For the first time since this Greatest Recession Since the Great Depression (GRSGD) began, bank delinquencies on the books of the more than 7800 banks that report to the FDIC are on the decline.  And Exhibit 1 shows the first point on what should continue to be a downward trend as loan delinquencies return to pre-GRSGD levels over the next few years.

Late in the fall of 1988 the accounting firm, Coopers & Lybrand (C&L), won a competitive award to construct a computer system that collected the monthly security and loan information relating to Ginnie Mae’s mortgage-backed security program. As a C&L consultant with a math major and a Wharton M.B.A., I was put in charge of testing the system as it was being developed.

My take is we should remember that it was Fannie Mae who started the whole securitization craze in an insane push for more home ownership and as Peter Schiff put it, “[created] a conflict of interest between the real estate market and mortgage market… [and] has corrupted an industry in which the availability and cost of credit are of central economic importance.” (Crash Proof, pg. 126) And it was that securitization, along with the massive influx of capital made avaible by the Federal Reserve, that were the primary causes of the housing boom and subsequent housing bust. In the end, phasing out these institutions, or at least reducing their role in the economy is the right step to take. Remember, the best way for there to be “affordable housing” is for housing to stay affordable. Fannie’s and Freddie’s incentives for people to take out more loans and drive up housing prices accomplishes the exact opposite.

Where is Howard Beale when we need him?  Two years into the Greatest Recession Since the Great Depression (GRSGD) and our financial leaders are still telling us that we need to be patient while waiting for our economic recovery.

Since receiving its last quarter’s data from the nearly 8,000 active banks in the United States, the FDIC is reporting another 700 plus banks as being troubled and part of their “problem bank list”.  Simply being on the FDIC’s problem bank list, however, does not mean or imply that a bank will be shutdown.  It simply means that the bank is showing some signs of problems, including such things as poor asset quality, insufficient equity to cover losses, poor risk management, etc.

The names of the FDIC problem banks are not made public.

Mortgage debt in the United States (currently more than $10 trillion) has grown to the point that it is nearly the same size as our national debt (in fact, a few years ago, U.S. mortgage debt actually successfully passed our national debt), and it has only been as a result of the new Administration’s debt spending that our national debt has regained the lead in the race to see which can account for the highest amount of our economic debt.

Peter Schiff just lost the Republican nod for US Senator in Connecticut. If someone ever embodied the antithesis to the nation’s current approach, it is Schiff.

A long Japanese-like malaise, very possibly a prolonged 70’s style stagflation and a slow downward spiral of a Britain-esque imperial demise is what I see on the horizon. Unfortunately, I almost hope for that since an all out Rome style collapse is within the realm of possibility.

Currently, public initiatives offer free, or heavily subsidized, birth control in some states through organizations like Planned Parenthood. With most state budgets in the tank, these options may not be there forever. Some religious groups scoff at the idea of publicly-funded birth control as it flies in the face of their spiritual beliefs; and more seriously, public financing for abortion. We can save abortion for another day, however, it’s safe to say you won’t find too many public health experts on the platform that distributing birth control is a bad idea.

Throughout much of our nation’s history, US federalism has moved toward centralizing power within the federal government. Since the post-bailout hysteria and most recent public sector expansion, the issue of states’ rights has had a renaissance. Some Americans long for a system where states have more control to govern. You know, the system our Founders seemed to envision, where each state is an experiment adopting best practices from one another.