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The coffers of the Federal Deposit Insurance Corp. have been so depleted by the epidemic of collapsing financial institutions that analysts warn it could sink into the red by the end of this year.
That has happened only once before – during the savings-and-loan crisis of the early 1990s, when the FDIC was forced to borrow $15 billion from the Treasury and repay it later with interest.
The FDIC on Thursday will disclose how much is left in its insurance fund, and update the number of banks on its list of troubled institutions. That number shot up to 305 in the first quarter – the highest since 1994 and up from 252 late last year.
That has happened only once before – during the savings-and-loan crisis of the early 1990s, when the FDIC was forced to borrow $15 billion from the Treasury and repay it later with interest.
The FDIC on Thursday will disclose how much is left in its insurance fund, and update the number of banks on its list of troubled institutions. That number shot up to 305 in the first quarter – the highest since 1994 and up from 252 late last year.
- Newsmax
The Federal Deposit Insurance Corp.'s fund that protects more than $4.5 trillion in U.S. bank deposits fell to just $10.4 billion at the end of June, as the banking industry continues to struggle with souring loans and regulators brace for pain in trying to clean up the mess.
The level of the FDIC's fund, the lowest since the savings and loan crisis, almost guarantees that the government will have to hit the banking industry with another special fee to recapitalize its reserves. Officials could also consider borrowing up to $100 billion from the Treasury Department, but government officials have avoided this option so far.
The $10.4 billion in the deposit insurance fund was down from an already low $13.3 billion at the end of March. The "deposit insurance fund ratio," which is a way the FDIC measures its fund against insured deposits, stood at just 0.22% on June 30, the lowest level since March 31, 1993.
The level of the FDIC's fund, the lowest since the savings and loan crisis, almost guarantees that the government will have to hit the banking industry with another special fee to recapitalize its reserves. Officials could also consider borrowing up to $100 billion from the Treasury Department, but government officials have avoided this option so far.
The $10.4 billion in the deposit insurance fund was down from an already low $13.3 billion at the end of March. The "deposit insurance fund ratio," which is a way the FDIC measures its fund against insured deposits, stood at just 0.22% on June 30, the lowest level since March 31, 1993.
- Wall Street Journal
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Don't Forget to Look Down
by Dan Ferris Thursday, August 27, 2009 Don't Forget to Look Down -
One Legend's Secret to Beating the Government
by Dr. Steve Sjuggerud Wednesday, August 26, 2009 One Legend's Secret to Beating the Government -
These Prices Are So Cheap, They're Stupid
by Tom Dyson Tuesday, August 25, 2009 These Prices Are So Cheap, They're Stupid -
How to Join a Compound Interest Club
by Tom Dyson Monday, August 24, 2009 How to Join a Compound Interest Club -
Why I Wouldn't Bet My Retirement on Stocks Right Now
by Chris Weber Saturday, August 22, 2009 Why I Wouldn't Bet My Retirement on Stocks Right Now
What the Mainstream Headlines Won't Tell You About Housing
By Dr. Steve SjuggerudFriday, August 28, 2009
$800,000.
That's about what the median home in San Francisco sold for at the height of the boom three years ago. Then the bust came, and prices fell 45%, according to the Case-Shiller home price index.
But a funny thing has been happening lately... something people haven't really noticed...
Home prices in San Francisco actually bottomed in March. According to the Case-Shiller Index, they've been up every month since... up nearly 4% in the latest month.
On my side of the country in Florida, the same thing is happening. Again, people are almost refusing to notice... But for 11 consecutive months, home sales in Florida have INCREASED over the same period last year.
Meanwhile, homes in Florida are now ridiculously affordable.
The median home price in Florida is now $147,600. That's a mortgage payment of about $650 a month (at current mortgage rates with 20% down). The median household income in Florida is about $50,000, roughly $4,000 a month before tax. That's about 16% of your household income – way below any rules of thumb about how much to put toward a house.
From coast to coast, housing affordability is better than it's ever been, getting a big boost from two things: the housing bust and super-low mortgage interest rates. The pile of government incentives has helped, too.
As an investor, I'm seeing what I love... It's an ideal situation that's rare, but incredibly important if you can recognize it. It's when people's emotional opinions are clearly at odds with the reality of the numbers.
The numbers for housing are really great right now. But after three years of losses, people are sour on housing. Perfect!
Three years ago, we had the opposite situation... The numbers for housing were terrible. Housing was completely unaffordable, and builders were building at a frantic rate. But people were incredibly enthusiastic.
Today, the value is there. What will cause prices to climb again? When the supply of homes available for sale shrinks. It's Economics 101. And guess what? We're there...
Right now, fewer homes are available for sale than at any time in the last 40 years (adjusting the supply for the growth in the U.S. population). If I hadn't crunched the numbers myself, I wouldn't believe it. Take a look:
Even better, when you do the simplest, dumbest comparison – the price of homes versus the supply of homes – you get exactly what you'd expect:When the supply of homes gets low, home prices rise.
David Dreman agrees... In 1980, he literally wrote the book. It's calledContrarian Investment Strategies. In it, he recommended going heavily into stocks. In the current issue of Forbes magazine, Dreman recommends U.S. residential real estate:
Good investing,
Steve
That's about what the median home in San Francisco sold for at the height of the boom three years ago. Then the bust came, and prices fell 45%, according to the Case-Shiller home price index.
But a funny thing has been happening lately... something people haven't really noticed...
Home prices in San Francisco actually bottomed in March. According to the Case-Shiller Index, they've been up every month since... up nearly 4% in the latest month.
On my side of the country in Florida, the same thing is happening. Again, people are almost refusing to notice... But for 11 consecutive months, home sales in Florida have INCREASED over the same period last year.
Meanwhile, homes in Florida are now ridiculously affordable.
The median home price in Florida is now $147,600. That's a mortgage payment of about $650 a month (at current mortgage rates with 20% down). The median household income in Florida is about $50,000, roughly $4,000 a month before tax. That's about 16% of your household income – way below any rules of thumb about how much to put toward a house.
From coast to coast, housing affordability is better than it's ever been, getting a big boost from two things: the housing bust and super-low mortgage interest rates. The pile of government incentives has helped, too.
As an investor, I'm seeing what I love... It's an ideal situation that's rare, but incredibly important if you can recognize it. It's when people's emotional opinions are clearly at odds with the reality of the numbers.
The numbers for housing are really great right now. But after three years of losses, people are sour on housing. Perfect!
Three years ago, we had the opposite situation... The numbers for housing were terrible. Housing was completely unaffordable, and builders were building at a frantic rate. But people were incredibly enthusiastic.
Today, the value is there. What will cause prices to climb again? When the supply of homes available for sale shrinks. It's Economics 101. And guess what? We're there...
Right now, fewer homes are available for sale than at any time in the last 40 years (adjusting the supply for the growth in the U.S. population). If I hadn't crunched the numbers myself, I wouldn't believe it. Take a look:
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Even better, when you do the simplest, dumbest comparison – the price of homes versus the supply of homes – you get exactly what you'd expect:When the supply of homes gets low, home prices rise.
David Dreman agrees... In 1980, he literally wrote the book. It's calledContrarian Investment Strategies. In it, he recommended going heavily into stocks. In the current issue of Forbes magazine, Dreman recommends U.S. residential real estate:
If inflation hits hard, the chief culprit of the bear market – real estate – is likely to be one of the best investments in the years ahead. Buy a home if you don't already have one or a second home if you can afford one.Time to buy a house. (Or two!)
Good investing,
Steve
BIG NEWS FROM ONE OF THE WORLD'S MOST EXPLOSIVE SECTORS
Interesting news from the biotech sector: The PowerShares Biotech Fund (PBE) is holding its breakout.
Longtime DailyWealth readers know we follow the biotech space for one major reason: These stocks regularly go through enormous booms... which are good for hundreds of percent returns in a few short years. Investors just love to get behind the promise of miracle drugs and cancer cures.
Like all stock market sectors, biotechs were hammered in late 2008. But in mid-July, the PBE (a broad basket of biotech stocks) "broke out" to its highest high in nine months. The breakout took the PBE to $16 per share. And this week, solid earnings reports and takeover news confirmed the breakout and drove the fund north of $17.
Is this the start of another giant biotech run? We can't know the future. But all bull markets start with a breakout on top of a breakout, like the one you see below... so it's best to be long this budding uptrend.
Longtime DailyWealth readers know we follow the biotech space for one major reason: These stocks regularly go through enormous booms... which are good for hundreds of percent returns in a few short years. Investors just love to get behind the promise of miracle drugs and cancer cures.
Like all stock market sectors, biotechs were hammered in late 2008. But in mid-July, the PBE (a broad basket of biotech stocks) "broke out" to its highest high in nine months. The breakout took the PBE to $16 per share. And this week, solid earnings reports and takeover news confirmed the breakout and drove the fund north of $17.
Is this the start of another giant biotech run? We can't know the future. But all bull markets start with a breakout on top of a breakout, like the one you see below... so it's best to be long this budding uptrend.