Trickle-Down Economics at Work: How the Crisis Will Continue to Trickle Down to Us!
August 12, 2009
– Comments (8)
As if small businesses were not already feeling the pinch from: the secular shift in American spending behavior, rising unemployment (yes, it is still rising), assets lost to the market drop, and negative home equity ... they are now facing the loss of another significant lifeline: smaller community and regional banks.
Small banks need to raise $21 billion (as if the first number offered ever lasts!?!)
http://www.marketwatch.com/story/panel-warns-small-bank-face-whole-loans-threat-2009-08-11
"The capital shortfall for those relatively smaller banks is primarily due to the lack of reserves, which on average account for only 25% of the expected loan losses."
"The COP report argued that problems for small banks are compounded by the fact that they hold "greater concentrations of commercial real-estate loans," which pose a potential threat of high defaults."
Deutsche Bank sees 48% of all U.S. mortgages underwater in 2011:
http://www.housingwire.com/2009/08/06/deutsche-sees-48-of-all-us-mortgages-underwater-in-2011/
"According to a report Deutsche released this week, the 25m represents a projected 48% of all US mortgages. While subprime and option adjustable-rate mortgages (ARM) are the biggest source of underwater borrowers in the current market, Deutsche said a larger percentage of prime conforming and prime jumbo borrowers will join the fray."
"Increased defaults in the middle class will suppress consumption, added Deutsche, further slowing housing recovery."
Zillow sees the number at 30% by mid-2010 ... FYI
“The negative-equity rate will rise and spin off more foreclosures,” Stan Humphries, Zillow’s chief economist, said in an interview. “I see a substantial downside risk to prices and don’t think we’ll see a bottom until the middle of next year.”
CIT is still facing bankruptcy
Cash for Clunkers was a blip on the radar
After sparking an initial rush to showrooms, the Cash for Clunkers program seems to be running out of fuel.
Interest in Cash for Clunkers has fallen 15% since its peak, and the number of people planning to buy cars could fall to pre-Clunkers levels by next week, an auto research group said Tuesday.
Banks will collect an astonishing $38.5 billion in overdraft fees this year ... who needs TARP?
Even TheStreet is placing unemplyment at 14.3%.
This article notes that official unemplyment figures only fell because of those who stopped looking for a job.
Thank goodness the recession is over ... otherwise I'd be concerned.
Sheesh!
"The money powers prey upon the nation in times of peace, and conspite against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, and more selfish than bureaucracy. I see in the near future a crisis approaching that unnerves me and cause me to tremble for safety of my country; corporations have been enthroned, an era of corruption in High Places will follow, and the Money Power of the country will endeavor to prolong its reign by working upon the prejudices of the People, until the wealth is aggregated in a few hands, and the Republic destroyed."
- Abraham Lincoln
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