Lunchtime Links 8-31

August 31, 2009

Raft of failed banks put U.S. on hook for billions (WSJ) This article notes that loss-share agreements FDIC has signed with healthy banks that acquire failing banks put it on the hook for $80 billion. I think that’s the total figure FDIC could conceivably lose if the loss rate on the assets in question was 100%. That’s fairly unlikely. In any case, bank failure press releases include estimates for losses FDIC expects from each deal, so they’re reserving for them. Of course many bank failures have ended up costing significantly more than FDIC’s initial estimate…

As big banks repay bailout money, U.S. sees profit (NYT) Eegads! I’m linking to this as an example of really unfortunate financial reporting. The U.S. is making a profit on the bank bailout because of a few deals for TARP warrants? Really? Take Goldman. Yeah, our return on the TARP portion of the bailout was positive, but that doesn’t mean the government “made money.” What about the $13 billion the Fed spent to make good on Goldman’s insurance policies with AIG? What about all of the debt FDIC has guaranteed for Goldman? On a risk-adjusted basis, we’re way in the hole. The long-term costs/consequences of explicit government guarantees against failure –which is what these banks now have — is many, many times larger than any profits earned on TARP warrants. Yves has more.

Hard cheese as hard currency (BBC) A good example of how bank credit can boost productivity.

Commercial real estate lurks as next potential mortgage crisis (WSJ) Not if the Fed conspires with banks to extend/amend/pretend!

As hybrid cars gobble rare metals, shortage looms (Reuters) “Jack Lifton, an independent commodities consultant and strategic metals expert, calls the Prius “the biggest user of rare earths of any object in the world.”

Toyota accused of hiding evidence (CBS) “A former attorney for Toyota has accused the automaker of illegally withholding evidence in hundreds of rollover death and injury cases, in a “ruthless conspiracy” to keep evidence “of its vehicles’ structural shortcomings from becoming known.”

Wall Street stealth lobby defends $35 billion derivatives (annual) haul (Bloomberg) I hadn’t seen an estimate of how much Wall Street firms make trading derivatives. It’s a long article, but full of great details. Very good for folks who want to understand issues surrounding derivatives.

Facebook exodus (NYT) No surprise here. Facebook is a fad like any other. Social networks will come and go, burn brightly for a few years and then die slowly as users leave them behind. I think Facebook is unique in that it provides enough value to actually charge users a small amount to keep their profile. I’d pay a buck a month to keep track of all my friends, and have a handy way to send out event notices, etc. Twitter is the one that will go super nova the quickest in my view. Right now it’s highly dependent on a few celebrity tweeters. When they get bored, traffic will disappear quickly…

UAE seizes North Korea shipment of arms bound for Iran (Reuters)

Schoolgirls rumble Ribena vitamin claims (Guardian) Out of New Zealand, a story of a high school science experiment that dismantles one food product’s nutritional claims. Makes you think: What about the hugely unregulated market for nutritional supplements? What’s actually in them? No doubt you can’t trust the labels.

Cool hotel…wait, what’s in that second to last pic? ( WTF?

Caught cheating…



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Your link to the Arab Emirates seizing the arms to Iran is incorrect…it leads to dealbook.

Posted by Bob D | Report as abusive

Thanks Bob. Fixed.

Posted by Rolfe Winkler | Report as abusive

I can’t resist. People who buy nutritional supplements deserve to be conned.

Posted by SimonS | Report as abusive

Just so you know, people in the rest of the world might not be able to access the main website, e.g. here in Canada it automatically flips to; plus, the featured hotels might change during the day, so I have no idea what the second-last hotel was picturing. I enjoy your blogs and links, thanks.

Posted by exAmericanGal | Report as abusive

Any place, person, business, etc., that has a random cat in mid-air is my kind of place.

Posted by Danny | Report as abusive

I’m curious about the hotel picture (human nature etc). Can you post something more direct?


Posted by gmak | Report as abusive

[…] That’s what the New York Times and government puppet,  ABC News would have us believe. Rolfe points out that the reality is that for the American people to actually makes a profit on these […]

Posted by Government makes a “profit” | The Swamp Report | Report as abusive