Either something weird is going on here or else the nation's financial honchos are just as confused as everybody else.
The FDIC, which as we wrote last week, is way underfunded for what it's being expected to do, has decided to ask the banksters to pay their 2010-12 premiums now rather than force the Obama Admin to bail it out to the tune of another $100Bil.
Federal regulators said Tuesday they expect bank failures to cost the deposit insurance fund about $100 billion in the next four years and the fund to begin running at a deficit this month.
That is higher than an earlier estimate of $70 billion in failure costs through 2013.
The Federal Deposit Insurance Corp. made the projections as its board voted to propose requiring banks to prepay an estimated $45 billion in regular insurance premiums for 2010-2012. The proposal could take effect after a 30-day public comment period.
"I do think this is a good balance," FDIC Chairman Sheila Bair said. The plan requires the banking industry "to step up" while spreading the financial hit to banks over a number of years, she said.
(emphasis added)
Good-o. Let the crooks pay their insurance a little in advance of when they'd have to do it anyway. It shouldn't be our problem and we shouldn't have to lay out a hundred billion $$$ to cover more bank failures created by the banksters themselves just so they can hoard their money for another year. But doesn't the expectation of all these failures the FDIC is getting ready to cover suggest that things aren't all hunky-dory in BanksterLand? That maybe the economy isn't "recovering" all that well despite a massive infusion of money into our financial pirates' coffers? More banks expected to fail than were expected to a few weeks ago doesn't exactly boost our confidence that "everything is returning to normal".
More evidence that that's the case comes from yet another article on the "jobless recovery" wherein the biggest CEO's in the country have gotten way skittish about, you know, hiring.
U.S. chief executives are not ready to step up hiring or capital spending, though a majority expect sales to rise over the next six months, according to a Business Roundtable survey released on Tuesday.
The survey said 40 percent expect to cut U.S. jobs over the next six months, compared with 13 percent who expect to add them. Some 35 percent expect to lower U.S. capital spending, more than the 21 percent who plan to raise it.
In a sign that they see the U.S. economy beginning to pull out of its worst downturn since the Great Depression, the majority -- 51 percent -- of CEOs expect their companies' sales to rise over the next six months.
"CEO's are beginning to see an uptick in expectations for sales, which is good; however, this demand has not yet translated into increased capital spending or hiring," said Ivan Seidenberg, chairman and CEO of Verizon Communications Inc <VZ.N>, who also serves as chairman of the Roundtable.
The Business Roundtable is a lot like the Chamber of Commerce when it comes to PR: upbeat or downbeat depending on which approach serves their purposes most directly, and their statements rarely acknowledge reality if it's not in their favor. One thing is almost always a feature, though: "Prosperity is right around the corner." In this case, 6 months' worth of corner.
Now, 6 months is roughly the time it takes to gear up an expansion. If the BR CEO's were serious, wouldn't that mean they were preparing for this uptick now? To repeat our previous question, "What are they waiting for?"
Seidenberg said that an upturn in hiring would likely lag a resumption of growth in sales by about 12 to 18 months.
I guess not.
Caution was the dominant response on both hiring and spending, with the largest number of CEOs saying they expected their U.S. headcounts and capital budgets to remain flat over the next six months.
Suddenly, these impulse gamblers have become cautious? Maybe, but only when it comes to creating jobs and hiring employees to fill them. As for deal-making and game-playing, the word is "Go!"
The corner office is getting a bit more bullish about the economy.
While investors have been bidding up shares in the stock market for months, many chief executives and boards had privately remained skittish about their own businesses — until recently.
In a signal that confidence — and perhaps a bit of executive swagger — may be returning to the business world, two large mergers were announced on Monday, adding to a flurry of deals in the last month. First, Abbott Laboratories, the drug maker, agreed to acquire a unit of Solvay of Belgium for $6.6 billion, and then Xerox agreed to buy Affiliated Computer Services, an outsourcer, for $6.4 billion.
Neither merger compares in size to the double-digit billion-dollar deals that took place just two years ago at the height of the buyout boom.
But taken in the context of what has been a merger drought — in the wake of the financial crisis, deal-making is still off by more than 50 percent from last year — the transactions suggest that the most senior ranks of corporate America may now have a more optimistic outlook on the economy than some people thought.
Oops. The cat's in the bag and the bag's in the river.
So, on the one hand they're "cautiously optimistic" but they won't be doing any hiring for a couple of years yet, and on the other, they're starting to swallow each other whole again, making big $$$ on paper without actually, you know, creating anything new. Good for the stock price and no downside. Like having to hire actual people. That, Wall Street would think, is Bad.
IOW, it isn't so much confusion as the safety involved in going back to doing what they've been doing for a couple of decades: making their money at the expense of the whole economy, gamblers betting their shirts that things will get better for them while inflation stays low (that's why they won't hire people) and profits stay up. What the hell, if they're wrong the govt will bail them out, right?
Basically, they're treading water hoping that the tide goes out. If it doesn't a whole lot of people are going to drown. But what do they care? They've got yachts and the Coast Guard is right off the starboard bow if anything goes wrong. Why should they worry?
Well, this could be a reason: if you're not going to hire anybody, who's going to buy these services you're dying to own?
Doesn't matter, that's the beauty of the scenario. By the time 2 years go by and it becomes obvious the economy is in a much bigger dumper than they claimed, they will have scammed the take from the rising stock prices and headed for Antigua. This is the same game they've been playing all along and if we're going to fall for their "cautious optimism" for the third time in a few years, maybe we deserve what we're going to get.
Screwed again.
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