A number of bloggers have been wondering about the health of the banking system's ultimate backstop, the Federal Reserve. As Barry Ritholtz at the Big Picture and Mike Larson at iStockAnalyst note, the Fed's balance sheet is falling apart, thanks to the acquisition of the same low quality paper that has driven American banks to the brink.

It's been a largely unstated assumption that the Fed has near infinite capacity to absorb toxic mortgage backed securities and corporate bonds, but the growing levels of low quality assets on the Fed's books bring that assumption into question. At some point, those bad assets will have to be dealt with.

Big news today for AOL: the company is getting a new CEO.

Tim Armstrong, formerly Google's (GOOG) head of US sales, will be the new chair and CEO of AOL, a Time Warner (TWX) subsidiary (and the owner of this blog). Current AOL Chairman and CEO Randy Falco and President and COO Ron Grant plan to leave after a transition period. (The press release is after the jump.)

Bernard Madoff's lawyer told a judge today that his client plans to plead guilty to 11 counts this coming Thursday. The list of charges includes money laundering, perjury and securities, mail and wire fraud. Madoff could potentially receive a sentence of 150 years in jail.

The announcement came at a hearing earlier today. Madoff appeared in court for the first time in several weeks to address questions about conflicts of interest with his lawyer. According to the AP, Madoff arrived at the Manhattan court wearing a bulletproof vest, just in case an armed and irate investor was looking for revenge. He also arrived several hours early, to avoid crowds of gawkers, angry investors and media hounds.

Rick Santelli made headlines a few weeks ago when he criticized President Obama's new housing plan live on CNBC. Millions of people saw him call for a "tea party" to protest the plan's supposed bailout of "losers" in danger of defaulting on their mortgages. In the wake of his impassioned rant, Santelli became a hero of sorts to Wall Street traders and economic libertarians throughout the land.

Like the fictional Howard Beale in the 1976 film Network, Santelli appeared to be a man suddenly unhinged by righteous anger. Beale famously shouted, "I'm as mad as hell, and I'm not going to take this anymore!" on live television, and Santelli did similarly, railing against President Obama's interference with the markets.

Zac Bissonnette recently wrote about a quote that is making the rounds on Wall Street. It claims to be a passage from Karl Marx that predicts our current economic predicament:

Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalised, and the State will have to take the road which will eventually lead to communism. (Das Kapital, 1867)

As a number of people pointed out, the quote is a hoax. You can easily search through all of Marx's writings at marxists.org and you'll quickly find that there is no such passage. But the quote raises some interesting questions: Why is this faux quote making the rounds, and why do people find it so interesting?

One reason might be the increasing fear that people are feeling about the stock markets and even capitalism itself. We've been living in a strongly pro-capitalist environment for decades now -- at least since Reagan was elected, and certainly since the fall of the Soviet Union -- and there has been very little by way of a legitimate leftist resistance to the organization of just about everything on a capitalist basis.