Bird in hand better than Two in a Bank

The market keeps going up, up, up...

All based on nothing, nothing, nothing...

And all the roaches on Wall St are happy, happy, happy..

And Yet, if everything is so great, great, great,

Why this...

"During the first 10 trading days of 2012, roughly 6.8 billion shares a day changed hands in the United States, down from 8 billion in 2011 and 8.3 billion in 2010, according to the New York Stock Exchange... " -- CNN/Money

And this...

"The Federal Reserve is likely to step in with $1 trillion worth of easing that could be announced as soon as this month, according to a growing consensus of economists who see the recent uptick in economic growth as unsustainable."  -- CNBC

Huh?  Thought everything was going super?  Markets keep rising.  Traders keep profiting.   What's this about "Unsustainable" and trading overall Down?   Where's all that money that is supposed to be in the market so professional traders and investors can maximize their profits on the backs of 'mom & pop'?

"Americans have been hoarding record amounts of cash since last July, according to the Federal Reserve data.   The monthly amount of cash placed in checking, savings and money market accounts, known as M2, grew at the fastest rate during the last six months of 2011 since the period following September 2001...  $889 billion, or eight times as much (has been put) into checking and savings accounts as put into stocks or bonds during the first 11 months of 2011, according to TrimTabs Investment Research. " (CNN/Money)

Nice to see people waking up to the stock market con game.  Its a nice start.  Eventually people will also wake up to the fact that their excess money shouldn't be in a bank either.

Here's two fun little math problems--   1)  Say you have $5000 in your savings account at 0.1% interest, how much interest do you collect yearly?   2)  How much profit does a bank make off your $5k if it lends to others at 6.9% interest?

Give you a moment to think...

~ Wait!  I need more time.. I don't do good at math..."

OK, answer time:

1)  $5,000 x 0.001 = $5.00   Allowing a bank to hold onto $5k of your money for a full year earns you one big fat, crisp Abraham Lincoln bill.  You can rent One whole movie and still have 75 cents after taxes to buy some chewing gum.

2)  Thanks to fractional reserve lending, a bank is allowed to lend up to 10x what it holds from depositors.  So your $5,000 allows Mr. Big Bank to lend out $50,000.  The interest based on 1 year works out as this:

$50,000 x 0.069 = $3,450, enough to buy.. well, a whole lot of stuff.

Subtract $3,450 - $5 and Mr Big Bank made $3,445 PROFIT off you

And if you think getting one-tenth of one percent is bad, just you wait!!

"The goal of the ( QE3 mortgage backed securities) purchases will be to drive down interest rates even further from current record-low levels..." (CNBC)


Who knows?  Maybe next year at this time $5k brings in a yearly savings return of a Whole Dollar!  Imagine what you can do with a buck?!

What's the morale to the story?

The government, i.e. Fed or Treasury is going to do absolutely nothing for your financial benefit unless you are extremely obscenely wealthy or are a 'Too Big to Fail'.   If somehow it could be orchestrated that tens of millions of people withdrew their non-essential money en masse from banks, it would cause the necessary chaos and fear to cause the Fed to raise interest rates one again to encourage the money to be re-deposited.

But short of something drastic, you, Mr & Ms everyday American will continue getting Bleeped by your government economically.

So really...  why is your $$ in a bank?

The FDIC Is Not "Well Capitalized".......

No wonder Bair has to produce "reasuring" Videos like this ( Clip from October ).....

Kein Wunder das Bair sich genötigt sieht solch "beruhigende" Botschaften unters Volk zu bringen ( Clip vom Oktober )....



FDIC’s insurance in the red, ‘problem banks’ hit 16-year high FT Alphaville

There are some shocking numbers in Federal Deposit Insurance Corp’s (FDIC) quarterly banking report for the three months to September 30, which the agency released on Tuesday.

Numbers like: -$8.2bn and 552. The first figure represents the balance on the FDIC’s insurance fund. That’s right - for the first time since 1992, the FDIC’s insurance fund has fallen — quite dramatically — into the red.

According to the report, the precipitous decline in the insurance fund was due to an additional $21.7bn set aside in the third quarter for expected bank failures. At the end of the second quarter, the FDIC’s insurance fund a balance of$10.4bn.

As for 552 - that’s how many US banks may claim, as of September 30, the dubious distinction of being included on the FDIC’s lists of “troubled” financial institutions. Total assets of “problem” institutions increased from $299.8 billion to $345.9 billion, the agency said.

Zero Hedge

More alarmingly, the massive spike in deposits ($491 billion in a single quarter) and total assets at problem institutions popped up $200 illionish in nine short months- exactly while the reserve ratio drops like a Cardiff girl's petticoat after 2am

Got GOLD.... ?

Prime Time Humor.....

Thanks to Gary Varvel!



















Souring Prime Loans Compound Mortgage Woes WSJ



MBA: Record 13.2 Percent of Mortgage Loans in Foreclosure or Delinquent in Q2 Calculated Risk

The Market Ticker

Delinquency cure rates refer to the percentage of delinquent loans returning to a current payment status each month. Cure rates have declined from an average of 45% during 2000-2006 to the currently level of 6.6%. It is important not only to observe total roll rates, but delinquency cure rates as well, according to Managing Director Roelof Slump.

In addition to prime cure rates dropping to 6.6%, Alt-A cure rates have dropped to 4.3%, from an average of 30.2%, and subprime is down to 5.3% from an average of 19.4%. 'Whereas prime had previously been distinct for its relatively high level of delinquency recoveries, by this measure prime is no longer significantly outperforming other sectors,' said Slump.

Bad, Bad Assets.....

Some kind of follow up to Joke Of The Day "Well Capitalized......”

Wenn man so will eine Fortsetzung von Joke Of The Day "Well Capitalized......”

Dank an Randy Glasbergen

Bad, Bad Assets Floyd Norris
The F.D.I.C. announced the seizure of Colonial Bank and the transfer of the deposits to BB&T, a regional bank based in North Carolina. (As an aside, I’ll note that Colonial only wanted to expand into fast-growing areas, and never chose to enter North Carolina. Tortoise and Hare?)

You can learn all you really need to know about the assets Colonial amassed from the breakdown of what will happen to them, although details are sparse.

1. The F.D.I.C. gets $3 billion in assets that BB&T did not want at all.
2. BB&T gets $7 billion of assets.
3. BB&T gets another $15 billion of assets to manage, but the F.D.I.C. will share losses on them, in ways that are not yet disclosed.

That means that of the $25 billion in assets Colonial had, only 28 percent of them were deemed by BB&T to be worth taking on without any protection. And 12 percent were deemed not worthy of being taken under any terms.

WSJ: Loss Rates for FDIC higher than during S&L Crisis via Calculated Risk

At three of the five banks that failed Friday, increasing the total to 77 so far this year, the financial hit to the agency's deposit-insurance fund is expected by the FDIC to be about 50% of their assets.

As of Friday August 14, 2009, FDIC is Bankrupt via Mish

Below is a graph showing the DIF capital as a percentage of total bank deposits insured by the FDIC. Note that this graph is based on the old insurance limit with a maximum coverage of $100.000/account. This limit has been changed to cover up to $250.000/account until January 1st 2014. Estimates say that the change increases the deposits covered under FDIC insurance to approximately $6 trillion in total.

The current reserve ratio of 0.014%1 strongly indicates how bad this crisis has affected U.S financial institutions. However, this is not the entire story. If we take a closer look at non-current loans and charge-offs from banks one realizes that the FDIC still has a lot of work to be done. Combined non-current loans and charge-offs amounted to nearly $100 billion in Q109 compared to $15 billion/quarter pre-crisis. Moreover, according to analysts at the Royal Bank of Canada the U.S still has banking failures in the thousands to face before the crisis is over. In turn that should result in the FDIC requesting the pre-approved funding signed by the Congress in May 2009, including $100 billion from the U.S Treasury Department.

Larger Version / Vergrößerte Version

You Know That Times Are Really Bad When Even Buffet Won´t Insure The Risk.....

There is really nothing more you need to know..... I assume the death toll on the Bank Closure Map will spike very soon....

Diese Mitteilung spricht Bände......Bei der Flut an untergehenden Banken die zu erwarten sind sicher keine Überraschung.... Die Anzahl der "Todesfälle" auf der Bank Closure Map wird schon sehr kurzfristig explodieren.....


Berkshire, in Blow to Banks, Reins In Its Deposit Insurer WSJ
Warren Buffett's Berkshire Hathaway Inc. has told one of its subsidiaries to stop insuring bank deposits above the amount guaranteed by the federal government, dealing a fresh blow to the financial-services industry as it tries to assuage anxious customers.

The subsidiary, Kansas Bankers Surety Co., is notifying about 1,500 banks in more than 30 states that it will no longer offer a program called "bank deposit guaranty bonds." KBS is an 18-employee subsidiary of Berkshire Hathaway, according to the parent firm's 2007 annual report. It is one of a handful of firms that offer such insurance, a big selling point for banks trying to attract wealthy customers.

That Mr. Buffett is withdrawing from this insurance market is an indicator of how many in the industry are worried about future bank failures.

In some cases, companies that acquire failed banks will buy all the deposits, making the government insurance limits irrelevant.

But customers with large deposits can lose money if the acquiring bank doesn't take on the extra deposits. When Columbian Bank & Trust Co., of Topeka, Kan., failed Aug. 22, there were about 610 accounts with $46 million total that potentially exceeded government insurance limits, the FDIC said.

KBS insured some deposits at this bank and lost money in the failure, people familiar with the matter said. Mr. Towle declined to comment on whether the bank was a customer.

Small Banks' Reckoning Day Is Coming

Does anyone believe Bernanke that the economy is on the way to recovery...... I cannot wait for the delinquency rates 12 month from now ( especailly in the condo segment ) . More from Mish Four Dozen Georgia Banks On Problem List , Phoenix Commercial Real Estate Financier Files Bankruptcy & the WSJ BofA, LaSalle Pact Boosts Problem-Loan Load via Calculated Risk

Diese Thematik ist in Deutschland bisher nicht sonderlich behandelt worden. In unsere Schlagzeilen schaffen es meist nur die großen Investmentbanken und die Bankentitel die sich im S&P 500 tummeln. Mindestens ebenso bedeutend ist aber für das volkswirtschaftliche Bild was sich unter dem Radar bei den regionalen Instituten abspielt. Und hier droht die "Auffanggesellschaft" FDIC ( vergleichbar mit dem Bankensicherungsfonds ) eine fast nicht zu meisternde Aufgabe. Kein Wunder das hier seit Monaten verzweifelt Restrukturierungs und Abwicklungsexperten angeheurt werden um mit den Bankenpleiten fertig zu werden. Schon fast mitleidig zu beobachten wie die Fed und Bernanke hier die Wirtschaft schon wieder auf dem aufsteigenden Ast sehen. Ich hoffe eindringlich das dies wider besseren Wissen geschieht. Bin mir nach den bisherigen permanenten Fehleinschätziungen dieser Clowns da nicht so sicher. Mehr zu diesem Thema gibt es mal wieder vom unermüdlichen Mish Four Dozen Georgia Banks On Problem List & Phoenix Commercial Real Estate Financier Files Bankruptcy sowie dem WSJ BofA, LaSalle Pact Boosts Problem-Loan Load via Calculated Risk. Man darf sich schon einmal auf den Chart in 12 Monaten freuen.....

Small Banks' Reckoning Day Is Coming WSJ

Billions in Troubled Construction Loans Promise to Pose Test for Regional Lenders

According to the Federal Deposit Insurance Corp., $45.4 billion of the $631.8 billion in construction loans outstanding at the end of the first quarter were delinquent ....

Scores of banks were already suffering headaches by the end of the first quarter, according to a review by The Wall Street Journal of FDIC-filed reports by 6,919 banks that make construction loans. The smallest banks, those with total assets of less than $5 billion, faced the biggest problems ...

Nearly one in three of the banks analyzed -- or 2,182 -- had construction-loan portfolios that exceeded 100% of their total risk-based capital, a red flag to regulators, although it doesn't mean the bank is in danger of failing. ...

Even more alarming, 73 of those banks had construction-loan delinquency rates of more than 25%. Executives at all of the banks that responded to questions acknowledged the problems but expressed confidence they had the capital to weather the storm. ....

In 2007 and the first quarter of this year, U.S. banks wrote down just 0.7% of their residential construction and land assets as bad debt, according to Zelman & Associates, a research firm. Over the next five years that figure could rise to 10% and 26%, which would amount to about $65 billion to $165 billion, Zelman projects. ....

> Enjoy the must see clip from Asia on how the landscape/skyline can look like after the bubble has burst.....

> Das nachfolgende Video zeigt eindrucksvoll wie es demnächst wohl auch in einigen Teilen der USA aussehen dürfte.....

Here is one hot candidate for a ghost tower Bangkok stlye..... Leaning Tower of Padre

Hier ein ganz heißer Kandidat für die US Version ..... Leaning Tower of Padre