This is an interesting take because it has yet another call to increase the capitalization of the so-called too big to fail banks. It sound great and 24/7 Wall St. is all in favor of big banks being on solid ground. The ultimate problem is that the big banks are so big that increase their capitalization requirements effectively withdraws too much capital from the economy.  It is without any doubt that you have heard of the calls to break apart the big banks before. You will here those same calls tomorrow and beyond as well.

When you consider that a mere handful of banks have about half of the country’s personal and commercial bank deposits you have a right to be scared. Increasing the capital requirements above the 10% hurdles set by Basel banking standards. Imagine how strong and able these banks would be able to hold up in another recession if their bank capital requirements went from 10% to say 15%.   Now for the bad news if you look at the tally of assets as of the end of 2012. J.P. Morgan Chase & Co. (NYSE: JPM) was about $2.36 trillion in assets and Bank of America Corporation (NYSE: BAC) has $2.2 trillion in assets, with Citigroup Inc. (NYSE: C) behind it at $1.86 trillon and then followed by $1.42 trillion for Wells Fargo & Co. (NYSE: WFC).

These four banks alone have $7.84 trillion in assets. The CIA World Factbook tracks just about all global economies and its final estimate for 2012 GDP was put at $15.66 trillion for 2012. Different regulators have many different means of calculating what they think the capitalization are best and keeping up with the flavor of the day or week is for government accountants and regulators. Still, this asset base for just the four biggest banks is right at half (actually 50.06%) of 2012 GDP on the purchasing power parity calculation preferred by economists.

It is very easy to merely say in a vacuum that the too big to fail banks should just increase their capital to hedge against future bailouts. Various regulators have various means of evaluating capitalization metrics and requirements. The unfortunate outcome is that by forcing banks to hold even more capital will tighten credit even further than it has been. With much of the world back in recession, that puts the U.S. back in recession.

Here is what Mr. Plosser said,

“Today, I will highlight why I think current efforts may not be sufficient and discuss a two-pronged approach to ending the problem of too big to fail. The first aspect of this approach is establishing a framework that permits a large financial institution to, in fact, fail without placing the financial system at risk. Large financial firms, and particularly their creditors, should not be rescued or protected by government guarantees or supports or by regulatory discretion. The second line of defense that I will discuss is to expect all financial firms to maintain sufficient levels of capital to significantly reduce the ex-ante risk of failure. Increased capital requirements can lower the incentive for financial institutions to become systemically important and lower the probability that such firms will fail in the first place.”

There is an admission that these “TBTF” banks would become less systemically important. We have no problem with the notion that 20 of the top 50 banks should be allowed to grow and take assets from the top 4. The question is how you can do it without creating a recession. No one seems to have the stomach to actually break apart these businesses. Merely lifting capital reserve requirements comes with a serious price due to the economies of scale here.

Finally, just imagine breaking all of these big banks up as the ultimate step that many people would like to see. This would be very messy and would likely throw the economy back into a self-imposed recession. At first there would be many layoffs and many immediate hits in the economy. That would likely reverse itself and perhaps in as short as one or two quarters of the year. During that period of chaos, businesses would have limited access to capital again just like in 2008 and 2009 at the same time that individuals would not be able to easily get mortgages and loans. The list of problems can just go on and on even though we agree that the big banks are just too big and too economically important.

It is easy for politicians and regulators to propose more strict and tighter standards. As you can see, the actual path to take is harder to walk down than it is to talk about. If you do not believe that there would not be real problems here, ask yourself why the moves have been so slow even after the financial crisis. Even with the anti-money sentiment that much of the public and their elected officials have today, the powers that be must also believe that the price to pay would be too costly.

The U.S. Department of Justice (DOJ) announced late on Thursday that it filed suit against Chemed and against its hospice subsidiaries. The subsidiaries being sued are Vitas Hospice Services and Vitas Healthcare, with the allegations being over false Medicare billings for hospice services.

Investors need to tread softly here because this could turn into criminal situation if the allegations are proven. The DOJ alleges that Vitas:

…knowingly submitted or caused the submission of false claims to Medicare for crisis care services that were not necessary, not actually provided, or not performed in accordance with Medicare requirements.

Another instance is even worse if it is true. The DOJ said:

In addition, the government’s complaint alleges that Chemed and Vitas knowingly submitted or caused the submission of false claims for hospice care for patients who were not terminally ill.

Shareholders are reacting to claims that Chemed and Vitas violated the False Claims Act and that the companies misspent tens of millions of taxpayer dollars. If proven, that goes well beyond just civil penalties for the executives who participated. Shareholders do need to know that the DOJ ended its release by saying, “The claims asserted against Chemed and Vitas are allegations only, and there has been no determination of liability.”

The DOJ said:

The companies allegedly paid bonuses to staff based on the number of patients enrolled in the program and based on patients who were admitted for longer lengths of stay, and took adverse employment actions against marketing representatives who did not meet monthly hospice admissions goals.”

Vitas is the largest for-profit hospice chain in the United States, with hospice services in 18 states. Chemed acquired Vitas back in 2004. Chemed’s shares are down 18% at $66.60, and the 2 million shares traded before noon are already more than 10 times the 150,000 or so shares traded on an average day. After the drop, Chemed is worth only about $1.23 billion, and its 52-week trading range is $54.06 to $82.00.

Bloomberg’s news service reported on the softening on austerity:

Europe may accelerate a shift away from its austerity-first agenda this week as the new Italian government changes course and a German-Spanish investment pact underscores a renewed focus on combating record unemployment.

The observation is one of many made by media and economists, which is that leaders have discovered that austerity probably causes recessions more than it helps balance budgets.

The Greek parliament must not have gotten the message. Its vote to approve massive job cuts among government employees by the end of 2014 is done. The move is meant to trigger $3.65 billion in bailout loans, which had been blocked because lenders want more proof of Greece’s commitment to austerity.

Eurostat recently released data that showed the February unemployment across the euro area reached 12%, which was a record. Greece’s jobless rate was highest on the list at 26.4%. However, the data from Greece lags, so its numbers are from December. The 15,000 government layoffs will raise that figure by a meaningful amount, because it goes hand-in-hand with other government efforts to downsize. There are already about 1.35 million unemployed people in Greece.

The debate about how to fix the deteriorating foundations of Europe’s most troubled economies continues to be marked by schizophrenia. The antagonism among the most powerful parties — the IMF on one hand and Germany on the other — has not changed much in recent months. Greece could have been thrown a life preserver before its parliament was forced to prove its commitment to austerity by increasing its unemployment. It is a commitment that will undermine future productivity for certain.

It may be that the tide against austerity and toward stimulus will need to wait until the economy of Greece has reached a point of perhaps as much as a 10% contraction per year. At that point, however, the 15,000 government workers will have been added to hundreds of thousands of unemployed who will be hopelessly beyond any approved aid. The 26% unemployment is too big a hurdle to overcome, at least until years of stimulus have been in place.

A two-year slump, 19 million unemployed and five countries on emergency aid are no reason to take bold, immediate action to spur economic growth, according to European officials set to defend their handling of the debt crisis in Washington this week.

Shrugging off the U.S. Federal Reserve’s stimulus and the Bank of Japan’s reflation campaign, Europe’s economic managers say they are on the right track in propping up the 17-nation euro zone, even if evidence is taking time to filter through.

“The euro area has made further progress in the implementation of its comprehensive crisis-response strategy,” European Union officials will tell the Group of 20 finance ministers this week, according to a draft statement obtained by Bloomberg News at an EU meeting in Dublin two days ago. The bloc expects “a mild recovery setting in toward mid-2013 and strengthening in the second half of 2013 and in 2014.”

Gold recently was called a short-sell by the strategists at Goldman Sachs. We would ask how much the firm’s position in gold changed ahead of that call. Traders were even saying last week that something fishy was happening in the gold market. And now the exodus of investors and speculators moving out of SPDR Gold Shares (NYSEMKT: GLD) is acting to drive the price of gold lower too. As a reminder, we have said over and over that if the SPDR Gold Shares was a country it would be one of the world’s top holders of gold, as it has 1,181.4 tonnes and still has a value of $59.43 billion.

Silver is often called the devil’s metal, and some even call it the poor man’s gold trade. The iShares Silver Trust (NYSEMKT: SLV) has seen waves of selling too. Still, its assets are $9.3 billion. Silver usually follows gold trends, and sometimes on a very exaggerated basis. Hence the name the devil’s metal.

Back to Bitcoin. The run-up was driven in part by the woes of Europe, but apparently thousands of traders were opening trading and merchant accounts and this caused the system to not work. The top Bitcoin exchange, called Mt. Gox, halted trading after shares rose sharply and then came crashing down again. Remember one thing, we are talking about a virtual currency here that has no central bank. It is just a peer-to-peer network of buyers and sellers of a virtual currency.

If investors and speculators are willing to drive up a virtual currency, does this not offer validity to the real value of gold and silver? Sure, gold and silver cannot exactly be sent around cyberspace all over the planet anonymously. But the government cannot just print more gold and silver. What would stop more Bitcoin currency units from being created in the future if demand remains high?

If you have been around since the Internet first started to go mainstream (or before), then the notion of a virtual currency is nothing new. All efforts so far have flopped, with the exception of PayPal, under eBay Inc. (NASDAQ: EBAY). It already has been pondered that Amazon.com Inc. (NASDAQ: AMZN) could use its new virtual currency to rival Bitcoin. The long and short is that there are just zero barriers to entry here. Another issue is what happens when cyberthieves take a Bitcoin unit. How does one get back their anonymous currency?

The current craze reminds me of the lessons of DigiCash from the 1990s that was supposed to be an anonymous virtual currency. I actually wanted that effort to work, but it was ahead of its time and there were too many concerns and technical limitations keeping it from succeeding. Then there was eCash. Now there are at least a dozen offshoots. The world of micropayments was supposed to take off 10 years ago, and Peppercoin was supposed to be a leader there. Now that domain is an insurance website, and you hardly ever hear about micropayments now. So, what is the real long-term value of a buck, virtual or real? If history doesn’t somehow change, a buck is probably worth a buck.

Do not take this to be an implied defense of the price of gold or silver on a trading trend. Just look at gold and silver prices on Friday with gold breaking $1500 and over this past week. A rising dollar is at work here, and we have even seen a challenge to dollar-yen parity. This is serious business. If the dollar keeps rising, no defense of gold and commodities is needed because the currency markets are the largest markets in the world. They are so fast that they will dominate comments and defensive posturing of any jackass like me or others out there.

Who knows where gold and silver will settle. If the trend remains, the answer is simply “lower.” Still, if people are willing to bid up and bid down a virtual currency, what does it mean for the real value of hard assets that central banks and investors still want to hold as an alternative to overly printed paper currency down the road?

Someone once named silver  the devil’s metal and we love that name. The craze in Bitcoin is likely to end leaving the name for Bitcoin as ”the sucker’s currency.”

Imagine if Bitcoin does somehow get to make it and the value of a buck is no longer a buck. Someone will have to create a Bitcoin ETF that trades on a real stock exchange.

Soros said in a speech:

The political problem is that Germany did not seek the dominant position into which it has been thrust and it is unwilling to accept the obligations and liabilities that go with it. Germany understandably doesn’t want to be the “deep pocket” for the euro. So it extends just enough support to avoid default but nothing more, and as soon as the pressure from the financial markets abates it seeks to tighten the conditions on which the support is given.

The financial problem is that Germany is imposing the wrong policies on the Eurozone. Austerity doesn’t work. You cannot shrink the debt burden by shrinking the budget deficit. The debt burden is a ratio between the accumulated debt and the GDP, both expressed in nominal terms. And in conditions of inadequate demand, budget cuts cause a more than proportionate reduction in the GDP — in technical terms the so-called fiscal multiplier is greater than one.

As the next series of austerity cuts begins, Portugal’s weary citizens were told to brace themselves again. According to The New York Times:

On Sunday, Prime Minister Pedro Passos Coelho warned his citizens to prepare for more hardship as his government would impose deeper spending cuts in areas like health and education to compensate for some austerity measures struck down by the country’s constitutional court.

While Mr. Passos Coelho’s determination to stick to the austerity script won immediate praise from Brussels, creditors are due back in Lisbon in coming weeks to assess just how far Portugal’s budgetary planning has been derailed by the court ruling.

If the court can block much of the austerity actions, Portugal’s cost to raise money may skyrocket, which would put the future of its bailout by the European Central Bank, European Union and International Monetary Fund in danger.

According to CNBC:

With Portugal’s main court rejecting cost-cutting measures which are central to financial aid, the country’s already faltering austerity program has been thrown into further doubt, adding to pressure on the euro zone, analysts told CNBC.

“Fiscal austerity in Portugal is failing,” Nick Spiro, head of Spiro Sovereign Strategy, told CNBC. “Portugal’s 2011 bailout program went off track some time ago. If it were not for the troika’s leniency and the dramatic rally in Portuguese debt, the program would have already failed by now.”

The data will open the debate, which now occurs daily, about whether austerity actually closes national deficits or widens them as lack of stimulus pushes gross domestic products into negative territory.

Recall, a PMI measurement of less than 50 signals contraction.

According to Markit:

At 46.5 in March, the final Markit Eurozone PMI Composite Output Index was unchanged on the flash reading, confirming that the rate of decline in activity accelerated for the second month in a row to reach the fastest since last November.

The PMI shows that output has fallen in each of the past 19 months with the sole exception of a marginal increase at the start of last year.

Of the four largest euro nations, France saw the steepest downturn with output falling at the fastest rate for four years, while severe contractions were again recorded in Spain and Italy (albeit with the latter showing a marginal easing in the rate of decline). Only Germany continued to see higher business activity, though even there the rate of expansion slowed sharply to near-stagnation.

The 2013 report was called one of frugality as the average person celebrating Easter will spend roughly $145.13 in 2013 versus $145.28 in 2012. The total comes from spending on candy, decor, apparel and food. Here are some basic statistics used from the study:

• Family brunch or dinner: 86.9% will spend an average of $45.26 on items needed for their holiday meal.
• New spring attire: Some 48.4% will purchase clothing this Easter, spending an average of $25.91 for bright new outfits for children or for themselves.
• Candy: A whopping 90.5% will have bought Easter candy, spending an average of $20.66 on jelly beans, chocolate and more.
• Easter gifts: $20.82 on gifts.
• Flowers: $9.49 on flowers.
• Decorations: $9.11 on decorations.
• Where they buy: Some 63.4% will shop at discount stores; 40.7% will shop at their favorite department store; 24.9% will shop at specialty stores, some 21.1% will shop online, and 10.6% will go to specialty clothing stores.

There is also proof that the mobile internet is taking over on shopping as well, even for the Easter Bunny. The report showed:

• 43.3% of smartphone owners will have used their mobile device to research product information, look up store hours and location, compare prices and even purchase gifts and other items.
• 14.8% said that they would purchase Easter products with their smartphones.
• 51.0% of tablet owners said that they would use their device to make purchases, or to do things like research prices and products and to look up retailer locations and hours.
• 22.1% of those surveyed said that they would purchase something via their tablet.

We would again note that the holiday tally here sounds huge at $17.2 billion in 2013. Our issue is that of the $145.13 spent, the tally of clothing, candy, gifts, food, flowers, decorations and greeting cards comes to $116.39. The “other” category is only $28.74 and does not include many of the things we might lump in with the extra family spending.

Read Also: The Cost of the 12 Days of Christmas

Many families go out of town to see family or to get away for the three-day weekend. Most schools were out on Friday, the banks and markets were closed, as were many government offices. The driving, airline tickets, hotels, and the new clothing that is likely bought ahead of a trip would blow this number out of the water. What about all of the extra churchgoers that head to church with their family? That brings extra dry cleaning bills, extra gasoline, and of course extra monetary donations. Then there are also all of those emergency expenses for things like bandaids and all of those “I forgot to bring” expenses that happen just about every time someone travels or goes somewhere outside of their house.

We would conclude with one simple question after tallying up all the other expenses that are not just considered to be retail expenses that the BIGinsight focus used and all the non-retail or planned expenses. Does all of this make really Easter more than a $20 billion holiday?

Read Also: How Halloween Now Costs Over $10 Billion

Oh, and there is one last thing for those who celebrate this holiday. Happy Easter!