Vox Day does some simple math:
This morning, I went through and added up the estimated losses that the FDIC reports each time it seizes a bank. As of yesterday, the cumulative estimated cost to the Deposit Insurance Fund since the beginning of the second quarter reached $15,992 million. This suggests that the FDIC is now $2.98 billion in the red after yesterday’s bank failures and will soon be requesting a bailout by the federal government. However, it may be even worse, since the $2,232 million in estimated losses during the first quarter translated into a $4,629 million reduction in the DIF balance.
While I disagree with alarmists who insist that you’ve gotta BUY GOLD NOW because the banking system will collapse on September 30th, I also believe that reports of the economy’s imminent recovery are full of… um, misinformation. Negotiations are probably taking place behind the scenes right now to figure out how to bail out the FDIC without using the word “bailout” in public.
Bottom line: the fourth quarter is going to be interesting. Not fun, but interesting.