by Calculated Risk on 10/14/2011 07:14:00 PM

Get to da' choppah's
Country Bank is mown over
Blackhawk taking down.
by Soylent Green is People
From the FDIC: Blackhawk Bank & Trust, Milan, Illinois, Assumes All of the Deposits of Country Bank, Aledo, Illinois

As of June 30, 2011, Country Bank had approximately $190.6 million in total assets and $167.5 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $66.3 million. ... Country Bank is the 80th FDIC-insured institution to fail in the nation this year, and the eighth in Illinois.

That makes four today.

by Calculated Risk on 10/14/2011 05:33:00 PM

Be vewey quiet
It's banker hunting season
Throughout the states South
by Soylent Green is People
From the FDIC: State Bank and Trust Company, Macon, Georgia, Assumes All of the Deposits of Piedmont Community Bank, Gray, Georgia

As of June 30, 2011, Piedmont Community Bank had approximately $201.7 million in total assets and $181.4 million in total deposits
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $71.6 million. ... Piedmont Community Bank is the 77th FDIC-insured institution to fail in the nation this year, and the twentieth in Georgia.

From the FDIC: Bank of North Carolina, Thomasville, North Carolina, Assumes All of the Deposits of Blue Ridge Savings Bank, Inc., Asheville, North Carolina

As of June 30, 2011, Blue Ridge Savings Bank, Inc. had approximately $161.0 million in total assets and $158.7 million in total deposits.
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $38.0 million. ... Blue Ridge Savings Bank, Inc. is the 78th FDIC-insured institution to fail in the nation this year, and the second in North Carolina.

From the FDIC: Northfield Bank, Staten Island, New York, Assumes All of the Deposits of First State Bank, Cranford, New Jersey

As of June 30, 2011, First State Bank had approximately $204.4 million in total assets and $201.2 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $45.8 million. ... First State Bank is the 79th FDIC-insured institution to fail in the nation this year, and the first in New Jersey.

Another bank in Georgia - and a pretty large percentage loss too!

by Calculated Risk on 10/14/2011 04:11:00 PM

This graph (click on graph for larger image) from Doug Short shows the recent market increase.

I'm at a foreclosure auction in California. The auction is ongoing ... 50+ properties were postponed. The first several properties went to the beneficiary.

We just saw a bidding war starting at $356,000 and the property was bought at $520,100. Pretty wild.

by Calculated Risk on 10/14/2011 01:25:00 PM

Kelly Evans at the WSJ makes an interesting observation: Economy in Full Swing (Watch Your Head)

So far, incoming September economic reports have been surprisingly firm. Auto sales rebounded to their highest level since April. Chain-store sales posted year-on-year growth of 5.5%. The economy added 103,000 jobs, and manufacturing sentiment improved a bit. [Retail sales increased 1.1% in September]

...
If this feels like a 180-degree turn from August, that's because it basically is. It would be one thing if this were a special case, or a broad turning point in the economy. But, in fact, this kind of volatility, these jerky swings in growth, have become the norm. Consider what has happened so far this year: Real gross domestic product shrank in January and February, according to tracking firm Macroeconomic Advisers. Then it surged by more than 1% in March. It contracted again in May and June—only to jump by more than 1% again in July.

This isn't typical. Since 1992, monthly GDP has fallen about a third of the time when the economy hasn't been in recession. This year, even assuming a small gain in August, monthly GDP has fallen about half the time.

Monthly GDP isn't released by the Bureau of Economic Analysis (BEA). Evans is using an estimate from Macroeconomic Advisers.

The BEA does release monthly Personal Consumption Expenditures (PCE) data, and the following graph shows the monthly change in real PCE back to 1995.

Click on graph for larger image.

Real PCE has declined in three months this year through August (September will be positive based on the retail report). We have seen multiple declines in a year before - outside of a recession - like in 1995 and 2005. Many of the monthly declines were during recessions, but many monthly declines were event driven (like hurricanes Katrina and Rita in 2005). The sharp decline in September 2009 was due to the end of "cash-for-clunkers" (another event).

Although growth is sluggish - due to the significant slack in the system (excess capacity, lack of demand) and also high levels of household debt, I think the volatility this year can be blamed on a series of events including extreme weather (significant snow storms, flooding, hurricane Irene), the oil price increase related to the "Arab Spring", the tsunami in Japan, and the debt ceiling debate in D.C. during late July and early August.

Also the ongoing European financial crisis keeps flaring up and impacting the U.S. economy.

Yes, the economy is very sluggish - 103,000 jobs was a weak report, just better than low expectations - but I think the economic volatility is related to events and hopefully not some new normal.

by Calculated Risk on 10/14/2011 09:55:00 AM

The preliminary October Reuters / University of Michigan consumer sentiment index declined to 57.5 from 59.4 in September.


Click on graph for larger image in graph gallery.

In general consumer sentiment is a coincident indicator and is usually impacted by employment (and the unemployment rate) and gasoline prices. In August, sentiment was probably negatively impacted by the debt ceiling debate. History suggests it usually takes 2 to 4 months to bounce back from an event (If we can call the threat of default an "event"). So sentiment might increase over the next couple of months.

And, of course, any bounce back from the debt ceiling debate would be to an already weak reading.

This was very weak, and below the consensus forecast of 60.0.