Here's a shocker!. Chicago Fed President Charles Evans claims that the U.S. is an a bona fide liquidity trap! His remarks were given in a speech to the Boston Fed and reported in the Wall Street Journal. In attendance were Fed employees, academics and Wall Streeters.

Evans is proposing a radical departure from established Fed policy, which is to maintain price stability and maximum sustainable employment. Here it is! He wants to foster above-target inflation for a time!

A Bloomberg National Poll's findings showed anger and rage on the part of Americans toward bankers, bonuses and bailouts.

Something went terribly wrong last year. A handful of bankers leveraged their banks to the brink of collapse. They used complex derivatives that created investments, which were then sold to investors. Many of the bets that traders placed were based on a false knowledge of the housing market. When the housing bubble burst, Wall Street was caught with its pants down. The fancy derivatives collapsed, bringing the banks to their knees. They cried to the government to help them. The government gave them billions to get them back on their feet.

The Federal Reserve and Wall Street executives are discussing a new way to provide bank capital in times of crisis. They want to issue a new security called a contingent convertible (CoCo).

What is a CoCos and how does it work? CoCos are hybrid securities, In normal times they operate like a bond and pay coupons to investors. However, in times of crisis they automatically convert into equity. If bank capital fell below prescribed limits they would trigger the conversion from bonds to equity.

Remember the havoc in the financial markets when the residential bubble burst last year? Are we in for a rerun this year or next year?

You are probably thinking that such an event could not occur. Well think again. There is a report that says that we may be in for another crisis.

The report was initiated by Federal Reserve analyst, K.C. Conway. Conway is a senior real estate analyst at the Federal Reserve Bank of Atlanta. The Federal Reserve has acknowledged the report but said that it is not part of its formal opinion. What does the report say?