St. Louis Fed

One of the numerous adverse side-effects of the horrendous policy decision to start bailing out each and every risky bank, and thus allowing no more risk in any investment (for the time being), has been the very simple observation that massively mispriced risk has gotten concentrated to an unparalleled degree among very few players. The population of Big Banks has been massively trimmed (Goldman thanks everyone for allowing them to have massive Fixed Income bid/ask spreads) and now a mere five banks account for the bulk of loans, deposits, and derivative exposure. When the economy is faced with another Lehman event at some point in the future, when bailing one of the Big 5 is no longer feasible, the delayed consequences which have so far been successfully swept under the rug, will come back in time and bury any positive legacy that the Man Of The Year may have created. One indication that this time may be sooner than most think comes out of the St. Louis Fed itself, which has released a paper titled "The evolving size distribution of banks" in which it highlights the expected: big banks are getting bigger, and are holding a record share of all rosky assets. When the asset repricing moment occurs, absent an apriori renewal of Glass-Stagall, look for the inevitable moment of complete House Of Cards collapse.

In addition to presenting the case for/against interest rate changes, the report below is a great compendium of all recent trends in monetary markets, compliments of the St. Louis Fed. A casual skimming the charts in this report should render moot any speculation about the validity of green shoot propaganda: there is no real economic improvement anywhere in sight.

In addition to presenting the case for/against interest rate changes, the report below is a great compendium of all recent trends in monetary markets, compliments of the St. Louis Fed. A casual skimming the charts in this report should render moot any speculation about the validity of green shoot propaganda: there is no real economic improvement anywhere in sight.