Archive for December, 2009

Quick Hit: “Is the Baltic Dry Index Signaling Problems Ahead?”

The Baltic Dry Index has been declining for 14 straight days and is threatening to sink below 3,000 today!

The last time it was below 3,000 was on October 28th when it was 2,986. Its low in 2009 was January 5th when it hit 772 on the second business day of the year. It started the year at 774 on January 2nd, and hit the high for the year, peaking at 4,661 on November 19th.

Is this a signal of a drastically slowing economy? Possibly.

It’s clearly a sign of shrinking global shipments. A sign that consumers are not stepping up and buying.

Over the six months from its peak the index fell 11,000 points to its low in January. Obviously it can’t fall that much during this decline, but a decline of only 3,900 from this year’s peak will put us again at the 2 year low.

Surely it won’t sink to that low in meteoric fashion, but, the next 2 weeks are critical and will give an indication of the direction the economy will go in 2010.

Keep an eye on this important index.

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Posted in Economy, Quick Hits, Shipping | Comments Off

“All Talk; No Action”

The President invited the Top Dogs of the Big Banks to the White House on Monday.

Or did he summon them?

Our favorite banker, Lloyd Blankfein, though capable of doing God’s work, was unable to make it from New York to Washington, DC. You’d think God would have given him a couple of Angels to insure he made this important meeting. I guess he’s only doing God’s work when it leads to profits.

On the President’s agenda was tough talk and ultimatums directed at the very group that caused the global financial meltdown.

The Fat Cats needed to be straightened out, chastised for their complicity in the financial crisis, even if it took whips and chains. They needed to be forcefully reminded that they could not continue to steal from the people who bailed their greedy asses out of the mess they found themselves in; those that prevented their failure; the American taxpayers.

This long needed whuupping from the Commander in Thief would surely shake these pillars of the community to their foundations.

Humbled by the Prez’s admonition the previous night on 60 Minutes, they would be ready to commit, without hesitation, to becoming the good corporate citizens necessary in turning around this dead and decaying economy.

But it appears there was no beating, no tough talk, no character building ass whuuppings, and no floggings from the people’s Commander in Grief. No Teddy Roosevelt ‘speak softly, and beat them into submission with a with a big stick.’

Instead, Mr. Obama politely requested their help in providing money for small business; modifying home loans to slow the rate of foreclosures—helping millions remain in their humble abodes; and lowering interest rates and fees on credit cards and home equity loans, affecting millions more Americans.

Oh, and telling their high-paid lobbyists to quit fighting the regulations that Congress was trying to pass. Or…trying to weaken them till they have little affect at all.

Congress was already good at that on their own. Read the rest of this entry »

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“UnAmerican Activities; The Banks Who Stole Christmas”

No Toto, we’re not in Whoville anymore!

Together these classic films, “The Wizard of Oz” and “The Grinch Who Stole Christmas,” one in magnificent color, written by L. Frank Baum, and the other an incredible story by the irrecusable Dr. Seuss, definitively describe what banks have done to the economy, the middle-class, the country, and—oh yes, Christmas.

The “UnAmerican Activities” of American banks have stolen Christmas, and Christmas cheer, from millions of Americans—and even more millions of children. They are, at the same time, the Wizard of Oz and the Grinch.

As the Wizard of Oz banks fooled unsuspecting and naive consumers into believing the American Dream was tied up in a 6.9% interest rate. Banks enticed everyone down the Yellow Brick Road, in search of the Emerald City.

But the road, like in the movie, wasn’t paved with gold. And there is no Emerald City to behold.

Bankers deceived hard-working Americans, convincing them the way to prosperity was cheap credit and burdensome debt. They tricked customers into massive obligation through subprime mortgages and credit cards with limits well beyond the cardholder’s means. And then the curtain was pulled back and revealed their deception.

Bad gambles, made with the play money they issued to all the ungrateful fools, began to unravel. The economy began to slide, and with it the banks’ profits disappeared.

With the falling economy their affable clients began to default and the bankers could see their ginormous bonuses fading. Years of fake prosperity were gone. The Wizard had been exposed, and banks found themselves in a dubious pinch.

That’s when they turned, into the petulant Grinch. Read the rest of this entry »

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“Who Left the Vaults Open in Georgia?”

Someone left the vault open in Georgia. Three (3) more Georgian banks were among the 6 banks seized by the FDIC on Friday. If the lights aren’t already out in Georgia, they’re certainly dimming!

Bank failures had been benign the previous three weeks. Four fell in the three weeks prior to this one. The six banks closed Friday brought the total to 130 U.S. banks this year. Of the 130, Georgia now has had 24 of those; 18% of the nations failed banking institutions.

The Wall Street Journal has an incredible, up-to-date web page that keeps track of the failed banks: “Failed Banks – The Wall Street Journal Online.” You can follow the bank failures there or at the FDIC website.

In a development last week, a week in which the FDIC had no bank failures, they released the number of banks on the watch list for the third quarter. The list of those banks the FDIC is monitoring grew to a startling 552 from last quarter’s 416 banks under the watchful eye of the banking regulators.

The increase of 33% has gone practically unnoticed by the markets and the media, which is perplexing. Like the watch list, another disturbing increase was evident in the noncurrent loans rate.

Noncurrent Loan Rates for all 13,080 banks insured or supervised by the FDIC, continue to deteriorate increasing for 13 straight quarters to 4.94% of all loans. In the third quarter of 2005 the noncurrent loan rate was one half of one percent (.51%).

But getting back to the closures over the last four weeks. Not to be out-done by Georgia the state of Florida lost 3 banks, one each in Sarasota, Naples, and Fort Myers. California lost one in San Clemente. Illinois lost another in Aurora. Florida now has 12 failed banks, California 16, and Illinois 20 so far this year.

The long stable AmTrust Bank in Cleveland, Ohio, was the oldest and largest of the 6 banks to succumb on Friday. Established in 1889, the hundred and twenty year old bank will cost the Federal Deposit Insurance Fund an estimated $2,000,000,000. The shared loss agreement with New York Community Bank is approximately $6,000,000,000.

The FDIF, the Federal Deposit Insurance Fund, will suffer a loss of approximately $3.4 billion for the 10 banks they assumed from November 13th through December 4th. The shared loss provision totals nearly $7 billion. The FDIC’s share, should all of the bad assets fail, would be $3.5 billion. Of course, not all of the toxic assets will default, but the loss to the fund could still be considerable.

As the end of the disastrous year approaches, 150 banks may have failed, bringing the two year total to 176. Even if the total reaches 150 by year’s end, it is much better than the earlier estimations of 180 to 200, but is still a disturbing number of failures.

Georgia is hurting, but had it not been for ‘the government,’ the Georgian banking system would have collapsed.

The problems in Georgia are evidence that a ‘free market,’ unregulated banking system is failing. The intervention of the FDIC; a social program set-up in the 1930’s by a visionary government, has prevented a Depressionesque failure in the state of Georgia.

Needless to say, if only the the regulatory agencies had been able, or willing, to do their job we may have averted this banking morass.

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Posted in FDIC Foreclosures | Comments Off

“UnAmerican Activities; The UnVirtuous Goldman”

It is a time of turmoil, a time of unrest, of upheaval. ‘It is the best of times, It is the worst of times.’

Especially for the economy!

The American people are struggling, weighed down by a mountain of debt, unemployment, stagnant wages, declining home prices, and foreclosures. The middle-class is eroding at the fastest pace since The Great Depression.

Though greed is at the heart of the meltdown, UnAmerican Activities have created and perpetuated this biting financial morass.

Most, if not all, of the current economic crisis has been the result of the risks and failures of financial institutions. Unfortunately, hardworking Americans are paying the price.

At the head of the turmoil, the cause of the pain most Americans are feeling, stands Goldman Sachs who seems to be successful no matter what happens in the economy. A beacon of success, a pillar of financial stability, a company to be admired and emulated! Not really. There are several reasons for their success, many not as noble as one would suspect.

Goldman has made billions ‘betting against America.’

Read the rest of this entry »

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Posted in Banking, Economy, Too Big to Bail, UnAmerican | Comments Off