Bank Bust Friday Continues

"Fail Is Our Middle Name"

Glenwood, IL based Heritage Bank became the 16th casualty of 2009. The FDIC estimated that the failure would cost the federal deposit insurance fund $42.6 million.

Not So Secure - Security Savings Bank

Nevada's Security Savings Bank was closed by regulators Friday, making it the 15th bank failure of 2009. The FDIC estimated the bank failure will cost its deposit insurance fund $59.1 million.

Dow Theory 50% Principal

The DJ Industrials Average closed below its November 20th low, thereby confirming the prior breakdown of the Transportation Average. Both averages closed to new lows, with the Dow closing below the halfway level (50%) of the 1982 - 2007 great bull market. If the market is a scale, it has now tipped and the path of least resistance is down. Get out. Raise cash. It will likely take many years, but at some point in the future the great unwinding will set the stage for a new great bull market where fortunes will be made.

Regulators Seize #14

Federal regulators shut Silver Falls Bank in Oregon, making it the 14th closure this year and 8th in February, the most in a single month since 1993. Citizens Bank will assume the deposits of Silver Falls. This failure will cost the FDIC approximately $50 million.

Looks Like Rain

The median value of a U.S. home in 2000 was $119,600. It peaked at $221,900 in 2006. Historically, home prices have risen annually in line with CPI. If they had followed the long-term trend, they would have increased by 17% to $140,000. Instead, they skyrocketed by 86%. It is now 2009 and the median value should be $150,000 based on historical precedent. The median value at the end of 2008 was $180,100. Therefore, home prices are still 20% overvalued. Long-term averages are created by periods of overvaluation followed by periods of undervaluation. Prices need to fall 20% and could fall 30%.

Gotta go. The DVD box set of Flip This House just arrived.

#13

Happy BANK FAIL Friday. FDIC closed Pinnacle Bank of Oregon.

#10, #11 and #12

It's bank failure Friday, and three more get added to the list. So long Sherman County Bank of Nebraska. Take care, Riverside Bank of Florida. See you never again Corn Belt Bank of Illinois.

The Maxine Waters Trainwreck Experience

Maxine Waters: "Why do you do that?"

Ken Lewis: "I, I don't know what you're talking about."

Maxine Waters: "Do, do any of you understand what I'm talking about?"
(then later) "Why are they paying themselves fees on the money that we give them?"

How Maxine Waters is part of the Congressional Financial Services Committee is beyond me.

S&P 500/Gold Ratio

Today, the S&P 500 closed at 833. Gold closed at $942.

All Aboard!

C Ya Alliance Bank

Alliance Bank of California joins the 2009 failboat.

So Long FirstBank Financial

FirstBank of Georgia. A tragic loss.

High Five!

Kazakhstan’s central bank devalued the tenge by 18% abandoning attempts to prop up exchange rates as currency reserves dwindle. It set a new range for the tenge allowing it to fluctuate by about 3% around a new level of 150 against the U.S. dollar.

Dow 7,552

Today, the Dow closed down 121 to 7,956. Please stay above 7,552. Please don't tip the scale to the downside. Pretty please...

A Trifecta Of Fail

At an FDIC cost of $126 million, three more banks boarded the failboat: Ocala National Bank, Suburban Federal Savings Bank and MagnetBank. Ocala was scooped up by Center State Bank, Suburban was taken over by Bank of Essex and FDIC could not find a buyer for Magnet Bank (mainly because Magnet was a complete and total joke of a bank to begin with).