beyondthemba

Bank Failures Continue - 3 More

While the market is rallying, somewhat irrationally in my opinion, the hints of a lingering economic problem continue. Today we heard of 3 more banks which are being closed at a cost of over $400m dollars to the FDIC.  The FDIC has close to $13Bl in their insurance account and this account topped $40bl before the economic meltdown began.

So, the lesson is this is not over yet. Since the TARP was never really used to buy troubled assets (despite its name), banks are sitting on billions of dollars of assets which need to be written down. As they take losses due to foreclosures and other things, they cannot survive.

This, along with pensions, medicare, and social security, tell me the meltdown has not even come close to finishing.

Northern Trust is a Bank I Have Trusted

Let's ensure we do not throw the baby out with the bath water. Northern Trust is a good bank and I have followed them for a long time. Now, Barrons writes and reports about it. 

Soros Believes This May Be Worse Than The Depression

I think the bank failures and the second down turn leg of the stock market have begun in earnest. So does George Soros. Love him or hate him, he has been right for most of this downturn. 

Another Week and More Bad News

Well, to be clear, there may be a silver lining but I will get there in a moment. Vanguard issues the "Economic week in review" and the summary is this:

1. Market is down for the week and down 8.43% for the year. Who said "it can't go any lower"?
2. The Fed will continue holding rates exceptionally low for some time to come. I think they have essentially decided money has to be free to turn the economy around.  
3. Interest rates on Treasuries continue to rise showing a potential "bubble burst" in treasuries. Where is all this money going if not in Treasuries and the stock market? 
4. The GDP was down dramatically.  

 The silver lining:  First, it appears home prices are starting to establish an equilibrium. While existing home sales prices were down the sales were up. When I see a normal reaction like that it tells me they are close to the equilibrium price (at least for now).

Second, the leading economic indicators actually went up. This one metric foreshadowed this deep recession in December 2007. I will never take my eye off this ball. One movement does not make a trend but let's keep our eye on it.