Two More Bank Failures This Week

The FDIC reports that two more banks failed this week - Security Savings Bank, Henderson, NV, and Heritage Community Bank, Glenwood, IL. That brings the total failures this year to 16. There were 25 bank failures in 2008. Looks like we are well on are way to surpassing that.

Mistakes, scandals, and failures no longer signal catastrophe. The crucial thing is that they be made credible, and that the public be made aware of the efforts being expended in that direction. The ''marketing'' immunity of governments is similar to that of the major brands of washing powder. --Jean Baudrillard

Are You Feeling Disenfranchised?

The economy continues to get worse. The headlines give little cause for optimism, let alone hope. Didn't President Obama get elected because his platform was one of reform and hope? Why, then, am I not able to conjure up any enthusiasm for his pledges and programs?

There is a rumbling in grass-root America and it is growing ever louder. Many American are feeling disenchanted, dispirited, and disenfranchised. In the early days of this economic crisis, there were a predictable few malcontents who blogged about an approaching Armageddon. but in the last couple of weeks, this has been echoed in the main-stream media. Reputable TV journalists have recently started talking about class warfare and insurrection with no hint of hyperbole and no wink of irony.

I did not vote for President Obama, but neither did I despair when he was elected. In fact, in the first few days of his presidency, I started to feel hopeful and optimistic. These feelings, however, are now starting to fade and appear to have been misplaced. Instead of bold new programs we are getting bigger doses of the same old ones. Instead of an inspired bi-partisan stimulus package which would turn the economy around and engender a new optimism, we have been treated to ill-conceived programs and uni-partisan pork.

Obama has squandered his hard-won mandate and surrendered his political capital to an out-of-control democratic congress and the Queen of Pork, Nancy Pelosi. It's very clear who really has the power in Washington, and it is not Obama!

A financial analyst whom I greatly respect and admire, Mitch "Mish" Shedlock, had a wonderful post on his blog this morning which perfectly captured the betrayal I have been feeling. He says everything that I could hope to say on the subject. Read, Dear Mr. President, With All Due Respect... for some critical insights.

"Oft expectation fails, and most oft there

Where most it promises; and oft it hits

Where hope is coldest, and despair most fits."

--William Shakespeare

Quote of the Day

"This too-big-to-fail problem has now become an even-bigger-to-fail problem as the current approach has lead weak banks to take over even weaker banks. Merging two zombie banks is like hav[ing] two drunks trying to help each other to stand up. " -- Nouriel Roubini in an article, It Is Time to Nationalize Insolvent Banking Systems

Where Are We Headed?

See if you can piece together the near-term future of the US economy based on the following recent headlines:

Plastic Is Fantastic - Visa and Mastercard benefit from consumers' lack of liquid funds during the recession.

Late Payments on Credit Cards Reach Record Levels - Growing signs of trouble in the credit card debt sector are documented in Fitch ratings’ latest monthly Credit Card Movers & Shakers report.

Prediction: Great Depression Ahead - Harry S. Dent Jr., author of the best-selling book The Great Depression Ahead, says gold and oil prices will rise as the economy and the stock market crash in the second half of 2009.

Jobs Contract 13th Straight Month; Unemployment Rate Soars to 7.6% - This morning, the Bureau of Labor Statistics (BLS) released the January Employment Report. Nonfarm payroll employment fell sharply in January (-598,000) and the unemployment rate rose from 7.2 to 7.6 percent...

‘Real’ unemployment rate hits a record 13.9% in January - The Big Picture (blog).

This Is Not Your Garden-Variety Downturn - If the recession now underway was a "normal" contraction, the near-term investment outlook might look quite a bit better.

Cumulative Job Losses: Getting Worse with Time - While they say things get better with time, the jobs picture is at least one exception.

Peter Schiff: Stimulus Bill Will Lead to "Unmitigated Disaster" - The fiscal stimulus bill being debated in Congress not only won't help the economy, it will make the recession much worse, says Peter Schiff, president of Euro Pacific Capital.

States Can't Afford To Pay Jobless Benefits - States are running out of cash to pay unemployment benefits.

Unemployed Workers Flood Calif. Job Centers - California furloughed more than 20,000 workers Friday in an effort to save the state money.

Three more bank closings brings this year's total to nine. - These three will cost FDIC $452M.

A White House official confirms talks are underway for more auto industry aid - A White House official confirms talks are underway for more auto industry aid...

He (Geithner) did say that some institutions are so frail that they would not survive - The Treasury Secretary told House Democrats the U.S. financial system is 'badly damaged,' adding, "It's clearly going to get worse..."

A growing number of states are running out of funds to pay unemployment benefits. - Seven are already borrowing money from Washington. Another 11 states could deplete their reserves by the end of the year.

Jobless Claims Soar To 626K, Factory Orders Plunge - It's a double shot of bad news today as jobless claims soar while factory orders sink.

"The government solution to a problem is usually as bad as the problem." -Milton Friedman

Double Standard

If you ever had any doubts about the popular claim that the US is not a democracy - rather more like an aristocracy - you have absolute proof this week. Two of Barack Obama's nominees for high-level administration positions have been caught cheating on their income taxes, and a third has withdrawn her name from consideration because she failed to pay employment taxes on household help.

The two tax cheats, Timothy Gethner, who has already been installed as Treasury Secretary, and Tom Daschle, who has been nominated for Secretary of Health and Human Services, did not just fudge a little bit on their tax returns. Geithner owed almost $50,000 and Daschle owed over $125,000! And both men apparently knew about their overdue tax obligations for many years!

Now what do you suppose would happen to you or me if we were caught doing the same thing? Our assets would be frozen, our wages would be attached, and there would be a good chance that we would end up in jail.

These two men, however, are not only not going to jail, they are being given a slap on the hand as their punishment, then being rewarded with appointments to help govern our country in high-paying positions! Apparently, if you are a member of the aristocracy, legal transgressions are acknowledged with a wink and rewarded with a promise of highly paid employment in a position of power and authority.

Obama and our sick congress just don't get it!

There has never been a better time for a taxpayer revolution, and they are practically inviting it! In light of the double standard, are you motivated to pay your taxes in full and on time? Or are you so infuriated that you are going to try to cheat any and every way you can on your own income taxes?

If the government becomes a law breaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy. - Supreme Court Justice Louis Brandeis