IEHI Feed: The Bank Implode-o-Meter http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-62322 Mon, 29 May 2017 19:46:39 GMT Stocks May Not Crash Spectacularly but May Zigzag Lower in Agonizing Ups-and-Downs, for Decades http://bankimplode.com/viewnews/2017-05-29_StocksMayNotCrashSpectacularlybutMayZigzagLowerinAgonizingUpsand.html iehi-feed-62320 Mon, 29 May 2017 18:04:37 GMT Italian banks sink on early election worries http://bankimplode.com/viewnews/2017-05-29_Italianbankssinkonearlyelectionworries.html iehi-feed-62319 Sun, 28 May 2017 17:42:46 GMT The Fed Will Blink http://bankimplode.com/viewnews/2017-05-28_TheFedWillBlink.html iehi-feed-62316 Sun, 28 May 2017 17:17:13 GMT New Home Prices Are Over 50% Higher In Canada Than The US http://bankimplode.com/viewnews/2017-05-28_NewHomePricesAreOver50HigherInCanadaThanTheUS.html iehi-feed-62312 Sat, 27 May 2017 14:57:25 GMT Most millennials want to buy a home--but are 10+ years off... http://bankimplode.com/viewnews/2017-05-27_Mostmillennialswanttobuyahomebutare10yearsoff.html New data from Apartment List shows that, although 80 percent of millennials would like to purchase real estate, very few are in a good position to buy, largely because they have nothing saved. According to the report, "68 percent of millennials said they have saved less than $1,000 for a down payment. Almost half, or 44 percent, of millennials said they have not saved anything for a down payment."

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Depending on where they are looking to buy, given their current savings rate, millennials are 10 years or more away from home ownership. Young residents of pricey San Jose, Calif., will have to be exceptionally patient: Odds are they won't be in a good position to buy an apartment there for "almost 24 years," or "until the year 2041."

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It's not clear to what degree most millennials realize the magnitude of the problem. They acknowledge that buying is a long-term goal, and over 70 percent cite "affordability" as the main problem, but they also seem unduly optimistic about when they think they'll be able to buy. For example, a majority of those surveyed said that buying real estate is in their five-year plan.

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The discrepancy might come, in part, from the fact that millennials don't fully understand how expensive real estate has become, especially in desirable cities, or how high down payments are

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iehi-feed-62309 Fri, 26 May 2017 16:12:51 GMT Japan, South Korea drive global bitcoin prices as retail investor pile in http://bankimplode.com/viewnews/2017-05-26_JapanSouthKoreadriveglobalbitcoinpricesasretailinvestorpilein.html Japanese and South Korean buying helped drive the price of bitcoin to an all-time high this week, with the digital currency more than doubling its value since the start of the year, analysts and market practitioners said on Friday.

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In Japan and South Korea, among the largest markets for bitcoin globally, bitcoin traded at a premium of more than $300 higher above the global average, according to CryptoCompare.com.

The rally appeared to have been driven by new buying from smaller retail investors, suggesting bitcoins are increasingly viewed among the general investing public as an alternative asset class much like gold, analysts said.

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iehi-feed-62308 Fri, 26 May 2017 16:09:55 GMT Fed faces a 'surprise' problem on U.S. inflation http://bankimplode.com/viewnews/2017-05-26_FedfacesasurpriseproblemonUSinflation.html iehi-feed-62307 Fri, 26 May 2017 14:56:06 GMT Romer Sidelined at World Bank as Establishment Economists Bristle at Reform http://bankimplode.com/viewnews/2017-05-26_RomerSidelinedatWorldBankasEstablishmentEconomistsBristleatRefor.html Romer pioneered research into "endogenous growth," examining how the diffusion of knowledge boosts output. His name often comes up in short lists for the Nobel Prize in economics.

... But in recent years, his attacks on the credibility of macroeconomic models irritated many of his peers. His combativeness didn't endear him to some of the more than 600 economists who work in DEC, according to people familiar with the matter.

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But researchers didn't like the curt way Romer often conveyed his message, said two people familiar with the matter. Staff were upset by what they saw as his abrasive emails, and they didn't feel Romer listened to their concerns, these people said. Researchers were flummoxed by some of his stylistic hangups, including a distaste for the conjunction "and."

Romer was frustrated with what some see as the dense, convoluted style of many of the department's reports. He pushed researchers to write more clearly, using the active voice to be more direct.

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A study by Stanford University's Literary Lab in 2015 found the bank's use of language has become more "codified, self-referential, and detached from everyday language" since the bank's board of governors held their inaugural meeting in 1946. The study coined the term "Bankspeak," a vague "technical code" that symbolized the lender's organizational drift.

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iehi-feed-62304 Fri, 26 May 2017 14:18:50 GMT The investigation of Jared Kushner fits a very troubling pattern http://bankimplode.com/viewnews/2017-05-26_TheinvestigationofJaredKushnerfitsaverytroublingpattern.html iehi-feed-62303 Fri, 26 May 2017 00:34:13 GMT Trump's Budget Is a Waste of Everybody's Time http://bankimplode.com/viewnews/2017-05-25_TrumpsBudgetIsaWasteofEverybodysTime.html The Trump administration has until now said its planned tax cuts would pay for themselves by pushing economic growth to 3 percent a year -- a claim already seen as outlandish by every serious analyst, liberal and conservative alike. The budget appears to go one better: It says this boost in growth will be sufficient not just to maintain revenue (despite the cut in rates) but will actually raise revenue by $2 trillion over 10 years compared with current policy. Perhaps somebody just made a dumb mistake, counting the revenue from faster growth twice over. With this administration, it's wise not to rule it out.

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Trump's budget has been almost universally called dead on arrival. That may be an understatement. This plan, if you can call it that, was never capable of life. White House budgets are often set aside, yet still can guide deliberations in Congress, where tax and spending decisions actually get made. This budget serves no such purpose. It is simply an extended tweet, and a waste of everybody's time.

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iehi-feed-62302 Thu, 25 May 2017 22:53:51 GMT Paul Manafort's Lucrative Ukraine Years Are Central to the Russia Probe http://bankimplode.com/viewnews/2017-05-25_PaulManafortsLucrativeUkraineYearsAreCentraltotheRussiaProbe.html Until recently, Manafort had receded into the background as the uproar over Trump's firing of his national security adviser, Michael Flynn, and then the FBI director, James Comey, began to shake the White House.

But the Manafort story--a tale of pro-Russia players, political tradecraft and cunning financial maneuvers--has never gone away. The reason, in a word, is money. Manafort, who less than a year ago was playing a central role in the Trump campaign, made millions of dollars over a decade promoting Kremlin-friendly interests in Ukraine and beyond. No other Trump associate has profited as handsomely from ties to Russia-linked businessmen and politicians.

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Ukrainian prosecutors are investigating what they call a "criminal organization" set up by Yanukovych via bribes and theft of state assets before he fled to Moscow after the killing of more than 100 protesters in 2014, and they are looking at what role Manafort may have played in the suspected scheme. They've repeatedly asked the FBI for help to question Manafort as part of their inquiry into a New York law firm in connection to a report that largely defended the Tymoshenko prosecution.

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In the five-year period from 2007 to 2012, Manafort was paid at least $12.7 million, according to a handwritten Party of Regions ledger found later in its head office. Ukraine's anti-corruption bureau and the FBI are investigating whether the ledger reflected any illegal payments to Manafort and to others. Manafort's spokesman says that after being paid he had many expenses and so the payment figure does not represent profit. One payment to Manafort on the ledger matches an invoice he signed in 2009 to sell $750,000 of computers to a Belize-registered company called Neocom Systems Ltd., according to documents obtained by Leshchenko from Manafort's Kiev office.

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Even after Russia annexed Crimea in 2014 and Yanukovych fled to Russia, Manafort returned to Ukraine 17 times, earning at least $1 million to help reelect pro-Russia politicians, according to a party official who worked with him. Manafort's spokesman declined to comment on that payment.

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While working in Ukraine, Manafort earned millions from a side private equity fund with Deripaska, according to a lawsuit by Deripaska, who is suing Manafort in the Cayman Islands over the soured business partnership. Deripaska declined to comment.

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"He was going for visceral issues and an emotional reaction," says Kateryna Yushchenko, the American-born wife of former President Viktor Yushchenko and a onetime State Department and White House official. "When I confronted his people about it, they said, ‘That's politics.' I said this isn't like gun rights or abortion. Here it could lead to war."

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Within months of his victory, Yanukovych ordered criminal investigations into Tymoshenko, culminating in a sentence of seven years in jail. Condemned around the world, her prosecution would become a flashpoint in negotiations between Ukraine and the European Union on an association agreement.

Manafort was closely involved in recruiting the firm of Skadden Arps Slate Meagher & Flom LLC on behalf of the Ukrainian Justice Ministry to write a lengthy report on Tymoshenko's prosecution. He met with Justice Minister Oleksandr Lavrynovych to go over the contract with Skadden and emailed with Skadden partner Greg Craig, according to documents uncovered by Ukrainian prosecutors. The ministry agreed to pay Skadden a mere $12,000, just below the threshold requiring it to go to a public tender. But much more money was to come to Skadden.

Prosecutors believe Manafort drew up a six-page media strategy plan with FTI Consulting on how to use the Skadden report, based on documents they have examined. The report, released at the end of 2012, criticized some aspects of the case but concluded that the evidence supported her conviction and that her due process rights hadn't been violated. After the document's release, Skadden signed a new contract with the ministry in 2013 that envisaged "additional work" and paid the firm $1 million, the prosecutors say, noting that no additional work was done. FTI declined to comment.

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iehi-feed-62301 Thu, 25 May 2017 22:21:11 GMT For China Now, the Only Question Is the Size of the Bill http://bankimplode.com/viewnews/2017-05-25_ForChinaNowtheOnlyQuestionIstheSizeoftheBill.html iehi-feed-62299 Thu, 25 May 2017 17:08:38 GMT Fed Minutes Hint at Rate Hike in June, Slow Balance Sheet Unwind http://bankimplode.com/viewnews/2017-05-25_FedMinutesHintatRateHikeinJuneSlowBalanceSheetUnwind.html Minutes from the Federal Reserve's May 2-3 meeting showed that policymakers anticipate a rate hike soon, possibly in the central bank meeting next month. At the same time, by agreeing to shrink the balance sheet gradually over a number of years, the Federal Open Market Committee has minimized possibilities of market gyrations and its impact on economic growth.

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The Fed also moved toward a consensus on a proposal to gradually unwind the massive balance sheet built up over the course of the asset buying program that was the core of Fed's quantitative strategy... But the Fed does not want to reduce the massive $4.5 trillion balance sheet at one go. Rather, it plans to let it shrink as the securities mature. The Fed officials did agree to end the reinvestment of principal of maturing securities in slow but increasing stages. Such an approach will stay on auto-pilot, until and unless there is major deterioration in the domestic economic front.

Even a maturation-based unwind is going to be a lot for the market to swallow... it has become dependent upon the Fed soaking up a huge amount of issuance in the last 9 years...

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iehi-feed-62298 Thu, 25 May 2017 17:01:10 GMT OPEC, non-OPEC extend oil output cut by nine months to fight glut http://bankimplode.com/viewnews/2017-05-25_OPECnonOPECextendoiloutputcutbyninemonthstofightglut.html OPEC and non-members led by Russia decided on Thursday to extend cuts in oil output by nine months to March 2018 as they battle a global glut of crude after seeing prices halve and revenues drop sharply in the past three years.

OPEC's cuts have helped to push oil back above $50 a barrel this year, giving a fiscal boost to producers, many of which rely heavily on energy revenues and have had to burn through foreign-currency reserves to plug holes in their budgets...

The price rise this year has spurred growth in the U.S. shale industry, which is not participating in the output deal, thus slowing the market's rebalancing with global crude stocks still near record highs.

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iehi-feed-62297 Thu, 25 May 2017 14:46:33 GMT The great London property squeeze sees spillover into substandard housing http://bankimplode.com/viewnews/2017-05-25_ThegreatLondonpropertysqueezeseesspilloverintosubstandardhousing.html There is a direct link between the wealth of those at the top and the capital's housing crisis -- which affects not just those at the bottom but the majority of Londoners who struggle to buy properties, or pay extortionate rents. The 2008 financial crash created a new politics of space, in which people on low incomes are forced out of their homes by rising rent and the wealthy are encouraged to use property for profit. These trends are not limited to London. The same currents of global capital are also transforming San Francisco, New York and Vancouver, European cities from Berlin to Barcelona and towns and cities in the UK from Bristol and Manchester to Margate and Hastings. This isn't gentrification, it's another phenomenon entirely. Global capital is being allowed to reconfigure the country.

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The shortage of affordable housing has given rise to a range of problems in private rented accommodation, from slum landlords and "beds in sheds" to middle-class Londoners under the age of 45 who can no longer afford to live in the city. A generation is being affected and our essential services, such as hospitals and schools, and the majority of our small and medium-sized businesses, are being undermined.

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Although it is notoriously difficult to get accurate figures, a 2013 report by the Migrants' Rights Network concluded that Ealing may have as many as 60,000 occupants in illegal structures, and Slough borough council, which deployed planes equipped with thermal imaging equipment in an effort to spot them, may have as many as 6,000 beds in sheds. In 2013 a BBC investigation found estate agents renting out beds in sheds in Willesden Green and Harrow.

Newham's licensing scheme has been widely praised, and many councils have expressed wishes to emulate it. But in 2015, to the delight of landlords, the government made it clear it did not want to extend the scheme's use, with then housing minister Brandon Lewis describing licensing as a "tenants' tax".

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iehi-feed-62296 Thu, 25 May 2017 14:36:15 GMT Rickards: Signs of Bubble Capitulation Pile Up; Extent Exceeds 1929 http://bankimplode.com/viewnews/2017-05-25_RickardsSignsofBubbleCapitulationPileUpExtentExceeds1929.html iehi-feed-62295 Thu, 25 May 2017 14:27:24 GMT A 10% hike to mortgage payments would sink almost 3 quarters of homeowners, Manulife says http://bankimplode.com/viewnews/2017-05-25_A10hiketomortgagepaymentswouldsinkalmost3quartersofhomeownersMan.html iehi-feed-62294 Thu, 25 May 2017 14:26:16 GMT China "National Team" Rescues Stocks As Downgrade Crushes Commodities http://bankimplode.com/viewnews/2017-05-25_ChinaNationalTeamRescuesStocksAsDowngradeCrushesCommodities.html iehi-feed-62293 Thu, 25 May 2017 14:22:25 GMT Toronto Homeowners Are Suddenly in a Rush to Sell http://bankimplode.com/viewnews/2017-05-25_TorontoHomeownersAreSuddenlyinaRushtoSell.html After a double whammy of government intervention and the near-collapse of Home Capital Group Inc., sellers are rushing to list their homes to avoid missing out on the recent price gains. The new dynamic has buyers rethinking purchases and sellers asking why they aren't attracting the bidding wars their neighbors saw just a few weeks ago in Canada's largest city.

"We are seeing people who paid those crazy prices over the last few months walking away from their deposits," said Carissa Turnbull, a Royal LePage broker in the Toronto suburb of Oakville, who didn't get a single visitor to an open house on the weekend. "They don't want to close anymore."

Home Capital may be achieving what so many policy measures failed to do: cool down a housing market that soared as much as 33 percent in March from a year earlier. The run on deposits at the Toronto-based mortgage lender has sparked concerns about contagion, and comes on top of a new Ontario tax on foreign buyers and federal government moves last year that make it harder to get a mortgage.

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The fate of Home Capital, known as a "b-lender" because it caters to new immigrants and other homebuyers who can't get a traditional bank loan, remains in question. A run on deposits and stock plunge began late last month after regulators accused the company of misleading investors about potentially fraudulent mortgage applications.

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iehi-feed-62292 Thu, 25 May 2017 14:19:17 GMT China's Rating Cut Exposes Firms Hooked on Dollar Borrowing http://bankimplode.com/viewnews/2017-05-25_ChinasRatingCutExposesFirmsHookedonDollarBorrowing.html While Chinese companies' foreign-currency debt is only a fraction of the $9 trillion local bond market, China Inc. is on pace for record dollar bond sales this year after the authorities' crackdown on financial leverage drove up borrowing costs at home. Overseas borrowing has also been part of the government's strategy to encourage capital inflows in a bid to ease the depreciation pressure on the yuan.

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Moody's lowered China's rating to A1 from Aa3 on Wednesday, citing a worsening debt outlook. Moody's also downgraded the ratings of 26 non-financial corporate and infrastructure government-related issuers by one level. China's Finance Ministry blasted the move as "absolutely groundless," saying the ratings company has underestimated the capability of the government to deepen reform and boost demand.

"The economy is dependent on policy stimulus and with that comes higher leverage," Marie Diron, associate managing director, Moody's Sovereign Risk Group, said on Bloomberg Television after the announcement. "Corporate debt is really the big part."

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