ThE fEd RaTe CuT wAsN't PoLiTiCaL aT aLl

 

CNBC fact-checks Joe Biden, now that it doesn't matter

 But the article name-checks Donald Trump five times because he's an opponent of Fed decisions.

There's a whole movement out there that wants to End the Fed, composed of Republicans, Democrats, and libertarians, which CNBC is loathe to mention.

Many of them argue that the US 2-year Treasury Note should be the benchmark for the Federal Funds Effective Rate, not the whim of the Fed Chair and the Federal Open Market Committee, who are un-elected, well-connected, and VERY WELL PAID elites who watch out primarily for the interests of the banksters.

For example, despite the disastrous Zero Interest Rate Policy post-Great Recession, DGS2 resisted it and outran DFF throughout the period under Obama and Trump, and anticipated the recent inflationary outburst by starting to rise in the spring of 2021, a full year before the Fed moved to "combat inflation" by raising the funds rate in the spring of 2022. 

Similarly DGS2 also started to fall in November of 2023 despite no change to Fed policy, anticipating the recent decline of inflation rates by almost a year.

The role of the US Treasury Secretary, AS MUCH A CREATURE of the Executive as the Fed Chair, is also huge for interest rates because the Secretary decides how to divvy up the debt securities for auction by duration.

Biden's Treasury Secretary Janet Yellen has been in the news for driving up the issuance in T-bills to 22% when 15% has been customary, which has contributed to longer rates falling and stocks rising, just in time for the election.

But the costs of this have been dramatic, financing deficit spending at the highest rates and driving interest payments on the debt to the third spot in the budget, behind only Social Security and Medicare.

Avoid people who insist that the US Dollar is losing its status as the world's reserve currency

 There's an index for that:

 

Seeing this headline html first thing Saturday morning is disorienting

 https://www.marketwatch.com/story/u-s-stock-futures-slip-as-investors-await-fed-chairman-powells-jackson-hole-address-11661508928

Investors await Powell's address?

That was published 24 hours ago, before the Powell speech, and the contents were updated last evening just before 5:00 PM.

But the pain surely ain't in the Fed.

The only pain described in the story is in households, businesses, families, not in the Fed.

Those Fed guys are rich, and get paid very handsomely.

The top 100 employees each made $274k or more in 2020. They are all named, here.

That puts them in the top 2% of all wage earners in the US.

They're the elites.

They experience no pain.

The Federal Reserve System had 23,517 employees in 2021, with a total system operating expense of $5.7353 billion, or about $244k per employee.

They live in a bubble. 

Everybody's just phonin' it in and getting the hell out of Dodge for the weekend. 

Especially Drudge.

 

Today's advance estimate of GDP for 3Q2016 at 2.9% actually looks pessimistic

The Board of Governors of the Federal Reserve in June reduced their forecast of 2016 GDP from 2.1-2.3% in March to 1.9-2.0%.

Today's estimate means the average report of GDP in 2016 is now 1.7%.

It'll take a lot more than today's 2.9% to get us up to 2.0% for the year.

Corporate Cash Sets Another Record At $1.093 Trillion, Liabilities Climb To $5.9 Trillion

Bob Pisani reports here:

"Cash set a record in the first quarter of 2013 on an absolute basis: $1.093 trillion in the S&P 500. It has set a record for 18 of the last 20 quarters."

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Yeah, but nonfinancial corporate business sector bond liabilities have climbed, too, from $3.7 trillion in 2007 to $5.9 trillion in the latest report.

Financial business sector bond liabilities have declined from $6.2 trillion to $4.9 trillion over the same period.

Tonight's Balance Sheet Of The Federal Reserve: $1.2 Trillion In Shitty Mortgages

Look for yourself, here.

$1.2 trillion is the "remaining principal balance of the underlying mortgages". That's one third of the total balance sheet.

Acquired at the pace of $40 billion a month, it would take the Fed 2.5 years to acquire all that crappy mortgage paper, but of course the latest iteration of MBS acquisition at $40 billion a month has been going on only since last September. That means just $440 billion of the $1,200 billion has been acquired recently.

There's a whole lotta crummy paper out there, folks. And Ben Bernanke and the US Federal Reserve Bank have been buying it . . . just for you!

Net Worth Up Most Under Carter, Least Under "W" Since WWII

It's shocking, but true.

Total household net worth as reported by the Federal Reserve in its Z.1 Releases of the Flow of Funds Accounts shows that Jimmy Carter wins the award, hands down, for the increase in this metric during the course of his presidential term as compared with all other presidents in the post-war period.

In point of fact, the zenith of growth in total household net worth clusters around ole Jimmy with Nixon/Ford just preceding him taking 3rd position and Ronald Reagan coming after him taking 2nd. The whole period from 1969 through 1988 represents the time when Americans made their biggest gains in overall wealth.

I measured the overall gain from January 1 of the year of inauguration to the January 1 of the year leaving office, as summarized here by the St. Louis Federal Reserve. The overall percentage gain is then divided by the number of years in office, either 4 or 8, to get an annualized score, which is not the same thing, obviously, as actual annualized performance. Data from Truman is only for three years from 10-1-1949 to 1-1-53. For Obama, who just barely beats Bush The Younger for dead last, the data is for 1-1-09 to 6-30-12 taken from the very latest Z.1 Release yesterday (here).

Carter                 +16.02 percent per year

Reagan                 11.80

Nixon/Ford           10.21

Clinton                    9.74

JFK/LBJ                  8.78

Truman                   8.49

IKE                         7.39

Bush The Elder       6.17

Obama                    4.92

Bush The Younger  3.43

Euro Area Gold Holdings Declined Almost 14 Percent Up To Crisis, Then Held Steady

So says Axel Merk in a very interesting analysis, here, which concludes that central banks have been scared into holding gold since the financial crisis:

From what we see, central banks have been scared into holding gold since the onset of the financial crisis. Beyond that, we don’t see an active strategy at the ECB to keep its gold reserves at 15% of total assets. Instead, the ECB’s comparatively measured approach has simply lead to a reasonably stable percentage of gold reserves. Of course that was before ECB President Draghi said on July 26, 2012, that he shall do “whatever it takes to preserve the euro.” (an interpretation of that may be that more money printing is on the way). For now, the cultural differences in responding to the financial crisis (Europe: think austerity; US: think growth) suggest that the euro should outperform the U.S. dollar over the long term, assuming the not-so-negligible scenario of a more severe fallout from the Eurozone debt crisis won’t materialize.

His chart shows Italy has sold absolutely no gold since 1999, and Germany very little, while the Euro area as a whole has sold just under 14 percent of gold holdings since December 1999. France was the big seller from 1999, arresting its gold holdings during the crisis at a level which nearly matches Italy's. America's gold reserve has remained constant for years according to official reports, although it is said that Rep. Ron Paul would like to audit Fort Knox and The Federal Reserve Bank Of New York just to make sure.

(image source)

Disappearing Real Estate Wealth Visualized

From the latest z.1 release from the Federal Reserve, real estate has declined from $25 trillion in 2006 to $18.6 trillion in early 2012.

The June 7, 2012, release is here.

The $6.4 trillion amount is almost the same $6 trillion amount noted by Mish via Zero Hedge here as evidence of ongoing deflation, defined as credit marked to market. It is the amount of decline in credit-money circulation.

When housing declines in value as it has, the credit used to secure it disappears with it.

The housing nadir was actually in Q4 2011 at $18.2 trillion, a $6.8 trillion dollar decline overall, or 27 percent from peak. Things have improved a little since then, by $400 billion, which is part of the reason for all the happy talk about real estate.

I remain unconvinced about a housing rebound since valuations remain at the upper limit of historical experience before the bubble. Stabilization of housing values near current levels and then going forward a number of years isn't unreasonable, but there are no guarantees given the absence of a driver for jobs.

Once and present homeowners rubes continue to bear the brunt of the deflation caused by the government/industry skimming operation designed to fleece Americans of their dreams. 

Not just fascism. Rapacious fascism.

Americans' Net Worth Drops 40%, 55% For Those Whose Home Is Their Primary Savings

So says the Federal Reserve in a just released report here:

[T]he decreases in median net worth appear to have been driven most strongly by a broad collapse in house prices. ... The decline in median net worth was especially large for families in groups where housing was a larger share of assets, such as families headed by someone 35 to 44 years old (median net worth fell 54.4 percent) and families in the West region (median net worth fell 55.3 percent). ... Although the overall level of debt owed by families was basically unchanged, debt as a percentage of assets rose because the value of the underlying assets (especially housing) decreased faster.

Meanwhile, Obama has focused his laser-like vision on his golf game and mucking with your healthcare while blowing off the real crisis in America. 

So much for not letting a good one go to waste, eh Rahm?

The Increase in the Wealth Gap is Due to the Housing Collapse

The latest figures from the Federal Reserve (link: compare lines 4 and 42) show that enormous wealth destruction in housing is the overwhelming cause of the dramatic decline in household net worth between 2006 and 2011.

Of the $7.8 trillion decline in net worth over that period, $6.6 trillion of that is all from the bursting of the housing bubble . . . nearly 85 percent.

Hurt most by this are the millions of middle class Americans whose primary asset is their home. Desperately trying to hold on to what they have, by scrimping, saving and working, they don't have the luxury of time to occupy much of anything to protest what is happening to them.

It is impolitic to say so, but their plight is the frequent one of the undiversified investor: too many eggs in one basket.

But that's not a bug, it's a feature of entering the middle class, whose goal is owning a home and raising a family in it, not sophisticated money management and investing. Such people who can scrape together the income of $40,000 to $50,000 necessary to support home ownership typically aren't going to have significant financial assets to manage. Of the 150 million wage earners in America, after all, fully 99 million make $40,000 a year or less.

Neither Obama nor the Republican candidates for president, nor Occupy Wall Street or the Tea Party for that matter, seem to talk much about any of this, yet the collapse of housing better explains the growing gap between rich and poor in America than do the supposed crimes of the one percent. The rich may be getting richer, but it's inspite of the fact that their own homes have declined in value, too. The middle class is being squeezed downward because its primary asset continues to lose value.

The deep frustration of so many of the American people with their elected leaders is that the leaders really don't represent them in this matter, in the same sense that sympathizing with, understanding, or trying to fix this problem doesn't have the urgency for them anymore than it does for the rich. The reason is that virtually none of them has personal experience of it. From our president to our senators and all the way on down to our representatives, we have leaders whose own high net worth and the insulation from our vulnerabilities that that affords make them remote, unfeeling, and unmotivated.

In point of fact, since it was Democrats and Republicans who conspired in the very policies which have misled Americans to drain $10 trillion in home equity over three decades (for example, dramatic changes to tax and banking policy in 1997 and 1999 under Bill Clinton, Newt Gingrich and Phil Gramm), it shouldn't be surprising that none of them really wants to talk about this gorilla in the living room. They helped make and sell the bed we're now sleeping in. And we bought it.

Of about 132 million total dwellings in 2010 of all types (table 3), just 61 million occupied dwellings are single family homes occupied by their owners, with an additional 11 million occupied by renters, according to the latest Census data here (link). That means something substantially less than 46 percent of total dwellings in the country could plausibly represent the American dream of the traditional middle class. The richest quintile, those households making over $100,000 per year, let it be remembered, lives in houses, too.

The Economic Policy Institute, whose president is a socialist, here (link) provides a useful summary of how wealthier individuals avoided the severity of the housing decline precisely because more of their assets were diversified and were not all riding on real estate (emphases added):

In 2007—prior to the Great Recession—median net worth was $106,000 (consisting primarily of home equity, as discussed later). ... Net worth for the top 1% was $19.2 million in 2007 . . ..

The updated figures for 2009 reflect the enormous destruction of wealth due to the bursting of the housing bubble. As a general rule, households with less wealth have a greater share of their wealth embedded in their homes. Thus, it is not surprising that the fallout from the deflating housing bubble disproportionally affected them. On average, the top 20% lost 16.0% and the bottom 80% lost 25.1% of their total wealth in 2008 and 2009. Average wealth of the bottom 80% was just $62,900 in 2009—a dropoff of $40,900 from 2007 and slightly less, in inflation-adjusted terms, than it was more than a quarter-century ago in 1983. Those at the top also lost ground but not nearly as much, percentage-wise. Average wealth of the top 1% was close to $14 million in 2009, down $5.2 million from 2007. ...

[H]ousing equity is a far more important form of wealth for most households. ... In 2007, the middle 20% of households held $196,700 in non-stock assets, and only $10,200 in stocks. In other words, non-stock assets—which are over-whelmingly housing equity—made up about 95% of this group’s wealth.

In the United States homeownership has long been associated with solid footing on the economic ladder, and yet the housing crash has meant that for a broad swath of people homeownership is no longer a reality.

The stepping stone from the lower and working classes to the upper classes, obviously, is the middle class. Very few skip that step, on the way up or on the way down. Rags to riches and back to rags again is interesting, but not common. Rich liberals from both parties, however, have a vested interest in minimizing the middle class to polarize the country. Rich Republicans and Democrats alike don't want the competition entrepreneurial Americans threaten them with, and leftist Democrats need a servile, manipulable constituency they can feed table scraps to in order to keep themselves in power. Some so-called conservative Republicans also, it must be said, seek their own fiefdoms of influence and power at the expense of impulses to limited government. George W. Bush's play for senior votes with Medicare Part D comes to mind.

What middle Americans should demand is a bigger House of Representatives to co-opt these entrenched interests by de-concentrating the power which the 435 now enjoy. Tea Partiers in particular should be advocating a return to the constitutional principle of one representative for every thirty-thousand of population, if their protestations to originalism mean anything. Instead of the bloated, rich and corrupt 435 politicians we've been stuck with for a hundred years, we should have 10,000 lean citizen legislators.

When we get them, things will begin to change for the better because our representatives will have far less power and far more reason to listen to the people. Special interests will have much less influence over them, campaigns will be far less costly, and Congressional staffs could be reduced dramatically, saving us money and getting some actual work out of our politicians for a change. The move would also take away the enthusiasm for radical proposals such as the elimination of the electoral college by dramatically expanding the pool of electors in presidential elections.

We might even persuade such a House to overturn the 17th Amendment, another blow for originalism, which would help improve the US Senate almost overnight. By returning the corrupting influences of campaign cash to state houses where senators would be appointed, we might actually be able to do something about corruption more often because it would be closer to home and we'd be more aware of it.

Brookings Institution Must Be Nuts: Says Congressional Wealth Reflects Middle Class

Brookings Corporate Sponsors

I refer to this in USA Today (link) back in November:

Lawmakers disclose their assets and liabilities only in broad ranges. So the numbers are estimates — the average of a member's lowest and highest possible net worth. Their actual wealth is often higher because disclosures don't include home values.

Despite some superwealthy members, Stephen Hess of the Brookings Institution says Congress generally reflects the middle class.

"In many cases, the top 10% are self-made … and it reflects something that's in the American psyche," he says. "We're not against people being rich. We just wish we were. But we are particularly attracted to people who made their own riches."

In the USA Today list of 530 US Representatives and Senators, fully 250 or 47 percent declare their net worth, sans their homes, to be $1 million or more. Add in everybody down to a declared net worth of $600K or more (the average of $1.1 million and $100K) and the list balloons to 315 or almost 60 percent of the Congress.

By contrast, 75 percent of the American people have average net worth of less than $80,000 as of 2007. In view of what has happened to housing values since then, I would expect more people to be worth even less than that.

Unlike the members of Congress in the USA Today report, household net worth calculations as tracked by the Federal Reserve include home values.

And between 2006 and Q3 2011, household net worth has fallen by $7.8 trillion, $6.6 trillion of which has been lost in the real estate maelstrom.

For Brookings to say Congressional wealth generally reflects the middle class is preposterous. Kind of like The Wall Street Journal claiming the tax money the government needs so desperately will be found in the middle class, not among the wealthy. Lies, damned lies, designed to rough you up before they pick your pockets again.

WE ARE RULED BY THE RICH.

Anyone who contributes one red cent to their campaigns should be . . . er, institutionalized.

Remembering the $Trillions Withdrawn from the Housing ATM

Boy, don't we wish we had those back today.

Consider The Washington Post, May 30, 2007, here:

According to Fed data, homeowners' equity -- the value of their homes minus mortgage debt -- grew to nearly $11 trillion at the end of [2006], or double the value at the end of 1998. ...

[T]he housing boom ... fueled spending directly by turning homes into cash machines. As prices rose and interest rates fell, Americans extracted trillions of dollars in extra cash through home sales, mortgage refinancings and home equity loans.

Homeowners gained an average of nearly $1 trillion a year in extra spending money from 2001 through 2005 -- more than triple the rate in the previous decade -- according to a study by former Federal Reserve chairman Alan Greenspan and Fed economist James E. Kennedy. That's the "free cash," as the authors call it, left over after closing costs and other fees deducted from equity withdrawals.

Most of the money extracted during those boom years, nearly two-thirds, came from home sales, the authors found. Another 21 percent came from home equity lines of credit, while 15 percent came from mortgage refinancings.

About a third of the free cash gained during this period was used to buy other homes, they calculated. About 29 percent was used to acquire stocks and other assets. About 12 percent went to home improvements. And nearly a fourth, 23 percent, went to consumer spending, including paying credit card bills and reducing other non-mortgage debts.

Translated into dollars, a trillion dollars a year for five years over 2001 through 2005 is $5 trillion nominal in extra spending money, nearly a quarter of which, $1.15 trillion, was simply blown. Some people literally ate it, drank it, and danced the night away with it. If the study is correct, the extra spending money in the 1990s from our homes came to an additional $3 trillion. I can only guess about the 1980s, but even if only $1.5 trillion, this means Americans have easily extracted almost $10 trillion from home equity over the course of 30 years.

A review of the latest Federal Reserve data here shows that net worth of owners' equity in household real estate has fallen $7 trillion just since 2005. Falling from $13.2 trillion in 2005 to $6.2 trillion as of the end of Q2 2011, this is a decline of 53 percent. This metric pretty perfectly mirrors the bubble in housing which began in earnest in 1997, coincident with the change in the tax law permitting capital gains tax free every two years up to $500K with conditions. Except that the measure hasn't yet quite reached what it was in 1997. We're still about a trillion dollars shy of that mark in nominal terms.

Total real estate valuation over the same period has fallen less, from $22.1 trillion to $16.2 trillion, or 27 percent. But equity as a percentage of value has fallen more than valuation, 35 percent.

A longer term chart of the latter phenomenon found here shows that since 1980 home equity as a percentage of value has been under constant pressure, most probably from what is called portfolio shifting, debt expenditures from car loans and credit cards, college tuition, stock investing and second, third and fourth home investing piling into HELOCs, 2nds, refis and the like. The interest on all that stuff before 1986 was tax deductible in its own right, but after Reagan's famous tax reform, deductibility was restricted to interest from home equity loans and lines of credit only. That arrangement was formalized at levels up to $100K in 1987, precisely after which as shown in the chart the decline in owners' equity commenced with new vigor. So people who could financed everything they could through HELOCs, cash out refinancing and the like in order to continue to be able to deduct the interest expense on their tax returns.

As a result of this and the collapse in the real estate bubble, today we are faced with the dramatic all time low of 38 percent in owners' equity as a percentage of value, a decline of nearly 47 percent since 1982.

Just think how much better off we would be today if we hadn't tapped all that equity over those three decades, especially in inflation-adjusted terms. We truly have been the squanderers.

So present household real estate valuation at $16.2 trillion represents a level last seen in 2003 in nominal terms. But adjusted for inflation, that's $13.7 trillion, which was actually the total nominal value of household real estate last seen in 2001. To get to the pre-bubble valuations of 1996, today's number would have to fall yet further to $11.8 trillion.

In other words, to erase completely the effects of the bubble on valuations, adjusted for inflation, would imply that total real estate valuation would need to fall another 27 percent from here, or $4.4 trillion.

The American dream nightmare.

Total Cash in Circulation at the End of 2010 was North of $0.935 Trillion

Per the Fed, here.

$1 billion

$1 trillion

h/t pagetutor

Talk About a Banking Farce: The US Federal Reserve System Itself is Currently Leveraged 53:1

As in $2.782 trillion in liabilities divided by $.052 trillion in capital: 

Have a nice weekend!

(source)

The Easiest Mortgage Loan Bailout Program Would Let Taxpayers Do It Themselves

According to the Federal Reserve's latest Statistical Release in September, here, the current value of all residential mortgages outstanding is $9.935 trillion.

That's down 5.8 percent from the 2007 peak of $10.542 trillion.

It is estimated that half of all residential mortgages are effectively underwater, meaning homeowners, if they could sell under current conditions, would not make enough from the sale to have 10 percent down for the purchase of a new home. This situation traps people in their homes, keeping them from moving to  take employment or retirement elsewhere.

The easiest solution to this problem is to allow holders of 401K, IRA and similar retirement accounts to withdraw funds without penalty, and perhaps even without taxation, if expressly used for the purchase of a new home, or for retirement of an outstanding mortgage or home equity loan. If not a complete tax forgiveness, government could settle for a flat tax at a low rate on such withdrawals in order to stimulate activity and help solve problems associated with indebtedness.

Holders of IRAs already know only too well that there are few exceptions to withdrawals without penalty. Perhaps the most useful of these few exceptions at present has been withdrawals permitted in certain circumstances for health insurance premium expenditures. Some people who have lost their jobs and their insurance have found this provision particularly helpful during this most severe period of unemployment since the 1930s. It has enabled them to purchase their own health insurance for themselves and their families with the funds.

The provisions permitting such withdrawals should be expanded to permit use of these funds to buy homes elsewhere, or pay off existing mortgages, which would do more than anything government has tried to do to date to stimulate velocity in the housing market.

People have saved plenty of dough to do it, too: $18 trillion.

Here's recent testimony about this from the Investment Company Institute:

Americans currently have more than $18 trillion saved for retirement, with more than half of that amount in defined contribution (DC) plans and individual retirement accounts (IRAs). About half of DC plan and IRA assets are invested in mutual funds, which makes the mutual fund community especially attuned to the needs of retirement savers.

Of course, not all of this money may presently be in the direct control of the individual taxpayers themselves to do with what they please, but a significant portion in IRAs and defined contribution plans, over $9 trillion, might very well be, according to ICI's latest data:

The risk to the retirements of people going forward if they are allowed to liquidate some of these monies is very real, but so is the prospect of a stagnant market of underwater mortgages devolving into bankruptcy, or even precipitating severe economic depression.

People should at least be given the choice under the current circumstances, perhaps with a sunset provision expiring in five years in order to spread out the effect.

A tip of the hat to John Crudele of The New York Post, who continues to argue for this solution in his columns.

After QE2 Ends It Continues, But on a Far Less Grand Scale

At least for the time being.

Tom Petruno for the LA Times notes:

The Fed may be slow to consider more stimulus for another reason: It still will be reinvesting the proceeds from its total $2.6-trillion securities portfolio in more Treasuries. And the central bank seems certain to keep short-term interest rates near zero for the time being. So in Fed parlance, policymakers remain very "accommodative" for growth.

Readers are left to wonder just how much money is involved when the Fed reinvests "the proceeds from its total $2.6-trillion securities portfolio."

According to the Federal Reserve, here, the earnings of the Fed in 2010 break down as follows:

The Reserve Banks reported comprehensive income of $81.7 billion in the year ended December 31, 2010, up from the year prior.

Total comprehensive income included interest earnings of $44.8 billion on the federal agency and government-sponsored enterprise (GSE) mortgage-backed securities (MBS) holdings,

$26.4 billion on holdings of U.S. Treasury securities,

and $3.5 billion on holdings of government-sponsored enterprise debt securities.

In addition, total comprehensive income included interest income of $3.5 billion on loans to depository institutions and others.

The consolidated LLCs contributed to the Reserve Banks’ comprehensive income, with net earnings of $7.6 billion for the year ended December 31, 2010. ...

Net earnings from the [System Open Market Account] portfolio were approximately $76.2 billion; most of the earnings were attributable to interest income on Treasury securities and federal agency and GSE MBS.

So compared to the QE2 program of $600 billion in purchases, the Fed's intention to reinvest the proceeds of about $75 billion annually in like instruments represents a continuation of the program, but scaled back by roughly 85 percent.

Various scenarios for the unwinding of the Fed's massive balance sheet are discussed here.

Facts Are Stupid Things

as in this from The Wall Street Journal:

At the end of 2009, nearly eight million households, or 15% of those with mortgages, were behind on mortgage payments or in the foreclosure process;

when compared with this from The New York Times:

Why So Glum? Numbers Point to a Recovery: . . . Firms have begun to hire and consumer spending seems to be accelerating.

At a median home price of $165,000, eight million mortgages going belly up represent assets of $1.32 trillion of an undercapitalized, indeed, insolvent banking system whose insured deposits total something in the neighborhood of $4.6 trillion but whose cash on hand is presently $1.2958 trillion, nearly the equivalent of those troubled assets.

How the banks have managed to increase their cash so dramatically from the less than $300 billion on hand just two years ago is another question. Are they counting increases to the base money supply provided by the Federal Reserve in the wake of the financial meltdown, which went from $800 billion to over $2 trillion? Almost overnight? Talk about monopoly money.

With over 700 banks on the FDIC "troubled" list and the FDIC openly stating it expects bank failures over the next few years to cost $100 billion on top of last year's $30 billion, does any of this sound like a reason to be happy? Like the worst is over?

I don't think so.