Afghanistan is having a run on its largest bank and they are turning to the United States to help.

As depositors thronged branches of Afghanistan’s biggest bank, Mahmoud Karzai, the brother of the Afghan president and a major shareholder in beleaguered Kabul Bank called on Thursday for intervention by the United States to head off a financial meltdown.

“America should do something,” said Karzai in a telephone interview, suggesting that the U.S. Treasury Department guarantee the funds of Kabul Bank’s clients, who number about a million and have more than a billion dollars on deposits with the bank.

Kabul Bank handles salary payments for soldiers, police and teachers. It has scores of branches across Afghanistan and holds the accounts of key Afghan government agencies. The collapse of the bank would likely spread panic throughout the country’s fledgling financial sector and wipe out nine years of effort by the United States to establish a sound Afghan banking system, seen as essential to the establishment of a functioning economy.

Action by the United States, said Mahmoud Karzai, would prevent a run on Kabul Bank and protect other banks, too. He said Kabul Bank is “stable and has money” but cannot withstand a stampede by panicked depositors.

“If the Treasury Department will guarantee that everyone will get their money, maybe that will work,” said Karzai, who holds 7 percent of the bank’s shares, making him the third-biggest shareholder. Karzai, who spends most of his time in Dubai – where he lives in a waterfront villa paid for by Kabul Bank – rushed to Kabul on Wednesday to join efforts to salvage the bank. {…}

{…} The U.S. Treasury Department has assigned a small team of experts to work with the Afghan Central Bank on the Kabul Bank mess, but it has so far given no hint of any readiness to step in more robustly. In an interview Wednesday, Treasury’s Assistant Secretary for Terrorist Financing, David Cohen, said the United States has “confidence” in the Afghan Central Bank’s ability to handle the situation and praised it for acting “aggressively, decisively.” {…} (WaPo)

The Treasury department has experts?  The Treasury could not prevent the largest financial crisis since the Great Depression here in the U.S. and they are now going to help Afghanistan…

Taxpayers to the Rescue of Afghanistan Banking Crisis? is a post from: Rebel Traders - Stock Market and Economic Analysis

7:45 am – ECB Rate Decision

8:30 am – US Final Q2 Nonfarm Productivity, Q2 Final Unit Labor costs, Initial Jobless Claims, Continuing Claims

10:00 am – US July Factory Orders, July Pending Home Sales

10:30 am – Natural Gas Inventories

11:00 am – US Treasury announcement

1:00 pm  – US Treasury’s 10-year TIPS auction

Same store sales data before the open

Earnings

Before the Open:

DLM, LAYN, SCMR, UTIW

After the Close:

ARST, COO, ESL, FNSR, HRB, MITL, ZQK, SEAC

Economic Data and Earnings Schedule for September 2 2010 is a post from: Rebel Traders - Stock Market and Economic Analysis

{…} White House economist Christina Romer says the government has the tools for bringing down unemployment, but policymakers need to find the will and wisdom to use them.

Romer called on officials Wednesday to move forward on policies that will increase government spending and cut taxes. She also called for investments in infrastructure and new trade agreements.

Romer said that while some new policies should be viewed as emergency measures, most should be paid for with future spending cuts or revenue returns. She said concerns about the mounting deficit should not be used as an excuse “for leaving unemployed workers to suffer.”

Romer is leaving her post as head of the Council of Economic Advisers to return to the University of California, Berkeley, as an economics professor. (AP)

Christina Romer Makes a Final Recommendation Before Leaving To Teach Keynesian Economics is a post from: Rebel Traders - Stock Market and Economic Analysis

Hovnanian Enterprises Inc Reports Q3 -$0.92 v -$0.52e, R$380.6M v $386Me

- Q3 contract backlog 1.5K homes v 2.2K q/q

- Q3 homebuilding gross margin 17.1% v 9.1% q/q

- Q3 net new home contracts -37% at 902 homes

- Q3 contract cancellation rate 23% v 17% q/q, flat y/y

Homebuilder Hovnanian (HOV) Reports Dismal Quarter is a post from: Rebel Traders - Stock Market and Economic Analysis

General Motors Corp Reports August vehicle sales -11% (combined 4 brands), to 185.1K units (-21.9% y/y for all brands, including discontinued brands). Note: 51.9 thousand of the sales GM reported for August were actually to fleets (car rental, leasing companies, etc).

Daimler AG Mercedes- Benz reports August US sales +15% y/y; to 19.6K units

Ford Motor Co Reports August US Sales -10.7% Y/Y; to 157K units

Chrysler reports Aug US sales +7%, at 99.6K units

Porsche Reports US Aug sales +33% y/y, to 2,032 units

Nissan Motor Co., Ltd Reports US Aug sales -27%, 76.8K units

Kia Motors Corporation Reports US August sales -19% y/y; to 32.4K units

Toyota Motor Corp Reports US Aug sales -31.4% y/y, to 148K units

BMW AG Reports US August sales -1.6% y/y to 23.9K units

Mazda Motor Corp Reports US Aug sales 19.7K units; -25.6% y/y

Honda Motor Co. Ltd Reports US Aug sales -33%, to 108.7K units

Volkswagen AG Reports August US Sales -7.96% y/y to 22.8K units

Suzuki Motor Corp Reports Aug US sales -68% to 1,830 units

Mitsubishi Motors Reports North America Aug sales -37% to 4,293 units

The takeaway for the August auto sales figures is that the rich are still buying high end cars while the remaining 99% of Americans have gone back into hibernation.

Auto Sales Data for August 2010 is a post from: Rebel Traders - Stock Market and Economic Analysis

The day started out with a bit of news from the New York Times. They calculated that the mergers and acquisitions (M&A) over the past month was the busiest month since August of 1999. I maintain my view that the increase in M&A activity is all part of corporate survival for the next decade.

Companies needing to finds ways of increasing revenue are realizing that organic growth of current products will not be enough, they must buy up the competition and/or buy up companies with diverse products to compliment their own. I see this as an ominous sign for the future as we will have less competition and more ‘mega’ companies that supply the majority of the necessary products in America.

A short time later we received our first glimpse into what Friday’s government jobs report may say. The ADP data issued this morning showed a negative reading, the first negative reading since February of this year.

AUGUST ADP EMPLOYMENT CHANGE: -10K V 15K Estimate

- Prior revised lower from +42K to +37K

Components:
- Small businesses: -6K v +21K m/m
- Medium businesses: -5K v +21K m/m
- Large businesses: 1K v Unch (0K) m/m
- Goods-producing sector: -40K v -21K m/m
- Service-providing sector: +30K v +63K m/m

AUGUST ISM MANUFACTURING: 56.3 V 52.7E; PRICES PAID: 61.5 V 55.3E

**Sub-indices:
- New Orders Index: 53.1 v 53.5 prior
- Production index: 59.9 v 57.0 prior
- Employment Index: 60.4 v 58.6 prior
- Inventories index: 51.4 v 50.2 prior

Stock Market Rewind – September 1, 2010 is a post from: Rebel Traders - Stock Market and Economic Analysis

WTF!

Lloyd’s of London is insuring Troy Polamalu’s hair for $1 million. I know Wall Street is nuts, but this just goes beyond insane.

{…} head & shoulders® announced today that they are taking out a $1 million dollar insurance policy on Pittsburgh Steelers safety Troy Polamalu’s trademark hair. The head & shoulders spokesperson’s iconic mane will be protected throughout the NFL season by the world’s leading insurance agency, Lloyd’s of London. {…}

Troy Polamalu Pittsburgh Steelers Hair - WTF!

One million dollar insurance policy for that? What is wrong with this world we live in?

One Million Dollar Insurance Policy for a Mop ? is a post from: Rebel Traders - Stock Market and Economic Analysis

7:30 am -  US Aug Challenger Job Cuts

8:15 am – US Aug ADP Employment Change

10:00 am – US Aug ISM Manufacturing, July Construction Spending

10:30 am – DoE Crude Oil/Gasoline/Distillate Inventories

1:40 pm -  Fed’s Fisher speaks on US economy

August Automobile sales data throughout the day

Earnings

Before the Open:

BF.B, CHRS, EXPR, GCO, HNZ, JOYG, LTXC, ZLC

After the Close:

CWST, PSS, FCEL, GEF, HOV, MATK, OXM, SAI

Economic Data and Earnings Schedule for September 1 2010 is a post from: Rebel Traders - Stock Market and Economic Analysis

FOR IMMEDIATE RELEASE

August 31, 2010

Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported an aggregate profit of $21.6 billion in the second quarter of 2010, a $26 billion improvement from the $4.4 billion net loss the industry posted in the second quarter of 2009. This is the highest quarterly earnings total since the third quarter of 2007. Despite the improvement, earnings remain below historical norms. On the positive side, one in five institutions reported a net loss for the quarter, compared to 29 percent a year earlier. And, the average return on assets (ROA), a basic yardstick of profitability, rose to 0.65 percent, from negative 0.13 percent a year ago.

“This is the best quarterly profit for the banking sector in almost three years,” said FDIC Chairman Sheila C. Bair. “Nearly two out of every three banks are reporting better year-over-year earnings. As long as economic conditions remain supportive, most institutions should maintain profitability and increase their capacity to lend.”

She added, “Without question, the industry still faces challenges. Earnings remain low by historical standards, and the numbers of unprofitable institutions, problem banks and failures remain high. But the banking sector is gaining strength. Earnings have grown, and most asset quality indicators are moving in the right direction.”

The primary factor contributing to the year-over-year improvement in quarterly earnings was a reduction in provisions for loan losses. While quarterly provisions remained high, at $40.3 billion, they were $27.1 billion (40.2 percent) lower than a year earlier. Net interest income was $8.5 billion (8.6 percent) higher than a year ago, and noninterest expenses were $1.5 billion (1.5 percent) lower.

I have opined on this very issue in the past. The fact that banks and other financial institutions are taking money away from loss reserves and placing it back onto the ‘active’ balance sheet is simply a game with numbers. The banks are attempting to boost their numbers by sacrificing the funds set aside for future losses.

This places the banks and financial institutions in even greater peril by operating with lower loss reserves. This is hardly good news.

The FDIC noted signs of improvement in asset-quality trends as the amount of loans and leases that were noncurrent (90 days or more past due or in nonaccrual status) fell for the first time since the first quarter of 2006. Insured banks and thrifts charged off $49 billion in uncollectible loans during the quarter, down $214 million (0.4 percent) from a year earlier. This is the first time since the fourth quarter of 2006 that net charge-offs posted a year-over-year decline.

We shall see just how long this ‘trend’ lasts, I do not expect it to last very long at all.

Total loans and leases declined by $107.5 billion (1.4 percent) during the quarter. Total assets fell by $136.2 billion (1.0 percent).

Financial results for the first quarter are contained in the FDIC’s latest Quarterly Banking Profile, which was released today. Also among the findings:

Loan-loss reserves declined for the first time since the fourth quarter of 2006. Although almost two out of every three banks (62.1 percent) increased their loan-loss reserves in the quarter, the industry’s total reserves declined by $11.8 billion (4.5 percent), as a number of large banks reduced their loan-loss provisions. The industry’s ratio of reserves to total loans and leases fell from 3.50 percent to 3.40 percent during the quarter, but this is still the second-highest ratio in the 63 years for which data are available. “Particularly given economic uncertainties, we believe all banks should continue to exercise caution and maintain strong reserves,” Chairman Bair said.

The industry’s “coverage ratio” of reserves to noncurrent loans improved for a second consecutive quarter, from 64.9 percent to 65.1 percent, as the decline in noncurrent loans outpaced the reduction in loss reserves.

The number of institutions on the FDIC’s “Problem List” rose from 775 to 829. However, the total assets of “problem” institutions declined from $431 billion to $403 billion. Also, while the number of “problem” institutions is the highest since March 31, 1993, when there were 928, it is the smallest net increase since the first quarter of 2009.

Forty-five insured institutions failed during the second quarter.

The Deposit Insurance Fund (DIF) balance improved for the second quarter in a row. The DIF balance – the net worth of the fund – improved from negative $20.7 billion to negative $15.2 billion during the second quarter. The improvement stemmed primarily from assessment revenues and from a reduction in the contingent loss reserve, which covers the costs of expected failures. The reserve declined from $40.7 billion to $27.5 billion during the quarter.

Negative $15.2 Billion insurance fund, still broke. Any questions?

The FDIC’s liquid resources – cash and marketable securities – remained strong. Liquid resources stood at $44 billion at the end of the second quarter, a decline from $63 billion at the end of the first quarter. The decline in cash balances reflects previously anticipated outlays, primarily related to three bank failures in Puerto Rico on April 30th.

“As we expected,” Chairman Bair said, “demands on cash have increased this year. But our projections indicate that our current resources are more than enough to resolve anticipated failures.”

Total insured deposits declined by 0.7 percent ($39 billion) during the quarter.

Not only are people withdrawing money from mutual funds of all types, they are even withdrawing funds from deposit accounts.

The complete Quarterly Banking Profile is available at http://www2.fdic.gov/qbp on the FDIC Web site.

FDIC’s Sheila Bair Issues Summary Statement On Quarterly Banking Report is a post from: Rebel Traders - Stock Market and Economic Analysis

City of Harrisburg, PA officially announces it will miss a $3.3 Million payment on General Obligation (GO) debt.

- The payment is due Sept 15, notes the city is working on a plan to meet its obligations and also points out they have insurance from Ambac (ABK)

A city on the verge of bankruptcy has insurance from a company that has its own budget issues. Oh this should work out well.

Harrisburg Will Fail To Make Payments on Bonds is a post from: Rebel Traders - Stock Market and Economic Analysis