That was a required accounting adjustment. Denninger should try reading the footnotes sometime, he might embarrass himself less:
As of the week ending March 31, 2010, domestically chartered banks and foreign-related institutions had consolidated onto their balance sheets the following assets and liabilities of off-balance-sheet vehicles owing to the adoption of FASB's Financial Accounting Statements No. 166 (FAS 166), Accounting for Transfers of Financial Assets, and No. 167 (FAS 167), Amendments to FASB Interpretation No. 46®. Domestically chartered commercial banks consolidated $377.8 billion in assets and liabilities.
We didn’t bail out Europe. There’s no way the Fed can secretly bail out an entire group of nations.
The Europeans are having fiscal problems because of the great recession, but also because so far they want to unite partially but not completely in the same way the states are highly unified in the US. They want a common currency, a common central bank, and a coordinated economic policy, BUT they don’t want to be blend together and be completely unified and economically responsible for the other countries in the EU. Here in the US, we’re economically responsible for the other states to a large extent whether we like it or not. California has been subsidizing the other states for decades by paying much more into the treasury than it receives in federal spending. Now those roles may have to reverse and the federal government and the other states ultimately may have to guarantee California’s muni bonds to prevent the interest rates from rising up to unaffordable levels.
The Europeans don’t want to blend together and take on the problems or other countries and be economically responsible for other countries. So they have no mechanism currently to guarantee the sovereign debt of the smaller EU nations in a crisis. So sovereign bonds of Greece and Portugal are collapsing in price because there’s no EU economic authority to back them up. Ultimately the Europeans will have to decide if they want to really blend together economically and be responsible for each other, or whether they want to kick a few smaller and fiscally irresponsible countries out of their economic union.
It looks like they wanted to be an economic contender to the US and get rid of all the different currencies without thinking the EU all the way through, including how they would handle an economic crisis and plunging confidence in sovereign debt.
Damn... that's one fat accounting adjustment, can I do that to my savings account too!?!?!