Bank failure – FDIC takes over Integrity Bank Another weekend and another bank failure. The FDIC estimates that the cost to its Deposit Insurance Fund will be between $250 million and $350 million. Bank failure – FDIC takes over Integrity Bank Another weekend and another bank failure. The FDIC estimates that the cost to its Deposit Insurance Fund will be between $250 million and $350 million.
Disappearing Money & The Great ‘Flation Debate PREVIEW Saturday, August 30, 2008 Here are two recent reader emails and my responses to them. The first asks the question, “Why does money have to disappear when debts get paid down?” and the second asks why I favor an inflationary outcome over a deflationary outcome. Since I think each of these reflects a possible source of broad interest, I decided to give them full responses and turned them into this weekend’s report. Disappearing Money & The Great ‘Flation Debate PREVIEW Saturday, August 30, 2008 Here are two recent reader emails and my responses to them. The first asks the question, “Why does money have to disappear when debts get paid down?” and the second asks why I favor an inflationary outcome over a deflationary outcome. Since I think each of these reflects a possible source of broad interest, I decided to give them full responses and turned them into this weekend’s report.
GM cuts off their nose If I were to be exceptionally sarcastic here, I would note that it is lucky for GM and its dealers that there was 3.3% GDP growth last quarter. If I were to shrug off the GDP report as hopelessly inaccurate, I would observe that when an auto manufacturer cuts off a $2.1 billion dollar (annually!) distributor of its products over concerns about the financial health of that entity, then there is a deep recession underway. GM cuts off their nose If I were to be exceptionally sarcastic here, I would note that it is lucky for GM and its dealers that there was 3.3% GDP growth last quarter. If I were to shrug off the GDP report as hopelessly inaccurate, I would observe that when an auto manufacturer cuts off a $2.1 billion dollar (annually!) distributor of its products over concerns about the financial health of that entity, then there is a deep recession underway.
Prime foreclosures surge Wow, with three exclamation points. The fact that PRIME foreclosures have now moved past SUBPRIME foreclosures is a big deal. In case you don’t know, the Hope Now program is a government-sponsored affair that was initiated very early on in the housing/credit bust. Its intent was to help borrowers avoid foreclosure by renegotiating the terms of their deal(s). Prime foreclosures surge Wow, with three exclamation points. The fact that PRIME foreclosures have now moved past SUBPRIME foreclosures is a big deal. In case you don’t know, the Hope Now program is a government-sponsored affair that was initiated very early on in the housing/credit bust. Its intent was to help borrowers avoid foreclosure by renegotiating the terms of their deal(s).
Russia threatens to cut off fuel to Europe In the US, the most important bit of news is the selection of a VP running mate for McCain. In Europe, it happens to be that you might freeze solid this winter. Russia threatens to cut off fuel to Europe In the US, the most important bit of news is the selection of a VP running mate for McCain. In Europe, it happens to be that you might freeze solid this winter.
Fuzzier than ever – GDP reported to be 3.3% A truly laughably fraudulent GDP report was released by the government today. However, we’re getting close to this just being a sad parody of Soviet crop reports of old, which were famous for being utterly out of alignment with reality. Fuzzier than ever – GDP reported to be 3.3% A truly laughably fraudulent GDP report was released by the government today. However, we’re getting close to this just being a sad parody of Soviet crop reports of old, which were famous for being utterly out of alignment with reality.
Record bank debt coming due And here’s the data I’ve been waiting for. To the exhaustive pile of new borrowing that the US government needs to shoulder, we can add $871 billion of debt that financial firms will need to somehow fund at the exact same time. I will be more than a little surprised if this does not result in either drastically higher interest rates, or massive inflation. Record bank debt coming due And here’s the data I’ve been waiting for. To the exhaustive pile of new borrowing that the US government needs to shoulder, we can add $871 billion of debt that financial firms will need to somehow fund at the exact same time. I will be more than a little surprised if this does not result in either drastically higher interest rates, or massive inflation.
Problem banks expand 30% It’s worth noting that not every bank on the problem list will fail, and not every failure will be on the list. To my knowledge, IndyMac was not on the list prior to failing. But the trend here tells us something meaningful; a 30% increase in problem banks in one quarter says we’re still in the early stages of this credit crisis. Problem banks expand 30% It’s worth noting that not every bank on the problem list will fail, and not every failure will be on the list. To my knowledge, IndyMac was not on the list prior to failing. But the trend here tells us something meaningful; a 30% increase in problem banks in one quarter says we’re still in the early stages of this credit crisis.
Home prices drop We’ve had damaging housing busts in the past, but they’ve always been contained to a specific region. Houston in the 1980’s and Florida in the 1920’s taught us that even a localized housing bust could spread ripples of discomfort far beyond their borders. This data showing that NO cities in the index saw a price gain deserves some notice. Home prices drop We’ve had damaging housing busts in the past, but they’ve always been contained to a specific region. Houston in the 1980’s and Florida in the 1920’s taught us that even a localized housing bust could spread ripples of discomfort far beyond their borders. This data showing that NO cities in the index saw a price gain deserves some notice.
Big three ask for bailout I know they’ve wrapped it in other language such as “retool to make more fuel efficient vehicles,” but the truth is that any money they receive will disappear into the black holes that reside at the center of each company. Besides the fact that they really should not have been caught unawares again, I think that GM, Ford, and Chrysler should provide clear plans for how they intend to return to profitability using taxpayer money. Big three ask for bailout I know they’ve wrapped it in other language such as “retool to make more fuel efficient vehicles,” but the truth is that any money they receive will disappear into the black holes that reside at the center of each company. Besides the fact that they really should not have been caught unawares again, I think that GM, Ford, and Chrysler should provide clear plans for how they intend to return to profitability using taxpayer money.
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