In this week's Off the Cuff with Mish & Chris podcast, Mish and Chris discuss:
- No Joy on Wall Street
- Banks cry poor despite record profits
- The Invisible Recession
- Hidden by faulty data
- The Fallible Fed
- It really doesn't know what's going on
- Our Taxing Tax System
- The case for simplification
It's clear to all that QE3 is a continued push by the Federal Reserve to rescue the banking system. But why is it necessary?
Bloomberg reports that the six largest banks earned $63 billion in profits over the past 12 months. That's at all-time high levels. Many of these banks continue to report perfect trading quarters in which not a single day had trading losses (and daily profits are commonly in the tens of millions). Direct money injections from the Fed have enabled the banks to build up over $1.6 trillion in excess reserves. But still somehow this is not enough.
Which begs the question: If, despite these mammoth reserves and profits, things are still so bad that the Fed is fearful enough to launch unlimited printing (a.k.a QE3), how dire is our financial system? Things must be staggeringly bad.
by rje