Today, we visit the FDIC to look at the latest charts and graphs they publish. And we visit the Nikkei news in Japan to get more graphs. This is all about understanding why the biggest, most international banking/investment systems went under so suddenly and so totally. Throwing good money after bad is stupid. Rubin and Greenspan don’t have a clue…their own words….as to what is going on. So maybe we can clue them in!


FDIC Graphs Show the Extent of the Financial Crisis – Seeking Alpha

Troubled assets continued to mount at insured commercial banks and savings institutions in the third quarter of 2008, placing a growing burden on industry earnings. Expenses for credit losses topped $50 billion for a second consecutive quarter, absorbing one-third of the industry’s net operating revenue (net interest income plus total noninterest income). Third quarter net income totaled $1.7 billion, a decline of $27.0 billion (94.0 percent) from the third quarter of 2007.

The industry’s quarterly return on assets (ROA) fell to 0.05 percent, compared to 0.92 percent a year earlier. This is the second-lowest quarterly ROA reported by the industry in the past 18 years. Evidence of a deteriorating operating environment was widespread. A majority of institutions (58.4 percent) reported year-over-year declines in quarterly net income, and an even larger proportion (64.0 percent) had lower quarterly ROAs.

The erosion in profitability has thus far been greater for larger institutions. The median ROA at institutions with assets greater than $1 billion has fallen from 1.03 percent to 0.56 percent since the third quarter of 2007, while at community banks (institutions with assets less than $1 billion) the median ROA has declined from 0.97 percent to 0.72 percent. Almost one in every four institutions (24.1 percent) reported a net loss for the quarter, the highest percentage in any quarter since the fourth quarter of 1990, and the highest percentage in a third quarter in the 24 years that all insured institutions have reported quarterly earnings.


This graph illustrates the suddenness as well as the amazing level of losses in the last year. This isn’t a mere handful of banks going under. It is a huge number of huge banks going under rapidly. This is due partially to the Derivatives Beast eating up all the reserves of all the banks, one after another. If the US government and Federal Reserve didn’t capitalize these banks to the tune of trillions of dollars, the entire banking system would have gone bankrupt.

In this regard, this graph is false. It shows only $348 billion in losses. If nature were to follow her natural course, it would really be well over $2.5 trillion and climbing rapidly. The Reagan/Bush Sr. collapse is still over $700 billion in today’s dollars. But again, this was when the US government didn’t have to bail out the entire banking business like they are doing today.

This graph is meaningless unless we figure out why there was almost no bank collapses between 1994 and 2008 with a tiny smidgen late in 2007. What happened during that time, anyway?

This curious question must be asked! For from 1998-2001, we had first, the Asian Currency Crisis then the Dot Com collapse! This caused a global recession. But no banks went under in 1998. $2 billion in losses in 1999. And zero losses again, in 2000. Even when Greenspan and Bush Jr claimed we had a financial crisis and Greenspan dropped interest rates to 1% while Bush cut taxes heavily, there were zero bank closings from the middle of 2003-2007.

My own theory here is obvious to regular readers: the Japanese carry trade began in 1994. It abruptly ended with a bang in mid-July, 2007. This is the only obvious cause that comes to mind. The day and night difference between the carry trade easy-lending era and its sudden end is obvious! For example, the first crashes in the West were exactly one month after the carry trade ended. Since many loans were 30 days short term loans so hedge funds and investment banks would work up ‘deals’, the sudden ending of this easy money caused all these deals to crash into the flight decks of all the biggest banks.

Thanks to the Seeking Alpha story, I was reminded it was time to revisit the official FDIC: Quarterly Banking Profile to see more charts and graphs besides the ones in the Seeking Alpha story.


This chart clearly shows that from 1999-end of 2003, there were the usual ‘problem institutions’. But they didn’t go bankrupt. And the valley was at the peak of the housing bubble: 2005-2006 saw the fewest banks in trouble. then, the trouble began to rapidly climb to higher levels than in 2002. But the startling thing is to compare this with the graph showing the actual losses.

The losses are epic today. Somehow, the infusion of funny money from 1994-2007 created a sudden, totally catastrophic crash in 2008. The number of institutions is not that big. It is the size of each that is startling.

Unlike previous crashes when small banks went under first, the first to go in this whacky cycle are the biggest, not the smallest. Many of the very smallest, the credit unions, barely have noticed this banking meltdown. The reason is obvious: THEY HAD NOTHING TO DO WITH THE JAPANESE CARRY TRADE. Thus, small, regional, local systems were immune to this crash.

Another set of banks have gone under: the big housing/business real estate bankers are going under very fast. Anyone who participated in the sub-prime markets is being cleaned out. But the capitalization for these loans, I would suggest, came out of the Japanese carry trade via the Caribbean Islands, for example.


Not ONE US region has banking capitalization at 10%. Most are well under that. While China, in 2007, raised the reserve ratios all the way up to over 16%, the US allowed our own reserves to drop. While China and Japan ran up huge FOREX reserves, the US didn’t buy yuan or yen and thus, capitalize our own FOREX reserves. I am very beastly about all this: the key to banking lies in savings. The US doesn’t save nearly enough compared to our lending.

Savings, in general, have collapsed in the US. We don’t buy our own government bonds, for example. Foreigners buy these. We know that over 80% of our national debt is now bought by either international corporations or foreign governments. In stark contrast, let’s look at Japan: Market Anxious Govt Spending May Lead To Higher Interest Rates

TOKYO (Nikkei)–In a desperate move to contain the financial crisis disrupting economies around the globe, the richer developed world is now rushing down a road to higher government spending.

As governments in Japan, the U.S. and Europe coordinate to expand their budget positions to provide large doses of fiscal stimulus for their economies, investors are flooding into government bonds. This move, prompted by deflation fears and concerns over the health of stock markets, may drag down long-term interest rates.

Many economists support the idea of fiscal expansion to fight the crisis, with some warning that the spending drive by the debt-swollen Japanese government could trigger a sudden rise in long-term interest rates at a time when the economy is sinking deeper into recession….For market players, this scenario raises bitter memories of what took place 10 years ago. In less than three months from mid-November 1998, long-term interest rates surged to 2.44% from 0.83% in an epic collapse of the government bond market that depressed the price of 10-year bonds from 100 yen in face value to 86 yen, causing a bond market crash remembered by investors here as the “Trust Fund Bureau Shock.”

In November 1998, newly elected Prime Minister Keizo Obuchi cobbled together a fiscal stimulus package worth 23.9 trillion yen, prompting the Finance Ministry’s Trust Fund Bureau to decide to stop buying government bonds due to a funding shortage.

Meanwhile, the monthly issuance of long-term government bonds rose to 1.8 trillion yen from 1.4 trillion yen, creating a huge glut in the bond market.

Here is the Nikkei news pie chart showing how many aliens own Fortress Japan:


It is the reverse of America’s debts. Barely 7% of Japan’s debts are owned by foreigners. The US, it is now over 50% is sold overseas or to internationalist organizations. Japan’s banks own most of it. And the Bank of Japan owns nearly 10%. If we consider all the LDP-controlled entities to be one and the same creature [which they all are] then the percentage of government debt owned by LDP-controllers which includes the Bank of Japan, the Public Pension Funds, the Japan Post Insurance and Banking system from pre-WWII Japan, this is nearly three quarters of Japan’s debts.

Japan has a lot more debt versus GDP than the US. It is now at 160% of the GDP. The Japanese expect 93% of this new debt the government plans to issue the next several years to be internally purchased, not sent overseas. I wonder if this will simply make the ‘depression’ in Japan much worse. The US has been able to hide the depressed economy for 20 years via outsourcing and the Japanese carry trade in tandem with shipping all our excess spending overseas to be held in foreign capitals like Tokyo and Beijing or offshoring it to the many pirate island faux banks.

Back to the FDIC data:


This liabilities pie chart isn’t a good turkey dinner eating experience. Only one third of US savings is insured by the FDIC. So far, we have no domestic losses in this area, the FDIC has kept up with the losses. The emergency bail out bills are for the three quarters of this pie that is being eaten by the Derivatives Beast. Mmmmmm….good. Munch, munch. And look at that 20% red slice of pie! ‘Other BORROWED funds’. How much of this is loans from Japan? The pie chart doesn’t break this sector down. It included Federal funds of various TARPian sorts, I guess. I don’t know. We need more information, don’t we?

One thing is certain here: savings are considered LIABILITIES because the bankers have to pay to hold this money. This is why they press the Federal Reserve very hard to drop interest rates. Then, they don’t have to pay savers. Savers, in turn, are exiting the banking system which is why savings have collapsed in the last decade to below zero growth rates.


Commercial lenders is nearly half of this pie chart. I do believe, they are mostly the guys who created those multi-multi billion dollar buy out and buy up deals. This sector has just begun to fall apart! The housing bubble ended a whole year before this sector began to collapse. The biggest deals on earth occurred in 2007 until the whole system began to fall apart after August, 2007. This sector is, in particular, in very dire condition today. All past deals did was pile debt on existing organizations.

This was utterly unlike the previous bubbles which saw investment in start-ups, for example. This business was all about simply finding existing companies and dumping on top of them, a mountain of funny money debts.


This graph shows how all systems are converging. Always, when systems change gears and things that are below yesterday are on top, tomorrow, this is usually a sign of fundamental changes in the ecosystem. When 30 year debt returns equal today’s, this is another bad sign.


This graph shows that consumer lending collapsed during most of 2006. Note the Xmas spike. By 2007, lending to consumers collapsed to negative numbers during the normal Xmas spike. Except for the Xmas spike in 2005, commercial lending has been always greater than consumer spending. During 2007, note how these deals shot through the roof! Consumer lending went very deeply into negative numbers after the Xmas spike which really was not much of a spike but rather, a flat system.

The government was already opening all its private lending windows during this entire year, yet at the end of it all, in last March, consumer lending collapsed into negative numbers. -34% during the start of the Xmas lending spike period! Commercial lending still exists but is dropping very rapidly and is lower than any time in the last 4 years.


Net operating income fell off the cliff right after the Japanese carry trade began to unwind in late 2007.


We see yet again, the hump of troubles in the 2000-2003 period when the Dot Com bubble burst and the 9/11 attacks caused economic problems. But few banks went under. For the Japanese carry trade bailed us out during that recession!

But look at how the graph does the dread ‘hockey stick’ climb! Noncurrent loans means someone isn’t paying their debts. This is growing rapidly. It is not ‘humping’.


2004-2007, construction loans climbed as more and more banks lent to builders. All have been caught in the gears now. The number of banks doing this is dropping. But I think this graph will, next year, show a very steep drop in early 2009 onwards.


Like this graph! Real estate loans have nosedived after the top of the housing bubble. which was in 2005. Below is the graph from SPIEGEL ONLINE – Nachrichten from Germany. It shows the collapse in auto sales both in Germany and the US.


Porsche sales, in particular, went bad in the US. Many investment geniuses bought Porsches to race at private race tracks. Now, that fad is over. Maybe they will be reduced to bike racing? Or marathon running from the law?

Auto Sales – Markets Data Center – WSJ.com


All the sales of big, fat, gas guzzlers are below 3o%. Only small cars are seeing any growth. Just like the small banks are doing OK. A lesson is here, somewhere.

FEEL FREE TO EMAIL ME AT emeinel@fairpoint.net


Filed under .money matters


  1. GK

    I realize the European Financial criminals operate on 50 year cycles so that the last victims of their scams are dead before the crminals’ children recycle the scam again, but perhaps one day the Americans will use the intertubes to check some history instead of the F***ING cyber-monday prices on DVD players from China.

    So in case you are distracted by those LOW LOW PRICES, I will summarize the plot for you.

    The US Government bailed out Wall Street right before WWI.

    And the Mossad just successfully started the ball rolling on India vs Pakistan NUKE fest. The first nuclear war you can watch on CNN live. Imagine the advertising revenues!


    Willie Simon was drafted into World War I, and my mother married Leo Baker in 1930.

    Just before the United States entered that war, our politicians bailed out the Wall Street bankers, reimbursing them for huge, unsecured loans to European governments. Those governments had spent the money for U.S.-made war materials. U.S. taxpayers got their worthless IOUs.

    Discussion about the swindle was suppressed by professionally organized pro-war demonstrations, propaganda hoopla about “freedom” and “democracy,” and “sedition” laws to imprison anyone who told the truth.

    One man, Richard F. Pettigrew, courageously defied the federal sedition law, and made the Feds back off, from prosecuting him.

    Read about it, on Pages 373-387, of Pettigrew’s classic book, “Triumphant Plutocracy,” For an online version, Google “Jerry Baker triumphant plutocracy.”

    For my blog, Google “Reykr.”

  2. “reykr. A site to celebrate the special eroticism of Interracial love ….”

    It’s just another one of those things I never thought about all that much. Thoughts must compete for resources in my head.

  3. GK

    OK, blues, since it looks like you prefer to stick to the mainstream, here is Robert Kiyosaki of Rich Dad, Poor Dad fame.


    “How did we get into the current financial mess? Great question.

    Turmoil in the Making

    In 1910, seven men held a secret meeting on Jekyll Island off the coast of Georgia. It’s estimated that those seven men represented one-sixth of the world’s wealth. Six were Americans representing J.P. Morgan, John D. Rockefeller, and the U.S. government. One was a European representing the Rothschilds and Warburgs.

    In 1913, the U.S. Federal Reserve Bank was created as a direct result of that secret meeting. Interestingly, the U.S. Federal Reserve Bank isn’t federal, there are no reserves, and it’s not a bank. Those seven men, some American and some European, created this new entity, commonly referred to as the Fed, to take control of the banking system and the money supply of the United States.

    In 1944, a meeting in Bretton Woods, N.H., led to the creation of the International Monetary Fund and the World Bank. While the stated purposes for the two new organizations initially sounded admirable, the IMF and the World Bank were created to do to the world what the Federal Reserve Bank does to the United States.

    In 1971, President Richard Nixon signed an executive order declaring that the United States no longer had to redeem its paper dollars for gold. With that, the first phase of the takeover of the world banking system and money supply was complete.

    In 2008, the world is in economic turmoil. The rich are getting richer, but most people are becoming poorer. Much of this turmoil is directly related to those meetings that took place decades ago. In other words, much of this turmoil is by design.”

    or here is the link to Triumphant Plutocracy


  4. michael g

    if you like statistics, on dollarcollapse.com they have great stats. on the real rate of unemployment very interesting.

  5. If You’re Thinking of Living In/Pocantico Hills; Simple Living Near the Rockefellers
    November 30, 2008

    The Rockefellers amassed more than 3,000 acres of land in Pocantico Hills, a hamlet in the town of Mount Pleasant. Over the last few decades, much of it has been deeded over as conservation land for their neighbors to enjoy. Today the family owns approximately 60 percent of the land it once did, said Darwin Stapleton, director of the Rockefeller Archive Center here, which is part of the Rockefeller University.

    ”The Rockefellers could have easily turned this area into much of what suburban Westchester now looks like,” he said. ”But they went about it much more deliberately, not going for the immediate profit of selling it off and building large subdivisions.”

    Instead, Pocantico Hills is an unexpected place so close to Manhattan, a village of simple, cozy living where the only local gathering places are the hamlet’s firehouse, schoolhouse and two churches.

    Did you get that?

    ”The Rockefellers could have easily turned this area into much of what suburban Westchester now looks like”…

    What that looks like is, in fact, you need to make about $2 million a year to begin to contemplate living in the nightmare of “suburban Westchester”!

    Sometime around 1982 or so, I drove up to Pocantico Hills. All I could see was this rather huge “Rockefeller Hill” and a tiny, albeit absurdly ritzy “convenience store” at the bottom. It was clearly “Outer Limits” territory. A town that existed solely to service one of the Rockefeller brothers.

    Meanwhile, we were coping with the (Nelson) Rockefeller “drug laws.” We had friends who were hiding millionaire drug dealers in attics. The thing about it was, the actual Rockefellers were about ten billion light years away from having to even think about the consequences.

    I know about the Jekyll Island meeting, and all that. The funny thing is, the political bloggers, “left,” “right,” whatever, generally have absolutely no clue about this stuff. They talk like they know!

    The thing about the people on Rockefeller Hill is precisely this: They are bosses. They are simply big bosses. They perceive themselves to be in charge of us. We are, at the very best, employees. They could care less. They could support Hitler, then cut him down. All at taxpayer expense, of course. Their mistakes are our debts. We are “little people” to them.

    I could not for the life of me see how these little cockroaches in New York State could ever vote Nelson Rockefeller to be their governor. They love the big bosses? I never did.

  6. Grok1

    A wee bit off topic but related to some of the comments above, I recently had the opportunity to view a 1933 film titled “Gabriel Over The Whitehouse”. I think most readers of this blog would appreciate the movie. The film stars Walter Huston as president “Judd” Hammond and directed by Gregory LaCava. The movie is a bit hokey, as most films of that era, but has striking parallels to modern day economic woes. Of course the main difference was that in 1933 the U.S. was a creditor nation unlike the debtor nation that exists today. TCM has presented the film on occasion.

    From Wikipedia:

    Controversial since the time of its release, Gabriel Over the White House is widely acknowledged to be an example of propaganda, although contention exists as to which ideology it is espousing.

    Filmed during the 1932 presidential election on the orders of media magnate William Randolph Hearst, the film was intended to be an instructional guide for Franklin D. Roosevelt during his presidency. Hammond as he exists prior to his accident is an amalgamation of caricatures of Presidents Warren G. Harding, Calvin Coolidge, and Herbert Hoover, Roosevelt’s immediate predecessors. After his accident, he is Hearst’s idealized image of the perfect president, the president he wanted Roosevelt to be.

    These facts, coupled with the film’s almost chilling accuracy at predicting Roosevelt’s economic programs, lead many, particularly classical liberals and conservatives, to believe that film is a sympathetic portrayal of what might be social liberalism’s worst excesses, or even socialism.

    Social liberals often counter these claims by declaring that the film’s politics trend more toward fascism than socialism. They point out that both Adolf Hitler and Benito Mussolini took steps similar to Roosevelt’s in stabilizing their countries’ economies and both men were much more like Hammond in their social and foreign policies (e.g., massive military buildup, martial law, secret police, show trials, etc.) than Roosevelt. They further point to Hearst’s well-known dalliance with Nazism, including his attendance of the 1934 Nuremberg Rally, as evidence of their theories.

    Recently, author and history professor Robert S. McElvaine wrote an editorial for the left-wing OpEdNews.com in which he compared current President George W. Bush to Judson Hammond.

    On the other hand, Hearst, who had crucially backed Roosevelt at the Democratic convention in 1932 and believed that he had provided the margin of FDR’s victory there, had actually submitted the script to FDR for suggestions and revisions during the post-general-election period while FDR was waiting to take office. FDR made changes in the script which were accepted by Hearst, and after the film was completed and exhibited FDR wrote to Hearst and praised it as a wonderful and inspiring work.

  7. GK

    Blues, the ‘left/right’ political blogs are 100% controlled dissent. They get you to bark at the moon, or bark at the sun, but you have to use the Sherlock Holmes ‘dog that did not bark’ deduction to see the true crimes.

    And Grok1, you are absolutely correct that the rules care not which party is keeping the white house chairs warm. If you read the introduction to Triumphant Plutocracy written back 80+ years ago you see that this is nothing new.

    Triumphant Plutocracy

    “The American people should know the truth about American public life. They have been lied to so much and hoodwinked so often that it would seem only fair for them to have at least one straight-from-the-shoulder statement concerning the government “of the people, by the people, for the people,” about whose inner workings the people know almost nothing.

    The common people of the United States, like the same class of people in every other country, mean well, but they are ill-informed. Floundering about in their ignorance, they are tricked and robbed buy those who have the inside information and who therefore know how to take advantage of every turn in the wheel of fortune.

    The people voted for Roosevelt because he talked of “trust-busting” at the same time that we has sanctioning the purchase of Tennessee Coal and Iron Company by the Steel Trust.

    They supported Wilson “because he kept us out of the war” at the same time that Wilson was making preparations to enter the war. The rulers can negotiate “secret treaties” at home and abroad.

    The people, knowing nothing of either the theory or practice of secret diplomacy, commit all sort of follies for which they themselves must later foot the bill. “

  8. emsnews

    Even if people know what is going on, they can’t change the course. The Iraq war business was VERY unpopular. Many people said, ‘Why not first get bin Laden?’

    Some of the biggest pre-war antiwar marches were seen across the planet before that stupid war. In the US, we had some of our biggest antiwar demonstrations, ever!

    The people spoke and were ignored.

    Right not, there is tremendous cynicism. Yet we see, in Thailand, the people occupying the airport and resisting the state! Imagine us doing that to say, Kennedy Airport?

    The US public is at a loss. We want the old days back, we can’t face the obvious future. This is why we dare not really act. We hope someone will save us. This desire is very strong.

    Hell, I see on the left, people begging FOREIGNERS to stop us from doing things that are stupid! This always annoys me. We and only we can or should, stop ourselves.

    Which is why I talk so much about sovereignty. We, the people, are the sovereigns of the US. We better start behaving this way.

  9. Gary

    Ground Control to Major Paulson……..

    Standing there alone
    the ship is waiting
    all systems are go
    are you sure?
    control is not convinced
    but the computer
    has the evidence
    “no need to abort”
    the countdown starts

    watching in a trance
    the crew is certain
    nothing left to chance
    all is working
    trying to relax
    up in the capsule
    “send me up a drink”
    jokes Major Tom
    the count goes on

    4 3 2 1
    Earth below us
    drifting falling
    floating weightless
    calling calling home…

    second stage is cut
    we’re now in orbit
    stabilizers up
    runnning perfect
    starting to collect
    requested data
    what will it effect
    when all is done
    thinks Major Tom

    back at ground control
    there is a problem
    go to rockets full
    not responding
    “hello Major Tom
    are you receiving
    turn the thrusters on
    we’re standing by”
    there’s no reply

    4 3 2 1
    Earth below us
    drifting falling
    floating weightless
    calling calling home…

  10. Thanks for the charts and data. When do we officially hit a depression?

  11. nah

    earths are birds
    minds are clowns
    dirt is rad
    mac is back
    eat a sammich
    can you say cheeze


    vote your paycheck

  12. Some anonymous person, who apparently wanted to mess with my blog name of “Reykr,” posted a note on the Internet, connecting that word to something about “interracial love.”

    I clicked that link, and got, “Page Not Found.”

    I picked that word out of an Icelandic dictionary. It means “smoke” or ‘steam,” in Old Norwegian, and is a root of Reykjavik, after the steam from the latter’s hot spring.

    The earliest settlers of Iceland were Norse Vikings, and their women were Irish captives. It’s quite a stretch, to call that “interracial.”

    Jerry Baker

  13. I wasn’t able to find a blog that looked like yours, Jerry. I did find the one about interracial love. I just posted that in jest. Someone suggested Googling it. It’s hard to believe that anyone would go to all that trouble. It’s frightening, sort of.

  14. Actually, I think “reykr” got connected to that peculiar topic by accident.

    Many years ago, I came across an article about so-called “Turks,” in the “New Yorker.” Its author was Calvin Trillin. It was about a mysterious ethnic group, called “Turks” or “Moors,” that lived in Sumter County, S.C.

    That got me interested in such things as “lost tribes,” such as the unusual ones mentioned in this article.


    One of these tribes is named the “Melungeons,” and Brent Kennedy, the author of a book about them, visited Turkey not long ago to investigate their possible Turkish origin. I’ve corresponded with him.

    I think that probably Internet search engines connected my interest in the origin of such unusual tribes with interracial marriage.

    My blog is at: http://reykr.livejournal.com

  15. I am glad that Tiger Woods is back playing. It makes the game exciting again.

  16. Looks like the Tiger Woods scandal has not done him excessive harm. He still earned $90 million last year!

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