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“On May 20, 2009, President Barack Obama signed the Helping Families Save Their Homes Act, which extends the temporary increase in the standard maximum deposit insurance amount (SMDIA) to $250,000 per depositor through December 31, 2013. This extension of the temporary $250,000 coverage limit became effective immediately upon the President’s signature. The legislation provides that the SMDIA will return to $100,000 on January 1, 2014.”
Economic Indicators Up, No Thanks to Home Building
” While the nations recession is likely to continue into the near term, the economys deterioration will be far less intense than in recent quarters, according to The Conference Board, whose Leading Economic Index released Thursday shows a significant 1.0% increase in April.”
The Destructive Implications of the Bailout
The bottom line is that the attempt to save bank bondholders from losses to provide monetary compensation without economic production is not sound economic policy but is instead a grand monetary experiment that has never been tried in the developed world except in Germany circa 1921. This policy can only have one of two effects: either it will crowd out over $1 trillion of gross domestic investment that would otherwise have occurred if the appropriate losses had been wiped off the ledger (instead of making bank bondholders whole), or it will result in a stunning and durable increase in the quantity of base money, which will ultimately be accompanied not by a year or two of 5-6% inflation, but most probably by a near-doubling of the U.S. price level over the next decade. As I’ve noted previously, the growth rate of government spending is better correlated with subsequent inflation than even growth in money supply itself, particularly at 4-year intervals. Regardless of near-term deflation pressures from a continued mortgage crisis, our present course is consistent with double digit inflation once any incipient recovery emerges.
TARP Warrants Shows Banks May Reap Ruthless Bargain
Banks negotiating to reclaim stock warrants they granted in return for Troubled Asset Relief Program money may shortchange taxpayers by almost $10 billion if Treasury Secretary Timothy Geithners first sale sets the pace, data compiled by Bloomberg show.
While 17 financial institutions have repaid TARP funds, only two have come to terms with the U.S. on the value of the rights to buy stock that taxpayers received for the risk of recapitalizing the industry. The first was Old National Bancorp in Evansville, Indiana, which gave the Treasury Department $1.2 million last week for warrants that may have been worth $5.81 million, according to the data.
Debt Destroys Solvency. America the Bankrupt. A Kool-Aid Nation.
” Every loan officer knows the story begins with debt and income. Debt and income define the financial health of a borrower. Is it any different for a country? If yes, then what do you use to determine the financial health of a country?
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“Total mortgage application volume sits 42% above levels seen in the same time last year, according to a weekly survey released today by the Mortgage Bankers Association (MBA). The gain in interest comes even as mortgage lenders tighten underwriting standards, making cheap credit at historic low interest rates more difficult for some borrowers to obtain than ever.”
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