Baseball91's Weblog

February 28, 2009



Government and bank protection were always synonymous.  Universally.  It was the order part in Law & Order.  These two entities had always been wed.  Or  paralyzed together. 

The graph shows that total gross domestic product (GDP) now totals the total amount of debt in America. 


Those concerns about deflation come true as 2008 came to a close.  Look at the return in your 401K.  The opposite of appreciation was depreciation.  The S&P’s finish on February 27, 2009 was its worst since the 731.54 hit at the close of Dec. 18, 1996, with its percentage decline in February proving to be the second-worst on record following the 18.4% hit that came in 1933. The world certainly looked to be a lot more precarious than it did in December 1996, so the performance in 2009 has come as no surprised to me.  My only surprised was that it took so long to reach 735.   


Feb. 27, 2009

HONG KONG (MarketWatch) — Japan‘s industrial output contracted by a record 10% and consumer spending fell in the first month of the year, data released Friday showed, adding to the growing perception that the No. 2 global economy this year will undergo the worst recession in more than half a century.  Output is expected to decline a further 8.3% in February and increase 2.8% in March, according to survey data compiled by the trade ministry and published and released Friday. Consumer demand is likely to undergo further setbacks in coming months as corporate earnings come under pressure and as companies reduce staff numbers, Bank of Japan policy board member Tadao Noda was cited as saying in a speech Thursday. Market watchers expect the economy to decline by double-digits in the first quarter of 2009.




NEW YORK (MarketWatch) — Banks insured by the FDIC posted a collective loss of $26.2 billion in the fourth quarter of 2008, the agency said Thursday, as the percentage of charged off loans tied a quarterly record 1.91%. The compared to a $575 million profit during the fourth quarter of 2007. “Rising loan-loss provisions, losses from trading activities and goodwill write-downs all contributed to the quarterly net loss as banks continue to repair their balance sheets in order to return to profitability in future periods,” the FDIC said in a press release. Sheila Bair, the agencies chief, said in a press conference that there will be no quick fix to the banking crisis and that troubled loans will keep rising. She said the number of “problem” banks identified by the FDIC rose to 252 in the fourth quarter, compared to 171 banks at the end of the last quarter. 


The dollar was 110 yen in September, but the dollar slipped to 97.53 yen from 98.34 yen late Thursday, but was still up 5.5% for the week and 9.6% for the month of February after creeping down below 90, as Japan‘s economic picture darkened. 


WASHINGTON (MarketWatch) – The Federal Deposit Insurance Corp. on Friday voted to charge banks a one time “emergency special” fee to refill its insurance fund to protect depositors, increasing costs to troubled financial institutions by $27 billion.


“Deposit insurance remains a good value,” said FDIC chairwoman Sheila Bair, in a statement. “Public confidence in the FDIC guarantee has helped assure a stable source of funding for banks in these troubled times.”  The one-time assessment will cost insured banks $12 billion on Sept. 30, on top of the $15 billion they own in periodic fees. The combined $27 billion will add funds to the FDIC’s Deposit Insurance Fund, which bank regulators believe could be depleted significantly due to bank failures. The fund is used to reimburse customers for deposits of as much as $250,000 when a bank fails.   


Banks are being assessed a one time 20 cents fee for every $100 in insured deposits. The FDIC will collect the fee in the third quarter of 2009. A bank with $1 billion in deposits would pay $2 million in fees, according to the agency.  


LONDON (MarketWatch) — Hard times are apparently getting even harder in the airline industry.  Taking discount travel to a new all-time low, Ryanair Holdings is considering charging passengers to use the toilet in flight, the Irish airline on Friday acknowledged in a statement. “Not everyone uses the toilet on board one of our flights but those that do could help to reduce airfares for all passengers,” the airline said. The seriousness of the statement was hard to ascertain — it said perhaps that CEO Michael O’Leary “was just taking a piss this morning,” referring to a radio interview the controversial executive had.  


SAN FRANCISCO (MarketWatch) — A wave of corporate bankruptcies triggered by the credit crunch and deepening global recession has pushed the number of credit-defaults swaps auctions to record highs, testing the system as it faces increased pressure to establish structures similar to other trading markets. Banks and institutional investors in February participated in 13 credit-default swap auctions on the defaulted debt of eight companies. 


NEW YORK (MarketWatch) — The World Bank and two other multinational institutions issued a joint pledge Friday to provide up to 24.5 billion euros ($31.2 billion) to support the banking sector in Eastern Europe and fund lending to businesses. Analysts, however, were skeptical that the size of the announced support would be enough to address the region’s vast economic woes. Investors have grown increasingly concerned in recent days about the exposure of Western European corporations, including banks, to fragile Eastern European economies. The vulnerability of Western banks, particularly those based in Austria and Sweden, was spotlighted by ratings agency Moody’s Investors Service last week.  Total European bank exposure to Emerging Europe runs in excess of $1.5 trillion, he said. 


NEW YORK (MarketWatch) – Two Federal Reserve bank presidents squared off Friday at the University of Chicago Booth School of Business and Brandeis International Business School, over the central bank’s new credit easing policy, with one describing it as essential and the other saying the jury is still out.  Federal Reserve Board Chairman Ben Bernanke has called for the Fed to be more transparent and Friday’s debate was one that has likely been repeated behind closed-doors.  The Fed’s balance sheet has ballooned by a trillion dollars and is on track to add a second trillion. It has been lending money to banks in return for almost all forms of collateral, including mortgage-backed securities. The goal is to bring down risk premiums that have strangled certain markets. Former Fed governor Frederick Mishkin said he supported the policy, but called it “scary” that the central bank was buying private assets. He said the Fed should adopt a formal inflation target so it can convince the market that it needs to sell them.


The danger is that prices keep falling so consumers delay purchases, which leads to lower prices — especially for non-essentials — and deflation takes hold. “Deflation will be a more enduring theme than many realize,” David Rosenberg, Merrill Lynch’s chief North American economist, said in a recent research report. “This deflation cycle may have another two years to go.”


The consumer has shut down.   And the Asians need to start buying their own product.  Exports have led growth in

Asia for 50 years.  If yen weakens too much, then American companies will have trouble competing with Honda.  And real deflation sets in.  We should all be praying for the strength of the yen as well as the dollar, in the days of March. 


1 Comment »

  1. Comment by baseball91 — September 7, 2016 @ 4:02 PM | Reply

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