The government is applying the same rebate program enacted to bail out car makers with Cash for Clunkers to jumpstart the appliance maker industry.  However, appliance  makers and retailers are having reservations about the program's success because they believe that with a budget of $300M, the program is seen as too small to provide significant gains to appliance makers like General Electric and Whirlpool.  
 
In contrast to economists' expectations that U.S. second quarter GDP would experience a downward revision of –1.5%, it remained unchanged at –1%.

According to a Federal Reserve official, if individuals who have dropped out from the workforce and those working less were taken into consideration, the actual unemployment rate would be at 16%.   "If one considers the people who would like a job but have stopped looking -- so-called discouraged workers -- and those who are working fewer hours than they want, the unemployment rate would move from the official 9.4% to 16%," said Atlanta Fed chief Dennis Lockhart.
 
The FDIC's watchlist of potentially problematic banks has increased to its highest level in fifteen years to 416 in Q2, the equivalent to around 5% of the country's banks, and the deposit insurance fund, which protects more than $4.5 trillion, fell from $13 billion to $10.4 billion in the previous quarter.
 
The U.S. banking system will lose some 1,000 institutions over the next two years, said According to John Kanas, whose private equity firm bought BankUnited of Florida in May, the U.S. banking system will dwindle by 1000 institutions within the next two years.  Kanas asserts, "Government money has propped up the very large institutions as a result of the stimulus package.  There's really very little lifeline available for the small institutions that are suffering."

Goldman Sachs Group Inc. asserts that as gains in oil and equities fuel signs of a global economic recovery push, the dollar may fall through "established lows." Thomas Stolper, an economist at Goldman Sachs in London, wrote in a report yesterday, "That kind of shift could easily be prompted by continued good news from the macro front and the persistently negative dollar-equity and dollar-oil correlations.  Dollar bulls could well end up disappointed."

The Fed's board of governors asked Manhattan Chief U.S. District Judge Loretta Preska has been asked by the Fed's board of governors to postpone enforcement of her Aug. 24 decision that the borrowers in 11 lending programs have their identities exposed to the public by Aug. 31, hoping that Preska will delay the enforcement until the U.S. Court of Appeals in New York can hear the case.  "What has the Fed got to hide?" said Senator Bernie Sanders, a Vermont independent. "The time has come for the Fed to stop stonewalling and hand this information over to the public," he said.
 
Posted by Blanchard and Company, Inc.