Thread: A note of caution for those with deposits in US Banks

.
......Falls Off A Cliff!

U.S. Economy: Retail Sales Drop in October by Most on Record

By Shobhana Chandra and Bob Willis

Nov. 14 (Bloomberg) -- Retail sales and prices of goods imported to the U.S. dropped by the most on record, signaling the economy may be in its worst slump in decades.

Purchases fell 2.8 percent in October, the fourth straight decline, the Commerce Department said today in Washington. Labor Department figures showed import prices dropped 4.7 percent, pointing to a rising danger of deflation, and a private report said consumer confidence this month remained near the lowest level since 1980.

``The weakness in growth is intensifying and inflation pressures have evaporated,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, who accurately projected the decline in sales. ``Deflation is a word that will be increasingly used over the coming months.''

Spending may continue to falter as mounting job losses, plunging stocks and falling home values leave household finances in tatters. Retailers from Best Buy Co. to J.C. Penney Co. are cutting profit forecasts ahead of the year-end holiday shopping season, when many stores do most of their business.

Continued here:

Bloomberg.com: Worldwide

^So, lets get this straight. They kept the banking collapse at bay with the Mother of all Bailouts; they kept the retail collapse falls at bay with the rebate cheques.

Now both of these have failed, what's the next plan?

Oh, there isn't one...

'

Lehman, European Units Reach Deal on Access to Assets (Update3)

By Jeff St.Onge and Tiffany Kary

Nov. 14 (Bloomberg) -- Lehman Brothers Holdings Inc. may complete billions of dollars in trades and unwind transactions that were pending two months ago when it filed the biggest bankruptcy in history, under an accord with European affiliates.

The deal gives the firm access to information systems in Europe, which it said were ``sealed off'' by its bankruptcies on both sides of the Atlantic. Without the accord, the New York- based company said it ``cannot execute trades or even obtain information on current positions,'' key requirements for paying creditors owed more than $613 billion.

Lehman Brothers International Europe, which ran Lehman's London-based prime brokerage, had about 3,500 asset managers, including hedge funds, as clients. The customers haven't known the status of their positions since Lehman's bankruptcy on Sept. 15 froze at least $65 billion in brokerage assets.

``Each day that passes, the debtors risk losing value that would otherwise be preserved and maximized for the benefit of their estates and all stakeholders,'' said Shai Waisman, a U.S. lawyer representing Lehman, in court papers filed today. The European positions freed up by the accord consist of more than one million trading positions and ``billions of dollars,'' Waisman said.

Amid Dispute

The agreement comes amid a dispute between Lehman's European and U.S. operations over which bankrupt estate owes the other money. Lehman U.S. lawyers said the parent company has the right to $8 billion it allegedly pooled from foreign subsidiaries on Sept. 12, three days before its bankruptcy filing.

Lehman's European units, unwinding in the U.K. in administrative proceedings overseen by PricewaterhouseCoopers, want the money back. It's unclear whether the funds still exist.

More at:

Bloomberg.com: Worldwide

It's unclear whether the funds still exist.

I'll say.

.
.......But Their Liabilities Keep On Growing For The US Taxpayer Though!

Aflac Chief Amos Says He Won't Bid for AIG Units (Update2)

By Linda Shen
Nov. 14 (Bloomberg) -- Aflac Inc. Chief Executive Officer Dan Amos said he lost interest in purchasing insurance units from American International Group Inc. because of declines in his company's share price and the higher cost of borrowing funds.

``Right now I think cash is king and liquidity is more important than acquisitions,'' Amos said today in an interview. ``You don't want to borrow in this environment.'' Columbus, Georgia-based Aflac, the world's largest seller of supplemental health insurance, previously expressed interest in purchasing AIG units in Japan.

Continued here:

Bloomberg.com: Worldwide

You merkin taxpayers must be sooooo pleased...

U.S. Cities, Reeling From Deficits, Seek Treasury Bailout Cash


By William Selway and Adam L. Cataldo

Nov. 14 (Bloomberg) -- Philadelphia, Atlanta and Phoenix are asking the U.S. Treasury Department for part of the $700 billion financial rescue package to help them finance construction projects and pay bills.

They seek $50 billion on behalf of cities nationally to spend on infrastructure and loans lasting for as long as a year to aid cash flow. A copy of the letter was supplied by a spokeswoman for Atlanta Mayor Shirley Franklin.

``The federal government is providing support for the financial industry,'' said Luke Butler, a spokesman for Philadelphia Mayor Michael Nutter, who organized the effort. ``Cities could use some support, too.''

In Washington, Treasury Secretary Henry Paulson said on Nov. 12 such requests are beyond the scope of the bailout.

More here:

Bloomberg.com: Worldwide

Henry Paulson said on Nov. 12 such requests are beyond the scope of the bailout.

I see, perhaps if he had defined the scope to begin with, Uncle Tom Cobley and all would not be forming an orderly queue...

Textron, AEP, Honda Ask Fed for Access to Commercial-Paper Fund


By Robert Schmidt and Bryan Keogh




Nov. 14 (Bloomberg) -- A group of companies including Textron Inc., Home Depot Inc. and Honda Motor Co. is pressing the Federal Reserve to expand purchases of commercial paper to include them, two people briefed on the matter said.

The coalition, which also counts Dow Chemical Co. and Nissan Motor Co. as members, wants the Fed to go beyond top-rated paper and buy debt with the second-highest grade, the people said on condition of anonymity. American Electric Power Co. Chief Financial Officer Holly Koeppel said the group is seeking to add more companies and preparing a letter to outline its case.

While accepting lower-grade debt could reduce borrowing costs for a broader group of companies, it would also expose the taxpayer to greater risk. The request is one of a number of attempts to get a share of federal rescues, with industries from automakers to heating-oil retailers seeking funds.

``We are really creating a mindset where no one fails,'' said Adolfo Laurenti, a senior economist at Mesirow Financial Inc. in Chicago.

More begging bowl tales here:

Bloomberg.com: Exclusive

``We are really creating a mindset where no one fails,'' said Adolfo Laurenti, a senior economist at Mesirow Financial Inc. in Chicago.

No, really?

Citigroup's Revenue Is `Strong and Stable,' Pandit Tells Staff


By David Scheer

Nov. 14 (Bloomberg) -- Citigroup Inc. Chief Executive Officer Vikram Pandit sought to reassure employees today, saying in an internal memo that the bank's revenue is ``strong and stable'' and its capital ``plentiful.''

More spin and bullshit here:

Bloomberg.com: Worldwide

Its funny how a week or so before every bank collapse, their CEO says exactly the same thing. The same was said by Lehmans, Bear, HBOS, B&B, IndyMac, AIG etc., etc., etc....

^To add, you wonder whether they are all given the same script.

Pandit has done some bad sh*t there. He allowed alot of crap with the derivatives team and promoted a hedge fund of a friend last year. Citi is a great firm; a pity he has feked it. (Still have friends there, so dunno if this is on the record.)

GM Collapse at $200 Billion May Exceed Bailout Plan (Update1)


By Alex Ortolani and Mike Ramsey

Nov. 14 (Bloomberg) -- General Motors Corp., seeking a federal bailout as its cash dwindles, would cost the government as much as $200 billion should the biggest U.S. automaker be forced to liquidate, a forecasting firm estimated.

A GM collapse would mean ``more aid to specific states like Michigan, Ohio, and Indiana, and more money into unemployment and extended benefits,'' Nariman Behravesh, chief economist at IHS Global Insight Inc. in Lexington, Massachusetts, said today in an interview. He prepared the estimate for Bloomberg News.

The projected expense of $100 billion to $200 billion covers funds for existing programs, such as unemployment insurance, and new measures that would be needed to revive economic growth after millions of auto-related job losses.
Such a sum would be an eightfold increase over the $25 billion bailout package that will be debated in Congress next week to help prop up Detroit-based GM, Ford Motor Co. and Chrysler LLC amid the industry's worst sales year since 1991.

More at:

Bloomberg.com: Worldwide

Just like the schoolyard 'if you don't let me play, I'll take the ball away'. Threats and bluster. What happens once this second load of bailout cash is burnt? Oh, if you don't give us more, you will have lost your 'investment'?

SOMEBODY SELLS A HOUSE

THE British economy turned a corner last night after somebody sold a house.





Princess Anne will visit the house later today




The prime minister said it marked the 'beginning of the end of the beginning' as the FTSE 100 climbed by 12 points and then stayed there for 20 minutes.

The sale was completed shortly after midday, but was kept under wraps until Downing Street had been informed.

It was finally confirmed in a newsflash from the Press Association at 1.26pm.
The soon-to-be-former owner Tom Logan said: "We had given up hope, what with the banks being shits and everything.

"But then this couple turned up, had a poke around in the kitchen, fiddled with the central heating, flushed the toilet and then suddenly said, 'we'd like to buy it.'

"My wife collapsed, I got a nose bleed and the dog started howling like a coyote."

By late afternoon a large and boisterous crowd had gathered outside the detached cottage in the Home Counties village of Minchinhamptonsteadbury as Mr and Mrs Logan gave interviews to Le Monde, CNN and Japan's TV-Osaka.

Burger vans and buskers cashed-in on the celebration while quick-witted entrepreneurs sold mugs, baseball hats and souvenir flags immortalising 'The House That Someone Bought'.

Mr Logan added: "I've no idea where they got the money from. Maybe they're drug dealers. Good luck to them."


SOMEBODY SELLS A HOUSE - The Daily Mash

Got to love the mash!

Are you an idiot to keep paying your mortgage?


Should you keep paying your mortgage?

If you have significant equity in your home, absolutely.

If you don't, it's getting harder to answer that question, especially when our government keeps giving people who owe more than their homes are worth so many reasons not to pay.

Last week, the government announced a program that will substantially lower payments for many homeowners who have little or no equity, but only if they are at least 90 days delinquent.

Critics say the plan, which applies to loans owned or guaranteed by government wards Fannie Mae and Freddie Mac among others, could encourage people to suspend payments.

But what about the moral obligation to pay off a debt?

Elected officials have been chipping away at that by blaming the foreclosure crisis largely on predatory lenders. In a campaign fact sheet, President-elect Barack Obama says he "recognizes that the real victims in the subprime mortgage crisis are not the lenders, but the millions of borrowers who followed the rules and whose only crime was taking out mortgages that lenders told them they could afford."

Last year, Congress started removing some financial hazards of default when it passed a bill that temporarily waives the income tax on mortgage debt that is canceled when a homeowner is foreclosed upon, sells a home for less than the remaining debt (a short sale) or gets a loan modification that reduces the principal balance.

The tax waiver originally applied only to debt on a primary residence canceled in 2007, 2008 or 2009. Last month, in the bailout bill, Congress extended the waiver until 2013.

There are exceptions: The waiver applies only to debt that was used to buy or improve a primary residence. If you took out a home-equity loan or did a cash-out refinance to buy a car, you'll still owe tax on that debt if it is canceled. For state income taxes, California has partially conformed to the federal law, but only for debt canceled in 2007 or 2008. (For more details, see my April 24 column at www.sfgate.com/ZFJS.)
The Federal Housing Administration is offering two programs to help homeowners get more-affordable mortgages, FHA Secure and Help for Homeowners. Neither requires borrowers to be current on their payments.

The program announced Monday goes a step further by requiring homeowners to be late.

The Streamlined Modification Program, sponsored by the government agency that oversees Fannie Mae, Freddie Mac and 27 loan servicers, promises to swiftly reduce payments for certain homeowners who appear to be on the verge of foreclosure.
How to qualify

To qualify, you must be at least 90 days delinquent and live in the home as your primary residence. You must owe at least 90 percent of the home's value. It's fine if you owe more than it's worth.

Your mortgage must be owned or guaranteed by Fannie Mae and Freddie Mac or held by one of the participating loan companies.

If you meet these requirements and can document your income, your servicer will reduce your monthly mortgage payment - including property taxes, insurance and association dues - to 38 percent of your gross income.

The reduction can be accomplished in one or more ways:

-- Reducing the interest rate, but not below 3 percent. (The new rate, if below market, goes back to a market rate after five years.)

-- Extending the term of the loan up to 40 years.

-- Reducing the principal on which monthly payments are calculated. Unpaid principal is added to the loan balance and due when the homeowner sells or refinances. The reduced interest payments never have to be repaid.

If you owe more than the home is worth, the plan will only reduce principal down to 100 percent of market value, according to an official for the Federal Housing Finance Agency, which supervises Fannie Mae and Freddie Mac.

If all three of these maneuvers can't reduce your payments to 38 percent of income, you won't get a fast-track modification but could still request a customized deal, says the official, who spoke on the condition of anonymity.

The streamlined process looks only at income, not assets. If you refinanced your home to buy a Mercedes or own another home, you won't be expected to sell them to pay your mortgage.

Peter Schiff, president of Euro Pacific Capital, predicts that many homeowners who have little or no equity will stop paying their mortgage and then reduce their income to get the biggest payment cut possible. They could stop working overtime or, if two spouses work, one could quit. After the modification, they could try to boost their income again.

"This is a once-in-a-lifetime opportunity," Schiff says. "People are going to feel like complete morons if they don't participate. The people getting punished are the ones who never made an irresponsible decision to buy a house they couldn't afford."

The government is offering loan servicers $800 for every homeowner they get into the plan.

Schiff predicts that loan agents "will be cold-calling people trying to get them into it. Just like they encouraged people to overstate their income to get a bigger loan in the first place, now they will encourage them to understate their income to qualify for a smaller loan."

Are you an idiot to keep paying your mortgage?

This effect was so obvious, so full of potential to make a bad situation worse, it beggers belief that no-one actually thought it through!

you do sound like a broken record with all those failed predictions and doom saying ?

maybe a new angle ?

Government stimilus packages to give more incentives to credit and borrowing to maintain the inflated prices of houses and also bailing out uncompetitive industries like the car manufactures and now a long que of others lining up. Yep. That sounds like a real good recipe for long term prosperity.

Trying to stave off the inevitable is just digging the hole we are all going to fall into a whole lot deeper. But hey, -- our governments know what they are doing. They got us to where we are today.

Originally Posted by Butterfly

you do sound like a broken record

Don't read my fucking thread if you don't like the message then.

Originally Posted by Butterfly

failed predictions and doom saying

Nope, they have all turned out to be true. Your lies and twaddle have proved laughable however.

Originally Posted by Butterfly

maybe a new angle ?

Which one would you like? One which didn't expose your false statements, financial naiveity and intellectual limititations?

Citigroup Shares Fall as Profit Outlook Deteriorates (Update1)


By Steve Dickson

Nov. 20 (Bloomberg) -- Citigroup Inc. fell 26 percent in New York trading, after losing almost a quarter of its value yesterday, as concern intensified that the U.S. recession will generate losses and weaken demand for financial services.

Citi, down for eight of the past nine trading days, declined $1.69 to a 15-year low of $4.71 on the New York Stock Exchange at 4:08 p.m. The stock, which fell as low as $4.39, slumped even after Saudi billionaire Prince Alwaleed bin Talal said he would boost his stake in the New York-based bank.

Buffeted by four straight quarterly losses, Citigroup has raised about $75 billion since December by selling assets and equity stakes, including a $25 billion injection from the U.S. Treasury. Alwaleed would have to spend about $350 million to boost his stake to 5 percent from 4 percent, based on yesterday's closing price.

Bloomberg.com: U.S.

And so the collapse of Citi continues. Too big to bail, too big to fail - as I have said all along - this is the main event!

California's unemployment rate jumped to 8.2 percent in October, the highest rate in 14 years, just as a state fund that pays unemployment benefits was about to run out of money.

State officials are preparing to ask the federal government to step in with a loan on Dec. 1 so they can continue paying jobless benefits to California's now more than 1.5 million unemployed, nearly a third of whom have lost their jobs in the last year.

The rate announced Friday by the state Employment Development Department was up from 7.7 percent in September, and from 5.7 percent in October 2007.

The largest hit came in the construction industry, which has lost 65,900 jobs in the last year, followed by manufacturing.

The department said its monthly survey found 527,918 people were receiving regular unemployment checks in October.

But the fund from which California makes those payments is on the brink of insolvency. The state's unemployment insurance fund is expected to have a deficit of $2.4 billion at the end of 2009, forcing it to borrow from the federal government for only the second time since the program was established in the 1930s.

From:

Calif. unemployment rate rises to 8.2 percent - BusinessWeek

Will the creeping insolvency terminate the Terminator?

.....As predicted by moi for how long?

Citigroup May Get Government Rescue, Investors Say (Update1)

By Christine Harper and Bradley Keoun

Nov. 21 (Bloomberg) -- Citigroup Inc. will probably get rescued by the U.S. government after a crisis in confidence erased half its stock-market value in three days, investors and analysts said.

Citigroup has more than $2 trillion of assets, dwarfing companies such as American International Group Inc. that got U.S. support this year. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke may favor a rescue to avoid the chaotic aftermath of Lehman Brothers Holdings Inc.’s bankruptcy in September.

“There is no question that Citi is in the category of ‘too big to fail,’” said Michael Holland, chairman and founder of Holland & Co. in New York, which oversees $4 billion. “There is a commitment from this administration and the next to do what it takes to save Citi.”

While Citigroup executives say the company has adequate capital and liquidity to ride out the crisis, its tumbling share price may shake the confidence of creditors, clients and rating agencies. A similar scenario played out at Lehman, when Chief Executive Officer Richard Fuld declared the firm was “on the right track” five days before the firm went bankrupt.

“The market may be implying some sort of regulatory intervention,” Jason Goldberg, a former Lehman analyst who now works at Barclays Capital in New York, wrote in a note to clients today. “In situations where the government has stepped in, the equity holders have not fared well.”

Continued here:

Bloomberg.com: Worldwide

The big one cometh. Be warned.

Originally Posted by raycarey

i think most people have their cash in FDIC accounts...but you should make sure that you don't have more than 100,000 in one bank...but if it's a joint account, the insurance goes up to 200 K. it's always smart to diversify...even with the banks holding your money.

people should also be slightly concerned about their money market accounts....i think we're going to see some funds 'break the buck' this year or next.

The FDIC amounts have been increased to 250 thousand per person, per bank, or 500K for a joint account.Still, anyone with large sums in a non-FDIC insured account would be very wise to move them, NOW!We're covered...(crossing my fingers, lol) Thanks!

^And since the Indymac failure, the FDIC pot is largely, er, potless...

If anyone thinks that they could make good on insuring all of Citigroup's accounts they are deluding themselves.

Originally Posted by bkkandrew

the FDIC pot is largely, er, potless...

your claim,

do you have any evidence of this ? or are you going to go into a long tirade of lies and made up facts ?

^Since you ask:

FDIC funds remaining after Indymac payout: $45.2BN

Source:

FDIC to recharge insurance fund - Aug. 26, 2008

Citi deposits (in US alone): $600BN

Source:

Citi and Wachovia Reach Agreement-in-Principle for Citi to Acquire Wachovia's Banking Operations in An FDIC-Assisted Transaction

As any mathematician would tell you - 600 into 45 doesn't go.....

And, just to underline the point - every failed bank thus far has taken out large advertisments immediately prior to collapse. For this reason I was expecting this:

Citi Speaks (via Newspaper Ads)

November 21, 2008, 6:23 pm





Citigroup may not sleep this weekend, as it ponders what to do amid a crisis that may test its survival. But it plans to reassure its customers — by taking out full-page advertisements.

In a series of ads set to run in major metropolitan markets on Sunday, Citi plans to tell its customers that its business is fundamentally sound. It acknowledges that “our financial markets have been tested in unprecedented ways,” but argued that it has the diversity and experience to pull through. It throws out a few numbers, in particular 100 (the number of countries it’s in) and 200 (its years of experience and the number of its customers).

The ad concludes: “That’s why now, more than ever, you can feel confident that Citi never sleeps.”

From:

http://dealbook.blogs.nytimes.com/20...newspaper-ads/

Originally Posted by bkkandrew

As any mathematician would tell you - 600 into 45 doesn't go.....

anyone with a minimum education level in banking would read that article and understand immediately how your statement above is ludicrous,

you do know how US banking works, do you ? from your comments, it would seem that you have absolutely no clue. As usual.

Originally Posted by Butterfly

Originally Posted by bkkandrew

As any mathematician would tell you - 600 into 45 doesn't go.....

anyone with a minimum education level in banking would read that article and understand immediately how your statement above is ludicrous,

Perhaps you could explain then, so I can poke more fun at you...

Originally Posted by Butterfly

you do know how US banking works, do you ?

Yes, thank you.

Originally Posted by Butterfly

from your comments, it would seem that you have absolutely no clue. As usual.

Can you point to your thread detailing the current economic collapse. Ooops, silly me, you haven't done one, because you didn't see it coming, didn't realise it wasn't happening and don't acknowledge it now.