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Chart Du Jour: Bank Failures, Facebook and the Scariest Jobs Chart Ever
Posted by: Louis Basenese (IP Logged)
Date: May 17, 2012 02:12PM

Today, we’re serving up a snapshot of the U.S. banking system. (Hint: It’s healing.)

We’re also putting the latest jobs data into perspective. It’s still not pretty.

And last but not least, we’re dogging the upcoming Facebook IPO yet again. For a perfectly legitimate reason, of course.

Enjoy!


Don’t Bank on Bank Failures

The banking sector suffered mightily through the financial crisis. Literally hundreds of banks went belly-up. But time heals all wounds. And the healing is definitely under way.



So far, the FDIC has only shuttered 23 banks. That’s down from 40 failures at the same time last year. And well below the pace in 2009 and 2010.

The unofficial list of problem banks is falling, too, according to CalculatedRiskblog.com.

Bottom line: Since banks got us into this whole mess, they’re going to have to lead us out. And although the fundamentals aren’t top notch, they’re improving. And that, my friends, is reason enough to be selectively bullish.

My True Stance on Unemployment

Readers reamed me for suggesting that the employment situation in the United States is just hunky-dory. That’s not what I said.

I merely pointed out that the U.S. youth unemployment rate is nothing to moan about compared to youth unemployment rates in Europe.

I’ll be the first to tell you that the jobs picture in the United States remains less than rosy. Just look at the labor force participation rate, which I called to your attention in early February. It measures the percentage of working-age Americans that are employed or unemployed, but looking for a job. And it keeps dropping.



The current reading of 63.6% is the lowest level since 1981.

Then there’s the fact that a massive unemployment gap remains. Job losses from the start of this recession are far from being recouped in percentage terms.



Bottom line: We’re witnessing a recovery in the employment market. But it’s a mind-numbingly slow and fragile one.

Facebook is NOT the Next Google

The hype surrounding Facebook’s upcoming IPO continues to mount. And it amazes me that people keep comparing it to Google’s IPO.

It doesn’t compare! Case in point: revenue growth.



In the four quarters preceding its IPO, Google’s sales more than doubled. Facebook’s revenue growth doesn’t even come close to measuring up to that standard. Heck, Facebook’s doesn’t even compare favorably to Zynga.

That’s a bad omen. As you know, Zynga’s IPO has been a total bust, which I predicted.

Bottom line: I still recommend you avoid Facebook’s IPO like the plague.

Courtesy Louis Basenese at Wall Street Daily (EconMatters author archive here)


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Re Chart Du Jour Bank Failures Facebook and the Scariest Jobs Chart Ever
Posted by: Cornelius Chan (IP Logged)
Date: May 19, 2012 12:02AM

What do you make of the whole MF Global fiasco and does that incident reflect on banks at all?


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Re Chart Du Jour Bank Failures Facebook and the Scariest Jobs Chart Ever
Posted by: paulwitt (IP Logged)
Date: May 19, 2012 12:37AM

When I heard about the JPM loss I thought about Barings Bank

From Wikipedia:

Barings Bank (1762 to 1995) was the oldest merchant bank in London[1] until its collapse in 1995 after one of the bank's employees, Nick Leeson, lost £827 million ($1.3 billion) due to speculative investing, primarily in futures contracts, at the bank's Singapore office.

*yes, we do need common sense regulation (republicans) but not to the point of strangulation(democrats) .....IMO


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Re Chart Du Jour Bank Failures Facebook and the Scariest Jobs Chart Ever
Posted by: Cornelius Chan (IP Logged)
Date: May 19, 2012 03:03AM

"*yes, we do need common sense regulation (republicans) but not to the point of strangulation(democrats) .....IMO"

You are 100% correct... Glass-Steagall was just such a regulation within the 1933 Banking Act that enforced the strict separation of investment and commercial banking.

That important regulation was repealed in 1999 by the Gramm-Leach-Bliley Act with a bi-partisan 343-86 vote.

I wonder why? But in the end it doesn't matter that I wonder why - it just matters that readers inform themselves and draw their own conclusions. Or you can just believe the blithe words of Louis Basenese and call it a day.


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