Over the course of 48 hours it’s come out that Citi needs to be rescued or it’ll fail the stress tests, GM/Chrysler need to be given more money or declare bankruptcy and AIG needs more money or cause ruin.

Just those four companies will require another $300-$500 billion in my estimation (that’s on the low side actually, if you want to be more pessimistic another $750 billion or so should do it). AIG and Citi want the government to do an accounting move so they are then “ready” to be given more money without triggering default. Yes, we are to the point where the bailouts need a bailout in order to legally allow for another bailout. We are way into the sunk cost fallacy; we could have created an entire new global banking system by now and had a trillion bucks to spare.

The moral of the story is that our entire system as a whole is insolvent (this is different than saying that every company is insolvent) which is the reason why earnings were negative for the first time ever and may be negative for the rest of the year.