October 2009
71 posts
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Bank Failure Friday
The FDIC added nine possibly interesting trick or treat locations to the FDIC Failed Bank List tonight. The FDIC folks don’t work banker hours. Go ahead and ring the doorbell if you live near any of the banks below:
North Houston Bank, Houston, TX
Madisonville State Bank, Madisonville, TX
Citizens National Bank, Teague, TX
Park National Bank, Chicago, IL
Pacific National Bank, San...
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CIT’s Deals With Icahn, Goldman Pave Way for... →
The latest in the CIT saga. Recall that earlier this year American Express shut down two small business lending units. Citigroup has taken the axe to its credit cards across the board, but particularly at the credit limit levels that would be important to small business owners. These sources of funding aren’t just important (even critical) for specific small businesses. They are a...
Dear Amazon, You Suck
I am an Amazon fanatic. I own two Kindle 2’s. I am Amazon Prime. My Christmas wishlist is my Amazon wishlist. Last year, roughly half of all family gifts were purchased directly from Amazon (to and from me, my mother, and my sister).
So why can’t my mother buy me a book for my Kindle? Why on Earth would you choose to make this difficult/impossible? I have seven bookshelves full of...
FSA fines mortgage lender GMAC £2.8m →
In light of the upcoming GMAC bailout, this could be titled “Government Sues Government for GMAC Bad Behavior.”
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GDP Up 3.5% Annualized
The BEA released the official GDP report for Q3 2009. GDP was up an annualized 3.5%. The Bloomberg consensus was 3.0% (range 2.0% to 4.0%). My own prediction (which was technically a prediction of the Bloomberg consensus) was 3.3%. The rule was that anything under 3% would lead to a bloodbath (metaphorical). This is good news by all of these metrics:
Real gross domestic product —...
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Unemployment Claims Steady
This week’s Unemployment Insurance Weekly Claims Report has been released. Initial claims dropped to 530,000. This is at the high end of the Bloomberg consensus range of 520k to 530k. For the first time in a long while, last week’s data was not revised upwards. From the report:
In the week ending Oct. 24, the advance figure for seasonally adjusted initial claims was 530,000, a decrease...
Report: The WaMu "Bank Run" Rumors were True →
Posting because the cited article is from Kirsten, a family friend.
“A writer expresses himself in words that have been used before because they give...”
– H. W. Fowler, A Dictionary of Modern English Usage
I really should have used this as a response to Mills’ post. Humor, however, has a lot to do with timing.
“People take you more seriously than me. You come across as knowledgeable; I...”
– Anon.
This was actually sent to me in an email today and it was intended to be taken mostly at face value. I can’t imagine anyone for whom this is true.
“The investigation of the truth is in one way hard, in another easy. An...”
– Aristotle, in Metaphysica, Book II.
I ran across this while searching for something else. Yes, I found this instead of the truth I was looking for. But what strikes me is not the applicability to my own search. No, what strikes me is that Aristotle, when referring to the “proverbial...
WatchStockton officer defends actions in spite of suspension
My coworker saw this on reddit and sent me the link. This is pretty amazing. There’s even a great punchline at the end.
(KSL.com’s embed code doesn’t actually work, so click the link)
Time to Buy a Home?
I’ve been fond of saying that nobody has ever successfully reblown the last bubble, but I should be more careful to point out that it doesn’t make it impossible. I imagine the unintended consequences would be disastrous, but enough magic money can accomplish quite a lot.
I bring this up because Robert Shiller, of the Case-Shiller Index, claimed that many areas are beginning to look...
“As another older banker and one who has experienced both the pre- and...”
– John S. Reed, retired chairman of Citigroup, in Letter - Volcker’s Advice - NYTimes.com (via quotingthecrisis)
John S. Reed? QtC seems to be having fun with hypocrisy today. Any quotes from Jeffrey Skilling on the importance of proper accounting?
“For too long, individuals have taken advantage of the system by hiding money in...”
– Treasury Secretary Timothy Geithner, quoted by Aaron Smith, in IRS says its ready to take on brave new world of tax cheats - Oct. 27, 2009 (via quotingthecrisis)
The first step in making sure that everyone pays their fair share, of course, was getting Treasury Secretary Timothy Geithner to pay his...
National Australia Has First Loss Since at Least... →
Australia has one of the most resilient economies in this global downturn and some of the most honest banks? Seriously, Australia, how did you swing that? While I would suggest that in the long run the two will be correlated, I would actually expect the short run to be the exact opposite. After all, the whole reason we will delay FAS 166[1] before the November 15 activation is that having our...
Home Prices in 20 U.S. Cities Rise for Third Month →
This is the Case-Shiller report (very important, unlike my previous link). This is the best housing price index we have, and more weight should be given to its results.
Home prices in 20 U.S. cities rose in August for a third consecutive month, bolstering the case that an economic recovery is at hand.
The S&P/Case-Shiller home-price index climbed 1 percent from the prior month,...
ING to Raise $11.3 Billion, Sell Insurance Units →
Only posting this because of the first thought I had when I saw the headline:
If beating a dead horse doesn’t work, try cutting it into pieces.
Caterpillar cuts 2,500 laid-off workers →
This sounds like more of the same bad news, right?
WRONG! This is actually good news.
Caterpillar Inc. said Monday about 2,500 laid-off employees will be permanently cut from the company and 550 others will be brought back to work by the end of next year.
That’s 550 more people heading back to work than most people legitimately expected.
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Bank Failure Friday
The FDIC last left us with 99 failed banks for the year. Everyone patiently waited for failure #100. It came, went, and didn’t even stop for coffee. Seven new additions to the FDIC Failed Bank List:
Partners Bank, Naples, FL — Total deposits of approximately $64.9 million and an estimated hit to the DIF of $28.6 million.
American United Bank, Lawrenceville, GA — Total...
B&N Ebook Reader Lets You Loan A Book Just Once →
Even though I went with the Kindle 2 (x2), I had hopes for the Nook. If nothing else, it would force Amazon to make the Kindle 3 that much more awesome. Absent that, I jump ship and lose my Kindle library.
One thing that I was curious about was how BN convinced publishers to allow lending. That was quite an upset vs. Amazon. Turns out the publishers weren’t that generous.
Publishers:...
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Foreclosures Are More Profitable Than Loan... →
Misleading title. It’s missing “for servicers,” to distinguish the winners from lenders, borrowers, and the local community. From the cited report:
Overall, these sources of income give servicers little incentive to offer sustainable loan modifications, and some incentive to push loans into foreclosure. The monthly fee that the servicer receives based on a percentage of the...
Housing prices decline nationally →
After three straight monthly gains, a government measure of average U.S. housing prices showed a decline in August.
The Federal Housing Finance Agency says nationwide, housing prices fell an average of 0.3 percent from July to August. It says prices are down 3.6 percent in the past year.
This isn’t a very important report like the Case-Shiller report, but it’s still...
GDP Report Next Week
The first GDP report for Q3 comes out next Thursday. I already promised that I would look to see if the financial sector grew faster than the rest of the economy. According to the last revision (Sept. 30) to the Q2 GDP report, it did (it grew in both absolute and relative terms), though it was down from the prior year. Some people aren’t too happy about that. I’m also going to...
Contrarian Investing
It is important to remember that the basic thesis of the contrarian investor is one of buying and selling exhaustion. The market tends to drop when there’s nobody left to buy and rise when there’s nobody left to sell at a given point. This is not to be confused with sentiment, although sentiment is often a good indicator of where people have their money. If I’m bullish on Apple,...
Investor.gov →
This is new.
(found via Clusterstock)
Gold
I just saw this on my Google reader.
Bronte Capital: The goldsmith as retail bank. The important part of the body is almost unrelated to the title. The State Bank of India has moved / is moving to make retail gold purchasing easier.
China recently announced something similar with gold and silver bullion.
In the US, advertisements of Cash4Gold on TV were thought to mark a top in Gold. When...
7,000 People per Day exhaust Extended Unemployment... →
This is related to my previous post.
The current bill has been modified to extend benefits in all states. For a federal bill, this seems to make more sense than saying that benefits extend in California but not Arkansas. More people would use the benefit in California, but it’s a swift kick in the happy sack for the guy in Arkansas who watches his benefits expire before he gets a job. The...
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Unemployment Rises
This week’s Unemployment Insurance Weekly Claims Report has been released. Initial claims rose to 531,000. I would have added “Unexpectedly” to the title, but most analysts were expecting a small increase. This topped the Bloomberg estimates of 510k to 525k, so I should perhaps revise that to simply state that analysts were expecting a small change in either direction. Last week’s...
Top French Official: U.S. Trying to Inflate Its... →
Woah woah woah! The French are just now figuring this out?
No, not really. They’ve known it for a while. The interesting thing is that public statements are being made about it from someone other than China, Brazil, Russia, the IMF, currency traders, Sweden, Switzerland, Japan, … ok, maybe they’re a bit late to the party on calling us out on it, too.
Full Spectrum of China Headlines
How are things going in China? As usual, it’s hard to tell. Here’s a variety of thoughts on the subject, all from today (and the first three all from Bloomberg):
China’s doing quite well — China’s Economy Grows 8.9%, Fastest Pace in a Year
China’s doing so well, it’s helping out Japan — Japan Exports Fall at Slower Pace on Chinese Stimulus
But, it...
Confronting Too Big to Fail →
There has been a lot of discussion about bringing back Glass-Steagall and breaking up the big banks. Given that the only bank merger before this crisis that would have been stopped by Glass-Steagall was Citigroup, and it was allowed to happen prior to repealing Glass-Steagall via a special act of Congress, I’ve never been convinced. The most important thing Glass-Steagall would have...
Now Europe's Freaking Out About The Weakening... →
With the U.S. dollar at a 14-month low against the Euro, the pressure is on for the European Union to join Brazil and certain Asian economies in helping prop up the dollar.
At the same time, everyone views a devalued dollar as a necessity to address the US trade deficit (more accurately, the current account balance). Such imbalances would naturally cause our currency to devalue relative to...
Chilling Audio Of Nuclear Power Worker Talking... →
I link to this not because there’s some reason to fear a nuclear engineer making a dirty bomb (I always assumed that a dirty bomb would be built from materials obtained from hospitals or industry, not a power plant). I reference it because NPR is discussing this kind of civil unrest. That’s different from James Howard Kunstler, who forecasts massive civil unrest every week. Is this a...
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Homeless Evicted From California Tent City →
Little known fact: Breaking up tent cities causes people to magically not be homeless anymore. All our problems are solved!
War Bonds Lawsuit
Everyone should be aware of this lawsuit. It takes a lot for me to side against states in favor of the federal government, but looting a generation’s legacy is sufficient. Some states are suing the Federal government over unclaimed war bonds (and other old savings bonds). The states want the money, but the Federal government has the obligation to pay out if and when the bonds are redeemed....
Woah. Just saw my buddy Owen on tonight’s episode of Big Bang Theory. I need to check Facebook more often.
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Three Holiday Shopping Surveys
The holiday shopping season must be here, because the various retail shopping surveys are all coming out.
The first is the NPD’s Retail Survey, found via Mish. It states that 30% of consumers plan to spend less this holiday season, compared to 26% last year. While that’s applauded as only a 4% difference, even a 0% difference implies a possible contraction in spending (the people who...
The next crisis is already under way →
Everyone has referenced Einhorn’s latest. It’s good, but this was the best thing I read today. Punchline:
What you should draw from this is the following:
The Great Moderation is revealed as an illusion once we reach the zero bound, where interest rates are near zero. At this point the asset-price reflation can no longer rely on interest rates alone, but must also use...
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Bank Failure Friday
Only one bank was added to the FDIC Failed Bank List. San Joaquin Bank of Bakersfield, CA failed. From the press release:
As of September 29, 2009, San Joaquin Bank had total assets of $775 million and total deposits of approximately $631 million. Citizens Business Bank did not pay the FDIC a premium for the deposits of San Joaquin Bank. In addition to assuming all of the deposits of the...
“Bowing to political pressure from community bankers, the House Financial...”
– Stephen Labaton - House Panel Exempts Over 8,000 Banks From Oversight - NYTimes.com
Regulatory capture is all in my head.
Note: At least they didn’t exclude the biggest banks.
“Jim Cramer just told Chris Matthews that we are going to have a great retail...”
– John Cole (via azspot:vruz)
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Sloppy Analysis
I was reading Corporate Giants Land Obama Small Business Funds Under ARRA, because I always find it interesting how large corporations manage to find ways to get government funding set aside for small business. Instead of legal loophole shenanigans, I found this alarmist gem:
In December of 2008, President Barack Obama’s Presidential transition team estimated that for every billion...
Hmmmm......
Did Google beat expectations or not?
We don’t need to go too far past the cheerleading headline on this one. From the Puget Sound Business Journal, Google: profit up 27%, ‘recession behind us’:
Internet and search engine giant Google Inc. beat third quarter expectations with a 27 percent increase in net income to $1.64 billion, or $5.13 cents a share.
So let’s look...
“In modern economics, monetary stimulus is considered an effective tool to soften...”
– Andy Xie: For Economic Stimuli, a Revolving Exit Door
Another one. There are many other excellent passages in this article. I’m sad that I let it sit for three days in my browser before reading it. I highly recommend it (and the articles previously written by Andy Xie). He does an admirable...
“My central point is that the global economy is cruising toward mild stagflation...”
– Andy Xie: For Economic Stimuli, a Revolving Exit Door
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Unemployment Dips Again
Spoiler: New claims are getting close to the 500k mark, but it’s never enough. This week’s Unemployment Insurance Weekly Claims Report has been released. Initial claims fell to 514,000. This landed squarely inside the Bloomberg estimates (500k to 530k). Last week’s number was revised up 3,000 to 524k. From the report:
In the week ending Oct. 10, the advance figure for seasonally adjusted...
Massachusetts Land Court Upholds Ruling Reversing... →
Posted for random lawyers trying to keep people in homes.