13 April 2009
Bust or Boom?
Posted by Joy Bischoff under: World Economy .
Peter Anderson sent me an email with the following information that I want to share with you. If you wonder why I want to take the doom and gloom perception of our current economic condition, I will give two reasons. First of all, let me say that I would love for the optimism to be based on reality. My husband has been laid off, along with thousands of other people in Las Vegas. This is not fun and we have no desire to see anyone in tough financial challenges.
Reason number one: if you are considering investing in Wall Street, and false data is being fed to you, this could put your money at great risk. Carefully read the information below and then dig for solid facts.
Reason number two: if you believe that the uncertainty is over and feel no need to prepare by getting out of debt and putting away some food, then you could be putting your family at risk if this upswing is based on incorrect information. All the economists I trust, and who predicted the recession, emphatically state that there will be further decline in spite of occasional jumps. Those who believe the problem will be solved if we simply think positively and go back to our old practices of spending, simply do not understand what brought us to this crisis in the first place.
Stocks jump on Wells Fargo surprise profit
by The Associated Press
Thursday April 09, 2009, 9:48 AM
Wall Street opened higher today after banking giant Wells Fargo & Co. issued a surprise profit announcement that was far above analysts’ estimates.
The Wells Fargo news today is a welcome sign for investors who have been looking for indications that the credit and lending markets are improving.
NOW COMAPRE NEWS ONLY TWO DAYS EARLIER! (very different indeed)
April 06, 2009 01:59 PM Eastern Daylight Time?
JPMorgan Chase, Goldman Sachs, Citibank, Wells Fargo and More Than 1,800
Other Institutions Believed to Be at Risk of Failure Based on Fourth Quarter 2008 Data
New Data Topic of Audio Press Briefing
JUPITER, Fla.– (BUSINESS WIRE)–Several of the nation’s largest banks, including JPMorgan Chase, Goldman Sachs, Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA , plus more than 1,800 regional and smaller institutions are at risk of failure despite government bailouts, according to Martin D. Weiss, Ph.D., president of Weiss Research, Inc., an independent research firm. . .
The debt crisis is much greater than the government has reported, according to the white paper. The FDIC’s “Problem List” of troubled banks includes 252 institutions with assets of $159 billion. The updated review by Weiss Research, however, shows that 1,816 banks and thrifts are at risk of failure, with total assets of $4.67 trillion, compared to 1,568 institutions, with $2.32 trillion in total assets in prior quarter.
Five large U.S. banks have credit exposure related to their derivatives trading that exceeds their capital, with four in particular — JPMorgan Chase, Goldman Sachs, HSBC Bank America and Citibank — taking especially large risks. . .
Until now, bank derivatives losses have been limited almost exclusively to credit defaults swaps (CDS), which represent only 7.8 percent of the notional value U.S. derivatives held by all U.S. banks. In the fourth quarter, although the CDS losses continued at a near-record pace, we also witnessed record losses in the interest-rate sector, which represents 82 percent of the derivatives market: The nation’s banks lost $3.4 billion in interest-rate derivatives, or more than seven times their worst previous quarterly loss in this category.”
Dr. Weiss continues, “In the face of such enormous risks and losses it’s entirely unreasonable to expect the U.S. Government to offset them without unacceptable damage to its own credit, credibility and borrowing power.”
Dr. Weiss points to early signs that the credit of the U.S. Treasury may already be suffering some damage in the wake of government bailout programs such as the $700 billion Troubled Asset Relief Program (TARP), the Federal Reserve’s recent $1.15 trillion commitment to purchase bonds, and the $1 trillion Private-Public Investment Program (PPIP).
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