Daily Digest

Daily Digest - Apr 19

Sunday, April 19, 2009, 10:40 AM
  • Financial Sense Newshour - Chris Martenson, The Crash Course (Audio, Great topics, Including China and copper)
  • Obama pushes for high-speed rail (H/T JoeManC)
  • Figures on government spending and debt (56+ trillion of off balance sheet obligations not included)
  • Weekend #17, Bank Failure #24
  • Weekend #17, Bank Failure #25
  • Hybrid Hummer Promises 100 Miles per Gallon
  • Test Ride: Even in New York, the Aptera Stops Traffic (Video embeded on page)
  • IMF: "worrisome parallels" with the Great Depression
  • Bank Stress Tests Now Officially a Garbage In, Garbage Out Exercise
  • FSN Hour 3 Part A (Audio, 31 Minutes ETF Ponzi, 44 Min Wheeler)
  • FSN Hour 3 Part B (Audio, 41 Minutes Taxes)
  • CM Users on Skype with KemoSavvy

Economy

Financial Sense Newshour - Chris Martenson, The Crash Course (Audio)

Obama pushes for high-speed rail (H/T JoeManC)

Obama envisions a network of short and longer-haul corridors of up to 600 miles plied by trains traveling up to 150 miles per hour. Acela service operated by Amtrak only reaches 150 mph over a short stretch in New England.

Freight railroads, which own much of the rail infrastructure outside the Northeast, would also play a key role in facilitating high-speed. The biggest freight lines include CSX Corp, Union Pacific Corp, Burlington Northern Santa Fe Corp, and Norfolk Southern Corp.

Figures on government spending and debt (56+ trillion of off balance sheet obligations not included)

Total public debt subject to limit April 16 11,125,587
Statutory debt limit                                     12,104,000
Total public debt outstanding April 16           11,183,899
Operating balance April 16                               257,351
Interest fiscal year 2009 thru February              148,762
Interest same period 2008                                198,518
Deficit fiscal year 2009 thru February                 764,525
Deficit same period 2008                                  264,541
Receipts fiscal year 2009 thru February             860,877
Receipts same period 2008                              967,153
Outlays fiscal year 2009 thru February            1,625,402
Outlays same period 2008                             1,231,694
Gold assets in March                                         11,041

Weekend #17, Bank Failure #24

American Sterling Bank, Sugar Creek, Missouri, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Metcalf Bank, Lee's Summit, Missouri, to assume all of the deposits of American Sterling Bank.

As of March 20, 2009, American Sterling Bank had total assets of approximately $181 million and total deposits of $171.9 million.

Weekend #17, Bank Failure #25

Great Basin Bank of Nevada, Elko, Nevada, was closed today by the Nevada Financial Institutions Division, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver.

As of December 31, 2008, Great Basin Bank of Nevada had total assets of $270.9 million and total deposits of $221.4 million. In addition to assuming all of the deposits of the failed bank, Nevada State Bank agreed to purchase approximately $252.3 million of assets. The FDIC will retain the remaining assets for later disposition.

Hybrid Hummer Promises 100 Miles per Gallon

All together the battery packs have a combined capacity of 40 kilowatt hours and total weight of 600 pounds. Raser claims a recharge time of between 3 and 10 hours, depending upon the voltage of the outlet the batteries are plugged into.

For the sake of comparison, the Volt uses a 16-kWh pack that weighs 375 pounds, while the Tesla Roadster has a 53-kWh pack weighing 992 pounds.

Test Ride: Even in New York, the Aptera Stops Traffic (Video embeded on page)

IMF: "worrisome parallels" with the Great Depression

The global economy is experiencing the deepest downturn in the post-World War II period, as the financial crisis rapidly spreads around the world. A large number of advanced economies have fallen into recession, and economies in the rest of the world have slowed abruptly. Global trade and financial flows are shrinking, while output and employment losses mount. Credit markets remain frozen as borrowers are engaged in a drawn-out deleveraging process and banks struggle to improve their financial health. Many aspects of the current crisis are new and unanticipated. Uniquely, the current disruption combines a financial crisis at the heart of the world's largest economy with a global downturn.

Recessions associated with financial crises tend to be unusually severe and their recoveries typically slow. Similarly, globally synchronized recessions are often long and deep, and recoveries from these recessions are generally weak. Countercyclical monetary policy can help shorten recessions, but its effectiveness is limited in financial crises. By contrast, expansionary fiscal policy seems particularly effective in shortening recessions associated with financial crises and boosting recoveries. However, its effectiveness is a decreasing function of the level of public debt. These findings suggest the current recession is likely to be unusually long and severe and the recovery sluggish.

Bank Stress Tests Now Officially a Garbage In, Garbage Out Exercise

The bank will run the tests themselves, using the same risk models that caused the mess. With only ten examiners on average per bank, and most of the banks having very diverse businesses (mortgages, complex structured credits, credit cards, consumer loans, commercial real estate, large corporate loans, small business lending, foreign operations, credit default swaps, other derivatives exposures, foreign lending and FX exposures), their ability to probe the results, from a skill and manpower basis, is dubious, particularly in the capital markets exposures.

FSN Hour 3 Part A (Audio, 31 Minutes ETF Ponzi, 44 Min Wheeler)

FSN Hour 3 Part B (Audio, 41 Minutes Taxes)

CM Users on Skype with KemoSavvy (I only had time to catch the impending RE bust discussion, it was good)

11 Comments

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - Apr 19

In the news today: Staggering debt, and another 2 banks declared inslovent. or as one blog put it, the FDIC made its move with it's Friday Night Special.

At least the folks at the FDIC have job security and work. I can't wait to hear Summers on the news talk about hope, bottoms and recovery this weekend, I'm sure it will make for a good delusional interview.

The best news I read today was the Hybrid and electric car stories. In addition to reading up on how to build your own solar array I have been reading on how to convert your internal combustion engine to an electric car.

Hope you have a great weekend, after seeing a client I hope to get into the garden, spend time with the kids and read. 

 

Aptera_4

FireJack's picture
FireJack
Status: Silver Member (Offline)
Joined: Feb 8 2009
Posts: 156
Re: Daily Digest - Apr 19

I think you had it posted on an earlier blog but Why a 50% Drop in Housing Is Not the Bottom

makes for a good read. Reminds me how people have been insulated from this recession with massive deficite spending by the US government. I still think that later this year (august/september) is going to start falling apart fast and everything is going down with it. Starting a nice big garden today, going to learn as much as I can. Stepping up my supply buying too.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - Apr 19

Hello FireJack: If that is a duplicate post I apologize -been a busy week. Enjoy the garden, I'm out there now, the interior electric fence around the garden is up for when we get sheep, 650#'s of cow is being butchered and I just finished reading how to make solar panels. Looks easy and cheap.

Don't know about the timing. Listening to FSN they are saying all hell with break loose in 2011. I'm more inclined to think along the lines you are thinking along. If housing meltdown one knocked the economy on the ropes I'm sure meltdown #2 will be the gut punch that puts it on its knees. But who knows. Pretty creative accountants. I read that 1/3 of REOs are trashed and unsellable - even if there was a market. And the banks turned a profit? Okay, I suppose they just forgot to mark those assets down some more, and I guess trashed vandelized homes don't bring down neighboring values. Then there is the self administered stress test is too bad to release.

Gee Mr. Soros, why on earth would the markets always be wrong? Take care

A. M.'s picture
A. M.
Status: Diamond Member (Offline)
Joined: Oct 22 2008
Posts: 2368
Re: Daily Digest - Apr 19

Davos,

Saw this this morning, and couldn't help but laugh:
http://www.cnn.com/video/#/video/living/2009/04/18/levs.green.cars.cnn

"Green" cars run on a combination of:
1. Ethanol - which we all know is a net energy consumer, with the added benefit of detracting from our food supply...
2. Electricity - the production of which requires oil in many places.

Cheers,

Aaron

cwixom's picture
cwixom
Status: Bronze Member (Offline)
Joined: Aug 18 2008
Posts: 44
Re: Daily Digest - Apr 19

The Aptera.  Cool, another COAL POWERED car.  Or did they get the power from "green" sources like Al Gore's house does?  Once again, until we get off the carbon based electrical generation process this doesn't solve the problem except to the extent that these vehicles might be more efficient due to lower weight, better aerodynamics, etc.  I certainly would not want to get hit by anything bigger than a bicycle in that little thing.  If you want to see what it will take to get off of coal see my post on April 17.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - Apr 19

I totally agree that a huge part of our electricty comes from coal and it is really bad to the enviornment.

The one thing I do like about the electric cars is that they can be charged with a solar array. Also, I read a book on convertions and it pointed out that 90% of the electricity goes towards moving the wheels, in an internal combustion engine it is 10% - that is an horrific amount of energy wasted.

And your right, getting hit with an Hummer would be road kill.

Take care 

Gado's picture
Gado
Status: Member (Offline)
Joined: Aug 31 2008
Posts: 24
Re: Daily Digest - Apr 19

Hi Davos 

Another weekend and another two banks!!

As I understand it the Federal Deposit Insurance Corporation (FDIC), when taking over a bank moves in with military precision, and uses a lot of resources. It appears to me that they only have enough resources to do two banks at a time, which begs the question If they had the resouces how many banks would now be closed?

cheers John

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - Apr 19

Hello Gaddo: Great point, I know they are weekend only and I have never seen more than 2 per weekend. Take care

joemanc's picture
joemanc
Status: Martenson Brigade Member (Offline)
Joined: Aug 16 2008
Posts: 834
Re: Daily Digest - Apr 19
Quote:

It appears to me that they only have enough resources to do two banks
at a time, which begs the question If they had the resouces how many
banks would now be closed?

I check this site every Friday night, seems like it's the first place that gets updated with the most recent bank failures...I see 3 bank failures occurred at a couple of different times recently.

http://www.fdic.gov/bank/individual/failed/banklist.html

cwixom's picture
cwixom
Status: Bronze Member (Offline)
Joined: Aug 18 2008
Posts: 44
Re: Daily Digest - Apr 19
Quote:

Citigroup posted a $2.5 billion gain
from accounting rules that allow companies to profit when their own
creditworthiness declines. The rules reflect the possibility that a
company could buy back its own liabilities at a discount, which under
traditional accounting methods would result in a profit.

That is from Mish's site.  

How about we all pay our taxes by telling the US Treasury that we "could" pay them but in fact aren't going to pay them but that they can book them as paid based on our capability to pay them if we wanted to.  If corporations can book profits based on this logic I see no reason we can't book tax payments based on the same insane logic.

mpelchat's picture
mpelchat
Status: Silver Member (Offline)
Joined: Sep 10 2008
Posts: 214
Re: Daily Digest - Apr 19

Hello guys,

Love the idea of the "Aptera" vehicle and I may think of one as a run around town vehicle, but since it would be by the article it is classified as a "motorcycle" you get around safety requirements that a "car" would be required to pass by the government.  I would be seriously concerned with this since the Aptera will move more like a car than a motorcycle and being as low as a car you lose the motorcycle advantage of seeing further ahead for trouble and maneuverability to get out of harms way.

 

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