How fast can the printing presses pump out the money - At least durring the depression our money was backed by Gold and had some value. Now it is quickly becoming worthless.There have been plenty of parallels drawn between the current downturn and the 1930s, but here’s another jarring one: U.S. banks are now charging off loan debts faster than they did in the early years of the Great Depression, according to Moody’s Investors Service.The banks have charged off $116 billion in loans so far this year, nearly three percent of all outstanding loans, Moody’s said in its report. Similar charge-offs accounted for only about 2.3 percent of outstanding loans in 1932, the Great Depression’s third year. A charge-off occurs when a bank writes off a loan as uncollectable and takes the loss for a tax benefit.The new figures help gauge the death of the U.S. credit crisis, a byproduct of the economic downturn begun in 2007. As unemployment and foreclosures increase, loan charge-offs have grown steadily throughout 2009, from $31 billion in the first quarter to $40 billion in the second quarter and $45 billion in the third, Moody’s said.The actual figures could be even worse than Moody’s estimates. The data provider and credit-ratings firm looked only at banks with more than $50 million in assets, meaning nearly a fifth of the nation’s banking assets – held in hard-hit community and regional lenders – weren’t included in the results.In recent months, the recession has lifted and growth has returned to many sectors, including housing and securities. But banks’ profits are increasingly being eaten by the high costs of their credit obligations, Moody’s said.“For most banks, third-quarter earnings were at best modest, and in many cases they recorded sizable losses,” Moody’s said in its report, adding that credit expenses led the firm to conclude that “earnings prospects for the fourth quarter of 2009 and for 2010 are bleak for many U.S. banks.”On a positive note, however, the firm said it had already accounted for the charge-offs in its credit ratings of U.S. banks, and was unlikely to take further downgrading actions – yet.
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