15 July 2008
News and Comments - 07/15/08
Posted by Roy Bischoff under: What's News .
Look out for the exhaust…
with the daily gas prices rising - this may be our only hope!
7 Comments so far...
Cameron Says:
15 July 2008 at 5:48 am.
Analysts Say More Banks Will Fail
by Louise Story
Monday, July 14, 2008
provided by
The New York Times
As home prices continue to decline and loan defaults mount, federal regulators are bracing for dozens of American banks to fail over the next year.
But after a large mortgage lender in California collapsed late Friday, Wall Street analysts began posing two crucial questions: Just how many banks might falter? And, more urgently, which one could be next?
The nation’s banks are in far less danger than they were in the late 1980s and early 1990s, when more than 1,000 federally insured institutions went under during the savings-and-loan crisis. The debacle, the greatest collapse of American financial institutions since the Depression, prompted a government bailout that cost taxpayers about $125 billion.
But the troubles are growing so rapidly at some small and midsize banks that as many as 150 out of the 7,500 banks nationwide could fail over the next 12 to 18 months, analysts say. Other lenders are likely to shut branches or seek mergers.
“Everybody is drawing up lists, trying to figure out who the next bank is, No. 1, and No. 2, how many of them are there,” said Richard X. Bove, the banking analyst with Ladenburg Thalmann, who released a list of troubled banks over the weekend. “And No. 3, from the standpoint of Washington, how badly is it going to affect the economy?”
Many investors are on edge after federal regulators seized the California lender, IndyMac Bank, one of the nation’s largest savings and loans, last week. With $32 billion in assets, IndyMac, a spinoff of the Countrywide Financial Corporation, was the biggest American lender to fail in more than two decades.
Now, as the Bush administration grapples with the crisis at the nation’s two largest mortgage finance companies, Fannie Mae and Freddie Mac, a rush of earnings reports in the coming days and weeks from some of the nation’s largest financial companies are likely to provide more gloomy reminders about the sorry state of the industry.
The future of Fannie Mae and Freddie Mac is vital to the banks, savings and loans and credit unions, which own $1.3 trillion of securities issued or guaranteed by the two mortgage companies. If the mortgage giants ever defaulted on those obligations, banks might be forced to raise billions of dollars in additional capital.
The large institutions set to report results this week, including Citigroup and Merrill Lynch, are in no danger of failing, but some are expected to report more multibillion-dollar write-offs.
http://finance.yahoo.com/banking-budgeting/article/105391/Analysts-Say-More-Banks-Will-Fail
THINKING Says:
15 July 2008 at 6:11 am.
The Next Major Banking Crisis To Unfold
By Greg McCoach | Monday, July 14th, 2008
Market conditions for the junior mining sector continue to deteriorate as we approach mid-summer. Several forces are currently at work, causing problems not only for our sector but for stock markets in general. Here is what I believe is happening:
First, fear is rapidly increasing that the next shoe is about to drop on the credit derivatives time bomb. Recent research I have been doing had led me to the conclusion that a major banking crisis is soon to unfold not just in America but Europe as well. The size of this debacle is going to be colossal. It will involve huge write-downs by the banks which in turn will cause instant liquidity problems and possibly bankruptcy for some of these institutions.
Many of these banks are already insolvent, but have been able to stay afloat using their credit lines and liquidity. What I mean by insolvent is that their debts are bigger than their assets. The problem as I see it moving forward is that not only are many of these banks insolvent, but they are about to become illiquid as well. It looks like the end of August or early September could be reckoning day for at least 20 financial institutions across the United States and Europe. The fallout will be devastating to financial stocks and depositors of troubled and or failing banks and institutions.
The Fed Response
The Fed will respond to the growing crisis with their usual denial and twisting of the facts. Recent meetings behind closed doors indicate clearly they are getting ready to deal with the next round of failures. It was one thing to bail out Bear Stearns without any comments from the public but now the Fed will be trying to bail out or benefit 17 of the largest financial institutions in the country without any public disclosure. Of course it won’t be labeled a “bailout” but that is exactly what is will be. Where is the money going to come from to pay for all of this insanity? The answer is massive inflation.
All of this is in my opinion is leading up to a major banking crisis that is going to hurt a lot of innocent people. Unfortunately for many unsuspecting depositors and clients of the affected companies, looking to the FDIC and SPIC to protect your savings and investments will be a joke.
In the past few weeks they talk like they are going to raise rates, but in the end as the banking crisis goes to the next level they will be left with no choice but to continue lowering rates. Raising interest rates at this point would slaughter the economy, stock and housing markets. It will also precipitate the failure of even more banks were they to raise rates. So despite what you hear in the media, know that the Fed will be forced to lower interest rates in the face of the coming banking collapse.
This is why I believe we are getting so much pressure from Dr. Evil (Hank Paulson) as he is aggressively trying to increase the powers of the Fed. This activity is frightening and should be opposed by all citizens of the United States. It is leading us down the wrong path. It also shows the Fed clearly knows what is coming and that there is little they can do about it. Giving the Fed more power at this point is not going to change the outcome; it will only allow them to steal from the average citizen even more than they have in the past!
From what I have been able to gather it appears the banks have run up against the wall with their credit derivative liabilities. A nasty reckoning day is close at hand. It will probably be round two of what looks to be a series of worsening rounds of financial debacle on an unprecedented scale. It will bring inflation to our economy with a vengeance.
So take note and be forewarned. This is one of the shockwaves that I said would hit in 2008.
Benjamin Says:
15 July 2008 at 8:57 am.
US stocks extend losses amid worries about financials; investors await Bernanke comments
NEW YORK (AP) — Stocks were knocked lower again Tuesday as investors grappled with escalating instability in the financial sector. The Dow Jones industrial average fell more than 100 points.
Wall Street is awaiting testimony from Federal Reserve Chairman Ben Bernanke, who will speak before the Senate Banking Committee to offer his midyear report on the economy. Treasury Secretary Henry Paulson is set to appear as well. President Bush, meanwhile, is expected to hold a news conference to discuss steps to help stabilize the housing and financial markets.
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The market’s ever-increasing anxiety about the financial sector had investors discounting a relatively tame report on wholesale inflation, and sending the dollar to a new low against the euro.
U.S. officials’ comments will come only days after the Fed and the Treasury said they would lend financial support to mortgage giants Fannie Mae and Freddie Mac if necessary. The well-being of the government-chartered companies has drawn Wall Street’s attention in recent weeks as the companies together hold or guarantee more than $5 trillion in mortgages — nearly half the nation’s total.
Cameron Says:
15 July 2008 at 10:27 am.
Bush calls on Congress to pass housing, energy
WASHINGTON (AP) - President Bush urged lawmakers on Tuesday to move quickly in putting into force legislation designed to help prop up mortgage giants Fannie Mae and Freddie Mac while declaring the nation’s financial system to be “basically sound.”
He also called on the Democratic-run Congress to follow his example and lift a ban on offshore drilling to help increase domestic oil production.
“I readily concede it won’t produce a barrel of oil tomorrow, but it will reverse the psychology,” Bush told a White House news conference.
Bush said the two troubled mortgage companies play a central role in the nation’s housing-finance system and that government action to help them were not bailouts, since the two would remain shareholder-owned companies.
“I don’t think the government ought to be involved in bailing out companies,” Bush said.
Amid soaring gas prices, the toughest real estate market in decades, falling home prices and financing that’s harder to come by, Bush said: “It’s been a difficult time for many American families.”
But he also said that the nation’s economy continues to grow, if slowly.
Bush said that despite the woes of Fannie Mae and Freddie Mac and the recent government takeover of California bank IndyMac, U.S. depositors should not worry because their deposits are insured by the government up to $100,000
“If you’re a depositor, you’re protected by the federal government,” Bush said.
http://www.breitbart.com/article.php?id=D91UBNNO0&show_article=1
E.E. Says:
15 July 2008 at 3:12 pm.
Good for the president. I’m proud of him for this. Come on Congress, follow his lead and show faith in the American people and show some faith in our economy by letting us drill.
Bush won’t demand conservation
President won’t ask Americans to conserve gasoline, despite rising oil costs.
President Bush said Tuesday that he will not call on Americans to conserve gasoline despite the rising price of oil, saying consumers are “smart enough” to figure out for themselves that they should drive less.
“They’re smart enough to figure out whether they’re going to drive less or not. I mean, you know, it’s interesting what the price of gasoline has done,” Bush said at a news conference in the White House press room, “is it caused people to drive less. That’s why they want smaller cars: They want to conserve. But the consumer’s plenty bright. The marketplace works.”
“You noticed my statement yesterday, I talked about good conservation and — you know, people can figure out whether they need to drive more or less,” he said. “They can balance their own checkbooks.”
“It’s a little presumptuous on my part to dictate how consumers live their own lives,” the president added. “I’ve got faith in the American people.”
SGS Says:
15 July 2008 at 6:30 pm.
We had some quite “heated” but good discussions about Iraq and its demand that there be troop withdrawal timetable. It turned out to be wrong. It was a mistranslation which mainstream media, and Obama, seized on. The reality is that:
in an audio recording of [Prime Minister Nuri Kamal al-Maliki’s] remarks, heard by the BBC, the prime minister did not use the word “withdrawal”.What he actually said was: “The direction is towards either a memorandum of understanding on their evacuation, or a memorandum of understanding on programming their presence.”
Read more about it here
The basic point is that the there are election coming up for many Iraqi politicians, and they have become rhetorical about US’s presence. They are trying to look tough enough they can deal with whatever get thrown at them in their jobs. And one of the biggest issues there right now has to do with holding US military accountable. Also, it was just a start-point in the negotiation for Iraq with US, but it was not their final demand in any case. Anyway, it’s a good reading for those who were involved in the discussion a few days ago. I am glad I’m wrong!
Cameron Says:
15 July 2008 at 9:19 pm.
I find it interesting the second alternative, getting an idea of what a permanent presence would be like. I think that is what some people in power want. I think it would be a bad idea. Thanks for the additional info.
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