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It’s criminal that we are devaluing our currency to bail out foreign banks. They knew PRECISELY what they were investing in with the bundled mortgages.
They gambled and lost,, i don’t see how thats my problem.
It’s amazing how often the people taking the loans are blamed for everything except bad weather, (and sometimes they are blamed for THAT too) but these massive banks and insurance companies like AIG are somehow naive innocent victims that must be rescued.
This whole article is so outrageous,, im pretty sure it actually justifies us to conduct a violent revolution.
2012 might be too far away and might not even offer someone who can stop this looting of our nation.
How the hell do we stop this? Romney and most repubs would continue it,, what do we do?
That last post was slightly sarcastic. I guess i should explain that in case someone gets frightened.
....”But implication #4 is by far the most important. Recall that Bill Gross has long been asking where the cash to purchase bonds come the end of QE 2 would come from. Well, the punditry, in its parroting groupthink stupidity (validated by precisely zero actual research), immediately set forth the thesis that there is no problem: after all banks would simply reverse the process of reserve expansion and use the $750 billion in Cash that will be accumulated by the end of QE 2 on June 30 to purchase US Treasurys.
Wrong.
The above data destroys this thesis completely: since the bulk of the reserve induced bank cash has long since departed US shores and is now being used to ratably fill European bank balance sheet voids, and since US banks have benefited precisely not at all from any of the reserves generated by QE 2, there is exactly zero dry powder for the US Primary Dealers to purchase Treasurys starting July 1.
This observation may well be the missing link that justifies the Gross argument, as it puts to rest any speculation that there is any buyer remaining for Treasurys. Alas: the digital cash generated by the Fed’s computers has long since been spent... a few thousand miles east of the US.
Which leads us to implication #5. QE 3 is a certainty. The one thing people focus on during every episode of monetary easing is the change in Fed assets, which courtesy of LSAP means a jump in Treasurys, MBS, Agency paper, or (for the tin foil brigade) ES: the truth is all these are a distraction. The one thing people always forget is the change in Fed liabilities, all of them: currency in circulation, which has barely budged in the past 3 years, and far more importantly- excess reserves, which as this article demonstrates, is the electronic “cash” that goes to needy banks the world over in order to fund this need or that. In fact, it is the need to expand the Fed’s liabilities that is and has always been a driver of monetary stimulus, not the need to boost Fed assets. The latter is, counterintuitively, merely a mathematical aftereffect of matching an asset-for-liability expansion. This means that as banks are about to face yet another risk flaring episode in the next several months, the Fed will need to release another $500-$1000 billion in excess reserves. As to what asset will be used to match this balance sheet expansion, why take your picK; the Fed could buy MBS, Muni bonds, Treasurys, or go Japanese, and purchase ETFs, REITs, or just go ahead and outright buy up every underwater mortgage in the US. This side of the ledger is largely irrelevant, and will serve only two functions: to send the S&P surging, and to send the precious metal complex surging2 as it becomes clear that the dollar is now entirely worthless.
That said, of all of the above, the one we are most looking forward to is the impeachment of Ben Bernanke: because if there is one definitive proof of the Fed abdicating any and all of its mandates, and merely playing the role of globofunder explicitly at the expense of US consumers and borrowers, not to mention lackey for the banking syndicate, this is it.”
That’s truly a mind-numbing well-researched article w/ the last paragraph as a good summary. I kept asking where our money went and just knew in my gut what they did with it as it was obviously not spent here.
But Dudley and Beranke tell us it’s slow but...need accomodating money policies aka want more money...
http://www.businessweek.com/news/2011-06-10/fed-s-dudley-sees-economy-recovering-from-soft-patch-.html
Our masters...
http://www.bis.org/about/board.htm
This 650, actual amount, was before QE anything, happened about the time AIG got its second 280 billion. The most of which went to foreign as well.
Bm
BFL.
“Which brings us to point #2: prepare for the Bernanke hearings and possible impeachment. For if it becomes popular knowledge that the Chairman of the Fed, despite explicit instructions to enforce the trickle down of “printed” dollars to US banks, was only concerned about rescuing foreign banks with the $600 billion in excess cash created out of QE2, then all political hell is about to break loose, and not even Democrats will be able to defend Bernanke’s actions to a public furious with the complete inability to procure a loan. Any loan. Furthermore the data above proves beyond a reasonable doubt why there has been no excess lending by US banks to US borrowers: none of the cash ever even made it to US banks! This also resolves the mystery of the broken money multiplier and why the velocity of money has imploded.”
HOORAY Tyler Durden! Imprison Bernanke. Eliminate the FED.
Unfortunately, our nearly illiterate electorate will never understand what was done to them.