Year: 2009
Economics Update
Well, it looks like bank failure Friday is going to be busy, with 200 Federal Deposit Insurance Corp. (FDIC) agents descending on Puerto Rico, and a report that BankUnited has halted attempts to raise capital, which indicates a fair number of bank seizures, or at least serious investigations, and BankUnited is a fairly big bank.
On the brighter side, we had the Consumer Sentiment Index rise in March.
In the meantime, people are still buying very little, so international trade is falling, including the US trade deficit, which fell to a 6 year low.
Part of this is that banks are increasingly unwilling, or charging more, to issue letters of credit to shippers, which makes shipping more difficult and expensive.
This is being mirrored by the tepid response to the Federal Reserve/Treasury program, the TALF, which has pushed back its start date because of the low number of interested parties.
In energy, we have oil falling on weak demand.
In currency, we have the dollar falling on the good consumer confidence numbers, which slows the “flight to safety.”
Jon Stewart: The Best Financial Journalist in America
Hell, maybe the best journalist in America, or at least the best interviewer. Jon Stewart really gets it.
Jon Stewart interviews Jim Cramer of CNBC (I saw it last night on TV):
When Does Jim Cramer Go To Jail?
I’m not an investment banker, but this sounds like illegal stock manipulation.
The Criminality is Systemic
So, it appears that Eric Holder is looking to crack down on financial fraud.
This makes sense, what with about half a dozen large Ponzi schemes popping up in the past few months, but if they are serious, they will discover quite a lot under that rock, because there are very few people at senior levels in US investment banking who would not be targeted for criminal investigation under a strict reading of the laws.
Sarkozy Fromally Announces France’s Return to NATO Command
While France has been a part of the mutual defense guarantees for something like 60 years, it left the command structure in 1966 because Charles de Gaulle wanted more independence from the US.
Sarkosy has now Sarkozy announced that France’s military will once again be formally integrated into NATO’s command structure.
I’m not sure if this will last, given that the opposition, and no small number of his own party, are rather hostile to the idea.
Signs of the Apocalypse
Signs of the Apocalypse, I Agree With Paul La Monica, who I generally find trite and relentlessly upbeat, when he says that mark to market is not a problem, but rather that the problem is that the banks made sh$% loans and created sh%$ derivatives, and did not hold enough capital.
That being said, he is not as inventive in his lede as David Reilly, who says that, “Elvis Lives, and Mark-to-Market Rules Fuel Crisis,” and notes that even now, only a fraction of the big sh$%pile is marked to market:
Of the $8.46 trillion in assets held by the 12 largest banks in the KBW Bank Index, only 29 percent is marked to market prices, according to my analysis of company data. General Electric Co., meanwhile, said last week that just 2 percent of assets were marked to market at its General Electric Capital Corp. subsidiary, which is similar in size to the sixth-biggest U.S. bank.
What are all those other assets that aren’t marked to market prices? Mostly loans — to homeowners, businesses and consumers.
Loans are held at their original cost, minus a reserve that banks create for potential future losses. Their value doesn’t fall in lockstep with drops in market prices.
Yet these loans still produce losses, thanks to the housing meltdown and recession. In fact, bank losses on unmarked loans are typically bigger than mark-to-market losses on securities like bonds backed by mortgages.
They both make the point that mark to model to a large created this crisis, by encouraging banks to create risky pieces of crap that no one wants to buy, though this reality is not preventing Congress from pressuring regulators to relax the rules on mark-to-market.
This stuff is worth pennies on the dollars, and the banks are insolvent. Let’s recognize reality and move on.
Muntazer al-Zaidi Gets 3 Years in Jail
For throwing his shoes at George W. Bush, he should be made a state hero.
I’m just glad that he did not die in custody, which is what I predicted would happen.
Nouriel Roubini Gives Good Rant
Hoocoodanode? Normally, he is calm and analytical, but when asked about Madoff, he really gives what for:
Here is my answer fleshed out in full:
Americans lived in a Made-off and Ponzi bubble economy for a decade or even longer. Madoff is the mirror of the American economy and of its overleveraged agents: a house of cards of leverage over leverage by households, financial firms and corporations that has now gone bust.
When you put zero down on your home and you thus have no equity in your home your leverage is literally infinite and you are playing a Ponzi game.
And the bank that lent you with zero down, a NINJA (no income, no jobs and assets) liar loan that was interest only for a while with negative amortization and an initial teaser rate was also playing a Ponzi game.
….
Go read the rest.
It’s one answer to how the economy is different from the machinations of Bernie Madoff: it isn’t.
It’s thought provoking.
Guilty, Guilty, Guilty
Madoff has pled guilty to all 11 charges, and the judge has ordered him jailed immediately as a flight risk.
Economics Update
So, today is the day for new jobless claims, and U.S. jobless claims rose by 9000 to 654,000, which is not a new record, though the continuing claims number of 5.317 million, which was a new record.
Well, we are seeing more in the way of rate cuts world wide, with the European Central Bank approaching 0% interest rates by stealth, using their deposit rate now at ½%, as opposed to their benchmark rate, now at 1½%, by lending like a madman, and the the Swiss central bank cut its benchmark rate to ¼% in an effort to keep the Franc from appreciating against other currencies, so the zero interest rate contagion is spreading.
And the consumer is still on vacation with retail sales falling by 0.1% in February, and it’s seen as a sign of progress, because the experts were expecting a fall of 0.5%.
It’s no wonder that retail sales are falling, as U.S. household net worth fell at a record pace in 4Q 2008, $5.1 trillion for the quarter and $11.2 trillion for the year, and this was accompanied by the first drop, at a 2% annual rate, in household debt ever.
These numbers are not surprising. With house prices down, and a foreclosures rising 30% year over year, and 6% month to month in February, it just makes sense to economize.
Interestingly enough, even though foreclosures continue to increase, mortgage rates fell this week, largely on the expectation of little in the way of inflationary pressures because of the weak economy.
We also have two bits of WTF today, with yet another bank, this time Bank of America saying that it made a profit in the first two months of the year, while not counting its losses in the big sh&^pile.
Additionally, S&P has downgraded General Electric from AAA to AA+, which, until the last year or so, I always thought was a sign of the economic apocalypse.
In energy, oil is up. largely on the retail sales report.
In currency, the dollar is up, largely on the aforementioned Swiss rate cuts.
Now This is Reassuring
Seymour Hersh is now saying that Bush and His Evil Minions™ turned the Joint Special Operations Command (JSOC) into a personal assassination squad reporting directly to Dick Cheney. (see also here and here):
Under President Bush’s authority, they’ve been going into countries, not talking to the ambassador or the CIA station chief, and finding people on a list and executing them and leaving. That’s been going on, in the name of all of us.
Seeing as how it was Dick Cheney calling the shots, let’s be glad that it wasn’t unleashed against inconvenient people in the USA.
Or, at least, I don’t think so. I’ve always wondered about J. Clifford Baxter.
The FDIC Didn’t Do What?????
Whiskey Tango Foxtrot??? The FDIC did not collect insurance premiums between 1996 and 2006.
I admit that I am not an insurance executive, but even I know enough to collect the damn premiums.
Great Googly Moogly!!! Not Over Yet!
Well, it looks like I was premature about Franken resting his case.
They have a few more witnesses who could not make it to court yesterday, so they should wrap today.
New York Times Makes an Affirmative Action Hire
I haven’t really read Ross Douthat, who has now been hired to write a regular column for the New York Times.
That being said, it is clear that he was not hired because they believed that he was the best writer and thinker out there; he was hired to fill a slot for conservatives, and he was the best person that they could find to fill that check off box.
I will note that the Times doesn’t do a great job with its regular columnists anyway, what with Maureen Dowd, who covers the issues of our day as if she is a middle schooler critiquing another shoes, and Tom Friedman, who seems to get his insights entirely in airports and taxicabs from people who talk like a person whose wife is worth (or was worth) about a billion dollars.
What a Little Whiner
Jamie Dimon, CEO of JPMorgan Chase:
Jamie Dimon, chief executive officer of JPMorgan Chase & Co., said the U.S. can rescue its banking system by the end of the year if officials start cooperating and stop the “vilification” of corporate America.
“If we act like a dysfunctional family and we don’t finish these things and we’re forever debating them, I think this will go on for several years,” Dimon, 52, said at a conference hosted by the U.S. Chamber of Commerce in Washington. “It’s completely up to us at this point.”
Awww…The poor liddle baby…..Someone hurt his feelings.
If I had the power sir, you would be in jail awaiting trial right now, because you are more dangerous than Osama bin Laden.
Not only did you loot this country, but you continue to do so.
Roubini Calls for Massive Cramdowns on Mortgates
He’s actually rather optimistic, for him anyway, in this vid.
At about 5:45 is where he talks about mandatory restructuring of home principal.
Unencumbered by the Thought Process
The EU is continuing to push finance deregulation in third world:
While EU and other global leaders have talked tough about re-regulating the financial sector in the wake of the economic crisis, they remain committed to pushing through banking deregulation in the developing world via trade deals.
This strategy is undermining poverty reduction in these countries and is reproducing the same type of circumstances that led to the crisis in the first place, warns a new report published on Wednesday (11 March) by the World Development Movement, an UK-based anti-poverty NGO.
Someone needs to whack these jokers upside the head with a clue stick.
What I Had for Dinner
Well, Sharon* got some Tuna steaks on sale at at the grocery store, and we cooked them. It was dead nuts simple, I dusted it with my curry spice rub, let it sit for about 10 minutes for the spices to mingle, and then seared each side for about 5 minutes in a hot pan with a bit of olive oil, and served.
There was just a bit of pink in the middle, and it turned out very nicely.
*Love of my life, light of the cosmos, she who must be obeyed, my wife.
More CNBC PWN463 (Ownage)
Damn, Jim Cramer is a glutton for punishment.
Remind me never ever to f^%$ with Jon Stewart.