Friday Afternoon Reads
By Barry Ritholtz - December 18th, 2009, 4:30PM
Some interesting items that caught my eye today:
• Agencies in a Brawl for Control Over Banks (WSJ)
• Accounting rule impact delayed (The Hill)
• Apparently, I am a Sith Lord (Business Insider)
• Harvard’s Feldstein Says U.S. Economy Still Mired in Recession (Bloomberg)
• Best of the Year:
-BOSTONIAN OF THE YEAR The Watchdog: Elizabeth Warren
-Public intellectual of the Year: Simon Johnson
(See eg Simon Johnson’s Paul Volcker Picks Up A Bat)• The golden detour: Contrarians still cautious about gold (Marketwatch)
• How the IRS sort-of-saved Citi (FT)
• Not Just Drones: Militants Can Snoop on Most U.S. Warplanes (Wired)
>
What are you reading?
Tweet
Facebook
Reddit
Digg this!
December 18th, 2009 at 3:17 pm
fat cat bankers, the pimps of Wall Street: for every pimp, there’s both a hooker and a john http://bit.ly/69Z682
having the soundest banks is for weenies http://bit.ly/51oBGq
spin citi http://bit.ly/50gahO
ben refied exploding ARM http://bit.ly/7COmRj (via calculated risk) i guess ben really believed there was no housing bubble. earlier this year, his wife was a victim of id theft http://bit.ly/6Z9kHy
December 18th, 2009 at 3:38 pm
Use the force wisely, young Skywalker
December 18th, 2009 at 3:47 pm
Interesting exchange in the Senate with Al Franken presiding:
http://politicalticker.blogs.cnn.com/2009/12/18/franken-takes-on-lieberman-as-tensions-builds-in-senate/#more-82284
The other thing that I’ve read recently is my 2010 health insurance card. We participate in one of the better Boston-area health plans. Premium went up again this year (of course) but co-pays for prescriptions and office visits nearly doubled.
I am very troubled by what I’ve been reading about the Senate health reform allowing annual coverage caps for individual care. The provision was added behind closed doors and last I heard no one was admitting responsibility for it.
http://www.cbsnews.com/stories/2009/12/11/politics/main5966352.shtml?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CBSNewsHealth+%28Health+News%3A+CBSNews.com%29
I’ll get personal here for a minute and share that my family had extraordinary medical care needs some time ago. We do okay financially but let’s just say that a $250,000 annual cap would have bankrupted us. This is a bad (maybe even evil) provision that IMO is the inverse of the failure to cap pharma costs under the “Medicare reform” legislation a few years ago. Without containing retail costs of care, this is pretty scary.
December 18th, 2009 at 5:04 pm
if we get an amnesty for all the illegals, say next year, what happens with healthcare- is there enough money to add more people?
December 18th, 2009 at 5:10 pm
“Outlandish and equally awesome…” Yep, that’s you Barry.
December 18th, 2009 at 5:22 pm
So I was reading the Simon Johnson link, and was browsing around there a little finding myself disagreeing with most things there. When I noticed this article highlighted on the side:
Alex Renton
To cut emissions we have to curb world population. So why isn’t this Copenhagen’s top priority?
With an following article about how we need to curb populations in Brazil and other developing countries.
This scares me – a lot.
Population Control… Really? Eugenics is rearing its ugly head yet again, this time under the guise of Climate Change. I pray this stay fringe…
December 18th, 2009 at 5:24 pm
So I was reading the Simon Johnson link, and was browsing around there a little finding myself disagreeing with most things there. When I noticed this article highlighted on the side:
Alex Renton
To cut emissions we have to curb world population. So why isn’t this Copenhagen’s top priority?
With an following article about how we need to curb populations in Brazil and other developing countries.
This scares me – a lot.
Population Control… Really? Eugenics is rearing its ugly head yet again, this time under the guise of Climate Change. I pray this stay fringe…
BR – Why post links to sites that support Eugenics? Assuming you did it unintentionally, but people might see it as endorsement.
December 18th, 2009 at 5:25 pm
Mr. Ritholtz:
Just because you and I are alleged co-Sith Lord’s, you get no special treatment as a former Crazy Eddie customer. No refunds!
Sam E. Antar (convicted felon and former Crazy Eddie CFO)
December 18th, 2009 at 5:27 pm
I haven’t read it yet…but in a few hours, I will read how the FDIC closed maybe three or four small banks in buttlick America…it is all planned. Hundreds are insolvent, but they can only be shut a few at a time on Friday nights. I will post the link when it comes in. We must sacrifice them to save the TBTF banks.
December 18th, 2009 at 5:28 pm
crazy eddie as in , “our prices are INSANE”? I remember that commerical- the guy use to dress up with a santa hat, i think
December 18th, 2009 at 6:07 pm
interview with Paul Samuelson
http://www.calculatedriskblog.com/2009/12/recent-interview-with-paul-samuelson.html
December 18th, 2009 at 6:09 pm
CTX:
This one’s for you.
http://www.youtube.com/watch?v=wqpfKG6ZHLs
December 18th, 2009 at 6:13 pm
Transor Z Says:
I am very troubled by what I’ve been reading about the Senate health reform allowing annual coverage caps for individual care. The provision was added behind closed doors and last I heard no one was admitting responsibility for it.
not sure but don’t we have this already? i know where i work we do. i get 3 choices, 2 have annual caps, the 3rd doesn’t (also the most expensive too. but not by much).
the 3rd is an EPO, the others aren’t (more like the old insurance plans of long ago. you know the ones where you file the claim to get reimbursement).
not saying its right though. just that its what we have already
http://baselinescenario.com/2009/12/18/small-steps-and-health-care-costs/#comment-36317
http://economistsview.typepad.com/economistsview/2009/12/reaching-into-bank-executives-deep-pocketbooks-motivates-action.html
December 18th, 2009 at 6:22 pm
and then 2010 like 1890s with robots maybe?
http://ftalphaville.ft.com/blog/2009/12/18/116571/ten-tweets-from-wilmot/
December 18th, 2009 at 6:23 pm
bank#134
http://www.calculatedriskblog.com/2009/12/bank-failure-134-rockbridge-commercial.html
December 18th, 2009 at 6:40 pm
@Theodore D — Prechter’s got a bunch of thoughts/info on the resurgence of eugenics during economic cycles such as this. Its sadly not a surprise at all — although weaving it into the rubric of climate change does make things more interesting.
December 18th, 2009 at 7:10 pm
down go 135-138
http://www.calculatedriskblog.com/2009/12/bank-failures-135-to-138-four-more.html
December 18th, 2009 at 7:13 pm
the dismal 2000s?
http://images.businessweek.com/ss/09/12/1217_numbers/1.htm
December 18th, 2009 at 7:17 pm
“Steve Barry Says:
December 18th, 2009 at 5:27 pm
I haven’t read it yet…but in a few hours, I will read how the FDIC closed maybe three or four small banks in buttlick America…it is all planned. Hundreds are insolvent, but they can only be shut a few at a time on Friday nights. I will post the link when it comes in. We must sacrifice them to save the TBTF banks.”
What a surprise…
Regulators shut banks in 4 states
By MARCY GORDON (AP) – 32 minutes ago
WASHINGTON — Regulators have shut down banks in Alabama, Florida, Georgia and Michigan, bringing to 137 the number of U.S. banks that have failed this year amid the soured economy and mounting loan defaults.
The Federal Deposit Insurance Corp. took over the four. Atlanta-based RockBridge Commercial Bank, with $294 million in assets and $291.7 million in deposits was shuttered, as was New South Federal Savings Bank, based in Irondale, Ala., with $1.5 billion in assets and $1.2 billion in deposits.
Also closing their doors were Citizens State Bank of New Baltimore, Mich., with $168.6 million in assets and $157.1 million in deposits; and Peoples First Community Bank of Panama City, Fla., with $1.8 billion in assets and $1.7 billion in deposits.
December 18th, 2009 at 7:22 pm
Make that 138.
December 18th, 2009 at 7:39 pm
This has gotten underplayed…Iran seizing an Iraqi oil field? Isn’t that ballsy, given we are protecting Iraq right now? What are the ramifications?
http://news.yahoo.com/s/ap/20091218/ap_on_re_mi_ea/ml_iraq_iran_oil
December 18th, 2009 at 8:23 pm
now up to 140?
http://www.calculatedriskblog.com/2009/12/bank-failure-140-first-federal-bank-of.html
http://www.calculatedriskblog.com/2009/12/bank-failure-139-imperial-capital-bank.html
December 18th, 2009 at 8:26 pm
@Steve Barry: i heard that this morning and almost drove off the road. WTF?
So what can we do, we’re mired down in Afghanistan now with the big surge? Next week maybe Iran will just sneak up to the next oil field and annex that too. Keep darin’ ‘em to do something about it. . . .
i know U.N. SANCTIONS!!
December 18th, 2009 at 8:42 pm
@willid:
I guess 7 failures makes sense this week…they can’t do any next Friday, 12/25. In 3 weeks, we’ll have another 7.
December 18th, 2009 at 8:54 pm
@tranzor
It gets even better…After McCain came out today and said that Franken’s action was an unprecedented disgrace to the Senate, Hardball with Chris Matthews dug up footage from 2002 of another US Senator objecting to allowing a colleague an extra minute of time. Guess who that senator was?
Hint–It starts with “Mc” and ends with “Cain!” =)
http://tpmlivewire.talkingpointsmemo.com/2009/12/flashback-mccain-objected-to-granting-dem-senator-more-time.php
@Barry
I object to the fact that every one of those Sith Lords is white. Where’s the diversity?
December 18th, 2009 at 9:29 pm
“small banks in buttlick America…”
Steve Barry,
I resent this. Everybody knows that Buttlick (which should be capitalized) is located on the Potomac.
December 18th, 2009 at 9:50 pm
” Agencies in a Brawl for Control Over Banks”
Yeah, the FDIC is apparently a problem so relegate control over banks to either the Treasury or the FED who are obviously the solution. I believe the American people have shown their distain for the Treasury and FED via multiple polls but hey, welcome to democracy.
December 18th, 2009 at 10:45 pm
@f411: Of course he did. The man is 110 years-old. Maybe he just forgot? Or maybe he’s just a giant hypocrite and fraud, like most of the cretins on Capitol Hill? You pick. ;-)
December 18th, 2009 at 10:47 pm
I haven’t read it yet…but in a few hours, I will read how the FDIC closed maybe three or four small banks in buttlick America…it is all planned. Hundreds are insolvent, but they can only be shut a few at a time on Friday nights. I will post the link when it comes in. We must sacrifice them to save the TBTF banks.”
What a surprise…,
Not sure what you’re complaining about. If you think incompetence should not be rewarded, shouldn’t you be happy the FDIC is closing these banks and their assets get bought by well-ran banks that didn’t take the same risks the closed bank did, thereby strengthening them?
So what can we do, we’re mired down in Afghanistan now with the big surge? Next week maybe Iran will just sneak up to the next oil field and annex that too. Keep darin’ ‘em to do something about it. . . .
i know U.N. SANCTIONS!!
People wanted a world with less American influence. They’re getting their wish. There’s a power vacuum and Iran for its part is wanting to become a larger power. The geopolitics websites in general think is more just testing the reaction. The only people that have publicly acknowledged it are the Iraqis. The Iranians have publicly not said anything, although “high ranking officials” have said what did it and how down to the point of the general in charge, so it’s not like they’re hiding it. The U.S. has said absolutely nothing.
December 18th, 2009 at 10:51 pm
@rj: Do you mean “well-run banks” like WFC, Citi, JPM Chase? If so, I think you might be insane. Or just misinformed.
December 19th, 2009 at 12:02 am
“Outlandish and equally awesome” ….. and awesomely hot!
December 19th, 2009 at 12:11 am
Oh, and on economics, and the bank closures, can someone explain to me what is going on? Why is it that a few banks go under every Friday after hours? Why is it that no one seems to notice or care? Is this just going to go on and on for months…years maybe?
I’m just a girl that doesn’t know anything really, just woke up one day a few years ago and realized that everything had gone a bit crazy, and that the people in charge didn’t know wtf they were talking about. I might not know much of anything, and might not understand 80% of the stuff you all talk about on here, but I want to thank Barry Ritholtz for this blog and creating a place where people like myself who simply have a “feeling” can become informed.
December 19th, 2009 at 1:00 am
@rj: Do you mean “well-run banks” like WFC, Citi, JPM Chase? If so, I think you might be insane. Or just misinformed.
No, I mean “well-run banks” as in the large number of regional and community banks in this country that did not walk the plank of carrying out risky lending. You know, traditional banking methods. The banks the FDIC are closing are not getting bought by Wells Fargo, Citi, or Chase. The banks that closed today and had buyers were bought by the likes of OneWest of Pasadena, City National Bank of L.A., Hancock Bank of Gulfport, Miss., and Beal Bank of Plano, Texas.
So the only person misinformed here is you. Feel free to apologize at any time for your idiotic post and assertion.
December 19th, 2009 at 4:16 am
Aspartame alert: Diet soda destroys kidney function
Thursday, December 17, 2009 by: E. Huff, staff writer
Scientists from Brigham and Women’s Hospital in Boston have revealed results from a study outlining some of the effects of artificial sweeteners on the body. Conducted on a group of 3,000 women, the results indicated that those who drank two or more artificially-sweetened beverages a day doubled their risk of more-rapid-than-normal kidney function decline.
The study accounted for various other risk factors including the woman’s age, her blood pressure, if she smoked, and if she had any other pre-existing conditions such as heart disease or diabetes. The 11-year study evaluated the effects of all sweetened drinks on progressive kidney decline and discovered that two or more diet drinks leads to a two-fold increase in rapid kidney decline incidences.
Though study results did not show any correlation between sugar- or corn syrup-sweetened drinks and the onset of rapid kidney decline, these ingredients are implicated in causing diabetes and obesity and should not be perceived as safe merely because they did not have a direct correlation in this particular study topic.
High sodium intake was also implicated in the study as promoting progressive kidney decline. Since diet soda contains excessive amounts of sodium, higher than sugar soda, it is no surprise that diet sodas were the primary offenders in the study. However it is unclear from this particular study which ingredient plays the larger role in progressive kidney decline, the artificial sweeteners or the sodium content
December 19th, 2009 at 4:18 am
Whoops! Link failed, try this
December 19th, 2009 at 4:20 am
@Steve Barry Says: December 18th, 2009 at 8:42 pm
I guess 7 failures makes sense this week…they can’t do any next Friday, 12/25. In 3 weeks, we’ll have another 7.
Hmmm, I wonder what will happen in the new year when the new fiscal tax write off season starts 8O
December 19th, 2009 at 4:30 am
Is the European police state going global?
Outside, in the real world, it was snowing, and a foretaste of the Brave New World being cooked up by “world leaders” in their fantasy-land was already evident. Some 20,000 observers from non-governmental organizations – nearly all of them true-believing Green groups funded by taxpayers – had been accredited to the conference.
However, without warning the UN had capriciously decided that all but 300 of them were to be excluded from the conference today, and all but 90 would be excluded on the final day.
Of course, this being the inept UN, no one had bothered to notify those of the NGOs that were not true-believers in the UN’s camp. So Senator Steve Fielding of Australia and I turned up with a few dozen other delegates, to be left standing in the cold for a couple of hours while the UN laboriously worked out what to do with us.
In the end, they decided to turn us away, which they did with an ill grace and in a bad-tempered manner. As soon as the decision was final, the Danish police moved in. One of them began the now familiar technique of manhandling me, in the same fashion as one of his colleagues had done the previous day.
Once again, conscious that a police helicopter with a high-resolution camera was hovering overhead, I thrust my hands into my pockets in accordance with the St. John Ambulance crowd-control training, looked my assailant in the eye and told him, quietly but firmly, to take his hands off me.
He complied, but then decided to have another go. I told him a second time, and he let go a second time. I turned to go and, after I had turned my back, he gave me a mighty shove that flung me to the ground and knocked me out…..
December 19th, 2009 at 5:29 am
CT scan radiation may cause cancers
New research suggests that about 2 per cent of all cancers in the United States are caused by exposure to radiation during computed tomography scans
December 19th, 2009 at 5:45 am
I hope you don’t mind my linkage diarrhea Barry. I only do it once a week or so and the links seem to be getting better these days. I suppose now that more people are focused on where the problems are and are no longer stunned by last year’s ambush, they are more focused on the task at hand. Hence, better news articles
Pension Fund Sues Goldman Over Pay
A pension fund said on Monday that it was suing Goldman Sachs, arguing that the firm’s planned compensation payouts this year are excessive and improper. It estimated that Goldman’s total payouts would exceed of $22 billion in 2009 and are based on the government’s bailout of the financial industry.
The suit was brought in New York State Supreme Court by the Security Police and Fire Professionals of America Retirement Fund. The pension fund accused Goldman’s board of breaching its fiduciary duties by failing to administer the company’s compensation plans in the best interests of the company and its shareholders, according to a statement from its law firm, Grant & Eisenhofer.
Check out the comment section. Pretty funny mom down there
December 19th, 2009 at 7:23 am
Deep Capture exposes the theft, corruption and criminality of wall street. Of course, the denizens of wall street see it as business as usual. That’s because wall street has ALWAYS been a den of thieves. Where ever there is free money, criminals will congregate.
Cramer, in a youtube video, even bragged about how little money it took to move a stock; about 10 million I recall; with a few well placed phone calls to so-called financial journalist it was easy to influence price action. Just business as usual but to an outsider it’s fraud. Just like the old days of trading in the pits in Chicago where I learned how business is really done. Why do you think the CBOT was so opposed to hand-held trading computers instead of cards? Wouldn’t have anything to do with the easy paper trail would it? No more off-floor trades, pre-arranged trades, front running trades, etc, etc. Just business as usual to us floor traders.
Anyone who exposes criminal fraud and corruption in our present deeply corrupt system is subject to ridicule and more; working within the corrupt system for change may or may not result in reform. With the so-called financial reform legislation working it’s way through our pretend congress I see no indication things will change. When corruption becomes endemic to the system, then it’s the system that must be changed – usually not peacefully.
December 19th, 2009 at 7:28 am
tude,
for twenty years big banks have been getting bigger by buying smaller regionals, the S&L crisis accelerated that, as did getting rid of glass stegal in 1999, i’m not exact with my numbers but over the last twenty years we have gone from 20k banks too 10k
now, you’re small town local bank did business with local business man and the people, and most area’s had 1-6 half dozen big employers, in no where’s-ville maybe a utility, a half dozen medium sized manufacuring companies, with de-manufacurization going on by shipping stuff overseas you’re local bankers customer base has been deleted
with glass stegal more of the big boys thru the internet and owning regionals went after you’re local businessman, store owner, car dealer, contractor……….one stop shops for business financing, persoanl financial planning and investments, insurance for the business and family
so, the local banks were left with local real estate, and real estat thru-out history has been the crack cocaine of banks, thus, all thru-out the nation you have local banks caught up in sub-prime, home loans, equity loans, construction loans and commercial real estate loans
essentially 80% of there profits came from this area and now that it’s decimated, so are they
as i’m sure you noticed most of these banks are shut down and bought out immediately, thus, it will continue until it’s done, other banks like to get customers and the government does not need to rush because the real estate that is the collateral can’t run away and hide, and the banks can’t make anymore loans, they have some experience with the S&L crisis, that went faster because even though it was real estate they got desposits nationa wide by offering high paying CD’s, so the tentacles were everywhere, in this case you’re local bank was not nationwide, they were in two place local or wall street, so it’s somewhat contained
if one wonder why so slow, simple market, 800 failed banks cannot be absorbed right now, the hope is economy get’s better and the good banks get stronger and can abosrb the weaker ones
imho, it’s a fairly good and realistic plan, the money has been lost, so slow and steady and get it done right
December 19th, 2009 at 7:52 am
@ Steve Barry
Not trying to be d***, but I’m curious…are you still holding the same bearish short position as you did at the March lows? Or did you exit some or all of the position?
December 19th, 2009 at 9:01 am
Doncha think that they could have used an actual photo of that Sith Lord, complete with hood, deep-set bloodshot eyes, and energy crackling around him, instead of that obviously photoshopped picture?
December 19th, 2009 at 9:17 am
@torrie-amos 7:28 am
Well-stated. To further reinforce your point about the banks in general getting larger, Calculated Risk has an excellent historical chart of bank failures going back to 1970, and overlaying the failures by number with a bar chart of assets of failed banks.
http://www.calculatedriskblog.com/2009/12/fdic-bank-failure-update_12.html
While I believe that if one adjusted these asset bars to constant-dollar numbers, the S&L collapse would still trump the current collapse to date, I am also certain that when (not if, when) one of our TBTF monsters stumbles, that will cause our current failed bank assets numbers — constant-dollars or not — to explode to levels not seen since the banking failures of the GD (which are not accurately recorded anywhere that I can find, at least the assets under management of the banking system when FDR invoked his bank holiday and restructured the industry).
Funny, I just cannot imagine our current president or Congress having the presence of mind/force of will to perform a similar action, even if there were a wave of banking failures rippling across the economy in non-stop fashion similar to that of the early 1930s.
December 19th, 2009 at 9:28 am
oops. I figger I better correct myself, before someone else actually reads the chart title and does it for me — the referenced chart IS in terms of constant dollars, so we have already blown past the assets-under-failed management peak from the S&L Collapse (courtesy of WaMu). My earlier statement aluding to how much higher it would go if any of our teetering TBTF banksters fails still stands (Citi is the most likely candidate, with Wells Fargo and BoA also still in the running — all that needs to happen is for there to be another severe credit contraction, and some of them will be toast. There are plenty of grossly overextended nations that might create such a splash when they default).
December 19th, 2009 at 10:46 am
@rj:
My sarcasm was directed at the fact that hundreds of banks really should be closed right now. Doing only a few at a time is giving the sense that this is under control. They are also announced on Friday night after the market closes…we all know if you want to release bad news, that is the best time to do so to fly under the radar.
@Mike
Still holding less than half my position…rest of my money is in 4 and 5 % CDs (a great deal in retrospect now). The market will crash again…I did not assume that they would be able to push it back to a bubble so soon. I should not underestimate the stupidity of investors.
December 19th, 2009 at 12:51 pm
My sarcasm was directed at the fact that hundreds of banks really should be closed right now. Doing only a few at a time is giving the sense that this is under control.
There’s only so many people working for the FDIC unless you want to create a large government agency that takes even more money.
They are also announced on Friday night after the market closes…we all know if you want to release bad news, that is the best time to do so to fly under the radar.
And it also gives them Friday night, Saturday, and Sunday to make sure everything flies smoothly. It’s not in the interest of the FDIC to create a clusterf*ck when they take over a bank. Think rationally.
December 19th, 2009 at 4:59 pm
http://theburningplatform.com/economy/brave-new-world-2009
December 19th, 2009 at 5:31 pm
@ Steve Barry
“Still holding less than half my position…rest of my money is in 4 and 5 % CDs (a great deal in retrospect now). The market will crash again…I did not assume that they would be able to push it back to a bubble so soon. I should not underestimate the stupidity of investors.
FWIW, we are probably not too far apart on our beliefs about the fundamental state of the economy. IMO, the mistake you are making/made is that you assumed the stock market had to reflect this on any particular timetable:
http://www.creditwritedowns.com/2009/04/the-fake-recovery.html
Why ‘Fake’? This is a fake recovery because the underlying systemic issues in the financial sector are being papered over through various mechanisms designed to surreptitiously recapitalize banks while monetary and fiscal stimulus induces a rebound before many banks’ inherent insolvency becomes a problem. This means the banking system will remain weak even after recovery takes hold. The likely result of the weak system will be a relapse into a depression-like circumstances once the temporary salve of stimulus has worn off. Note that this does not preclude stocks from large rallies or a new bull market from forming because as unsustainable as the recovery may be, it will be a recovery nonetheless.
The real situation
In truth, the U.S. banking system as a whole is probably insolvent. By that I mean the likely future losses of loans and assets already on balance sheets at U.S. financial institutions, if incurred today, would reveal the system as a whole to lack the necessary regulatory capital to continue functioning under current guidelines.
I don’t think the stock market will “crash” again anytime soon similar to fall 08 and Jan/Feb 09. That simply isn’t the historical precedent. The historical technical pattern is one crash followed by many years of sideways action although it could be a very wide range. In the meantime, speaking strictly technically, the S&P 500 may yet go much higher. Head over to decisionpoint.com and check out Swenlin’s analysis the last 3-4 weeks. He thinks we could retest the old highs despite the market having “no fundamental underpinnings”. I’ve learned over the years you don’t fight the trend regardless of one’s fundamental views. Good luck.
December 19th, 2009 at 6:15 pm
[...] what almost nobody’s wanted to discuss lately: that the recession isn’t over (hat tip, Big Picture.) The U.S. economy remains mired in a recession, prospects for next year are weak and home prices [...]