A Symptom Of A Rotten Financial System
Readers suggested a topic on the economy. “The weekend topic I would like to discuss is: the US is in a stagflationary depression. For the purpose of this discussion, never mind the NBER’s definitions determined by calendar quarters of ‘real’ GDP growth/contraction. The ‘official’ calculation of CPI and its components should be discounted as well, consider the article on Marketwatch today stating that ‘food-at-home’ costs (excludes takeout and restaurant purchases) have increased only 3.9% over the past 12 months.”
“If what followed the 2001 recession was called the ‘jobless recovery,’ what we are living in now should be called the ‘recoveryless recovery.’”
A reply, “Is ‘recovery’ dependent upon housing? No. ‘Recovery’ is dependent upon jobs, increases in income, confidence, etc. Housing then follows. It is my opinion that the housing mania was just a symptom of an already rotten financial system.”
“I make this bold prediction: there will be NO recovery until the banking system is overhauled in favor of the people, and made accountable to the people. NO recovery until the Fed is dissolved and has no more sway over the people. NO recovery until the current politicians at all levels are replaced by those who are willing to be responsible to the people. NO recovery until illegals are run out of the country with their families. NO recovery until we repudiate the debt with China, or do our own manufacturing and producing. NO recovery until we unhook from the globalist system. NO recovery until the corps are made accountable to their customers, only in doing so can they really benefit shareholders. NO recovery until any and every trader and bankster who manipulated the system and profited off the misery of others is properly keelhauled. (an old fashioned form of waterboarding).”
“Bottom line, however, is that there will be NO recovery until the people are confident in their institutions and in their leaders and government. Believe it. I’ve said this from time to time here on the blog: a fiat system depends upon confidence, and that confidence is waning fast.”
“BTW, don’t try to find any logic in the thought processes of most of the members of CONgress, the Administration or SCOTUS. This is difficult to swallow, but you have to accept that most of them are out and out insane. Washington is an insane asylum. I’m not kidding. Most of these people are not fit for decent company.”
“There should be a moat around Washington, filled with gators.”
To which was said, “This is so common sense that I think all of us here agree Yet its not ‘obvious’ to the PTB, meaning they are either idiots or have an agenda.”
One replied to the first second poster, “That Ashton Kutcher is replacing Charlie Sheen on ‘Two and a half men’ matters more in the minds of 90% of the sheeple than any single item in your wish-list above. The sheeple know that something has gone terribly wrong in this country and/or in their lives, but once safely ensconced upon couch with remote and slipping into high-fructose-corn-syrup coma, all is well…”
A reply, “Maybe the sheeple subconsciously appreciate that, unlike banks and government, the entertainment industry doesn’t tolerate moral hazard. Charlie Sheen thought he was too big to fail, and guess what? He wasn’t!”
From Arkansas Online. “Stockholders attending the First Federal Bancshares of Arkansas Inc. special meeting Friday in Harrison approved all the proposals required to shift majority interest in the publicly traded company to a Little Rock-based investment group.”
“It also clears the way for Bear State Financial Holdings, owned by about two dozen investors including Joe Ford, Scott Ford and Rick Massey, to inject $55 million into the financially unstable bank and buy out its federal Troubled Asset Relief Program shares at a severe discount.”
“Bear State will pay about $6 million for the bailout shares, worth about $16.5 million. The Treasury Department has been discounting repayment of the investment it made under the Troubled Asset Relief Program for the banks having the most problems making their repayments.”
“The discounts are being made rather than allowing the troubled banks to fail or lose potential buyers.”
“The Treasury agreed to discount First Federal’s repayments by 63.6 percent as part of the company’s pending acquisition by Bear State Financial Holdings, according to a Treasury Department news release April 20. First Federal has missed several bailout repayments, including the most recent one that was due in February, according to the department release.”
The Times Herald. “And then there were none. At 15 minutes before closing time Friday evening, the Sharpsburg branch of First Choice Community Bank had every appearance of a normal business day. But less than half an hour later, it and all other local First Choice branches had the now familiar FDIC notices posted in the window, stating that an Arkansas-based bank will be acquiring the bank’s assets.”
“Bank of the Ozarks, Little Rock, Ark., acquired the banking operations, including all the deposits, of First Choice and a Valdosta-based Bank, The Park Avenue Bank, late Friday. To protect depositors, the Federal Deposit Insurance Corporation entered into purchase and assumption agreements with Bank of the Ozarks. The Georgia Department of Banking and Finance closed the banks and appointed the FDIC as receiver.”
“The FDIC and Bank of the Ozarks entered into loss-share transactions on the failed banks’ assets. The loss-share transaction for First Choice Community Bank was $260.7 million, and the loss-share transaction for The Park Avenue Bank was $514.1 million. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) for First Choice Community Bank will be $92.4 million, and for The Park Avenue Bank, $306.1 million. Bank of the Ozarks’ acquisition of all the deposits of the two institutions was the “least costly” option for the DIF compared to all alternatives.”
“Michael Chaffin, former president and CEO of First Choice Community Bank, said that the term ‘troubled assets’ in the relief program prepared by the U.S. Congress was too narrowly defined to be of much help to community banks like First Choice. ‘Most community banks do not hold mortgage paper,’ he said at the time. ‘Savings and loans did in the past, but it doesn’t work on a small bank’s balance sheet. So if this bill is specifically for the purchase of mortgage paper, then the direct impact for us would be zero.’”
“As it turned out, TARP had a negligible impact on community banks, and many failed even as they sought more assistance. ‘Large banks are getting the large part of the money,’ said Chaffin at the time. ‘I don’t know why.’”
“First Choice at first appeared to have weathered the storm, but in February 2010, the bank announced that it had agreed to enter into a consent order to merge with its sister bank, First Choice Community Bank of Dallas, Ga., as fallout from an April 2009 bank examination. ‘As everyone is aware, banks in the Atlanta metro area have been negatively impacted by the housing crises of the past few years,’ said Chaffin at the time of the merger.”
“‘Losses associated with falling real estate values and with land development curtailment have reduced bank earnings,’ he said. ‘We at (First Choice) have not been immune to these real estate woes,’ he said.”
“‘However, the good news is that our bank remains ‘well capitalized,’ as defined by the FDIC,’ he said at the time.”
