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Forum Post: Living In A QE World /// All Central Bank Balance Sheets Are Exploding Higher, Or Engaged In QE /// Largest Central Banks Now Hold Over 15 Trillion in Fictitious Capital

Posted 12 years ago on Jan. 28, 2012, 5:20 p.m. EST by MonetizingDiscontent (1257)
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Living In A QE World

http://www.ritholtz.com/blog/2012/01/living-in-a-qe-world/

-January 27th, 2012-

All Central Bank Balance Sheets Are Exploding Higher, Or Engaged In QE

The degree to which central banks around the world are printing money is unprecedented.

The first eight charts below show the balance sheets of the largest central banks in the world. They are the European Central Bank (ECB), the Federal Reserve (Fed), the Bank of Japan (BoJ), the Bank of England (BoE), the Bundesbank (Germany), the Banque de France, the People’s Bank of China (PBoC) and the Swiss National Bank (SNB). Noted on the charts are significant events or growth rates.

Shown is the size of each respective balance sheet in its local currency. Note that all are exploding higher as every chart goes from the lower left to the upper right. Most are still making new all-time highs. If the basic definition of quantitative easing (QE) is a significant increase in a central bank’s balance sheet via increasing banking reserves, then all eight of these central banks are engaged in QE.

ECB Balance Sheet

The Federal Reserve's Balance Sheet

Bank Of Japan's Balance Sheet

Bank of England's Balnce Sheet

Bundesbank (Germany's Central Bank) Balance Sheet

Bank de France (French Central Bank) Balance Sheet

Swiss National Bank (Switzerland's Central Bank) Balance Sheet

Comparing Central Bank Balance Sheets

For comparison’s sake, we converted the eight balance sheets above into dollar terms. The four largest, the PBoC, the Fed, the BoJ and the ECB are shown in the first chart below. The second four, the Bundesbank, Banque de France, the BoE and SNB are shown in the second chart below. We split them up because of their vastly different scales.

In the first chart, note that the balance sheets of the PBoC and the ECB are larger than the Federal Reserve when converted to dollars. The BoJ used to be the largest balance sheet in dollar terms until 2006.

Central Banks Balance Sheet (China, ECB, US & Japan)

When shown in dollar terms below, the Bundesbank is the largest of the “second four” central banks. Further, its growth rate over the last five years has been among the highest. This is surprising since the Bundesbank is considered the “hard money” central bank.

Central Banks Balance Sheets (Germany France UK & Switzerland)

Combining Central Bank Balance Sheets

The next chart below adds up the eight largest central bank balance sheets in dollar terms. It is only current through October as that is the latest number from the PBoC.

The combined size of these eight central banks’ balance sheets has almost tripled in the last six years from $5.42 trillion to more than $15 trillion and is still on the rise!

The Eight Central Bank Balance Sheet (US UK ECB Japan Germany France China & Switzerland)

Central Banks Equal To One-Third Of World Equity Values

As noted above, QE is an expanding of balance sheets via increasing bank reserves. The purpose of QE, as explained by this Bank of England video... http://www.bankofengland.co.uk/education/inflation/qe/video.htm ...is to increase bank reserves through purchases of fixed income securities in order to lower interest rates. This makes fixed income securities relatively unattractive/overvalued and pushes investors out the risk curve. This should increase buying for riskier assets such as stocks, pushing them higher in price. Theoretically these higher prices should lead to a wealth effect and increased economic activity.

Given this definition and purpose, it is fair to compare the size of these balance sheets (now $15 trillion) to the capitalization of the world’s stock markets (now $48 trillion). This is shown in the chart below.

Prior to the 2008 financial crisis, the eight central bank balance sheets were less than 15% the size of world stock markets and falling. In the immediate aftermath of Lehman Brothers’ failure, these eight central bank balance sheets swelled to 37% the capitalization of the world stock market. But keep in mind that the late 2008/early 2009 peak was due to collapsing stock market values combined with balance sheet expansion via “lender of last resort” loans.

Recently, the eight central bank balance sheets have spiked back to 33% of world stock market capitalization. This has come about not by lender of last resort loans, but rather by QE expansion (buying bonds with “printed money“)... http://www.arborresearch.com/bianco/?page_id=46908 ...even faster than world stock markets are rising.

Size Of The Eight Central Banks Balance Sheets As A Percent Of World Market Capitalization

What Does It All Mean?

In our conference call... http://www.arborresearch.com/bianco/?page_id=46898&ref=http%3A%2F%2Fwww.arborresearch.com%2Fbianco%2FSubscriberArea%2Fspecialreports%2Fpdffiles%2Fsr-13v1.pdf ...earlier this month we said (page 12):

2011 was so difficult because all stocks seemingly moved together. It was as if every S&P 500 company had the same chairman of the board that knew only one strategy, resulting in a high degree of correlation between seemingly unrelated companies.

Massive central bank involvement in the markets risks returning us to a de facto centrally planned economy. Those S&P 500 companies all have the same chairman; it is Ben Bernanke because his policies are affecting everybody. That is what makes money management so difficult. Correlations will ebb and flow; they always do. But what makes them go away? This will only happen when governments and central banks go away.

But if they go away, then does that not mean things get ugly? Maybe they do get ugly, but it also means that we sort out the excesses in the market. We reward the people that do the right thing and we punish the people that do the wrong thing. And we have an adjustment process that may be ugly, but then we have a period of long expansion.

Central banks are ruling markets to a degree this generation has not seen. Collectively they are printing money to a degree never seen in human history.

So how does this process get reversed? How do central banks pull back trillions of dollars of money printing without throwing markets into a tailspin? Frankly, no one knows, least of all central banks as they continue to make new money printing records.

Until a worldwide exit strategy can be articulated and understood, risk markets will rise and fall based on the perceptions and realities of central bank balance sheets. As long as this is perceived to be a good thing, like perpetually rising home prices were perceived to be a good thing, risk markets will rise.

When/If these central banks go too far, as was eventually the case with home prices, expanding balance sheets will no longer be looked upon in a positive light. Instead they will be viewed in the same light as CDOs backed by sub-prime mortgages were when home prices were falling. The heads of these central banks will no longer be put on a pedestal but looked upon as eight Alan Greenspans that caused a financial crisis.

The tipping point between balance sheet expansion being bullish for risk assets versus bearish is impossible to know. Given the growth rate of central bank balance sheets around the world over the past few years, we might not have to wait too long to find out. Enjoy it while it is still bullish.

(((Source))) http://www.arborresearch.com/bianco/?page_id=46898&ref=http%3A%2F%2Fwww.arborresearch.com%2Fbianco%2Findex.php%3Fp%3D58604

European Bailout Infographic: Presenting The Truckloads Of Cash Needed To Rescue The Insolvent PIIGS

http://www.zerohedge.com/news/european-bailout-inforgraphic-presenting-truckloads-cash-needed-rescue-insolvent-piigs

-01/30/2012-

...No, literally truckloads. Our friends at demonocracy.info have been kind enough to put together an infographic that explains the European bailout in simple, visual terms, that even the most innocent of FTL truckers can grasp without much exertion, for the simple reason that it shows all the bailouts amounts in terms of trucks of cash. And here is the kicker: one would need a 13 lane highway, filled with trucks bumper to bumper, stretching for about 3 kilometers to represent the €2.91 trillion in total amounts owed by the PIIGS and their citizens (whether voluntarily or not... actually make that involuntarily) to Europe's largest banks.

What is most frightening is what is not shown: just how it is that the world's central banks are keeping all of these banks propped up. Because sooner or later all this money will be discovered to have been fatally misallocated. Then the real bailout cost will become all too evident, and just like in the US, it will be in the double digit trillions. Which means the metaphorical highway of trucks full of cash will stretch on for kilometers and kilometers and so on (or miles, for the naive US-based truckers). But since that day is in the future, there is no reason to worry about it.

(((European Bailout Infographic))) http://demonocracy.info/infographics/eu/debt_piigs/images/demonocracy.info-who_loaned_piigs_the_money-watermark-large.jpg

Largest Central Banks Now Hold Over 15 Trillion in Fictitious Capital

http://www.zerohedge.com/contributed/largest-central-banks-now-hold-over-15-trillion-fictitious-capital

-01/27/2012-

53 Comments

53 Comments


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[-] 3 points by MonetizingDiscontent (1257) 12 years ago

Irish Journalist Vincent Browne Vs. The ECB: "Explain Why The Irish People Have To Bailout Billionaire Bondholders"

European Central Bank Press Conference in Ireland

(((Video))) http://www.youtube.com/watch?feature=player_embedded&v=HAf7J4a_T1g

-Jan 19, 2012-

This is excellent. Just watch the final 90 seconds, if you're in a hurry. Irish Journalist Vincent Browne shows the ECB how they roll in Eirinn. The ECB's Klaus Masuch gets a well-deserved earful.

Memo to Erin Burnett - This is how one demonstrates journalistic integrity.

[-] 2 points by MonetizingDiscontent (1257) 12 years ago

:::::::::::::::::::: How Europe Has Evolved From A Democracy ::::::::::::::::::::

::::::::::: To A Bankocracy And Why Austerity Will Lead To Chaos :::::::::::

http://www.zerohedge.com/news/how-europe-has-evolved-democracy-bankocracy-and-why-austerity-will-lead-chaos

-2/04/2012-

In one of the clearest (and most optically pleasing) discussions of recent months, David McWiliams... (of Punk Economics): http://www.davidmcwilliams.ie/2012/01/30/punk-economics ...succinctly explains how Europe has evolved from a democracy to a bankocracy, the implications of which lead to austerity for the people and a Franco-German imposition (the 'fiscal compact') that can only lead to social unrest and chaos.

In this brief (and expertly illustrated) video, the Irish economist clarifies Europe's 'dirty little secret' where economic policy is being run almost exclusively for the banks which, as we see in Greece and Ireland, means the political elite are becoming more and more detached from the people. The terror of the r-word (referendum) looms large as McWilliams analogizes the two ways out of a debt crisis (squeeze the debtor or forgive the debtor) with the catholic and protestant perspectives on sin and forgiveness.

While falling short of calling for governments to go full-Keynesian (everyone knows you never go full-Keynesian), he (focusing on the problems of the current hopeful solution) summarizes the fiscal union as envisaged by France and Germany (which actually penalizes countries that are in trouble, rather than help them) as not a friendly-union but a vindictive strait-jacket put in place to help banks, not countries.

It comes as no surprise to him that the price of Gold (and Bunds) is firm as the 'example' that Greece is likely to set (or face extreme social upheaval) will domino-like stumble across the other troubled nations and as he points "we have been warned".

Our view remains that austerity works if countries manage to cut expenses while keeping a balance. Alas, the balance is out of skew due to 30 years of runaway full-Keynesianism, which leads indeed to the problems that McWilliams so well espouses.

Punk Economics: 1

(((Video))): http://www.youtube.com/watch?v=oAR0VRLRGHE&feature=player_embedded


[-] 1 points by epa1nter (4650) from Rutherford, NJ 12 years ago

Read Krugman in the NY Times regarding QE. He lays to rest the fears about QE, and demonstrates, convincingly, that they are a very good thing right now.

[-] 2 points by MonetizingDiscontent (1257) 12 years ago

Paul Krugman... Very aware of him, but please explain. and a link (?)


Why Notions of Systemic Failure Are On Par with Bigfoot and Unicorns for Most Investors

http://www.zerohedge.com/contributed/why-notions-systemic-failure-are-par-bigfoot-and-unicorns-most-investors

-02/02/2012-

I wanted to take a moment to address the notion of serious collapse and/or systemic failure and why it's so hard for most investors to conceive.

First off, most people in general tend to be optimists or to generally believe that things will work out fine. So the idea of catastrophe is not something they spend much time thinking about.

Because of this, and other factors I'm about to explore, the notion of systemic failure is virtually impossible to grasp for most investors. Most professional traders are usually under the age of 40 (in fact they're typically in their mid to late 20s). As a result of this, they:

  • 1) Didn't experience the 1987 Crash

  • 2) Have never seen a Crisis that the Fed/ IMF/ etc. couldn't handle

Let's add a secondary element to this. Most institutional traders today operate, for the most part, based on trading models. These models, in general, are quantitative and based on correlations and patterns, not qualitative judgments.

This goes a long ways towards explaining why the market has developed such simplistic trading patterns. Consider the "Monday market rally" phenomenon we saw throughout 2009-2010. Or how about the Aussie Dollar/Japanese yen correlation to the S&P 500 we saw throughout much of 2010-2011. As one asset manager put it to me recently, the market has essentially become "one big trade" with virtually all asset classes moving tick for tick relative to each other.

Let us consider the mentality these age demographics and professional working tools engender. In general, both of these factors make for short-term thinking and a lack of qualitative analysis. They also mean that items or developments that exist outside the universe of trading models (most of which are entirely based on post-WWII data), are outside the scope of these traders' thinking.

This issue doesn't merely pertain to traders either. Going back 80+ years, there's never been a time in which the markets didn't have a backstop in the form of the Fed/ IMF/ or some other entity. No matter the Crisis that erupted, there was always money printing and other monetary policies to calm the storm.

Now, let's expand our analysis outside of professional traders to include asset managers and other institutional investors, the vast majority of whom are under the age of 60 or so.

Based on this age demographic, we find that there is an entire generation of investment professionals (aged 35-60) who:

  • Have never witnessed nor invested during a bear market in bonds

  • Have never witnessed, nor invested during a credit market collapse

  • Have never witnessed a secular shift in the global economy

Consequently, the vast majority of professional investors are unable to contemplate truly dark times for the markets. After all, the two worst items most of them have witnessed (the Tech Bust and 2008) were both remedied within about 18 months and were followed by massive market rallies.

Because of this, the idea that the financial system might fail or that we might see any number of major catastrophes (Germany leaving the EU, a US debt default, hyperinflation, etc.) is on par with Bigfoot or Unicorns for 99% of those whose jobs are to manage investors' money or advise investors on how to allocate their capital.

If this doesn't worry you, you need to start looking at the actual numbers behind the financial system today. Here are just a few worth considering:

  • 1) US commercial banks currently sit atop $248 TRILLION in derivatives

  • 2) The US Federal Reserve is now buying 91% of all long-term new US debt issuance (at the same time China and Russia are dumping US bonds)

  • 3) Japan already spends roughly half of its annual tax revenues on debt payments and has relied on debt issuance more than tax revenues to fund its budget for four years now (how much longer can this last?)

  • 4) Europe's entire banking system is leveraged at 26 to 1 (Lehman Brothers was leveraged at 30 to 1 when it failed)

Folks, bad times are coming. It doesn't matter what the trading programs or "professionals" think about it... the math simply doesn't add up to us having a calm, profitable time in the markets over the next few years.

For more market and geopolitical insights, swing by www.gainspainscapital.com.

(((Continue Reading this article Here))) http://www.zerohedge.com/contributed/why-notions-systemic-failure-are-par-bigfoot-and-unicorns-most-investors


[-] 1 points by epa1nter (4650) from Rutherford, NJ 12 years ago

Dr. Paul Krugman is a Nobel Laureate economist and economics professor at Princeton University. He writes an editorial column in the NY Times every Monday and Friday, and has a daily blog there.

He has been very publicly supportive of OWS, and visited Duccatti Park a number of times.

As for links: hmmmm. I would go to the NY Times page, then click on the "Opinions" category and look for "Columnists". Under Krugman, click on the blog link. (It is entitled "The Conscience of a Liberal"). There is a search field on the top right of each page, I believe. Type in QE or Quantitative Easing in that field, and every blog entry that he wrote with those included in them should come up as a list. Make sure that when you click on any article, you do so by opening it in a new tab; otherwise you will run up against the Times's limit on free articles.

Hope this helps.

[-] 1 points by smartcapitalist (143) 12 years ago

Krugman is simply playing to the gallery

[-] 0 points by epa1nter (4650) from Rutherford, NJ 12 years ago

Sure he is. And i've got a bridge to dell.

[-] 2 points by MonetizingDiscontent (1257) 12 years ago

:::::::::::: "Nobody understands Debt (But Me)" ::::::::::::

http://www.zerohedge.com/news/guest-post-%E2%80%9Cnobody-understands-debt-me%E2%80%9D

-02/06/2012-

Luckily they are easy to spot: the demagogues, the manipulators and the hired claqueurs. Unfortunately, there is no lack of media willing to provide a platform to perform their insidious game.

Take Nobel-prize wielding economist Paul Krugman. In an article for the New York Times (“Nobody understands debt”) from January 1, 2012, he writes: http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html?_r=1

“Through most of 2011, as in 2012, almost all of the conversation in Washington was about the allegedly urgent issue of reducing the budget deficit.”

His opening gambit: a reduction of the budget deficit is not an urgent issue. Really? The US has reached 100% debt-to-GDP, and each year another 10%-points get added to the pile. Those $15 trillion exclude a vast array of debt from quasi-governmental organizations (FannieMae, FreddieMac, etc) and unfunded liabilities (Medicare, Social Security, Veterans’ benefits) resulting in a total debt of $61.6 trillion, as per the Heritage Foundation. This explains Krugman’s disdain for the institution, as we will see below. He continues:

“This misplaced focus said a lot about our political culture, in particular about how disconnected Congress is from the suffering of ordinary Americans.”

Krugman tries to portray those who are trying to save the country by reducing spending as heartless and mean-spirited people, when those attributes should apply to those who applauded spending future generations’ taxes to the point of collapsing the financial system. To add insult to injury:

“When people in [Washington] D.C. talk about deficits and debt, by and large they have no idea what they’re talking about.”

He brings out the “I know better – I have a Nobel prize” argument. And the reasoning:

“Perhaps most obviously, the economic ‘experts’ on whom much of Congress relies have been repeatedly, utterly wrong about the short-run effects of budget deficits. People who get their economic analysis from the likes of the Heritage Foundation have been waiting ever since President Obama took office for budget deficits to send interest rates soaring. Any day now! And while they’ve been waiting, those rates have dropped to historical lows.”

This is right in line with those people who, back at the height of the housing boom, ridiculed anyone warning about dangers of a possible fall in housing prices. Only because riding your bike with your hands up in the air went smoothly for 10 seconds doesn’t mean you will make it in one piece over the pothole. Krugman’s rhetoric matches that of a mayfly rejecting the possibility she might die at the end of the day because so far the sun has never set during its life.

(((VeryGraphicExamples))): http://www.funpeak.com/the-most-stupid-accidents-ever-seen-on-earth/

Could the international financial crisis have led to a flight to safety into US Treasury bonds? Could the trillions of Fed buying have helped? Could the largest non-official buyer of Treasuries (Cayman Islands) be hedge funds looking for a cheap way to “hedge” stock market risk, because, in a twisted way, they rely on negative correlation between stocks and bonds (if one goes up, the other one goes down) to continue ad infinitum? Where else are the Chinese going to put their trillions of foreign exchange assets accumulated by holding the Yuan down? In the crumbling Euro? Back to mayfly Krugman:

“For while debt can be a problem, the way our politicians and pundits think about debt is all wrong, and exaggerates the problem’s size.”

If anything, the size of the debt problem is underestimated. It is amazing to see how the problem (too much spending leading to too much debt) is being turned around 180 degrees into “the problem is too little spending”.

“Deficit-worriers portray a future in which we’re impoverished by the need to pay back money we’ve been borrowing.”

Paying back debt doesn’t impoverish; spending money you don’t have does. But Mayfly doesn’t relent and tries to spell it out in simple terms for the average American:

“They see America as being like a family that took out too large a mortgage, and will have a hard time making the monthly payments. This is, however, a really bad analogy in at least two ways. First, families have to pay back their debt. Governments don’t – all they need to do is ensure that debt grows more slowly than their tax base.”

Exactly. Let’s look at how US GDP and debt have developed over the last 46 years:

(((US GDP LongScale))): http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/01/US%20debt%20and%20GDP%20-%20log%20scale_0.PNG

Debt caught up with GDP, reaching 100% in Q4 2011. Debt (taking only the “on-the-books” part) is growing faster than GDP.

Over the last three years, US debt has grown by roughly $4 trillion , while GDP has grown only by $1 trillion. One additional dollar of debt has led only to 25 cents additional GDP. This is the “marginal utility of debt” (how much you get out of an additional dollar of government spending). At elevated debt levels, debt service (interest and redemptions) carves out an increasingly high share of tax revenue, leaving less for productive uses.

(((US Marginal GDP, Debt and Debt Utility))): http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/01/US%20marginal%20utility%20of%20debt.PNG

The lower chart shows rolling 3-year periods for growth in GDP and debt as well as the resulting ratio (marginal debt utility). It has almost reached zero. Granted, the increase in government debt has partially been “diluted” by a deleveraging of the private sector. Still, 2012 will be the fourth year in a row with a budget deficit exceeding $1 trillion. Continuing this pace, combined with a marginal debt utility of 0.25 would get the US to a Greece-like 143% debt-to-GDP ratio within 9 years. But Mayfly tells us we don’t understand.

“We need more, not less, government spending to get us out of our unemployment trap. And the wrong-headed, ill-informed obsession with debt is standing in its way.”

How can a Nobel-prize carrying economist, who is presumably smart, write such nonsense? “He knows better”, says Jim Rickards (author of “Currency Wars”). And that makes Krugman so dangerous. Decision makers will reference his “debt does not matter” mantra over and over again – until it’s over. Thank you, Mayfly. You really understand debt – and how to make others believe it doesn’t matter.

From Lighthouse Investment Management:

::::::::::::::: “Nobody understands debt (but me)” :::::::::::::::

http://www.lighthouseinvestmentmanagement.com/2012/02/02/nobody-understands-debt-but-me/

-February 2, 2012-

[-] 1 points by epa1nter (4650) from Rutherford, NJ 12 years ago

Wow, way to go, ideologue!

There are so many straw men arguments, ignoring of facts, outright distortions, and, ad hominem fallacy, and simple stupidity in your cut and paste post, it would take hours to reply. It's hardly worth it: I have seen you completely resistant to fact, and working to dismantle this crock you posted would follow a law of diminishing returns.

[-] 2 points by MonetizingDiscontent (1257) 12 years ago



I already told you in my own words, previously, what I thought about Mr Krugman. A long time ago. Days ago. ((Look Below))

  • This article was relevant to your remarks concerning Krugman, (A subject you inserted) in this thread.

  • The article also hits on my own opinions on Krugman and his constant shilling for more government intervention, which I expressed in my own words three days ago.

  • I found the article fitting, even ironic.

And even now, the best you can do is complain that I 'copy & paste an article here, the topic of which was well within your chosen topic of discussion.

As for how long I take to respond, screw you. Who the hell are ~you.~

Moreover, I dont see much content here from you other THAN opinion. And even in that, its more aimed at myself personally rather than Krugmans Brilliance ...which was what your focus was centered around. Was it Not?

"""Wow, way to go, ideologue!"""

One more thing, I'd rather be an impractical idealist, in impractical situations, than an addicted gambler betting on speculative rainbow-dreams, unwilling to be ~inconvenienced~ by the magnitude of this economic storm of counterparty-risk that is staring the world down, Right Now.




[-] 1 points by MonetizingDiscontent (1257) 12 years ago

identify one

[-] 2 points by MonetizingDiscontent (1257) 12 years ago

:::::::::::::::: US Adds $120 Billion In Debt Since Debt Ceiling Hike On Friday, ::::::::::::::::

::::::::::::::::::::::::::::: $310 Billion More On Deck In Next Two Months ::::::::::::::::::::::::::::::

http://www.zerohedge.com/news/us-adds-120-billion-debt-debt-ceiling-hike-friday-310-billion-more-deck-next-two-months

-02/01/2012-

Remember when the US hiked its debt ceiling on Friday courtesy of a formulaic 52 affirmative votes in the Senate.... http://www.zerohedge.com/news/senate-vote-progress-increase-us-debt-ceiling-12-trillion ...giving the Treasury $1.2 trillion in dry debt powder to attempt to grow the economy one more time according to the algorithmic fantasies of voodoo priests with pieces of Ivy League parchment on their walls?

Well, two days later, the dry powder is less than $1.1 trillion. In other words, in the past two days, total US debt increased by $120 billion, along the lines of our expectations, as the Treasury filled up all the G-fund cash it had pillaged to continue issuing debt throughout the month of January even though it was formally above the debt ceiling.

What is more concerning, is that as the chart below shows, the trendline of US debt since the beginning of 2011 is no longer a straight line, but has slowly transformed into a parabola, the very same word used as the root in such other infamous words as, for example, parabolic.

It gets worse: even according to the drastically, and very unrealistically, downward revised borrowing expectations of the Treasury released yesterday... http://www.treasury.gov/press-center/press-releases/Pages/tg1401.aspx ...the US will issue $444 billion in debt in this quarter.

Today's number means that in February and March alone Tim Geithner will raise another $310 billion, which will send total debt to $15.7 trillion as of March 31. What is the final debt ceiling? Just under $16.4 trillion. So the US will have $700 billion in debt issuance capacity for the 7 months leading into the presidential election (and 9 until the end of the year).

Now naturally, if the debt ceiling becomes a sticking point at the election, Obama's chances of reelection plunge. Which makes us wonder - will Republicans grasp that the paradox of defeating Obama is precisely in giving him a carte blanche on all the stimulus programs he wants? Because if Congress approves another $200, 300 or even $400 billion in stimulus pork (the only thing better than one Solyndra? One thousand Solyndras!) the Treasury will drown in the need to raise hundreds of billions more, and will in fact hit the ceiling well in advance of the elections.

As for the stimulus projects themselves, they will crash and burn just like all centrally planned endeavors, and actually results in a far worse outcome than if they had never been attempted.

Because ironically, now that the entire world has passed the Rubicon, and unfortunately there really is no way of fixing anything, the only thing one can hope for is letting the status quo get on with doing what it does best, and leading the 100 year process of central planning to its sad and terminal conclusion, only after which can the "fresh start" reset occur. Ironically, the same thing is true with the farce that is the debt ceiling: the best way to finally get back to a fiscally prudent regime? Why go to town, of course.

:::::::::::::: Total Public Debt Outstanding ::::::::::::::

(((SeeChart))) http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/01/Total%20Debt%20US%202.1_0.jpg

And, we almost forgot to add, as of today, total debt to GDP is once again well over 100% even with the latest Q4 GDP data, at 100.4% and rising every day.


[-] 1 points by epa1nter (4650) from Rutherford, NJ 12 years ago

Long term debt is not the most pressing issue in the country. Lack of employment at a living wage is. A regressing tax code is. The recession is. Increasing employment (broadening the tax base and generating revenue), re-establishing a progressive tax code, ending wars, ending the recession, AND surgical spending cuts will evaporate the debt that you are in such a misdirected tizzy about.

[-] 2 points by MonetizingDiscontent (1257) 12 years ago

$52,000 per person not enough for you? Not an issue? Not part of the equation in your preferred, practical economic theoretical misgivings that an incessant demand can be satiated in a very finite world of supply?

Supply has been exhausted some time ago if you haven't noticed, my freind.

Treasury Resumes Pillaging Retirement Accounts To Fund Deficit Spending Until Debt Ceiling Raised

The US will issue $444 billion in debt in this quarter alone

[-] 0 points by epa1nter (4650) from Rutherford, NJ 12 years ago

Did I say it was not an issue, or did I say it is not the most pressing one in the short term? Of COURSE it is an issue, and the solution to it is job creation and all the other things I just listed.

[-] 1 points by MonetizingDiscontent (1257) 12 years ago

Ive never read an article by him that has not promoted more debt or more intervention as his brilliant solution. Care to show me one?

[-] 0 points by epa1nter (4650) from Rutherford, NJ 12 years ago

You haven't read enough, then.

[-] 1 points by MonetizingDiscontent (1257) 12 years ago

I have read plenty by him, but grew out of Dr. Suess Books quite some time ago. I have read both sides Keynes and Austrian. Both. I have read more than enough to be able discern which theory has predicted more booms and busts. How bout you. Did you read both, before deciding to parrot talking points for the Central Planners and Opinion Makers?

[-] 1 points by epa1nter (4650) from Rutherford, NJ 12 years ago

As I said, I understand what I read; you don't seem to.

[-] 1 points by MonetizingDiscontent (1257) 12 years ago

elaborate then, please...

[-] 1 points by MonetizingDiscontent (1257) 12 years ago

Yes, I am aware of him, I asked for the link is all. Ok how about a headline for your article, Im bending over backwards for you now. Which Article (?) If your going to bring yourself to a table to engage in debate, come armed and -site your sources-

Or how about trying to put it in your own words, since you understood this article so well? oh nevermind

[-] 0 points by epa1nter (4650) from Rutherford, NJ 12 years ago

There is no one headline. That's why I can't get a single link for you. Krugman discusses it in multiple posts. I gave you, in good faith, the method of your finding as many of them as you care to.

I am not an economist, and certainly can't express the findings as well as Krugman himself can. My best recommendation is not to ask me for a synopsis, but read his stuff directly. If you are genuinely interested in learning from another point of view, that's the best way to go. My understanding is a pale shadow of his.

[-] 1 points by MonetizingDiscontent (1257) 12 years ago

oh, ok. well. thanks... You yourself claim to understand his theories, Apparently not enough to do anything but parrot your puppet.

I used to read him a lot too. Until I realized the policies that he is a mouthpiece for, are systemically flawed. Krugman is the go to guy if you think more central planning and QE is what keeps the world turning. Good luck with that.

If people want the money out of politics, then restore the free market. Government controlled economies do not equate to a free-market. Take Greece, the banks are being bailed out, not Greece

QE is sucking up the wealth, taking money -out- of the peoples economy, just like taxes take money OUT of the people's economy. Sure we get a 'program' out of it. But its money taken from our economy. We cant continue down this path, or we're liable to end up where we are headed.

[-] 0 points by MonetizingDiscontent (1257) 12 years ago

"""Dr. Paul Krugman is a Nobel Laureate"""

Yep and Obama is a Nobel Peace Prize winner...

Every other time Krugman opens his malfeasance he discredits his debt-hole, and in turn.. yours

I hope you haven't been reading this guys trash very long.

[-] 1 points by epa1nter (4650) from Rutherford, NJ 12 years ago

Yes, I read Krugman's accurate analysis often, and unlike you, I understand what he writes.

[-] 0 points by MonetizingDiscontent (1257) 12 years ago

Show me some of his pedictions. His track record. Show me how brilliant Krugman is.

Start a "Krugman Is Brilliant" Post... I'll contribute ... I'll be bumping it up, all the time.

[-] 0 points by epa1nter (4650) from Rutherford, NJ 12 years ago

Read his column and his blog. Clearly, you haven't, and are simply repeating what you have been told by your right wing buddies, Beck and Limbaugh.

[-] 2 points by MonetizingDiscontent (1257) 12 years ago

mhm, yery presumptuous of you, speculative even. Surely,y ou are not trying to say Democrats are not concerned with debt, the fed, and deficit spending are you? because Its not a republican issue. Its not a Democrat issue.


By Alan Grayson

:::::::::: The Fed Bailouts: Money for Nothing ::::::::::

http://www.huffingtonpost.com/rep-alan-grayson/the-fed-bailouts-money-fo_b_1129988.html

-Dec, 5th 2011-

(Alan Grayson (D) - Former U.S. Congressman from Florida's 8th District)

I think it's fair to say that Congressman Ron Paul and I are the parents of the GAO's audit of the Federal Reserve. And I say that knowing full well that Dr. Paul has somewhat complicated views regarding gay marriage.

Anyway, one of our love children is a massive 251-page GAO report technocratically entitled "Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance." It is almost as weighty as that 13-lb. baby born in Germany last week, named Jihad. It also is the first independent audit of the Federal Reserve in the Fed's 99-year history.

Feel Free to Take a Look at it Yourself, It's Right Here

http://www.gao.gov/new.items/d11696.pdf

It documents Wall Street bailouts by the Fed that dwarf the $700 billion TARP, and everything else you've heard about.

I wouldn't want anyone to think that I'm dramatizing or amplifying what this GAO report says, so I'm just going to list some of my favorite parts, by page number.

  • (((Page 131))) - The total lending for the Fed's "broad-based emergency programs" was $16,115,000,000,000. That's right, more than $16 trillion. The four largest recipients, Citigroup, Morgan Stanley, Merrill Lynch and Bank of America, received more than a trillion dollars each. The 5th largest recipient was Barclays PLC. The 8th was the Royal Bank of Scotland Group, PLC. The 9th was Deutsche Bank AG. The 10th was UBS AG. These four institutions each got between a quarter of a trillion and a trillion dollars. None of them is an American bank.
  • (((Pages 133 & 137))) - Some of these "broad-based emergency program" loans were long-term, and some were short-term. But the "term-adjusted borrowing" was equivalent to a total of $1,139,000,000,000 more than one year. That's more than $1 trillion out the door. Lending for these programs in fact peaked at more than $1 trillion.

  • (((Pages 135 & 196))) - Sixty percent of the $738 billion "Commercial Paper Funding Facility" went to the subsidiaries of foreign banks. 36% of the $71 billion Term Asset-Backed Securities Loan Facility also went to subsidiaries of foreign banks.

  • (((Page 205))) - Separate and apart from these "broad-based emergency program" loans were another $10,057,000,000,000 in "currency swaps." In the "currency swaps," the Fed handed dollars to foreign central banks, no strings attached, to fund bailouts in other countries. The Fed's only "collateral" was a corresponding amount of foreign currency, which never left the Fed's books (even to be deposited to earn interest), plus a promise to repay. But the Fed agreed to give back the foreign currency at the original exchange rate, even if the foreign currency appreciated in value during the period of the swap. These currency swaps and the "broad-based emergency program" loans, together, totaled more than $26 trillion. That's almost $100,000 for every man, woman, and child in America. That's an amount equal to more than seven years of federal spending -- on the military, Social Security, Medicare, Medicaid, interest on the debt, and everything else. And around twice American's total GNP.

  • (((Page 201))) - Here again, these "swaps" were of varying length, but on Dec. 4, 2008, there were $588,000,000,000 outstanding. That's almost $2,000 for every American. All sent to foreign countries. That's more than twenty times as much as our foreign aid budget.

  • (((Page 129))) - In October 2008, the Fed gave $60,000,000,000 to the Swiss National Bank with the specific understanding that the money would be used to bail out UBS, a Swiss bank. Not an American bank. A Swiss bank.

  • (((Pages 3 & 4))) - In addition to the "broad-based programs," and in addition to the "currency swaps," there have been hundreds of billions of dollars in Fed loans called "assistance to individual institutions." This has included Bear Stearns, AIG, Citigroup, Bank of America, and "some primary dealers." The Fed decided unilaterally who received this "assistance," and who didn't.

  • (((Pages 101 & 173))) - You may have heard somewhere that these were riskless transactions, where the Fed always had enough collateral to avoid losses. Not true. The "Maiden Lane I" bailout fund was in the hole for almost two years.

  • (((Page 4))) - You also may have heard somewhere that all this money was paid back. Not true. The GAO lists five Fed bailout programs that still have amounts outstanding, including $909,000,000,000 (just under a trillion dollars) for the Fed's Agency Mortgage-Backed Securities Purchase Program alone. That's almost $3,000 for every American.

  • (((Page 126))) - In contemporaneous documents, the Fed apparently did not even take a stab at explaining why it helped some banks (like Goldman Sachs and Morgan Stanley) and not others. After the fact, the Fed referred vaguely to "strains in the financial markets," "transitional credit," and the Fed's all-time favorite rationale for everything it does, "increasing liquidity."

81 different places in the GAO report - The Fed applied nothing even resembling a consistent policy toward valuing the assets that it acquired. Sometimes it asked its counterparty to take a "haircut" (discount), sometimes it didn't. Having read the whole report, I see no rhyme or reason to those decisions, with billions upon billions of dollars at stake.

  • (((Page 2))) - As massive as these enumerated Fed bailouts were, there were yet more. The GAO did not even endeavor to analyze the Fed's discount window lending, or its single-tranche term repurchase agreements.

  • (((Pages 13 & 14))) - And the Fed wasn't the only one bailing out Wall Street, of course. On top of what the Fed did, there was the $700,000,000,000 TARP program authorized by Congress (which I voted against). The Federal Deposit Insurance Corp. (FDIC) also provided a federal guarantee for $600,000,000,000 in bonds issued by Wall Street.

There is one thing that I'd like to add to this, which isn't in the GAO's report. All this is something new, very new. For the first 96 years of the Fed's existence, the Fed's primary market activities were to buy or sell U.S. Treasury bonds (to change the money supply), and to lend at the "discount window." Neither of these activities permitted the Fed to play favorites. But the programs that the GAO audited are fundamentally different. They allowed the Fed to choose winners and losers.

So What Does All This Mean? Here Are Some Short Observations

  • (1) In the case of TARP, at least The People's representatives got a vote. In the case of the Fed's bailouts, which were roughly 20 times as substantial, there was never any vote. Unelected functionaries, with all sorts of ties to Wall Street, handed out trillions of dollars to Wall Street. That's now how a democracy should function, or even can function.

  • (2) The notion that this was all without risk, just because the Fed can keep printing money, is both laughable and cryable (if that were a word). Leaving aside the example of Germany's hyperinflation in 1923, we have the more recent examples of Iceland (75% of GNP gone when the central bank took over three failed banks) and Ireland (100% of GNP gone when the central bank tried to rescue property firms).

  • (3) In the same way that American troops cannot act as police officers for the world, our central bank cannot act as piggy bank for the world. If the European Central Bank wants to bail out UBS, fine. But there is no reason why our money should be involved in that.

  • (4) For the Fed to pick and choose among aid recipients, and then pick and choose who takes a "haircut" and who doesn't, is both corporate welfare and socialism. The Fed is a central bank, not a barber shop.

  • (5) The main, if not the sole, qualification for getting help from the Fed was to have lost huge amounts of money. The Fed bailouts rewarded failure, and penalized success. (If you don't believe me, ask Jamie Dimon at JP Morgan.) The Fed helped the losers to squander and destroy even more capital.

  • (6) During all the time that the Fed was stuffing money into the pockets of failed banks, many Americans couldn't borrow a dime for a home, a car, or anything else. If the Fed had extended $26 trillion in credit to the American people instead of Wall Street, would there be 24 million Americans today who can't find a full-time job?

And here's what bothers me most about all this: it can happen again. I've called the GAO report a bailout autopsy. But it's an autopsy of the undead.

Courage,

Alan Grayson

(((Follow Alan Grayson on Twitter))) http://twitter.com/alangrayson


Alan Grayson: "Which Foreigners Got the Fed's $500,000,000,000?" Bernanke: "I Don't Know."

(((Video))) http://www.youtube.com/watch?v=n0NYBTkE1yQ


Rep. Alan Grayson: "Has the Federal Reserve Ever Tried to Manipulate the Stock Market?"

(((Video))) http://www.youtube.com/watch?v=mXmNpdYpfnk


Alan Grayson on the Worst Deal Since Manhattan Was Sold for $24 in Trinkets

(((Video))) http://www.youtube.com/watch?v=A-DOwLnQ4nk&feature=relmfu


Alan Grayson: Is Anyone Minding the Store at the Federal Reserve?

(((Video))) http://www.youtube.com/watch?v=cJqM2tFOxLQ


What was that about my right wing buddies again?

[-] 0 points by epa1nter (4650) from Rutherford, NJ 12 years ago

And what does this have t do with Krugman? Hayeck is dead and discredited. he Fed bailouts kept the economy from complete meltdown. Were they enough? Arguably, no. The stimulus package and job creation were certainly half of what they should have been, and banking insiders in the Obama administration (most of all Summers) made sure of it fro political reasons.

And I never said you were Repelican. I think you might possibly be a libertartdian.

[-] 1 points by MonetizingDiscontent (1257) 12 years ago

[-] 1 points by epa1nter (1579) from Rutherford, NJ 3 hours ago

Read his column and his blog. Clearly, you haven't, and are simply repeating what you have been told by your right wing buddies, Beck and Limbaugh.


...look, for better or worse, Im just trying to stay on your topics pal, try keeping up with your own chain of thought. Again, my response was in line with your blithering.

In the future, If you can stick to Krugman in your commentary, then my replies would not be reacting to your own leftwing - rightwing connotations

[-] 1 points by epa1nter (4650) from Rutherford, NJ 12 years ago

No, sir, you are not. Grayson does not address Krugman's analysis. (Why would he? He's a politician - a Blue Dog Democrat - not an economist.) Nor does your latest post indicate in any way my post explaining that the long term debt is not the primary, immediate threat to the economy. It is merely a criticism of the fact that the Fed is not a democratic institution, and the fact that the Fed spent a LOT of money.

My topic as you recall, is that the long term debt is not an immediate, short term emergency, and that it can be addressed by more investment in jobs, which broadens and increases the tax base, and therefore revenue. It does not address other long term solutions, like re-establishing a progressive tax code, eliminating oil company and other corporate subsidies, and closing corporate tax loopholes, that would also reduce the long term debt. Or eliminating the Bush tax cuts, which would also reduce the long term debt. Or ending two wars, which would also reduce the long term debt. And so on.

Growing the tax base faster than growing the debt solves most of the problem of the long term debt. Its called taking in more than you spend. Krugman is dead-on accurate about that. (His other predictions about jobs loss, the length of the recession, the paucity of inflation during the crisis, have also been right in target.)

[-] 1 points by MonetizingDiscontent (1257) 12 years ago

Woa, Allow me to walk you through it then =)

Your remark:

[-] 1 points by epa1nter (1579) from Rutherford, NJ 3 hours ago**

Read his column and his blog. Clearly, you haven't, and are simply repeating what you have been told by your right wing buddies, Beck and Limbaugh.

( ( ( ( ( ( ( ( R E M EM B E R ) ) ) ) ) ) ) ) (?)

And My Reply:

mhm, yery presumptuous of you, speculative even. Surely, you are not trying to say Democrats are not concerned with debt, the fed, and deficit spending are you? because Its not a republican issue. Its not a Democrat issue.

((((((((wow, see how related they are? Or are you unable to connect the dots? see.. when two adults have conversations, they often reply to eachother based on what was just said by the other as they communicate back and forth. Its called a conversation, and sometimes it can lead to multiple areas of discussion. Such as my right wing buddies as you so elquently chose to put it)))))))))


By Alan Grayson

:::::::::: The Fed Bailouts: Money for Nothing ::::::::::

http://www.huffingtonpost.com/rep-alan-grayson/the-fed-bailouts-money-fo_b_1129988.html

-Dec, 5th 2011-

(Alan Grayson (D) - Former U.S. Congressman from Florida's 8th District)

I think it's fair to say that Congressman Ron Paul and I are the parents of the GAO's audit of the Federal Reserve. And I say that knowing full well that Dr. Paul has somewhat complicated views regarding gay marriage.

Anyway, one of our love children is a massive 251-page GAO report technocratically entitled "Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance." It is almost as weighty as that 13-lb. baby born in Germany last week, named Jihad. It also is the first independent audit of the Federal Reserve in the Fed's 99-year history.

Feel Free to Take a Look at it Yourself, It's Right Here

http://www.gao.gov/new.items/d11696.pdf

It documents Wall Street bailouts by the Fed that dwarf the $700 billion TARP, and everything else you've heard about.

I wouldn't want anyone to think that I'm dramatizing or amplifying what this GAO report says, so I'm just going to list some of my favorite parts, by page number.

  • (((Page 131))) - The total lending for the Fed's "broad-based emergency programs" was $16,115,000,000,000. That's right, more than $16 trillion. The four largest recipients, Citigroup, Morgan Stanley, Merrill Lynch and Bank of America, received more than a trillion dollars each. The 5th largest recipient was Barclays PLC. The 8th was the Royal Bank of Scotland Group, PLC. The 9th was Deutsche Bank AG. The 10th was UBS AG. These four institutions each got between a quarter of a trillion and a trillion dollars. None of them is an American bank.
  • (((Pages 133 & 137))) - Some of these "broad-based emergency program" loans were long-term, and some were short-term. But the "term-adjusted borrowing" was equivalent to a total of $1,139,000,000,000 more than one year. That's more than $1 trillion out the door. Lending for these programs in fact peaked at more than $1 trillion.

  • (((Pages 135 & 196))) - Sixty percent of the $738 billion "Commercial Paper Funding Facility" went to the subsidiaries of foreign banks. 36% of the $71 billion Term Asset-Backed Securities Loan Facility also went to subsidiaries of foreign banks.

  • (((Page 205))) - Separate and apart from these "broad-based emergency program" loans were another $10,057,000,000,000 in "currency swaps." In the "currency swaps," the Fed handed dollars to foreign central banks, no strings attached, to fund bailouts in other countries. The Fed's only "collateral" was a corresponding amount of foreign currency, which never left the Fed's books (even to be deposited to earn interest), plus a promise to repay. But the Fed agreed to give back the foreign currency at the original exchange rate, even if the foreign currency appreciated in value during the period of the swap. These currency swaps and the "broad-based emergency program" loans, together, totaled more than $26 trillion. That's almost $100,000 for every man, woman, and child in America. That's an amount equal to more than seven years of federal spending -- on the military, Social Security, Medicare, Medicaid, interest on the debt, and everything else. And around twice American's total GNP.

  • (((Page 201))) - Here again, these "swaps" were of varying length, but on Dec. 4, 2008, there were $588,000,000,000 outstanding. That's almost $2,000 for every American. All sent to foreign countries. That's more than twenty times as much as our foreign aid budget.

  • (((Page 129))) - In October 2008, the Fed gave $60,000,000,000 to the Swiss National Bank with the specific understanding that the money would be used to bail out UBS, a Swiss bank. Not an American bank. A Swiss bank.

  • (((Pages 3 & 4))) - In addition to the "broad-based programs," and in addition to the "currency swaps," there have been hundreds of billions of dollars in Fed loans called "assistance to individual institutions." This has included Bear Stearns, AIG, Citigroup, Bank of America, and "some primary dealers." The Fed decided unilaterally who received this "assistance," and who didn't.

  • (((Pages 101 & 173))) - You may have heard somewhere that these were riskless transactions, where the Fed always had enough collateral to avoid losses. Not true. The "Maiden Lane I" bailout fund was in the hole for almost two years.

  • (((Page 4))) - You also may have heard somewhere that all this money was paid back. Not true. The GAO lists five Fed bailout programs that still have amounts outstanding, including $909,000,000,000 (just under a trillion dollars) for the Fed's Agency Mortgage-Backed Securities Purchase Program alone. That's almost $3,000 for every American.

  • (((Page 126))) - In contemporaneous documents, the Fed apparently did not even take a stab at explaining why it helped some banks (like Goldman Sachs and Morgan Stanley) and not others. After the fact, the Fed referred vaguely to "strains in the financial markets," "transitional credit," and the Fed's all-time favorite rationale for everything it does, "increasing liquidity."

81 different places in the GAO report - The Fed applied nothing even resembling a consistent policy toward valuing the assets that it acquired. Sometimes it asked its counterparty to take a "haircut" (discount), sometimes it didn't. Having read the whole report, I see no rhyme or reason to those decisions, with billions upon billions of dollars at stake.

  • (((Page 2))) - As massive as these enumerated Fed bailouts were, there were yet more. The GAO did not even endeavor to analyze the Fed's discount window lending, or its single-tranche term repurchase agreements.

  • (((Pages 13 & 14))) - And the Fed wasn't the only one bailing out Wall Street, of course. On top of what the Fed did, there was the $700,000,000,000 TARP program authorized by Congress (which I voted against). The Federal Deposit Insurance Corp. (FDIC) also provided a federal guarantee for $600,000,000,000 in bonds issued by Wall Street.

There is one thing that I'd like to add to this, which isn't in the GAO's report. All this is something new, very new. For the first 96 years of the Fed's existence, the Fed's primary market activities were to buy or sell U.S. Treasury bonds (to change the money supply), and to lend at the "discount window." Neither of these activities permitted the Fed to play favorites. But the programs that the GAO audited are fundamentally different. They allowed the Fed to choose winners and losers.

So What Does All This Mean? Here Are Some Short Observations

  • (1) In the case of TARP, at least The People's representatives got a vote. In the case of the Fed's bailouts, which were roughly 20 times as substantial, there was never any vote. Unelected functionaries, with all sorts of ties to Wall Street, handed out trillions of dollars to Wall Street. That's now how a democracy should function, or even can function.

  • (2) The notion that this was all without risk, just because the Fed can keep printing money, is both laughable and cryable (if that were a word). Leaving aside the example of Germany's hyperinflation in 1923, we have the more recent examples of Iceland (75% of GNP gone when the central bank took over three failed banks) and Ireland (100% of GNP gone when the central bank tried to rescue property firms).

  • (3) In the same way that American troops cannot act as police officers for the world, our central bank cannot act as piggy bank for the world. If the European Central Bank wants to bail out UBS, fine. But there is no reason why our money should be involved in that.

  • (4) For the Fed to pick and choose among aid recipients, and then pick and choose who takes a "haircut" and who doesn't, is both corporate welfare and socialism. The Fed is a central bank, not a barber shop.

  • (5) The main, if not the sole, qualification for getting help from the Fed was to have lost huge amounts of money. The Fed bailouts rewarded failure, and penalized success. (If you don't believe me, ask Jamie Dimon at JP Morgan.) The Fed helped the losers to squander and destroy even more capital.

  • (6) During all the time that the Fed was stuffing money into the pockets of failed banks, many Americans couldn't borrow a dime for a home, a car, or anything else. If the Fed had extended $26 trillion in credit to the American people instead of Wall Street, would there be 24 million Americans today who can't find a full-time job?

And here's what bothers me most about all this: it can happen again. I've called the GAO report a bailout autopsy. But it's an autopsy of the undead.

Courage,

Alan Grayson

(((Follow Alan Grayson on Twitter))) http://twitter.com/alangrayson


Alan Grayson: "Which Foreigners Got the Fed's $500,000,000,000?" Bernanke: "I Don't Know."

(((Video))) http://www.youtube.com/watch?v=n0NYBTkE1yQ


Alan Grayson: Is Anyone Minding the Store at the Federal Reserve?

(((Video))) http://www.youtube.com/watch?v=cJqM2tFOxLQ


What was that about my right wing buddies again?

[-] 1 points by epa1nter (4650) from Rutherford, NJ 12 years ago

So it was a Blue Dog Democrat. There's no difference. Right wing is right wing. Again, you still have not addressed the issue. We ALL KNOW that the fed did some really dub things. But the national long-term debt is another issue.

[-] 1 points by MonetizingDiscontent (1257) 12 years ago

Ok so we have established that my replies to your remarks are ontopic (((WITHYOU)))

"""So it was a Blue Dog Democrat""" What does that mean? Whats your definition of a Blue Dog Democrat? A traitor? For bringing to light something everyone needs to know?

Are you saying Democrats shouldn't expose such things? That they would be "alright" by you, if they didn't? You're not a great spokesman for democrats if thats the case.

Where does long term debt come from. You tell me. Careful Im baiting you. What does Krugman tell you before bedtime?

[-] 0 points by epa1nter (4650) from Rutherford, NJ 12 years ago

Do put words in my mouth. Just pointing out that he is right wing, too.

Again, we all know there is long term debt. We all know that the Fed was involved in creating much of it. That does not address the fact that it is not a short term emergency that needs to be dealt with before anything else. It is a long term issue with plenty of solutions. Unfortunately, we are following few of them because of of an evil right-wing and libertardian, obstructionist, brain dead congress.

[-] 1 points by MonetizingDiscontent (1257) 12 years ago

:::::::::: Vicious Cycles Persist As Global Lending Standards Tighten ::::::::::

http://www.zerohedge.com/news/vicious-cycles-persist-global-lending-standards-tighten

-02/02/2012-

One of the major factors in the Central Banks of the world having stepped up the pace of flushing the world with increasing amounts of freshly digitized cash is writ large in the contraction in credit availability to the real economy (even to shipbuilders). Anecdotal examples of this constrained credit are everywhere but much more clearly and unequivocally in tightening lending standards in all of the major economies.

As Bank of America's credit team points out, bank lending standards to corporates have tightened globally in Q4 2011 and the picture is ubiquitously consistent across the US, Europe, and Emerging Markets. Whether it is deleveraging, derisking, or simple defending of their balance sheets, banks' credit availability is becoming more constrained.

While the Fed's QE and Twist monetization and then most recently the ECB's LTRO has led (aside from self-reinforcing short-dated reach-arounds in BTPs and circular guarantees supposedly reducing tail risk) to nothing but massive increases in bank reserves (as opposed to flowing through to the real economy), we suspect it was designed to halt the significantly tighter corporate lending environment (most significantly in European and Emerging Markets).

The critical corollary is that, as BAML confirms, the single best non-market based indicator of future defaults is tightening lending standards and given the velocity of shifts in Europe and EM (and very recent swing in the US), investors reaching for high-yield may be ill-timed at best and disastrous credit cycle timing at worst (bearing in mind the upgrade/downgrade ratio is also shifting dramatically). Liquidity band-aids are not a solution for insolvency cardiac arrests as the dual vicious cycles of bank and sovereign stress remain front-and-center in Europe (with EM a close second) and the hope for real economic growth via credit creation kick-started by an LTRO is the pipe-dream the market is surviving on currently......

(((Continue Reading this article & view charts Here))) http://www.zerohedge.com/news/vicious-cycles-persist-global-lending-standards-tighten


[-] 1 points by ineptcongress (648) 12 years ago

in the face of what we see, i find it interesting that gold isn't higher; and likewise, that the broader market isn't much much lower.

[-] 1 points by MonetizingDiscontent (1257) 12 years ago

interesting observation. I've even considered it myself. The higher the price goes, the more the JP's out there have to buy physical to cover their naked short selling of GLDs and SLVs ...because, they sell more paper certificates than they hold in metals, and they must hedge accordingly. Or have the appearance there of, at least. '

[-] 1 points by ineptcongress (648) 12 years ago

Do you think JP, etc... would be so foolish as to be short? They may just be that silly, since the list you provide (printing et. al.) currently has no catalyst to provide for a change of such policies. I agree completely with your reasoning though. Perhaps what has held the price down, somewhat, is selling by the EU banks and sovereigns to raise capital, a rumor I've heard from reasonably credible commodity trader sources.

[-] -1 points by smartcapitalist (143) 12 years ago

In layman terms, the typical common sense response when credit in an economy dries up is to pump more money into the economy. That is exactly what central banks in US and Europe are doing. Besides, with low level of inflation this is a feasible response. But look at many emerging economies, particularly India, where their Central bank has been increasing interest rates ever so often to tame inflation and in fact reduce money supply. So dont worry. Expanding balance sheets arent a problem, yet.

[-] 1 points by MonetizingDiscontent (1257) 12 years ago

It cant be all about demand. If you have no supply, demand does not matter, and supply is exhausted.

Treasury -Resumes- Pillaging Retirement Accounts To Fund Deficit Spending Until Debt Ceiling Raised: http://www.zerohedge.com/news/treasury-resumes-pillaging-retirement-accounts-fund-deficit-spending-until-debt-ceiling-raised (((01/17/2012)))

And Isn't stealing pensions... http://www.zerohedge.com/news/treasury-resumes-pillaging-retirement-accounts-fund-deficit-spending-until-debt-ceiling-raised ...for deficit spending the very same type of commingling of segregated accounts we saw from MF Global recently?

Why are the -people- being punished for run away deficit spending on Capital Hill? Its almost as if the people are in a hostage-like situation, where in a way, they are held against their will until a demand is met or something.

Here wrap your arms around this little rainbow, It will be the Margin Call heard around the world: - $707,568,901,000,000: How (And Why) Banks Increased Total Outstanding Derivatives By A Record $107 Trillion In 6 Months: http://www.zerohedge.com/news/707568901000000-how-and-why-banks-increased-total-outstanding-derivatives-record-107-trillion-6 -11/26/2011-

Can you say Counter-Party Risk? Everyone will be learning that word soon. MF Global Customers have learned this word thoroughly. As have the entire futures trading markets. MF Global was a counter-party event. http://blog.ml-implode.com/2012/01/trading-commodities-bankruptcies/

Then again maybe you just need to hear it from Ben Bernanke, himself. He outlined a plan back in 2002 which he would be willing to implement, in the event that we would face another great depression. 5 things which would help protect the banks shareholder's stock prices from deflating/crashing/plummeting/or being driven to zero So, will the Federal Reserve Devalue Dollar by 40% as Ben Bernanke suggested? (which will most certainly prop up their shareholders stock price artificially high)

::::::Remarks by Governor Ben S. Bernanke Before the National Economists Club, Washington, DC:::::::

Deflation: Making Sure "It" Doesn't Happen Here

http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm

-November 21, 2002-

In this 2002 speech by --then-- Federal Reserve Board Governor Ben Bernanke is saying that If he ever faced another Great Depression, he would do 5 things... and he has done everything he said he would do so far, now that he is at the helm, as Chairman! Accept for one final thing....

  • Interest rates to zero (CHECK)
  • Buy securities to expand the feds balance sheet (CHECK)
  • Increase the money supply (CHECK)
  • Buy the countries debt, QE1 QE2 etc etc... (CHECK)

And the only thing left that Ben promised to do, that he hasn't done yet...

  • Devalue the Dollar by 40%

Ben Bernanke 2002: "Although a policy of intervening to affect the exchange value of the dollar is nowhere on the horizon today, (((2002))) it's worth noting that there have been times when exchange rate policy has been an effective weapon against deflation. A striking example from U.S. history is Franklin Roosevelt's 40 percent devaluation of the dollar against gold in 1933-34, enforced by a program of gold purchases and domestic money creation. The devaluation and the rapid increase in money supply it permitted ended the U.S. deflation remarkably quickly.

Indeed, consumer price inflation in the United States, year on year, went from -10.3 percent in 1932 to -5.1 percent in 1933 to 3.4 percent in 1934.17 The economy grew strongly, and by the way, 1934 was one of the best years of the century for the stock market. If nothing else, the episode illustrates that monetary actions can have powerful effects on the economy, even when the nominal interest rate is at or near zero, as was the case at the time of Roosevelt's devaluation."

= = = =

((MD)): This speech is of utmost importance, people need to take some time to read it. A 40% devaluation will come in some form of Quantitative Easing. http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm The snip of the speech I provided is in his closing remarks. But people should read the whole thing.

Again I ask, why are the people implementing these policies not electable by the people. Ben Bernanke admitted recently that inflation is indeed a -tax-

Monetary policy effects everyone, and everything, so ...why is it that the people who set loose/cheap money-policy/law & the people implementing these policies over at the FOMC & Federal Reserve not elected anymore?

well anyway Its long passed tourniquet time, Im not suggesting panic, but I think most adults are rightfully alarmed.

And I'm just getting started, but hey, If nothing in the above merits any concern in your world, you my friend are one tough audience. =)

[-] 1 points by ineptcongress (648) 12 years ago

I wonder about the derivative exposure and how it's measured given the fact that there are no reporting/ data aggregation requirements in place--is it just a rough estimate, or how did they get to that scary number?

[-] 1 points by MonetizingDiscontent (1257) 12 years ago

A good anwser would require a little more space than allowed on the threads. So I'm going to suggest a couple articles as a starting point, and use MF Global as the example, because out of their collapse came a certain term: Re-Hypothecation & Re Re Re Hypothecation which exposed much of where this hidden debt comes from. From Off balance sheet accounting schemes. Undisclosed debt will always be kept off the books.

Why The UK Trail Of The MF Global Collapse May Have "Apocalyptic" Consequences For The Eurozone, Canadian Banks, Jefferies And Everyone Else

http://www.zerohedge.com/news/why-uk-trail-mf-global-collapse-may-have-apocalyptic-consequences-eurozone-canadian-banks-jeffe

...Under the U.S. Federal Reserve Board's Regulation T and SEC Rule 15c3-3, a prime broker may re-hypothecate assets to the value of 140% of the client's liability to the prime broker. For example, assume a customer has deposited $500 in securities and has a debt deficit of $200, resulting in net equity of $300. The broker-dealer can re-hypothecate up to $280 (140 per cent. x $200) of these assets.

But in the UK, there is absolutely no statutory limit on the amount that can be re-hypothecated. In fact, brokers are free to re-hypothecate all and even more than the assets deposited by clients. Instead it is up to clients to negotiate a limit or prohibition on re-hypothecation. On the above example a UK broker could, and frequently would, re-hypothecate 100% of the pledged securities ($500)...."

This asymmetry of rules makes exploiting the more lax UK regime incredibly attractive to international brokerage firms such as MF Global or Lehman Brothers which can use European subsidiaries to create pools of funding for their U.S. operations, without the bother of complying with U.S. restrictions....

(((MD: Thats even where Bernie Madoff went)))


(Now try following the above article up by reading this)

:::::::::::::::The Great Wall St Re-Hypothecation Scandal:::::::::::::::

http://newsandinsight.thomsonreuters.com/Securities/Insight/2011/12_-_December/MF_Global_and_the_great_Wall_St_re-hypothecation_scandal/


[-] 1 points by ineptcongress (648) 12 years ago

i actually knew about the uk exemption, but what he describes in the article is more pervasive than i would have thought. love those guys at zero hedge.

[-] 0 points by smartcapitalist (143) 12 years ago

You have written about a lot of things and it would take me a LOT of time to respond to each. However, I disagree with Ben on getting interest rates to absolute zero, sure it should be lowered by not zero. Also inflation being a tax is a common concept in finance. It's a 'tax' in the sense that it devalues you existing cash. As for devaluing dollar, QE would sort of do that a little bit but it is probably not a very good idea. We depend heavily on imports and a devaluation of dollar would hurt those in the short and medium term.

[-] 1 points by ineptcongress (648) 12 years ago

it's not surprising, i suppose, that the only way we can increase taxes is through the backdoor--i.e., inflation (currency devaluation). people just want a fantasy government, they'd never vote for the truth.

[-] 0 points by smartcapitalist (143) 12 years ago

Well inflation as a 'tax' does not add to govt tax revenue. It's a 'notional' tax not a 'real' tax. I hope you understand that

[-] 1 points by ineptcongress (648) 12 years ago

oh yes, indeed. but from the consumer's point of view, it sure feels real--the tricky thing is that we can't even oust the beast that's causing it, since he is basically insulated from the voters.

[-] 0 points by smartcapitalist (143) 12 years ago

Any growing economy has inflation. And you can out vote inflation

[-] 1 points by MonetizingDiscontent (1257) 12 years ago

QE would sort of do that a little bit?

Wait, Ben is prescribing to intervene in the monetary system with massive injections into the money supply, enough to effect the exchange value of the dollar, as a last stand to fight off the effects of deflation caused by prior money injections that obviously have never worked for many 10's of years.... I don't think Ben is talking "sort of, a little bit" as you 'kind of' say,

No.. Ben is very specific in what he saying, and what he prescribes as a last ditch effort to kick the the can one more time, is intervening to the tune of a 40% devaluation. Remember, the context that he is talking in, is in the event that we are faced with another depression, as a last resort. And I would remind you he has already tried all his other alternatives.

Last resorts are never sort of, or kind of, or a little bit smartcapitalist


[-] 0 points by smartcapitalist (143) 12 years ago

Also if I should clarify on my 'QE would sort of do that a little bit'. For one, what happened with the last QE rounds was that a lot of the money was invested abroad particularly in emerging economies. So when that happens (dollars are used to buy foreign currency), the demand for dollar drops vis-a-vis that currency and therefore the dollar exchange rate decreases. Also the fact that interest rates will drop because of increased money supply in domestic economy will also drop the value of the dollar, if interest rate parity is to be maintained.

But a 40% devaluation of currency in a short span of time is a huge thing. The effect of this cannot be predicted and no economist would want to suggest such a move.

[-] 0 points by smartcapitalist (143) 12 years ago

But as an analyst, I do not foresee a 40% drop in value. I would strongly recommend hedging risk but even a look at the futures would tell you that no one expect 40% drop

[-] 1 points by MonetizingDiscontent (1257) 12 years ago

....I was just analyzing this a minute ago....


:::::::::::: Debt Ceiling 101, Rick Santelli Sounds Off ::::::::::::

(((CNBC News Video))) http://www.zerohedge.com/news/debt-ceiling-101-santelli-sounds

-01/27/2012-

In an effort to reach the angry mob, CNBC's Rick Santelli goes all Sesame Street on the numbers behind the US Debt Ceiling Rise.

Focusing for two minutes on what this practically means for every man, woman, child, and politician, the shouting Chicagoan points out that when the US breaches this new limit then the world's entire population will be on the hook for $2,346 each

(and $52,409 per US person).