Mish's Global Economic Trend Analysis |
- Fed Truncates Non-Performing Loan Data Series; Is the Fed Hiding Something?
- Merkel's Hypocritical, Undeserved Self-Praise; German Taxpayers at Serious Risk of Uncontrolled "Transfer Union" Budgets
- Congressional Spending Problem in Easy to Understand Format; It's Only Make Believe
| Fed Truncates Non-Performing Loan Data Series; Is the Fed Hiding Something? Posted: 21 Dec 2012 11:36 AM PST Reader Wendy pinged me with a question I have no answer for: What happened to the Fed data series on non-performing loans? Here is the link: Assets at Banks whose ALLL exceeds their Nonperforming Loans (LLRNPT). Reader Wendy writes ... The original series showed how banks always had 90% or above allowance for loan and lease losses until the 2008 financial crisis. It then dropped like a stone to 15%. It has been gradually struggling up since then and is now 35%.Hello Wendy, Merry Christmas to you and all my readers as well. I do not know when this happened, or why, so I cannot comment on that. However, I have a few historical charts to show from late 2009, and I have some thoughts on the data series following the charts. Current Truncated Chart  Click on any chart for sharper image To show you what Wendy is asking about, here are a few charts that I captured in 2009. Assets at banks whose ALLL exceeds Nonperforming loans  Banks with Total Assets from $1B to $10B where ALLL exceeds Nonperforming loans  Banks with Total Assets from $1B to $10B (Pacific Region) where ALLL exceeds Nonperforming loans  Banks with Total Assets over $20B where ALLL exceeds Nonperforming loans  Remember that allowances for loan losses will decrease as charge offs increase. However, the above charts are in relation to non-performing loans. Description of Allowances for Loan & Lease Losses To understand the importance of ALLL, inquiring minds are reading a description of Allowances for Loan & Lease Losses. Businesses try to predict, on an ongoing basis, the amount of loss in their accounts. They take periodic charges to earnings to better match losses to periods when they occurred. Banks do this as well. They use current income, through the provision for loan and lease losses, to create and build a reserve to absorb losses.Implications Because allowances for loan losses are a direct hit to earnings, and because allowances are at ridiculously low levels, bank earnings have been wildly over-stated. Thanks Wendy. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 21 Dec 2012 10:52 AM PST Praise from German chancellor Angela Merkel is typically hard to come by. However, Merkel is freely distributing praise these days, to the person least-deserving, herself. As the eurozone marches down the "Road to Shared Liability" Germans are largely unaware of the Hidden Risks of the Euro-Zone Bank Oversight Plan risks that Merkel ignored when agreeing to the eurozone oversight plan last week. German Chancellor Angela Merkel was full of praise for the euro-zone bank oversight plan passed last week at the EU summit in Brussels. But the deal is not nearly as watertight as she claimed. It lacks a legal foundation and could lead to a conflict of interest at the highest levels of the European Central Bank.As I have pointed out on numerous occasions, chancellor Merkel is willing to sell her soul and German taxpayers down the river if that is what it takes to create a nannyzone. And what a nannyzone it will be, if a vote from Malta or Portugal counts as much as a vote from Germany or France. It's no wonder that Euroskepticism on Rise in New EU Members. Indeed, citizens from Poland, Latvia, Bulgaria, and the Czech Republic are all having doubts about joining the eurozone, even if some of the political leaders of those countries are willing to proceed full speed ahead. The Czech president is one of those thinking clearly. He went so far as to call the ESM a "monstrous and outrageous thing". Merkel does not care about such matters. Her vision is that of a combined Europe, regardless of what it takes, or who is damaged in the process. Since no one else in Germany is singing Merkel's praises at the moment, she (like all politicians) is willing to do that herself. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Congressional Spending Problem in Easy to Understand Format; It's Only Make Believe Posted: 21 Dec 2012 01:57 AM PST Since 2000, how much has your average hourly wage gone up? If you are in the upper crust, the answer may be staggering. If not, perhaps the following chart more closely resembles your experience. Average Hourly Earnings 2000-2012  Just the Facts Ma'am
Bear in mind, those are averages. Don't be surprised if you are much worse off because of distributional skew (huge wage increases at the high end pull the average up). Moreover, the above chart does not reflect sales taxes, property taxes, state income taxes, gasoline taxes, fees, etc., all of which are way higher now than in 2000. In other words, the chart reflects average hourly wages, not spendable income. Actual spendable income is up far less than 44%. It's a peculiar thing how the CPI does not properly account for tax hikes. While pondering those thoughts, please consider federal spending. Federal Spending The following table will show without a doubt the purported "revenue problem" in Congress, is without a doubt really an "out of control spending problem".
Problem in a Nutshell
The idea behind this post comes from a friend, Bob Gudas. The numbers are from OMB Historical Tables. The spreadsheet is from Table 3.1 Outlays by Superfunction and Function: 1940-2017. I downloaded the excel spreadsheet, hid all columns except 2000 and 2012, then calculated the percentage difference discarding a few columns where the numbers were negative or the calculations infinite. Military Spending Wages are up 44%, military spending is up 145%, total outlays are up 112%. Let's dig deeper. What are veteran's affairs programs and homeland security? By any rational measure of sanity, those programs constitute defense spending. How much of NASA is really defense spending? How much of department of education spending is free tuition for those putting in military service? What about the department of state? How much of the cost of building the embassy in Iraq and other places is buried there? Let's go further yet and investigate the 2012 OMB budget. Specifically, consider the separate budget item of $96.7 billion for "Overseas Contingency Operations". Where was that line item in 2000? What about the "National Intelligence Program" at 52.6 billion? Is that not defense? Let's ignore all of that and simply total up Defense, Homeland Security, and Veteran's Affairs.
I suggest defense spending is out of control, as is nearly everything else. Medicare and Medicaid Medicare and Medicaid are not broken out in the spreadsheet, so here are the numbers from the Fiscal Year 2013 Budget (which contains the most current estimate of 2012 spending), and the Fiscal Year 2002 Budget (which contains actual spending for 2000). Medicare 2000: 200,588 Medicare 2012: 480,202 Medicaid 2000: 117,744 Medicaid 2012: 283,597 Medicare spending is up 139% Medicaid spending is up 140% Where's the Problem? All things considered, what's the bigger problem? Failure to collect more taxes, or out of control spending? It's Only Make Believe Regardless of your answer to the preceding question, one thing is for certain: The purported effort to balance the budget is nothing more than an exercise in make believe. With a tip of the hat to Conway Twitty I offer this musical tribute. Can we get President Obama, Ben Bernanke, and John Boehner to do a remake? If so, we need background vocals. I propose Nancy Pelosi, Dick Cheney, Hank Paulson, Barney Frank, Tim Geithner, along with international rock stars Angela Merkel, Shinzo Abe, and Mario Monti. We just need one slight change in the lyrics. People see us everywhere. They think "we" really care. But myself, I can't deceive, I know it's only make believe. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com "Wine Country" Economic Conference Hosted By Mish Click on Image to Learn More  |
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