October 2009

Latvia about to implode

Latvia, and several other former Soviet bloc nations have been on life-support for a long time. It looks like the first eastern European domino is about to fall.

(MarketWatch) -- It's never good news when a government bond auction fails. It's particularly bad news when an auction fails for a note maturing in just six months. And it's really bad news when there isn't any bid at all.
Yet that's what happened Wednesday when Latvia tried to sell close to $17 million of paper.
...
The Baltic country is squabbling with Western -- mostly Swedish -- leaders over spending cuts, and it's a very real possibility that the country may be forced to devalue its euro-pegged currency if emergency global funds don't arrive.

Revolving Consumer Credit Drops 13.1% in August

The Federal Reserve has issued it's consumer credit report for August 2009.

Consumer credit decreased at an annual rate of 5-3/4 percent in August 2009. Revolving credit decreased at an annual rate of 13 percent, and nonrevolving credit decreased at an annual rate of 1-1/2 percent.

Revolving credit means credit cards in so many words. So, awesome Americans are starving the beast on those greedy bastards.

Total credit though, which means car loans, personal loans also dropped.

Bloomberg:

“Demand for credit has just gone through the floor,” said Ellen Zentner, senior macro economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York. “Households are in paying- down-debt mode, they’re not in the mode of taking on new debt.”

SIGTARP October 2009 Report

The new SIGTARP report is out and it's not the bombshell last month's report was.

Below is an interview with SIGTARP inspector general Neil M. Barofsky that's just dynamite. MSNBC anchor Dylan Ratigan has coined a new phrase, Corporate Communism to describe how taxpayers are getting the shaft while a select group of financial institutions can do no wrong.

An earlier post gave a preview of this report. The claim some healthy banks were receiving TARP funds was fiction and done simply to boost investor confidence.

State budgets in terrible condition

It's well known how bad the California state budget is, but it isn't as well known just how bad other states are in.
The Automatic Earth has compiled a list of articles which reveals the extent of the distress.

Will California become a failed state?

Connecticut's new budget already in trouble

Pennsylvania budget falls apart

Will New York become the next California?

Ohio Supreme Court throws out state budget

Must Read Posts - Sometimes you just can't say it better for October 6, 2009

On The Economic Populist you might have noticed the middle column. We try to list other sites and blogs who have exceptional insight and writing on what is happening in the U.S. economy.

Sometimes though, one cannot say it better but miss those who did.

Must Read #1

Chris Whalen says Q4, 2009 will be a bloodbath for banks. It's a long video interview talking about how the original bank problems have been simply put off but have not gone away. This is completely contrary to Goldman Sachs upgrades on TARP banking companies recently. He also says the real U.S. economy is dying.

This is a major h/t from Naked Capitalism who expands on the prediction. This quote:

Overdraft fee profits $24 Billion in 2008

A Huffington Post article, As Economy Crashed, Banks Made A Killing On Overdraft Fees overviews a couple of reports on the profits financial institutions are making when people screw up and withdraw more money that is in their checking account or go over the credit limit on a card.

The report estimates that about 51 million people were affected - meaning that one in six Americans were hit, on average, with $470 in overdraft fees last year.

Check out these minor facts (from Moeb Services):

moebs, overdraft fees

The article has the original report embedded in the post.

Another milestone in the demise of the dollar

The headline appears more scary than it actually is, but it is still a significant step down the road.

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

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