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Posts Tagged ‘insurance fund’

The meaningless crisis at the FDIC’s meaningless insurance fund

The meaningless crisis at the FDIC’s meaningless insurance fund

By Justin Fox, courtesy of TIME

This news generated some worried-sounding headlines. Think about it for a moment, though: If the resources available to insure $4.8 trillion in deposits (it’s actually more than that, but the FDIC doesn’t say how much more for reasons I will explain near the end of this post) really amounted to only $10.4 billion, we shouldn’t be worried. We should be completely freaking out—pulling our money out of banks and stuffing it in mattresses. I haven’t noticed this happening lately. So either (a) we are a nation in complete denial, or (b) the size of the FDIC insurance fund doesn’t matter much.

I’m going to go with (b). Yes, the continuing shrinkage of the deposit insurance fund from a peak of $52.8 billion at the end of March 2008 indicates that banks are troubled. (Who knew?) But the deposit insurance numbers that really matter are how much the FDIC can borrow from the Treasury to cover any shortfalls and how much it can charge still-solvent banks to pay back any borrowings and eventually rebuild its insurance fund.

First, the FDIC’s borrowing line with Treasury: In May, Congress voted to increase it to $100 billion from $30 billion, with borrowings of up to $500 billion possible if the Federal Reserve Board and the Treasury Secretary give their okay. So we’re talking about $510.4 billion currently available to insure depositors. What’s more, Congress has stated in the past that FDIC-insured deposits are "backed by the full faith and credit of the United States." If losses passed $510.4 billion, Congress would presumably be good for them. If it welshed, argentined russia’d vallejoed jeffersoncountied, that would amount to a default on the nation’s obligations.

Taxpayers aren’t supposed to end up footing the cost of bank failures, though. Banks are, through the assessments (insurance premiums, basically) levied by the FDIC. The cost of these assessments tends to get passed on to depositors (in


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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!

 
 

Zero Hedge

The Magic Number Is Revealed: It Costs Central Banks $200 Billion Per Quarter To Avoid A Market Crash

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

We have all seen it countless times before: visual confirmation that without the Fed's (and all other central banks') liquidity pump, the S&P would be about 70% lower than were it is now.

Most recently, this was shown last Friday in "Another Reminder How Addicted Markets Still Are To Liquidity" in which Deutsche bank's Jim Reid said:

The recovery from the lows after Bullard spoke yesterday is another reminder how addicted markets still are to liquidity. Indeed in today's pdf we reprint and  update a table from our 20...



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Chart School

Anticipating the 2015 Cost of Living Adjustment for Social Security

Courtesy of Doug Short.

Summary: Tomorrow the Social Security Administration will announce the 2015 COLA. A forecast based on data so far is 1.7%. But Q3 decline in energy prices strengthens the odds of a lower 1.6% adjustment.

Tomorrow the government will release the Social Security cost-of-living adjustment (COLA) for 2015. The adjustment will become effective with benefits payable for December but received by beneficiaries in January.

Although the first monthly Social Security payments were received in 1940, annual COLAs began being paid 35 years later in 1975. During 1975-82, COLAs were payable for June and received by beneficiaries in July. After 1982, COLAs were payable for December and received by beneficiaries in January.

How the Annual COLA is Determined

The adjacent table documents Socia...



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Sabrient

Sector Detector: Sharp selloff in stocks sets up long-awaiting buying opportunity

Courtesy of Sabrient Systems and Gradient Analytics

Last week brought even more stock market weakness and volatility as the selloff became self-perpetuating, with nobody mid-day on Wednesday wanting to be the last guy left holding equities. Hedge funds and other weak holders exacerbated the situation. But the extreme volatility and panic selling finally led some bulls (along with many corporate insiders) to summon a little backbone and buy into weakness, and the market finished the week on a high note, with continued momentum likely into the first part of this week.

Despite concerns about global economic growth and a persistent lack of inflation, especially given all the global quantitative easing, fundamentals for U.S. stocks still look good, and I believe this overdue correction ultimately will shape up to be a great buying opportunity -- i.e., th...



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Phil's Favorites

Goodbye War On Drugs, Hello Libertarian Utopia. Dominic Frisby’s Bitcoin: The Future of Money?

Courtesy of John Rubino.

Now that bitcoin has subsided from speculative bubble to functioning currency (see the price chart below), it’s safe for non-speculators to explore the whole “cryptocurrency” thing. So…is bitcoin or one of its growing list of competitors a useful addition to the average person’s array of bank accounts and credit cards — or is it a replacement for most of those things? And how does one make this transition?

With his usual excellent timing, London-based financial writer/actor/stand-up comic Dominic Frisby has just released Bitcoin: The Future of Money? in which he explains all this in terms most readers will have no trouble following. As ...



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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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OpTrader

Swing trading portfolio - week of October 20th, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Market Shadows

Falling Energy Prices: Sober Look takes a Sober Look

Falling Energy Prices: Sober Look takes a Sober Look

What do falling energy prices mean for the US consumer? Sober Look writes a brief yet thorough overview of the consequences of the correction in the price of crude oil. There are good aspects, particularly for the consumer, bad aspects, and out-right ugly possibilities. For more on this subject, read James Hamilton's How will Saudi Arabia respond to lower oil prices?  In previous eras, Saudi Arabia would tighten the supply to help increase prices, but in this "game of chicken," the rules m...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly. Just sign in with your PSW user name and password. (Or take a free trial.)

#457319216 / gettyimages.com

 

...

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Option Review

Release Of Fed Minutes, Icahn Tweet Boost Shares In Apple

Shares in Apple (Ticker: AAPL) are near their highs of the session in the final hour of trading on Wednesday, adding to the muted gains seen earlier in the day, following the release of the September FOMC meeting minutes and after activist investor and Apple shareholder Carl Icahn tweeted, “Tmrw we’ll be sending an open letter to @tim_cook. Believe it will be interesting.” Icahn’s tweet hit the ether at 2:33 pm ET and was met with a spike in volume in Apple shares. The stock is currently up 2.0% on the day at $100.75 as of 3:15 pm ET.

Chart – Apple rally accelerate...



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Digital Currencies

Bitcoin Has Been Getting Obliterated

Joe has found a place for Bitcoins, and if you hold a lot of them, you won't like it.

Bitcoin Has Been Getting Obliterated

Courtesy of 

Remember Bitcoin?

There's not much to say about it, except that it's doing TERRIBLY.

Here's a chart going back to earlier this summer. Charts don't get uglier than this.

Bitcoinwisdom

Interestingly, the Bitcoin industry continues to be quite excited about the prospects for the digital currency, and there continue to be announcements about expand...



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Promotions

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Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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