Economy

In the Martenson Report from this weekend, I mentioned Guaranty Bank of Texas as one of the more obviously insolvent institutions out there.

Looks like the FDIC “moved” on this bank by asking for bids by today.  I am confused by this, as I thought this sort of thing mostly happened over the weekend, in private, and out of view.  If I were a Guaranty customer, this news would make me run, not walk, to the bank to move my funds.  Which is why they typically remain mum prior to a receivership action.

At any rate, here’s the story:

While the press has been excited by a recent uptick in home sales, much of the activity can be directly tied to an incredibly irresponsible federal mortgage program that puts the prior Fannie Mae and Freddie Mac shenanigans to shame.

This next article, from the WSJ online edition, needs to be quoted from extensively, because it is so packed with essential information.

Just a few articles below about state tax collections that came out this morning. I caution that this is not a representative sample, it just happens to be whatever came out this morning.

I wish there was an easy way to collect state information but it is only collated by private firms that charge a lot for the information. I don’t subscribe to any…so I collect the anecdotes as they come.

The reason I spend any time on this at all is that state tax revenues are among the cleanest economic figures we can get our hands on. Besides giving a more accurate picture of "where we are" (which is far lower than the 1% decline the BLS reported in its highly suspect GDP report) I am counting on state tax revenues to provide one of the better indicators that we’ve hit a true bottom.

The overall picture? State tax revenues are down by high double digits year over year.

Since a rebound in housing prices is the absolute key to warding off a complete financial disaster, we spend our days tracking the data in an attempt to assure we know what’s going on.  

Unfortunately, the mainstream press is always and forever filled with the pronouncements of the NAR, despite the fact that this conflict-of-interest source was proven to have provided disastrously misleading information during the bubble run-up.  On that basis I would have expected the NAR pronouncements to come with some sort of a warning label affixed but apparently that lesson went unlearnt.

At any rate, one of the key statistics that the NAR has been offering, and which the press has been only too happy to repeat, concerns falling inventory. 

Today, again, we receive news that Fed is continuing to pour more and more POMO money into the banking system, this time with a ‘mere’ ~$2 billion addition.

August 7 – New York Fed purchases $1.937 billion in agency coupons

As long-time readers here know, I have been tracking the Permanent Open Market Operations (or "POMO") activity of the Fed for a long time.