Sorry, I don’t believe you:
Federal regulators told the country’s 19 largest banks that they must raise $75 billion in extra capital by November, a more upbeat verdict on the health of the financial system than the industry had feared just two months ago.
Ten of the 19 bank holding companies deemed “too big to fail” by the Obama administration will be required to raise additional capital, according to the results of the government’s stress tests, released late Thursday afternoon. But the 10 banks will have to raise much less capital than some analysts had expected as recently as a few days ago.
I just have no faith in this being the case, and have no faith in the banks “only” needing 75 billion in capital. I keep hearing all these reports about the economy getting better, yet we just shed another couple hundred thousand jobs.
In the area I grew up, the Ohio Valley, they just announced that Severstal is shutting down a 3,100 more steel jobs, basically devastating Wheeling, Steubenville, Follansbee, and Weirton. Unless you are from the region, you probably will not understand how much losing 3,100 good jobs like this is going to wreak havoc on the region. This is a dagger to the heart.
So color me skeptical about this news about the banks and the stress tests and all the other rosy news we have heard lately.
Downpuppy
When I was a kid this was famous as the most polluted area in the country.
That was a long time & an awful lot of bankruptcies back.
TenguPhule
Jobs are a lagging indicator.
Supposedly.
Libby
Well whatever you do, don’t read Atrios. You wo’t just be skeptical. You’ll be depressed. He’s predicting Round Two of the meltdown is just around the corner.
John Cole
@Downpuppy: You rolled your windows up driving through Follansbee, that is for damned sure. As kids we called it “pew pew city.”
It has changed a lot, though, but one thing that was really cool as a kid was that you really got a sense of the size and scope of our nation when you started in Weirton and could drive for hours down Route 2 and as long as you drove you would see nothing but ginormous coke, steel, petrochemical, and glass factories.
Just Some Fuckhead
John, everyone has to believe or recovery won’t happen.
TenguPhule
Now John, this is a faith based economy!
Why, if a billionare can’t have their gold plated BMW then Baby Raptor Jezus cries and baby won’t get a pair of new shoes.
robertdsc
The whole thing is fucked up. Goddamned banks. Goddamned deregulation. Goddamned everything. Ugh.
Dreggas
@Libby:
Yeah the next wave of Arm resets etc. Those were nothing more than time bombs.
Martin
Personally, I don’t think the job situation is ever going to fully recover. Most of what I’ve seen suggests that this nation requires a much smaller workforce to provide basic services (food, shelter, transportation, etc.) than it did 20 years ago. Now, some of those functions have left the country, but not really all that many.
What the nation has been dependent on is consumer willingness to reach for more and more goods and services than they need to provide the job demand. Clearly that’s not sustainable.
The nation really faces two choices:
1) Become an export nation once again until such time as the rest of the planet reaches this same point.
2) Redefine full-time employment.
I think the latter is again necessary – reduce the standard work week below 40 hours, or some equivalent – basically reduce worker productivity in some way. We’ve done it many times before – the introduction of the 40 hour work week, elimination of child labor, mandatory high-school, near mandatory college are all essentially moves to thin demand for jobs to keep people working when worker productivity outstripped national demand for employment.
Dennis-SGMM
How in the world does needing $75Bn in new capital (And that predicated on converting a shitload of the gov’s – our – preferred shares to common stock) possibly mean that they passed? Fuck me, this is way too reminiscent of the Terri Schiavo mess only now it’s the Obama administration insisting that we shouldn’t pull the feeding tube.
TenguPhule
Unless you’re following up with living wages, support systems and universal health care, this is asking for a nation of part-time serfs and a few rich lords.
Followed shortly by a lot of mobs and lords burned alive at the stake.
Hypatia
@Just Some Fuckhead:
Yeah, but for me that’s a bug, not a feature.
I don’t believe the stress tests either.
This is one of the BIG downside legacies of Chimpy that doesn’t get much discussion. MANY more people can now make substantive arguments about why they no longer trust the government. But our financial system requires trust.
TenguPhule
Not at all comparable.
This Terri is wired to the deadman switch of a bomb under our feet.
Brick Oven Bill
The FDIC does ‘stress tests’ on all of these banks on a regular basis, and keeps the results private.
Question: So why are the examinations now being made public?
Answer: So that the bankers can be publically presented with several options to raise money, all bad, one of which will be to sell common stock to the taxpayer, er, Obama Administration.
This whole charade is a backdoor process of nationalizing the banks. This, of course, will be a disaster. Say what you want about the Soviets, but at least Soviet leadership had the mental capacity to play chess and seemed to care about their nation.
Obama’s executive experience is limited to being the Editor of the Harvard Law Review, where he contributed nothing. Oh, sorry, he ‘edited’.
TenguPhule
Wrong again, BOB. Investment banks that have no insured deposits are not under FDIC supervision.
If A happens then B will follow and I present as evidence….WOOKIES ON ENDOR!!!!
Fencedude
@Brick Oven Bill:
This is one of the more profoundly stupid things you have yet come up with.
And it is also one of your more repeated ones.
SnarkIntern
Job trends tend to lag as an indicator.
I live in a part of the country where people tend not to marry their cousins as readily as OH and WV. Gays yes, cousins, no. God said marriage is between one man, and one woman, or two men, or two women, but not inside one family. So anyway …
So it’s a little different out here. Our industries are tourism, big universities, Intel plants, software, mining, and cocaine. So we are pretty stable.
PeakVT
Ten of the 19 bank holding companies deemed “too big to fail”
19? That’s a lot of TBTF.
I’d buy the results of the so-call stress tests if a) somebody who doesn’t identify with the banksters was in charge of Treasury, and b) the revolving door between W$ and the US government wasn’t spinning so fast. As it is, this just seems to be another kick of the can.
JenJen
My grandmother was a secretary at Wheeling-Pittsburgh Steel. Very sad news, John.
It’s happening all over the Ohio Valley, as you know (closer to where I live, DHL closing their Wilmington, Ohio hub has led to job losses approaching 8,000). Every day brings more bad news, it seems, but this one hit me in the gut a little bit.
“Foreman says, ‘These jobs are goin’, boys, and they ain’t comin’ back’
To your hometown”
– Bruce Springsteen, “My Hometown”
Xenos
@TenguPhule:
Not to be pedantic, but many of the firms are investment banks or financing companies that became banks in order to get financial support. Thus, the need for stress tests now that the FDIC is regulating them. The others were already banks, but were insolvent but for billions in financial support, so it makes sense to stress-test them anew to make sure we don’t throw good money after bad.
Still, BOB will find a way to misunderstand it and will proceed to make a completely inapposite point.
Thankovsky
Well, first of all, as someone already pointed out, jobs always lag behind the other signs of economic health – and I understand that jobs are a little bit more than just a “sign of economic health”, but the point still stands: the fact that we haven’t cauterized the job losses yet doesn’t mean that the economy isn’t taking a turn for the better.
Secondly, you’re not wrong to be skeptical; I’d like to believe that we’ve hit bottom and things are going to get better from here, but I’m not going to assume that’s the case. But even so, so much of a consumer-based economy relies upon group psychology, and a big part of spurring consumption is making consumers think that it’s safe to start buying things and injecting money into the economy again.
Some Guy
Unemployment is a lagging indicator, but yeah, I don’t believe them at all.
SnarkIntern
Bob just cycles through the same little portfolio of bunk every week.
It’s about time for the birth certificate again.
Thankovsky
@SnarkIntern:
When I used to post on the Something Awful forums, we had a saying for situations like these: “Don’t feed the trolls.”
Brick Oven Bill
Xenos, do you really believe that any of these 19 banks will be allowed to fail?
The big banks will not be allowed to fail. The Obama Administration will press buttons, make electronic money, and take control of the decision making. There is no cost other than deflating the currency.
Fencedude
@Brick Oven Bill:
Weren’t you screaming about Inflation a few weeks ago?
Thankovsky
@Fencedude:
Shhhhh, he doesn’t know what he’s talking about and just spouting out random platitudes. Ignore him and I guarantee you, he will go away.
Just Some Fuckhead
Jesus is gonna come back and then you all will see BOB was right. Fuckers.
Xenos
Obama is so talented he can inflate the currency and deflate it at the same time. This will be done by O-flating the currency. We will need three-dimensional graphs with a z-axis to track all the mojo.
SnarkIntern
@Fencedude:
He has committed conflation of inflation and deflation.
Tarnation.
Laura W
@Thankovsky: I’m guessing you are sorta new here? No, he won’t go away. He’s been here a very long time and is immune to ridicule and will not even notice that you are trying to ignore him.
He’s generally not mean or abusive, is often entertaining, and like John Cole’s non-stop typos and contradictions in what’s “acceptable” and “fair” to post in comments….. part of the “charm” here.
Best make your peace with him now, or look up Cleek’s pie filter.
Frankly, some nights (like tonight, for instance), he’s the only thing that keeps me refreshing this site.
(shhhhhhhhhh……….)
TenguPhule
We’re all gently caressed up goons here.
Xenos
I still can’t tell if BOB is a troll or a spoof. If he is a spoof then someone is going to an awful lot of work for me to dump him in a pie filter. It just would not be right.
Brick Oven Bill
I intended to mean no cost to the Obama Administration Fencedude. Americans will all pay a higher tax in the form of inflation. This erodes savings, pensions, and paychecks. This is a small price to pay in exchange for control, in accordance with the mindsets of those who currently are pulling the levers of power.
Power is addictive to weak minded government people.
TenguPhule
Which is why Republicans should never be allowed near them and Democrats only when properly supervised.
Comrade Kevin
@Just Some Fuckhead:
We need Mystico and Janet to take charge of the economy!
Thankovsky
@Laura W:
Oh, I’m certainly new here. But believe me when I say I’ve dealt with bigger trolls than this.
@TenguPhule:
I won’t get banned for saying “lulz” here, will I?
(USER WAS BANNED FOR THIS COMMENT)
TLaw
Amen about the effect of those job cuts. Those are good jobs in a solid, value-added industry that are the lynchpin of so many economies in that region. Manufacturing’s decline doesn’t seem like it’s going to hit bottom for months to come…
Rick Taylor
I saw this interview of Geitner on Charlie Rose. It made me feel less secure, not more. He kept talking about confidence, confidence confidence confidence., how it was improving, how it needed to improve. All I could think of, what if it isn’t a matter of confidence; what if the fundamentals are bad? What if the banks are insolvent, and all the positive thinking in the world won’t change that?
JenJen
@Laura W: You know what really cracked me up about this post? You described him kind of in the way one would describe a puppy up for adoption at PetFinder. ;-)
asiangrrlMN
It is all a game of psychology. The market is truly faith-based. What’s my religion? Agnostic, as always.
Martian Buddy
Isn’t there a point where we can revoke their corporate charters? It would seem to me that we could make a strong case that they’re causing severe public harm.
Shabbazz
I growed up in the Ohio Valley. I lived on the Ahia side of the river, but went to highschool in Wheeling (yes — I had to go to West Virginia to get to the GOOD schools.)
My old man spent 30 years at Wheeling Pittsburgh Steel (the Mingo plant) and I want to smack anyone who preaches the virtues of Reaganomics. Pops spent nearly an entire year on strike during the mid 80s while the company tried to steal away the pension he had worked nearly 20 years to earn. It’s pretty tough to watch your dad haul scrap metal just to make ends meet.
He just told me that the mill was closing their doors for the indefinite future and I knew immediately what it meant for the area. We’re talking third-world levels of poverty when these jobs vanish. Good thing they built another fuggin’ mall on the outskirts of town (while the entire city of Wheeling crumbles to the ground).
It make me unbelievably sad every time I go back.
Lesley
The Bank of America, alone, needs $33.9 billion in bail out money AFTER the stress test so…
Laura W
@JenJen: What can I say? I have a soft spot in my hard heart for misfits, outcasts, eccentrics and insane maniacs.
Obviously. Look where I choose to spend my free time.
b-psycho
…and this is a departure from past practice how?
rikyrah
Don’t give them one thin dime.
OriGuy
@Thankovsky: Oh, “lulz” is ok. Just don’t say “shøes” or “soçialism”. Your post will get stuck in moderation.
DougJ
I think the happy talk about banks may be warranted. People I talk to in the financial industry — most of them pretty cynical normally — think that subprime-backed stuff really is undervalued, which makes the balance sheets look worse than they really are.
wilfred
The truth of this should be easy enough to detect – either the banks will need more money or they won’t. If they do, no one will remember this well intentioned lie. Besides, there are never any consequences for people who make statements like this when they do turn out to be written on cloud-cuckooland stationary.
You can almost hear someone grunting: “There, that oughta hold the little bastards for a while”.
wilfred
Here’s what I mean:
The first lie – that Taliban killed these people with grenades and then hauled their bodies to the bombing sit (?!!) – was enough to defuse the immediate reaction. Note the weasel words.
By now everybody has forgotten the story.
Anne Laurie
Yeah, it does read like one of those well-intentioned Petfinder posts from a group trying to re-home elderly, brain-damaged strays or ex-mill-dogs with multiple ‘challenges’… “He’s almost completely housebroken now, as long as someone’s around to put him outside every couple of hours! He loves his meals, which makes it much easier to get the six different daily medications into him, and the prescription diet he needs really isn’t much more expensive than regular kibble! Once he’s gotten used to a place, he gets around so well you’ll hardly notice that he’s blind and mostly deaf and can’t climb stairs! Restrictions: No kids (he only snaps because he’s afraid they’ll hurt him), no cats or other small animals (he’s very prey-driven). He’s not always friendly with other dogs, either, but since he’s got no teeth left he can’t do much to hurt them. Give him a little time to get used to you — you can’t blame him for being hand-shy — and BoB will reward you for the all the extra dedication and attention… “
(And before I get slammed for my vile insensitivity: I share a household with an elderly, incontinent, multiply-challenged female dog, 3 rescued cats (2 ex-feral, one ‘boarder’ from friends who left the country 6 years ago), and two rescue boy dogs — the second because the Spousal Unit fell for a Petfinder entry and the shelter’s tragic story about the difficulty of re-homing an “unhousebreakable” three-time-loser gawky adolescent with fear-biting issues. I mock because I’ve been there, worse luck.)
WestVirginiaRebel
The manufacturing industry does seem to be in decline in this state…but the health care business is expected to grow. One seems to be feeding the other.
We may be entering a period where only small factories that produce light manufacturing can survive.
Irony Abounds
The next shoe to drop is the commercial real estate market. Given how the housing debacle was underestimated, my guess we’ll be back down in the doldrums in the next 6 months or so after everyone realizes the banks have a new set of crappy loans on their books.
bob h
“Unless you are from the region, you probably will not understand how much losing 3,100 good jobs like this is going to wreak havoc on the region. This is a dagger to the heart.”
I wonder if the people from this area question their allegiance to the Republican Party in recent years.
The Saff
“60 Minutes” had a story on the option ARMs a couple months ago. Those mortgages are going to reset in the 2010-2011 timeframe. Very depressing.
Oh, and don’t forget the billions outstanding in credit card debt.
ppcli
““Unless you are from the region, you probably will not understand how much losing 3,100 good jobs like this is going to wreak havoc on the region. This is a dagger to the heart.”
I wonder if the people from this area question their allegiance to the Republican Party in recent years.”
.
Naw, I’m sure that West Virginian Republican voters don’t mind that they delivered the state (and hence the nation) to Bush in 2000 and again in 2004 (though it wouldn’t have made a difference to the result in this year). True, a lot of jobs are being lost, but the whopping tax cut on multi-million-dollar estates more than makes up for it, I’m sure. And no doubt all the abstinence-only birth control education has helped West Virginia teenagers avoid early unplanned pregnancies. So really, it all balances out.