Yet-Another-Non-Sequitur Alert

According to U.S. Treasury Secretary Timothy Geithner, the worst is well and truly behind us (via Business Insider):

"The U.S. financial system is stronger and getting stronger...we have shut down or restructured the weakest parts of our system... finally we've been able to dramatically reduce the expected cost of the financial crises to levels unthinkable in 2009...the financial system is much less vulnerable than it was and is much more able to manage a growing economy."

And yet, we have this --

"Treasury May Let Investors Pay to Lend to U.S. Government" (Reuters)

The U.S. government may ask investors to pay for the privilege and safety of holding short-term debt issued by its Treasury Department.

In response to clamor from investors, the Treasury said on Wednesday it was looking closely at allowing negative-yield auctions. This would mean bidders who want the security of U.S. government debt in the face of global insecurity, might have to pay a premium for it.

Doing so would allow the U.S. government to benefit from something that is already occurring on the secondary market, where investors have accepted negative yields in recent months to protect their cash from financial strains.

Remarkably, Wall Street is asking to be able to pay a premium for U.S. debt even after the United States lost its prized AAA rating last year and as the government heads for a fourth straight year with $1 trillion-plus budget deficit.

"It is the unanimous view of the committee that Treasury should modify auction regulations to permit negative rate bidding and awards in Treasury bill auctions as soon as feasible," according to minutes of the Treasury Borrowing Advisory Committee, which includes 21 financial institutions that make markets for U.S. government securities.

The European debt crisis and worry about global prospects is fueling investor demand for safe assets like short-term U.S. government debt. Treasury said modifying its auction rules would require overcoming "operational issues" but they were related to accounting rather than to legal questions.

and this --

"REPORT: Prepare For A Giant New Wave Of US Bank Failures" (Business Insider)

Forget Europe — the weak U.S. recovery puts more than 750 domestic banks at risk of failure, according to a report from Invictus Consulting Group (via Business Wire).

Invictus, which stress tested all FDIC-insured banks, says 758 lenders could collapse in the next three years, forecasting a new wave of borrower defaults in the absence of a strong economic up-tick.

A disaster in Europe would probably make things much worse.

Invictus says the at-risk lenders — mostly regional banks or subsidiaries of the majors — won't be able to sustain themselves on current earnings, and will likely fail if they don't merge or raise "significant" amounts of new capital. --

and this --

"Treasury’s 2008 Financial Rescue Could Last Until 2017" (Real Time Economics)

The U.S. government’s rescue of the financial system could last for five more years as the Treasury Department unwinds its investments in hundreds of banks and other companies propped up in the aftermath of the 2008 financial crisis, a government watchdog said Thursday.

The Bush administration launched the financial rescue plan in the autumn of 2008 at the height of the financial crisis. At its launch, Congress authorized spending $700 billion on the bailout known as the Troubled Asset Relief Program, or TARP. The Treasury Department currently estimates that the final cost for TARP will be $68 billion.

As of the end of last year, about $414 billion had been spent through 13 programs, while $278 billion had been repaid and $51 billion was still available to be spent, according to a quarterly report to Congress by the special inspector general for the TARP program. The remaining institutions in the program include 455 banks and thrifts, plus insurer American International Group Inc., General Motors and Ally Financial Inc.

“TARP is not over,” said Christy Romero, the acting TARP special inspector general. “Some TARP programs last until 2017, and market volatility has slowed Treasury’s progress in unwinding its investments.”

The report also found that exiting these investments could be difficult in the coming years, as financial markets remain rocky and many community banks that receive federal aid continue to struggle.

Yep, things sure are looking good for the financial system.

Comments

[GCT]

Kinda sorta like the new unemployment figures recovering. The part they forgot to post is the BLS just vaporize 1.1 million people! Gotta love the truth posted by the Fed! The sheeple will cheer this administration as they lead us into hell!

[It seems no one counts, anymore!]

Employment Report: Blatant And Outrageous Lies

There are times when one questions a report as possibly being wrong or in error, and then there are times when one has to raise a flag and say "This is an intentionally false picture being presented by a government agency."

I'm in the latter camp with this one, and it is rare for me to brand something as not possibly wrong and in error, but intentionally fraudulent.

"Not in labor force" numbers leaped upward on an annualized basis (seasonally adjusted the "right way") and what's worse on a raw basis 1.572 million people exited the labor force last month.

http://market-ticker.org/akcs-www?post=201459

[If The Economy Is Improving….]

If The Economy Is Improving….

Regardless of what the media or official government stats say…this post lists all the reasons why it is looking more and more like a depression and not a recovery. But you probably already knew that.

But right now there are some "bright spots" in the economy, and you are bound to run into family and friends that will repeat to you the nonsense that they are hearing on the television about how the economy is recovering.

When they try to convince you that the economy is getting better, ask them these questions....

http://theeconomiccollapseblog.com/archives/if-the-economy-is-improving

[roger]

Translation:
The weakest part of our system successfully restructured,
IE: American labor commodity eliminated,replaced by
automation and cheap Chinese labor commodity.
Dramatically reducing cost of financial crisis,IE:
concentration and privatizing of enormous profits
while socializing losses,compliments of Mr.and Mrs
middle class. Well done Timothy Geithner!

[sharonsj]

You forgot about the $7 trillion of credit the Fed gave to the international banks. That credit is now backed by the full faith and credit of the U.S. government--even though Congress never approved the loans.

[robert in london]

Gasoline consumption declining (and at an historic rate of acceleration), tax receipts falling, food stamp use rising, Fed 'extension' of low interest rates out to the far horizon. Plus, the unprecedented, soviet era style boom in the 'marketing' and consumption of economic balderdash. That's all I need to know about the 'health' of this Potemkin village economy.