Posted from an e-mail today comes this comment from Noni Mausa. For me the key is how to filter the noise from the music so to speak. And this involves being willing and then doing the quick checks on something that catches your eye. You don’t have to agree with Noni’s conclusions to make yourself ask the questions needed to put articles in context.
It makes me more certain that we need a section for those who are mildly interested in economics as it affects their lives, or feel either not qualified or reticent to even ask a simple list of questions in an effort to understand what is going on. With examples.
by Noni Mausa
Good News! Little Billy Recovering Well!
The Associated Press had an article this morning about how well the banking sector is recovering from the financial crisis. I had to giggle — it’s like reporting that little Billy is feeling better now after getting a tummyache from eating Little Susie’s entire birthday cake.
I commented online to that article, but here’s my comment for your delectation.
Full article at
U.S. banks see their fortunes rise
Article by: MARCY GORDON , Associated Press, Updated: July 5, 2012 – 10:42 PM
Profits are up, bank failures are down, more loans are being repaid
on time and losses are ebbing.”
And this is being presented as GOOD news? Let’s see:
— Interest rates are down, so they’re not making money off interest, or not much.
— Loans are being offered “cautiously,” which I guess means they’re only loaning to people and businesses who don’t really need it.
— Instead, they are profiting from “higher account fees and more mergers,” that is, charging more the same or lesser services. (Could you remind me how this cannot be a drag on the economy?)
— Bank failures are slowing — but hundreds of banks have closed down (http://www.fdic.gov/bank/individual/failed/banklist.html) or been swallowed up by others since 2000. Thirty-one have closed in 2012 alone, all smaller, local banks from the look of the lists.
— But the big banks are much bigger. There are currently about 7,500 banks in the US, of which the largest (JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and Goldman Sachs) held more than
$8.5 trillion in assets at the end of 2011, equal to 56 percent of the U.S. economy, according to the Federal Reserve. http://www.businessweek.com/articles/2012-04-19/big-banks-now-even-too-bigger-to-fail
The Big Five today are about twice as large as they were a decade ago relative to the economy.
How much of their profits comes from systemic fraud and extortion? I
guess we’ll find out once the FBI have finished their work.
The stability and profits of the banking sector is a good news story indeed — if you happen to be a bankster.
PS I found all this data online in the 17 minutes it took me to write
PPS What is it with the Associated Press? They seem to often have
these rah-rah articles.