Bank’s Bookkeeping: US banks have about $5 trillion in questionable mortgages and another $3 trillion in shaky consumer credit and loans. These are “assets”. To balance them there is a bit less than $1 trillion in common stock. Good thing that accounting standards were trashed so banks don’t have to disclose just how bad it is.
Wells Fargo Bank is projecting a record $3 billion in first quarter profits. Hey, they’re doing okay on the $25 billion the taxpayers lent them.
Not Better: Over 40% of those getting a mortgage modification fall 60 days behind in their payments after only 5 months.
Slowdown: Some US states’ tax collections are so far below normal that the states cannot send out tax refunds to their citizens promptly because “we don’t have the money.”
Now and Then: The Fed’s meeting minutes indicate they expect unemployment to rise steeply throughout 2009 and into 2010 before leveling off. Continuing unemployment claims rose to yet another all-time record, at 5.84 million.
Market Contras: Corporate fundamentals are historically awful, with little hope of improvement, so naturally the stock market rallies on the hope of unearned riches.
Reset: If recovery means returning to the credit-driven consumptive binge of the last 20 years, ask the family that just lost their job, their house and their dreams how long it’ll be before they get sucked into that trap again.