“The increasing role of non-banks in the U.S. mortgage market sparks memories of the 2008 financial crisis. As the likes of Citigroup, Bank of America and JPMorgan have cut home lending and servicing, specialists have stepped in, but they lack bank-like capital cushions. Government-owned Ginnie Mae, guarantor of $2 trillion in mortgage-backed securities, is particularly exposed, as are the mainly lower-income Americans it is supposed to help.
“Ginnie Mae, which supports mortgages for veterans, lower-income individuals and minority groups, can’t adequately police the non-banks whose borrowers’ performance it essentially guarantees. A September audit supported that finding.
“Non-bank lenders and mortgage servicers often rely on the kind of short-term funding that proved so vulnerable during the crisis. Furthermore, non-banks are largely regulated by state watchdogs, which have varying standards.
“U.S. Housing Secretary Ben Carson, who oversees Ginnie Mae, is positioned to sound the alarm but he is one of the less visible members of President Donald Trump’s cabinet and has little experience in mortgage finance…”
Trump in effect using economic blackmail to try to push the EU into buying US LNG, which would be significantly more expensive than buying gas from Russia.
“The EU also agreed to work on more U.S. liquid natural gas exports, the newswire reported.”
It’s looking more and more likely that we’ll get a price-spike in the not-too-distant future. 2019?
“Crude inventories in the US fell by 6.15 million barrels in the week ending July 20, the Energy Information Administration said. The drop brings overall US stockpiles to the lowest point since February 2015.”
But a price-spike will cause demand to crater, if it doesn’t collapse the entire financial system, and prices will not remain high long enough to rescue the energy industry and energy producing nations from the doldrums:
“The rout in China’s high-yield debt market stems partly from the slew of corporate defaults this year, both in the domestic market and offshore. In late May, China Energy Reserve & Chemicals Group, an oil and gas producer, defaulted on a US$350 million bond, triggering cross-defaults on four other of the company’s dollar-denominated notes. In the local market, Wintime Energy, a coal miner, defaulted on 11.4 billion yuan (US$1.7 billion) of debt earlier this month, the largest corporate default this year.”
“Russia is preparing the most radical shakeup of its oil-tax system since 1999. The changes will allow the nation’s producers to export crude and oil products duty-free… The tax overhaul is Russia’s second attempt to remove export duties on crude and oil products, after an earlier effort in 1996. Just three years after the move, the government was forced to reinstate the levies as it scrabbled for funds after the 1998 financial crisis.”
“Iranian leaders are pushing to contain a deepening economic crisis that is slashing the buying power of Iranians and pressuring Tehran’s ruling elite even before the bite of looming U.S. sanctions.”
“Saudi nationals are borrowing two to three times more money than last year as government moves to shore up public finances push living costs through the roof. Since the beginning of 2018, the government has raised fuel and utility prices, introduced value added tax and imposed a levy on some temporary foreign workers not under an employer’s sponsorship… the latest official loan data suggest the policy is hitting ordinary citizens in their wallets.”
“Venezuela will remove five zeroes from the bolivar currency rather than the three zeroes originally planned, President Nicolas Maduro said on Wednesday, in an effort to keep up with inflation projected to reach 1 million percent this year.”
“Sam Woods, the central bank’s top supervisor, said contingency planning for Britain’s withdrawal from the European Union will be similar to its preparations for the Scottish independence referendum in 2014 and the U.K.’s Brexit vote two years later, which sent the pound plunging against the dollar. “Because of the times we live in, that’s become standard business for us,” he said.”
“After months of speculation over the health of Italy’s banking sector, another Italian lender is in the spotlight after the European Central Bank (ECB) demanded Banca Carige to see new capital plans as it tries to overcome a management crisis… This crisis adds up to the pile of problems in the Italian banking system, where crisis-legacy issues remain, with one of the biggest problems being a build-up of non-performing loans.”
“Sydney house prices fell 4.5 per cent in the year to June, their fastest rate in a decade, and Melbourne houses grew at their weakest pace in almost six years as the unwinding of the housing boom gained pace. Tighter credit and weaker investor activity continued to slow the housing market on Australia’s eastern seaboard in the June quarter…”