Is the Great Recession still in play in the USA economy? Heck, yeah.

There are still major banks around the globe continuing to recover. We now know what trickle-down sincerely means. These economic stresses have an impact on the USA economy. It creates a drag on growth.

5:30 AM Sunday Nov 4, 2012
By Bernard Hickey

...The bank (click here) would be able to close all its access channels (online, branches, ATMs) and then reopen for business. This allows the bank to keep operating while the statutory manager works out who will take losses. The assumption is shareholders will be wiped out first, but unsecured term deposits may also take a haircut.

Reserve Bank Governor Graeme Wheeler has pointed out that OBR is not set in stone and it only provides a "very real alternative to bailout" by the Government.

So the moral hazard remains, as does the uncertainty for voters with $111.4 billion in term deposits at the end of September.

Unfortunately, it means the banks have the best of both worlds. They still have the implied guarantee from the Government, which effectively reduces the interest rate they have to pay savers, which is not paid for in the form of any deposit guarantee fee to the Government.

Taxpayers still face the risk of seeing bank losses socialised in future while today's profits are privatised.

A more honest solution would be for the Government and the Reserve Bank to openly state that a bailout would not occur. Term would demand a higher return to compensate for the higher risk, and it would remove the moral hazard that currently subsidises the profits of Australian banks....