I like Peter Schiff, he was an early predictor of the current financial crisis so was Marc Faber.-Lou
Sunday, May 31, 2009
Saturday, May 30, 2009
Troubled Bank Loans Hit a Record High
There can be no economic recovery when credit defaults are rising. The next leg down in the economy and stock market will be the most painful unfortunately.-Lou
Troubled Bank Loans Hit a Record High
OVERALL loan quality at American banks is the worst in at least a quarter century, and the quality of loans is deteriorating at the fastest pace ever, according to statistics released this week by the Federal Deposit Insurance Corporation.
The report highlighted that even as the government and major banks have scrambled to deal with the impaired securities the banks own, the institutions have been plagued by an unprecedented volume of old-fashioned loans going bad.
Of the entire book of loans and leases at all banks — totaling $7.7 trillion at the end of March — 7.75 percent were showing some sign of distress, the F.D.I.C. reported. That was up from 6.9 percent at the end of 2008 and from 4.1 percent a year earlier. It also exceeded the previous high of 7.26 percent set in 1990 and 1991, during the last crisis in American banking.
The F.D.I.C. has been collecting the figures since 1984.
Read More:
http://www.nytimes.com/2009/05/30/business/economy/30charts.html?ref=business
Troubled Bank Loans Hit a Record High
OVERALL loan quality at American banks is the worst in at least a quarter century, and the quality of loans is deteriorating at the fastest pace ever, according to statistics released this week by the Federal Deposit Insurance Corporation.
The report highlighted that even as the government and major banks have scrambled to deal with the impaired securities the banks own, the institutions have been plagued by an unprecedented volume of old-fashioned loans going bad.
Of the entire book of loans and leases at all banks — totaling $7.7 trillion at the end of March — 7.75 percent were showing some sign of distress, the F.D.I.C. reported. That was up from 6.9 percent at the end of 2008 and from 4.1 percent a year earlier. It also exceeded the previous high of 7.26 percent set in 1990 and 1991, during the last crisis in American banking.
The F.D.I.C. has been collecting the figures since 1984.
Read More:
http://www.nytimes.com/2009/05/30/business/economy/30charts.html?ref=business
Bond markets defy Fed as Treasury yields spike
My contacts in the mortgage market tell me that all hell was breaking loose on Wednesday as interest rates soared on mortgage bonds. The last thing the Fed and Treasury want to see is rising interest rates in the bond market. It is obvious from the big bounce in Treasury prices that the government has heavily interveaning on Thursday and Friday trying to get yields down. Although it did have the desired effect short term, but longer term it is the market that will set rates, not the Fed. The dollar hit a new low on Friday not helping matters.-Lou
Bond markets defy Fed as Treasury yields spike
The US Federal Reserve may soon be forced to launch fresh blitz of quantitative easing whatever the consequences for the US dollar, or risk seeing economic recovery snuffed out by the latest surge in long-term borrowing costs.
By Ambrose Evans-Pritchard-Telegraph May 29, 2009
Yields on 10-year Treasury bonds have risen relentlessly since March when the Fed first announced its plan to buy $300bn (£188bn) of US government debt directly, a move that briefly forced rates down to nearly 2.5pc, a level thought to be the Fed's implicit target.
Yields have jumped to 3.69pc – after spiking as high as 3.74pc on Wednesday – pushing up the standard 30-year mortgage loan to 5.08pc and lifting the borrowing cost for corporations.
The Fed is going to have to consider doubling its purchases of Treasuries," said Ashraf Laidi, from CMC Capital Markets. "We could be nearing the end-game for the US dollar but the Fed has little choice at this point. We're in a vicious circle where any policy aimed at supporting the US economy must be at the expense of the dollar."
The US Mortgage Bankers Association yesterday highlighted the fragility of the US housing market, reporting that 12pc of homeowners are either behind on their payments or facing foreclosure, the highest level since records began.
Read More:
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5402260/Bond-markets-defy-Fed-as-Treasury-yields-spike.html
Bond markets defy Fed as Treasury yields spike
The US Federal Reserve may soon be forced to launch fresh blitz of quantitative easing whatever the consequences for the US dollar, or risk seeing economic recovery snuffed out by the latest surge in long-term borrowing costs.
By Ambrose Evans-Pritchard-Telegraph May 29, 2009
Yields on 10-year Treasury bonds have risen relentlessly since March when the Fed first announced its plan to buy $300bn (£188bn) of US government debt directly, a move that briefly forced rates down to nearly 2.5pc, a level thought to be the Fed's implicit target.
Yields have jumped to 3.69pc – after spiking as high as 3.74pc on Wednesday – pushing up the standard 30-year mortgage loan to 5.08pc and lifting the borrowing cost for corporations.
The Fed is going to have to consider doubling its purchases of Treasuries," said Ashraf Laidi, from CMC Capital Markets. "We could be nearing the end-game for the US dollar but the Fed has little choice at this point. We're in a vicious circle where any policy aimed at supporting the US economy must be at the expense of the dollar."
The US Mortgage Bankers Association yesterday highlighted the fragility of the US housing market, reporting that 12pc of homeowners are either behind on their payments or facing foreclosure, the highest level since records began.
Read More:
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5402260/Bond-markets-defy-Fed-as-Treasury-yields-spike.html
Silver posts biggest monthly gain in 22 years; gold rallies
click on chart to enlargeGold and especially silver are on fire as the decline of the U.S. dollar gains steam. Above is the chart of the silver ETF, SLV. The inflation train is leaving the station and smart money knows it and is piling into gold, silver , oil and food commodities. I have been warning you about the possibility of a dollar crisis and hyper-inflation and it looks more likely by the day. The big decline in US bonds this week (before what looks like government intervention Thursday and Friday) portends big problems for the dollar, interest rates and the hope of economic recovery later this year. Gold looks ready to challenge $1,000/ounce again and silver may take oout it's 2008 high of 20$. Oil hit $66.64/bbl on Friday. Make sure you have some inflation hedges in your portfolio.-Lou
Silver posts biggest monthly gain in 22 years; gold rallies
NEW YORK (MarketWatch) -- Silver futures gained 3% Friday, ending May with their biggest monthly gain in 22 years as inflation worries and hopes for an economic recovery boosted the metal. Gold rose to three-month highs as the dollar slipped.
Silver for July delivery, the most active contract, gained 45 cents to end at $15.61 an ounce on the Comex division of the New York Mercantile Exchange. The front-month June contract closed at $15.60 an ounce.
Meanwhile, gold for June delivery rose $17.30, or 1.8%, to close at $978.80 an ounce, the highest settlement since Feb. 23.
Silver has gained 26.6% this month, the biggest since April 1987. The metal has many industrial uses but is also seen as a hedge against a weaker dollar and inflation. In contrast, gold, which has limited industrial uses, has gained 9.8% in the month, the biggest monthly gain since November.
Read More:
http://www.marketwatch.com/story/silver-poised-for-biggest-monthly-gain-in-22-years-200952991600
Here is a crappy cell phone picture of me with Mark Victor Hansen, the author of the Chicken Soup For The Soul series. He spoke at the seminar on book promotion that I attended on Thursday. He is a dynamic speaker and the most succesful author of all time. He has sold over 140 million books. I am attending his three day author bootcamp in Orlando next week.-Lou
Friday, May 29, 2009
Leap in U.S. debt hits taxpayers with 12% more red ink
We are mortgaging our children's future with reckless abandon. When you break it down by household, the numbers become more real.-Lou
Leap in U.S. debt hits taxpayers with 12% more red ink
Taxpayers are on the hook for an extra $55,000 a household to cover rising federal commitments made just in the past year for retirement benefits, the national debt and other government promises, a USA TODAY analysis shows.
The 12% rise in red ink in 2008 stems from an explosion of federal borrowing during the recession, plus an aging population driving up the costs of Medicare and Social Security.
That's the biggest leap in the long-term burden on taxpayers since a Medicare prescription drug benefit was added in 2003.
The latest increase raises federal obligations to a record $546,668 per household in 2008, according to the USA TODAY analysis. That's quadruple what the average U.S. household owes for all mortgages, car loans, credit cards and other debt combined.
"We have a huge implicit mortgage on every household in America — except, unlike a real mortgage, it's not backed up by a house," says David Walker, former U.S. comptroller general, the government's top auditor.
Read More:
http://www.usatoday.com/news/washington/2009-05-28-debt_N.htm
Thursday, May 28, 2009
U.S. Inflation to Approach Zimbabwe Level, Faber Says
Mark Faber is a smart guy, I would take his remarks seriously.
Sorry for the lack of posts today, I'm in NY at the big book convention promoting my book it's a wild industry I'm learning.-Lou
U.S. Inflation to Approach Zimbabwe Level, Faber Says
May 27 (Bloomberg) -- The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said.
Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.
“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”
Read More:
http://bloomberg.com/apps/news?pid=20601087&sid=aIeLg1djbBps&refer=home
Wednesday, May 27, 2009
US Bond Market Breaking Down
To those who follow technical analysis, this is one scary chart of the 10 Years US Treasury note. Prices falling and yields rising to areas that would derail any chance of a housing market bottom or an economic rebound. This is big stuff folks, stay tuned.-Lou
Time For A National Sales Tax?
Every day brings this great country down the path to socialism. Our income is taxed, our property is taxed, we pay state sales tax and now the government wants to hit us with a VAT to fund universal healthcare. This is really outrageous and must be strongly opposed.-Lou
Once Considered Unthinkable, U.S. Sales Tax Gets Fresh Look
Levy Viewed as Way to Reduce Deficits, Fund Health Reform
Washington Post Wednesday, May 27, 2009
With budget deficits soaring and President Obama pushing a trillion-dollar-plus expansion of health coverage, some Washington policymakers are taking a fresh look at a money-making idea long considered politically taboo: a national sales tax.
Common around the world, including in Europe, such a tax -- called a value-added tax, or VAT -- has not been seriously considered in the United States. But advocates say few other options can generate the kind of money the nation will need to avert fiscal calamity.
At a White House conference earlier this year on the government's budget problems, a roomful of tax experts pleaded with Treasury Secretary Timothy F. Geithner to consider a VAT. A recent flurry of books and papers on the subject is attracting genuine, if furtive, interest in Congress.
And last month, after wrestling with the White House over the massive deficits projected under Obama's policies, the chairman of the Senate Budget Committee declared that a VAT should be part of the debate.
"There is a growing awareness of the need for fundamental tax reform," Sen. Kent Conrad (D-N.D.) said in an interview. "I think a VAT and a high-end income tax have got to be on the table."
A VAT is a tax on the transfer of goods and services that ultimately is borne by the consumer. Highly visible, it would increase the cost of just about everything, from a carton of eggs to a visit with a lawyer. It is also hugely regressive, falling heavily on the poor. But VAT advocates say those negatives could be offset by using the proceeds to pay for health care for every American -- a tangible benefit that would be highly valuable to low-income families.
Liberals dispute that notion. "You could pay for it regressively and have people at the bottom come out better off -- maybe. Or you could pay for it progressively and they'd come out a lot better off," said Bob McIntyre, director of the nonprofit Citizens for Tax Justice, which has a health financing plan that targets corporations and the rich.
Read More:
http://www.washingtonpost.com/wp-dyn/content/article/2009/05/26/AR2009052602909_pf.html
Once Considered Unthinkable, U.S. Sales Tax Gets Fresh Look
Levy Viewed as Way to Reduce Deficits, Fund Health Reform
Washington Post Wednesday, May 27, 2009
With budget deficits soaring and President Obama pushing a trillion-dollar-plus expansion of health coverage, some Washington policymakers are taking a fresh look at a money-making idea long considered politically taboo: a national sales tax.
Common around the world, including in Europe, such a tax -- called a value-added tax, or VAT -- has not been seriously considered in the United States. But advocates say few other options can generate the kind of money the nation will need to avert fiscal calamity.
At a White House conference earlier this year on the government's budget problems, a roomful of tax experts pleaded with Treasury Secretary Timothy F. Geithner to consider a VAT. A recent flurry of books and papers on the subject is attracting genuine, if furtive, interest in Congress.
And last month, after wrestling with the White House over the massive deficits projected under Obama's policies, the chairman of the Senate Budget Committee declared that a VAT should be part of the debate.
"There is a growing awareness of the need for fundamental tax reform," Sen. Kent Conrad (D-N.D.) said in an interview. "I think a VAT and a high-end income tax have got to be on the table."
A VAT is a tax on the transfer of goods and services that ultimately is borne by the consumer. Highly visible, it would increase the cost of just about everything, from a carton of eggs to a visit with a lawyer. It is also hugely regressive, falling heavily on the poor. But VAT advocates say those negatives could be offset by using the proceeds to pay for health care for every American -- a tangible benefit that would be highly valuable to low-income families.
Liberals dispute that notion. "You could pay for it regressively and have people at the bottom come out better off -- maybe. Or you could pay for it progressively and they'd come out a lot better off," said Bob McIntyre, director of the nonprofit Citizens for Tax Justice, which has a health financing plan that targets corporations and the rich.
Read More:
http://www.washingtonpost.com/wp-dyn/content/article/2009/05/26/AR2009052602909_pf.html
North Korea abandons truce and threatens to attack the South
So nuclear power Pakistan is becoming Taliban, Iran moving warships into the gulf, and now North Korea testing A-bombs and threatening full-scale war. Looks like our new president is being tested, wonder if he will pass the test. The world is becoming very unstable.-Lou
North Korea abandons truce and threatens to attack the South
North Korea has declared it is abandoning the truce that ended the Korean war and warned that it could launch a military attack against the South.
Pyongyang said that South Korea's decision to start intercepting ships that are suspected of carrying weapons of mass destruction was tantamount to "a declaration of war against us".
The statement follows a number of missile tests and an underground nuclear test by the North in the last two days.
The statement, through North Korea's state newswire, warned Seoul that North Korea "will no longer be bound by the armistice accord" and that the "Korean peninsula will go back to a state of war".
Pyongyang had previously warned Seoul that joining the US-led Proliferation Security Initiative (PSI) would have fearful consequences.
No formal peace treaty has ever been signed between the two countries, but an armistice in 1953 and a Mutual Defence treaty between the US and South Korea effectively ended the Korean war.
Read More:
http://www.telegraph.co.uk/news/worldnews/asia/northkorea/5391720/North-Korea-abandons-truce-and-threatens-to-attack-the-South.html
U.S. to take majority state in General Motors
What a sorry state of affairs we find our country in today. It has become apparent from the sheer amount of money the government has to commit to GM that this company should just be allowed to die and be liquidated. Ford and Chrysler could buy GM's good brands and then grow marketshare in an auto market without GM, both would most likely thrive. But that would mean fewer jobs for the United Auto Workers, the main reason American auto companies are dying in the first place. So now the U.S. government is the largest shareholder in the largest car maker in America. I wonder how Ford management feels competeing with a government owned GM and Chrysler. Will it really be a level playing field or will GM and Chrysler offer below market interest rates on car loans through the taxpayer subsidized GMAC which now can offer loans to both GM and Chrysler customers. Capitalism is dying before our eyes my friends, it's very sad to watch.-Lou
U.S. to take majority state in General Motors
Bankruptcy likelihood rises
Wasington Times-The White House is driving General Motors Corp. toward a bankruptcy reorganization that would grant the government as much as a two-thirds stake in the battered automaker, while consigning bondholders and unions to minority shares.
GM's bankruptcy now appears more likely than ever within days as the government declined to significantly increase the share of the company offered to bondholders from the 10 percent level they previous rejected. Meanwhile, the United Auto Workers union revealed that its retiree health care fund would receive no more than a 20 percent share of the company.
Within two months, the U.S. and Canadian governments together under the plan would own nearly 70 percent of the storied Detroit company, which is considered the backbone of the U.S. auto and manufacturing sectors, according to sources familiar with the discussions. Canada would receive a small share in exchange for assisting GM, but the sources declined to be more specific.
The overwhelming share of the company the government is giving itself much exceeds the 50 percent share originally reported last month and angered bondholders who feel that the government should have offered more to investors in light of the union's agreement to halve its earlier reported 39 percent share.
"The government is going to get more? Talk about making this worse," said Bill Zastrow, 59, a small-business owner in Massachusetts with $240,000 invested in GM bonds. "I would have thought that would give them the opportunity to do the right thing and sort of even things out."
The White House defended the giant stake it is taking in the nation's largest manufacturer, saying the move was necessary to make sure taxpayers profit from what is likely to be a very expensive investment in GM as it goes through bankruptcy.
Read More:
Tuesday, May 26, 2009
Listen To This Week's Radio Show
Listen to this past Sunday's edition of "The Financial Physician" radio program.
Listen Here:
Geopolitics Hit Markets Worldwide
Here are some of the geopolitical headlines that the markets are trying to digest today. The world is becoming more destabilized day by day. Keep a good eye on the news and manage your money accordingly. There will be money making opportunities if you are in the right markets at the right time. Selective shorting with ETFs could pay off big during the next downleg. I will keep you posted as best I can -Lou
Defying world powers, N. Korea conducts nuke test
http://www.breitbart.com/article.php?id=D98DCSF00&show_article=1
Iran sends warships to Gulf of Aden
http://in.reuters.com/article/worldNews/idINIndia-39868320090525
Gates Says Taliban Have Momentum in Afghanistan
http://online.wsj.com/article/SB124329472631452687.html
Why the Taliban’s going to win in Pakistan
http://www.livemint.com/2009/05/21211703/Why-the-Taliban8217s-going.html
Defying world powers, N. Korea conducts nuke test
http://www.breitbart.com/article.php?id=D98DCSF00&show_article=1
Iran sends warships to Gulf of Aden
http://in.reuters.com/article/worldNews/idINIndia-39868320090525
Gates Says Taliban Have Momentum in Afghanistan
http://online.wsj.com/article/SB124329472631452687.html
Why the Taliban’s going to win in Pakistan
http://www.livemint.com/2009/05/21211703/Why-the-Taliban8217s-going.html
California faces its day of fiscal reckoning
The bankruptcy of California will usher in the next phase of the financial crisis, the insolvency of states, cities and towns . California will be followed by New York, New Jersey and other states that allowed their spending to get out of control. The resulting budget difficulties will require governments to cut services like police, garbage pickup, and road repair. Contractual agreements with state labor unions will make it impossible to bring down labor costs by eliminated state jobs. Our quality of life will begin to recede and the real extent of this financial crisis will be felt by us all. Some are saying that California will have to break up into smaller states to survive. The next phase has just begun-LouCalifornia faces its day of fiscal reckoning
"The voters are getting what they asked for, but I'm not sure at the end of the day they're going to like what they asked for," said Jim Earp, executive director of the California Alliance for Jobs, which represents the hard-hit construction industry. "I think we've crossed a threshold in many ways."
California is looking at a budget deficit projected at more than $24 billion when the new fiscal year starts in July. That is more than one-quarter of the state's general fund.
This week, voters said they no longer want the Legislature to balance budgets with higher taxes, complicated transfer schemes or borrowing that pushes California's financial problems off into the distant future. In light of that, Republican Gov. Arnold Schwarzenegger has made it clear he intends to close the gap almost entirely through drastic spending cuts.
The governor's cutbacks could include ending the state's main welfare program for the poor, eliminating health coverage for about 1.5 million poor children, halting cash grants for about 77,000 college students, shortening the school year by seven days, laying off thousands of state workers and teachers, slashing money for state parks and releasing thousands of prisoners before their sentences are finished.
"I understand that these cuts are very painful and they affect real lives," Schwarzenegger said. "This is the harsh reality and the reality that we face. Sacramento is not Washington - we cannot print our own money. We can only spend what we have."
He also has advocated selling state assets to raise cash, including the Los Angeles Memorial Coliseum and San Quentin State Prison.
The Democrats who control the Legislature do not want major spending cuts, but so far they don't have a plan for closing the deficit. And if their solution is higher taxes and more borrowing, they will probably not have enough Republican votes to get the two-thirds approval needed for passage.
Read More:
Monday, May 25, 2009
US bonds sale faces market resistance
click on chart to enlargeThis could be a week of major inflection in financial markets. If these bond auctions are poorly recieved, the dollar and bond market will continue to tank. The above chart shows the rising yield on the 10 year U.S. Treasury bond. I suspect this chart is keeping both Ben and Timmy up at night. Rising rates is their worst nightmare.
If, as I expect, foreigners decide to pare back their participation in this week's auctions the Fed will have to monetize a huge portion of the debt. If this happens the financial markets will react accordingly. The dollar (very oversold), stocks and bonds will decline and yields, gold and other commodities will rise. The stock market is begining to look tired after it's historic bear market rally of the last few months, it will not take much to push it off it's overbought perch.
I expect the market to resume it's primary bearish trend any day. I for one have established a short position in financial stocks (SKF) and long dated Treasurys (TBT) while increasing my long position in oil (USO) and select resource stocks. This holiday shortened week should be quite interesting, stay tuned.-Lou
US bonds sale faces market resistance
The US Treasury is facing an ordeal by fire this week as it tries to sell $100bn (£62bn) of bonds to a deeply sceptical market amid growing fears of a sovereign bond crisis in the Anglo-Saxon world
The interest yield on 10-year US Treasuries – the benchmark price of long-term credit for the global system – jumped 33 basis points last week to 3.45pc week on contagion effects after Standard & Poor's issued a warning on Britain's "AAA" credit rating.
The yield has risen over 90 basis points since March when the US Federal Reserve first announced its controversial plan to buy Treasury bonds directly, a move designed to force down the borrowing costs and help stabilise the housing market.
The yield-spike may be nearing the point where it threatens to short-circuit economic recovery. While lower spreads on mortgage rates have kept a lid on home loan costs so far, mortgage rates have nevertheless crept back up to 5pc.
The Obama administration needs to raise $2 trillion this year to cover the fiscal stimulus plan and the bank bail-outs. It has to fund $900bn by September.
The US Treasury is selling $40bn of two-year notes on Tuesday, $35bn of five-year bonds on Wednesday, and $25bn of seven-year debt on Thursday. While the US has not yet suffered the indignity of a failed auction – unlike Britain and Germany – traders are watching closely to see what share is being purchased by US government itself in pure "monetisation" of the deficit.
Read More:
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5379733/US-bonds-sale-faces-market-resistance.html
Don't Monetize the Debt: Dallas Fed Chief Fisher
Don't Monetize the Debt
The president of the Dallas Fed on inflation risk and central bank independence.
Wall Street Journal
May 25, 2009
From his perch high atop the palatial Dallas Federal Reserve Bank, overlooking what he calls "the most modern, efficient city in America," Richard Fisher says he is always on the lookout for rising prices. But that's not what's worrying the bank's president right now.
His bigger concern these days would seem to be what he calls "the perception of risk" that has been created by the Fed's purchases of Treasury bonds, mortgage-backed securities and Fannie Mae paper.
Mr. Fisher acknowledges that events in the financial markets last year required some unusual Fed action in the commercial lending market. But he says the longer-term debt, particularly the Treasurys, is making investors nervous.
The looming challenge, he says, is to reassure markets that the Fed is not going to be "the handmaiden" to fiscal profligacy. "I think the trick here is to assist the functioning of the private markets without signaling in any way, shape or form that the Federal Reserve will be party to monetizing fiscal largess, deficits or the stimulus program.
The very fact that a Fed regional bank president has to raise this issue is not very comforting. It conjures up images of Argentina. And as Mr. Fisher explains, he's not the only one worrying about it. He has just returned from a trip to China, where "senior officials of the Chinese government grill[ed] me about whether or not we are going to monetize the actions of our legislature." He adds, "I must have been asked about that a hundred times in China."
Read More:
Sunday, May 24, 2009
$250,000 FDIC Insurance Limits Extended
The FDIC just announced that the increase in FDIC insurance to $250,000 will be extended to December 31, 2013 from it's previous December 31, 2009 expiration date. My guess it will then be extended indefinately, assuming there still is an FDIC at that time. So now you can get a CD for up to $250,000 those maturity is longer than six months-Lou
FDIC Insurance Coverage Extension of Temporary Increase in Standard Maximum Deposit Insurance Amount
May 22, 2009
Summary:
On May 20, 2009, President Barack Obama signed the Helping Families Save Their Homes Act, which extends the temporary increase in the standard maximum deposit insurance amount (SMDIA) to $250,000 per depositor through December 31, 2013. This extension of the temporary $250,000 coverage limit became effective immediately upon the President's signature. The legislation provides that the SMDIA will return to $100,000 on January 1, 2014.
FDIC Website:
Obama: We Are Out Of Money Now
This came from an interview Saturday with CSPAN. There was little coverage by the mainstream media about this very important and market moving statement. This an incredible and irresponsible statement from the President of The United States. Although he speaks the truth, it is important that the president exude confidence in the country, it's finances and it's future. Last week the dollar was taken out to the woodshed and Treasurys joined in. This statement may encourage further selling next week, especially from foreigners. Mr. Obama should leave it to others to say we are broke.-Lou
'WE'RE OUT OF MONEY
Sat May 23 2009
In a sobering holiday interview with C-SPAN, President Obama boldly told Americans: "We are out of money."C-SPAN host Steve Scully broke from a meek Washington press corps with probing questions for the new president.
SCULLY: You know the numbers, $1.7 trillion debt, a national deficit of $11 trillion. At what point do we run out of money?
OBAMA: Well, we are out of money now. We are operating in deep deficits, not caused by any decisions we've made on health care so far. This is a consequence of the crisis that we've seen and in fact our failure to make some good decisions on health care over the last several decades.
So we've got a short-term problem, which is we had to spend a lot of money to salvage our financial system, we had to deal with the auto companies, a huge recession which drains tax revenue at the same time it's putting more pressure on governments to provide unemployment insurance or make sure that food stamps are available for people who have been laid off.
So we have a short-term problem and we also have a long-term problem. The short-term problem is dwarfed by the long-term problem. And the long-term problem is Medicaid and Medicare. If we don't reduce long-term health care inflation substantially, we can't get control of the deficit. So, one option is just to do nothing.
We say, well, it's too expensive for us to make some short-term investments in health care. We can't afford it. We've got this big deficit. Let's just keep the health care system that we've got now. Along that trajectory, we will see health care cost as an overall share of our federal spending grow and grow and grow and grow until essentially it consumes everything...
Smart Money Buying Gold
John Paulson was one of the few hedge fund managers that made big money for his investors last year. He went short mortgage debt and cleaned up. The fact that he has loaded the boat with gold should not be underestimated. This week's action in the dollar, US Bonds and Gold should be of great comfort to Mr. Paulson.-LouGold bugs at last have their perfect trinity
China has doubled its bullion reserves and left us in no doubt that it will spend more of its $40bn monthly surplus on hard assets rather than the toxic paper of Western democracies.
The world's top hedge fund manager John Paulson has built a gold position of at least $5.5bn, the biggest such move since George Soros and Sir James Goldsmith bet on Newmont Mining in 1993.
Britain has become the first of the Anglo-Saxon "AAA" club to face a downgrade. As feared, the cancer of bank leverage is spreading to sovereign cores.
Gold prices tend to slide in late May and languish through the summer, because of the seasonal ups and downs of jewellery demand. The trader reflex would be to short gold at this stage after its $90 vault to $959 an ounce over the past month. They may think again this year.
Paulson & Co has bought $2.9bn in SPDR Gold Trust, the biggest of the gold exchange traded funds (ETFs), which now holds 1106 tonnes − three times the Brown-gutted reserves of the United Kingdom.
Mr Paulson has also built up a $2.3bn holding of Anglo Ashanti, Goldfields, Kinross Gold, and Market Vectors Gold Miners. The fact that he is launching a "Paulson Real Estate Recovery Fund", reversing the bet against sub-prime securities that made him rich, tells us all we need to know about his thinking. This is a liquidity-reflation play.
Read More:
Saturday, May 23, 2009
Remembering Those Who Paid The Price For Freedom
On this Memorial Day weekend we gather together with friends and family, enjoy a barbeque or day at the beach. Memorial Day is the unofficial start of the summer season and we all look forward to warm breezes and a cool swim in the pool. Many of us fail to relect on what Memorial Day is really all about. It's about remembering and honoring all the men and woman who died defending America against those who would take away our freedom. The years to come will be filled with planeloads of flag draped coffins as the world devolves into global conflict and scores of American soldiers fall to our enemies. Let us all enjoy the three day weekend and remember to relect on those who are not with us today and pray for our troops who will not spend the day at the beach or enjoy a hotdog in the backyard.-LouDollar Downer
This is a chart of this past week's action in the U.S. dollar index. A 3.7% decline in one week is very rare and it looks like new lows are ahead of us. The U.S. Treasury market also took it on the chin with long dated Treasury bonds falling and yields rising dramatically. The fact that this is happening while the Fed is buying bonds in the market is very troublesome. The dollar is oversold here and a bounce next week would not be unexpected but the primary trend now is down. Fears in the market that the U.S. will lose it's AAA rating are fueling a run on the dollar. Higher rates in the bond market will trample any "green shoots" of economic recovery (if there really is any). This situation will be the primary topic on Sunday's radio show, tune in live at 11am ET on the internet-LouWatch America Go Bankrupt
This is one scary picture. Watch how our debts and other liabilities rise by the second. It is only a matter of time before the dollar crashes (it may have started this week). Protect yourself.-Lou
http://www.usdebtclock.org/
http://www.usdebtclock.org/
Bank Closure Friday
These two bank closures follow the early morning announcement that Florida's largest bank, BankUnited was siezed by regulators. Expect the pace of bank closures (and the cost to FDIC's insurance fund) to accelarate.-Lou
Two Illinois banks fail, bringing year's total to 36
Strategic Capital had $471 million in deposits and $537 million in assets as of May 13, according to the FDIC. Effingham, Ill.-based Midland States Bank has agreed to assume the failed bank's deposits, the FDIC said.
Midland States has also agreed to acquire about $536 million worth of Strategic Capital's assets.
The FDIC said Strategic Capital's failure should cost its deposit insurance fund $173 million.
The FDIC voted Friday to charge an emergency fee to U.S. banks, in an effort to replenish the deposit insurance fund amid the ongoing credit crisis.
Macomb's Citizens National Bank marked the second Illinois closure announced on Friday, and the fifth in that state so far this year.
Morton, Ill.-based Morton Community Bank has agreed to assume Citizens National's deposits, the FDIC said. Citizens National had roughly $400 million in deposits as of May 13, and $437 million in assets, the FDIC said.
The FDIC estimated that the failure of Citizens National will cost its insurance deposit fund $106 million.
Also on Friday, BankUnited Financial Corp said it had filed for Ch. 11 bankruptcy protection. BankUnited Financial is the former holding company for BankUnited FSB, the largest lender based in Florida, which was closed Thursday and placed in receivership.
The company said that it is unlikely it will be entitled to any distribution from the FDIC given the bank's financial condition.
Two Illinois banks fail, bringing year's total to 36
SAN FRANCISCO (MarketWatch) -- Champaign, Ill.-based Strategic Capital Bank and Macomb, Ill.-based Citizens National Bank were closed by regulators Friday, bringing the total number of bank failures for 2009 to 36, according to the Federal Deposit Insurance Corp.
Strategic Capital had $471 million in deposits and $537 million in assets as of May 13, according to the FDIC. Effingham, Ill.-based Midland States Bank has agreed to assume the failed bank's deposits, the FDIC said.
Midland States has also agreed to acquire about $536 million worth of Strategic Capital's assets.
The FDIC said Strategic Capital's failure should cost its deposit insurance fund $173 million.
The FDIC voted Friday to charge an emergency fee to U.S. banks, in an effort to replenish the deposit insurance fund amid the ongoing credit crisis.
Macomb's Citizens National Bank marked the second Illinois closure announced on Friday, and the fifth in that state so far this year.
Morton, Ill.-based Morton Community Bank has agreed to assume Citizens National's deposits, the FDIC said. Citizens National had roughly $400 million in deposits as of May 13, and $437 million in assets, the FDIC said.
The FDIC estimated that the failure of Citizens National will cost its insurance deposit fund $106 million.
Also on Friday, BankUnited Financial Corp said it had filed for Ch. 11 bankruptcy protection. BankUnited Financial is the former holding company for BankUnited FSB, the largest lender based in Florida, which was closed Thursday and placed in receivership.
The company said that it is unlikely it will be entitled to any distribution from the FDIC given the bank's financial condition.
Friday, May 22, 2009
The Credit Card Accountability, Responsibility and Disclosure Act
The Credit Card Accountability, Responsibility and Disclosure Act
In an effort to boost profits and recover from massive credit losses, the nations credit card companies began to charge excessive fees and arbitraraly raise interest rates to as much as 30%. Credit lines were cut and accounts that had no balances were closed. This has many Americans angry since we are giving the banks billions in bailout funds and they then sock it to the public with usury interest rates and fees.
Congress passed "The Credit Card Accountability, Responsibility and Disclosure Act" that ends some of the most egregious practices of the nations credit card companies. President Obama will sign the bill into law today. Rarely does Congress do something that has such a beneficial effect for the public. It is about time.
The important provisions of the bill:
Credit card companies must give 45 days notice before increasing fees and raising rates and finance charges.
If you are offered "teaser rates" (low initial interest rates) they must stay in effect for 6 months.
When the credit card company increases your interest rate, it will only apply to new purchases not existing balances (assuming your not 60 days delinquent). This is huge.
Banks must send out your bill no later than 21 days before the due date.
Principle payments will be applied to the balance with the highest interest rates first, prior to the new law it was applied to the lowest rate balance.
Limits on how people under 21 are offered credit cards. . For adults less than 21 years old, they can only apply for a card if they can prove income, and their credit limit is capped at 30 percent of that income. I love this provision. Young adults are indoctrinated into debt addiction at a young age and it reamins a problem the rest of their life.
Universal default, which raises the interest on your credit cards if your late on payments such as utility bills and car payments is prohibited.
Quote of the Day
"A government big enough to give you everything you want, is strong enough to take everything you have". Thomas Jefferson
Supersize My Home
Houses today are almost triple the size they were in 1950. The taxes, utilities and upkeep are about five times what they were back then. How are we able to afford all this? Well back in 1950 few moms went to work. Stay at home moms are now a rarity and our younger generation has paid the price.-LouPIMCO's Gross: U.S. at risk of losing top AAA rating
Bill Gross's comments yesterday afternoon sent the stock and bond market into a big decline. The dollar also fell to a year low and gold rose to $953/ounce.-LouPIMCO's Gross: U.S. at risk of losing top AAA rating
NEW YORK (Reuters) - Bill Gross, manager of the world's biggest bond fund, warned on Thursday the United States will eventually lose its top AAA credit rating, a fear that had already spooked financial markets on Thursday and could keep the dollar, stocks and bonds under heavy selling pressure.
The United States will face a downgrade in "at least three to four years, if that, but the market will recognize the problems before the rating services -- just like it did today," Gross told Reuters.
Gross, the co-chief investment officer of Pacific Investment Management Co. and manager of the Pimco Total Return Fund, which has $154 billion in assets, earlier had told Reuters via email that market declines on Thursday were due to investor fears that the United States is "going the way of the UK -- losing AAA rating which affects all financial assets and the dollar."
Standard & Poor's on Thursday lowered its outlook on Britain to "negative" from "stable," threatening the nation's top AAA rating. Britain faces a one in three chance of a ratings cut as debt approaches 100 percent of gross domestic product.
Read More:
Biggest Bank Failure of The Year
The FDIC could not even wait until Friday night, the traditional time for announcing bank failures. Let's see if there are more banks closed tonight. The cost to FDIC's insurance fund is $4.9 billion, almost half of the fund balance, time to tap into government funds.-Lou
BankUnited Shut Down, Sold To Private-Equity Group
The largest bank failure so far in 2009 is also notable because the failed bank's buyer is a consortium of private-equity firms.
BankUnited, FSB, based in Coral Gables, Fla., was closed by the Office of Thrift Supervision on Thursday, and the Federal Insurance Deposit Corporation was appointed receiver.
The bank was bought by a newly chartered federal savings bank named BankUnited. The BankUnited management team is headed by John Kanas, the former head of North Fork Bank. Ownership includes WL Ross & Co., Carlyle Investment Management, Blackstone Capital Partners V, Centerbridge Capital Partners, LeFrak Organization, The Wellcome Trust, Greenaap Investments and East Rock Endowment Fund.
BankUnited, was established in 1984, had $13.1 billion in total assets, 85 branches and had 1,083 employees. The FDIC estimates that this failure will cost its deposit-insurance fund $4.9 billion.
The bank was “critically undercapitalized and in an unsafe condition to conduct business. The bank reported losses of $1.2 billion in 2008 as loan quality continued to deteriorate,” according to a press release from the Office of Thrift Supervision.
Such strong language is unusual from the press releases sent by government agencies regarding bank closures. Also unusual was the Thursday action; most bank-failure announcements occur late Friday evening.
The FDIC immediately chartered BankUnited as a federal savings bank which will take over banking operations and all nonbrokered deposits of BankUnited, FSB.
The newly formed bank will take on $12.7 billion of the bank’s assets and $8.3 billion nonbrokered deposits, which should minimize disruptions for customers.
BankUnited will not assume the approximately $348 million in brokered deposits. The FDIC said it will pay the brokers directly, and that customers who placed money with brokers should contact them directly for more information.
This is the 34th bank insured by the FDIC to fail this year, and the third bank in the state of Florida to fail this year.
BankUnited Shut Down, Sold To Private-Equity Group
The largest bank failure so far in 2009 is also notable because the failed bank's buyer is a consortium of private-equity firms.
BankUnited, FSB, based in Coral Gables, Fla., was closed by the Office of Thrift Supervision on Thursday, and the Federal Insurance Deposit Corporation was appointed receiver.
The bank was bought by a newly chartered federal savings bank named BankUnited. The BankUnited management team is headed by John Kanas, the former head of North Fork Bank. Ownership includes WL Ross & Co., Carlyle Investment Management, Blackstone Capital Partners V, Centerbridge Capital Partners, LeFrak Organization, The Wellcome Trust, Greenaap Investments and East Rock Endowment Fund.
BankUnited, was established in 1984, had $13.1 billion in total assets, 85 branches and had 1,083 employees. The FDIC estimates that this failure will cost its deposit-insurance fund $4.9 billion.
The bank was “critically undercapitalized and in an unsafe condition to conduct business. The bank reported losses of $1.2 billion in 2008 as loan quality continued to deteriorate,” according to a press release from the Office of Thrift Supervision.
Such strong language is unusual from the press releases sent by government agencies regarding bank closures. Also unusual was the Thursday action; most bank-failure announcements occur late Friday evening.
The FDIC immediately chartered BankUnited as a federal savings bank which will take over banking operations and all nonbrokered deposits of BankUnited, FSB.
The newly formed bank will take on $12.7 billion of the bank’s assets and $8.3 billion nonbrokered deposits, which should minimize disruptions for customers.
BankUnited will not assume the approximately $348 million in brokered deposits. The FDIC said it will pay the brokers directly, and that customers who placed money with brokers should contact them directly for more information.
This is the 34th bank insured by the FDIC to fail this year, and the third bank in the state of Florida to fail this year.
Thursday, May 21, 2009
Dollar Breaking Down, Gold Rising
Click On Charts To Enlarge
The top chart is the U.S. dollar index, the bottom one is gold. As you can plainly see the dollar has been under severe pressure the last few days. Gold has been moving up in inverse fashion as well it should. There is concern that the United States may lose it's AAA rating. Treasury yields are moving higher in response and look to want to go higher. This is a serious situation that may be the start of and inflationary dollar crisis. The stock market is down close to 200 points as well.-LouMy Book In Career Press's Fall Catalog
Career Press Fall 2009 New titles
Scroll down to page 5 to see my book description in my publisher's fall catalog. Or click on top hyper-link to view larger catalog-Lou
Paid Vacation Act
More government out of control. Who is Congress to demand businesses give a certain amount of paid vacation? Why not become Socialist Europe where they get two months vacation and their economies stink. I love this picture though-Lou
Alan Grayson to introduce Paid Vacation Act
Rep. Alan Grayson was standing in the middle of Disney World when it hit him: What Americans really need is a week of paid vacation. So on Thursday, the Florida Democrat will introduce the Paid Vacation Act — legislation that would be the first to make paid vacation time a requirement under federal law.
The bill would require companies with more than 100 employees to offer a week of paid vacation for both full-time and part-time employees after they’ve put in a year on the job. Three years after the effective date of the law, those same companies would be required to provide two weeks of paid vacation, and companies with 50 or more employees would have to provide one week.
The idea: More vacation will stimulate the economy through fewer sick days, better productivity and happier employees. “There’s a reason why Disney World is the happiest place on Earth: The people who go there are on vacation,” said Grayson, a freshman who counts Orlando as part of his home district. “Honestly, as much as I appreciate this job and as much as I enjoy it, the best days of my life are and always have been the days I’m on vacation.”
Day of reckoning looms for the U.S. dollar
I have been warning for sometime that there will be a currency crisis most likely later this year where confidence in the U.S. dollar is lost. Quantatative easing (money printing) coupled with huge budget deficits will result in the dollar collapsing especially against gold. We are begining to see the start of the decline. The result will be massive inflation and shortages of basic supplies as inflation expectations lead people to begin to hoard items that they fear will be more expensive in the future. Commodity prices have been on a tear lately as dollars begin to flow toward all things tangible. Oil prices are at $62 a barrel almost double what they were just a few months ago. Gold looks like it wants to go over $1,000/ounce, this time for good.-Lou
Day of reckoning looms for the U.S. dollar
The U.S. dollar's day of reckoning may be inching closer as its status as a safe-haven currency fades with every uptick in stocks and commodities and its potential risks - debt and inflation - are brought under a harsher spotlight.
Ashraf Laidi, chief market strategist at CMC Markets, said Wednesday a "serious case of dollar damage" was underway.
"We long warned about the day of reckoning for the dollar emerging at the next economic recovery," Mr. Laidi said in a note.
Mr. Laidi said economic recovery would weigh on the greenback as real demand for commodities, coupled with improved risk appetite, caused investors to seek higher yields in emerging markets and commodity currencies. This would draw investment away from the U.S. dollar, which was dragged down by growing debt and the risk quantitative easing would eventually spark a surge in inflation.
The U.S. dollar slid against most major currencies Wednesday, hitting a five-month low of US$1.3775 against the euro and pushing the Canadian dollar up US1.21¢ to a seven-month high of US87.69¢.
John Curran, the senior corporate dealer at Canadian Forex, said the U.S. dollar would likely fall further in the next week, with the Canadian dollar likely reaching about US88.35¢, at which point it could break higher to test the US92.35¢ level.
"The U.S. dollar is continuing to slide as investor appetite is gaining momentum," Mr. Curran said. "People are getting comfortable about taking on a little more risk."
Read More:
Standard & Poor's cuts U.K. outlook to negative from stable
This is what happens when you debase your currency,is U.S. next?-LouStandard & Poor's cuts U.K. outlook to negative from stable
LONDON (MarketWatch) -- Standard & Poor's on Thursday lowered its credit outlook on the U.K. to negative from stable in view of the country's swelling debt, which may expand even as the economy recovers.
The move by Standard & Poor's raises the prospect not only of a credit-rating downgrade in Britain but a lowering of the outlook in the U.S., which has taken a similar path of big spending and quantitative easing to escape the credit-led recession.
"I think there will be a downgrade on the U.K. and I think there will be a downgrade on the U.S. outlook from one of the Big Three" credit-rating firms, said Stephen Gallo, head of market analysis at Schneider Foreign Exchange.
The British pound sputtered after the report, sliding as much as 1% after the news, though the currency is still trading near the highs of the year.
The FTSE 100 stock-market index weakened after the report, sliding 2.1%.
Yields on 10-year British government bonds, known as gilts, rose 4 basis points to 3.62%. Yields move in the opposite direction to prices.
S&P kept the country's AAA rating intact, but the outlook signals that the country's credit rating could be lowered within the next two years.
S&P already has lowered the ratings of other European countries, including those of Spain, Ireland, Greece and Portugal. The Daily Telegraph newspaper had reported in April that S&P was mulling its position on the U.K.
Read More:
http://www.marketwatch.com/story/sp-cuts-uk-outlook-to-negative-from-stable
Wednesday, May 20, 2009
Democrats seek financial rescue of minority-owned broadcasters
On one hand the socialists in Washington want to stifle conservative talk radio with the "Fairness Doctrine" and on the other they want to subsidized failing liberal broadcasting. More government gone wild.-Lou
Democrats seek financial rescue of minority-owned broadcasters
High-ranking House Democrats are urging the Treasury Department to prop up minority-owned broadcasters suffering from a lack of capital and lost advertising revenue amid the economic slump.House Majority Whip James Clyburn (D-S.C.) is leading an effort to convince Treasury Secretary Timothy Geithner to take “decisive action” by extending credit to this sector of the broadcasting industry.Clyburn and other senior members, including House Financial Services Committee Chairman Barney Frank (D-Mass.) and Ways and Means Committee Chairman Charles Rangel (D-N.Y.), argue that minority-owned broadcasters are sound businesses, but that the recession could undermine the government’s efforts to diversify the airwaves.A number of members from the Congressional Black Caucus signed the letter, too.
While many jobs are at stake, a more important principle — the government’s fundamental interest in promoting a diversity of voices, including service to underserved communities — is severely threatened,” the members write in a draft of a letter that was scheduled to be sent Tuesday.
Read More:
http://thehill.com/business--lobby/democrats-seek-financial-rescue-of-minority-owned-broadcasters-2009-05-19.html
Democrats seek financial rescue of minority-owned broadcasters
High-ranking House Democrats are urging the Treasury Department to prop up minority-owned broadcasters suffering from a lack of capital and lost advertising revenue amid the economic slump.House Majority Whip James Clyburn (D-S.C.) is leading an effort to convince Treasury Secretary Timothy Geithner to take “decisive action” by extending credit to this sector of the broadcasting industry.Clyburn and other senior members, including House Financial Services Committee Chairman Barney Frank (D-Mass.) and Ways and Means Committee Chairman Charles Rangel (D-N.Y.), argue that minority-owned broadcasters are sound businesses, but that the recession could undermine the government’s efforts to diversify the airwaves.A number of members from the Congressional Black Caucus signed the letter, too.
While many jobs are at stake, a more important principle — the government’s fundamental interest in promoting a diversity of voices, including service to underserved communities — is severely threatened,” the members write in a draft of a letter that was scheduled to be sent Tuesday.
Read More:
http://thehill.com/business--lobby/democrats-seek-financial-rescue-of-minority-owned-broadcasters-2009-05-19.html
click on chart to enlargeI posted this chart so you can see how the current bear market (blue line) rally is similar to the bear market rally following the 1929 crash (gray line). There were a number of significant bullish pops in the market during the depression but the primary trend was still down. I believe this market will closely mirror that of the thirties, be careful.-Lou
Florida's Largest Bank About To To Be Seized By Regulators?
This could be the largest bank failure since IndyBank last year and may wipe out much of the FDIC's remaining capital, stay tuned.-Lou
BankUnited Bidders Said to Be Told Bank to Be Seized
May 19 (Bloomberg) -- Bidders for BankUnited Financial Corp., the ailing Florida bank, were told by U.S. officials that regulators plan to put the lender into receivership before selling its assets, according to people familiar with the auction.
May 19 (Bloomberg) -- Bidders for BankUnited Financial Corp., the ailing Florida bank, were told by U.S. officials that regulators plan to put the lender into receivership before selling its assets, according to people familiar with the auction.
WL Ross & Co. and private-equity firms including Carlyle Group and Blackstone Group LP submitted a bid today to buy BankUnited Financial Corp. assets, according to people with knowledge of the offer, who declined to be identified because the talks are confidential. Goldman Sachs Group Inc. and Toronto-Dominion Bank also made a joint bid, Dow Jones Newswires reported, citing unidentified people.
Blackstone and Carlyle, the world’s two biggest leveraged buyout firms, are among those eager to snap up banks on the cheap after global losses from the credit crisis topped $1.4 trillion. BankUnited, with about $14 billion in assets, lost money for three straight quarters amid surging defaults on option adjustable-rate mortgages. Regulators earlier this year declared the Coral Gables-based company “critically undercapitalized” and ordered it to find a buyer.
“The FDIC will try to line up buyers before taking over a lender,” said Patricia McCoy, who teaches banking and securities regulation at the University of Connecticut School of Law in Hartford, referring to the Federal Deposit Insurance Corp. “In receivership, the operating assumption is that the common equity will be reduced to zero.”
Shareholders at Risk?
Federal regulators may take BankUnited into receivership as early as this week, the people said, a step that could wipe out shareholders. The group with the winning offer may then take over the lender, Florida’s largest, from the government.
The FDIC has been named the receiver for 33 banks that have failed this year, and found buyers for all but five. In the case of BankUnited, whose primary regulator is the Office of Thrift Supervision, the OTS would be responsible for closing the bank and placing it in receivership, while the FDIC would be responsible for the sale.
BankUnited spokeswoman Melissa Gracey didn’t return a call or an e-mail. Representatives for the private-equity firms, Goldman Sachs and Toronto-Dominion declined to comment.
“We don’t comment on open and operating institutions,” said FDIC spokesman David Barr. OTS spokesman Bill Ruberry declined to comment.
BankUnited fell 21 percent to 70 cents in Nasdaq Stock Market trading at 4:10 p.m. The stock traded as high as $32.95 in December 2004
How can this happen in America?
This I found on Jim Sinclair's website www.jsmineset.com (one of my favorites) How can this happen in America? My heart goes out to this guy-Lou
Letter from a Dodge dealer May 19, 2009
letter to the editor
My name is George C. Joseph. I am the sole owner of Sunshine Dodge-Isuzu, a family owned and operated business in Melbourne, Florida. My family bought and paid for this automobile franchise 35 years ago in 1974. I am the second generation to manage this business.
We currently employ 50+ people and before the economic slowdown we employed over 70 local people. We are active in the community and the local chamber of commerce. We deal with several dozen local vendors on a day to day basis and many more during a month. All depend on our business for part of their livelihood. We are financially strong with great respect in the market place and community. We have strong local presence and stability.
I work every day the store is open, nine to ten hours a day. I know most of our customers and all our employees. Sunshine Dodge is my life.
On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as "new," nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.
Our facility was recently totally renovated at Chrysler’s insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.
HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN?
THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY
This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong.
This atrocity will most likely force my family into bankruptcy. This will also cause our 50+ employees to be unemployed. How will they provide for their families? This is a total economic disaster.
HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?
I beseech your help, and look forward to your reply. Thank you.
Sincerely,
George C. Joseph President & Owner Sunshine Dodge-Isuzu
Letter from a Dodge dealer May 19, 2009
letter to the editor
My name is George C. Joseph. I am the sole owner of Sunshine Dodge-Isuzu, a family owned and operated business in Melbourne, Florida. My family bought and paid for this automobile franchise 35 years ago in 1974. I am the second generation to manage this business.
We currently employ 50+ people and before the economic slowdown we employed over 70 local people. We are active in the community and the local chamber of commerce. We deal with several dozen local vendors on a day to day basis and many more during a month. All depend on our business for part of their livelihood. We are financially strong with great respect in the market place and community. We have strong local presence and stability.
I work every day the store is open, nine to ten hours a day. I know most of our customers and all our employees. Sunshine Dodge is my life.
On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as "new," nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.
Our facility was recently totally renovated at Chrysler’s insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.
HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN?
THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY
This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong.
This atrocity will most likely force my family into bankruptcy. This will also cause our 50+ employees to be unemployed. How will they provide for their families? This is a total economic disaster.
HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?
I beseech your help, and look forward to your reply. Thank you.
Sincerely,
George C. Joseph President & Owner Sunshine Dodge-Isuzu
Obama's new rules will transform US auto fleet
The U.S. government is now being controlled by environemental extremists who want to control all that you do. This dictatorial decree will further hurt the dying auto industry by forcing them to make smaller cars that Americans do not want to buy. Cars will cost thousands more by some estimates. This will also put your family at risk as smaller cars are more dangerous. Little by little this administartion is taking your freedoms away. -Lou
Obama's new rules will transform US auto fleet
DETROIT (AP) - Some soccer moms will have to give up hulking SUVs. Carpenters will still haul materials around in pickup trucks, but they will cost more. Nearly everybody else will drive smaller cars, and more of them will run on electricity. The higher mileage and emissions standards set by the Obama administration on Tuesday, which begin to take effect in 2012 and are to be achieved by 2016, will transform the American car and truck fleet.
The new rules would bring new cars and trucks sold in the United States to an average of 35.5 miles per gallon, about 10 mpg more than today's standards. Passenger cars will be required to get 39 mpg, light trucks 30 mpg.
That means cars and trucks on American roads will have to become smaller, lighter and more efficient.
Eric Fedewa, vice president of global powertrain forecasting for the auto consulting firm CSM Worldwide in Northville, Mich., said the changes will make pickup trucks so much more expensive that they will be used almost exclusively for work.
And instead of a minivan or SUV, more parents will haul their families in much smaller vehicles with three rows of seats - something more like the Mazda 5 small van, he said. The Mazda 5 gets about 28 mpg on the highway.
Read More:
Tuesday, May 19, 2009
GM bankruptcy plan eyes quick sale to gov't
This is totally outrageous, what are we the Soviet Union? This is all about Obama taking care of his buddies at the UAW. The union will wind up the majority owner of GM. They already own a big chunk of Chrysler. Let's see if I have this right, the unions bankrupt the auto manufacturers with their outrageously generous labor contracts and then the government keeps the companies alive with billions in taxpayer funds. Then the government owns the good part of the company, forgives taxpayer loans and the unions have a nice new auto company to own and bankrupt again. Do you think the government would bail out these companies if unions were not involved? Government is out of control, this country is headed for it's own bankruptcy.-LouGM bankruptcy plan eyes quick sale to gov't
NEW YORK, May 19 (Reuters) - General Motors Corp's plan for a bankruptcy filing involves a quick sale of the company's healthy assets to a new company initially owned by the U.S. government, a source familiar with the situation said on Tuesday.
The source, who would not be named because he was not cleared to speak with the media, did not specify a purchase price. The new company is expected to honor the claims of secured lenders, possibly in full, according to the source.
The remaining assets of GM would stay in bankruptcy protection to satisfy other outstanding claims.
GM has about $6 billion in secured debt, including a secured revolving credit and bank debt.
The government's plans include giving stakes in the new company to GM's union and bondholders, although the ownership structure of the company is still being negotiated, said the source who is familiar with the company's plans.
In addition, the government would extend a credit line to the new company and forgive the bulk of the $15.4 billion in emergency loans that the U.S. has already provided to GM, the source said.
The government has given GM until June 1 to restructure its operations to lower its debt burden and employee costs.
If those talks failed, the company has said it would follow rival Chrysler LLC into bankruptcy.
Setting up a new company to buy the healthy assets is aimed at reassuring consumers who might not be willing to make a major purchase from a bankrupt company, fearing it would not honor warranties or provide service.
The board of the new company would be established with the tacit approval of the government. Fritz Henderson, who took the helm of GM earlier this year after the government pushed out Rick Wagoner, would likely head the new company, the source said.
GM could not be immediately reached for comment.
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