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When Interest Doesn’t Get Paid There’s Nowhere To Hide

A report from The Street. “Florida’s Sarasota is the city with the biggest increase of home listings hitting the market. Between May 2022 and 2023, there’s been an 128.1% increase in for-sale properties. The high inventory has to do with overall oversaturation of the real estate market. ‘Too many sellers are pricing their homes as if the market were still as hot as it was a year or two ago,’ Realtor.com writes, paraphrasing local agent Carissa Pelczynski. Other cities with high numbers of new homes hitting the market include Nashville, Tenn., and Austin, Texas. Home inventory is up a respective 124.7% and 112.5% in each city. But when mortgage rates rose in 2022, the Austin market was one that cooled the most, with list prices falling 15% from May 2022 to January of this year.”

The Seattle Times in Washington. “Higher rates and lingering uncertainty in the economy mean ‘the sense of urgency for buyers to get into a home has really changed,’ said Seattle Redfin agent Bliss Ong. The median single-family home in King County sold for $910,000 in May, down 9% from a year ago, according to the Northwest Multiple Listing Service. The decline was especially dramatic in North King County and in Seattle, where median home prices dropped 17% and 12%, respectively. Condo prices were down 5% countywide.”

“The median Snohomish County home sold for $780,000, down 4%. The median Pierce County home sold for $544,990, down 6%. The median Kitsap County home sold for $557,450, roughly flat from this time a year ago. (Even so, Kitsap hasn’t been immune to the market downturn. In April, the median price there was down 8% year over year.) King County home prices peaked at this time last year, when the median home cost a record high of nearly $1 million, and prices were up 15% from a year earlier. ‘Certainly, we have seen a correction,’ Windermere Chief Economist Matthew Gardner said, ‘which makes sense because the market was artificially overheated’ by ultralow mortgage rates from 2020 through early 2022.”

The Livingston Enterprise on Montana. “Gallatin County’s housing market has continued to cool since the pandemic. The overall median sales price in Gallatin County dipped to $633,000, which is an 8% decrease from last year. The median sales price for a single-family home dropped to $777,000, a nearly 6% decrease from last year. The amount of closed sales dropped by over 20% from last April. The amount of properties on the market in Gallatin County at the end of April was over 83% higher than the previous year. ‘With increased inventory it gives buyers more choices as opposed to rushing out to buying what’s there,’ said Jim Gingery, board president of the Gallatin Association of Realtors.”

From Newsweek. “Andrew Lieb, an attorney who offers real estate legal services around the New York metro area, told Newsweek via email that higher interest rates are ‘generally devastating to the real estate world’ not just because they depress demand by pricing out commercial buyers who count on leveraged offers. Instead, he said the real risk posed by higher interest rates is with respect to owners who have adjustable-rate mortgages that will automatically adjust to much higher interest payments, without notice or option, and as a result destroy owners’ profit margins.”

“Andrew Ragusa, a licensed real estate associate broker, told Newsweek via email that ‘there is an eerie unsettling feeling going around’ because many people are knowingly overpaying for properties because they have no other choice. ‘A lot of people are going to see their house value come down after a big crash but they’re all committed to monthly payments that are high and now have large loan balances,’ Ragusa said. ‘It does not look good right now.'”

The San Francisco Standard in California. “Park Hotels and Resorts, a Virginia-based real estate investment firm, said Monday that it had stopped paying back a $725 million loan on its main San Francisco properties and is likely to give two of the largest hotels in the city back to its lender. The decision to offload the city’s largest hotel—the 1,921-room Hilton San Francisco Union Square—as well as its fourth-largest hotel—the nearby 1,024-room Parc 55 San Francisco—represents a major disinvestment and negative sign for what was once one of the strongest hospitality markets in the country. Taken together, the two properties make up around 9% of the city’s total stock of hotel rooms.”

“Alan Reay, president of hotel consulting firm Atlas Hospitality Group, said some hotels are facing headwinds similar to San Francisco’s office market, which is seeing record-high vacancies.  He pointed to other signs of trouble, such as the distressed sale of the Huntington Hotel in Nob Hill and financial troubles at the nearby Stanford Court Hotel, which is having trouble paying back its loan. In 2016, Hilton San Francisco Union Square and Parc 55 San Francisco were appraised at $1.6 billion, according to CMBS loan documents. Reay said the rubber could meet the road when a lender takes control of the properties and sells them off at a substantial discount.”

“‘If you have a 50% reduction in value since 2016, if you start to take that across the board on other hotel assets, that’s going to be a major problem,’ Reay said, noting that the properties most at risk are larger hotels that cater to business travelers.”

The Salt Lake City Tribune in Utah. “Downtown Salt Lake City may be forever changed by the coronavirus pandemic. As the pattern persists, effects of remote work and all those empty cubicles are now combining with higher interest rates, pockets of layoffs and rising economic uncertainty to produce a major slowdown in the city’s office sector, with office vacancies in some cases as high as 30% to 50% in parts of West Valley City and in southwestern portions of the valley. Technology and call centers, in particular, have shed space, and several large employers have put sizable portions of their offices up for sale or sublease since January.”

“‘Office is definitely going through pain,’ said Kip Paul, vice chair of investment sales for brokerage firm Cushman & Wakefield. ‘Nobody’s going to build an office building right now. Some of these buildings are transacting at literally 50% of what they would have been two years ago ‘”

Bisnow London in the UK. “The logic is impeccable: Distress ought to be hurtling toward commercial real estate like an angry summer storm. Squeezed between the suddenly escalating costs of refinancing, and their suddenly falling portfolio valuations, plenty of individual buildings and many landlords, must be heading for trouble. The advisers to lenders from the restructuring and insolvency worlds, those people who try to avoid financial cataclysm when loans become distressed, and take over when it can’t be avoided, have a message. Lenders are beginning to deal with problems. The storm is about to hit.”

“‘Every lender you speak to say yes, we expect stress in the market, but our books are clean. The trouble is I remember this being said in 2008-2010 right up until the point when it was clear they weren’t,’ said Fraser Greenshields, EY partner and corporate finance leader. ‘When interest doesn’t get paid there’s nowhere to hide,’ Greenshields said. ‘Buildings that looked good four years ago now look decidedly tricky when existing tenants lease expires. So there’s argument for lenders to the get asset on the market now because the situation its only going to get worse; more will hit the market and at least if you act now potential buyers will look at the asset and you’ll get a price, even if you don’t like the price. In a short while, when six similar buildings are on the market, buyers may not even look at yours.'”

“RSM UK Restructuring Advisory partner Damian Webb said that the current period is the calm before the storm. ‘It’s coming,’ he said, of a wave of distress. ‘Remember, it’s only 12 months since interest rates started going up, and nobody then envisaged them going this high, of demand softening in the way it has. Nobody, for instance, expected the negative land values we’re now seeing thanks to high debt costs,’ Webb said, adding that in these circumstances it has taken lenders (and borrowers) a while to grasp that this wasn’t an inflationary blip.'”

The Delta Optimist in Canada. “According to the Real Estate Board of Greater Vancouver, the benchmark price for a single-detached house in Ladner in May 2023 was $1,399,600, up 3.5 per cent from this April. The price, though, was still down 9.3 per cent compared to May 2022, when the market had cooled. The benchmark price for a house in Tsawwassen last month was $1,553,300, almost unchanged from the pervious month, while down 10.7 per cent compared to May 2022. The benchmark for a single-detached house in North Delta last month was $1,383,500, almost two per cent up from April, while 12.9 per cent down from May 2022. Meanwhile, the Fraser Valley Real Estate Board says it saw an injection of supply in May as new listings surged by more than 40 per cent over April.”

ABC News in Australia. “Maria Tupou was having dinner with her husband, Sio, in April when he delivered some bad news. Sio had just learned they could lose the $30,000 deposit they paid to construction firm Porter Davis to build their ‘forever home’ in Wollert, a suburb in Melbourne’s outer north. They signed a contract with Porter Davis in November 2022. Then, in March this year, before construction had started, the firm collapsed. ‘I just remember sitting there crying in the middle of a busy restaurant,’ says Maria. ‘I’m still emotional about it.'”

“Maria and Sio are far from alone. Porter Davis is just one of dozens of building companies to collapse in the last 12 months. Phil Dwyer, president of the Builders Collective of Australia and builder of 40 years’ experience, says the insolvency crisis in the construction industry is a ‘nationwide problem.’ Dwyer says, currently, ‘there’s a great escalation in insolvencies.’ Dwyer says introducing the HomeBuilder scheme into an already ‘heated industry’ created a volume of work that has proved unmanageable for the nation’s builders. ‘[The government] should never have done it,’ he says.”

“With the price of raw materials such as steel and timber increasing between 40 and 50 per cent during the pandemic, many operators have simply run out of money to finish projects. ‘It’s devastating for the building industry [and it’s] devastating for consumers … We’re in a lot of trouble,’ Dwyer says. Michael, a residential builder based in Melbourne, has recently finished work on a project he took over in 2021, after the owner discovered the previous builder was trading insolvent. ‘This is the third job I’ve completed where the previous builder has gone broke or gone missing,’ he says.”

“The completed work was substandard and underinsured, creating problems for the owners, including a $400,000 budget blowout. ‘[The owners have] got two young children; they’re living with their parents. They’re struggling financially, too,’ Michael says. These days, it’s a situation he’s seeing more often. ‘A lot of builders who are going broke … are office-based. They pay people to manage the jobs — they have an accounts team; they have a marketing team,’ which amounts to ‘a lot of fixed costs,’ he explains.”

“These large firms, who might do up to 90 jobs at a time, now face a perfect storm of raw material price hikes and expensive delays, due to labour shortages, lockdowns and bad weather. ‘This is where they’re getting bitten,’ Michael says. ‘If you’re a large or volume builder, you’re really caught out in this inflation bubble.'”

From Yicai Global. “Amid sluggish demand in China’s property market, developers in some cities are offering ‘zero down payment’ and ‘negative down payment,’ sales practices that exploit legal loopholes, to attract buyers, Yicai Global has learned. The cities include Shenzhen, Foshan, and Huizhou in China’s southern Guangdong province, Changchun in the northeast of the country, and Chongqing in the southwest. Compared with the previous zero down payment practice, which was more of a marketing gimmick, this time some developers are taking a risk to artificially lower the initial payment made on properties, Yicai Global found from interviews.”

“‘If you buy a certain apartment in our project, we can offer you an actual zero or even negative downpayment,’ a sales agent in southern China told a reporter from Yicai Global posing as a homebuyer. This is done by exploiting the difference between the price filed with the local authorities and the price the customer actually pays, the agent said. With the buyer’s cooperation, the developer notifies the authorities that an apartment sold at the government-set guide price of CNY18,000 (USD2,530) per square meter, but in reality it sold at discount for about CNY14,400 per sqm.”

“The buyer then uses the fabricated data to apply for a mortgage, borrows more than actually needed, and uses the difference to reduce the actual downpayment. The practice means buyers only need to pay 30 percent or less of the official minimum downpayment to seal the deal, a sales agent in Huizhou told Yicai Global.”

“When the property sector boomed in the past, there was no room for such market manipulation, as builders were unwilling to offer any discount against the price filed with the authorities, according to a source at another developer in southern China. The practice’s emergence reflects sluggish market demand, the person added. The various gray-area practices to lower downpayments reflect weak housing market demand, with some developers desperate for buyers, an analyst at Centaline Property in southern China told Yicai Global.”

“These developers splurged on land at the peak of the speculative bubble several years ago, but after the market cooled their destocking efforts barely work, and in some smaller townships, sales are so poor that only a handful of properties change hands each month. Fighting to survive, these developers have no other choice but to offer subsidies and cut prices, the source added. Regional regulators have picked up on the new practice and are stepping in. For example, Huizhou put out a notice late last month to forbid such illegal practices among developers and real estate agencies.”

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This Post Has 76 Comments

  1. I love 50% off in the mornin!

    ‘Certainly, we have seen a correction which makes sense because the market was artificially overheated’ by ultralow mortgage rates from 2020 through early 2022′

    You know Matt, that whole time you said prices were to the moon Alice! with no problems ahead. You know what you have to do Matt:

    via GIPHY

  2. ‘It’s coming,’ he said, of a wave of distress. ‘Remember, it’s only 12 months since interest rates started going up, and nobody then envisaged them going this high, of demand softening in the way it has. Nobody, for instance, expected the negative land values we’re now seeing thanks to high debt costs’

    via GIPHY

    1. Nobody, for instance, expected the negative land values we’re now seeing
      The guy running foreclosures at a TBTF bank last crash specifically told me many times about properties in the banks books. “I wouldn’t take that property if they gave it to me.” In most of these cases it was due to HOA fees, taxes and other Homeowner requirements tied to the property be it raw land or completed Single Family. I also know my last employer had to pay the town it was moving its headquarters from, so they would take our Old headquarters. I expect a lot of negative value properties in the future.

      1. Many beachfront condos now have HOA fees of over $1000/mo. These are just regular condos, nothing luxury. I remember back in 2008 I rented a nice 2/2 apartment for $750/mo.

  3. ‘Regional regulators have picked up on the new practice and are stepping in. For example, Huizhou put out a notice late last month to forbid such illegal practices among developers and real estate agencies’

    But China-ron is going to have a computer see through yer mouth-hankey if yer jaywalking and deduct a fine from yer imaginary pesos.

  4. ‘If you have a 50% reduction in value since 2016, if you start to take that across the board on other hotel assets, that’s going to be a major problem’

    At least you can do yer puddle watching with no mean tweets Alan.

    1. Fill them up with illegals at $350/night courtesy of the taxpayers. That’s what NYC is doing.

  5. “…RSM UK Restructuring Advisory partner Damian Webb said…”

    “…Remember, it’s only 12 months since interest rates started going up, and *nobody* then envisaged them going this high, of demand softening…”

    Really, Damain Webb? Nobody?

    Damain, you need to get out of your cocoon, open your eyes, take a walk around the block, and start earning your fat paycheck.

  7. Owner of Biggest Hotel in San Francisco Gives Up Amid Downtown Woes

    JOEL B. POLLAK
    6 Jun 2023

    The owner of two major hotels in downtown San Francisco is preparing to give the properties up to foreclosure as the city’s downtown decline continues, with retail shops leaving the area amid crime and homelessness.

    The San Francisco Chronicle reported Monday:

    Park Hotels & Resorts said Monday that it stopped making payments on a $725 million loan due in November and expects the “ultimate removal of these hotels” from its portfolio. The company said it would “work in good faith with the loan’s servicers to determine the most effective path forward.”

    The 1,921-room Hilton is the city’s largest hotel and the 1,024-room Parc 55 is the fourth-largest, and together they account for around 9% of the city’s hotel stock. The hotels could potentially be taken over by lenders or sold to a new group as part of the foreclosure process.

    San Francisco has been suffering an exodus of major retail stores from the Union Square area over the past several months. The city also lost residents during the pandemic, and there are fewer commuters due to a shift to work-from-home in the tech industry. Amid a looming commercial real estate collapse, experts are advising the city to think about creative and drastic solutions to bring visitors back to the city before it is too late.

    https://www.breitbart.com/politics/2023/06/06/owner-of-biggest-hotel-in-san-francisco-gives-up-amid-downtown-woes/

    1. “Owner of Biggest Hotel in San Francisco Gives Up Amid Downtown Woes“

      – Woe is me! Woe is me!

      – The is no hybrid Capitalism / Socialism economic model or system that’s viable. It’s either Capitalism only or Socialism only.

      – One of these in turn is viable and lifts all boats; the other ends in barbarism and civilization in decline.

      – “Socialism is Western Civilization in retrograde.” – I said that.

      – Would the last person to leave SF, CA please turn out the lights? Also watch your step, since plenty of feces and needles, tents, homeless, etc.

      – You get the government you voted for. Gooder and harder SF. Could now be Mogadishu, Kabul, Caracas. Enjoy the Socialism. BTW, this is the “right” kind of Socialism. There are no good outcomes once one goes down that path.

      1. or you can be like NYC. turn over a historic hotel to the migrants

        Now, Adams is signing the biggest hotel deal of all: a $225 million, three-year deal for all of the Roosevelt’s rooms, working out to $205 a night. According to the Pakistani government, which owns the Roosevelt, the deal even includes a payout for hotel union workers laid off during the pandemic.

        https://www.city-journal.org/article/mayor-adams-is-making-the-migrant-crisis-worse-for-new-york

        1. The money is coming out of our state funded hospital system. I wonder how the mayor has the legal authority to do this.

      2. Send them 100,000 Haitian, Honduran, and Somalian migrants and get it over with. After that, it can fall into the ocean

  8. There is no shortage of bullshit in the MSM these daze about the plights of hapless, helpless real estate owner victims:

    “Andrew Ragusa, a licensed real estate associate broker, told Newsweek via email that ‘there is an eerie unsettling feeling going around’ because many people are knowingly overpaying for properties because they have no other choice. ‘A lot of people are going to see their house value come down after a big crash but they’re all committed to monthly payments that are high and now have large loan balances,’ Ragusa said. ‘It does not look good right now.’”

    1. “they’re all committed to monthly payments that are high and now have large loan balances”

      They have no other choice? Do they now?

      Live in overpriced city. Buy property outside of city 100+ miles away. Leave city.

      1. Buy property outside of city 100+ miles away.

        Limited opportunities are real. Every dentist and plumber in the world cannot make ends meet if they all go to the rural areas.

      2. They have a choice. I’m renting until we see sane prices again. I did that in 2006 and finally bought in 2H 2008 at a good discount. I purchased for $175K. Sold in 2022 for $435K. My next purchase will be in 2024 or 2025 depending on how long they prop up this shirtshow.

  9. It seems pretty early in the bust for Austin to be in full-on crash mode. I wonder how bad things will eventually get there if the long heralded recession eventually arrives?

    “Other cities with high numbers of new homes hitting the market include Nashville, Tenn., and Austin, Texas. Home inventory is up a respective 124.7% and 112.5% in each city. But when mortgage rates rose in 2022, the Austin market was one that cooled the most, with list prices falling 15% from May 2022 to January of this year.”

    1. They keep saying “they’re not making anymore land” but you don’t have to in Texas. There’s farm and ranch land as far as the eyes can see and then some. There’s some prime locations on the lakes and rivers that might be worth a premium, but there’s millions of acres in Central Texas. It takes 12 hours to drive from one end of Texas to the other.

  10. A reader sent these in:

    Some creative thinking is all that’s needed.

    https://twitter.com/WallStreetSilv/status/1665084327816753153

    This is what you get without an HOA

    https://twitter.com/EnronChairman/status/1665062765331922949

    America may owe $1 trillion in credit card debt, but think of all the points we’ve earned.

    https://twitter.com/dougboneparth/status/1663889606880768003

    Up to $26k & @IRSnews bureaucrats are JUST NOW waking to the magnitude of the fraud..:

    https://twitter.com/DiMartinoBooth/status/1665353525835059205

    “Nearly…62% of new homebuyers have struggled when it came to paying their mortgages, according to the April 12-13 survey of 1,000 Americans who bought homes in 2022 or 2023.”

    https://twitter.com/m3_melody/status/1665425924915953665

    Facts are facts. 500 bp later and UR is still pretty much where it was at the start. All Fed managed to do is hurt some sh$t banks and the ZIRP carry Boyz, and these an economy they don’t make! The rest of the private sectors have much lower leverage and as such the credit multiplier is lower than in previous cycles. Job not done yet.

    https://twitter.com/INArteCarloDoss/status/1665762034997133329

    16 Million homes sit vacant in the United States. This is the aspect of the, “there’s no supply” equation I struggle with. Were anything to nudge investors & 2nd home owners to sell, that narrative could change fast.

    https://twitter.com/mcspacface/status/1665748311415087104

    The equal weight S&P 500 just entered its sixth death cross since 2009. There were no times the S&P 500 didn’t implode after.

    https://twitter.com/SuburbanDrone/status/1665740388324474880

    The Bank of Canada let housing run amok in 2021 – now it needs to act by raising rates – The Globe and Mail

    https://twitter.com/maxentropy4344/status/1665864176978341893

    Mortgage rates heading up another 20bps this week as we head into the slower summer months. Spring frenzy is in the rear view now.

    https://twitter.com/SteveSaretsky/status/1665883010212958209

    Relying solely on central banks to manage the housing market is retarded

    https://twitter.com/NipseyHoussle/status/1665900922160005123

    The 15 slices of avocado toast we ate when we were 27 didn’t print 8 trillion dollars and add it to the Fed’s balance sheet

    https://twitter.com/texasrunnerDFW/status/1665794564848865282

    “THiS tiMe iS DifFErEnT”

    https://twitter.com/GRomePow/status/1655594573463449600

    Google Trends “Housing Crash” Arizona = highest interest🤡 Dead🤣

    https://twitter.com/iTurquoiseZebra/status/1665848458224304128

    What happens exactly when the owner of the largest hotel in a major city decides to stop paying its loan and abandon its property to the lender? Park Hotels, who owns San Francisco’s largest hotel the Hilton Union Square, is doing this.

    https://twitter.com/Arditi_d_Popolo/status/1665816366996127747

    We’re turning back on some people’s largest debt ($1.8t student loans) and a recession is looming. But I’m sure the millions of discretionary mini-hotels (AirBnB) run by massively leveraged broke amateurs will be fine

    https://twitter.com/GRomePow/status/1665829685991972864

    But AirBnBs are going to be just fine….

    https://twitter.com/GRomePow/status/1665802762829922304

    Every time the government stops an eviction or foreclosure, they’re just stealing homes from families who make good financial decisions.

    https://twitter.com/GRomePow/status/1665438306635509767

    1. “Relying solely on central banks to manage the housing market is retarded”

      “The 15 slices of avocado toast we ate when we were 27 didn’t print 8 trillion dollars and add it to the Fed’s balance sheet”

      “ Every time the government stops an eviction or foreclosure, they’re just stealing homes from families who make good financial decisions.”

      – Any centrally planned, command and control economic system is doomed to fail. The State owning the means of production, stonk markets, housing markets, etc. is the road to ruin. The gooberment picking winners & losers policies can’t possibly end well. Only “the invisible hand” of free markets enables a smoothly functioning economy, but too few opportunities for graft and corruption. Crony capitalism doesn’t cut it either. And yet, here we are…

      “Everything the government touches turns to crap.” – Ringo Starr

      – Venezuela here we come.

    2. What happens exactly when the owner of the largest hotel in a major city decides to stop paying its loan and abandon its property to the lender? Park Hotels, who owns San Francisco’s largest hotel the Hilton Union Square, is doing this.

      Sure, but nobody would ever walk away from a car that is worth 50% of what they owe on it, or a house they are underwater on.

    1. Stock Market Today
      Dow Jones Falls As Crypto Stock Coinbase Crashes 21% On SEC Lawsuit.
      SCOTT LEHTONEN 09:54 AM ET 06/06/2023

      The Dow Jones Industrial Average sketched minor losses Tuesday morning, continuing to fall after the stock market’s slight retreat on Monday. Meanwhile, AI stock Mobileye (MBLY) skidded after the company announced that Intel (INTC) will sell part of its holdings in the self-driving technology firm. And cryptocurrency exchange Coinbase (COIN) crashed after the SEC sued the company for operating as an unregistered broker.
      …
      https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-fall-hot-ai-stock-mobileye-skids-on-secondary-offering/

    2. SEC Wants Blood: Coinbase Sued 1 Day After Binance
      Reynaldo Marquez
      1 hour ago

      The U.S. Securities and Exchange Commission (SEC) filed a complaint against crypto exchange Coinbase over allegedly trading unregistered securities. According to a document filed with the Southern District of New York, the regulator claims that the crypto company failed to register with the SEC.

      Just yesterday, the regulator filed a similar complaint against the world’s largest crypto exchange Binance and its CEO, Changpeng “CZ” Zhao. Today’s action represents worsening conditions for crypto companies to operate in the United States.
      …
      https://bitcoinist.com/sec-wants-blood-coinbase-sued-1-day-after-binance/

    3. Crypto Futures Sees $300M Flush As Bitcoin Plummets Under $26,000
      Hououin Kyouma
      2 hours ago

      Data shows the crypto futures market has registered liquidations of almost $300 million in the past day as Bitcoin has plunged below $26,000.

      A futures contract is said to be “liquidated” when the derivative exchange that the contract has been opened with forcefully closes the position. A platform generally does it whenever the contract accumulates enough losses to wash away a defined percentage of the margin (the initial collateral).
      …
      https://bitcoinist.com/crypto-futures-300m-flush-bitcoin-plummets-26000/

      1. Bitcoin just jump up a little to over $27000. Either they aren’t taking the SEC seriously, or they really think Bitcoin is going to be adopted as a borderless currency on pen drive wallets.

    4. The Financial Times
      an hour ago
      SEC chair says crypto built on non-compliance with US securities laws
      Alexandra White in New York

      The head of the US securities watchdog said the cryptocurrency industry is built on non-compliance, just hours after the Securities and Exchange Commission sued cryptocurrency exchange Coinbase and one day after it brought a lawsuit against rival Binance.

      “The whole business model is built on non-compliance with the US securities laws and we’re asking them to come into compliance,” SEC chair Gary Gensler said in a CNBC interview on Tuesday.

      Gensler alleged many crypto companies are commingling various functions such as operating a hedge fund while running an exchange, which is prohibited in traditional finance.

      “The public would be aghast if they thought the New York Stock Exchange was also running a hedge fund trading against them . . . or lacked controls to protect against fraud and manipulation,” Gensler said.

      1. “Gensler alleged many crypto companies are commingling various functions such as operating a hedge fund while running an exchange, which is prohibited in traditional finance.”

        Is he suggesting many other crypto companies are following the FTX-Alameda Research model?

      1. Forbes
        Forbes Digital Assets
        $100 Billion Crypto Price Crash Sparks Serious Coinbase Warning As Bitcoin And Ethereum Plummet
        Billy Bambrough
        Senior Contributor
        I write about how bitcoin, crypto and blockchain can change the world.
        Jun 6, 2023, 08:26am EDT

        Bitcoin (BTC -1.2%), ethereum and other major cryptocurrencies have plummeted in the wake of the U.S. Securities and Exchange Commission’s (SEC) bombshell lawsuit against Binance (coming in the same week as a potentially game-changing new crypto bill in Congress).

        The bitcoin price has dropped to its lowest level since March, wiping around $100 billion from the combined ethereum price and other cryptocurrencies as fears grow among crypto traders that this is the start of a broader SEC crackdown.
        …
        https://www.forbes.com/sites/digital-assets/2023/06/06/100-billion-crypto-price-crash-sparks-serious-coinbase-warning-as-bitcoin-and-ethereum-plummet/?sh=4ba1e6e0548e

        1. Yawn. A quick glance at Bitcon shows it’s still trading at $26,000 per electronic tulip. Wake me up when it’s at its true intrinsic value of zero.

          1. Things could get interesting if the Fed succeeds on reducing inflation to below 2% and nominal long-term interest rates normalize to the historic 3% + inflation. We’re not there yet.

          2. If we don’t know what the rate of inflation is, how will we ever know if interest rates are higher?

    1. I own a hole in the ground, a burnt out pile of rubble, and the land it sits on.

      Get out of the pod, and get into The Pit.

    1. Finance ·Housing
      The Fed’s man-made housing market recession hit so hard that 4 real estate titans just lost their Fortune 500 status
      BY Lance Lambert
      June 6, 2023 at 12:56 AM PDT
      Zillow just fell out of the Fortune 500.
      Getty Images

      Not only did rock bottom interest rates during the pandemic spur a refinancing bonanza, but with the help of remote work and tight inventory, they also heated up the housing market in a way that hadn’t been seen since the bubble. Borrowers simply couldn’t pass up on 30-year fixed mortgages with a rate of 3%—or in some cases 2%. Few companies, of course, benefited more from that housing boom than Rocket Companies, which during the roughest part of the lockdowns did $5 billion in sales in the second quarter of 2020 compared to $1.6 billion in the same quarter in 2019.

      That’s behind us now: The mortgage rate shock created by the Federal Reserve’s rate hiking campaign has set off a housing market recession. While national home prices remain fairly stable, housing activity hasn’t been so lucky. Residential fixed investment, otherwise known as housing GDP, has fallen for four straight quarters, while mortgage refinance applications and mortgage purchase applications are down 45% and 31%, respectively, on a year-over-year basis.

      The Fed’s man-made housing market downturn has been so sharp that when the Fortune 500 list was unveiled on Monday, it was missing four major real estate companies, which had been on the list last year. That includes Rocket Companies (which was No. 282 on the Fortune 500 list unveiled in June 2022), Zillow (No. 424 last year), Anywhere Real Estate (No. 427 last year), and Compass (No. 495 last year).
      …
      https://fortune.com/2023/06/06/housing-market-activity-decline-knocks-some-fortune-500-real-estate-companies/

      1. Borrowers simply couldn’t pass up on 30-year fixed mortgages with a rate of 3%—or in some cases 2%.

        Yep, I was told this was free money and the guaranteed route to riches. Of course, when I read that, I thought why in the heck would the USA Government intentionally give the hoi polloi something for free?

        No free lunches and all.

  15. Exposing the FDA’s Orwellian Lie About Ivermectin | Facts Matter
    Roman Balmakov

    It seems like the messaging that’s coming down to us, the American citizens, from our own federal government resembles the world of George Orwell’s 1984 more and more.

    Case in point: over on the FDA’s website, they maintain a page called: “Why You Should Not Use Ivermectin to Treat or Prevent COVID-19”

    However, when you dig into it, you’ll find that the clinical trials that the FDA points to (the ones that are listed on that page) say the exact opposite.

    As ridiculous as it sounds: the FDA claims that ivermectin does not work against COVID-19, but in order to prove that point, they link to studies that say that it does.

    🔵 Our Analysis:

    https://ept.ms/3C7QG5R

    🔵 89 Study Repository:

    https://ept.ms/3qqz2HT

    🔵 FDA Recommendation:

    https://ept.ms/3qgU5fI

    https://www.theepochtimes.com/fda-makes-unexpected-ivermectin-announcement-facts-matter_5307194.html

    2. Why did they do this? Was it so Pfizer could make all of that money? Or, was it because they were using this respiratory virus as a plandemic to print all of that money and make insiders extraordinarily wealthy?

      1. An Emergency Use Authorization (EUA) is a mechanism to facilitate the availability and use of medical countermeasures, including vaccines, during public health emergencies, such as the current COVID-19 pandemic. Under an EUA, FDA may allow the use of unapproved medical products, or unapproved uses of approved medical products in an emergency to diagnose, treat, or prevent serious or life-threatening diseases or conditions when certain statutory criteria have been met, including that there are no adequate, approved, and available alternatives.

        https://www.fda.gov/vaccines-blood-biologics/vaccines/emergency-use-authorization-vaccines-explained

        1. available alternatives

          Which is why any alternatives must not only be unavailable, they must be unmentionable.

          1. It was hard to find a doctor who would give me an Ivermectin prescription, and also hard to find a pharmacy that would fill it.

    3. I learned in one of my jobs to only read source material. Everything else is likely BS.

    4. Exposing the FDA’s Orwellian Lie About Ivermectin

      When I tell people that I took Ivermectin when I had the coof, they usually have a horrified look and ask me why did I take “horse medicine”. When I tell them that I had a prescription and was able to fill it at a local pharmacy, and not at Tractor Supply, they are incredulous.

      “But they said on TeeVee that Ivermectin is only for horses!”

      Me: “The people on TeeVee were lying.”

      1. I did the same thing. Now all my business (and anyone else I can convince) runs through that independent compounding pharmacy.

  16. Im noticing major deleting of articles.
    Thats the reason I did a lot of research in last three years because I felt window of opportunity would close.
    What’s the point of having information internet thats pumps disinformation.
    I think AI is doing the editing. Many articles just wiped out totally. Strange inserts in articles pushing narrative conclusions.
    Don’t do your own research, just listen to Authorities…….
    Was talking to a old friend on phone and couldn’t believe how brainwashed..We had totally opposite facts. Than I find out my friend had been vaccine injured and been dealing with it for a year…..

    1. All of those articles are screen shotted on the Archive website, it just takes a little effort to find them.

      This isn’t the 1930’s where Stalin had the “disappeared” re-painted out of official portraits with him.

    1. NPR had a piece yesterday noting the 55th anniversary of the murder of RFK Sr.

      They didn’t mention his eldest son once, or that he’s polling at 20% in the D primaries.

  18. The median Kitsap County home sold for $557,450, roughly flat from this time a year ago

    The locals call this place Kidnap County. $557,450? Absolutely delusional.

  19. Fortune: The Fed’s man-made housing market recession hit so hard that 4 real estate titans just lost their Fortune 500 status
    BYLance Lambert
    June 6, 2023 at 12:56 AM PDT

    The Fed’s man-made housing market downturn has been so sharp that when the Fortune 500 list was unveiled on Monday, it was missing four major real estate companies, which had been on the list last year. That includes Rocket Companies (which was No. 282 on the Fortune 500 list unveiled in June 2022), Zillow (No. 424 last year), Anywhere Real Estate (No. 427 last year), and Compass (No. 495 last year).

    https://fortune.com/2023/06/06/housing-market-activity-decline-knocks-some-fortune-500-real-estate-companies/

  20. ‘he said the real risk posed by higher interest rates is with respect to owners who have adjustable-rate mortgages that will automatically adjust to much higher interest payments, without notice or option’

    A lot of certified letter brown spot moments going on out there I’d bet.

    First Andy, that’s some rock solid lending right there. It’s starting to look like yer trap doors don’t work so good when the FB is underwater. As a matter of fact, this looks like a good old credit event. DFW in the 80’s sort of thing, except all over the place and at the same time.

  21. ‘So there’s argument for lenders to the get asset on the market now because the situation its only going to get worse; more will hit the market and at least if you act now potential buyers will look at the asset and you’ll get a price, even if you don’t like the price. In a short while, when six similar buildings are on the market, buyers may not even look at yours’

    That’s the spirit Fraser, keep up the good work!

  22. ‘The buyer then uses the fabricated data to apply for a mortgage, borrows more than actually needed, and uses the difference to reduce the actual downpayment’

    Hey, that how FHA works! The Chinese are always stealing our tech.

  24. Finance Housing
    The housing market is so broken that many 40- and 30-something millennials have no choice but to build homes in their parents’ backyards
    It is actually illegal to build anything other than a single-family house on 75% of residential land in American cities.
    BY Jeff Kruth, Murali Paranandi, AND The Conversation
    June 06, 2023 1:05 PM EDT
    Photo of a person’s hand holding a model of a tiny house
    https://fortune.com/2023/06/06/housing-market-broken-zoning-affordability-millennials-building-tiny-homes-backyard/amp/

    1. Congratulations to anyone who does this. And a big FU to the corporate carpetbagger landlords who lose out on collecting rent.

      1. IIRC, you have a son doing this on the in-laws or soon-to-be in-laws property.

  26. The Financial Times
    US Treasury bonds
    US Treasury’s $1tn borrowing drive set to put banks under strain
    Analysts fear scale of new issuance following debt ceiling fight will push up yields and suck cash out of deposits
    The US Capitol building in Washington
    It is estimated that Washington will need to borrow $1.1tn in short-dated Treasury bills by the end of 2023
    Kate Duguid in New York 3 hours ago

    A $1tn US government borrowing spree is set to increase the strain on the country’s banking system as Washington returns to the markets in the aftermath of the debt ceiling fight, traders and analysts say.

    Following the resolution of that dispute — which had previously prevented the US from increasing its borrowing — the Treasury department will seek to rebuild its cash balance, which last week hit its lowest level since 2017.

    JPMorgan has estimated that Washington will need to borrow $1.1tn in short-dated Treasury bills by the end of 2023, with $850bn in net bill issuance over the next four months.

    A principal concern voiced by analysts was that the sheer volume of new issuance would push up yields on government debt, sucking cash out of bank deposits.

    “Everyone knows the flood is coming,” said Gennadiy Goldberg, a strategist at TD Securities. “Yields will move higher because of this flood. Treasury bills will cheapen further. And that will put pressure on banks.”

    He said he was expecting the biggest increase in Treasury bill issuance in history, apart from during crises such as the 2008 financial meltdown and the pandemic in 2020. Analysts said the bills would have maturities ranging from a few days to a year.

    Yields had already begun to rise in anticipation of the increased supply, added Gregory Peters, co-chief investment officer of PGIM Fixed Income.

    That shift increases pressure on US bank deposits, which have already fallen this year as the rise in interest rates and the failure of regional lenders have sent customers seeking higher-yielding alternatives.
    …

  27. Strange how crashes never get seen before they happen. Always a surprise to estate agents who only see “opportunities” .

    Jeremy Leaf, an estate agent based in north London, and a former RICS residential chairman, said:

    Halifax, like the Nationwide figures, exclude cash sales and reflect activity from a few months ago. However, they do confirm recent trends that tentative market recovery is being threatened by the prospect of more interest rate rises and stubbornly high inflation.

    Leaf added that Halifax’s market survey shows that “prices are still considerably above where they were two years ago so cash and equity-rich buyers in particular are recognising the opportunities.”

    https://www.theguardian.com/business/blog/live/2023/jun/07/uk-house-prices-in-first-annual-fall-since-2012-hackers-issue-ultimatum-to-bbc-ba-and-boots-business-live

    1. “Strange how crashes never get seen before they happen.”

      It’s similar to musical chairs, i.e., just position yourself close to an empty chair when the music stops.

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