Hazardous Lending and Lax Collection Practices

One of Minnesota's largest and oldest community banks, Forest Lake's Mainstreet Bank gets FDIC order to change.

Mainstreet Bank of Forest Lake, one of Minnesota's largest and oldest community banks, has received a cease-and-desist order from the Federal Deposit Insurance Corp., alleging "hazardous lending and lax collection practices."

My Comment: If hazardous lending and lax collection practices are grounds for cease and desist orders, then about 1000 notices ought to be flying out of FDIC headquarters right now, starting with Citigroup (C), Bank of America (BAC), Wells Fargo (WFC), and even some newly created bank holding companies like GMAC.

Like many community banks, Mainstreet is getting stung by loans it made to developers and builders during the real estate boom, when property prices were going nowhere but up. Now, those loans are souring at an alarming rate, and banks that hold the loans are being ordered by state and federal regulators to clean up their lending practices.

The FDIC claims Mainstreet operated with policies and practices that "jeopardize the safety of its deposits." The 105-year-old bank, which has nine branches in the Twin Cities area, operated with an excessive level of delinquent loans and did not keep an adequate allowance for loan and lease losses, according to a 23-page order, issued Dec. 12 and made public Friday.

My Comment: The whole freaking system is insolvent. There is nothing special about Mainstreet. What is special is the perhaps 10-20% of the banks that did nothing stupid but are being punished for it. FDIC insurance has CD money flowing to the crappiest of crappy banks.

One way to tell if a bank is crappy is to look at the CD rate. If it is way above normal, then assume it is involved in way above normal risk.

Out of commercial real estate

A Mainstreet spokeswoman said Friday that the bank is moving quickly to address the FDIC's concerns. It has temporarily stopped making loans to real estate developers, and will focus instead on consumer and business loans.

"It's back to our core, which is community banking," said Karen Greisinger, chief marketing officer. "All of our products are still in place. We're still making loans. But we're just moving away from that segment -- commercial real estate."

My Comment: Now there's a fantastic plan. Mainstreet made hazardous loans on commercial real estate and now wants to return to its core business of making hazardous loans to consumers smack in the face of a soaring unemployment rate.

In Minnesota, the delinquency rate on commercial mortgages and construction loans made by state banks rose 84 percent in the third quarter of 2008 from the same quarter a year earlier, according to Foresight Analytics, a California real estate research firm.

"It was the residential housing market that burst first," said Jennifer Thompson, a financial analyst with Portales Partners. "But all these home builders borrowed from someone, and those loans are starting to crack, too."

As of Sept. 30, an alarming 37 percent of the bank's construction and land loans were more than 30 days past due -- nearly four times the national average, according to Foresight.

About 100 Minnesota banks have more than four times their total capital in commercial real estate -- a level at which heightened scrutiny from examiners may be warranted, according to the FDIC.

Let's translate that last sentence so that it reads properly: "As many as 100 Minnesota banks may be doomed to fail having engaged in hazardous lending and lax collection practices centered around commercial real estate".

A tsunami of commercial real estate failures is coming. And when it comes to "lax collection practices", you either have the money or you don't. All the debt collectors in the universe cannot squeeze blood out a bankrupt turnip.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Case Shiller and CAR Analysis January 2009 Release

California Association of Realtors C.A.R. Data

The following chart is from my friend "TC" who has been monitoring California Association of Realtors (C.A.R.) and DQNews data. C.A.R. data contains resale single family residences and new homes. DQNews data contains resale single family residences and new homes.

click on any chart in this post for sharper image



Median nominal prices in CA are now down 53% according to CAR and 48% according to DQNews - and those declines are in 19-20 months!

Case-Shiller is a more accurate way of looking at home prices than median prices. Case-Shiller data follows.

Case Shiller January 2009 Release

Inquiring minds are considering the Case Shiller Home Price Release for January 2009.

Home Price Declines Continue as the S&P/Case-Shiller Home Prices Indices Set New Record Annual Declines.

New York, January 27, 2009 � Data through November 2008, released today by Standard & Poor�s for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, shows continued broad based declines in the prices of existing single family homes across the United States, with 11 of the 20 metro areas showing record rates of annual decline, and 14 reporting declines in excess of 10% versus November 2007.



The chart above depicts the annual returns of the 10-City Composite and the 20-City Composite Home Price Indices. Following the lead of the 11 metro areas described above, the 10-City Composite matched last month�s record decline of 19.1% and the 20-City Composites set a new record, down 18.2%.

�The freefall in residential real estate continued through November 2008,� says David M. Blitzer, Chairman of the Index Committee at Standard & Poor�s. �Since August 2006, the 10-City and 20-City Composites have declined every month � a total of 28 consecutive months.



The chart above shows the index levels for the 10-City Composite and 20-City Composite Home Price Indices. It is another illustration of the magnitude of the decline in home prices over the past two years.

Please see the original article for more commentary and tables on the data.

Case-Shiller Declines Since Peak

The following charts were produced by my friend "TC" who has been monitoring Case-Shiller Data. Although individual cities topped at varying times, the top-10 and top-20 city composites peaked in a June-July 2006 timeframe.

Case-Shiller Declines Since Peak Current Data
Correction: The column below that reads 2009 should say 2008.



click on chart for sharper image

Case-Shiller Declines Since Peak Futures Data



click on chart for sharper image

"TC" writes:

The Nov 2008 Case-Shiller data continues to accelerate to the downside. The 10 and 20 city index show declines from their peak in excess of 25% and the bubble cities (along with Detroit) all have declines in excess of 30% with Phoenix having the largest percentage drop of -43% and San Francisco having the largest price drop at $351,000+.

It is important for readers to know that Case-Shiller uses a Repeated Sales Methodology (RSM) which provides the most accurate housing data available. Additionally, as requested I've added two columns titled "Price Level" which show both the last time prices were at the current level and what price level prices are projected to decline to based upon the CME Futures market.

The most extreme bubble city decline is once again San Francisco which is at prices last seen in May 2002. However, the most extreme overall city is Detroit which has now reverted to prices last seen in Aug 1997.

This additional data is even more interesting when you look at the projected trough months. For example, Los Angeles is expected to trough in Nov 2010 at prices last seen in Jan 2003. However, those Jan 2003 prices are an amazing 44% higher than LA prices were in Jan 2000. Consequently, we can certainly go a lot lower and it appears that even the Futures market may be too optimistic about when this market bottoms.

Lastly, the sheer number of negative quarters in every city continues to amaze as 14 of the 20 cities have now experienced 9 or more consecutive quarters of prices declines!

Thanks "TC"

Those wanting to see still more graphs of housing and other data should take a peek at another fine post by Calculated Risk called January Economic Summary in Graphs.

My take is unemployment is going to soar in 2009 along with foreclosures, credit card writeoffs, and bankruptcies. Those will add to the inventory problems. Thus it is extremely unlikely that housing bottoms anytime soon.

And as much as housing prices have declined, take another look at the second chart in the news release above. Imagine where prices will be if they fall back to 2003 levels or worse yet 2001 levels. Moreover, why shouldn't prices fall back that far? Finally, how many are prepared for it, if indeed that were that to happen?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Pentax K2000 / K-m Review

The entry-level DSLR sector has become argue ably the hardest-fought camera sector over the past year. Reduced-spec, cheaper DSLRs have appeared from all the major camera companies, looking to tempt compact camera users across to the 'will it fit in my pocket?' divide. Pentax has responded to this with the K2000/K-m. In most respects it's a smaller, friendlier K200D with a little less mass and a little more mass-appeal.

And, to Pentax's credit, they've taken very little away from the K200D and clearly spent a lot of time making it as user-friendly as possible. The on-screen control panel is very well done, making it easy to find and change all the key shooting settings and meaning the top LCD (one of the few K200D features that has been removed), is unlikely to be missed by many. The automatic scene mode selection feature (which is becoming increasingly common on compacts), is a nice touch, too.

So our first impressions of the K2000 were very positive - it's a well designed little thing with some of the best build quality in its class and a level of accessibility that makes it probably the best beginners DSLR Pentax has yet made.

However, the thing we liked least about the K200D - its JPEG engine - appears to have been inherited, unchanged from the old model, which is quite a drawback for a camera aimed at the first time user. The default bright, high-contrast and saturated look makes sense for this target audience (though they're a bit much for our tastes), but the poor level of detail if you examine the images closely puts the K2000 at the bottom of its class for image quality. We're also not convinced that the same users who want those punchy colors will be best served by the low levels of noise reduction (or that they'll find custom setting 12 to change it), and rather conservative metering. This isn't a problem for the more experienced user, of course, who is more likely to apply exposure compensation and be happy to shoot in RAW and process the images later to get the best out of them.

Richard Butler & Lars Rehm

more : dpreview

Pentax K2000 / K-m Review

The entry-level DSLR sector has become argue ably the hardest-fought camera sector over the past year. Reduced-spec, cheaper DSLRs have appeared from all the major camera companies, looking to tempt compact camera users across to the 'will it fit in my pocket?' divide. Pentax has responded to this with the K2000/K-m. In most respects it's a smaller, friendlier K200D with a little less mass and a little more mass-appeal.

And, to Pentax's credit, they've taken very little away from the K200D and clearly spent a lot of time making it as user-friendly as possible. The on-screen control panel is very well done, making it easy to find and change all the key shooting settings and meaning the top LCD (one of the few K200D features that has been removed), is unlikely to be missed by many. The automatic scene mode selection feature (which is becoming increasingly common on compacts), is a nice touch, too.

So our first impressions of the K2000 were very positive - it's a well designed little thing with some of the best build quality in its class and a level of accessibility that makes it probably the best beginners DSLR Pentax has yet made.

However, the thing we liked least about the K200D - its JPEG engine - appears to have been inherited, unchanged from the old model, which is quite a drawback for a camera aimed at the first time user. The default bright, high-contrast and saturated look makes sense for this target audience (though they're a bit much for our tastes), but the poor level of detail if you examine the images closely puts the K2000 at the bottom of its class for image quality. We're also not convinced that the same users who want those punchy colors will be best served by the low levels of noise reduction (or that they'll find custom setting 12 to change it), and rather conservative metering. This isn't a problem for the more experienced user, of course, who is more likely to apply exposure compensation and be happy to shoot in RAW and process the images later to get the best out of them.

Richard Butler & Lars Rehm

more : dpreview

February Lectures

Lots of lectures, exhibitions and other presentations happening in New York City during the second month of 2009. Below is a list of some of those. Click the titles for prices, learning units and other information.

Tuesday, February 3
Step by Step: Building Schools in Africa, lecture by Diebedo Francis Kere
6:30-8:30pm @ Columbia University, Wood Auditorium, Avery Hall

Wednesday, February 4
Eco-Cities: Building Green on a City Scale, Eric Sanders will lead a discussion with Hillary Brown, Kate Orff and Ashok Raiji
6:30pm @ Museum of the City of New York, 1220 Fifth Avenue at 103rd St.

Conflicts, lecture by Thomas Leeser
6:30-8:30pm @ Columbia University, Wood Auditorium, Avery Hall

Monday, February 9
Advancing Architectural Research, debate with GSAPP Professors/ Lab Directors: David Benjamin, Living Architecture Lab; Jeffrey Inaba, C-Lab; Jeffrey Johnson, China Lab; Laura Kurgan, Spatial Information Lab; Scott Marble, Fabrication Lab; Moderated by Kazys Varnelis, Network Architecture Lab
6:30-8:30pm @ Columbia University, Wood Auditorium, Avery Hall

Wednesday, February 11
The Bank of America Tower with Richard A. Cook and Robert F. Fox, Jr, Cook + Fox Architects LLP
6:30pm @ Museum of the City of New York, 1220 Fifth Avenue at 103rd St.

Architecture and Context, lecture by Annabelle Selldorf
6:30-8:30pm @ Columbia University, Wood Auditorium, Avery Hall

Thursday, February 12
Peter Eisenman: University of Phoenix Stadium for the Arizona Cardinals, a film by Tom Piper, presented by Steven Holl
6:30pm - 9pm @ The Center for Architecture, 536 LaGuardia Place

In Situ Design: People, History, Place, lecture by George Ranalli
6pm @ Pratt University, Higgins Hall Auditorium

Friday, February 13
Current Work Grafton Architects, lecture with Yvonne Farrell and Shelly McNamara of Grafton Architects
7pm @ The Urban Center, 457 Madison Avenue

Book Launch: "Leven Betts, Pattern Recognition," by Leven Betts Studio
6-8pm @ 66 Fifth Avenue, Kellen Auditorium Lobby

Saturday, February 14
Urban China: Jiang Jun, presentation by the editor-in-chief of Urban China
3pm @ The New Museum, 235 Bowery

Monday, February 16
Material IMMATERIAL, Kengo Kuma and The Work of Kengo Kuma, Botond Bognar
Kengo Kuma exhibition begins, running until March 13
6pm @ Pratt University, Higgins Hall Auditorium

Crisis, debate and Volume Magazine launch with Benjamin Godsill, New Museum; Joseph Grima, Storefront for Art and Architecture; Jeffrey Inaba, Volume; Jeffrey Johnson, C-Lab; Jiang Jun, Urban China
6:30-8:30pm @ Columbia University, Wood Auditorium, Avery Hall

Tuesday, February 17
The Rebirth of the South Bronx with Majora Carter
6:30pm @ Museum of the City of New York, 1220 Fifth Avenue at 103rd St.

Wednesday, February 18
Interlaced Logic, lecture by Pei Zhu + Tong Wu
6:30-8:30pm @ Columbia University, Wood Auditorium, Avery Hall

Thursday, February 19
Process: Alice Tully Hall, Lincoln Center, with Charles Renfro, Mark Holden, Peter Rosenbaum, and introduction by Reynold Levy
12:30pm @ Alice Tully Hall, Lincoln Center

James Wines lecture
6pm @ City College, Shepherd Hall room 95

Steven Holl: The Nelson-Atkins Museum of Art, Kansas City, a film by Tom Piper, presented by Peter Eisenman
6:30pm - 9pm @ The Center for Architecture, 536 LaGuardia Place

Slenderness: New York | Hong Kong, super slender New York towers
6:30pm @ Steelcase Showroom, 4 Columbus Circle (@ 58th Street)

Friday, February 20
Hermitage 2014, lecture by Rem Koolhaas
6:30-8:30pm @ Columbia University, Wood Auditorium, Avery Hall

Situation Room, exhbition opening (running until March 31)
Storefront for Art and Architecture, 97 Kenmare Street

Saturday, February 21
Home Design in New York with Jean Nouvel, Craig Greenberg, James Archer Abbott, moderated by Donald Albrecht
1-5pm @ Museum of the City of New York, 1220 Fifth Avenue at 103rd St.

Wednesday, February 25
Book Launch: "Digital Modelling for Urban Design", new book by Brian McGrath
6-8pm @ 25 E. 13th Street, 2nd floor: The Glass Corner

New Urbanism for New Yorkers with Robert Yaro and John Norquist
6:30pm @ Museum of the City of New York, 1220 Fifth Avenue at 103rd St.

Thursday, February 26
Lebbeus Woods lecture
6pm @ City College, Shepherd Hall room 95

For more lecture resources, see also:
:: AIA/NY Calendar
:: newyork-architects
:: bustler

January ends with grim news on stocks, jobs, shipping

The stock market decline that started over a year ago picked up some steam in the Worst January ever for Dow, S&P 500

It was the worst January ever for the Dow industrials and S&P 500, according to Stock Trader's Almanac data.

The Dow lost 8.8% and the S&P 500 lost 8.6% in the month.

The Nasdaq's loss of 6.4% was eclipsed by last January's loss of 9.9%. That 2008 loss was the worst in the tech average's history, going back to its inception in 1971.

As goes January so goes the year. Or so they say.

Cargo Plummets 22.6% in December

The International Air Transport Association is reporting Cargo Plummets 22.6% in December

The International Air Transport Association (IATA) released international scheduled traffic results for both December 2008 and the full-year.

In the month of December global international cargo traffic plummeted by 22.6% compared to December 2007. The same comparison for international passenger traffic showed a 4.6% drop. The international load factor stood at 73.8%.

For the full-year 2008, international cargo traffic was down 4.0%, passenger traffic showed a modest increase of 1.6%, and the international load factor stood at 75.9%.

�The 22.6% free fall in global cargo is unprecedented and shocking. There is no clearer description of the slowdown in world trade. Even in September 2001, when much of the global fleet was grounded, the decline was only 13.9%,� said Giovanni Bisignani, IATA�s Director General and CEO.� Air cargo carries 35% of the value of goods traded internationally.

Nearly 6% of world�s boxships laid up

The picture is grim for container ships as well as Nearly 6% of world�s boxships laid up

The number of containerships laid up is growing very fast. According to French maritime consultant AXS-Alphaliner, 255 ships, equivalent to 675,000 teu in capacity (5.5% of the global containership fleet), were laid up as of January 19 this year. It projects that the volume of containerships on standby will jump to the equivalent of 750,000 teu in early February this year, accounting for 6% of the entire global boxship fleet.

Since the week before Christmas - just one month ago - the number of ships idling has grown by 90 or 255,000 teu.

Worse is to come. Alphaliner estimates that new build deliveries in 2009 will represent 14% of the current fleet. Another 12% will join in 2010. Despite continued scrapping, the weak demand trends will fall well short of absorbing this net new capacity. Compounding the problem, as pointed out by Alphaliner, is that current bunker prices are reaching the point where the popular coping practice of "slow steaming" becomes uneconomical. In short, the idle fleet will expand considerably.

Harbours fill with surplus ships

Harbormasters are rejecting ships as Harbours fill with surplus ships

Boatowners are likely to encounter many more laid-up merchant ships around the UK due to the credit crunch. Harbours and anchorages in several parts of the country are filling up with surplus ships as owners lay-up their vessels.

The lay-up area at King Harry Ferry on the River Fal is already so full of dormant ships that Carrick harbourmaster Andy Brigden has had to reject a request to accommodate a further fleet of seven vessels. Southampton, meanwhile, has become the temporary home of four large ships totalling over 300,000 tonnes, and it is reported that additional moorings will be laid to accommodate further arrivals.

French workers march on 'Black Thursday'

In France, A million workers march on 'Black Thursday'

(Jean-Paul Pelissier /Reuters)

About a million French workers staged a one-day strike yesterday and hundreds of thousands took to the streets in a show of force against President Sarkozy and his handling of the economic slump.

The stoppage, mainly by public sector workers, closed many schools but failed to paralyse public transport as the strikers had hoped. The Paris transport system remained about 75 per cent normal. But quiet stations and roads around the capital and other cities showed that many people had stayed at home for what had been billed as �Black Thursday�.

Mr Sarkozy�s Government played down the �day of mobilisation� as relatively routine by French standards. �This was by no means exceptional in terms of a public sector stoppage,� said Luc Chatel, the Cabinet Minister who acts as government spokesman. �It was about the same as in May this year and in 2006.�

Index shows economic activity decreased further in December

The Chicago Fed National Activity Index shows economic activity decreased further in December.

The Chicago Fed National Activity Index was �3.26 in December, down from
�2.78 in November. All four broad categories of indicators made negative
contributions to the index in December.



The three-month moving average, CFNAI-MA3, increased slightly to �2.40 in December from �2.56 in the previous month. With recent revisions, the three-month moving average reached its lowest value since 1980 in November. December�s CFNAI-MA3 suggests that growth in national economic activity was well below its historical trend. It also indicates little inflationary pressure from economic activity over the coming year.

The production and income category of indicators made a large negative contribution of �1.32 to the index in December, following a contribution of �1.06 in November. Total industrial production declined 2.0 percent in December after decreasing 1.3 percent in the previous month. In addition, manufacturing capacity utilization declined to its lowest level since 1983�at 70.2 percent in December from 71.9 percent in November.

General Motors To Invest $1 Billion of TARP Funds in Brazil

US Taxpayers are creating auto jobs in Brazil as General Motors to Invest $1 Billion in Brazil Operations

General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.

According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012."

"It wouldn't be logical to withdraw the investment from where we're growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil.

Riot Fears In China

As the global economy sours, China fears riots will spread as boom goes sour

Today millions will leave the cities to return to their rural family homes for the new year celebrations. But this year Beijing hopes the newly jobless revellers will stay there - to prevent a fresh wave of unrest in the cities.

They surged into the grimy streets around the factory: first scores, then hundreds, then more than a thousand, as word spread and tension loaded the stale, grey air. The boldest overturned a police van and smashed up motorcycles, then tore through the building destroying computers and equipment. The mood was exhilarated, angry and frightened.

"It happened so quickly ... There were maybe 500 involved and another 1,000 watching them. People were yelling: 'It's good to smash'," said a witness.

But the riot late last year at the Kai Da factory in Dongguan, amid the grim industrial sprawl of the Pearl River Delta, was not an isolated incident. It was one of tens of thousands of protests, many erupting from the same mixture of economic grievances, resentment of police and swirling rumour.

Property tax revenue plummets with home values

Adding to the growing list of California woes, Property tax revenue plummets with home values

California could pay the price for the foreclosure crisis for years to come, thanks to Proposition 13, the 1978 voter initiative that caps property taxes.

As banks feverishly dump foreclosed homes at cut-rate prices, and as neighboring homes change hands at similar bargain-basement rates, those amounts are enshrined as the new basis for determining property tax until the homes are sold again. Under Prop. 13, that basis can rise a maximum of just 2 percent a year, even if the home is worth significantly more. The consequence is likely to be a revenue crunch for the public services funded by property tax revenues.

"This is going to have a long-term impact on the state budget and on local budgets," said Jean Ross, executive director of the nonpartisan California Budget Project in Sacramento. "It means that even after the economy recovers, state and local government budgets will not recover fully."

Gus Kramer, Contra Costa assessor, puts it in stark terms.

"It's going to be an absolute economic disaster in Contra Costa County and surrounding areas," he said. "Everyone thinks this is like the last recession with values going down and that when they come back there will be a resurgence - but it's not going to be like that. It will be years before (the tax roll) recovers because all these people are selling (distressed) homes, banks are selling at deep discounts, values are going down from 50 percent to 75 percent. The people buying them will hold onto them for five, six, seven years. The tax base is not going to recover anytime soon."

Ford Burns Through Cash, Seeks Deal With Bondholders

In what may amount to an exchange of worthless shares for worthless bonds, Ford May Seek Distressed Debt Swap With Bondholders

Ford Motor Co., the only U.S. automaker shunning federal loans, may seek to exchange its unsecured debt with bondholders �in the coming months� as it burns through cash in the longest U.S. recession since the 1980s.

There is �little chance� that Ford, which depleted $21.2 billion of cash in 2008, will pay unsecured debt holders back at par, Kip Penniman Jr., an analyst at Montpelier, Vermont-based KDP Investment Advisors Inc., wrote in a report today.

Ford, the second-biggest automaker, on Jan. 29 reported a worse-than-expected $5.9 billion fourth-quarter loss, capping what was the worst annual performance in its 105-year history. The company said it would tap a $10.1 billion credit line to increase cash reserves.

Utah's MagnetBank closed without an acquirer

It's Friday so this news cannot be unexpected: Utah's MagnetBank closed without an acquirer

Utah's MagnetBank became the fourth bank failure of the year on Friday, and the Federal Deposit Insurance Corp. was forced to directly refund depositors after being unable to find another institution willing to take over its operations.

It marks the first time the FDIC has been unable to find an acquirer for a failed bank in nearly five years, according to FDIC spokesman David Barr.
"This bank did not have an attractive franchise value, and not many retail deposits or core deposits," Barr said. The FDIC had conducted an extensive marketing process for the bank's assets, he said.

The closure marks the fourth bank failure of 2009 and the 29th since the start of the credit crisis.

80 proof, not recession proof

The Seattle Times is questioning conventional wisdom in 80 proof, not recession proof for liquor industry

Drinking away your troubles? Possibly. But chances are you're doing less of it, and you're imbibing at home.

The alcohol industry is often thought of as "recession proof," but the spirits industry said Friday that its business softened last year, with revenue growth slowing and spending shifting away from bars and restaurants.

Revenue reported by liquor suppliers rose 2.8 percent from the previous year to $18.7 billion in 2008, according to the Distilled Spirits Council of the United States. That's slower than the 6 percent average annual growth rate since 2000. Volume grew 1.6 percent, also below the 2.7 percent average growth of recent years.

That there is even still growth shows the spirits business is "recession resilient," said council president Peter Cressy, but not immune to the pressures of the economy.

"It is absolutely not recession proof," Cressy said. "There's no question the fourth-quarter softened substantially."

Economic Plunge Worst Since 1982

Obama says it's a continuing disaster as the Economy's new plunge is worst in quarter-century

Battered by layoffs, debts and dread of worse to come, shoppers clutched ever tighter to their wallets in the final three months of 2008 and thrust the economy into its worst downhill slide in a quarter-century. Americans cut spending on everything from cars to computers, and it's only getting worse so far in the new year.

All told, the economy staggered backward at a 3.8 percent pace at the end of last year, the government said Friday. And the tailspin could well accelerate in the current quarter to a rate of 5 percent or more as the recession churns into a second year and consumers and businesses buckle under a relentless crush of negative forces.

Spending cutbacks hit everywhere last quarter. Shoppers chopped spending on cars, furniture, appliances, clothes, food, transportation and more. Businesses dropped the ax on equipment and computer software, home building and commercial construction. And overseas sales of U.S.-produced goods and services tanked as foreign buyers grappled with their own economic woes.

It's "a continuing disaster" for the nation's families, declared President Barack Obama, making what has become an increasingly urgent daily pitch for his $819 billion stimulus package to revive the economy.

Auto Fleet Sales Off to Slow Start

An automotive hurricane is hitting the industry. Low fleet demand gets '09 auto sales to slow start

A steep drop in sales to rental car companies and other fleet buyers is expected to weigh heavily on carmakers when they report their January sales results Tuesday. It remains to be seen whether injecting government cash into automakers' financing arms helped consumers make up the difference.

"It is an automotive hurricane moving through this industry," said Jim Farley, Ford Motor Co.'s marketing chief, at last weekend's National Automotive Dealers Association convention. Farley predicted a big drop in business from fleet buyers, which are keeping their current vehicles longer to pare costs.

Fleet sales -- big-volume sales to customers like rental car companies and municipalities -- typically account for about 20 percent of industrywide sales, but analysts expect that to be down sharply in January. Rental car companies have taken a big hit as consumers and businesses slash their travel budgets in the economic downturn, and the companies are holding onto their old cars rather than buying new ones.

"Our demand is down double-digits," said Richard Broome, spokesman for rental car company Hertz Global Holdings Inc. "So the need for new cars is less now than it would be in most years."

Many U.S. auto plants have been closed all month, with some shut down as long as eight weeks, said Jesse Toprak, executive director of industry analysis for the auto Web site Edmunds.com. He predicted industrywide fleet business fell 50 percent from January 2007.

"I think there's a lot of pent-up demand," Toprak said. "Consumers postponed purchases in the marketplace for the last year or longer, and once conditions start stabilizing in the economy, we're going to start seeing those postponements become reality."

Pent Up Demand? Let's look at the jobs picture before discussing pent up demand. Unemployed persons are not prone to buy cars.

Job cuts exceed 100,000 for the week

CNN Money is reportingJob cuts exceed 100,000 for the week

In a brutal week for the job market, an assortment of companies across various industries announced more than 100,000 job cuts.

The bulk of the job loss news occurred on Monday, when several major U.S. companies announced sweeping job cuts, pushing the day's total to more than 70,000.

Pfizer (PFE, Fortune 500), the leading drugmaker in terms of annual pharma sales, and Caterpillar (CAT, Fortune 500), a heavy equipment manufacturer based in Peoria, Ill., each said they would cut 20,000 jobs. These are the biggest reported eliminations among U.S.-based companies.

Boeing (BA, Fortune 500) announced its massive layoffs on Wednesday. The Chicago-based airplane manufacturer said 10,000 workers, including 4,500 previously announced reductions, would lose their jobs. The company blamed this on dwindling demand for its aircraft.

The U.S. economy lost 2.6 million jobs in 2008, according to government reports. This includes 21,137 mass layoffs, a seven-year high. In a mass layoff, 50 or more workers are laid off at a time.

Pent Up Demand?

Yes there is a pent up demand, not for autos, but rather for cash.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Drawing male face Swordman or Samurai video tutorial

How to Draw face male, Swordman or Samurai face video and step by step tutorial.
Another art tutorial on face drawing and rendering. How to draw and design character face with some realistic lighting or shading design.
If you are looking for more of the similar level tutorial of facial structure go to Character Design Face Male Merchant Character, and Learn how to draw and paint face You will like them.

But for a little bit easier and close to basic you can go to How to draw a man face basic, how to draw a person's head 3/4 view basic and you might also like draw Manga facial expression mad or angry. Enjoy

Peace!

Final Swardman Face tutorial

Here are step by step tutorial Drawing swordman
1)


2)


3)


4)


5)


Final sketch Swordman


Watch Video Tutorial drawing process


Drawing Software & Tools I used and recommended:
-Genius MousePen 6x8
-Wacom Intuos3 6X8 Pen Tablet
-Bamboo (Small) Pen Tablet (new from Wacom!) Economy for everyone.
Softwares:
-Gimp (Free Download)
-Adobe Photoshop CS4 (Professional software)
*You can just use pencil, paper, markers on this one...just practice rendering.

New Drawing Video tutorials:
-Environmental concept Ice landscape
-Painting crystal cave concept
-Painting with waterfall custom brushes
-How to paint rocky bridge.
-Draw and paint valleys environmental concept
-Draw Female spy comics style
-How to draw a woman
-Painting portrait front view

FEATURE TUTORIAL:



-Draw and Paint Women Body Tutorial I: Female Manga Fusion I
-Draw and Paint Women Body Tutorial II: Female Manga Fusion II
-Character Design Tutorial: Dark Valkyrie

** If you have any basic questions or specific please looked up Q/A section. Most of the time your questions has already been answered in Q/A.

If you need any help or support you can
-post questions or comment on the post (seems to be the fastest way to get response)
Peace,

Panasonic's DMC-FT1, TZ7, TZ6, FX550, and FX40 cameras outed by French authority

Panasonic's DMC-FT1, TZ7, TZ6, FX550, and FX40 cameras outed by French authority

We're not sure what's going in France at the moment but a bevy of new 12 megapixel Panasonic Lumix cameras have broken loose with or without corporate approval. Let's start with the rugged �399 DMC-FT1 (pictured). It features a 12 megapixel (1/2.33-inches) with a 28-128mm optically stabilized 4.6x zoom Leica lens and a 2.7-inch LCD. It'll survive drops of up to 1.5 meters, water to a depth of 3 meters, while surviving storage in the dustiest of apartments. It'll even shoot 720p video in 'AVCHD Lite' format... whatever that is. Next up are the �429 DMC-TZ7 and its �329 DMC-TZ6 little buddy. The TZ7 couples a 12x optically stabilized zoom (25-300mm) with the ability to shoot 720p HD video in that same AVCHD Lite format and reviewable on a biggie (but relatively common) 3-inch LCD.

Also outed is the �299 FX550 with 5x zoom, 720p video capture, and a 3-inch touchscreen buzzing along with haptic feedback. It'll even handle aperture and shutter priority modes in addition to manual exposure for those who wish to push their amateur credentials to the edge. The �299 DMC-FX40 dials things back with a skinnier chassis and smaller 2.5-inch LCD while ditching the manual stuff. Check 'em all in the gallery.

Gallery: Panasonic's DMC-FT1, TZ7, TZ6, FX550, and FX40 cameras outed in France

[Via 1001 Noisy Cameras]

Panasonic's DMC-FT1, TZ7, TZ6, FX550, and FX40 cameras outed by French authority

Panasonic's DMC-FT1, TZ7, TZ6, FX550, and FX40 cameras outed by French authority

We're not sure what's going in France at the moment but a bevy of new 12 megapixel Panasonic Lumix cameras have broken loose with or without corporate approval. Let's start with the rugged �399 DMC-FT1 (pictured). It features a 12 megapixel (1/2.33-inches) with a 28-128mm optically stabilized 4.6x zoom Leica lens and a 2.7-inch LCD. It'll survive drops of up to 1.5 meters, water to a depth of 3 meters, while surviving storage in the dustiest of apartments. It'll even shoot 720p video in 'AVCHD Lite' format... whatever that is. Next up are the �429 DMC-TZ7 and its �329 DMC-TZ6 little buddy. The TZ7 couples a 12x optically stabilized zoom (25-300mm) with the ability to shoot 720p HD video in that same AVCHD Lite format and reviewable on a biggie (but relatively common) 3-inch LCD.

Also outed is the �299 FX550 with 5x zoom, 720p video capture, and a 3-inch touchscreen buzzing along with haptic feedback. It'll even handle aperture and shutter priority modes in addition to manual exposure for those who wish to push their amateur credentials to the edge. The �299 DMC-FX40 dials things back with a skinnier chassis and smaller 2.5-inch LCD while ditching the manual stuff. Check 'em all in the gallery.

Gallery: Panasonic's DMC-FT1, TZ7, TZ6, FX550, and FX40 cameras outed in France

[Via 1001 Noisy Cameras]

Toshiba Camileo P30 And H20 HD Camcorders

Toshiba Camileo P30 And H20 HD Camcorders

Toshiba has just rolled out a couple of HD camcorders for the masses - the P30 and H20, hoping to make high definition shooting affordable to everyone even in the current tough economic climate. Once you're done shooting, you can always opt to share them with either model, and each purchase comes with YouTube uploading and ArcSoft editing tools. Other features of both HD camcorders include HDMI connectivity, Night Mode for low light shooting, an SD memory card slot, 5x optical and 4x digital zoom, a 3' TFT display, (2.5' for the P30) video stabilization, special effect options, a remote control and the ability to shoot stills ala a normal digital camera. The Toshiba Camileo P30 and H20 will retail for �149.99 and �179.99, respectively when they arrive next month in the UK.

(Via UberGizmo, the Gadgets News Blog.)

Panasonic SDR-SW21 Shock & Waterproof Camcorder

Panasonic SDR-SW21 Shock & Waterproof Camcorder

Panasonic has announced its new SD memory card enabled camcorders called the SDR-SW21. The Panasonic SDR-SW21 sports a tough body and is more of a rugged camcorder. The device can withstand shocks, a 4 foot drop and also survive after being submerged in about 6.5 feet of water. The compact camcorder is also dustproof which makes it a great choice for outdoor shooting. The camera also boast of a quick start recording time of about 0.6 seconds. The SDR-SW21 will be available in three hues namely lime green, orange and silver for a price of $399.95 and will be shipped around April, 2009.

(Via The Digital Camera Blog.)

Panasonic reveals new LUMIX bounty prior to PMA

Panasonic reveals new LUMIX bounty prior to PMA

Ah, the sweet smell of PMA. While the camera-filled trade show is still over a month away, Panasonic's not wasting any time in outing its new LUMIX lineup -- which we already saw with Euro model names earlier today. Up first is the ZS-series, which contains the 10.1 megapixel DMC-ZS3 ($399.95) and DMC-ZS1 ($299.95), both of which boast a 25mm ultra-wide angle lens and a 12x optical zoom. The ZS3 is marked as the planet's first digicam to feature HD video recording in AVCHD Lite (a subset of AVCHD restricted to 720p, yuck), and the twin CPU Venus Engine HD provides the power to handle it. Next is the DMC-FX580 ($399.95), a compact 12.1 megapixel shooter with a 5x optical zoom and a swank touchscreen on the rear. For the argonauts in attendance, there's the DMC-TS1 ($399.95), a rough and rugged 12.1 megapixeler with AVCHD Lite capturing abilities (guess it's numero dos?), a 4.6x optical zoom and a waterproof / shockproof chassis.

(Via Engadget.)

Kodak Easyshare C180 bursts onto the scene, no one seems overly excited

Kodak Easyshare C180 bursts onto the scene, no one seems overly excited

Kodak's just announced they're rolling out a new entry-level point and shoot for your photography-loving self, friend or next door neighbor. The EasyShare C180's going to have a 10.2 megapixel sensor and a 3X optical zoom lens, a 2.4-inch display. The little camera will be available in silver, blue, red and pink sometime this August, and it's going to cost you about $120. Eh, thanks, but we'll probably just wait for the Lego cam.



[Via Lets Go Digital]

Toshiba Camileo P30 And H20 HD Camcorders

Toshiba Camileo P30 And H20 HD Camcorders

Toshiba has just rolled out a couple of HD camcorders for the masses - the P30 and H20, hoping to make high definition shooting affordable to everyone even in the current tough economic climate. Once you're done shooting, you can always opt to share them with either model, and each purchase comes with YouTube uploading and ArcSoft editing tools. Other features of both HD camcorders include HDMI connectivity, Night Mode for low light shooting, an SD memory card slot, 5x optical and 4x digital zoom, a 3' TFT display, (2.5' for the P30) video stabilization, special effect options, a remote control and the ability to shoot stills ala a normal digital camera. The Toshiba Camileo P30 and H20 will retail for �149.99 and �179.99, respectively when they arrive next month in the UK.

(Via UberGizmo, the Gadgets News Blog.)

Panasonic SDR-SW21 Shock & Waterproof Camcorder

Panasonic SDR-SW21 Shock & Waterproof Camcorder

Panasonic has announced its new SD memory card enabled camcorders called the SDR-SW21. The Panasonic SDR-SW21 sports a tough body and is more of a rugged camcorder. The device can withstand shocks, a 4 foot drop and also survive after being submerged in about 6.5 feet of water. The compact camcorder is also dustproof which makes it a great choice for outdoor shooting. The camera also boast of a quick start recording time of about 0.6 seconds. The SDR-SW21 will be available in three hues namely lime green, orange and silver for a price of $399.95 and will be shipped around April, 2009.

(Via The Digital Camera Blog.)

Panasonic reveals new LUMIX bounty prior to PMA

Panasonic reveals new LUMIX bounty prior to PMA

Ah, the sweet smell of PMA. While the camera-filled trade show is still over a month away, Panasonic's not wasting any time in outing its new LUMIX lineup -- which we already saw with Euro model names earlier today. Up first is the ZS-series, which contains the 10.1 megapixel DMC-ZS3 ($399.95) and DMC-ZS1 ($299.95), both of which boast a 25mm ultra-wide angle lens and a 12x optical zoom. The ZS3 is marked as the planet's first digicam to feature HD video recording in AVCHD Lite (a subset of AVCHD restricted to 720p, yuck), and the twin CPU Venus Engine HD provides the power to handle it. Next is the DMC-FX580 ($399.95), a compact 12.1 megapixel shooter with a 5x optical zoom and a swank touchscreen on the rear. For the argonauts in attendance, there's the DMC-TS1 ($399.95), a rough and rugged 12.1 megapixeler with AVCHD Lite capturing abilities (guess it's numero dos?), a 4.6x optical zoom and a waterproof / shockproof chassis.

(Via Engadget.)

Kodak Easyshare C180 bursts onto the scene, no one seems overly excited

Kodak Easyshare C180 bursts onto the scene, no one seems overly excited

Kodak's just announced they're rolling out a new entry-level point and shoot for your photography-loving self, friend or next door neighbor. The EasyShare C180's going to have a 10.2 megapixel sensor and a 3X optical zoom lens, a 2.4-inch display. The little camera will be available in silver, blue, red and pink sometime this August, and it's going to cost you about $120. Eh, thanks, but we'll probably just wait for the Lego cam.



[Via Lets Go Digital]

Global Crisis Destroys 40% of World Wealth; Bailout to Hit $4 Trillion

The world Economic Forum is reporting Global crisis 'has destroyed 40pc of world wealth'

The past five quarters have seen 40pc of the world's wealth destroyed and business leaders expect the global economic crisis can only get worse.

Steve Schwarzman, chairman of private equity giant Blackstone, said an "almost incomprehensible" amount of cash had evaporated since the financial crisis took hold.

"Business will be very different," he added.

His comments came on a day of the World Economic Forum characterised by the gloom of its participants and warnings that the crisis will endure for some time. News Corp chief executive Rupert Murdoch kicked off the meetings by warning that the atmosphere was worsening � despite global economic confidence plumbing the lowest depths on record.

"The crisis is getting worse," he said. "It's going to take drastic action to turn it around, if it can be turned around, quickly. I believe it will take a long time."

Indeed, business will be very different. This is the back side of Peak Credit and its twin sister Peak Earnings.

Inflationists simply do not understand the destruction of bank credit accompanying in conjunction with the decline in asset prices. Nor do they understand the changing attitudes towards debt. This is a once in every 3-4 generational occurrence. Hardly anyone alive has experienced anything but inflation all their lives until about a year or so ago. A rude awakening is at hand.

Pimco Says U.S. Must Buoy Asset Prices for Recovery

Oce again Bill Gross misses the mark by a mile. Please consider Pimco Says U.S. Must Buoy Asset Prices for Recovery.

Policy makers must stop declines in asset prices to revive the U.S. economy in 2010 and curb rising unemployment, according to Bill Gross, co-chief investment officer of Pacific Investment Management Co., the world�s biggest bond fund.

�You can�t bail out everyone, yet economic recovery is not possible unless certain critical asset sectors are not only reliquefied but rejuvenated in price,� Gross wrote in his February investment outlook posted today on the firm�s Web site. �An economic recovery is dependent upon commercial real estate prices stabilizing and more retail stores staying open for business in the months and years ahead.�

Policy makers should purchase municipal bonds, commercial mortgage-backed securities and investment-grade corporate bonds as a �necessary step towards eventual economic revival,� Gross wrote.

It is impossible for government to stop the decline of asset prices except by owning every one of them. Prices will fall to their natural level regardless of intervention.

What Gross is essentially asking for is for the government to guarantee above market prices for the assets PIMCO owns.

Darling Lines Up The Tools

On the other side of the Atlantic Darling Gives BOE Authority on Asset Purchase Fund

The U.K. government gave the central bank authority to spend 50 billion pounds ($71 billion) on bonds and commercial paper and paved the way for the central bank to lift money supply as interest rates keep falling.

Chancellor of the Exchequer Alistair Darling directed Bank of England Governor Mervyn King to buy investment-grade securities as a way of unfreezing financial markets. The bank�s Monetary Policy Committee also will consider using the fund to stimulate the economy, though it will need permission to act.

Britain�s recession is deepening as banks ration credit, shrugging off seven cuts in the central bank�s borrowing costs. The policy, set out in letters between the central bank and the Treasury, marks a first step toward so-called quantitative easing, where governments increase the money supply to reduce its cost and prevent a downward spiral in the economy.

�They�re getting all the tools lined up,� said Matthew Sharratt, an economist at Bank of America Corp. in London. �All you need to do is stop the sterilizations to increase money supply. The mechanics are being set up to move into quantitative-easing proper. It is a rising probability they may be forced into further down the line.�

As I commented in Fed Adopts "Throw The Kitchen Sink" Policy

Flooding the market with words and throwing the kitchen sink at the problem will not stop the impending wave of failures. In cases of tools vs. tsunamis, the tsunami will win every time.

And after the kitchen sink, it's straight down the drain thereafter.

The Ever Rising Cost Of The Bailout

Does anyone remember when the cost of the bailout was supposed to be $500 billion? Then $1 trillion? Then $2 trillion, then a whopping leap to $3.6 trillion. It's time top up the taxpayer ante once again.

Fortune Magazine is reporting Bank bailout could cost $4 trillion

Banks don't have enough capital to fix their problems, which means the Obama administration may need a lot more money to clean up the financial mess.

The cost of the bank bailout is likely to be much higher than $700 billion.

While the Obama administration hasn't asked Congress for more money yet, some experts warn that government spending on support for struggling financial services companies will ultimately reach into the trillions of dollars.

"The amount of working capital you'd expect the government to take into this would be around $3 trillion to $4 trillion," said Simon Johnson, a senior fellow at the Peterson Institute for International Economics and author of its Baseline Scenario financial crisis blog.

But calls for a comprehensive response from the government have increased in recent weeks following the free fall of bank stocks.

The KBW Bank index has dropped 35% in January after a 50% plunge in 2008, as investors worry that the government may be forced to nationalize some banks -- and wipe out shareholders in the process. Shares of Citigroup (C) and Bank of America (BAC) have been particularly hard hit.

"The big banks are a hope trade right now," Johnson said.

Johnson said the government could get warrants in banks receiving assistance that would convert to common shares once the government sells them. He also said the government could hire private equity managers to oversee the assets the government takes on -- and sell them when the time is right.

These arrangements, he said, should allow the Treasury to extract some gains for taxpayers when the economic free fall ends and the banking system starts to recover.

Some observers believe asset values are so depressed right now that as long as the government has a well designed plan that restores investor confidence, taxpayers should profit from the financial bailout

"I think we have seen prices fall to a point where the government could very easily make money, though I'd be very happy if we end up breaking even," says Gary Hager, president of Integrated Wealth Management in Edison , N.J.

I am sorry, there simply is no hope for the "Hope Trade". Citigroup, Bank of America, Wells Fargo, etc are gigantic black holes that will suck in every dollar available. All taxpayers will get, if anything, are a few quarks that escape.

Colin Barr, senior writer for the story goes on to say "If the history of previous banking system rescues is any guide though, there's also a good chance that removing toxic assets from bank balance sheets could leave taxpayers with a significant tab."

Had Barr written "near certainty" instead of "good chance" and I would have rung the bell and given him a cigar.

And in talking about a possible RTC style bailout, Barr concludes "But whatever method the aggregator bank uses, it could mean significantly higher startup costs than the RTC had. So expect to see the Obama administration coming back to Congress for more money...soon."

Ding, ding, ding, we have a winner. I am ringing the bell for Barr's final conclusion. That unfortunately, is the sad state of affairs.

Murray Rothbard vs. Tim Geithner

Inquiring minds are considering a 1984 classic by Murray Rothbard entitled Wall Street, Banks, and American Foreign Policy.

Commercial bankers, engaged as they are in unsound fractional reserve credit, are, in the free market, always teetering on the edge of bankruptcy. Hence they are always reaching for government aid and bailout.

My friend "BC" just pinged me with ... The banksters hold the marked cards, the politicians are the dealer, and the taxpayers are the patsy in this game. Of course the banks are not just 'teetering' anymore. They have actually gone bankrupt.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Putting odd wall space to use

I have a major staircase redo in the works, but until then, I'm adding this post to Beth's party!
Thank you for your encouragement about my last post! You are all so wonderful and it warmed my heart. Thanks to those who have already gotten in touch with me -- I'm so excited about working with you all!!

So you may have heard me complain about our lack of beautiful stairway railings in our house. (Especially at Christmas with the GORG garland wrapped around them.) I only have myself to blame for this -- hubby wanted them when we were building our house but I was already hyperventilating about the growing size of our mortgage with every. single. little. thing. we were adding. The extra four grand for railings (come on) was enough to put me over the edge.

So I've dealt with what we have. Which is a bunch of HUUUUGE walls on our stairway. It is open to the top of our house, about 25 feet up, so there's lots of space to work with. I've done a couple things to fill these spaces, the first of which I wanted to share with you today:

I started with a vinyl rub on from Uppercase Living. If you haven't heard about them, I wrote about the products here. I love this stuff!! Luuuuurve it!

I found floating frames at Joann's at half off -- I've probably spent about $50 on all of them. I love that there is no mat, just the wall showing through:
I started taking my own pictures of our son when he was itty bitty -- the baby who NEVER cried screamed like a banshee for his first professional pictures -- so that day I went home, stripped him down, laid him on black fabric, and shot away. I did this often his first year or so:
**This does not work with a two-year-old. :)

I didn't use any kind of design to put these up -- just hung them willy nilly, and I love doing it that way:
It's one of the first things you see when you walk into our home and it's one of my favorite spots. I just added a new one today, and may add one more, but I don't know. I like all the "white space":

I always suggest this kind of wall for weird hallways and stairways. I think it is a beautiful way to deal with awkward spaces like this. The pictures cost me nothing because I print them at home, on regular paper. Love it!

And yes, I hang my head at the awful lack of stepdaughter pictures. I am really a good stepmom, I swear. It's hard getting a good picture of a teenager -- especially when they don't live with you full time. (Or hardly ever come over anymore cause they are too busy with work, choir, friends, boyfriend, school, sporting events....wait, sorry....rant.) Sniff. :)

Deals of the Week

Inquiring minds are reading about "Deals of the Week" in Five Things You Need to Know: Banana Republic. Let's take a peek.

1. Change Comes Hard

This morning I was rudely greeted by two bizarre news headlines; bizarre because they were written about roughly the same thing, yet presented two diametrically opposed thoughts.

The first was from the New York Times: Geithner Sets Limits on Bank Lobbying

The second was from the Wall Street Journal: Geithner's New Chief of Staff is Former Bank Lobbyist

What in the hell? Seriously? That used to be something you would only read in a local broadsheet while waiting on a sweaty tarmac to flee a collapsing South American dictatorship.

Yes, change comes hard in all senses of the word.

2. Deal of the Weak

As if to underscore the reality of a the ongoing structural shift in consumption taking place, the Wall Street Journal "Deal of the Week" in commercial real estate this week is the sale of one of Cincinnati's largest malls by Simon Property Group (SPG) for $20 per square foot.

According to the Journal, the average price nationally for malls is around $134 per square foot.

"To be sure, the property is in sad shape," The newspaper noted. "Some 40% of its non-anchor retail space is empty."

Expect more "Deals of the Weak" to follow in the months ahead.

Day in and day out, Kevin Depew writes one of the best columns on the web.

Please take a look at his post if you are a following gold. In point 3, Kevin has charts of "Two views of Gold", one in Euros, the other in dollars. His take, there's reason for caution. My take? I still like gold here. Compromise: Perhaps gold does well in real terms (what it buys in terms of other assets) but remains range bound in nominal terms.

As for "more deals coming in the months ahead", why here's a deal to consider from two days ago. ....

Regulators Are Demanding A Deal

Please consider Suburban Federal Savings Bank told to sell

Federal banking regulators have told Crofton-based Suburban Federal Savings Bank that it must be sold by Friday or face a possible government takeover.

The 53-year-old thrift has been trying to recover from losses on soured real-estate loans. In documents filed last week, the Office of Thrift Supervision ordered Suburban to merge with another institution or accept "appointment of a conservator or receiver."

If Suburban were to be seized, it would be the first bank to fail in Maryland since 1992, the tail end of the savings and loan crisis.


The bank had about $33 million in bad loans as of Sept. 30, about eight times its capital.

If neither Suburban nor the government can find a buyer, the FDIC could take receivership and try to find one or more parties to buy pieces of it. "The desire is to have a whole bank transaction, where the healthy institution takes over the failed institution ... so they've acquired a franchise," said FDIC spokeswoman LaJuan Williams-Dickerson.

Bert Ely, a banking consultant in Alexandria, Va., said it will difficult to find a buyer for Suburban. "It's absolutely amazing they're still open," Ely said. "The capital at the end of September was almost exhausted."

Here's the deal. Deal: Sell Yourself. No Deal: The FDIC takes you over. That's the deal. More deals coming. ... Soon.

Good Bank Bad Bank Deal Is A Bad Deal

Institutional Risk Analysis is discussing The Big Banks vs. America: A Roundtable with David Kotok and Josh Rosner.

The term "bad bank" is being tossed around Washington dinner tables this week, a sign that the situation facing the largest banks is reaching a boiling point. It is amazing to us to see how little people understand the choices facing us with the big banks, how narrow those choices truly are and how the numbers in terms of losses are so BIG that they will ultimately force us to do the right thing.

Remember that the entire banking industry stands in front of the taxpayers in terms of loss absorption at the FDIC, so you can understand why the smaller banks in the industry are SERIOUSLY PISSED OFF at the large banks and their minions in the Obama Administration like Tim Geithner and Robert Rubin. Oh, and don't forget Chairman Ben Bernanke and the entire Fed board of governors. These leading officials are increasingly talking the side of the large banks in the battle over limited financial resources, a fact that is causing the community bankers to rise in anger. Stay tuned.

Roundtable: David Kotok & Josh Rosner

For additional perspective on this issue, The IRA spoke last week to Josh Rosner of Graham Fisher & Co and David Kotok of Cumberland Advisors:

The IRA: The basic question everyone's asking is what do we do with the big banks, particularly C and BAC and the growing tension between the cost of supporting the big banks w/o a resolution and the rest of the industry, which is being resolved according to the law. You can see our discussion of the issue and our view of loss rates above.

Rosner: First, I am very cautious about making loss estimates because your loss number could be very low. I can actually draw a scenario that gets us well above that level of charge offs, especially if we assume worsening macro conditions and their further impacts on ADC books, corporate defaults and other areas outside of the structured exposures.

Kotok: The motivation of keeping big banks alive is driven by a desire to avoid another Lehman on the Obama watch. I hear people saying that we cannot have another Lehman, therefore we cannot permit a failure. ... It is the Lehman failure and the contagion that is driving this policy.

The IRA: Well this just confirms that nobody in Washington understand the problem. As we have heard from many people in the industry who did the diligence on Lehman, there was no way for a private buyer to do the deal, so bankruptcy was the only choice w/o a very large, several hundred billion public bailout. The fact that the Fed and Treasury professional staff support this type of idiocy, over tinme, will destabilize the political consensus in this country behind an independent central bank. We might as well just make the Fed part of Treasury now.

Kotok: It looks to me as well that we now have Paul Volcker saying that we cannot tolerate another Lehman failure. Maybe Chris has some thoughts on this?

The IRA: My conversations with Chairman Volcker are OTR unless he says otherwise.

Rosner: I think what you are going to see is, on the one hand, the Fed, Treasury and OCC put together a proposal for a continuing or institutionalization of the "insurance wrap" approach used with C and BAC. This is a useless approach, in my view, and as we saw in the case of C because it created greater market confusion.

The IRA: Nobody in the Congress or the White House wants to acknowledge that the policy prescriptions coming from the Fed and Treasury are badly flawed when it comes to bank solvency. The market liquidity measures have had success, but the "save the big banks" approach by the Fed is just more of the same nonsense that cause the problem in the first place.

The Institutional Risk Analysis is always a good read. This one was exceptional. I recommend reading the entire article to see the letter from the reader that inspired the post, as well as more of the roundtable discussion.

"Black Swan" commented earlier today, his idea of what is driving Geithner. "There is only one reason Geithner doesn't want to nationalize the banks. It would destroy all the stock wealth of his bankster cronies now running these banks, and would force them out of their financial engineering jobs and personal fiefdoms. Geithner will do everything possible to not force banking's elite insiders to have to go out in the working world amongst the commoners."

Regardless of the motivation, one look at the IRA article suggests something that I have maintained for quite some time. This may not be a issue of "too big to fail", but rather the combined losses may be so great that it's a case of "too big to bail". Nonetheless, expect them to try, and expect lots of damage to our economy when Geithner does try. That unfortunately is the deal.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List