Sunday, September 13, 2009

Davos on the Edge / Market Thread 9.14.2009

  • Weekend Stupidity Roundup: Debt On Parade
  • Federal Reserve Oversight and the Failure of Riverside Bank of the Gulf Coast
  • Failed Banks, Julian Week #37 Banks #90-93
  • Max Keiser: GP Morgan Goldman Sachs Gold Silver Wall Street
  • FSN, Peter Schiff, Inflation or Deflation?
  • Adviser: High unemployment for years
  • Mike's take on DC protest of too much spending
  • FSN: Same as it ever was, 1930s Depression and now

Economy

Weekend Stupidity Roundup: Debt On Parade


Max Keiser: GP Morgan Goldman Sachs Gold Silver Wall Street


Federal Reserve Oversight and the Failure of Riverside Bank of the Gulf Coast

"Emerging problems" in 2007? I strongly believe that action should have been taken much sooner - at least by 2005 - because of 1) concerns about the housing market, and 2) the concentration of loans in residential real estate. From the report:

Historically, Riverside-Gulf Coast focused on growth through real estate lending in its local service area, a business strategy that created concentrations in both the type of loans and the geographic location. In general, local real estate concentrations increase a financial institution’s vulnerability to cyclical changes in the local market place and may elevate a bank’s safety and soundness risk. Examiners noted that Riverside-Gulf Coast experienced rapid growth during its first six years when the bank’s total assets grew approximately 40 percent annually, to $275 million as of December 31, 2003.

...

Riverside-Gulf Coast’s concentration in real estate loans ranged between 92 and 98 percent of total loans during 2003 to 2008. The bank’s real estate portfolio included traditional one-to-four family mortgages and home equity lines of credit. In addition, a substantial number of Riverside-Gulf Coast’s real estate loans, such as those for residential construction, were categorized as CRE because repayment was dependent on the rental income, sale, or refinancing of the underlying collateral.

emphasis added

The signs of excessive risk were apparent in 2003 to 2005. The Fed is aware of the risks, especially of a high growth strategy with a high loan type concentration. If the regulator was unable to step in sooner and evaluate the risk, then the regulatory process is flawed - and the regulator has already failed. It was too late by 2007.


The inability of the Federal Reserve and the Inspector General to recognize the need for tighter supervision in 2005 or earlier is a serious oversight failure.

Failed Banks, Julian Week #37 Banks #90-93

Corus Bank, N.A.
Chicago IL 13693 September 11, 2009 September 11, 2009
Venture Bank
Lacey WA 22868 September 11, 2009 September 11, 2009
Brickwell Community Bank
Woodbury MN 57736 September 11, 2009 September 11, 2009

FSN, Peter Schiff, Inflation or Deflation?

Mp3

Windows Media

Real Player

  • 1:00 sand foundation
  • 2:00 cooked data
  • 3:50 loan default deflationary?
  • 6:00 govt. fools
  • 8:50 prices going up today
  • 10:32 can't read notes
  • 12:00 Schiff's investing wins and loses
  • 17:10 Fed's balance sheet
  • 18:20 Velocity or lack there of?
  • 19:20 Nail on the head
  • 21:20 Japan vs. US
  • 23:00 Output Gap
  • Rest good didn't take notes

Adviser: High unemployment for years

The president’s chief economic adviser warned Friday that the nation’s unemployment rate could stay “unacceptably high” for years to come — a situation that would seriously complicate Barack Obama’s ability to convince Americans that he’s beating back the recession.

“The level of unemployment is unacceptably high,” National Economic Council Director Larry Summers said Friday. “And will, by all forecasts, remain unacceptably high for a number of years.”

Summers’ comments came in a briefing with reporters ahead of Obama’s speech in New York City on Monday, marking the one-year anniversary of the collapse of Lehman Brothers, an event widely regarded as having created a panic that caused the global economic meltdown.

Mike's take on DC protest of too much spending

I was at the rally yesterday in D.C., working to educate others that were open minded to listening. 50,000 is such a low estimate it is laughable. I have no experience estimating crowd size, but the march down Pennsylvania Avenue was about a mile long and absolutely filled it. There were many others on the periphery as well. 1 million sounds like a very reasonable lower range to me.

Most that showed up there were simply "anti-Obama," "anti-socialism," but there were a significant number that seemed to have an understanding of the Federal Reserve system and were very responsive when an individual started a chant around the Fed. There also seemed to be a growing awareness of the corrupt revolving door politics with the banks that have a vice grip on our political system.

Anyone that characterizes this rally as simply a "health care thing" is grossly mistaken. Further, there were clearly people there that had no interest in politics for many many years, but have recently become energized. Most interesting of all, were the multiple WWII veterans that appeared in wheelchairs to protest our foreign policy.

__________________

-formerly StudentOfJefferson, reporting live from the Washington D.C. Metro Area

FSN: Same as it ever was, 1930s Depression and now

Mp3

Windows Media

Real Player

  • 2:56 History then vs. history now, economic contraction
  • 4:17 Inept monetary policies
  • Taxes 63%, 79%, 94% and attempted 100% for high income earners
  • 10:50 assault on 4 horsemen
  • 12:57 George W. Kaynes and Franklin Delonor Obama
  • 20:36 David Walker 4 deficits
  • 29:00 UN Currency in the making
  • 34:44 Why a dollar collapse would be disadvantageous to all
  • 38:45 Summers and Romer bring the dollar down in orderly fasion
  • 1:04:40Justice for All (Just tax system)



Once in a lifetime...Same as it ever was, same as it ever was