Can Jay end the Fed Put?
Nobody in DC or Wall Street wants that.
“I think he wants to break the stranglehold of the Fed Put, and it’s a very difficult job and he’ll probably fail at it, but if he can succeed in maintaining the shrinkage of the balance sheet, and never go back to the zero-bound, and if that’s his legacy? And we get rid of those two, ZIRP and QE, throw them out of the toolbox forever? To me, that’s one hell of a legacy. Good for him.”
Ben Bernanke on monetizing the debt, 2012
No, that's not what is happening, and that will not happen. Monetizing the debt means using money creation as a permanent source of financing for government spending.
Florida couple charged with more than $2M in COVID-19 relief fraud A southwest Florida couple has been charged with stealing more than $2 million in COVID-19 relief funds and using the money to buy boats, new businesses and other luxury items.
You know their big mistake? Stealing more than $2 million.
The SBA states that PPP loans with original principal amounts less than $2 million (in combination with any affiliate loans) will be deemed to have made the certification in good faith.
This for some reason reminded me of our anti-science government:
DOL and OSHA, as well as other federal agencies, are working diligently to encourage COVID-19 vaccinations. OSHA does not wish to have any appearance of discouraging workers from receiving COVID-19 vaccination, and also does not wish to disincentivize employers' vaccination efforts. As a result, OSHA will not enforce 29 CFR 1904's recording requirements to require any employers to record worker side effects from COVID-19 vaccination at least through May 2024. We will reevaluate the agency’s position at that time to determine the best course of action moving forward.
Scott Everett - Founder & CEO of S2 Capital - On MF Outlook, FED, Banking Crisis, Capital Markets Interesting discussion of multi-family syndication etc. I’ll even overlook his defense of private equity.
“If it was anyone but the government doing what they’re doing - selling new debt to pay down the original debt - you’d call it a Ponzi.” - Michael Ippolito
“Agustin Carstens, you know, kingpin guy, is not a good person - I shouldn’t say that, he might be a good person…no, he’s not a good person. He’s just not. And none of those people are. They have an agenda, and it’s to continue to create this system that propagates wealth to the top and keeps the masses dependent.” - Mark Yusko
Bill Black and Michael Hudson on Corruption in Finance
Brits are facing a major mortgage crisis as lending rates soar Spot the aberration.
In New Zealand, high interest rates have sent property prices sliding nearly 18 percent since November 2021.
I find this paragraph quite funny:
During the pandemic, as people took advantage of low mortgage rates and relaxed lending rules, house prices soared almost 50 percent. Since November 2021, after New Zealand’s hawkish central bank embarked on one of the most aggressive rate-tightening cycles in the world to tackle rising inflation, prices have plummeted 17.5 percent, eradicating more than $6 billion in household wealth, according to Statistics New Zealand estimates.
…investors who bought properties to rent out are often paying significantly more each month in mortgage repayment and expenses than they receive from tenants.
“This may have been the last straw for some owners.”
Wall Street is betting against America’s downtowns.
Investors are paying less for bonds linked to New York subways and buses. Downtown-focused real-estate investment trusts trade at less than half their prepandemic levels. Bondholders are demanding extra interest to hold office-building debt.
Well, yeah. Rates have gone up, after years of artificial suppression. e.g.,
those who buy a common type of low-rated commercial mortgage-backed security are demanding 9.25 percentage points more interest than that on 10-year Treasurys as of June 12, according to research from Bank of America. This spread is three times as big as before the pandemic for such securities, which finance a property mix that is around 30% office space.
“Over the next 10 years, we’re gradually going to come to grips with this, and the stuff will slowly reprice,” said Stijn Van Nieuwerburgh, a Columbia Business School professor.
OK, what’s wrong with that?
Spreads in general still seem very complacent to me, but I’m just a caveman.
This is interesting, from “last winter”:
The recovery rates on office properties already are pretty dismal.
There’s a thread I saw this morning from a director of the New York Fed calling for some sort of (you know governmental) program to bail out CRE bagholders. I’ve been saying this is coming for a long time. Barry Sternlicht needs ZIRP and 18% rent hikes.
Another Heavily Revised Housing Starts Joke of a Report for May 2023
Last month I stated “History suggests the April rise will be revised away in May.” Sure enough. The Commerce Department revised housing starts in April from 1,401,000 to 1,340,000. That’s a negative revision of 4.4 percent. The big jump in April is now a reported decline. So take the huge jump this month with with a heavy dose of skepticism.
This is for future historians:
Kyle Bass, talking to Grant Williams in 2016 about the housing bubble before this housing bubble:
This meme is accurate from what I’ve seen:
China’s Big-City Homeowners Cash Out as Wealth Dream Fades The St. Louis Fed actually has data on this:
“When philosophers imagined a rhizome shaped labyrinth they found that it, “has no center; it has no perimeter; and, worst of all, it has no way out.” Thus, the rhizomatic maze is a labyrinth of endless paths and endless clues but no escape. Like the mannerist maze, there is no Minotaur in the rhizomatic maze. The threat comes from the disordered and inescapable shape of the labyrinth. When escape is impossible, the maze becomes the monster.”
This allegation is unique and explosive because it moves JPMorgan Chase from being just a cash facilitator for Epstein’s sex-trafficking of underage girls to engaging directly in the sex-trafficking. Unfortunately, the American people may never get to see the evidence that proves or disproves that critical allegation because of a settlement in the case…
After JPMorgan was confronted with overwhelming internal email evidence, obtained during discovery and documented further during depositions, that the bank played a central and pivotal role in allowing Epstein’s operations to continue for more than a decade by providing him with millions of dollars in cold, hard cash from his accounts, in brazen violation of anti-money laundering laws, the bank decided on June 12 to settle the Boies case on behalf of Epstein’s victims for $290 million.
The lawyers for plaintiffs and the bank have until this Thursday, June 22, to file their moving papers detailing the terms of the settlement, according to a docket entry in the case.
I’m in the CRE space. The lunatics who grossly overpaid for development sites or buildings should suffer the consequences. No more of this “privatize the profits, socialize the losses” nonsense.
"There’s a thread I saw this morning from a director of the New York Fed calling for some sort of (you know governmental) program to bail out CRE bagholders. I’ve been saying this is coming for a long time. Barry Sternlicht needs ZIRP and 18% rent hikes" - we knew it....and I believe FNMA/FHLMC will get called in to help as well.