It's Called "Precedent" (Bair)
When GM and Chrysler were bailed out, I wrote on the foolishness of setting forth precedent allowing secured creditors to get screwed so the UAW could "get theirs." Apparently people didn't bother to listen, because now Bair of the FDIC has endorsed an amendment to the Regulatory Overhaul Bill that would require "secured" creditors to take a haircut if a "systemically significant" firm fails - at the discretion of the government. At first this sounds reasonable - demand that people investigate risk, basically, by demandi

The FDIC Is Broke
Yes, really. Off the wire this morning: FDIC Deposit fund had negative $8.2B balance in Q3 That's broke.  Bankrupt.  Kaput.  Gone.  Poof.  Dead.  Rotting.  A corpse. Yes, yes, I know, Treasury has their back.  But let's not forget - The FDIC does not have a legal "full faith and credit" guarantee from the US Federal Government and Treasury. It has a "sense of Congress" resolution, but not a formal, legally-binding guarantee. I am not, by the way, p

GDP: 20% Miss (Yes, Really)
GDP 3Q 2009 "Second Estimate" is out and it is 2.8%. But let's remember - it was 3.5% on the "preliminary" report. That's a 20% decline. Was that an error, or was that an intentional overstatement to pump the markets and "confidence" in the original "preliminary" estimate? Oh, and cash-for-clunkers?  It was responsible for half of the so-called "advance" in the 3rd quarter (1.45%), it was a one-time deal, and it was and is just more pulled-forward demand. Government expenses?  Up 8.3%.  State and

Housing: Yes, That Was (And Is) A Train Wreck
The WSJ is starting to "get it" when it comes to housing: Nearly 10.7 million households had negative equity in their homes in the third quarter, according to First American CoreLogic, a real-estate information company based in Santa Ana, Calif. .... Home prices have fallen so far that 5.3 million U.S. households are tied to mortgages that are at least 20% higher than their home's value, the First American report said. More than 520,000 of these borrowers have received a notice of default, according to First American.

Who's Lying About Personal Spending?
Here are your possibilities: The BEA is lying.  In the third quarter they claim that PCE changed +0.2, +1.4, and -0.6% for July, August and September, respectively, leading to an aggregate change of +1.2%. Business that remit sales tax are lying. The overall sales tax collections in the 3rd quarter were down 8.2% from last year's levels, and this is the fourth quarter in a row that year-over-year declines were poste