehi-feed-65165 Fri, 24 Jan 2020 01:15:28 GMT Ex-Wells Fargo CEO John Stumpf barred from industry, to pay $17.5M for sales scandal http://implode-explode.com/viewnews/2020-01-23_ExWellsFargoCEOJohnStumpfbarredfromindustrytopay175Mforsalesscan.html ``The U.S. government announced Thursday that former Wells Fargo CEO John Stumpf has been banned from ever working at a bank again and will pay $17.5 million for scandals in which millions of fake accounts were set up to meet sales quotas.

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In addition to the $17.5 million fine, Stumpf's settlement declares he shall not participate "in any manner" at any bank regulated by the OCC or participate or attempt to participate in a bank's corporate board votes.

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The nation's fourth-largest bank, Wells Fargo has remained muddled in restructuring and regulatory reforms since 2016 stemming from the scandals at its consumer-facing community bank.

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iehi-feed-65164 Fri, 24 Jan 2020 00:21:05 GMT NYC City Council Passes Bill Requiring Restaurants & Other Retail Businesses To Accept Cash http://implode-explode.com/viewnews/2020-01-23_NYCCityCouncilPassesBillRequiringRestaurantsOtherRetailBusinesse.html "We in the Council have real concerns that an increasingly cashless marketplace could have a real-world discriminatory effect on the most vulnerable New Yorkers," said the bill's sponsor, Councilmember Ritchie Torres, in a phone interview. "There are some people, especially senior citizens...who prefer cash as a habitual method of payment. There are some who prefer cash because it's more predictable. Or they're concerned about privacy."

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The bill imposes civil penalties: $1,000 for the first violation, and $1,500 for additional violations. Businesses that have a way to convert cash into cards -- say, laundromats -- are exempt, but they must not impose a fee for the cards or require a minimum deposit more than $1, and the cards cannot expire.

Crypto-based consumer kiosk cards would be a good application for this.

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iehi-feed-65162 Thu, 23 Jan 2020 14:43:37 GMT Bank Of America Alert: Can Bank of America Validate Your Mortgage? http://implode-explode.com/viewnews/2020-01-23_BankOfAmericaAlertCanBankofAmericaValidateYourMortgage.html iehi-feed-65159 Wed, 22 Jan 2020 18:12:28 GMT Almost All of the New Apartment Inventory Nationwide is "Ultra-Luxury" http://implode-explode.com/viewnews/2020-01-22_AlmostAlloftheNewApartmentInventoryNationwideisUltraLuxury.html There's a rampant homelessness crisis in large cities across the country, stoked by a lack of affordable housing units. But fear not -- developers are constructing new apartments at a rapid clip this year.

The catch: Up to 80% of those rental units to be completed this year will be in luxury buildings the average person likely can't afford, according to data obtained by the Wall Street Journal from the real estate analytics firm RealPage.

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A sizable portion of this year's expected 371,000 new rental units will also come online in cities with deep poverty and inequality crises, like Los Angeles, Dallas, and Washington, D.C., according to the data released Wednesday. In Dallas, nearly 21% of the city's population lives below the poverty line, compared to a national average near 12%. In Los Angeles, where the homelessness population has swelled to 36,300 people, the poverty rate is 19%. In D.C., nearly 17% of the population is impoverished. Collectively, those cities will get nearly 60,000 new units.

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Developers often argue that building a new apartment is prohibitively expensive, making luxury units the only real profitable option for them, according to the Journal. And ideally, developers say, building more units for wealthy tenants means they'll move out of their smaller apartments, leaving them available to lower-income renters. An analysis out of the Joint Center For Housing Studies of Harvard University found this isn't happening.

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iehi-feed-65157 Wed, 22 Jan 2020 01:47:36 GMT US-China deal is a disaster, former White House economist says http://implode-explode.com/viewnews/2020-01-21_USChinadealisadisasterformerWhiteHouseeconomistsays.html "While this deal is great in the sense that it has calmed things, additional tariffs aren't going on, aside from that the deal is essentially a disaster. It doesn't address any of the systemic issues," Chad Bown, senior fellow at the Peterson Institute for International Economics, said.

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200 billion in U.S. goods over the next two years, as part of the deal. President Donald Trump, who addressed the Davos forum earlier on Tuesday, said the number of purchases could end up closer to $300 billion.

"These are unrealistic numbers, which puts the whole viability of the deal into question," Bown said, adding that the only way to reach these figures is by diverting trade away from other countries, such as soy beans away from Brazil and fish away from Canada.

Among the additional purchases of U.S. goods, China has committed to buy at least $40 billion worth of American farming products. However, a leading commodities expert at Goldman Sachs casted doubts over whether China will manage to do that. Speaking to CNBC earlier this month Jeff Currie said "there is still a lot of uncertainty about how you would achieve $40 (billion) or potentially even $50 billion of agricultural purchases."

Note that in almost every previous, when Trump announced a big "investment" in the US, it either (a) didn't materialize in anywhere near the scale touted, or (b) was simply re-counting some other investment that was already planned or in-process. Thus, this critique is worrying.

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