• Category Archives Banking
  • This Michigan Bank Just Brought Back The Zero-Down Mortgage; They’ll Even Cover Your Closing Costs

    A small savings bank in Michigan, Flagstar Bank, has come up with a genius, innovative new mortgage product that they believe is going to be great for their investors and low-income housing buyers: the “zero-down mortgage.” What’s better, Flagstar is even offering to pay the closing costs of their low-income future mortgage debtors. Here’s more from HousingWire:
    Under the program, Flagstar will gift the required 3% down payment to the borrower, plus up to $3,500 to be used for closing costs.
    According to the bank, there is no obligation for borrowers who qualify to repay the down payment gift.
    The program is available to only certain low- to moderate-income borrowers and borrowers in low- to moderate-income areas throughout Michigan.
    Borrowers would not have to repay the down payment or closing costs. But a 1099 form to report the income would be issued to the Internal Revenue Service by the bank. So the gifts could be taxable, depending on the borrower’s financial picture.
    Flagstar said borrowers who might qualify for its new program typically would have an annual income in the range of $35,000 to $62,000. The sales price of the home — which must be in qualifying areas — would tend to be in the range of $80,000 to $175,000.

    This post was published at Zero Hedge on Nov 17, 2017.


  • BOE Warns Weekly Fund Redemptions Of 1.3% Would Break Corporate Bond Market

    The Bank of England has done some timely and truly eye-opening research into the resilience of corporate bond markets. The research is contained in the Bank of England Financial Stability Paper No.42and is titled ‘Simulating stress across the financial system: the resilience of corporate bond markets and the role of investment funds’ by Yuliya Baranova, Jamie Coen, Pippa Lowe, Joseph Noss and Laura Silvestri.
    The starting point of the analysis is to revisit the Global Financial Crisis (GFC) which saw $300 billion of related to subprime mortgages amplified to well over $2.5 trillion of write-downs across the global financial system as a whole. One of the problems was that the system was structured in a way that did not absorb economic shocks, but amplified them. The amplification came via a feedback loop. As the crisis unfolded, fears about credit worthiness of banks led to the collapse of interbank lending. Weaker banks had their funding withdrawn, which led to a downward spiral of asset sales and the strangling of credit in the broader economy.

    This post was published at Zero Hedge on Nov 17, 2017.


  • How Corporate Zombies Are Threatening The Eurozone Economy

    The recovery in Eurozone growth has become part of the synchronised global growth narrative that most investors are relying on to deliver further gains in equities as we head into 2018. However, the ‘Zombification’ of a chunk of the Eurozone’s corporate sector is not only a major unaddressed structural problem, but it’s getting worse, especially in…you guessed it… Italy and Spain. According to the WSJ.
    The Bank for International Settlements, the Basel-based central bank for central banks, defines a zombie as any firm which is at least 10 years old, publicly traded and has interest expenses that exceed the company’s earnings before interest and taxes. Other organizations use different criteria. About 10% of the companies in six eurozone countries, including France, Germany, Italy and Spain are zombies, according to the central bank’s latest data. The percentage is up sharply from 5.5% in 2007. In Italy and Spain, the percentage of zombie companies has tripled since 2007, the Organization for Economic Cooperation and Development estimated in January. Italy’s zombies employed about 10% of all workers and gobbled up nearly 20% of all the capital invested in 2013, the latest year for which figures are available. The WSJ explains how the ECB’s negative interest rate policy and corporate bond buying are keeping a chunk of the corporate sector, especially in southern Europe on life support. In some cases, even the life support of low rates and debt restructuring is not preventing further deterioration in their metrics. These are the true ‘Zombie’ companies who will probably never come back from being ‘undead’, i.e. technically dead but still animate. Belatedly, there is some realisation of the risks.

    This post was published at Zero Hedge on Nov 17, 2017.


  • Pay Down Your Mortgage

    The latest issue of Street Freak came out on Tuesday. Street Freak is a bit of an aggressive stock-picking newsletter, where we come up with a new idea every month. I try to keep the ideas a secret – if you want them, you have to subscribe! But I’m going to let you in on this month’s idea for free. Are you ready? Here it is:
    Pay down your mortgage.
    Yes, that’s a bit unorthodox for a financial newsletter. But people spend too much time thinking about the next get-rich-quick idea and not enough time thinking about their overall financial well-being. I’m willing to bet that in addition to having a successful portfolio, many investors reading this also have a lot of debt.
    Going into what might be a downturn, I’m uncomfortable having a lot of financial leverage. If you think the market is going to go down, then you should stop thinking about buying inverse VIX ETNs and start thinking about how to deleverage in a smart fashion.
    Better Risk-Reward Paying down your mortgage is part of that. It is part of an overall exercise in balance sheet repair, which includes –
    Building a cash position Paying off debt: Margin debt Credit card debt Car loans Mortgage debt

    This post was published at Mauldin Economics on NOVEMBER 16, 2017.


  • Another Step Forward for Sound Money: Location Picked for Texas Gold Depository

    The Texas Bullion Depository took a step closer becoming operational earlier this month when officials announced the location of the new facility. The creation of a state bullion depository in Texas represents a power shift away from the federal government to the state, and it provides a blueprint that could ultimately end the Federal Reserve’s monopoly on money.
    Gov. Greg Abbot signed legislation creating the state gold bullion and precious metal depository in June of 2015. The facility will not only provide a secure place for individuals, business, cities, counties, government agencies and even other countries to store gold and other precious metals, the law also creates a mechanism to facilitate the everyday use of gold and silver in business transactions. In short, a person will be able to deposit gold or silver in the depository and pay other people through electronic means or checks – in sound money.
    Earlier this summer, Texas Comptroller Glenn Hegar announced Austin-based Lone Star Tangible Assets will build and operate the Texas Bullion Depository. On Nov. 3, the company announced it will construct the facility in the city of Leander, located about 30 miles northwest of Austin. According to the Community Impact Newspaper, the Leander City Council has approved an economic development agreement with Lone Star. Construction of the depository is expected to begin in early 2018. Lone Star officials say it will take about a year to complete construction of the 60,000-square-foot secure facility located on a 10-acre campus.

    This post was published at Schiffgold on NOVEMBER 16, 2017.


  • Goldman Reveals Its Top Trade Recommendations For 2018

    It’s that time of the year again when with just a few weeks left in the year, Goldman unveils its top trade recommendations for the year ahead. And while Goldman’s Top trades for 2016 was an abysmal disaster, with the bank getting stopped out with a loss on virtually all trade recos within weeks after the infamous China crash in early 2016, its 2017 “top trade” recos did far better. Which brings us to Thursday morning, when Goldman just unveiled the first seven of its recommended Top Trades for 2018 which “represent some of the highest conviction market expressions of our economic outlook.”
    Without further ado, here are the initial 7 trades (on which Goldman :
    Top Trade #1: Position for more Fed hikes and a rebuild of term premium by shorting 10-year US Treasuries. Top Trade #2: Go long EUR/JPY for continued rotation around a flat Dollar. Top Trade #3: Go long the EM growth cycle via the MSCI EM stock market index. Top Trade #4: Go long inflation risk premium in the Euro area via EUR 5-year 5-year forward inflation. Top Trade #5: Position for ‘early vs. late’ cycle in EM vs the US by going long the EMBI Global Index against short the US High Yield iBoxx Index. Top Trade #6: Own diversifed Asian growth, and the hedge interest rate risk via FX relative value (Long INR, IDR, KRW vs. short SGD and JPY). Top Trade #7: Go long the global growth and non-oil commodity beta through long BRL, CLP, PEN vs. short USD.

    This post was published at Zero Hedge on Nov 16, 2017.


  • BoE Deputy Governor Gives Crazy Speech Warning Markets Have Underestimated Rate Rises

    On 2 November 2017, the Bank of England raised rates for the first time in a decade and Sterling’s initial rise was promptly sold off by forex traders as we discussed.
    The 7-2 vote by the Monetary Policy Committee was not the unanimous decision some had expected, while Cunliffe and Ramsden saw insufficient evidence that wage growth would pick up in line with the BoE’s projections from just over 2% to 3% in a year’s time. Ben Broadbent, MPC member, deputy governor and known to be a close confidant of Governor Carney, gave a speech today at the London School of Economics (LSE) in which he warned markets that Brexit issues didn’t necessarily mean that interest rates have to remain low.
    Bloomberg reports that Broadbent stated that the Brexit impact on monetary policy depends on how it affects demand, supply and the exchange rate.
    “There are feasible combinations of the three that might require looser policy, others that lead to tighter policy.”
    Which sounds alot like he doesn’t know, although he stuck to the central bankers trusty tool, reassuring LSE students the Phillips Curve “still seems to have a slope”.

    This post was published at Zero Hedge on Nov 16, 2017.


  • The Fed’s Bubblenomics

    The Following is adapted from a preface to a new report by Murray Sabrin, featured in his November 15 presentation, “Bubblenomics” at Ramapo College.]
    If you Google ‘dot com bubble,’ you will get nearly 1.2 million hits, and 3.3 million hits if you Google ‘tech bubble.’ A Google search of ‘housing bubble’ will return nearly 11 million hits. (The searches were conducted on March 29, 2017). And if you search Amazon books for financial crisis 2008 you will get more than 1200 hits.
    Given all the books, monographs, essays, articles, and editorials that have been written about back-to-back bubbles that occurred within two decades, one would think there would be nothing else to write about.
    The purpose of this book is to present to the general public, my fellow academicians and policymakers with an brief account and review of one of the most turbulent periods in United States history without the usual jargon academics are noted for.
    As the two quotes from the Federal Reserve’s website above reveal, the Fed has been given the responsibility by the Congress of the United States to essentially promote sustainable prosperity, stabilize prices and maximize employment. During the past 100 years of the Federal Reserve’s operations, the economy has grown substantially (see Figure 1 for data since 1929), but the path to higher living standards have been interrupted by depressions/ recessions, a few bouts with double-digit price inflation and occasionally widespread unemployment. Although the Congress has expected the Federal Reserve to be a wise and prescient ‘helmsman,’ navigating the economy from becoming overheated or plunging into a recession or worse, the Fed’s track record belies its mandates.

    This post was published at Ludwig von Mises Institute on 11/15/2017.


  • BANK ADMITS FIAT CURRENCIES ARE FAILING AND CRYPTOCURRENCIES MAY REPLACE THEM

    As the transition towards a blockchain based economy continues, the established financial powers are desperately trying to stay relevant. In an attempt to boost their credibility, analysts at Deutsche Bank are finally admitting that state-run fiat currencies are becoming obsolete. For years, blockchain entrepreneurs and other critics of central banking have been branded either conspiracy theorists or criminals. But recently, those controversial opinions about the inevitable changes coming to the world’s financial system are being echoed by mainstream pundits.
    Deutsche Bank’s top strategist, Jim Reid, recently articulated a view on the economy that is shared by many but rarely talked about:
    ‘Central banks and governments which have ‘dined out’ on the 35 year secular, structural decline in inflation are not able to prevent it rising as raising interest rates to suitable levels would risk serious economic contraction given the huge debt burden economies face. As such they are forced to prioritise low interest rates and nominal growth over inflation control which could herald in the beginning of the end of the global fiat currency system that begun with the abandonment of Bretton Woods back in 1971.’

    This post was published at The Daily Sheeple on NOVEMBER 15, 2017.


  • Millions Of Millennials Could Be Trading Sex For Their Next Debt Payment – Here’s How

    As the storm clouds of peak stupidity gather over the heads of the millennial generation who were conned by banks, government, and universities to take out excessive amounts of leverage in auto loans, credit cards, and student debt; millions have flocked to a new website seeking ‘Sugar Daddies’ and or even ‘Sugar Mommies’ to pay off their debt amid an economic environment where wage growth remains non-existent.
    Today’s real simple get-out-of-debt option for the broke college/post college millennial is through an unconventional dating website called SeekingArrangement.com.
    In 2016, the website identified some 2.5 million college students who turned to the site in an act of desperation to find a ‘Sugar Daddy’ or even a ‘Sugar Mommy’ in exchange of personal time for straight cash.
    The website’s mission is to ‘delivers a new way for relationships to form and grow. Sugar Babies and Sugar Daddies or Mommas both get what they want, when they want it’.
    We find it hard to believe the intention of the website, when created by MIT graduate Brandon Wade in 2006, was to have 25% of the 10 million users – broke college millennials.
    According to Business Insider,
    A couple years ago, the site noticed an uptick in the number of members signing up with a university email address, Alexis Germany, a spokesperson for SeekingArrangement.com, told Business Insider.

    This post was published at Zero Hedge on Nov 15, 2017.


  • Desperately Seeking 1995

    The year 1995 wasn’t exact a good year to remember. There was the Oklahoma City bombing, the San Diego tank rampage, the New Jersey Devils winning the Stanley Cup in a lockout shortened NHL season, and some former Buffalo Bills running back named OJ getting into trouble out in LA. Steve Forbes would announce his candidacy to challenge President Clinton that September.
    Despite all that, in 2017 both the bond and stock markets are almost desperate to repeat the year, at least its financial and economic characteristics. To be more precise, it is stock investors who are betting on a 1995 while bond investors are holding out against that scenario – leaving Economists and the media to openly cheer for it and directly against them.
    Though it started in late ’94, the bond ‘massacre’ that year still stings in bond traders’ collective memories. Alan Greenspan’s Fed has begun to raise interest rates after several years of very low federal funds, ‘stimulus’ the central bank judged necessary because of a sluggish, almost jobless recovery (just ask President George H. W. Bush who Clinton defeated on ‘it’s the economy stupid’). That for many people is as compelling a setup as there may ever be.

    This post was published at Wall Street Examiner on November 13, 2017.


  • Sweden: The World’s Biggest Housing Bubble Cracks

    Sweden’s property bubble is probably the world’s biggest, despite which it gets relatively little coverage in the mainstream financial media – although that might be about to change. Warnings about this bubble are not new. In March 2016, Moody’s issued a very explicit warning that Sweden’s negative interest rates were propagating an unsustainable housing bubble.
    The central banks of Switzerland, Denmark and Sweden (all rated Aaa stable) have been among the first to push policy rates into negative territory. A year into this novel experience, Moody’s Investors Service concludes that, from among the three countries, Sweden is most at risk of an – ultimately unsustainable – asset bubble…
    “The Riksbank has not been successful in engineering higher inflation, while Sweden’s GDP growth continues to be among the strongest in the advanced economies,” says Kathrin Muehlbronner, a Senior Vice President at Moody’s.
    “At the same time, the unintended consequences of the ultra-loose monetary policy are becoming increasingly apparent – in the form of rapidly rising house prices and persistently strong growth in mortgage credit”, adds Ms Muehlbronner. In Moody’s view, these trends will likely continue as interest rates will remain low, raising the risk of a house price bubble, with potentially adverse effects on financial stability as and when house prices reverse trends.

    This post was published at Zero Hedge on Nov 15, 2017.


  • Auto-Loan Subprime Blows Up Lehman-Moment-Like

    But there is no Financial Crisis. These are the boom times. Given Americans’ ceaseless urge to borrow and spend, household debt in the third quarter surged by $610 billion, or 5%, from the third quarter last year, to a new record of $13 trillion, according to the New York Fed. If the word ‘surged’ appears a lot, it’s because that’s the kind of debt environment we now have:
    Mortgage debt surged 4.2% year-over-year, to $9.19 trillion, still shy of the all-time record of $10 trillion in 2008 before it all collapsed. Student loans surged by 6.25% year-over-year to a record of $1.36 trillion. Credit card debt surged 8% to $810 billion. ‘Other’ surged 5.4% to $390 billion. And auto loans surged 6.1% to a record $1.21 trillion. And given how the US economy depends on consumer borrowing for life support, that’s all good.
    However, there are some big ugly flies in that ointment: Delinquencies – not everywhere, but in credit cards, and particularly in subprime auto loans, where serious delinquencies have reached Lehman Moment proportions.

    This post was published at Wolf Street on Nov 14, 2017.


  • Venezuela Defaults On A Debt Payment – Is This The First Domino To Fall?

    Did you know that Venezuela just went into default? This should be an absolutely enormous story, but the mainstream media is being very quiet about it. Wall Street and other major financial centers around the globe could potentially be facing hundreds of millions of dollars in losses, and the ripple effects could be felt for years to come. Sovereign nations are not supposed to ever default on debt payments, and so this is a very rare occurrence indeed. I have been writing about Venezuela for years, and now the crisis that has been raging in that nation threatens to escalate to an entirely new level.
    Things are already so bad in Venezuela that people have been eating dogs, cats and zoo animals, but now that Venezuela has officially defaulted, there will be no more loans from the rest of the world and the desperation will grow even deeper…
    Venezuela, a nation spiraling into a humanitarian crisis, has missed a debt payment. It could soon face grim consequences.
    The South American country defaulted on its debt, according to a statement issued Monday night by S&P Global Ratings. The agency said the 30-day grace period had expired for a payment that was due in October.
    A debt default risks setting off a dangerous series of events that could exacerbate Venezuela’s food and medical shortages.
    So what might that ‘dangerous series of events’ look like?
    Well, Venezuela already has another 420 million dollars of debt payments that are overdue. Investors around the world are facing absolutely catastrophic losses, and the legal wrangling over this crisis could take many years to resolve. The following comes from Forbes…

    This post was published at The Economic Collapse Blog on November 14th, 2017.


  • China’s Credit Growth Is Freezing Up At The Worst Possible Time

    Submitted by Gordon Johnson of Axiom Capital
    CREDIT LEADS ‘ALL OTHER’ ECONOMIC DATA IN CHINA
    China until recently euphoric credit growth, is rapidly grinding to a halt. As we published last week, and a key underpinning of our negative outlook on commodity prices through the remainder of 4Q17 and into 2018, the moderation in China’s credit seen more recently appears to be gaining momentum. The evidence?
    Well, we note that: (1) new yuan loans in October came in at CNY1.04tn (vs. expectations of CNY1.1tn, and CNY1.8tn in the prior month), with banks making up CNY663.2bn of this amount – which was below the Consensus estimate of CNY783bn for October, and down from CNY1.27tn the prior month (Exhibit 1), (2) shadow banking remains around one-third of total social financing (‘TSF’), showing little signs of providing the ‘lift’ to credit it has previously when bank debt issuance underperformed – Exhibit 2, (3) year-over-year growth of new yuan loans, on a three-month-rolling average, has slowed to just +7.5% in October (Exhibit 3), (3) Y/Y M2 growth in China hit a multi-decade low of +8.8% in October (Exhibit 4), (4) household loan growth (i.e., mortgages) continued its precipitous fall in October (Exhibit 5), (4) Y/Y corporate bond and government bond issuance continues to trend negative (Exhibit 6), all ultimately resonating in (5) broad credit growth that continues to moderate (Exhibit 7).
    In short, we believe
    China’s efforts to deleverage are, increasingly, bearing fruit. What this means, in our view, is that China’s economic indicators will continue to slow, weighing on bulk commodity prices, and ultimately industrials, metals, and mining stock prices.

    This post was published at Zero Hedge on Nov 14, 2017.


  • Canada Builds $300 Million Highway To Nowhere, But Is There A Hidden Agenda?

    A new $300-million first of its kind ‘permanent’ highway will officially open in the Northwest Territories of Canada on Wednesday.
    This will be the first time in Canada’s history that the national highway system will be linked to all coasts. The completion of the four-year project is said to connect the tiny Arctic coastal town of Tuktoyaktuk with the rest of the communities to provide better transportation for residents.
    We think there could be another reason why Canada would build a highway to nowhere.
    As explained by one citizen in the video below, the new route is called ‘road to resources’, it’s where major reserves of oil and gas reside, and at one time inaccessible due to poor infrastructure.

    This post was published at Zero Hedge on Nov 14, 2017.