IEHI Feed: The Bank Implode-o-Meter http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-64955 Sat, 21 Sep 2019 12:49:22 GMT Bernie Sanders Proposes 25% House Flipping Tax http://bankimplode.com/viewnews/2019-09-21_BernieSandersProposes25HouseFlippingTax.html iehi-feed-64954 Thu, 19 Sep 2019 18:47:43 GMT Powell says the Fed may have to resume balance sheet growth http://bankimplode.com/viewnews/2019-09-19_PowellsaystheFedmayhavetoresumebalancesheetgrowth.html Powell's comment that the central bank may have to start to organically grow the size of its balance sheet comes after officials said earlier this year that they were considering a new program that would allow banks to exchange Treasurys for reserves. Such a move, they hoped, would guarantee liquidity during difficult times but also would help the central bank decrease the size of its nearly $4 trillion balance sheet.

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Powell's 2018 comments that the Fed's balance sheet reduction was on "autopilot" sparked a market meltdown that soured markets for much of the quarter. Since October 2017, the Fed has been allowing a set level of proceeds from Treasurys and mortgage-backed securities holdings to roll off each month.

Total capitulation.

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iehi-feed-64952 Wed, 18 Sep 2019 23:23:05 GMT For the second day in a row, the New York Fed injected billions of dollars into the market http://bankimplode.com/viewnews/2019-09-18_FortheseconddayinarowtheNewYorkFedinjectedbillionsofdollarsintot.html For the second day in a row, the New York Federal Reserve injected a huge sum of money into the financial system in a bid to calm stress that has emerged in the overnight lending market.

The Fed on Wednesday poured another $75 billion into the market following a $53 billion rescue by the NY Fed on Tuesday. Overnight lending rates have suddenly spiked, and the Fed is acting to bring them back down to keep markets functioning smoothly.

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The fact the Fed has needed to pump $128 billion into the system over the past two days shows how a crack has emerged in a seldom-discussed corner of Wall Street that is central to the global financial system. It raises concern that the Fed is losing its grip on the short-term rates the central bank is supposed to control.

"It shows you the plumbing is broken," said Michael Block, market strategist at Third Seven Advisors. "It's nice they are recognizing this and that they have safety valves."

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iehi-feed-64951 Wed, 18 Sep 2019 22:06:46 GMT S&P 500 ends slightly higher after Fed cuts, gives mixed signals http://bankimplode.com/viewnews/2019-09-18_SP500endsslightlyhigherafterFedcutsgivesmixedsignals.html iehi-feed-64949 Tue, 17 Sep 2019 22:48:59 GMT A crack emerges in financial markets: The New York Fed spends $53 billion to rescue the overnight lending market http://bankimplode.com/viewnews/2019-09-17_AcrackemergesinfinancialmarketsTheNewYorkFedspends53billiontores.html Borrowing rates skyrocketed on Tuesday in a corner of the markets the public rarely notices but that is critical to the functioning of the global financial system. The spike in overnight borrowing rates forced the New York Federal Reserve to come to the rescue with a special operation aimed at easing stress in financial markets.

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It was the NY Fed's first such rescue operation in a decade, the last occurring in late 2008.

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On Tuesday morning, the NY Fed launched what's called an "overnight repo operation," during which the central bank attempts to ease pressure in markets by purchasing Treasuries and other securities. The goal is to pump money into the system to keep borrowing costs from creeping above the Fed's target range .

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The episode demonstrates evidence of emerging strains in financial markets and raises concern that the Federal Reserve could be losing its grip on short-term rates.

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The NY Fed announced plans late Tuesday to hold another repurchase agreement operation on Wednesday that would aim to repurchase up to an additional $75 billion.

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The rate on overnight repurchase agreements hit 5% on Monday, according to Refinitiv data. That's up from 2.29% late last week and well above the target range set in July by the Federal Reserve, which is 2% to 2.25%. The surge continued Tuesday, with the overnight rate hitting a high of 10% before the NY Fed stepped in.

Although it doesn't get as much attention as the Dow or the 10-year Treasury rate, this overnight market plays a central role in modern finance. It allows banks to quickly and cheaply borrow money, for short periods of time, often to buy bonds like Treasuries. This market broke down during the 2008 financial crisis.

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"No one knows why this is happening," Jim Bianco CEO of Bianco Research, said on Twitter. "If it persists more than another day or two, it will be a problem."

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iehi-feed-64947 Tue, 17 Sep 2019 14:27:01 GMT WeWork to Delay IPO Amid Suspicion It Is Not Actually a Tech Company Worth $47 Billion http://bankimplode.com/viewnews/2019-09-17_WeWorktoDelayIPOAmidSuspicionItIsNotActuallyaTechCompanyWorth47B.html iehi-feed-64946 Tue, 17 Sep 2019 03:02:12 GMT U.S. charges JPMorgan metals traders over alleged precious metals market manipulation http://bankimplode.com/viewnews/2019-09-16_USchargesJPMorganmetalstradersoverallegedpreciousmetalsmarketman.html The Department of Justice charged two current and one former JPMorgan Chase & Co executives on Monday with alleged racketeering and manipulating prices of metals such as gold, silver, platinum and palladium between 2008 and 2016

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In a statement and in the indictment, prosecutors described how the trio executed "thousands" of unlawful trading sequences that included "layering" deceptive orders at different prices in rapid succession. Prosecutors also described attempts to influence market prices toward specific price points to trigger or avoid triggering options.

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iehi-feed-64945 Tue, 17 Sep 2019 02:59:47 GMT The We Company reportedly will put its public offering on hold http://bankimplode.com/viewnews/2019-09-16_TheWeCompanyreportedlywillputitspublicofferingonhold.html iehi-feed-64944 Mon, 16 Sep 2019 22:24:18 GMT Donald Trump is a deeply stupid man who routinely gets his ass kicked on the world stage http://bankimplode.com/viewnews/2019-09-16_DonaldTrumpisadeeplystupidmanwhoroutinelygetshisasskickedonthewo.html Trump wanted a trade war with China. Because he thought he could bluster and bully and get his way. But like the rest of the world, China is laughing at Trump, when they're not scratching their heads because Trump is so deeply stupid, and his administration so profoundly incompetent that China doesn't even know with whom to negotiate. But Trump got his trade war. Which he is losing. Because he is a deeply stupid man.

Trump's trade war already has cost 300,000 American jobs. And every time he opens his mouth about China, the American stock markets get spooked. And then after threatening to escalate his trade war, Trump backed down, and now desperately wants to find a way out of yet another crisis that is entirely of his own making. Because he has no idea what he's doing. Because he is a deeply stupid man who routinely gets his ass kicked on the world stage.

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iehi-feed-64942 Mon, 16 Sep 2019 14:03:11 GMT Former Mulholland Group CFO Pleads Guilty to Fraud http://bankimplode.com/viewnews/2019-09-16_FormerMulhollandGroupCFOPleadsGuiltytoFraud.html iehi-feed-64941 Sun, 15 Sep 2019 23:24:23 GMT The Trump Admin's Fannie and Freddie "Reform" Plan is A Cronyism Rehash http://bankimplode.com/viewnews/2019-09-15_TheTrumpAdminsFannieandFreddieReformPlanisACronyismRehash.html It's official: The Trump administration has a plan to deal with mortgage giants Fannie Mae and Freddie Mac -- by returning them to the same quasi-governmental form that set them up for failure in the 2008 financial crisis. If executed, it's likely to be a win for a small coterie of hedge funds, and a big loss for everybody else.

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There are better options. For example, Fannie Mae and Freddie Mac could be merged into a single, fully government-owned corporation that would transfer most of its credit risk to private investors, retaining just the catastrophic risk that only the government can bear. This would get private capital involved without letting it so easily shift risk to taxpayers. Pricing the guarantee correctly would be easier. This in turn would promote more competition from completely private lending channels. As it happens, Fannie Mae and Freddie Mac have already been moving in this direction, issuing special credit-risk-transfer securities and creating a common mortgage-securitization platform.

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iehi-feed-64940 Sun, 15 Sep 2019 12:22:48 GMT Former NYPD Officer Pleads Guilty To Tax Fraud http://bankimplode.com/viewnews/2019-09-15_FormerNYPDOfficerPleadsGuiltyToTaxFraud.html iehi-feed-64939 Fri, 13 Sep 2019 22:58:40 GMT In Our Insane System, It Harms The Working Poor When They Save For Retirement http://bankimplode.com/viewnews/2019-09-13_InOurInsaneSystemItHarmsTheWorkingPoorWhenTheySaveForRetirement.html ... most low-income workers receive benefits from one or more government transfer programs. Because many government programs have means tests, low earners who build even modest savings could disqualify themselves for thousands of dollars in government benefits.

An Urban Institute analysis found that for a married couple with two children, increasing the household's liquid assets from below $1,000 to between $1,000 and $2,000 would reduce annual benefits from means-tested transfer programs by almost $3,000. IRAs generally count as liquid assets because they can be readily converted into cash (with a penalty), though states have some leeway on how to apply means testing.

There's another risk: once low earners see their take-home pay reduced via automatic enrollment, they may borrow to maintain their standard of living. Recent research found that when federal employees automatically enrolled in their 401(k)-type retirement plan, employee contributions indeed rose. But four years following auto-enrollment, there wasn't any statistically significant increase in those employees' net worth. While the researchers' data were incomplete, the results hinted that less-educated workers may have borrowed more via higher credit cards, auto or mortgage loans. State auto-IRA plans will enroll many more low-wage workers than the federal government plans, so states should investigate how these employees' total household finances react, not simply laud increases in retirement plan balances.

Does this mean states should abandon their auto-IRA plans? No. But they need to rethink the idea that everyone should be saving for retirement at all times of their lives, regardless of income. It just doesn't work that way.

So glad to see this coverage, finally. One of many examples of how the "conventional" financial advice and assumptions do not apply to the large and growing segment of the population that has fallen out of, or cannot attain "middle class" or better status.

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iehi-feed-64938 Fri, 13 Sep 2019 22:35:16 GMT $1 Billion in Suspicious Sackler Family Wire Transfers; Anonymous Corporate Shells and Trusts Discovered http://bankimplode.com/viewnews/2019-09-13_1BillioninSuspiciousSacklerFamilyWireTransfersAnonymousCorporate.html Earlier this week, thousands of municipal governments and nearly two dozen states tentatively reached a settlement with the Sackler family and the company it owns, Purdue Pharma, maker of OxyContin. But the attorneys general of a majority of states, including New York and Massachusetts, are balking at the proposed deal, contending that the Sackler family has siphoned off company profits that should be used to pay for the billions of dollars in damage caused by opioids.

The wire transfers are part of a lawsuit against Purdue and individual Sacklers in New York. Letitia James, now the state's attorney general, had issued subpoenas last month to 33 financial institutions and investment advisers with ties to the Sacklers in an effort to trace the full measure of the family's wealth.

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Forbes has estimated that the family fortune is worth $13 billion, a figure the family has not disputed, but many state attorneys general believe that the family has far more hidden away, as a safeguard against the cascade of litigation.

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In addition to the thousands of lawsuits in state and federal court aimed at Purdue itself, some 26 states have named the Sacklers individually, with more, most recently North Carolina, having announced they are about to pursue family members as well.

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A series of transfers involving Mortimer D.A. Sackler, a former Purdue board member, was highlighted in the filings. In one case, $64 million was transferred in 2009 from a previously unknown trust called Purdue Pharma Trust MDAS, through a Swiss bank account, and then to Mr. Sackler, the filing said.

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In a letter to the court Friday, a lawyer in the attorney general's office, David E. Nachman, wrote: "Already, these records have allowed the state to identify previously unknown shell companies that one of the Sackler defendants used to shift Purdue money through accounts around the world and then conceal it in at least two separate multimillion-dollar real estate investments back here in New York, sanitized (until now) of any readily detectable connections to the Sackler family."

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iehi-feed-64937 Fri, 13 Sep 2019 16:14:02 GMT One in Four of New York's New Luxury Apartments Are Unsold As 3-Year Market Downturn Deepens http://bankimplode.com/viewnews/2019-09-13_OneinFourofNewYorksNewLuxuryApartmentsAreUnsoldAs3YearMarketDown.html Among the more than 16,200 condo units across 682 new buildings completed in New York City since 2013, one in four remain unsold, or roughly 4,100 apartments -- most of them in luxury buildings, according to a new analysis by the listing website StreetEasy.

"I think we're being really conservative," said Grant Long, the website's senior economist, noting that the study looked specifically at ground-up new construction that has begun to close contracts. Sales in buildings converted to condos, a relatively small segment, were not counted, because they are harder to reliably track. And there are thousands more units in under-construction buildings that have not begun closings but suffer from the same market dynamics.

Projects have not stalled as they did in the post-recession market of 2008, and new buildings are still on the rise, but there are signs that some developers are nearing a turning point.

Already the prices at several new towers have been reduced, either directly or through concessions like waived common charges and transfer taxes, and some may soon be forced to cut deeper. Tactics from past cycles could also be making a comeback: bulk sales of unsold units to investors, condos converting to rentals en masse, and multimillion-dollar "rent-to-own" options for sprawling apartment... The slowdown is uneven and some projects are faring better than others, but for well-heeled buyers there is no shortage of discounts and sweeteners to be had.

... the city's flagging condo market [...] peaked about three years ago amid a glut of inventory. Now the market could face new obstacles, from growing fears of a recession, to changes in tax law and political instability heading into an election year.

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Moreover, a growing share of condos sold in recent years have been quietly re-listed as rentals by investors who bought them and are reluctant to put them back on the market. Of the 12,133 new condos sold between January 2013 and August 2019, 38 percent have appeared on StreetEasy as rentals.

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The downturn has been hardest on the ultraluxury market, which kickstarted the trend toward bigger and fancier apartments more than six years ago. The super-tall One57 tower, completed in 2014 and considered the forerunner of Billionaires' Row, a once largely commercial corridor around 57th Street in Midtown, remains about 20 percent unsold... "That's mind-blowing," Mr. Miller said, because the building actually began marketing eight years ago, in 2011, and a typical building might sell out in two to three years in a balanced market.

In an analysis of seven luxury towers on and around Billionaires' Row, including pending sales, almost 40 percent of units remain unsold... [the analysis shows] there are over 9,000 unsold new units in Manhattan [including] so-called "shadow inventory," which developers strategically do not list for sale to hold off for a stronger market. At the current pace of sales, it would take nine years to sell them... New development is also performing worse than the resale market. From January to late August, there was a 35 percent drop in the number of contracts signed for new development at or above $4 million, compared to the same period last year...

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iehi-feed-64935 Fri, 13 Sep 2019 15:56:05 GMT Gold tallies a back-to-back gain after ECB unleashes basket of easy-money measures; Fed under pressure http://bankimplode.com/viewnews/2019-09-13_GoldtalliesabacktobackgainafterECBunleashesbasketofeasymoneymeas.html Gold futures marked a second consecutive gain Thursday after the European Central Bank cut eurozone interest rates and delivered a batch of measures intended to boost the region's sluggish economy -- bullish moves for bullion. The ECB cut its deposit rate further into negative territory, decreasing it by 10 basis points to negative 0.5%, while also announcing it would restart its monthly bond-buying program as it attempts to juice inflation and European expansion.

"Gold certainly welcomed the ECB stimulus," said Craig Erlam, a senior market analyst at Oanda. "Ultimately, global easing like we're seeing now has been bullish for gold and that's exactly what we're seeing right now."

December gold on Comex gained $4.20 an ounce, or 0.3%, to settle at $1,507.40 an ounce ... Silver for December delivery, meanwhile, added nearly a penny, or 0.04%, at $18.177 an ounce...

"Central banks around the world have been easing, and will continue to do so, and that's why gold has been making such strides higher with only modest corrections along the way," Erlam said in a market update.

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iehi-feed-64934 Fri, 13 Sep 2019 15:25:57 GMT Trump Is Pushing the U.S. Toward Negative Interest Rates http://bankimplode.com/viewnews/2019-09-13_TrumpIsPushingtheUSTowardNegativeInterestRates.html ... what Trump is saying is, "Boneheads, lower the interest rates down to zero so that we can refinance the United States' debt and feel wealthier. In fact, lower the rate down to negative." So that's his whole purpose first of all. Treasury debt under Trump has grown by around $2.6 trillion already.

You might know that I have an opinion that under every eight-year president in the United States, the national debt doubles. It's been that way roughly back to Reagan. So we'll see if that holds true with Trump. He's well on his way

... the interest rate should compensate you for the risk of loaning to the nation. And now those rewards for loaning money have gone down so low that they've actually gone negative where it's a privilege to loan money to a country.

I'm not so sure that in the long run that holds up. But it is the case right now. And I think the U.S. is going to be the next one to follow.''

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iehi-feed-64933 Fri, 13 Sep 2019 14:54:48 GMT 'Stop the WeWork deal' -- Cramer says embattled IPO could wreck rally http://bankimplode.com/viewnews/2019-09-13_StoptheWeWorkdealCramersaysembattledIPOcouldwreckrally.html CNBC's Jim Cramer said on Friday that WeWork should pull its embattled initial public offering because the negative sentiment around slashing its valuation could be contagious in the overall stock market.

"Stop the WeWork deal," Cramer said on "Squawk Box." "We don't want that deal. I just wish they would go away."

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"I don't want WeWork at any price," Cramer said. "There are certain deals that can come and they can just really take the air out of any market."

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WeWork's plans to move forward despite the reported advice from its major investor SoftBank, which will likely face a multibillion dollar write down if the company debuts at a valuation between $15 billion and $20 billion. SoftBank invested $2 billion in WeWork in January at a valuation of $47 billion. On Friday, CNBC's David Faber was hearing the valuation could be $15 billion or lower.

It's fascinating and telling that Cramer is mostly interested in the effect on the wider market -- the level of anxiety about keeping the market propped up at all costs has reached a fever pitch.

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iehi-feed-64932 Thu, 12 Sep 2019 21:23:12 GMT Ditech Bankruptcy Deal Assures Ditech's Sale http://bankimplode.com/viewnews/2019-09-12_DitechBankruptcyDealAssuresDitechsSale.html iehi-feed-64930 Thu, 12 Sep 2019 15:11:53 GMT ECB Blinks; Revives QE and Cuts Rates Deeper Below Zero http://bankimplode.com/viewnews/2019-09-12_ECBBlinksRevivesQEandCutsRatesDeeperBelowZero.html The European Central Bank cut interest rates further below zero and revived bond purchases after President Mario Draghi overcame critics of his stimulus policies to make a final run at reflating the euro-area economy.

The ECB reduced the deposit rate to minus 0.5% from minus 0.4%, and said it'll buy debt from Nov. 1 at a pace of 20 billion euros ($22 billion) a month for as long as necessary to hit its inflation goal.

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The ECB changed its guidance on interest rates to say they'll stay at present or lower levels until the outlook for inflation "robustly" converges to its goal of just below 2%. It previously expected borrowing costs to stay unchanged until mid-2020. It also scrapped a 10-basis point rate premium previously attached to its long-term loan program.

The actions prompted U.S. President Donald Trump to tweet that the ECB is "acting quickly" while the Federal Reserve "sits, and sits, and sits." That's in line with his strategy of calling on the Fed to cut rates aggressively. The Fed is likely to lower borrowing costs next week for the second time this year, as central banks around the world ease to combat the spreading weakness.

Apparently no recessions will be allowed. Astounding.

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