Daily Graphic: 10 Years of Bank Failures
UPDATED: Includes the seven banks seized by the FDIC over the holiday weekend. Since the FDIC began publishing the failed bank list in 2000, 74% of the banks on the list were placed there during this recession.
Transcript: Joe Biden on ABC’s This Week with George Stephanopolous – July 5
Filed under: Economy, Foreign Policy, National Security, Politics
(Source: ABC News)
ABC’S “THIS WEEK WITH GEORGE STEPHANOPOULOS”
STEPHANOPOULOS: Major milestone this week here in Iraq with the American troops pulling out of the cities. And I wonder if you can put the broader American mission in context. Are we in the process of securing victory or cutting our losses to come home?
BIDEN: Securing victory. Look, the president and I laid out a plan in the campaign which was twofold. One, withdraw our troops from Iraq in a rational timetable consistent with what the Iraqis want. And the same time, leave behind a stable and secure country.
And one of the reasons I’m here, George, is to push the last end of that, which is the need for political settlement on some important issues between Arabs and Kurds and among the confessional groups. And I think we’re well on our way.
Daily Graphic: FDIC Bank Seizures This Year at 45 Nearly Double Those Seized in Recession’s First Year
Five more banks were seized by the Federal Deposit Insurance Corp. over the weekend in Georgia, Minnesota and California. During the first year of the current recession – 2008 – 25 FDIC insured banks failed. Little more than halfway through 2009 this year’s total is 45.
Full Text: Fed Statement – FOMC June 24
Release Date: June 24, 2009
For immediate release
Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing. Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.
The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.
In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
Daily Graphic: Oil Well On Way to Climbing Back to $100
Go check out this story at the Financial Times … energy market may conspire to stop recovery …
Text: Geithner Testimony to Senate Appropriations Committee – Treasury’s Priorities & Financial System Update
(Source: U.S. Dept. of the Treasury)
Chairman Durbin, Ranking Member Collins, members of the Subcommittee, I appreciate the opportunity to testify before you for the first time as Treasury Secretary on the President’s Fiscal Year 2010 Budget request for the Department of the Treasury.
While we see some initial signs of economic improvement and the financial system is beginning to heal, our country faces very substantial economic and financial challenges.
President Obama and his Administration are working to meet these challenges by getting Americans back to work and getting our economy to grow again; by restoring fiscal discipline to ensure a sustained recovery, and by making the long-neglected investments in health care, energy and education needed to enhance America’s global competitiveness and produce more balanced, sustainable growth over the long-term.
Treasury’s Key Priorities
To achieve these goals, we are repairing and reforming our financial system so that it works for, not against, a recovery that serves all Americans.
To restore growth and meet our fiscal goals, we are redesigning and bolstering enforcement of our tax code so that it is both fairer and more efficient.
To advance our interests globally, we are working with other nations to promote economic recovery and financial repair, and to ensure more open markets for U.S. business.
Full Text: Fed Chairman Ben Bernanke, Testimony to Congress, June 3 – Economic Outlook
(Source: Board of Governors of the Federal Reserve)
Current economic and financial conditions and the federal budget
Before the Committee on the Budget, U.S. House of Representatives, Washington, D.C.
June 3, 2009
Chairman Spratt, Ranking Member Ryan, and other members of the Committee, I am pleased to have this opportunity to offer my views on current economic and financial conditions and on issues pertaining to the federal budget.
Economic Developments and Outlook
The U.S. economy has contracted sharply since last fall, with real gross domestic product (GDP) having dropped at an average annual rate of about 6 percent during the fourth quarter of 2008 and the first quarter of this year. Among the enormous costs of the downturn is the loss of nearly 6 million jobs since the beginning of 2008. The most recent information on the labor market–the number of new and continuing claims for unemployment insurance through late May–suggests that sizable job losses and further increases in unemployment are likely over the next few months.
Daily Graphic: GM Stock First Day on the Pink Sheets – GMGMQ Chart
Additional 1,000 GM Dealers to Get Axe During Bankruptcy
From McClatchy:
For the first time, Henderson said the new GM will accept 4,100 dealer contracts out of 6,000, leaving 2,100 in the old company. GM had sent letters earlier this month to 1,100 dealers, saying their contracts would be ended by late next year.
Henderson said the new GM would sign “deferred termination agreements” with most of the dealers targeted for closure, giving them up to 17 months’ notice, to ease their hardship.
The plan will allow “thousands of dealerships to survive, while providing for an orderly wind-down of those dealerships not being retained,” Henderson said. “The alternative to the exercise of sound business judgment is that the Company would liquidate — and all dealerships would cease to be GM dealerships.”
Full Text: Timothy Geithner Speech at Peking University, May 31
(Source: U.S. Dept. of the Treasury)
It is a pleasure to be back in China and to join you here today at this great university.
I first came to China, and to Peking University, in the summer of 1981 as a college student studying Mandarin. I was here with a small group of graduate and undergraduate students from across the United States. I returned the next summer to Beijing Normal University.
We studied reasonably hard, and had the privilege of working with many talented professors, some of whom are here today. As we explored this city and traveled through Eastern China, we had the chance not just to understand more about your history and your aspirations, but also to begin to see the United States through your eyes.
Full Text: White House Fact Sheet on Government’s 60% Stake in GM and Bankruptcy Plan
The Obama Administration released the following fact sheet at 10 p.m. Sunday night regarding the path forward for GM and the government as 60% owner.
Click for White House Fact Sheet on GM Bankruptcy, Government's Role
U.S. Govt Will Pony Up Another $30 Billion for a Smaller GM
It’s being reported that GM’s bankruptcy filing will occur Monday morning at 8 o’clock. MarketWatch says tonight that the feds will support the company with $30 billion through a 60 to 90 day bankruptcy period.
What I found most interesting in tonight’s story at MarketWatch was this:
As a result of this restructuring, GM will lower its break-even point to sales of 10 million cars per year. Before the restructuring, GM needed to sell about 16 million car sales a year to turn a profit.
The way I read that, GM is either downsizing by about half or cutting its costs by about that much. When you hear all the millions and billions roiling around this story, you sometimes lose the scale of things. Ten million cars per year to break even versus 16 million is a number I understand.
Of course, GM is downsizing and cutting costs. But that number brings it home — GM, for the time being will be a smaller footprint on the trail of the U.S. economy. What’s to become of that old saw, “As GM goes, so goes the nation?”
Daily Graphic – The Fast Demise of GM – Two Historical Stock Charts
Daily Graphic: Percent Change in U.S. GDP From Preceding Quarter 2007 to Present
Data From Dept. of Commerce
Two More Dark Near Term Predictions for U.S. Economy
Uber investor Marc Faber says he’s 100 percent sure the U.S. will experience hyperinflation and economist Nouriel Roubini says that while the U.S. economy may post modest growth in six to nine months there is still a chance for a second dip beginning some time in 2010.
The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said.
Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.
“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”
Roubini stood by a recent article in which he mentioned the possibility of a “perfect storm” in 2010.
“There is even a risk of a double dip, a W-shaped recession at the end of next year,” he said, a combination of rising oil prices, rising public debt and increases in real interest rates, rising concerns about inflation and the expiration of a number of tax cuts in the United States.
IRS Tax Revenue Biggest Drop Since 1981
From USA Today:
Federal tax revenue plunged $138 billion, or 34%, in April vs. a year ago — the biggest April drop since 1981, a study released Tuesday by the American Institute for Economic Research says.When the economy slumps, so does tax revenue, and this recession has been no different, says Kerry Lynch, senior fellow at the AIER and author of the study. “It illustrates how severe the recession has been.”
For example, 6 million people lost jobs in the 12 months ended in April — and that means far fewer dollars from income taxes. Income tax revenue dropped 44% from a year ago.
“These are staggering numbers,” Lynch says.
Chart Source: American Institute for Economic Research
Krugman Talks of Green Shoots in UAE But Says Look Out for Decade-Long Slump
From Reuters:
The world economy has avoided “utter catastrophe” and industrialized countries could register growth this year, Nobel Prize-winning economist Paul Krugman said on Monday.
“I will not be surprised to see world trade stabilize, world industrial production stabilize and start to grow two months from now,” Krugman told a seminar.
“I would not be surprised to see flat to positive GDP growth in the United States, and maybe even in Europe, in the second half of the year.”
The Princeton professor and New York Times columnist has said he fears a decade-long slump like that experienced by Japan in the 1990s.
Read the rest of the story at Reuters
Bernanke’s Green Shoots for Boston College Law Grads …
Federal Reserve Chairman Ben Bernanke gave the commencement address today to the Boston College School of Law’s graduating class. His speech centered on the inherent unpredictability in people’s lives and his perspective on how to deal with that. The business press was dismissed for coffee and Bernanke gave a personal speech.
There was no news to move the markets, but there was a personal sentiment on Bernanke’s own enduring confidence in the U.S. economy and his foreshadowing on some of the great challenges to be faced by the class of 2009:
You are lucky also to be living and studying in the United States. There is a lot of pessimistic talk now about the future of America’s economy and its role in the world. Such talk accompanies every period of economic weakness. The United States endured a decade-long Great Depression and returned to prosperity and global leadership. When I graduated from college in 1975, and from graduate school in 1979, the economy was sputtering, gas prices and inflation were high, and pessimism–malaise, President Carter called it–was rampant. The U.S. economy subsequently entered more than two decades of growth and prosperity. The economy will recover–it has too many fundamental strengths to be kept down for too long–and the mood will brighten.
This is not to ignore real challenges. Our society is aging, implying higher health-care costs and fiscal burdens. We need to save more as a country, to reduce global imbalances in saving and investment, and to set the stage for continued growth. Our educational system is strong in some areas, including our university system, but does not serve everyone equally well, contributing to slower growth and greater income disparities. In the diverse capacities for which your training has prepared you, many of you will play a vital role in addressing these problems, both in the public and private spheres.
Daily Graphic: Mass Layoffs During the U.S. Recession 2008-09
Statistics Source: Bureau of Labor Statistics, U.S. Department of Labor
As defined by the Dept. of Labor, a mass layoff is a situation in which 50 or more persons have filed initial claims for unemployment insurance benefits against an establishment during a consecutive 5-week period.
Sign of the Beast! 6.66 Million Receiving Jobless Benefits
Headline is for the End Times Asshats.
From Bloomberg:
More Americans than forecast filed claims for unemployment insurance last week, and the total number of workers receiving benefits rose to a record, signs the job market continues to weaken even as the economic slump eases.
Initial jobless claims fell by 12,000 to 631,000 in the week ended May 16, from a revised 643,000 the prior week that was higher than initially estimated, the Labor Department said today in Washington. The total number of people collecting benefits rose to 6.66 million, a record reading for a 16th straight week, and a sign companies are still not hiring.
