The total amount of individual filings could reach as high as 4.5m in 2010, up from 3.9m filings in 2009, [Rick Sharga, a RealtyTrac senior v.p.] said.

Filings increased from the previous year for 52 [...]]]> RealtyTrac says that 3.8 million households will receive a foreclosure filing in 2010. That is a 35.7% increase over 2009.

The total amount of individual filings could reach as high as 4.5m in 2010, up from 3.9m filings in 2009, [Rick Sharga, a RealtyTrac senior v.p.] said.

Filings increased from the previous year for 52 consecutive months from January 2006 to March 2010, when the numbers dropped 2% in April 2010 from April 2009.

But 80% of the houses that enter the foreclosure process never reach REO status, Sharga said. Those REO agents starved for inventory and eager to protest that number received a strong warning from Sharga.

Inventory is at an all-time high with almost 900,000 REOs in RealtyTrac’s database, Sharga said. In Q110, there were 250,000 new REO actions, a new record.

“Be careful what you wish for,” he said. “The only thing keeping this market from tanking is that these properties aren’t on the market. We went from seeing a steady stream of REO to a trickle and it should go back to a stream. But there will be no tsunami.”

Sharga said that but for the moratoria, government programs, and bank policy changes, last year’s 2.8 million would have been as high as 3.5 million.

With declining home prices, more and more home owners are supporting mortgages that are greater than the values of their homes. That doesn’t provide a lot of incentive for them to continue to pay their mortgages. If 20% go into foreclosure, that could be 760,000 foreclosures.

For almost 50 years, SBBT was a Santa Barbara institutions. Founded by civic leaders, it was one of [...]]]> This is the year that Santa Barbara Bank & Trust (Pacific Capital Bancorp; Nasdaq:PCBC) celebrated its fiftieth anniversary. It also may be the year it goes out of business if a recent rescue deal isn’t completed.

For almost 50 years, SBBT was a Santa Barbara institutions. Founded by civic leaders, it was one of the few local banks that thrived and survived over the years. There were a number of other local banks that started here which either went out of business or were acquired by a larger institution. Only one other local bank has survived long-term and thrives as an independent entity, the much smaller Montecito Bank & Trust founded in 1975. That bank is privately owned by a single local entrepreneur.

Since 1960 SBBT had built itself on a conservative business model that relied on lending to local individuals and businesses, using the connections and reputation of their founders and the knowledge they had of the community they served. After a few years it was clear that the bank was enjoying solid, but not spectacular, growth and paid regular dividends to its shareholders. The stock was closely held in that no one ever sold stock unless they had to or died. There was a standing list of people who wished to invest if stock became available. Many investors became very well off from their investment, especially the early investors who benefited from stock splits over the years. I know several that became wealthy and the stock comprised most of their asset base.

They hired bright people who took the firm’s banking philosophy seriously. Many of the senior level executives were life-long employees of the bank and had acquired a great deal of wealth from their stock purchases over the years. I’m not going to portray the people who founded and ran the bank as geniuses or saints, or that they never made mistakes, but I will say they were honest, careful, concerned, and dedicated to the bank. I found it was not so easy to get a loan from them, as some of my real estate clients discovered.

Some of the senior loan officers, executives, and managers who had been with the bank for many years had the opportunity to retire well relatively young, relying on their bank stock sitting in the company’s ESOP. Some came away with very substantial amounts. The bank was generous to their retired employees, providing some health and dental care benefits.

Then things changed. They went for regional expansion starting in the late 1980s and started establishing branches out of the immediate Santa Barbara area. At that time, as now, the population on what is called the South Coast, the coastal towns including Santa Barbara, was was relatively small, about 200,000. They expanded south into Ventura and even Northern Los Angeles counties, and northward into San Luis Obispo, Monterey, San Benito, Santa Clara, and Santa Cruz counties. Much of their expansion was through acquisitions made from 1997 to 2005. Now it has 48 branches and has assets of $7.369 billion.

It seemed that SBBT went from the conservative local bank to a forward-looking and expanding regional bank. Also the bank’s culture had changed with its size. Perhaps that is inevitable with growth. In order to compete with other regional players they had to be more aggressive in attracting deposits and borrowers as they entered new territories. They had to offer different products and services. They built up a trust department and engaged in wealth management. They completed about ten mergers over the years to acquire smaller banks in these areas.

Now they are struggling to stay in business.

Looking back with quite a bit of hindsight, there were basic flaws in its business model and some of the business choices it made that led to its downfall. To be fair, hindsight is a wonderful thing for a commentator looking on from the outside. Perhaps my observations are wrong, but here’s how I see it.

1. In 2005 they implemented a new computer system for its banking business and added customer relations management programs. From what I heard on the street the implementation was a disaster and the bank had substantial problems which ultimately resulted in the replacement of the then current president. It’s kind of interesting because their 10K in 2006 only said, “The Company has experienced some challenges with the installation that have caused inconvenience to customers.” Having been on the lawyer side of securities issues I believe that statement is quite an understatement. What I think it says was that “We had a disaster but fixed it. Sorry.”

It makes one wonder about management when something like that happens. While it had fine people at the top, perhaps they under-appreciated the complexity of the new world in which they operated. I see the computer fiasco as a symptom of that stress.

2. They had acquired a tax anticipation loan business (Refund Anticipation Loan “RAL” and Refund Transfer “RT”) that generated a lot of cash flow. Basically tax preparers submit loan applications to the bank for clients who want an immediate payment of their tax refunds and didn’t want to wait around for the IRS to pay them. The interest charged on such loans is very high and the bank caught a lot of criticism from consumer advocate groups. According to their Q1 2006 10K, “In the first quarter of 2006, funds lent in RAL transactions totaled $6.0 billion compared to $4.8 billion in the first quarter of 2005. The funds processed through RT transactions totaled $12.1 billion in the first quarter of 2006…” They had revenues of $87,573,000 from these loans in Q1 but loan charge offs were rising. They borrowed the funds to make these loans by securitizing the loans.

They sold the business for $10 million in January of this year. While profitable, the securitization business had dried up making it difficult for them to raise capital to fund these loans. The need to raise additional capital to fund RALs compounded their problems since they needed a lot more capital just to maintain their Tier 1 capital ratio because of their growing problem with real estate loans. So, a significant amount of cash flow was lost to them which only compounded their problems.

3. They jumped big into the residential real estate development business, mainly through acquisitions of other banks. From their Q3 2006 10K, their president says,

From a core bank perspective, our business development efforts during the third quarter remained strong, particularly in the construction and residential real estate segments, which helped drive annualized loan growth of approximately 9% during the quarter. However, the competitive deposit pricing environment and higher borrowing costs continue to drive compression in our net interest margin and present challenges to generating earnings growth. We are pleased to have partially offset this through implementation of the expense management initiatives that we announced last quarter. Our operating efficiency ratio improved nearly 400 basis points from the second quarter of 2006, and we are focused on making continued progress in this area.

The management statement notes that much of the loan interest growth was driven by loans from a bank they acquired in San Luis Obispo county.

This is where the money train goes off the tracks. A growing portfolio of commercial real estate (CRE) and residential real estate loans, both for development and acquisition, were made throughout the boom, including loans made at the very top of the market.

No one saw it coming.

Loan Portfolio Analysis

As you can see their loan portfolio grew substantially during the boom years, especially loans to developers and for CRE. You can also see how their non-real estate commercial loans, consumer loans, and home equity loans increased along with real estate. This demonstrates the “wealth effect” of any boom where increasing asset values, in this crisis, housing, encourages people to take on more debt and spend.

As with most regional or local banks, SBBT was not caught with the toxic assets usually blamed for the crash. Their loans and assets were more traditional, and were heavily weighted to real estate, which at the height of the boom in 2006 constituted two-thirds of their loan portfolio (including home equity loans). As you can see from the below chart, these loans now account for 78% of their problem loans.

Allowance For Loan Losses

I don’t think most people in Santa Barbara had a clue that SBBT was having problems until they announced that they took $180.6 million of TARP money in November, 2008. That knocked me off my stool. As a mere depositor and borrower, I had not realized that there had been fundamental changes to the bank, much less any substantial structural problems.

I think we can all guess what is happening to them now as loans for residential real estate construction are being written down or written off, as CRE continues to decline in value, and as home values decline. While Santa Barbara real estate is still relatively expensive when compared to the rest of the U.S., it is unfortunate that many of SBBT’s loans are not confined to this area. As a result, the value of the bank’s stock is almost zero ($1.60 per share at last look):

Their most recent 10Q report for Q1 2010 was not encouraging. They restated earnings, actually losses, to -$83 million to reflect a $3.1 million under reporting mistake. On May 11 the OCC and the San Francisco Fed imposed new harsher conditions on them, and which give the regulators greater oversight. Among the requirements: “to achieve and maintain thereafter a total capital at least equal to 12% of risk-weighted assets [now 10.1%] and Tier 1 capital at least equal to 9% [now 4.6%] of adjusted total assets (the “Minimum Capital Ratios”) by September 8, 2010.”

Then came the following statement in the 10Q report:

If we fail to consummate the investment and the recapitalization or otherwise fail to raise sufficient capital, our ability to continue as a going concern would be in doubt and we may file for bankruptcy and/or the bank may be closed by the OCC and placed into FDIC receivership …

The only thing that will keep the bank from the above consequences is a pending deal from an investor who is willing to invest up to $500 million in the bank. The investor, [not The] Gerald Ford, is an experienced banker who apparently sold his bank at the top of the market and is sitting on a pile of cash looking for good banking opportunities. The deal will give Mr. Ford and his company 80% control of the bank. The existing shareholders have a chance to buy up to 20% of new shares at the same price Mr. Ford is paying.

In either case it appears that the shareholders will be wiped out. It is not a pretty sight in a small community where many people had invested in the bank and the bank’s stock represented a major (if not the major) portion of their assets. It is sad to see the many employees who spent their entire working lives with the bank, and who thought they had retired well, now find themselves considerably poorer, not able to earn it back at their later stage of life.

For what it’s worth, this is the unfortunate side of capitalism’s creative destruction that Austrian theory economist Joseph Schumpeter wrote about. This is the part where failed and unprofitable ventures go away so that capital may be directed to more productive enterprises. This is the process that corrects the mistakes of the business cycle and keeps the economy moving forward. It is necessary and unavoidable, but it leaves only the destruction part behind for those involved.

I think the big question on everyone’s mind is: why did this happen to such a fine institution? Or, to be more specific, why did those running the bank put it in a position that left very little margin of error?

Let me restate that I knew several of the bank’s founders, senior employees, and I bank with them. I also know several of the current board members who are rather stuck with the problem. I have the highest respect for them as professionals and business persons and I am well aware of their achievements and capabilities.

But for them, the crash was a Black Swan event. No one apparently saw it coming, or if they did, they were not able to sway opinion to their viewpoint. To be fair to SBBT and their executives, most of the financial world did not see the bust coming. Most people on Wall Street only saw the boom.

I further will disclose that I didn’t see it coming either. I worked for a local developer at the time and didn’t want to see it coming. I only saw piles of potential money. Mea culpa. But then that was before I had the leisure of unemployment and re-retirement which enabled me to resurrect my Austrian theory roots and become a famous blogger.

To those practitioners of Austrian theory economics, the event was not a Black Swan. In fact, Black Swan author, Nassim Taleb, says it was not a Black Swan event because the potential of a major crash was obvious. Taleb, I should point out, is of the Austrian School of economics for the most part. Many Austrian theory economists saw the boom, understood its causes, and predicted the inevitable bust.

The purpose of this article is not to chastise human behavior, but to criticize the state of economic knowledge in our world. Our current economics is now dominated by Keynesian or Monetarist econometricians. If one looks candidly at how our government has responded to this crisis, one can see that the same policies that caused the boom are being redeployed to rescue the economy from the bust. I am not going to discuss why these policies are wrong here because I have written extensively about the current state of the economy. I will say that propping up failed companies and banks is the wrong policy and that is why we, like Japan who tried these policies many times and failed each time, still suffer from a credit freeze, deflation, high unemployment, and stagnation.

I think a reflection on the plight of SBBT and the people who suffer from its downfall is a sad but valuable lesson in economics. We need to take a fresh look at economic theory. I’m not talking about egg-headed ivory tower-ism here, I’m talking about the practical effect of the policies our government uses. These Keynesian and Monetarist policies are directly responsible for the booms and busts we seem to be facing with increasing regularity. Unless we change our ideas of how the economy should run, the tragedy of SBBT will only be repeated.

Most of the time I think I know people, but this headline caught me completely flatfooted. Kathy Ireland a is another one of my famous neighbors. Now, I have met her on several occasions, but she wouldn’t know me if I were in a police lineup. I can say that she is beautiful, [...]]]>

Most of the time I think I know people, but this headline caught me completely flatfooted. Kathy Ireland a is another one of my famous neighbors. Now, I have met her on several occasions, but she wouldn’t know me if I were in a police lineup. I can say that she is beautiful, a much overused word, but quite applicable to her. She is also a very impressive business babe, so she has my respect. Starting with socks, she parlayed her beauty into a $1.4 billion a year branding success (Kathy Ireland Worldwide), which would belie her air-headed reputation. Whatever.

But this story from Housing Wire this morning was over-the-top for this amazing woman:

Allonhill Hires Kathy Ireland to Lead Securitizations

Denver-based third-party review firm Allonhill hired 30-year banking and financial services veteran Kathy Ireland as director of securitizations.

Ireland, a former vice president of special projects at bank holding company Fidelity Southern Corp., will manage the firm’s core securitization solutions.

“We are very pleased to add yet another industry veteran to our leadership team, to help guide Allonhill’s continued growth and fulfill our mission to reinvent the mortgage industry,” said Sue Allon, CEO and founder of Allonhill, in a statement.

“Kathy’s expertise in the challenges of securitized pools, working with rating agencies, and supervising loan reviews, all with a heightened focus on integrity and independence, will play an instrumental role in the continued success and growth of Allonhill.”

Allonhill, which specializes in mortgage due diligence and credit risk management, made the hire after announcing in January a push into residential mortgage-backed securities (RMBS). The offering helps issuers and underwriters meet the requirements of the major rating agencies.

Apologies to both Kathy Irelands. The subject of the story is probably sick of the comparison. But … who could resist. I thought it was a great way to start the week.

A total of 775 banks, or one-tenth of all U.S. banks, were on the Federal Deposit Insurance Corp.’s list of “problem” institutions in the first quarter, as bad loans in the [...]]]> The FDIC reported today that the number of troubled banks rose to 775, and total assets of “problem” institutions increased from $403 billion to $431 billion:

A total of 775 banks, or one-tenth of all U.S. banks, were on the Federal Deposit Insurance Corp.’s list of “problem” institutions in the first quarter, as bad loans in the commercial real-estate market weighed on bank balance sheets.

Poor loan performance in other sectors also continued to hurt banks, with the total number of loans at least three months past due climbing for the 16th consecutive quarter, FDIC officials said in a briefing on Thursday.

“The banking system still has many problems to work through, and we cannot ignore the possibility of more financial market volatility,” FDIC Chairman Sheila Bair said.

There were 702 on the FDIC’s “problem” bank list at the end of 2009 and 252 at the end of 2008. …

Banks, squeezed by problem loans and the continued recession, responded by reducing their lending. The industry’s total loan balances grew by 3% during the quarter, but the increase was due to accounting changes that required banks to bring securitized assets back onto their balance sheets. Without taking into account these accounting changes, lending would have declined for the seventh straight quarter, as banks cut back across most major lending categories.

Much of the gains seen in banking were confined to the largest banks, although 51% of banks saw growth in net income in Q1 :

Insured institutions set aside $51.3 billion in provisions for loan and lease losses in the first quarter, a $10.2 billion (16.6 percent) decline from a year earlier. However, only about one-third of insured institutions reported year-over-year declines in loss provisions, with much of the overall reduction concentrated among a few of the largest banks.

The detail on loan problems is interesting, and the FDIC sees this trend leveling off:

The amount of loans and leases that were noncurrent (90 days or more past due or in nonaccrual status) increased for a 16th consecutive quarter, rising by $17.4 billion (4.4 percent) from the level at the end of 2009. This is the smallest quarterly increase in noncurrent loans since third quarter 2007, and all of the increase consisted of loans and leases 90 days or more past due. Loans and leases in nonaccrual status fell for the first time in four years, declining by $65 million. Noncurrent credit card loans increased during the quarter by $7.6 billion (51.9 percent), reflecting the inclusion of securitized credit card receivables. Noncurrent residential mortgage loans rose by $12.9 billion (7.2 percent), and noncurrent nonfarm nonresidential real estate loans increased by $3.7 billion (8.8 percent). In contrast, noncurrent C&I loans declined by $5.1 billion (12.2 percent), and noncurrent real estate construction and development loans fell by $1.8 billion (2.5 percent). It was the second consecutive quarterly decline in noncurrent levels for both loan categories.

There is nothing really new in this report. The trend continues as banks overloaded with bad debt are starting to face reality: “extend and pretend” and “delay and pray” are not working. This is the major reason why credit is frozen and money supply is declining. If as Chairman Bair says, this is a leveling trend then that is good news and bad news.

The good news is that the liquidation of banks will lead to a recovery of the economy. The bad news is that we are a long way off if it takes several years to close out these banks. The other negative factor is that the declining commercial real estate market may take a greater toll on banks than the FDIC is anticipating. The one saving grace is that there is a huge pool of investment capital on the sidelines waiting to invest in CRE at bargain prices which will act as a backstop for CRE prices.

While many analysts see failing banks as a dangerous sign for the economy, we should look at it in the opposite way. Without these failures and the clean out of bad banks, the economy would not recover because we would end up with the “Japanese Disease” which are the zombie banks (“the living dead”) which caused Japan to stagnate for almost 20 years.

This is what Joseph Schumpeter, the great Austrian economist, called “creative destruction.”

In a setback for the May payroll outlook, initial jobless claims jumped 25,000 in the May 15 week to 471,000. The disappointment includes a 2,000 upward revision to the prior week. There are no special factors to explain the latest week’s jump. [...]]]> In another data report unexpected by economists, jobless claims jumped last week:

In a setback for the May payroll outlook, initial jobless claims jumped 25,000 in the May 15 week to 471,000. The disappointment includes a 2,000 upward revision to the prior week. There are no special factors to explain the latest week’s jump. The 471,000 level is the highest in five weeks, the second highest since February, and 12,000 higher vs. mid-April. But in an important offset, the four-week average of 453,500 does show improvement from mid-April’s 461,000.

The four week moving average smooths out the data, but the drop was significant. Most commentators are saying things like, “well, these recoveries never work in a straight line,” or “uncertainty over the euro” is causing these problems. When the data is going up, the comments are usually, “clear indicators of a recovery,” or “we’ve definitely turned the corner.”

Another reversal in expectations came in today’s Conference Board Leading Indicators report which showed a decline, the first in more than a year:

The index of U.S. leading economic indicators unexpectedly declined in April, a sign the economic expansion may cool in the second half of the year.

The 0.1 percent decrease in the New York-based Conference Board’s measure of the outlook for three to six months marked the first drop in a year and followed a revised 1.3 percent gain in March. Other reports showed more Americans filed for jobless benefits and manufacturing in the Philadelphia region expanded.

There was some good news and the reports from the New York and Philadelphia Federal Reserve Banks report on regional manufacturing gains. However business sentiment surveys from both areas revealed pessimistic views of the next six months. It will depend on continuing consumer purchases, the future of the dollar-euro ratio, and whether the current fiscal stimulus has run its course. My view is that these gains represent some cyclical recovery, but I believe that most of it is a result of stimulus with no lasting economic effect, and that the economy will retrench in H2.

CoreLogic (First American) reported:

The number of borrowers with negative equity declined slightly in Q110, but underwater mortgages and borrowers with less than 5% home equity accounted for 28% of all residential properties, according to the latest data from CoreLogic.

More than [...]]]> Three reports came out today regarding residential mortgage delinquencies, defaults, and negative equity.

CoreLogic (First American) reported:

The number of borrowers with negative equity declined slightly in Q110, but underwater mortgages and borrowers with less than 5% home equity accounted for 28% of all residential properties, according to the latest data from CoreLogic.

More than 11.2m, about 24% of all residential properties with mortgages were in negative equity at the end of Q110. That’s down slightly from 11.3m, or 24%, Q409. The state with the highest rate of negative equity mortgages continues to be Nevada, where 70% of all properties are underwater, followed by Arizona (51%), Florida (48%), Michigan (39%) and California (34%).

Las Vegas remains the core-based statistical area (CBSA) with the greatest rate of underwater mortgages. There, 75% of mortgaged properties are underwater. …

Not only did the number of underwater borrowers decline, but the amount of negative equity also dropped for many. The number of borrowers with a mortgage loan-to-value (LTV) of 125% or more totaled 4.9m, or 10.4%, down from 5m, or 10.6%. The aggregate dollar value of negative equity for borrowers with 125% LTV was $656bn. Research has shown borrowers are more likely to strategic default once their LTV reaches 125%.

Zillow reported similar data:

More than a fifth of U.S. mortgage holders owed more than their homes were worth in the first quarter as repossessions climbed to a record, according to Zillow.com.

Twenty-three percent of owners of mortgaged homes were underwater during the period, up from 21 percent in the previous three months, the Seattle-based property data provider said today in a report. More than one in 1,000 homes were repossessed by lenders in March, the highest rate in Zillow data dating back to 2000. …

Sales of foreclosed properties by banks accounted for more than a fifth of all U.S. home sales in March, Zillow said. They made up 66 percent and 62 percent of transactions, respectively, in the metropolitan areas of Merced and Modesto in California.

About 32 percent of homes sold in the U.S. in March went for less than their sellers paid for them, Zillow said.

Then TransUnion, a credit reporting agency reported similar news:

The rate of 60+ day delinquencies among US mortgages fell 12 basis points (bps) to 6.77% in Q110, from 6.89% in the previous quarter, according to market research by credit bureau TransUnion.

It marks the first quarterly decline since 2006, after 12 consecutive quarterly increases. On a yearly basis, however, the delinquency rate is up nearly 30% — or 155bps — from 5.22% in Q109.

Nevada (15.98%) and Florida (14.65%) continued to lead the states in terms of the highest delinquency rates in Q110. North Dakota (1.76%), South Dakota (2.44%) and Nebraska (2.68%) had the lowest mortgage delinquency rates.

Courtesy TransUnion via Housing Wire

Downward pressure on housing prices will continue on a national basis although some regions are improving.

Delancey says:

Though most historians have praised Justinian I, emperor of the Eastern Roman Empire (483 – 565 AD), because of the great [...]]]> This was brought to me by DelanceyPlace.com which sends daily interesting excerpts from books. Today they quote from James J. O’Donnell, The Ruin of the Roman Empire (HarperCollins; 2008), pages: 285-289.

Delancey says:

Though most historians have praised Justinian I, emperor of the Eastern Roman Empire (483 – 565 AD), because of the great monuments he built, martial victories he claimed, and legal code he sponsored, and have blamed his failures on the plague, in reality he ruined the finances of his Empire through his profligate spending on these wars and monuments.

Here is the excerpt from O’Donnell’s book:

Humankind does not live by edifices alone. The constant temptation of ancient monarchs was to seize grandeur rather than earn it, by coercing resources from the margins to the center, to invest in ostentation and display. The Justinian who is remembered for what he built is not the Justinian of history – or, rather, is an embodiment of the weakness of that Justinian. To see Hagia Sophia and the great church Justinian built in Jerusalem as testimonies to his weakness and shortsightedness is to see them as they really are. The outsize scale of his buildings shouts aloud the ego and insecurity of their creator. Justinian and his great empire proved vulnerable to the tiniest of enemies, the plague bacillus.

The years in which his military campaigns in the west went bad and he found himself in his Italian quagmire were dismal ones spent close to home. So much Justinian scholarship has concentrated on the self-glorifying legal, military, and architectural self-assertion of the early years that an important recent scholarly work was impishly called ‘The Other Age of Justinian’ – precisely to signal the long years of frustration and decline that formed part of the career of this grandiose monarch. …

Ancient empires kept abundant financial records, but hardly any of those documents survive. (Palaces and their archives are designed to be plundered, sooner or later.) A recent scholar has made some sober estimates of the profligacy of Justinian’s expenditures. A summary of the bad news runs something like this:

Justinian’s wars cost him about 36 million solidi, with some interesting proportions:

• About 5 million on the eastern front,
• About 8 million in Africa, half of it after ‘victory’ was achieved in Belisarius’s short campaign
• About 21.5 million in Italy, fully half of it in the last two ruinous years 552-554,
• By comparison, his annual revenues for a good year of his reign amounted to about 5 million solidi; when Africa and Italy were added to his domains, they brought about another ten percent each, or 500,000 solidi each. Most of that revenue was expended locally on governing those restive provinces.

When he began to feel the financial pressures of such extravagant wars, Justinian took the natural action of a martial but improvident ruler: he plundered his own subjects and attacked his own currency, progressively thinning out the amount of bronze in the coinage and profiting handsomely at the treasury as a result. The effects of such a devaluation [inflation] were slow but inevitable.

Justinian’s successor inherited (with Italy and Africa) greater responsibilities than Justinian began with, and had far more restricted financial capacity to address them. No emperor at Constantinople after Justinian had the opportunity for both lavish construction and warfare that Justinian had squandered so unwisely.

I haven’t read this book, but I just started The New Deal in Old Rome, by H. J. Haskell.

Of course, a gold certificate would be better, but if I’m going to carry around fiat money, this is it.

For those of you who would miss dead [...]]]> I don’t know about you, but this should be the new currency. These are designed by Dean Potter. For information see the Dollar ReDe$ign Project.

Of course, a gold certificate would be better, but if I’m going to carry around fiat money, this is it.

For those of you who would miss dead presidents on our currency, I say, why? In the days when we had real money, gold, our coins were decorated with the head of Miss Liberty which signifies the ideals of our Republic. If you go back in history, most coinage was decorated with the head of the sovereign. Miss Liberty was a radical decision to depart from the past. We have elevated our presidents to the level of kings and gods on our currency.

I like the idea of Dickinson, Ellington, and Twain because they’ve done a lot for me rather than to me.

If you want a dead president, there is always this:

SeekingAlpha is the premier site on the Web for investment and market analysis and discussion. Here is their blurb:

Seeking Alpha is the premier website for actionable stock market opinion and analysis, and vibrant, intelligent finance discussion. We handpick articles from the world’s top market blogs, money managers, [...]]]>

SeekingAlpha is the premier site on the Web for investment and market analysis and discussion. Here is their blurb:

Seeking Alpha is the premier website for actionable stock market opinion and analysis, and vibrant, intelligent finance discussion. We handpick articles from the world’s top market blogs, money managers, financial experts and investment newsletters – publishing approximately 250 articles daily. Our site is the only free, online source for over 1,500 public companies’ quarterly earnings call transcripts, including the S&P 500.  Seeking Alpha was named the Most Informative Website by Kiplinger’s Magazine and has received Forbes‘ ‘Best of the Web’ Award.

In the spirit of disclosure, I am one of 3,000 contributors, but, even though I just got approved by them I’ve already had two articles published. As most of you know, I do “macro” analysis and don’t follow stocks or give investment advice. I do invest, but I don’t reveal what I am doing. I have yet to really understand stock markets as anything other than gambling at worst and a lucky guess at best.

All of my articles on SeekingAlpha are published here first. But it gives me another, wider audience for my free market ideas.

I also publish on Zero Hedge, another very popular site. Occasionally my articles get picked up by other blogs such as Naked Capitalism, The Big Picture, and others.

You can find me on SeekingAlpha at my personal blog there or on their front page when my articles are published.

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