CIT's shaky future hurts small biz

From NPR Marketplace

CIT is this country's biggest lender to small and medium-sized businesses. Chances are though, you'd never heard of it 'til this summer when it ran into some trouble over how much money it owed. It tiptoed away from Chapter 11 back then, thanks in part to a $2 billion donation from the TARP. . .

There are reports today CIT is once again scrambling to work out a deal with its bondholders. If that deal does not work out, CIT may become one of the biggest bankruptcies in this country ever.

link here

FDIC Discloses Deposit Insurance Fund Is Now Negative

from zerohedge.com

"In an unprecedented disclosure, the FDIC has highlighted that it expects the DIF reserve ratio to be negative as of September 30. As there are a whopping 48 hours before that deadline, one can safely assume that the DIF is now well into negative territory: as of today depositors have no insurance courtesy of a banking system that has leeched out all the capital of the Federal Deposit Insurance Corporation. Let's pray there is no run on the bank soon."

Link here

Dollar carry trade

Voltron says: Low US interest rates mean FX traders can borrow dollars cheap and invest them in high interest rate currencies like the australian dollar. The kicker is that you gain if the dollar falls due to inflation.

http://www.businessinsider.com/dollar-carry-traders-take-advantage-of-fed-stimulus-2009-9

CBO says Social Security in the red by next year

Voltron says: The upswing back into the black assumes a "V" shaped economic recovery.
http://crfb.org/blogs/cbo-projects-social-security-deficits-2010

Humor: Elephant in the room (video)

http://www.youtube.com/v/RYA0DsPcbaU

U.S. Bailout at $11.6 Trillion

To put $11,600 Billion into context, consider some major US expenses, adjusted for inflation:

Marshall Plan: $115.3B
Louisiana Purchase: $217B
Apollo Moon Shots: $237B
S&L Bailout: $256B
Korean War: $454B
the New Deal: $500
Operation Iraqi Freedom: $597B
Vietnam War: $698B
NASA (total): $851.2B
WWII: $3.6T

http://www.ritholtz.com/blog/2009/09/bailout-costs-to-date/

Loan Losses Triple-Slam The Banks

http://www.businessinsider.com/loan-losses-triple-slam-banks-25-09-09

Short sales increase

http://www.baltimoresun.com/business/chi-sun-short-sales-0920sep20,0,1828281.story?page=1

Inflation a Risk Without Foreign Debt Buyers: Robertson

http://www.cnbc.com/id/33004753

Dollar under scrutiny at G20 summit

http://news.yahoo.com/s/afp/financeeconomyg20forexuschina

Home prices down 12.5% from last year

The median sales price was $177,700, down 12.5 percent from $203,200 in the same month last year.

Home sales drop 2.7 percent.

Foreclosures and other financially distressed sellers accounted for about 30 percent of the market.

With unemployment and foreclosures rising in the upper end of the housing market, "there will be plenty of more pain for higher-priced properties,"

http://finance.yahoo.com/news/Home-sales-drop-27-apf-2064841344.html?x=0&.v=6

Housing Crash to Resume on 7 Million Foreclosures, Amherst Says - Bloomberg.com

The crash in U.S. home prices will probably resume because about 7 million properties that are likely to be seized by lenders have yet to hit the market.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aw6_gqc0EKKg

A stimulating discussion of Option-Arms

http://www.calculatedriskblog.com/2009/09/comment-on-option-arms.html

Bankruptcy Filings Approach 2005 Highs

http://globaleconomicanalysis.blogspot.com/2009/09/bankruptcy-filings-approach-2005-highs.html

Bank of America versus America

BofA to face SEC trial, Loses Gov't Guarantees

BofA plays lawyer games with congress

BofA's Growing Legal Woes Could Bring Shakeup at Top

Housing: "Facing a triple whammy" at end of Year

"We could be facing a triple whammy at the end of the year: the expiration of the tax credit, the end of the Fed mortgage-buying program and rising foreclosures." 
Thomas Lawler, housing economist

http://www.calculatedriskblog.com/2009/09/housing-facing-triple-whammy-at-end-of.html

Unable To Sell Homes, Brokers Turn To Arson

A California couple was so dependent on the housing market that, facing economic ruin after they lost virtually all of their property wealth when the economy tanked, they allegedly burned down their own home for insurance money.

http://www.businessinsider.com/john-carney-unable-to-sell-homes-brokers-turn-to-arson-2009-9

Conditions build for another meltdown

excerpt:

One year after the demise of Lehman Brothers Holdings Inc. paralyzed the financial system, "mega-banks," as Fine's group calls them, are as interconnected and inscrutable as ever. The Obama administration's plan for a regulatory overhaul wouldn't force them to shrink or simplify their structure.

"We could have another Lehman Monday," Niall Ferguson, author of the 2008 book "The Ascent of Money" and a professor of history at Harvard University in Cambridge, Mass., said in an interview. "The system is essentially unchanged, except that post-Lehman, the survivors have 'too big to fail' tattooed on their chests."

full article: http://www.honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20090920/BUSINESS12/909200339

More proof that banks are kicking the can down the road.

Voltron says: 62% of the foreclosures in Nevada are "postponed" . . . what are they waiting for?

http://boombustblog.com/200909191145/The-ARE-trying-to-kick-the-bad-mortgages-down-the-road-here-s-proof.html

Updated Links

Voltron says: I've updated the links on the right column on the blog. Enjoy.