Jay's Daily News

"The recovery is likely to be anaemic and below trend in advanced economies and there is a big risk of a double-dip recession". -Nouriel Roubini

http://www.ft.com/cms/s/0/90227fdc-9...44feabdc0.html

How Safe Are FDIC-Insured Bank Accounts?

When a series of banks started failing last year, federal officials said consumers’ money was safe and guaranteed, as long as their financial institution was insured by the Federal Deposit Insurance Corporation (FDIC).

Now, it’s becoming clear that the FDIC has its limits. According to an Aug. 23 report by Richard Bove, the vice president of equity research at Rochdale Securities, another 150 to 200 banks may fail in the aftermath of the credit crunch yet, and if they do, the FDIC could need more money to secure consumer deposits.

The FDIC’s Deposit Insurance Fund is now at its lowest point since March 2003, down to around $10 billion in June 2009 from more than $40 billion in June 2008, according to Bove. As that reserve has dwindled, the number of troubled banks has climbed to 250, and 81 have failed so far this year. During the 12 months prior to March 31, 44 banks failed and cost the Deposit Insurance Fund an estimated $20.1 billion, according to the FDIC. At the end of the first quarter of this year, the FDIC had $13 billion in its fund, and its reserve ratio (the balance of the fund divided by insured deposits) stood at 0.27%, its lowest point since 1993.

Regardless of the fund’s level and the stunning speed of its decline, all sources interviewed for this article said that the government plans to do everything in its power to keep it from running dry. As the fund loses money from bank failures, the FDIC replenishes it by charging its member banks a special assessment fee, which is essentially an insurance premium. Riskier institutions have to pay more, based on a risk assessment that includes supervisory issues, leverage ratios and loans that are past due, says Andrew Gray, a spokesman for the FDIC.

Go for a drive down Camden, NJ. Leave a wallet open with hundred dollar bills sticking out. Leave the engine running, the keys in the ignition and a window open.

That actually would not be safer than an FDIC insured bank. But only just.

Days Away From Economic Chaos?

by Bill Sardi

America is just a few days away from a possible day of reckoning. I again call attention to this day, August 25, when the Federal Deposit Insurance Corporation issues its 2nd Quarter report for 2009 on the state of health of American banks.

It has not particularly alarmed Americans that its growth and prosperity have been built upon debt. The American public is a bit desensitized, particularly since the Y2K threat fizzled. We must wait and see how Americans respond to the upcoming FDIC report.

The following charts tell the story. There are roughly 8400 American banks that set aside a small portion of their profits to aggregately insure bank depositors should their local bank fail. A plethora of bank failures has depleted the FDIC reserve fund from $52.8 billion in 2008 to $13 billion in the 1st Quarter of 2009. (See chart below)

Real US unemployment rate at 16 pct: Fed official


http://www.breitbart.com/article.php...show_article=1

Good find there Opie. Folks, if you're reading this, you should really click the link and read the article in it's entirety. It's that good.

Hummel: The US Will Default On Its Debt

John Carney|Aug. 27, 2009, 4:01 PM

http://static.businessinsider.com/%7...21eb499de1d400The flood of debt that the US is taking on in its efforts rescue to economy will combine with huge social insurance obligations--Medicare, MedicaidSocial Security--to create an unsustainable level of public indebtedness, economist Jeffrey Rogers Hummel argues in at length here.

Faced with this mountain of debt, policy makers will have just two choices: repudiate the debt or engage in hyper inflation to monetize it, Hummel writes. And faced with that choice the Treasury will likely protect the currency and default on Treasuries.

Here's the scary conclusion:

It is not literally impossible that the Federal Reserve could unleash the Zimbabwe option and repudiate the national debt indirectly through hyperinflation, rather than have the Treasury repudiate it directly. But my guess is that, faced with the alternatives of seeing both the dollar and the debt become worthless or defaulting on the debt while saving the dollar, the U.S. government will choose the latter. Treasury securities are second-order claims to central-bank-issued dollars. Although both may be ultimately backed by the power of taxation, that in no way prevents government from discriminating between the priority of the claims. After the American Revolution, the United States repudiated its paper money and yet successfully honored its debt (in gold). It is true that fiat money, as opposed to a gold standard, makes it harder to separate the fate of a government's money from that of its debt. But Russia in 1998 is just one recent example of a government choosing partial debt repudiation over a complete collapse of its fiat currency.

A more likely outcome, it seems to us, is that the US will make good on Treasury debt but repudiate soft obligations like Social Security and Medicare. That way the US would continue to be able to borrow in the future. And all it would require would be a Congressional vote lowering the outlays for these programs.

But maybe all this is unnecessary doomsaying. AIG is up HUGE, so we're sure everything will be just fine.

the zero hedge manifesto


our mission:

* to widen the scope of financial, economic and political information available to the professional investing public.
* to skeptically examine and, where necessary, attack the flaccid institution that financial journalism has become.
* to liberate oppressed knowledge.
* to provide analysis uninhibited by political constraint.
* to facilitate information's unending quest for freedom.



This Is How You Kill The Dollar And Keep The Ponzi From Unraveling For Another Day

by Tyler Durden on 08/27/2009

Congratulation Ben - thanks to you those ZH t-shirts just got more expensive. Dollar carry traders everywhere rejoice.

Study Says World's Stocks Controlled by Select Few

Companies from US, UK and Australia have the most concentrated financial power.

Aug 25, 2009
By Lauren Schenkman

Inside Science News Service

WASHINGTON -- A recent analysis of the 2007 financial markets of 48 countries has revealed that the world's finances are in the hands of just a few mutual funds, banks, and corporations. This is the first clear picture of the global concentration of financial power, and point out the worldwide financial system's vulnerability as it stood on the brink of the current economic crisis.

A pair of physicists at the Swiss Federal Institute of Technology in Zurich did a physics-based analysis of the world economy as it looked in early 2007. Stefano Battiston and James Glattfelder extracted the information from the tangled yarn that links 24,877 stocks and 106,141 shareholding entities in 48 countries, revealing what they called the "backbone" of each country's financial market. These backbones represented the owners of 80 percent of a country's market capital, yet consisted of remarkably few shareholders.

"You start off with these huge national networks that are really big, quite dense," Glattfelder said. “From that you're able to ... unveil the important structure in this original big network. You then realize most of the network isn't at all important."

This is a link to an RSS feed I receive. A boxing metaphor.
The article's subheading queries 'Will the U.S. currency be the reserve
currency in three years?'

http://www.worldcurrencywatch.com/20...-of-the-world/

Jay Walker & Opie999:

Thanks for the link to Lew Rockwell. Good timing for me to find this writer.

Surge in Homeless Pupils Strains Schools.

This is truly sickening!

http://www.nytimes.com/2009/09/06/ed...less.html?_r=3

The ratings agencies effectively took bribes for higher ratings, just like people who knowingly authenticate forged art so that they will earn a higher fee

http://www.washingtonsblog.com/2009/...ribes-for.html

Lehman leads way in 'lottery ticket' rally

http://www.ft.com/cms/s/0/0ada19e6-9...nclick_check=1

The US Federal Reserve's policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy, according to a top member of the Communist hierarchy.

http://www.telegraph.co.uk/finance/e...-printing.html

SEC contrite about missing Madoff, vows reforms

Thu Sep 10, 2009 7:12pm EDT


By Rachelle Younglai


WASHINGTON (Reuters) - Contrite U.S. Securities and Exchange Commission officials apologized for bungling five probes that should have uncovered Bernard Madoff's $65 billion fraud and pledged to overhaul the way the agency operates.


A scathing report issued last week by SEC Inspector General David Kotz found that the agency missed numerous red flags, did not properly follow up on leads and dismissed tips and complaints that might have uncovered Madoff's investment sham.

China to Issue Yuan-Denominated Bonds in Hong Kong


By CHRIS V. NICHOLSON
Published: September 8, 2009

The Chinese Ministry of Finance said Tuesday that it would issue 6 billion yuan worth of government bonds in Hong Kong, a major step to internationalize its currency at a time of concern about the dollar.
http://graphics8.nytimes.com/images/...09yuan_190.jpg

This is the first time that government bonds, comparable to U.S. Treasury securities, are to be issued. Above, a Bank of China in Hong Kong.

The yuan bond issue, the equivalent of $879 million, will “promote the yuan in neighboring countries and improve the yuan’s international status,” the ministry said on its Web site.

“The first step toward internationalization is regionalization,” Shi Lei, a currency analyst at Bank of China in Beijing, said during an interview. “China wants to develop the offshore market in Hong Kong.”

While domestic banks like Bank of China and the Export-Import Bank of China have issued yuan-denominated bonds in Hong Kong for a couple of years at the encouragement of Beijing, this is the first time that government bonds, comparable to U.S. Treasury securities, are to be issued. The sale is set for Sept. 28.

Revealed: The ghost fleet of the recession

By Simon Parry


Last updated at 3:34 AM on 13th September 2009
The biggest and most secretive gathering of ships in maritime history lies at anchor east of Singapore. Never before photographed, it is bigger than the U.S. and British navies combined but has no crew, no cargo and no destination - and is why your Christmas stocking may be on the light side this year



http://i.dailymail.co.uk/i/pix/2009/...10_634x403.jpg The 'ghost fleet' near Singapore. The world's ship owners and government economists would prefer you not to see this symbol of the depths of the plague still crippling the world's economies

Great read Opie. Thanks for sharing!

they need to pay to park there right?

In international waters? Which one exactly?