Understanding our economic situation in a quick post

[AllentownJake]

Banking



This is what is keeping the world financial system functioning at the moment. It is is supposed to end in April. Without the federal reserve keeping interest rates at 0 and purchasing toxic assets from the banks, there is no banking sector.

Add to that the number of troubled banks in the 1st quarter of 2010 is 702 larger than in the 4th quarter of 2009 reported number of 559. This is close to being up 150 from the last time they reported.


http://wallstreetpit.com/17528-fdic-problem-banks-list-balloons-what-recovery

Bailouts

AIG has been significantly and adversely affected by the market turmoil in late 2008 and early 2009, and, despite the recovery in the markets in mid and late 2009, is subject to significant risks, as discussed below. Many of these risks are interrelated and occur under similar business and economic conditions, and the occurrence of certain of them may in turn cause the emergence, or exacerbate the effect, of others. Such a combination could materially increase the severity of the impact on AIG. As a result, should certain of these risks emerge, AIG may need additional support from the U.S. government. Without additional support from the U.S. government, in the future there could exist substantial doubt about AIG's ability to continue as a going concern. See Management's Discussion and Analysis of Financial Condition and Results of Operations — Consideration of AIG's Ability to Continue as a Going Concern and Note 1 to the Consolidated Financial Statements for a further discussion.

http://market-ticker.denninger.net/archives/2014-AIG-Gets-The-Dreaded-Going-Concern.html

Going Concern is accountant speak for, the entity is dead.

This is what should have happened over a year ago. This means that either AIG gets more government money, or it goes through bankruptcy and the parts that are useful get sold the parts that are not are sold for spare parts are sent to the junkyard. The taxpayers will get none of their money back from AIG, or through the backdoor bailout to the vampire squid Goldman Sachs.

Stimulus Spending and the States

The States are largely bankrupt entities. California is toast without Greek proposed like Austerity measures, Nevada couldn't even survive what is coming with those. Illinois, New Jersey, and New York are in about slightly better shape than California, and Michigan should petition Canada for admittance to their union, and secede cause it would wipe out their debt and give their citizens health care.

The stimulus is mainly 3 things.

Tax Incentives
Tax Cuts
and State Spending Initiatives.

When you hear of "stimulus money not spent" it is because the stimulus was designed to release those 3 things over a period of 2 years.

Here is what is going to happen to the last category "State Spending Initiatives." When the federal government is no longer sending money to the states, kiss any state level created job goodbye. The only reason why it exist is the state got funding for it. They are cutting workers in other areas, mandated federal programs for cash go away after the cash runs out. This money runs out sometime early next year for the most part.

States have to either balance their budgets through tax and fee revenue (which is way down) or by borrowing or by cutting spending. They will try a combination of all 3.

Housing

95% of all Mortgages in the 4th quarter of 2009, had federal funding as their primary source. In 2007 before the crisis, that was 40%

More foreclosures are projected for 2010 than happened in 2009. The President's HAMP program other than extending the period of foreclosure process will not do much, because if you bought a house in the 2000s using a debt instrument that provided the failure to build equity, and the floor dropped in your housing market, without a reduction of the principal on your loan, you are going to be underwater for year. If you have faced a reduction of income in that period, the answer is simple, you stop paying. All this does is give you more time to live there till you have to leave.

The President maybe able to draw out the period it takes to foreclose, he will not stop the foreclosures indefinitely. This is what we call extend and pretend.

Since there is an excess of recently built supply on the market, housing starts are going to be anemic until this housing works its way through the system. Add to this older people looking to downgrade or move into retirement communities, it gets worse.


This is not doom and gloom

This is simply communicating where we are in the middle of the 1st quarter of 2010.

[Donnachaidh]

1. k&r, but the unrec squad got here first. n/t

[AllentownJake]

2. They spend their day looking for me to speak

:loveya: unrec squad!

[dixiegrrrrl]

5. I spend my day rec'ing right behind them, as do others.

I am not much into censorship.

[AllentownJake]

7. Love You!

:loveya:

Honestly, there is no political statement in here other than, extending the time it takes to foreclose on a house is not a longterm solution.

[OhioChick]

17. Same here n/t

[laughingliberal]

3. K & R nt

[proudohioan]

4. As unpleasant as this might be...

at some point, we are going to have to get brutally honest and look at the bigger picture.

We're not going to be able to figure out where we're going if we don't know where we've been or where we are now.

[AllentownJake]

6. Exactly

and it starts with citizens taking an interest, because Politicians have an honesty problem.

[proudohioan]

10. "Politicians have and honesty problem"?????

:rofl:

That's the understatement of the year!

You go, Allentown Jake!!!

:thumbsup:

[AllentownJake]

11. It is like Katrina

For years the levies were not constructed right, there was plenty of reporting, these levies will fail.

Politicians in 2010, don't care if there is a disaster, they only care that someone else gets blamed for it when it occurs.

[proudohioan]

12. Generation CYA!!!!!

The tinfoil hat part of me thinks that maybe the politicians really do care about disasters; being "owned" as they are by corporations, those disasters give M$M a ton of money via endless coverage, and the politicians can then come in and act; thus coming out looking like "hero's" and the money continues to flow...... Disaster Porn feeds itself in a perpetual cycle.


However, in the age of internet, that chicken is starting to come home to roost.

Did you hear about the Cheyenne River Sioux? No media attention whatsoever (with the single exception of a Keith Olberman show).

[AllentownJake]

13. Give me a link

Would be interested.

[proudohioan]

14. Here it is.

I had heard about it on NPR one afternoon.
And in our own country, no less. (But why should this surprise anyone??)

www.sioux.org/

[AllentownJake]

18. Thanks nt.

[pscot]

15. The public has an honesty problem

They've been spoon fed bullshit for so long their heads are full of n othing else. Facing up to reality is not something we're good at.

[AllentownJake]

16. Well they've been taught looking realistically at something

is a bad thing.

[midnight]

8. Something major has to been done for those affected by a debt instrument

that provided to build equity. Hamp is not working.... Maybe those affected can get a bail out next instead of the banks...

[AllentownJake]

9. Doubtful

Every solution that is ever proposed appears to be bank centric.