The two hallmarks of the Great Depression were unemployment and bank failures. While the same economists who denied there was a recession for the first nine months of the economic contraction are now insisting that it is over and the recovery has begun, I am extremely dubious. Since the crisis became apparent, I believed that 2009 would be the equivalent of 1930, that being the year that everyone expected recovery to be waiting around the corner. But while there are some statistical green shoots, there are also numerous signs that the perceived recovery is illusory, and in fact, the economic situation is more dire now than it was 79 years ago.
There wasn’t space for this additional chart, which shows the difference between the FDIC-reported estimated losses and the actual reductions in the Deposit Insurance Fund in 2008. Note that the reductions shown in the 2009 chart in the column are my projections, while this 2008 chart shows the historical data from the previous FDIC Quarterly reports. We can test the accuracy of those projections soon, as if I’m correct, the next Quarterly will either show a balance of around -$4,407 million or incorporate money borrowed from its $100 billion credit line with the U.S. Treasury.
