Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-64638 Mon, 18 Mar 2019 21:24:20 GMT The Fed has exacerbated America's new housing bubble: FT http://implode-explode.com/viewnews/2019-03-18_TheFedhasexacerbatedAmericasnewhousingbubbleFT.html Hyman Minsky would have had a field day with last week's US inflation numbers. One of the key points in the late, great economist's Financial Instability Hypothesis was that there are two kinds of prices -- prices for goods and services, and asset prices. Inflation in the two areas should, as a result, differ. And indeed they have, quite markedly. The latest Consumer Price Index figures show that almost all core inflation, which was weaker than expected, was in rent or the owner's equivalent of rent (up 0.3 per cent). Core goods inflation, meanwhile, was down 0.2 per cent. Very simply, this means that the housing market is once again completely out of sync with the rest of the economy.

A decade on from the subprime bubble, housing, which is not only shelter but also the biggest financial asset for most Americans, is the only major component of the CPI with a national inflation rate that is consistently above the overall number. Why is this? Because, just as Minsky would have predicted, loose monetary policy over the past several years buoyed assets, but didn't create meaningful new supply or, consequently, enough demand in construction and other home-related areas. The point is illustrated in an academic paper, "What the Federal Reserve got totally wrong about inflation and interest rate policy" from the Mario Einaudi Center for International Studies at Cornell University. As its author Daniel Alpert says: "What we have now is a form of inflation that's never been seen before -- it's all concentrated in housing."

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iehi-feed-64637 Sun, 17 Mar 2019 21:32:53 GMT NYC's Hudson Yards Is a Billionaire's Fantasy City http://implode-explode.com/viewnews/2019-03-17_NYCsHudsonYardsIsaBillionairesFantasyCity.html Architecture, like politics and war, springs from a million separate decisions made within the context of vast historical forces, decisions that can seem freer or more meaningful than they really are. At Hudson Yards, the path to the ribbon-cutting followed an inexorable trajectory based on impregnable financial logic. Underutilized space must be reclaimed for its highest and best use. The MTA needed cash. Costs were high, so potential profits had to be too. The most efficient way to finance and engineer the project was to hand it off to a single developer, who was only ever going to build a city as a luxury product. Each decision made the next one essentially foreordained.

At times, that relentless march of circumstance can produce results that look insane or visionary, depending on the month. Conceived in the wake of the 2008 recession and executed during the boom that followed, the megadevelopment opens onto a troubling future. The market for ultradeluxe condos is sagging, and we'll see whether that's one of the shocks that Hudson Yards is built to withstand. A dozen years ago, it seemed obvious that retail would prop up a shaky market for office space. Now the opposite is true. The 720,000-square-foot mall comes online even as storefronts are shuttering all over New York and Amazon threatens the whole concept of entering a shop with money and walking out with a shopping bag. On the other hand, businesses that were once squeamish about relocating to an uncertain frontier zone are now gobbling up square footage. Companies like Coach, L'Oréal, Warner Media, Wells Fargo, and Boston Consulting Group will cohabit with creations of the millennial boom like Stonepeak, and the demand for office space seems likely to outpace the current glut.

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iehi-feed-64636 Sun, 17 Mar 2019 17:03:11 GMT The Most Splendid Housing Bubbles in Canada Deflate | Wolf Street http://implode-explode.com/viewnews/2019-03-17_TheMostSplendidHousingBubblesinCanadaDeflateWolfStreet.html iehi-feed-64633 Fri, 15 Mar 2019 15:34:05 GMT Lawmakers Support Special Tax on Multimillion Dollar Second Homes in NYC http://implode-explode.com/viewnews/2019-03-15_LawmakersSupportSpecialTaxonMultimillionDollarSecondHomesinNYC.html There's speculation that after Kenneth C. Griffin, the hedge fund multibillionaire, bought a Central Park South apartment for $238 million, it became a little more feasible to suggest that maybe people worth $10 billion could afford to pay a little more in taxes so the roads, bridges, and mass transit systems that keep the cities and their businesses running can be fixed in the supposedly greatest city in the world in the country of American Exceptionalism

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The New York Times explains why the tax makes sense in these cases and how the city is hurt right now without it. "The $238 million record purchase was a visceral reminder that when wealthy buyers like Mr. Griffin purchase expensive apartments as second homes or investments, New York City and the state get less financial benefits than if the home was owned as a primary residence. If the buyers live out of state, they are not subject to state or city income taxes, and do not pay New York sales tax while outside the state."

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iehi-feed-64632 Wed, 13 Mar 2019 22:10:54 GMT The housing market is turning: Millennials unhappy with purchases; CA supply at highest since 2012 http://implode-explode.com/viewnews/2019-03-13_ThehousingmarketisturningMillennialsunhappywithpurchasesCAsupply.html iehi-feed-64627 Sat, 09 Mar 2019 15:54:34 GMT Iconic Chrysler Building sold at a huge loss http://implode-explode.com/viewnews/2019-03-09_IconicChryslerBuildingsoldatahugeloss.html The Chrysler Building, the famous art deco New York skyscraper, will be sold for a small fraction of its previous sales price. The deal, first reported by The Real Deal, was for $150 million, according to a source familiar with the deal.

Mubadala, an Abu Dhabi investment fund, purchased 90% of the building for $800 million in 2008. Real estate firm Tishman Speyer had owned the other 10%.

The buyer is RFR Holding, a New York real estate company. Officials with Tishman and RFR did not immediately respond to a request for comments.

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The incentive to sell the building at such a huge loss was due to the soaring rent the owners pay to Cooper Union, a New York college, for the land under the building. The rent is rising from $7.75 million last year to $32.5 million this year to $41 million in 2028.

Meantime, rents in the building itself are not rising nearly that fast. While the building is an iconic landmark in the New York skyline, it is competing against newer office towers with large floor-to-ceiling windows and all the modern amenities.

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iehi-feed-64620 Mon, 04 Mar 2019 14:27:26 GMT Neighbors bash Emily Ratajkowski, hubby for 'dodging rent' http://implode-explode.com/viewnews/2019-03-04_NeighborsbashEmilyRatajkowskihubbyfordodgingrent.html iehi-feed-64618 Sat, 02 Mar 2019 22:48:59 GMT Why Trump Remains On the Grift So Hard: "His AGI Is Under $500k Per Year" - David Cay Johnston http://implode-explode.com/viewnews/2019-03-02_WhyTrumpRemainsOntheGriftSoHardHisAGIIsUnder500kPerYearDavidCayJ.html iehi-feed-64612 Thu, 28 Feb 2019 03:02:29 GMT Alexandria Ocasio-Cortez lays groundwork for Democrats to subpoena Trump's tax returns at Michael Cohen hearing http://implode-explode.com/viewnews/2019-02-27_AlexandriaOcasioCortezlaysgroundworkforDemocratstosubpoenaTrumps.html iehi-feed-64610 Wed, 27 Feb 2019 23:18:21 GMT Cohen Confirms Trump Made Illegal Payments in Campaign; Continued to Control Trump Org As Prez http://implode-explode.com/viewnews/2019-02-27_CohenConfirmsTrumpMadeIllegalPaymentsinCampaignContinuedtoContro.html Mr. Cohen's most damaging revelations related to Mr. Trump's personal involvement in a potential criminal conspiracy to violate campaign finance laws and cover up those offenses. This possible conspiracy was the subject of a comprehensive report issued by Citizens for Responsibility and Ethics in Washington, the watchdog organization that I direct. In the report, we detail how Mr. Trump could be personally liable for unlawful campaign contributions in the form of payments involving Mr. Cohen to silence women who claimed that they had affairs with Mr. Trump. These potential violations are no small matter. Rather, they appear to have been committed for the purpose of suppressing negative stories about a central issue of the campaign: Mr. Trump's attitudes toward and alleged mistreatment of women.

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The most compelling evidence produced by Mr. Cohen on Wednesday was not anything he said but two documents he produced: copies of two $35,000 checks he received in 2017, one signed by Allen Weisselberg, the chief financial officer of the Trump Organization, and Donald Trump Jr., the other by President Trump. With these and nine other payments over the course of that year, Mr. Cohen was "reimbursed" by the Trump Organization and President Trump for the money that Mr. Cohen spent to pay Ms. Clifford for her silence. The payments also included a $60,000 bonus for Mr. Cohen -- presumably a reward for his loyalty.

These checks are key. They corroborate Mr. Cohen's testimony and provide hard evidence that Mr. Trump and senior executives at the Trump Organization knew of and committed overt acts in furtherance of a conspiracy to violate campaign finance law and cover up those violations. Additionally, the checks are evidence that Mr. Trump knowingly made a false statement when he failed to report his liability to Mr. Cohen on his personal financial disclosure form in June 2017. This potential felony was committed while Mr. Trump was president.

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iehi-feed-64597 Thu, 21 Feb 2019 04:03:04 GMT Sellers are taking huge losses on Billionaires' Row. These are some of the biggest http://implode-explode.com/viewnews/2019-02-20_SellersaretakinghugelossesonBillionairesRowThesearesomeofthebigg.html Whereas just 7.7 percent of the 16,000 apartments resold in New York from 2014 to 2018 sold for an outright loss, that percentage rose to 39 percent -- 26 out of 66 -- for luxury apartment resales in Midtown.

"One of the things that I struggle to wrap my head around is why people continue to park money in high-end New York real estate when it's not a very lucrative asset class," StreetEasy senior economist Grant Long told the New York Post.

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iehi-feed-64593 Tue, 19 Feb 2019 21:16:40 GMT Worried about Costs & Slowdown? Amazon Scuttles HQ2 Altogether, Plunges NY City Real Estate Industry "Into Despair" | Wolf Street http://implode-explode.com/viewnews/2019-02-19_WorriedaboutCostsSlowdownAmazonScuttlesHQ2AltogetherPlungesNYCit.html [Not renewing the HQ2 search] means that Amazon has decided it didn't really need this big facility. Is it worried about retail sales not holding up? Is it fretting about competition from the biggest retailers in the US and elsewhere as they catch the drift of e-commerce? Is it worried about a slowdown at AWS, its big data-center money maker, now that the exuberance about the "cloud" is waning? Is it worried that in the future, investors will once again hound it about ballooning expenses, and hammer its stock price to smithereens? This was a move designed to keep operating expenses and capital expenditures from ballooning further. Laying off people is one thing when push comes to shove, but getting rid of a monstrous multi-billion-dollar HQ2 is another.

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Forget soaring rents for apartments, forget higher home prices, and surging rents for office and industrial space, forget booming commissions. That whole dream went up in smoke today -- in a market that has already come under pressure.

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iehi-feed-64590 Sun, 17 Feb 2019 23:18:13 GMT Why America's New Apartment Buildings All Look the Same http://implode-explode.com/viewnews/2019-02-17_WhyAmericasNewApartmentBuildingsAllLooktheSame.html iehi-feed-64573 Tue, 05 Feb 2019 04:59:14 GMT Federal prosecutors issue sweeping subpoena for documents from Trump inaugural committee, a sign of a deepening criminal probe http://implode-explode.com/viewnews/2019-02-04_FederalprosecutorsissuesweepingsubpoenafordocumentsfromTrumpinau.html ``Federal prosecutors in New York on Monday delivered a sweeping request for documents related to donations and spending by President Trump's inaugural committee, a sign of a deepening criminal investigation into activities related to the nonprofit organization.

A wide-ranging subpoena served on the inaugural committee Monday seeks an array of documents, including all information related to inaugural donors, vendors, contractors, bank accounts of the inaugural committee and any information related to foreign contributors to the committee, according to a copy reviewed by The Washington Post.

Only U.S. citizens and legal residents can legally donate to a committee established to finance presidential inaugural festivities.

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The subpoena -- issued by the U.S. attorney's office in the Southern District of New York -- indicates that prosecutors are investigating crimes related to conspiracy to defraud the United States, mail fraud, false statements, wire fraud and money laundering.

The subpoena also specifically seeks all communications with one donor, Los Angeles venture capitalist Imaad Zuberi, as well as the firm with which he is affiliated, Avenue Ventures. The company donated $900,000 to the inaugural committee, records show.

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The committee was chaired by real estate developer Tom Barrack Jr., a longtime friend of Trump's. Barrack, who is not mentioned by name in the subpoena, declined to comment.

The request for documents, first reported by ABC News, is a sign of another widening legal headache for Trump, whose business, personal charitable foundation and campaign are all under investigation by state and federal authorities.

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At Manafort's trial in Virginia in August, [Rick] Gates testified that it was "possible" that he stole money from the inaugural committee by submitting false expense reports for his work.

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iehi-feed-64567 Sun, 03 Feb 2019 21:16:36 GMT H&M to shutter 160 stores amid profit slump http://implode-explode.com/viewnews/2019-02-03_HMtoshutter160storesamidprofitslump.html iehi-feed-64565 Sun, 03 Feb 2019 01:12:55 GMT Manhattan Condo, Co-op Sales Down Again http://implode-explode.com/viewnews/2019-02-02_ManhattanCondoCoopSalesDownAgain.html [Elliman], which tracks residential market trends, said annual sales of condominiums and co-ops had the largest year-over-year decline since the financial crisis.

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"Inventory was up 11.8% from the same time last year, however all the gains occurred in the resale market. By contrast, new developments fell 10.6%, with developers pulling apartments out of active inventory."

The report also "paints a picture of a market slowdown across the board in Manhattan in 2018," notes The Real Deal. "Though big sales at ultraluxury buildings like 520 Park Avenue, 432 Park and 220 Central Park South have dominated the headlines, Elliman's new report found that price trend indicators all declined year-over-year in 2018, as the legacy contracts inked when the market was booming finally closed."

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arburg's report also shows a greater difference between asking prices and selling prices in the New York City real estate market. "Offers 20% and 25% below asking prices began to flow in, a phenomenon last seen in 2009,"

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iehi-feed-64564 Sun, 03 Feb 2019 01:09:31 GMT Trump sought a loan in 2016. Deutsche Bank reportedly turned him down http://implode-explode.com/viewnews/2019-02-02_Trumpsoughtaloanin2016DeutscheBankreportedlyturnedhimdown.html iehi-feed-64561 Fri, 01 Feb 2019 01:56:34 GMT Why Technology Hasn't Fixed the Housing Crisis http://implode-explode.com/viewnews/2019-01-31_WhyTechnologyHasntFixedtheHousingCrisis.html Billions have been flowing into a corner of the tech industry focused on the housing market. And now there are start-ups to help landlords manage properties, or homeowners manage sales, or tenants manage their packages.

But hardly any of it touches the central problem of housing: For many people, it costs too much.

"None of that investment, nor the solutions that those companies are offering, will fundamentally change the dynamic of the housing market in a way that increases housing affordability," said Matt Hoffman, the vice president for innovation at the national housing nonprofit Enterprise Community Partners, surveying what venture capitalists have come to call "proptech."

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"This looking for a tech solution -- I understand why people want it," Ms. Brenner said. But she doesn't believe it exists. The housing crisis is a policy problem, she says, one that Nimbyism, zoning laws, land use restrictions and tax policies have made worse. She fears that the dream of a tech fix will distract voters and politicians from those culprits.

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It now costs as much as $500,000 per unit to build low-income housing in the most expensive markets. Savings in the cost of construction could help developers of such housing stretch subsidies further. Cheaper construction could also change the math in markets where developers say it's also not profitable to build middle-class housing.

But Mr. Hoffman is skeptical that construction tech can fundamentally change affordability; market-rate developers have no incentive to pass those savings on to renters or home buyers, he said

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It's notable this month that as both Microsoft and the Chan Zuckerberg Initiative pledged major new housing investments, neither proposed spending its money on tech fixes. Both announced investment funds to help affordable housing developers. And both plan to push for local policies that would make it easier to expand housing.

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iehi-feed-64547 Sun, 27 Jan 2019 00:08:25 GMT Most expensive home in the US sells for $238 million to Ken Griffin (WHICH IS A PRICE CUT!) http://implode-explode.com/viewnews/2019-01-26_MostexpensivehomeintheUSsellsfor238milliontoKenGriffinWHICHISAPR.html The most expensive home in the country sold in New York for $238 million. Hedge fund billionaire Ken Griffin closed on the Manhattan property at 220 Central Park South on Wednesday his spokesperson said.

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Miller said when he first heard about the property at 220 Central Park South in 2014 it was listed for $250 million. "The sale for $238 million has nothing to do with the current market. It has everything to do with 2015, which was around peak luxury," he said. "In New York the top end is softening right now because of over-development."

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iehi-feed-64531 Wed, 16 Jan 2019 01:32:35 GMT Why mortgage lending at Wells Fargo, Chase and Citi plunged http://implode-explode.com/viewnews/2019-01-15_WhymortgagelendingatWellsFargoChaseandCitiplunged.html With earnings from three of the four biggest banks in, one metric stands in sharp relief. Mortgage lending just keeps plunging. In the fourth quarter, mortgage originations at Citi C, +4.16%   were down 23% compared to a year ago. At Wells Fargo WFC, -1.55%  , they were 28% lower, and at JPMorgan Chase JPM, +0.73%  , they were down 30%.

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What's going on? Here's how JPMorgan CFO Marianne Lake described it in her prepared remarks to analysts Wednesday: "Home Lending revenue was down 8%, driven by lower net reduction revenue in a low volume highly competitive environment."

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Mortgage lending is down, mostly because there aren't enough houses for people to buy to sustain a healthy housing market -- although rising rates aren't helping either. Also thanks to those higher rates, the long refinance boom is over

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