Net Interest | InvestmentWatch

Spain’s Bankia reports a €2.6B loss in Q3, bringing cumulative 2012 losses to €7.1B as provisioning for bad loans rises to €11.5B.

Non-performing loans rose to 13.3% from 11% last quarter. This figure was just 7.63% 2 quarters ago. The scope of the increasing losses raises the idea of another bailout for the bank (#1 was 2 months ago).

From rtve.es:

Bankia has lost 7.053 millioneuros in the first nine months of the year compared to the 295 million earned in the same period of 2011, following the allocation of 11.485 million euros in [...]

Payments on Interest to Exceed Defense Spending by $125 Billion

In a decade, federal spending to pay for the interest on America’s debt will exceed total spending on the defense budget by $125 billion, or 20 percent, according to projections from the Congressional Budget Office and the Office of Budget Management. The projections are based on President Barack Obama’s current budget plan.

Here’s a chart from the Republican side of the Senate Budget Committee that shows 2022 national defense spending vs. net [...]

European Banks Under Substantial Pressure – Deutsche Bank Report

FRANKFURT, Aug. 13 (Xinhua) — European banks remain under substantial pressure on many operating fronts, a Deutsche Bank report said on Monday.

Revenue declines seem to become entrenched due to volatile capital markets and the low interest rate environment and initial improvements on the cost side have not nearly been able to compensate for those reduced earnings, said the report.

The report pointed out that the 20 largest banks in Europe reported [...]

China cutting interest rates would be a “wrong move,” worsen inflation, hurt lenders’ net interest margin: 21st Century Business Herald

PRESENTING THE US GOVERNMENT’S INFOGRAPHIC OF ITS OWN INSOLVENCY

by SIMON BLACK

April 20, 2012
[Undisclosed location]

Here’s a fun way to cap off your week.

The Congressional Budget Office has just released three very telling Infographics which, unintentionally, spell out a pretty dreary picture of US government finances.

The first graphic shows US federal revenue, both in raw numbers ($2.3 trillion in 2011) and expressed as a percentage of GDP (15.4%).

There are a lot of interesting things about this graphic. Check out the massive downward swing of payroll tax [...]

Third Largest U.S. Bank Fails Tee-Ball Stress Test

The Federal Reserve Bank released stress tests 2 days early, prompted by New York branch class A shareholder/director Jamie Dimon, who also happens to be the CEO of government-backstopped megabank, JP Morgan (JPM).

Dimon announced an equity buy back plan for JP Morgan and a dividend hike, timed to counter the negative sentiment in financial equities that followed the mild Fed statement which implied a bit of a wait for further [...]

Negative Bank Preannouncements Begin

We are not even half way into the quarter, and the negative preannouncements for financials have already begun:

MACQUARIE SAYS `SUBSTANTIALLY LOWER LEVELS’ OF CLIENT ACTIVITY – BLOOMBERG

Why is this the case? Just read the previous post on market volume hitting decade lows. And while there are just under 2 more months left in the quarter, absent some seismic volatility explosion in the next month (ahem, Greece) we fail to see how bank [...]

Obama runs up another trillion-dollar deficit

2012 marks a fourth year of trillion-plus deficits for the government. | AP Photo

The government faces a fourth year of trillion-plus deficits in 2012, according to new projections released Tuesday—numbers which also show little relief in the future unless Washington comes to grips with needed changes in its tax and spending policies.

Like Aunt Cassandra coming down from the attic, the Congressional Budget Office steps squarely into the 2012 campaign season with the 147-page report [...]

Wall Street firms profit from accounting rules: It allows banks to write down their debt to “market value.” In other words, if a bond valued at $100 is trading for $90 that’s a $10 gain for the bank — even though the bank is responsible for paying back $100 to buyers

By MarketWatch

NEW YORK — Welcome to the new Wall Street. You can guess the rest.

Once the industry’s quarterly profits were driven by trading revenue, income gained on the proliferation of mortgage securities, net interest income and fees paid by clients.

Today, as Citigroup Inc.’s [...]

Rosenberg Presents The Three Ways Bernanke Disappointed The Market, And Why It Is Dumping

From David Rosenberg

First, the Fed once again downgraded its outlook on the economy, citing “significant downside risks” (the word “significant” was not there on August 9th) and added “strains in global financial markets” as one of the reasons for the more downbeat assessment.

If there hadn’t been so many trial balloons being floated in recent weeks over the prospect of an Operation Twist (“OT”) style of [...]

SMART SOLUTIONS: BUDGET RESULTS THAT MAKE AMERICA GREAT AGAIN: PROGRESSIVE POLICIES ARE EASY TO SELL

1. Deficit Reduction of $5.6 Trillion
2. Primary spending cuts of $869 Billion
3. Net interest savings of $856 Billion
4. Total spending cuts of $1.7 Trillion
5. Revenue increase of $3.9 Trillion
6. Public investment of $1.7 Trillion
7. Budget surplus of $30.7 Billion in 2021

ACHIEVE USING 2011 PROGRESSIVE BUDGET:

1. Eliminate Bush Tax Cuts
2. Eliminates all Wars – Brings Our Troops Home
3. Implements FAIR TAX SYSTEM with fair tax brackets for millionaires/billionaires
4. Insures healthy Medicare and Social Security
5. Insures healthy [...]

BUDGET RESULTS:

ACHIEVE USING 2011 PROGRESSIVE BUDGET:

1. Eliminate Bush Tax Cuts
2. Eliminates all Wars – Brings Our Troops Home
3. Implements FAIR TAX SYSTEM with fair tax brackets for millionaires/billionaires
4. Insures [...]

Progressive Budget Eliminates Deficit by 2021

by Philip
1. Eliminate Bush/Obama Tax Cuts
2. Eliminates all Wars Brings Our Troops Home
3. Implements FAIR TAX SYSTEM with fair tax brackets for millionaires/billionaires
4. Insures healthy Medicare and Social Security
5. Insures healthy Medicaid
6. Puts America Back to Work
7. Restores America’s Competitiveness
8. Rebuilds our roads and bridges
9. Rebuild our dams and waterways
10. Improves shipping systems to compete worldwide
11. Builds educational system by training more and better teachers
12. Teachers to help each student [...]

Where the average family’s tax dollars went last year:

by William

Household income: ……..$50,000
Federal Tax/FICA Paid: ….$6,883

Itemization of 2010 U.S. federal budget expenditures relative to taxes paid:

Defense: ……….……….……….……….………..$1,375.40
Social Security: ……….……….……….………..$1,334.78
Medicare: ……….……….……….……….……….…$845.70
Low-income assistance: ……….……….………...$617.16
Medicaid: ……….……….……….……….……….…$509.43
Net interest on the debt payments: ……….…….$433.11
Unemployment compensation: ……….……….…$363.18
Veterans Affairs: ……….……….……….……….…$230.43
Education: ……….……….……….……….………...$211.26
Law eneforcement: ……….……….……….……….$173.33
Transportation: ……….……….……….……….……$168.48
Health (not Medicare and Medicaid): ……….…..$137.29
Environmental protection: ……….……….……….…$72.26
Managing federal employees and bldgs: ………...$62.35
Agriculture: ……….……….……….……….……….…$57.01
Space and science: ……….……….……….………..$49.84
Housing and community planning: ……….………..$47.69
Trade and economic development: ……….………..$43.04
Foreign aid: ……….……….……….……….……….…$42.81
Social services: ……….……….……….……….…….$41.42
Energy: ……….……….……….……….……….………$38.47
Workplace safety and rights: [...]

Peter Tchir: By 2020 Interest Payments Will Be Greater Than The Budget Deficit

by Peter Tchir of TF Market Advisors

Debt Service Is Growing Rapidly and Will Dwarf other Budget Line Items

Asides from the fact that I don’t see how people can believe the deficit doesn’t matter, let’s take a quick look at the facts that show it does matter. Massively!

Put most simply, in 2010, for every $1 of discretionary spending we spend $0.15 on interest. By 2020, for every [...]

“Hey, sorry, but inflation is really low and so we are going to hold off on any wage increases right now…”

by cmartenson

I recently interviewed John Williams (coming soon) and I really think his CPI numbers are far more accurate. Â He’s currently sitting around 5% with his alternate assessment of inflation, and I suppose a doubling from there to the levels of the 70′s is not out of the question.

However, a big portion of the 70′s-style inflated revenues was due to the wage portion of the [...]

The CBO estimates that interest rates on 3-month bills and 10-year notes will reach 5.0% and 5.9%, respectively, by 2020.

The Treasury, Fed and CBO don’t include the trillions of debt guaranteed for FNMA, Freddie Mac, AIG, Citi, Bank of America, JP Morgan and the 20/80 addition guarantee policy of the FDIC. On top of that the Fed has $2.4 Trillion of junk bonds they bought from the banks (they, for some absurd reason, don’t have to disclose who they are and what, they [...]

Are Banks really creating profits? Yes and no.

The no part – Majority of banks haven’t written down/recognized problem loans and don’t have enough in reserves to cover needed writedowns. This is based on where we are today. If the economic conditions improve and real estate in particular appreciates, then some of the losses could be avoided. At the same time, real estate prices could definitley fall more.

The yes part – The Fed has taken rates to 0%. [...]

There are improvements but, there can be no recovery.

A “recovery” is where a person or economy is restored to health. We have not had a recovery for decades. We have never, even under the best years of coming close to no new debt, ever got to the point we stopped adding burdens to the private sector they can’t pay for.

This is not about GDP where debt based spending is counted as growth, nor some rising tax revenues or [...]

Growth? Yes, short term but not continued.

quote

2011 Budget Request from President Obama
Table SÃ¢â‚¬â€œ13. Economic Assumptions (page 177)

Real GDP, percent change, year/year ………… 0.4
2009… Ã¢â‚¬â€œ2.5%
2010… 2.7%
2011… 3.8%
2012… 4.3%
2013… 4.2%
2014… 4.0%
2015… 3.6%
2016… 3.2%
2017… 2.8%
2018… 2.6%
2019… 2.5%
2020… 2.5%

http://www.whitehouse.gov/omb/budget/fy2011/assets/budget.pdf
====================

Interest on debt eats up more and more tax revenues too.

quote
Pg 153 of budget (net interest)

2010… $188b
2011… $251b
2012… $340b
2013… $434b
2014… $516b
2015… $586b
2016… $652b
2017… $716b
2018… $779b
2019… $844b
2020… $912b

http://www.whitehouse.gov/omb/budget/fy2011/assets/budget.pdf
=================

However, the key is that tax revenue growth is always lower than Growth of Debt and [...]

Must-Know: Figures On Government Spending And Debt

Total public debt subject to limit March 29 12,630,081
Statutory debt limit 14,294,000
Total public debt outstanding March 29 12,686,250
Operating balance March 29 149,440
Net interest fiscal year 2010 thru Feb 86,453
Net interest same period 2009 74,981
Deficit fiscal year 2010 thru Feb 651,602
Deficit same period 2009 589,802
Receipts fiscal year 2010 thru Feb 800,538
Receipts same period 2009 860,786
Outlays fiscal year 2010 thru Feb 1,452,140
Outlays same period 2009 1,450,689
Gold assets in March 11,041

http://www.businessweek.com/ap/financialnews/D9EP64100.htm

Any rise in interest rates will speed up the collapse.

These are good points and what is different this time about rising rates is interest on debt.

This time, much of the long term debt has been rolled over to short term. Now, on average, we rollover debt about every 3 years. The biggest impact of the rollover is with that short term debt 1 year or less. Thus, in that part of the debt, a 1% interest rate would quadruple [...]

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