lets say he bought 3 trillion in bonds some short and some longer term on the longer term stuff he was buying when the rate was 3%, now its 4%, thats a 33% haircut. as they have said they must deleverage their own balance sheet--ie they plan or need to sell--not hold to maturity. and the pain on the short stuff is just around the corner, when they raise rates, the 1-3 yr stuff they hold is gonna take an even bigger hit. my guess is they lose over 1 trillion dollars--which is bigger than the 700 billion dollar bailout. ---so the damage to the tax payer just doubled. pity the youth of today as they will pay and pay and pay, for this failed effort to save the banks and capitalism as we knew it. --- theres a new economy on the way, what it will be is not known. but, this failed effort was really the knife in the heart of the capitalism they tried to save. as now, the govt and taxes--will ensure that it is not possible to return to the capitalism of the 1940's to the 1990's. that form of capitalism ended in insolvency on 8/8/8.