The Risk Professional: While US maintains focus on Eurozone, domestic bank failures reach 150 this year

It doesn't matter how many good news stories the media at large put out, or how much gloss is put onto poor figures, the simple truth is that the US - and therefore almost by definition - the world economy remains in very poor shape.

As the owners of Paramount Bank give up the fight and hand their bank over - for nothing - to neighbouring Level One bank, the shareholders have lost everything.

It's a tale that has been seen, so far this year, 151 times (Paramount was not the only bank closed on 10th December) and last year had been thought to be a watershed with 140 banks closed. It wasn't.

Paramount is typical of the banks that have gone under, some finding a willing buyer (for a premium of at most 1.5% of the deposits), some being given away (almost all of them) and some in such bad shape that no one would have them at any price. The banks that take over also take over the "assets," paying face value and again at no premium which, as the sole revenue generating aspect of many small banks appears surprising. But moreover, the banks taking over have a claw-back from FDIC if the assets further depreciate.

Paramount was not the smallest of the failed banks: it had "assets" of approx USD250. But, because the USA excused all but the largest banks from compliance with Basel II, like most small US banks, it almost matched its assets with its deposits: approx USD213.

That, anyone should be able to see is a recipe for disaster: as asset values fall - and Michigan has been severely affected in the sub-prime market, that asset value continues to drop. The small deposits figure means that the bank is dependent on borrowing in order to keep up its lending business.

Some blame the banks yet the true culprit is the US Fed which decided that Basel II should be, in effect, optional for almost all US banks.

The FDIC does not maintain a publicly accessible constant countdown of the number of banks it still regulates. But a broad picture is available. The most recent figure is 7,760.

When the financial crisis began to sink banks, in February 2007, that number was 8,743.

The figure of 151 failed banks so far this year reflects only those that FDIC has closed down. Banks that have wound themselves up or been taken over in private deals don't figure in the running total.

US inflation v earnings continues to paint a grim picture. Ben Bernanke, in Novemver 2008, told a Senate Committee that, if people were in trouble with meeting debt repayments, they should re-mortgage their homes and use equity to pay off debt. Incomes for the vast amount of Americans have not increased, measures to reduce the incidence of repossession are expiring, mortgage brokers, who created much of the problem with low-start, self-certification loans are spamming millions of potential victims each day with the same kind of offers that underpinned the home-loans crisis.

US Jobless figures are desperate. The smallest number of new jobs is jumped on as a sign of recovery but in some parts of the USA jobless totals remain stubbornly between 15 and 20%. Millions are coming to the end of their benefits entitlement which will lead, again, to housing loan defaults.

Retailers are expecting a dismal Christmas - for many their last. Online giants such as Amazon and cost-cutters such as Target are snaffling cost-concious consumers at every turn.

Food prices are rising: with the price of animal feed rising by as much as 40% this year, meat prices are increasing by perhaps 15%. Clothing prices will rise: cotton has seen one of its most rapid rises ever in the past year. Wool is being dragged along behind. That means people will once again start to make do.

The good news stories are hiding an uncomfortable truth: the recession in the USA may be over if one takes the strict economists' view of two consecutive months' shrinkage. But in the real world, where people live and - if they are lucky -work, it most certainly is not.

And while a macro-economic policy including helicoptering in vast amounts of cash has helped the big banks and mega corporations, it has not found its way to the millions of Americans living on welfare and charity, with no money, no job, increasingly no home and no money.

It is incredible that a supposedly left-leaning President has failed to reach the poorest sections of the USA's population and is devoid of ideas outside hefty taxes - a battle he has lost.

It is equally incredible, as 151 banks fail adopting a policy positively encouraged by the Fed for almost a decade, that so few people notice just how bad the situation really is.