Political Will For Bailouts Continues to Shrink

FDIC says deposits in foreign branches of US banks won't be insured

The Federal Deposit Insurance Corp. on a 5-0 vote rejected the request from the banking industry seeking to extend the insurance of up to $250,000 to U.S. banks' deposits overseas. The FDIC estimates those deposits are worth about $1 trillion.

In 2008, the Fed bailed out foreign banks, let alone foreign branches of American banks. This decision shows that there is neither the funds nor the will to bail out foreigners. In the U.S., bailouts may not last long either in a major crisis, as one major bank may be enough to bankrupt the FDIC.

The U.S. dollar is the world's biggest short position. Nearly everyone is short the dollar today. When the position reverses, all hell will break loose again.