1/24/09 News Radar

by JASON | 8:27 AM in |

The government of Iceland today became the first to be effectively brought down by the credit crunch.

After several nights of rioting over the financial crisis, Prime Minister Geir Haarde, surrendered to increasing pressure and called a general election for May.

A poll would not normally be held until 2011.

The global financial crisis hit Iceland, which has a population 320,000, in October, triggering a collapse in its currency and financial system under the weight of billions of dollars of foreign debts incurred by its banks

The economy is set to shrink 10 percent this year and unemployment is surging.

Protests had been held weekly since the crisis broke last year, but since Tuesday have been held every night.

On Thursday, police used teargas on demonstrators for the first time since protests against the North Atlantic island's entry into the NATO alliance in 1949.

Special forces had to rescue Haarde from his car after he was surrounded by an furious mob hurling eggs and cans outside the government offices, in Reykjavik.

On Wednesday night, when former NSA analyst Russell Tice told MSNBC's Keith Olbermann that the Bush administration's National Security Agency spied on everyone in the United States, specifically targeting journalists, the Countdown host was so flabbergasted that Tice was invited back for a second interview.

On Thursday, he returned to the airwaves with expanded allegations against the NSA, claiming the agency collected Americans' credit card records, and adding that he believes the massive, warrantless data vacuum to be the remnants of the Total Information Awareness program, shut down by Congress in 2003.

The Obama administration fell in line with the Bush administration Thursday when it urged a federal judge to set aside a ruling in a closely watched spy case weighing whether a U.S. president may bypass Congress and establish a program of eavesdropping on Americans without warrants.

According to reports, the Home Office is currently trialing technology that could enable police to control stolen cars using text message.

Should it be deemed successful, police would have the power to stop cars remotely, providing an alternative to the use of more crude vehicle-capturing techniques such as stingers, and reducing the need for high speed car chases.

This trial forms just part of the Home Office’s effort to reduce the number of civilian and police deaths resulting from high speed pursuits; they have also appealed to a number of independent companies for suggestions as to other ‘vehicle stopping' technologies that could be implemented on a wide scale basis.

David Cameron has warned Britain faces a real risk of needing a humiliating 1970s-style bail-out from the International Monetary Fund.

In his strongest remarks to date on the financial crisis, the Tory leader said if the Government continued on its present course, 'the money will run out'.

He refused to predict when national bankruptcy could occur but warned it could come 'very soon'.

ISLAMABAD, Pakistan (AP) - Suspected U.S. missiles killed 18 people on the Pakistan side of the Afghan border Friday, security officials said, the first attacks on the al-Qaida stronghold since President Barack Obama took office. At least five foreign militants were among those killed in the strikes by unmanned aircraft in two parts of the frontier region, an intelligence official said without naming them. There was no information on the identities of the others.

Pakistan's leaders had expressed hope Obama might halt the strikes, but few observers expected he would end a tactic that U.S. officials say has killed several top al-Qaida operatives and is denying the terrorist network a long-held safe haven.

The first attack Friday took place in the village of Zharki in North Waziristan, when a single drone fired three missiles in the space of 10 minutes, the security officials said.

The missiles destroyed two buildings, killing 10 people, at least five of whom were foreign militants, the officials said on condition of anonymity because they were not authorized to speak to the media.

Comment on this one - In light of the fact that the CIA has had a very close working relationship with the Pakistan ISI for several decades and that the CIA & ISI worked together to allow Bin Laden, the publicized culprit of 911, to escape from Tora Bora via air transport to Pakistan - one has to wonder whether these alleged foreign militants were actually freedom fighters trying to topple the US established government in Pakistan

WASHINGTON (AP) -- Regulators on Friday shut down 1st Centennial Bank in California, the third U.S. bank to fail this year. California regulators closed the Redlands-based bank and appointed the Federal Deposit Insurance Corp. as receiver. 1st Centennial had assets of $803.3 million and deposits of $676.9 million as of Jan. 9.

The FDIC said 1st Centennial's insured deposits will be assumed by First California Bank, based in Westlake Village, Calif. Its six branches will reopen Monday as offices of First California.

First California also will buy about $293 million of the failed bank's assets; the FDIC will retain the rest for eventual sale. The FDIC estimated that the resolution of 1st Centennial will cost the federal deposit insurance fund $227 million.

1st Centennial was the third federally insured bank to fail and be shuttered by regulators this year amid the pressures of tumbling home prices, rising mortgage foreclosures and tighter credit. It's expected that many more banks won't survive this year's continued economic tumult, and some may have to merge with other institutions.

Twenty-five U.S. banks succumbed last year, far more than those that failed in the previous five years combined. Only three failed in 2007.

Last week, the government extended a new multibillion-dollar lifeline to the country's biggest bank by assets, Bank of America Corp., providing an additional $20 billion in support from the bailout fund on top of the $25 billion it previously received.

Seattle-based thrift Washington Mutual Inc. failed in late September, the biggest bank collapse in U.S. history. It had $307 billion in assets.

The FDIC estimates that through 2013, there will be about $40 billion in losses to the deposit insurance fund, including an $8.9 billion loss from the failure of IndyMac Bank last July. The agency has raised insurance premiums paid by banks and thrifts to replenish its fund, which now stands at around $34.6 billion, below the minimum target level set by Congress and the lowest level since 2003.

The FDIC has in place a program to guarantee as much as $1.4 trillion in U.S. banks' debt for more than three years as part of the government's financial rescue plan. Under the program, which is meant to thaw the freeze in bank-to-bank lending, the FDIC is providing temporary insurance for loans between banks, guaranteeing the new debt in the event of payment default by the borrowing bank.

Of the roughly 8,500 federally insured banks and thrifts, the FDIC had 171 on its confidential list of troubled institutions as of Sept. 30 -- a nearly 50 percent jump from the second quarter and the highest tally since late 1995.

I'll recap some of the detail on this one as it should be extremely important regarding personal financial decisions from here on out.

(1) Notice that this small bank was shut down i.e. no Fed money for the small guys.

(2) 1st Centennial is a very small bank (6 branches) and it will cost the FDIC fund at least 1/3 of a billion dollars.

(3) The FDIC fund now stands at around $34.6 billion.

(4) If the collapse of Washington Mutual was handled similarly (my understanding is they sold the assets out from underneath the holding company to another bank leaving the shareholders with the loss) the cost to the FDIC would have been $24 billion +

(5) They claim that out of 8,500 federally insured banks and thrifts, the FDIC has only 171 on its confidential list of troubled institutions as of Sept. 30.

NOTE: Of the bank failures that occurred last year and this year - 50% of them were not on the troubled institution list. The largest in history, Washington Mutual, never showed up on the list. Wachovia also wasn't on the list. WaMu and Wachovia had more than $1 trillion in assets.

(6) They state that the FDIC has a guarantee for as much as $1.4 trillion. When they moved the limit from $100k per person per bank to the $250k the insurance obligation became more like $4.5 to $5.5 trillion.

Here's a quick test you can conduct yourself. Goto TheStreet.com and click on Portfolio & Tools then on Banks and Thrifts screener - here's the link for you


Put Banks for company type. All for states. D - weak or Lower for Rating.

Now look at the results - I come up with 1380 banks. 169 banks E or worse. For a personal bank I wouldn't touch it unless it was A or higher....and then I would spread the money around to a couple of them. I'd also keep at least 1 months worth of expenses in cash on-hand and I think 3 months is ideal.

Remember that prime defaults surpassed subprime defaults on home loans in October - so even the A banks are in trouble.

In the savings-and-loan crisis of the late 1980s and early ’90s, the federal bailout ballooned to as much as $150 billion–far more than the FDIC had on hand then or has on hand now.

Remember the leverage and the amount at risk today far surpasses the S&L crisis. Chase alone has nearly $100 Trillion in derivative contracts.

Another item to look at on the banking scenario - notice how the big banks (Citigroup, Bank of America, etc all get handouts from the Fed while the little banks get closed down? There is a method to the madness. Its called a roll-up strategy. Wayne Huizenga was highly successful doing this with garbage - Waste Management. He also moved on to do the same thing with video rental stores - Blockbuster Video.


The banking scenario is different. The government is choosing who gets to stay and who gets taken out. The federal government also intends to nationalize the big players.

So let's recap. The government & Federal Reserve (they are intertwined in this agenda) relaxes the regulations and interest rates. They create the biggest debt bubble in the history of the world. Then in the resulting collapse they roll up all the little players across the country into a couple behemoths which they then nationalize. In short what's the result? They own us! Welcome to the USSA!

Freddie Mac disclosed yesterday that it would ask for up to $35 billion in additional taxpayer dollars, eating up roughly half of the funds the government has pledged to keep the mortgage giant on firm financial footing.