After posting massive losses, yet again, Fannie and Freddie have warned that they will be needing another round of bailouts in the near future.

  Fannie Mae and Freddie Mac, already reeling in red ink, are warning they could face additional losses from the weakening condition of mortgage-insurance companies.

  Fannie and Freddie together have required capital injections from the Treasury of $112 billion since the government took them over through conservatorship last year. Their need for government support would have been greater without collecting on claims from mortgage-insurance companies. Fannie and Freddie have received payouts of $2.3 billion and $658 million, respectively, from mortgage insurers through September this year.

  But as conditions for mortgage insurers deteriorate, Fannie and Freddie have warned that their claims against the insurers may not be paid in full.

  Moody’s released a report that would be headlines in the financial news media of any country that wasn’t in bed with Wall Street.

 The average maturities of new debt issuance by Moody’s-rated banks around the world fell from 7.2 years to 4.7 years over the last five years – the shortest average maturity on record.

 So how much is that in raw numbers? Banks will face $7 Trillion in maturing debt before the end of 2012, and $10 Trillion by the end of 2015.

  Those are staggering numbers, but it doesn’t end there.

  Despite every effort from Washington, the American consumer continues to repair his/her balance sheet. The federal government has repeatedly gone back to what it knows and teased us with goodies (like cash4klunkers) in an effort to get us to spend money we don’t have on things we don’t need, but those days appear to be over.

 (Bloomberg) — U.S. consumer credit fell in September for an eighth straight month, the longest series of declines on record, as thousands of Americans lost their jobs and banks tightened access to loans.

   Borrowing fell more than economists predicted, declining by $14.8 billion, or 7.2 percent at an annual rate, to $2.46 trillion, according to a Federal Reserve report released today in Washington. Credit dropped by $9.86 billion in August, less than previously estimated. The consecutive declines were the most since records began in 1943.

 The optimists, who are already predicting that happy days are here again, fail to mention how the economy will rebound without the American consumer. Consumer spending is 70% of the economy. So how will the economy grow when the consumer is paying down debt rather than buying junk at the mall?

  Goldman released its trading records from the 3rd Quarter today, and it was impressive.

 (Bloomberg) — Goldman Sachs Group Inc., the most profitable securities firm in Wall Street history, reaped more than $100 million of trading revenue on 36 days in the third quarter, down from a record 46 in the preceding three months.

  The firm’s trading division lost money on only one day during the quarter, down from two days in the second quarter, according to a quarterly filing with the U.S. Securities and Exchange Commission. New York-based Goldman Sachs made at least $50 million on 53 of the 65 trading days in the period, or 82 percent of the time.

 The statistical probability of losing money on only 1 out of 65 days goes a little beyond just skill.

   New York Lieutenant Governor Richard Ravitch made a statement last week that should have gotten headlines, but didn’t.

 “I believe that the states across the United States will face deficits a year after stimulus ends of $300 billion to $500 billion a year,” Ravitch told about 200 people gathered at New York University’s Robert F. Wagner Graduate School of Public Service. “You’re going to begin to see cracks in the municipal bond market well before then, because that’s an inexorable casualty of unfundable state deficits.”

 To put this into perspective, the total state budgets for 2010 was about $1.4 Trillion. If his predictions are anywhere close to being true then the budget problems of the states are essentially unfixable.

  Now that the Great Recession has been declared dead and gone by everyone who failed to see the possibility of it happening in the first place, it is important to examine the reasons for its demise.

 The White House has been busy declaring that its Stimulus policies have created or saved 640,000 jobs. We should note that the White House originally claimed credit for 1 million jobs, and only revised them down after realizing that they are spending $234,000 for each job saved. More revisions are sure to come.

  It’s also important to note that the job number is based on mathematical calculations and is impossible to prove.

  One thing that can’t be denied is that the stimulus did have an effect on the economy. It’s this impact that needs to be examined further.

  The economic crisis has the country flailing.

That’s not a controversial statement. Since early 2008 the federal government has been trying various, and expensive methods, of jump-starting the economy and propping up the housing market. Since December 2007 the Federal Reserve has created an alphabet soup of programs to stabilize the credit markets.

 So far all of these attempts to stabilize the economy have had mixed results at best. Trillions of dollars have been spent and yet the economy is still crippled. Why?

 The problem is that the people in charge are asking the wrong question. They are asking, “How do we get back to where we were before this crisis?” The question they should be asking is, “How did this happen?”

  Unless we understand what happened and why, we will never be able to fix the economy.

  Hundreds of years ago the Incas would sacrifice virgins to appease their Volcano God.

  The Gods and methods of sacrifice may have changed, but the tradition remains.

  Like the Incas of old, we find ourselves helpless against forces we do not understand. The foundations of our economy shake and falter in terrifying ways.

 In our desperation for answers we turn to High Priests of Economics who tell us these evils have befallen us because of our sins. We must sacrifice the innocent to the Volcano God or it will destroy us all.

  The High Priests of Economics never explain exactly how these sacrifices will fix the economy, nor do they mention that the sins in question might be their own. Yet we still rush to offer up our children’s futures through unpayable debts while never considering that there might be better alternatives.