1 Month, 24 Bank Failures: Random Event or Wilting Economy?

In what has become as much a staple of Friday nights as drunkenness itself, the FDIC on Friday conducted "seizures" of the following five banks:

1. Mutual Bank (Harvey, IL)
2. First BankAmericano (Elizabeth, NJ)
3. Peoples Community Bank (West Chester, OH)
4. Integrity Bank (Jupiter, FL)
5. First State Bank of Altus (Altus, OK)

Despite the fact that JP Morgan (JPM) and Goldman Sachs (GS) continue to earn (?) healthy profits, the plight of the nation's small community banks appears substantially more imperiled.

The familiar Fridays that used to feature a single bank failure are now characterized by a new tradition which dictates that at least four - and possibly five banks must fail each Friday. The rate and magnitude of recent bank failures does not correspond well with the popular belief of the day; being that we have "turned a corner", "stopped the tailspin", "stabilized" or any other number of foolish statements currently in vogue.

To take a look at some data that slaps the recovery hypothesis right in its face, let's take a look at the past thirteen months' bank failures, by the number that have occurred each month (source: FDIC: Failed Bank List):

Month / Number of Bank Failures

• July 2008 - 3
• August 2008 - 3
• September 2008 - 4
• October 2008 - 4
• November 2008 - 5
• December 2008 - 3
• January 2009 - 6
• February 2009 - 10
• March 2009 - 5
• April 2009 - 8
• May 2009 - 7
• June 2009 - 9
• July 2009 - 24

It's immediately apparent that July's number of failures represents a severe departure from normal.

The question is, did we just experience a run of the mill anomaly that occurred independently of economic conditions, or do the numbers indicate something more troublesome? To say that 24 bank failures in one month alone is NOT an indication of economic deterioration, one would have to suppose that there is an element of randomness to the number of failures that occur each month.

If that is so, we should be able to apply some elementary statistics to the situation to discern just how probable it is that July would randomly produce 24 bank failings.

Running the numbers on the 12 months ended June 2009, we calculate that the mean number of bank failures for a single month is 5.58, and the population standard deviation is 2.33. For the uninitiated, this means that - assuming the Failures are distributed normally - the number of financial institutions collapsing in a single month will be between 3.2 and 7.9, approximately 68% of the time.

Taking the exercise a step further, we can state that 97.5% of the time, a given month will produce 10.23 or fewer Friday night FDIC raids. To calculate the probability of the 13th month in the series (July 2009) bearing witness to a full 24 FDIC seizures, one must first arm himself with spreadsheet software capable of displaying results to the Quadrillionth (Google's spreadsheet program is just barely able to do so).

The probability-value associated with such an event is 1.18755X10^-15, or 0.0000000000000018755.

Based upon the monthly rate of bank closings during the most recent 13 periods, it's apparent that the random forces of nature are, in all likelihood, not responsible for the FDIC's hectic July schedule. We must then conclude that the responsible party is none other than a deteriorating economy.

To be more specific, the recent spike in bank failures is a reflection of the rapidly deteriorating economy on Main Street a.k.a those who did not receive a bailout and continue to either fear or experience job losses; consequently, straining the ability of these individuals to honor the obligations made to many smaller, community oriented banks.

Disclosure: no positions

Comments

[Tack:]

Exactly.

There were over 1300 bank and S&L failures during the 1989-1991 S&L (RTC) crisis. Give me a buzz when we get to even one-quarter of that.


On Aug 02 01:50 PM FB5000 wrote:

> Dude, you have the wrong end of the stick on this one. Put down the
> calculator. Use logic. Get out the pencil and paper. You are probably
> really young. You need some perspective. Seriously. I lived through
> the 80's and 90's. Old people are useful since there is a survivor
> bias in the population - worth listening too
>
> Look at the data - in 1989 there were over 500 failures in 1990 there
> were almost 450. That's way out there - based on your calcs.
>
> This is a good sign. It means that stupid stuff is being undone and
> absorbed.
>
> Here look at what the S&P did during the period. This is like
> a 12% move up in the market during a period when there almost 900
> failures! Wow. We should be sitting around in caves and hunting buffalo
> - but we aren't. Fancy that.
>
> 310189 297.50
> 280289 288.90
> 310389 294.90
> 280489 309.60
> 310589 320.50
> 300689 318.00
> 310789 346.10
> 310889 351.50
> 290989 349.10
> 311089 340.40
> 301189 346.00
> 291289 353.40
> 310190 329.10
> 280290 331.90
> 300390 339.90
> 300490 330.80
> 310590 361.20
> 290690 358.00
> 310790 356.10
> 310890 322.60
> 280990 306.00
> 311090 304.00
> 301190 322.20
> 311290 330.20
> The rest is history.
>
> That's all
>

Aug 02 03:30 PM

[manya05:]

Most of these banks are there only because the communities they serve are too small to be properly served by the big guys (too costly to open branches everywhere). This is just burning the brush so the big trees can grow and move into these tiny markets. First BankAmericano of Elizabteh NJ? give me a break.

Aug 02 04:26 PM

[TLassen:]

As FB5000 stated earlier, here are some more facts for you to learn from. History didn't start the day you were born ,)

You can view the history of bank failures since the establishment of the FDIC below:

Year - Number of Bank Failures

2009 - 68
2008 - 30
2007 - 3
2006 - 0
2005 - 0
2004 - 4
2003 - 3
2002 - 11
2001 - 4
2000 - 7
1999 - 8
1998 - 3
1997 - 1
1996 - 6
1995 - 8
1994 - 15
1993 - 50
1992 - 181
1991 - 271
1990 - 382
1989 - 534
1988 - 470
1987 - 262
1986 - 204
1985 - 180
1984 - 106
1983 - 99
1982 - 119
1981 - 40
1980 - 22

Aug 02 05:22 PM

[in4thelonghaul:]

Though 24 failures is indeed an ominous jump..it means little except to indicate a possible trend. After all, bank failures are a 'lagging' indicator...right(?); just about everything is a lagging indicator and counts for spit. The government has already declared that they will just print money, any amount of money required, so who gives flying fruck about another few banks, even a few hundred banks...IT IS JUST MONEY DUMMY!!! Now, show me a consecutive series of poor debt auctions and the politicos will all be soiling themselves...until then get a grip man.

Comrade, you need to get with the program...the beginning of the end of the recession is upon us. Everything, and I mean everything, which doesn't support the party line is a lagging indicator. You need to relax and turn on CNBC.

Aug 02 09:34 PM

[indynoir:]

Boys,

Quit giving the kid a hard time. Actually, I think the naivity is on the so called experience here. The comparisons to 80's levels bank failures are really lame. If I remember correctly, we didn't dump 24 trillion of backstops into the system back in the 80's and early 90's. What would today's number be without these backstops. Not to mention there has been so much consolidation in the banking business you can't use individual banks as comparisons, but rather compare dollars. Now if we look at the bailouts of the big boy banks who basically are the banking system now...this crisis would have easily topped the 80-90's. Good luck to all those experienced traders here who have confidently watched the U.S. parade through the last three recessions, which from what I can gather makes them qualified to call this a gardern variety recession. Truthfully, your experience will be your undoing, and the youth will be the smart money in this cycle as they haven't been conditioned to believe the bull long lives. Just as a side-note...any experienced traders here impressed with last Friday's GDP report. I hope your smart enough to understand how revisons and the deflator work. The real number was -2.7 if you know how to read the report, and this number came with a 11% increase in Government spending...pretty scary number. We'll see how this recovery pans out after a 50% run-up in equities. There better be something out there better than what was in the latest GDP report, or part II of the crisis is sooner than I thought. Good luck to all the experienced traders here:)

Aug 02 09:50 PM

[FB5000:]

Wow. Really an experienced trader. Way cool! You run money for a living. How much? I bet you are whale. So you traded the Q2 GDP numbers? Really? How did you make out? Good I bet.

C'mon champ. Gimme a break.

1. Shlock analysis and data just needs to be called out. The savings and loan crisis of the 1980s and 1990s was the failure of 745 savings and loans. Utimate cost estimated to have totaled around $160billion, about $125billion of which was directly paid for by the U.S. government. Or in 2008 dollars about $291billion using the Consumer Price Index $258billion using the GDP deflator, using value of consumer bundle, $298billion using the unskilled wage, $360billion using the nominal GDP per capita and $447billion using the relative share of GDP. (You get to pick) The slowdown in the finance industry and the real estate market was contributing cause of the 1990–1991 economic recession. Between 1986 and 1991, the number of new homes constructed per year dropped from 1.8 million to 1 million, the lowest rate since World War II.

It was pretty bad. Yes not as bad as now in some ways but in other ways worse. TARP is about $700billion so that's more. Less banks have failed - far less and in many ways the system is far more resilient than it was and the policy response has been better.

2. Yes this is the worst recession in a long while. 4 quarters of negative GDP - you have to go back to the 40's for that. But next quarter - the one we are in RIGHT NOW will be positive. The recession is over. the signs if you care to see them are becoming clearer.

So you trade on GDP data? I tip my hat to you. Sort of like driving by only looking in the rear vision mirror. That takes some skill. That's some feat.

Some more ancient history.
Pearl Harbor Attack. S&P 8
Cuban Missile Crisis - October 1962. S&P 56
Penn Central collapse - June 1971. S&P 99

Were you around in October 1987?

My point here - if you have pulse and have paid attention you will notice that despite the hype that we are at the "end of days" there has been a lot of bad stuff happen before and guess what - we are still here.

Two lessons that I have learned.
1. You don't win betting against the house.
2. You don't bet against America

That's all.









On Aug 02 09:50 PM indynoir wrote:

> Boys,
>
> Quit giving the kid a hard time. Actually, I think the naivity is
> on the so called experience here. The comparisons to 80's levels
> bank failures are really lame. If I remember correctly, we didn't
> dump 24 trillion of backstops into the system back in the 80's and
> early 90's. What would today's number be without these backstops.
> Not to mention there has been so much consolidation in the banking
> business you can't use individual banks as comparisons, but rather
> compare dollars. Now if we look at the bailouts of the big boy banks
> who basically are the banking system now...this crisis would have
> easily topped the 80-90's. Good luck to all those experienced traders
> here who have confidently watched the U.S. parade through the last
> three recessions, which from what I can gather makes them qualified
> to call this a gardern variety recession. Truthfully, your experience
> will be your undoing, and the youth will be the smart money in this
> cycle as they haven't been conditioned to believe the bull long lives.
> Just as a side-note...any experienced traders here impressed with
> last Friday's GDP report. I hope your smart enough to understand
> how revisons and the deflator work. The real number was -2.7 if you
> know how to read the report, and this number came with a 11% increase
> in Government spending...pretty scary number. We'll see how this
> recovery pans out after a 50% run-up in equities. There better be
> something out there better than what was in the latest GDP report,
> or part II of the crisis is sooner than I thought. Good luck to all
> the experienced traders here:)

Aug 02 11:14 PM

[derryl:]

The other side of the equation of these failed banks is who is assuming their assets and liabilities. In most cases it is neighboring regional banks who are enjoying the opportunity to accelerate their expansion plans by snapping up the business of their failed competitors at bargain prices. The FDIC is admirably fulfilling its mandate by asking a failed bank's still solvent competitor to take over the loans and depositors with the least disruption possible. This is how the system is supposed to work and it is working. I don't see how this can be interpreted as a bad thing.

"Wilting economy"? Of course asset prices have 'wilted' from their bubble levels and banks who lent too much into the bubble will now be insolvent. But many bankers were prudent and are not insolvent. Unlike their bankrupt former competitors the prudent bankers did not enjoy the unsustainable short term highs but now they are not suffering the medium term losses, and they are able to profit from their prudence by buying up assets at a fraction of book value.

It's called "capitalism" and it works pretty good for the most part, except when 'too big to fail' banks are not only insolvent but are rescued with taxpayer money rather than being dissolved and their assets bought up on the cheap by prudent savers and bankers. Free market capitalism rewards prudence with profits and punishes imprudence with bankruptcy. I like that system.

Aug 02 11:55 PM

[Investing1:]

I disagree that this quarter we are in right now will see the end of the recession. I concur that with the deflator we were -2.7. With the strong revision to -6.5 and a deflator at -2.7 that compares to a real, soon to be revised number ot -3.7

traders do not trade off of silly ness like a government report. In fact traders have not been trading in several months as there is no volume in the market right now and has not been volume in a long time.

Money has evaporated from all the systems in the US. Banks are failing because they do not have money. Businesses are failing because they have no access to money. The only people with money are the government and that is why they have increases spending by 11%. To get money into the system.

There has been billions and billions pulled from the economy on the month as people hoard the stuff. There has been a HUGE baby boomlett that will fix the social security crisis in 18 years as the huge number of kids born since 2007 will be turning 18 and entering the work force.

With national health care we will be able to kill off all the sick and infirm and that will lower total cost.

Things are starting to look great for this economy. As Plague, Swine Flu, and Malaria, and AIDS are sweeping around the globe killing millions of people that will right size the human population on earth and gas house emmisions will decrease over time.

Things are improving each and every day. It is something that gets better with time not worse. There will be a stock market correction and it MAY get started MONDAY.... The data points to the fact that IT MAY get started soon. But each time the data precipitates to weakness we see a new wave of cash hit the market and it corrects higher. If you want to stand in front of the wave of the fixative causues comming with TIME, then so be it. I just can not do that.

Aug 03 12:25 AM

[perceptions...:]

Big Texas bank on verge of failure
Guaranty Bank, which counts Carl Icahn as one if its backers, is teetering on the edge of insolvency. But it may not be easy for regulators to find a buyer.

NEW YORK (Fortune) -- Guaranty Bank is hardly a household name. But the Austin, Texas-based thrift's looming failure is shaping up as a big headache for bank supervisors -- not to mention a black eye for Carl Icahn and others in the smart money set.

Guaranty (GFG) could be soon seized by the government in what would be the biggest bank failure in a year that has already had 64 of them. Last week, the bank warned investors to expect a federal takeover after regulators forced a writedown of its risky mortgage investments and a bid to raise new capital failed.

Guaranty has $13.4 billion in assets and operates 160 branches in Texas and California -- two of the three best banking markets in the nation, thanks to their size and population growth.

A big tab on Guaranty would be costly to the deposit fund, whose balance was $13 billion at the end of the first quarter. The FDIC has estimated failure costs on cases since then at $11.2 billion.

A spokesman for the FDIC stresses that it has already set aside an additional $22 billion for failure-related costs in 2009, and adds that congressional action this spring gave the agency access to $500 billion in Treasury credit.
Link -
money.cnn.com/2009/07/... ranty.headache.fortune... 73113
================
It just rolls off the tongue, "congressional gave the agency access to $500 billion in Treasury credit".

Yes, that's $500 Billion!

Why do you think the FDIC could need $500 Billion?

Aug 03 01:06 AM

[Dialectical...:]

I was around for '87. And if you think we are going to come out of this as quickly as we did then, you haven't been paying attention. We are like the addicted gambler who keeps borrowing more to hit it big. Sure there are some wins, but the trend is down. Down badly. But I'm sure if you can lend me a C-note this next one's a winner, okay?
Don't bet against the house. Is the US still the house?

On Aug 02 11:14 PM FB5000 wrote:

>
> Were you around in October 1987?
>
> My point here - if you have pulse and have paid attention you will
> notice that despite the hype that we are at the "end of days" there
> has been a lot of bad stuff happen before and guess what - we are
> still here.
>
> Two lessons that I have learned.
> 1. You don't win betting against the house.
> 2. You don't bet against America
>
> That's all.
>

Aug 03 03:25 AM

[christophe:]

Thanks Carneades! Your article had the merit to spark some good reactions/comments and good data for all see things in balanced perspective.

Aug 03 04:10 AM

[Cliff Wachtel:]

Nice article, good info, just one minor correction: You state:

Despite the fact that JP Morgan (JPM) and Goldman Sachs (GS) continue to earn (?) healthy profits, the plight of the nation's small community banks appears substantially more imperiled

NONE of the major banks had anything close to "healthy" profits - not one had profits based on sustainable ongoing operations. Goldman's came from very risky and by definition unpredictable trading operations, the rest beat the very low estimates via one time asset sales. Citi would have shown a loss without the sale of Smith Barney. For more detail check out:


seekingalpha.com/artic...

Virtually all noted rising credit risk. Unemployment and eroding real incomes and spending are eroding the foundations of the banks - fewer debtors are able to repay their loans. Cliff

Aug 03 06:59 AM

[ebworthen:]

Banks failing? Don't worry (puff), everything will be (puff, puff) just fine (pass - hold - exhale - repeat).

Aug 03 10:12 AM

[cbc:]

Carneades is young yes but at least he did not start his post with "Dude".
I am guessing you are of the advanced age of about 32. It shows in your arrogance and ignorance. "Dude" "like" stop it already. You are acting like a a$$hole.


On Aug 02 01:50 PM FB5000 wrote:

> Dude, you have the wrong end of the stick on this one. Put down the
> calculator. Use logic. Get out the pencil and paper. You are probably
> really young. You need some perspective. Seriously. I lived through
> the 80's and 90's. Old people are useful since there is a survivor
> bias in the population - worth listening too
>
> Look at the data - in 1989 there were over 500 failures in 1990 there
> were almost 450. That's way out there - based on your calcs.
>
> This is a good sign. It means that stupid stuff is being undone and
> absorbed.
>
> Here look at what the S&P did during the period. This is like
> a 12% move up in the market during a period when there almost 900
> failures! Wow. We should be sitting around in caves and hunting buffalo
> - but we aren't. Fancy that.
>
> 310189 297.50
> 280289 288.90
> 310389 294.90
> 280489 309.60
> 310589 320.50
> 300689 318.00
> 310789 346.10
> 310889 351.50
> 290989 349.10
> 311089 340.40
> 301189 346.00
> 291289 353.40
> 310190 329.10
> 280290 331.90
> 300390 339.90
> 300490 330.80
> 310590 361.20
> 290690 358.00
> 310790 356.10
> 310890 322.60
> 280990 306.00
> 311090 304.00
> 301190 322.20
> 311290 330.20
> The rest is history.
>
> That's all
>

Aug 03 10:56 AM

[Josh Kupers...:]

Interesting article, except:
[snip]
"assuming the Failures are distributed normally"
[snip]

What, exactly, is the justification for assuming that bank failures should be modeled by the normal distribution. I see no obvious reason for the central limit theorem to apply here. In fact, I'd argue that a fat-tailed probability distribution is far more appropriate for cases such as bank failures which can and are influenced by mass panics and human psychology. I'd love to hear your justification for using a normal distribution, if you have one.

Aug 03 11:17 AM

[Carneades:]

Part of the purpose here was to illustrate the - for lack of a better term - ludicrousness of the p-value associated with 24 failures under the normal distribution framework. It would be more comforting to think that bank failures can be modeled by a Gaussian curve; as opposed to one containing some extreme form of leptokurtosis. The reason being, events found in the "fat-tails" of these distributions are not necessarily independent of one another; that is to say they are not entirely random, and are influenced by some event. In this case you can call that event "panic" or, as I have asserted, a wilting economy.


On Aug 03 11:17 AM Josh Kupershmidt wrote:

> Interesting article, except:
> [snip]
> "assuming the Failures are distributed normally"
> [snip]
>
> What, exactly, is the justification for assuming that bank failures
> should be modeled by the normal distribution. I see no obvious reason
> for the central limit theorem to apply here. In fact, I'd argue that
> a fat-tailed probability distribution is far more appropriate for
> cases such as bank failures which can and are influenced by mass
> panics and human psychology. I'd love to hear your justification
> for using a normal distribution, if you have one.

Aug 03 12:17 PM

[Bull Run:]

Bank failures are now one/day across America, and I expect this to increase, for couple reasons. 1) ARM home morgages, are about to reset, between the end of 2009 and 2012 a large number will be facing reset deadlines, but will be unable to refinace at lower terms because of falling home prices, unless they can come up with a huge amount of CASH.. This leaves them with only the ARM reset option. This means they will "walk or default". 2) The biggest reason for the coming bank failure, is their commercial loans, which are overextended, and without hope of refinancing. The biggest number are also coming due in the same time sequence as the ARM's are facing resets. I've personnally seen this sequence of events happen before, only on a regional level, and the commercial property falls 1 1/2 to 2 years "after" the housing collapse. The commerical property fall is even more significant than the housing collapse. For anyone that wants to buy real estate, wait for the commerical property collapse, don't buy houses..3) The overhanging reason for bank failures in America, is America is out of work, and what work there is "part time' or " minimum wage". There is a big difference when Wal-mart is America's #1 employer today, v.s. GM 40 years ago, when it was America's #1 employer. (Disposible income)

Aug 03 12:49 PM

[Newspeak:]

Neither an economist nor financier am I - but I wonder...

(oh, before I begin I must say your statistical analysis was at once insightful and funny - thank you)

What % of the banks are folding right now? As in, is this a further consolidation for the bigger, more favored banks? I see this insolvency ("credit" if you follow M$M) as a kind of musical chairs - each time there are less chairs - and only big banks with buddies in D.C. are allowed to sit down; they get to bid on the losers assets.

I see another realistic explanation that may be hand in hand with the bankerz designs: don't lend because the velocity of money will go up - sparking hyperinflation, for sure. It's still a waiting game - the banks will be able to cut their losses before the public knows about it - has anyone else heard about a banking holiday coming up in the next month or so?

Don't bet against America? The international, opportunistic profiteerz ain't Americans - and the few that are share nothing in common with their countrymen when it comes to working hard to survive and make ends meet. When we, as a society, refuse to see something for what it really is (open theft by bailouts, then continuing to charge usury-level rates of interest through the front door) we can kiss it all goodbye. History doesn't repeat itself - it rhymes.

Earlier someone posted numbers from the 80's and those failures were in the 100s - but have all those banks been replaced?

I come from the camp that believes that the Fed Reserve has been consolidating its power for years - so if only a small number of banks are failing it's because there aren't many holdouts left - but I don't know where to find all those numbers, nor do I have the expertise in deducing what they might indicate. What if 24 bank failures in 2009 is on par with 240 busts in the 1980's? That's something I would like to know.

Aug 03 03:42 PM

[indynoir:]

FB5000,

Your post is all over the place and contradictory but I'll try to and respond. First read my post again because I'm not for sure you paid much attention reading it the first time. It sounds like your admitting today's crisis was worse in dollar numbers...so not for sure where your going. Using your own numbers...AIG bailout alone takes a huge chunk out of the numbers you present. You site housing drops in the 80's...have you seen the recent drop in new housing starts...kinda makes the 80's look like a gentle correction.

Okay sport...everybody and their brother knows the 3rd quarter GDP will most likely be a positive print from an inventory rebuild and government spending. Actually, 8 of the last 11 recessions have had a quarter or two of positive GDP sandwiched in between the recession, as we already have, but considering the magnitude of this downturn a double dip now is a possibility. However, the point I was making about the 2nd quarter GDP is that things are still pretty bad and worse than being reported, as to call into question what kind of recovery will we have. "The new normal," as has been discussed by several smart economists is what you should be worrying about rather than getting all giddy over the end of negative growth. If nominal GDP is only 2-3 percent going forward...good luck betting on America. And this was the point to my whole post. You believe some magical formula will take us back to 5-6 percent nominal GDP just because it's always been that way. Look around us...and look how we achieved that growth over the last 20 years. Do ya really think all the leverage and credit is coming back...do ya really think the consumer is going to jump right back into his old parabolic spending habits. The mistake guys like you are making is that you lived in the 1982-2000 era and don't look any further back on the charts. Check out 1965-1982. Yes, the S&P goes up over the long haul but it's not uncommon to have extended and lasting periods of a secular bear market, and I hate to tell you but we're in one. How has betting on America helped your portfolio over the last 10 years...your down big time even with the recent 50% run.

I was smart enough to get out at 1450...a tad early...and smart enough to ride the bear rally from 693 to 830. Yes, I've missed a lot recently but as of yesterday I have started to short the market aggressively again. Could we go to 1100-1200...sure we could but that's why you use stops. Nonetheless, at some point this technical rally will run it's course and the big money will be made on the short side again. And it won't be because of Q2 GDP that should have been -2.7. It will be because future GDP will be so muted as to only support much lower stock valuations than currently priced. In final, the positive 3rd quarter GDP has already been priced in...but what kind of growth should be your worry.


On Aug 02 11:14 PM FB5000 wrote:

> Wow. Really an experienced trader. Way cool! You run money for a
> living. How much? I bet you are whale. So you traded the Q2 GDP numbers?
> Really? How did you make out? Good I bet.
>
> C'mon champ. Gimme a break.
>
> 1. Shlock analysis and data just needs to be called out. The savings
> and loan crisis of the 1980s and 1990s was the failure of 745 savings
> and loans. Utimate cost estimated to have totaled around $160billion,
> about $125billion of which was directly paid for by the U.S. government.
> Or in 2008 dollars about $291billion using the Consumer Price Index
> $258billion using the GDP deflator, using value of consumer bundle,
> $298billion using the unskilled wage, $360billion using the nominal
> GDP per capita and $447billion using the relative share of GDP. (You
> get to pick) The slowdown in the finance industry and the real estate
> market was contributing cause of the 1990–1991 economic recession.
> Between 1986 and 1991, the number of new homes constructed per year
> dropped from 1.8 million to 1 million, the lowest rate since World
> War II.
>
> It was pretty bad. Yes not as bad as now in some ways but in other
> ways worse. TARP is about $700billion so that's more. Less banks
> have failed - far less and in many ways the system is far more resilient
> than it was and the policy response has been better.
>
> 2. Yes this is the worst recession in a long while. 4 quarters of
> negative GDP - you have to go back to the 40's for that. But next
> quarter - the one we are in RIGHT NOW will be positive. The recession
> is over. the signs if you care to see them are becoming clearer.
>
>
> So you trade on GDP data? I tip my hat to you. Sort of like driving
> by only looking in the rear vision mirror. That takes some skill.
> That's some feat.
>
> Some more ancient history.
> Pearl Harbor Attack. S&P 8
> Cuban Missile Crisis - October 1962. S&P 56
> Penn Central collapse - June 1971. S&P 99
>
> Were you around in October 1987?
>
> My point here - if you have pulse and have paid attention you will
> notice that despite the hype that we are at the "end of days" there
> has been a lot of bad stuff happen before and guess what - we are
> still here.
>
> Two lessons that I have learned.
> 1. You don't win betting against the house.
> 2. You don't bet against America
>
> That's all.
>
>
>
>
>
>
>

Aug 03 10:09 PM

[Iconoclast421:]

Maybe if we get 48 bank failures in august, the DOW will break 10,000.

Aug 04 02:36 PM