Forum Post: Federal Reserve May Inject Over $1 Trillion To Bail Out Europe /// Fed Foreign Bank Lifelines May Reach $1 Trillion, Congress Told-9
Posted 12 years ago on Dec. 19, 2011, 8:22 a.m. EST by MonetizingDiscontent
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Fed May Inject Over $1 Trillion To Bail Out Europe
http://www.zerohedge.com/news/fed-may-inject-over-1-trillion-bail-out-europe
-12/18/2011-
As first reported here, two weeks ago... http://www.zerohedge.com/news/we-just-had-rerun-bear-stearns-when-lehman-coming ...European banks saw the amount of USD-loans from the Fed, via the ECB's revised swap line, surge to over $50 billion - a total first hit in the aftermath of the Bear Stearns failure prompting us to ask "When is Lehman coming?" http://www.zerohedge.com/news/we-just-had-rerun-bear-stearns-when-lehman-coming
However, according to little noted prepared remarks by Anthony Sanders in his Friday testimony to the Congress Oversight Committee, "What the Euro Crisis Means for Taxpayers and the U.S. Economy, Pt. 1", we may have been optimistic, because the end result will be not when is Lehman coming, but when are the next two Lehmans coming, as according to Sanders, the relaunch of the Fed's swaps program may "get to the $1 trillion level, or perhaps even higher."
As a reference, FX swap line usage peaked at $583 billion in the Lehman aftermath (see chart)
(((Chart))) http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2011/12/Fed%20Swap%20Lines%20past%20%2B%20future.jpg
Needless to say, this estimate is rather ironic because as Bloomberg's Bradely Keoun reports... http://www.businessweek.com/news/2011-12-16/fed-foreign-bank-lifelines-may-reach-1-trillion-congress-told9.html ..."Fed Chairman Ben S. Bernanke yesterday told a closed-door gathering of Republican senators that the Fed won’t provide more aid to European banks beyond the swap lines and the discount window -- another Fed program that provides emergency funds to U.S. banks, including U.S. branches of foreign banks."
Well, between a trillion plus in FX swap lines, and a surge in discount window usage which only Zero Hedge has noted so far, there really is nothing else that the Fed can possibly do, as these actions along amount to a QE equivalent liquidity injection, only denominated in US Dollars.
Aside of course to shower Europe with dollars from the ChairsatanCopter. Then again, before this is all over, we are certain that paradollardop will be part of the vernacular.
For all those lamenting the ECB's lack of willingness to print, fear not: the almighty Chairsatan has vowed to valiantly take his place when needed. As in 2 weeks ago. From Bloomberg:
Thanks for keeping these issues active. The Tylers are some of the best reads with regards to trying to interpret the actions of the Fed and the shadow banking system.
Zerohedge also was responsible for proving the existence of high-frequency trading, and showing that on many days the supposed markets are really just a battleground for HFT algorithms.
Many are hesitant to return monetary powers to Congress, and that is PERFECTLY understandable.
But we want campaigns to be transparent, swearing that sunshine would help prevent the wholesale purchase of politicians.
So why not with the Fed? The audit bill got a lot of support, and even Bloomberg sued to get information released. The result? We find that ten times or more in bailouts were dished out by the Fed, on top of what Congress had authorized, a large portion going to foreign banks?
Is that not good to know or to have be public? Did it destroy the credibility of the dollar? It probably actually bolstered it, the Fed having proved that it will stand behind the dollar with every printing press it owns, the effect on the 99% be damned.
The Fed has, more than any other institution, unleashed the Kraken of moral hazard. Zerohedge has done more than any other site I've found to expose every instance of this it finds.
But the chilly reality is that even though ZH has been providing endless evidence of the corruption in Wall Street, their well-informed opinions will fall mostly on deaf ears around here. Too many Paul supporters. Too many Fed haters. Too many who understand all too well how the two-edged sword of regulation cuts way too deeply both ways. Too many who think Krugman is the penultimate shill for the 1%.
The orthodoxy of this forum won't stand with the orthodoxy of ZH.
My Christmas wish is that ZH and OWS invade each other's site, so we can get some real discussion going. They don't suffer retards any better than here, so it could erupt into some serious enlightenment all around.
lmao, I enjoyed your Christmas Wish...
~Well met, FreedomIsFree~
Gotta keep those bankers in the dough.
So . . . what does this mean, exactly?
the article... http://www.zerohedge.com/news/fed-may-inject-over-1-trillion-bail-out-europe ...goes on to say that:
So I think volatility will increase in intensity, but metals will continue to do very well. (even though you 'hear' gold is down, which is true only if you if you are relying on a weekly or monthly chart ..Because.. If you look at the 1-Year chart... http://www.kitco.com/charts/popup/au0365nyb.html ...It is in reality, actually -Up- by around 200.00 for the year.) So we have a long way to go before any r e s p o n s i b l e reporter will tell you that gold is down.
and these currency wars... countries who debase their currencies by printing more cash-fiat, in order to have a cheaper, more "Competetive" money to offer the world than other countries, is a pretty insane idea, in my very small and humble opinion.
They go back and forth, debasing/printing/devaluing until someone says "Uncle" ..or.. (forbid it please) ...an actual, real, major, HOT-war breaks out.
I think keeping a "competitive" dollar (cheaper/debased/devalued through debt-money-printing) explains why when the US cheapens its dollars with printing, China then, in turn, prints too, enough to keep their currency as cheaply pegged against the dollar as it was before. Its a game of chicken on a dizzying, woozy, nauseatingly disorienting global scale. Who will crash first? Its frightening because people are caught in this, of course. We are all swimming against a rising tide. It's like being trapped on a bus ride where the driver fell asleep, and you are unable to step off, watching as the bus plummets over a cliff.
I understand what you wrote - sort of. If we say a rock has value, and print paper shares based on that rock, and then we print more paper shares, the original paper shares are worth less because there are more total shares but the rock is the same.
That I get.
I also get the idea behind the money war, two rocks, lots of paper, paper for paper exchange, I get a better deal if I have more paper to trade with the other guy, unless he prints more paper too.
the rock remains the same.
Rocks will tend to do that - until you examine them on the basis of geologic time . . .
Anyway - what I don't get is the quote above - there is a whole history, set of language, and procedure, that I'm just not familiar with, so it's hard to follow.
aye, I hear you zendog, I think I'm with you... Im a lil confused about the technicalities.
Speaking for myself though: I'm coming up from the rear, so to speak, and am struggling to understand some of the terminology sometimes. The terminology is the trickiest part. (ZIRP)
But i think the biggest thing that I have come away with, from this article, is this: That while I was waiting for QE3 to officially commence, I may still miss it when it happens, because it will be complicated, difficult to track and confirm in a way that is easily comprehended. Sort of like the mysterious nature of derivatives. Complicated. Not easily understood by the rabble.
QE Stealth, I think I'll call it. (At least that is the way I am understanding the article for the time being)
and what is QE3?
I guess I can google
I had to ask . . . .
I get it, kinda - it's a way to increase the amount of cash reserve a bank has, against which it can lend. But, they have to be willing to lend it, number one, and number two, it seems the assets bought have to actually have value - and that isn't a foreclosed on house.
Although it might provide a mechanism to end homelessness . . . .
Your rock analogy is easy to understand. If the Fed was required to write in plane english, they might not be able to get away with their subversive moves.
JFK started printing US money outside the realm of the the Fed and Johnson quietly pulled the US dollars back in. We need to get rid of the Fed. We've been over Fed and it's killing us.
yeah - I don't understand that. Is the FED a public institution? or privately owned?
Another site shows that the Rothschilds and the Bank of England were/are involved in the Fed Reserve http://www.lawfulpath.com/ref/federal_reserve.shtml
A scary but interesting read.
just fucking shoot me already.
I'd say it is a massive banking institution that 'appears' to be a part of the government but actually isn't a clear branch or department. The US treasury is a department. The Fed is listed in the phone book in the regular pages, not under the US government section.
A google search: http://www.factcheck.org/2008/03/federal-reserve-bank-ownership/
Q: Who owns the Federal Reserve Bank?
A: There are actually 12 different Federal Reserve Banks around the country, and they are owned by big private banks. But the banks don’t necessarily run the show. Nationally, the Federal Reserve System is led by a Board of Governors whose seven members are appointed by the president and confirmed by the Senate.
FULL ANSWER
The stockholders in the 12 regional Federal Reserve Banks are the privately owned banks that fall under the Federal Reserve System. These include all national banks (chartered by the federal government) and those state-chartered banks that wish to join and meet certain requirements. About 38 percent of the nation’s more than 8,000 banks are members of the system, and thus own the Fed banks.
The concept of "ownership" needs some explaining here, however. The member banks must by law invest 3 percent of their capital as stock in the Reserve Banks, and they cannot sell or trade their stock or even use that stock as collateral to borrow money. They do receive dividends of 6 percent per year from the Reserve Banks and get to elect each Reserve Bank’s board of directors.
The private banks also have a voice in regulating the nation’s money supply and setting targets for short-term interest rates, but it’s a minority voice. Those decisions are made by the Federal Open Market Committee, which has a dozen voting members, only five of whom come from the banks. The remaining seven, a voting majority, are the Fed’s Board of Governors who, as mentioned, are appointed by the president.
The Fed is a little defensive about the question of ownership. In its Frequently Asked Questions section, the Federal Reserve Board says: "The Federal Reserve System is not ‘owned’ by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects." It continues:
Federal Reserve Board: As the nation’s central bank, the Federal Reserve derives its authority from the U.S. Congress. It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms. However, the Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute. Also, the Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government. Therefore, the Federal Reserve can be more accurately described as "independent within the government."
The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation’s central banking system, are organized much like private corporations–possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.
Thank you for sharing. One thought relating to your reply here, that has haunted me for some time is that considering the shareholders of the Federal Reserve are probably as unstable as the economy, its not out of the question to wonder whether some portion of these banks are insolvent or not.
Which leads me to wonder whether the Federal Reserve is not insolvent too. And if so, how about the IMF, since it's biggest funder is the Federal Reserve?
so - the FED is then, a public institution. And if we End the Fed?
It becomes a private institution?
and this makes sense how, exactly?
As it is now, all we have to do is replace the leadership, and provide for the foundation of a new ideology.
Well thats a complicated question. I will just say that the power to print money was originally placed soley in the Congress, by the constitution, because that is where (money) policy-makers were/would-again-be held accountable to the people through democratic E l e c t i o n s . The board of the Federal Reserve is not electable by the people. (and remember Bernanke admitted that inflation is a tax)
Plus, remember the Fed prints the money, then loans it to us at interest. So there is always more debt created than money. (so can it even be paid back?)
Congress (electable by the people) could issue the money without burdening its people with the debt of interest. They could issue it at Zero interest by cutting out the middle man. But of course that would defeat the purpose of congress having had outsourced their responsibility to an insulated unaccountable unelected institution, long before I was born.
Yes, why not print our own money. But look who is at the helm of the US and head of the Treasury. There will be no meaningful change until we get accountable management in!!!
The last line of long post of the Fed above is: "The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year."
Does that sound like a gov institution?
I think we want to avoid politicizing our financial policy.
And I'm not crazy about the debt driven aspect of the financial market - we incentivize indebtedness as a way of life - it isn't, it's just the way consumerism is framed.
We need a whole new theory of economics.
hmm, its hard not to politicize monetary policy though, because monetary policy creates its own set of laws. Congress already politicized it when they created the Federal Reserve. You have asked a crucial question here that needs to be answered. But I think the question you are asking is a loaded one. (but not by you zendog)
Its very difficult to answer in one sentence, because its a public private institution or something, this is where i get fuzzy... doesn't the Fed have some sort of dual identity, so to speak?
I think perhaps if we asked Ben he would try to tell us he is half pregnant.
I dunno.
But this whole end the fed thing - if the fed is a public institution - is just another Wall Street scam.
The ultimate goal of deregulation.
The goal should be accountability. Accountability can only be realized by returning the power of the purse to a congress that is elected by the people.
That should be the real focus I think. Then the people could&would elect people with strong dollar policies.
Congress Cronies wouldn't load up on spending bills the way they are doing even now, if they were answering to the people on election day, from state to state, city to city. Congress would have to take responsibility for monetary policy once again, finally.
Your question was and is relevant. And don't be too cautious of being accused of something like politicizing the issue. Because it is already political. Dodd Frank Bill. The repeal of Glass Stegall. The bills are endless.
We are not the ones who politicized the issue and thats for certain.
So Zendog, it is clear to you that the Federal Reserve is a department of the US government?
I have not done the research. It sounds like a separate entity of government, under Congressional oversight.
Is that what you posted,
From what you are saying, it seems the Fed is could be a quasi government institution. Does any other part or agency of the US gov have a similar status?
Can a woman be sort-of pregnant?
It sounds like a separate entity of government, under Congressional oversight.
Is that what you posted,
Check this out:
For full article: http://www.globalresearch.ca/index.php?context=va&aid=8518
Court Rules Federal Reserve is Privately Owned Case Reveals Fed's Status as a Private Institution
Below are excerpts from a court case proving the Federal Reserve system's status. As you will see, the court ruled that the Federal Reserve Banks are "independent, privately owned and locally controlled corporations", and there is not sufficient "federal government control over 'detailed physical performance' and 'day to day operation'" of the Federal Reserve Bank for it to be considered a federal agency:
Lewis v. United States, 680 F.2d 1239 (1982) John L. Lewis, Plaintiff/Appellant, v. United States of America, Defendant/Appellee. No. 80-5905 United States Court of Appeals, Ninth Circuit. Submitted March 2, 1982. Decided April 19, 1982. As Amended June 24, 1982.
Plaintiff, who was injured by vehicle owned and operated by a federal reserve bank, brought action alleging jurisdiction under the Federal Tort Claims Act. The United States District Court for the Central District of California, David W. Williams, J., dismissed holding that federal reserve bank was not a federal agency within meaning of Act and that the court therefore lacked subject-matter jurisdiction. Appeal was taken. The Court of Appeals, Poole, Circuit Judge, held that federal reserve banks are not federal instrumentalities for purposes of the Act, but are independent, privately owned and locally controlled corporations.
Banks, plural - not the Federal Reserve itself - which dispenses money to those banks.
then you go back to the singular, thus confusing the issue - are we talking a single entity? or the 12 separate federal reserve banks.