The over/under is 5. The unders win. The economic backdrop is a picture of smoke and mirrors. Today, the first Friday of the month, brought the jobs report from the Labor Department. The economy lost 20,000 nonfarm jobs and the unemployment rate dropped from 10% to 9.7%. Job losses from April 2008 through March 2009 were revised up a whopping 930,000, or 23% from their earlier revisions.  In addition, the BLS revised their job loss estimates for 2009 up 617,000, or 14.8%.

How does the economy lose jobs and the unemployment rate drops? In January, 1.1 million people fell off the list. They have been unemployed so long they become invisible. Poof – 1.1 million people disappear. The number of people unemployed for more than 27 weeks has jumped dramatically over the past year; last January's 2,689,000 versus this morning's January 2010 reading of 6,313,000. In January, 11.5 million people were collecting some form of unemployment insurance, up 27.8%, from 9.0 million in November. But the headline number “9.7%” makes me feel warm and fuzzy and full of bile.

Consumer credit continues to unwind. Nonmortgage debt dropped $1.7 billion from November to December. Consumer credit contracted by $100 billion in 2009. People took on less debt and defaulted on some debt. Outstanding credit card debt fell 9.5%, the first annual decline on record, dating to 1969.

Greece has a debt problem; Portugal and Spain, too. The spread on Greek Credit Default Swaps widened, or inverted if you prefer. The spread is reminiscent of Lehman Brothers CDS before the collapse.

Ken Lewis and Bank of America are facing civil charges from the New York Attorney General for lying about the Merrill Lynch acquisition. NY has the Martin Act, which only requires evidence that disclosures were not made to shareholders and does not require proof of intent. Criminal charges? That only applies to the peons. In an alternate universe Martha Stewart could slaughter school children with a meat cleaver and only face civil charges, if in that alternate universe she was a white male bank CEO.

JPMorgan Chase CEO Jaime Dimon and Goldamn Sachs CEO Lloyd Blankfein secure nifty bonuses this week. Dimon pockets $17 million, Blankfein gets $9 million in bonus out of the $16.2 billion that Goldamn set aside for bonuses. The CEO’s get less than Tiger Woods, but at least Tiger will kiss you before he bends you over.

At the World Economic Forum in Davos, protesters handed out leaflets demanding derivatives be traded on regulated exchanges; the anarchists have come so far. The regulators claim they will impose coordinated controls on the bankers; and nobody laughed in their faces. The bankers claim that any regulation would be very negative; and nobody laughed in their faces.

The “Delicious Irony Award” goes to the Mortgage Bankers Association. Three years ago they built an office in Washington DC at a cost of $90 million. It sold today for $41 million. No word whether it was a short sale.

Earlier in the week the IMS reported manufacturing and service sectors of the economy improved, but Wall Street took a hit, and dropped on Thursday, and the slide continued Friday morning until the Plunge Protection Team stepped in to defend the Dow 10,000 mark. You might think the drop to 9.7% unemployment would set up a scenario for Helicopter Ben to stop drop buckets of cash on the banksters; you might think that would spook Wall Street, but no – the Dow finished up 10 points for the day. Really, it is rigged. Or maybe everybody was just laughing, “Oh, isn’t it cute how they pretend there is an exit strategy!” At any rate, Timmy and Ben used up their entire allowance and there was nothing left over for Sheila over at the FDIC. We get one stinking bank failure and a small one at that.

The 16^th bank failure of the year was First American State Bank of Minnesota. A few years back, management had the unique foresight and prudent wisdom to invest in a housing project north of Phoenix that had beautiful views but no water, plus condo projects in Miami; all that from the little hamlet of Hancock, population less than your high school. One year ago, 1^st had more than $26 million in assets. They wasted away $8 million while the FDIC frittered.

#16 - 1^st American State Bank of Minnesota, Hancock, Minnesota was closed Friday, February 05, 2010 by the Minnesota Department of Commerce, which appointed the FDIC as receiver. Community Development Bank, FSB, Ogema, Minnesota will assume all of the deposits of 1^st American State Bank of Minnesota.

1^st American State Bank of Minnesota had approximately $18.2 million in total assets and $16.3 million in total deposits, and two branch locations. Community Development Bank, FSB did not pay the FDIC a premium to assume all of the deposits of 1^st American State Bank.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $3.1 million. 1^st American State Bank of Minnesota is the 16th FDIC-insured bank failure in the nation this year, and the third in Minnesota.

Cert # 15448

Sinclair Noe

Eat the Bankers

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