Some Notes: How NOT to Improve the Savings Rate

From the Federal Reserve statistical release H.4.1 (10/23/08):

-- The Federal Reserve System holds $45.26 in assets for each dollar of capital

-- Their holdings of U.S. Treasury securities have decreased by $303 billion

-- Other loans (this includes broker/dealer loans, the commercial paper liquidity program and the initial AIG loan) total $408 billion

-- The U.S. Treasury has now supplied the Fed with $559 billion via the Supplementary Financing Program. Please check the 10/8/08 post "Some Bullet Points" for Program details.

From the Federal Reserve statistical release Z.1 Flow of Funds (9/18/08):

-- Household real estate holdings: $19.429 trillion

-- Household mortgage debt: $10.632 trillion

-- Household real estate equity: 45.3% (please see the 10/15/08 post for details)

-- My best guess, this ratio will hit 43.4% at year end. This is like a margin call for real estate, defaults will only slow when this ratio gets back to 50%.