Tuesday, November 24, 2009

FDIC in the red, US growth numbers were made up, no one pays attention due to holiday

Optimists were all liars?

Economy's rebound not as strong as first thought
The economy is growing modestly, with consumers too wary about spending to invigorate the recovery.

That picture emerged Tuesday from reports on the nation's economy and the confidence of consumers, who power 70 percent of it. The economy grew at a 2.8 percent rate last quarter -- less than originally estimated. And forecasts for the current quarter are for similarly slight growth before a drop-off next year.

The main reasons are that consumers remain reluctant to spend, commercial construction has slipped and imports are dampening U.S. growth.

The Commerce Department's new reading on gross domestic product was weaker than the 3.5 percent growth rate for the July-September period estimated just a month ago. The GDP, which measures the value of all goods and services produced in the United States, also was a tad weaker than the 2.9 percent growth rate that economists surveyed by Thomson Reuters had expected.

‘Problem’ Banks at 16-Year High in Third Quarter
U.S. “problem” lenders climbed to the most in 16 years and the Federal Deposit Insurance Corp.’s fund protecting customers against bank failures slipped into a deficit in the third quarter, the agency said.

Shouldn't the situation at FDIC get everyone, including cash holders - scream with anxiety?
U.S. Fund for Bank Deposit Insurance Falls Into the Red
The government-administered insurance fund that protects depositors fell $8.2 billion into the red for the first time since the fallout from the savings-and-loan crisis of the early 1990s as the pace of bank failures accelerated in the third quarter.

Bank customers, however, should remain confident that their deposits would be protected since the bulk of that negative balance reflects money the agency has set aside to cover future bank failures.

Federal Insurance Deposit Corporation officials warned in October that the deposit insurance fund had been depleted, but Tuesday’s third-quarter report card on the banking industry marked the first time that hard numbers had been released. Even amid early signs that the economy is recovering, the report suggested that the country’s 8,100 lenders remain in fragile condition.

In its state of the industry report, the F.D.I.C. reported that banks posted a $2.8 billion gain in the third quarter, after a $3.7 billion loss in the previous period. Meanwhile, the number of “problem banks” that run the biggest risk of collapse increased to 552, from 416 in the second quarter. Bad loans of virtually every stripe — credit cards, mortgages, small business and commercial real estate — continue to grow, albeit at a slower pace.

No one's in doubt - if there's enough non-existing money to stimulate to the sum of 800 billion, and non-existing money to fund new legislation and social plans - I doubt the government would let FDIC fail and let everybody's cash savings at banks disappear. If that day would ever come, you'd see real blood in the streets.

Have a joyous family time this weekend. Try to make it about family and giving thanks, not about shopping... frugal cheers!

1 comment:

  1. The government can always print more money to cover the loses [sarcasm alert].

    Good grief. Talk about fiscal irresponsibility. This news is one of the reasons I think that gold is doing so well. Right now the app, ExactPrice, shows the metal at $1,191.70 an ounce. Add to this the news of Russia and India buying gold and all the other central banks adding it and you know that the bankers are preparing their back door for what is coming.