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Fed Pretends It Is Preparing To Soak Up Excess Reserves, Even As Currency Swaps Are Sure To Add About $500 Billion To Fed's Assets

Tyler Durden's picture


Less than 24 hours after bailing out Europe for the latest time with hundreds of billlions of liquidity swaps (full terms TBD still, record short covering certainly not TBD), the Fed is pretending to be a prudent monetary power, by announcing that it will "conduct 5 small-value term deposit offers." As a reminder, in its January 2010 minutes, the Fed noted that it would "eventually" move to a less accomodative policy "using a term deposit facility (TDF) to absorb excess reserves." So the schizos at the Eccles building want the gullible public to believe that just like all those micro reverse repos that it conducted in late 2009 (which led nowhere), the TDF tests will be critical to withdrawing some of the $2.5 trillion in assets on the Fed's balance sheet. Well guess what: with about $500 billion in liquidity swaps about to hit the asset side of the ledger (that's a conservative estimate based on the last time the Fed went full bore on bailing out Europe, and sorry, that European bailout does not come cheap), Excess Reserves (fed liabilities) are about to skyrocket by a comparable amount to match the assets. And here is the double whammy: $500 billion in new excess reserves earning 0.25% for holder banks, means US banks are about to earn an additional $1.25 billion a year risk-free courtesy of US taxpayers, who already are getting the shaft by paying more for gas thanks to the privilege of having bailed out Europe and drowned the world in new and unprecedented gobs of excess liquidity! Simply stated, the Greek "bailout" is a roundabout way of funneling over another extra billion to US banks! Direct cost to US taxpayers to bailout Europe via IMF: $50 billion; Indirect cost to fund incremental bank excess reserves: $1.25 billion; The joy of being raped daily by the Fed-Wall Street complex and assuring another year of record Wall Street bonuses: priceless. Some things money can't buy. For everything else there are trillions in Federal Reserve Notes appearing each and every day out of thin air.

Full text of Fed statement:

The Federal Reserve Board has authorized up to five small-value offerings of term deposits under the Term Deposit Facility (TDF) to be conducted in coming months. The Board had indicated in its announcement on April 30 that it anticipated conducting such small-value offerings. These small-value offerings are designed to ensure the effectiveness of TDF operations and to provide eligible institutions with an opportunity to gain familiarity with term deposit procedures. The development of the TDF and the small-value TDF offerings are a matter of prudent planning and have no implication for the near-term conduct of monetary policy.

The Board also approved a basic structure for the small-value TDF offerings. Similar to many money market instruments, the term deposits offered will be simple fixed-rate instruments with maturities of 84 days or less and will be issued primarily through competitive single-price auctions. TDF offerings will also include a noncompetitive bidding option to ensure access to term deposits for smaller institutions.

The first small-value TDF offering could be held as early as mid-June. More information about the timing and other details of these small-value TDF offerings will be announced at a later date. Terms and conditions for the small-value TDF offerings as well as information about the steps that institutions must complete to be eligible to bid for term deposits are available at


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Mon, 05/10/2010 - 17:34 | 342123 The Rock
The Rock's picture



Mon, 05/10/2010 - 18:46 | 342255 B9K9
B9K9's picture

First everyone griped about the green shoot propaganda (lies), fraudulent behavior and outright illegal activity. Now, with the criminal enterprise unmasked and the power-elite operating in broad daylight without any hint of embarrassment, everyone seems to ... still be unhappy.

Well, I for one am glad the tide has been breached. To be honest, the waiting game was beginning to try my patience. Nobody enjoys uncertainty; it's usually best just to get on with things.

So now we know - not that it was any surprise. Perhaps this date will be remembered along with 9/1/39 or 12/7/42. The gauntlet has been thrown down and there's no going back.

Mon, 05/10/2010 - 19:17 | 342311 ghostfaceinvestah
ghostfaceinvestah's picture

No doubt, this weekend was the beginning of the endgame.

Mon, 05/10/2010 - 20:03 | 342424 dark pools of soros
dark pools of soros's picture

bail out one currency with another... while destroying them both

a true Greek tragedy 

Mon, 05/10/2010 - 21:57 | 342622 Popo
Popo's picture

I wish you were right. But I have plenty well educated, successful friends who don't have the faintest idea what's going on.

They think "Goldman is bad"...but they're not 100% clear on why.

If I rant about the Fed, they immediately think I've gone tinfoil-hat on them.

Mon, 05/10/2010 - 23:25 | 342733 Crab Cake
Crab Cake's picture

Honestly Popo, I don't expect the majority to understand why they are living like animals, burning once hallowed now fatally corrupt institutions and buildings, and stringing up anyone in a suit when the time comes.  I doubt anyone will understand a few hundred years from now, when they try to explain it in History books either.  Madness knows no reason.

There is a word for what is happening, insanity, and a word for what is coming, chaos.

TPTB think they can control and mold the coming chaos, but they will find out otherwise as chaos is bound by no hand or mind of man; there is no predicting the unpredictable.

Rise Fenrir, your time approaches....

It sates itself on the life-blood
of fated men,
paints red the powers' homes
with crimson gore.
Black become the sun's beams
in the summers that follow,
weathers all treacherous.
Do you still seek to know? And what?
Brothers will fight
and kill each other,
sisters' children
will defile kinship.
It is harsh in the world,
whoredom rife
—an axe age, a sword age (and the sun rises)
—shields are riven—
a wind age, a wolf age—
before the world goes headlong.
No man will have
mercy on another
- Völuspá
Tue, 05/11/2010 - 02:31 | 342892 merehuman
merehuman's picture

Euro @1.2701  on a downward trend  11:31pm  Pacific time

Tue, 05/11/2010 - 01:15 | 342847 JethroBodien
JethroBodien's picture

Whats the end game here...  If I didn't know better this looks like a take down of Europe with surgical precision.  Europe has become a debt slave to its lending overlords.  And who are these overlords you may ask?  Well the ECB and US Federal Resereve of course which are simply banking cartels.  The question everyone should be asking is what is the end game of these cartels?  I fear more sinister motives are behind these financial machinations.

Acoms Razor says that : 'the simplest answer is usually the right answer'

I think we dismiss this as a possibility because of the sheer audacity and magnitude of the deception. I would argue its all very clear.

Tue, 05/11/2010 - 01:59 | 342876 Rusty Shorts
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The real Nuclear Option = reset gold to $30,000 an ounce.


Problem solved.

Tue, 05/11/2010 - 05:19 | 342973 i.knoknot
i.knoknot's picture

i was kind of surprised at how flat gold was today in light of the current events, and today's market hop...

clearly the correlation between the dow and gold was stressed this week - gold jumped on the mini-crash, and today it was flat on the pop.

i dunno about 30K, but barring manipulation... the direction sounds right. heh.

(rs, sorry about the interchange a few weeks back. i re-read and felt like an ass... cheers)

Tue, 05/11/2010 - 08:56 | 343183 Rusty Shorts
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Hey, no problem, I was drowning in beer that particular night...making stupid post, it was me being an ass, not you.

Mon, 05/10/2010 - 17:33 | 342124 USCDoctor
USCDoctor's picture

Man... I didn't even get a reach-around. WTF?

Mon, 05/10/2010 - 18:32 | 342231 The Rock
The Rock's picture

Satan: How tall are you private?
Lloyd: Sir! Five foot six, sir!
Satan: Five foot six? I didn't know they stacked shit that high! You tryin' to squeeze an inch in on me somewhere, huh?
Lloyd: Sir! No Sir!
Satan: Bullshit. It looks to me like the best part of you ran down the crack of your momma's ass and ended up as a brown stain on the mattress! I think you been cheated! Where in the hell are you from anyway, private?!
Lloyd: Sir! New York, Sir!
Satan: Holy dog shit! New York? Only steers and queers come from New York, Private Lloyd. And you don't look much like a steer to me so that kinda narrows it down. Do you suck dicks?!
Lloyd: Sir! No Sir!
Satan: Are you a peter puffer?!
Lloyd: Sir! No Sir!
Satan: I'll bet you're the kinda guy that would fuck a person in the ass and not even have the goddamn common courtesy to give him a reach-around! I'll be watching you!

Mon, 05/10/2010 - 18:36 | 342237 Rainman
Rainman's picture

uh, Full Metal Jacket I thinks. Funnier than shit. Thanx for the laff, Rock.

Mon, 05/10/2010 - 17:34 | 342127 Ned Zeppelin
Ned Zeppelin's picture

Ha, ha.

Oh, wait. The joke's on us.

Mon, 05/10/2010 - 17:35 | 342128 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Why do I always get the picture of BS with a pitchfork, a pile of Doelarrs, and a bonfire in my head any time he has a plan?

Mon, 05/10/2010 - 17:35 | 342129 Cheeky Bastard
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Mon, 05/10/2010 - 17:44 | 342148 Mitchman
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Mon, 05/10/2010 - 20:32 | 342483 tip e. canoe
tip e. canoe's picture

where's mr. creasote?

Mon, 05/10/2010 - 20:35 | 342487 MountainHawk
MountainHawk's picture

Love it

Tue, 05/11/2010 - 00:03 | 342785 dumpster
dumpster's picture

what comes out the end

Dear Friends,

So many unprecedented events have occurred that even we are getting hardened to the economically absurd.

The Western world was once again on the brink of a financial collapse last evening. If it wasn’t, you can be assured that the Fed would not have ponied up swaps as large as they have.

The reason I discuss this tonight is to drive home the realization that the Western world is financially crippled with band-aids now amounting in the trillions.

I can only imagine what size offering of euros took it down from over $1.30 to the present $1.2887. You pledge almost $1 trillion to do all necessary to support the euro, and it fails to take the prize on the day of initiation.

"Pretend" comes at an ever increasing price. This time it was $200 billion more than TARP.

"Extend" becomes less and less effective.

Be very careful as this last save has not yet occurred.

Jim sinclair

Mon, 05/10/2010 - 17:36 | 342132 naiverealist
naiverealist's picture

More auctions?  More debt?  Just what classifies as a small-value TDF?  Less than a trillion dollars?  And me without my KY.

Mon, 05/10/2010 - 20:09 | 342435 Cognitive Dissonance
Cognitive Dissonance's picture

When, not if, we run out of K-Y, it's best to know in advance acceptable substitute lubricants one can use in an emergency. Of course, Vaseline is always a fine substitute when the going gets rough.

My favorite is land-o-lakes butter (not margarine) in the one pound package. Once you've been buttered up, any remaining land-o-lakes can be used for the pancakes the next morning, assuming there was a sleep over. 

Mon, 05/10/2010 - 20:39 | 342492 ColonelCooper
ColonelCooper's picture

May I suggest the unsalted?

Mon, 05/10/2010 - 21:26 | 342573 Cognitive Dissonance
Cognitive Dissonance's picture

Sounds like a man of experience, as we all are, or soon will be.

Mon, 05/10/2010 - 22:34 | 342677 Howard_Beale
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Check out the Zazzle store for great Euro Bailout items from William Banzai. It all goes to benefit ZH, with your continued support.

Several new shirts...will add more in the next few days. Keep checking it out! Even if you are just window shopping it's good for a laugh...

Mon, 05/10/2010 - 20:42 | 342501 Papasmurf
Papasmurf's picture

Olive oil is superior for Greek.

Tue, 05/11/2010 - 01:51 | 342869 Rusty Shorts
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 WHAT, Olive oil is for cooking???

Mon, 05/10/2010 - 23:52 | 342774 Joe Sixpack
Joe Sixpack's picture

That is ummm..., bloody funny!

Mon, 05/10/2010 - 17:36 | 342133 buzzsaw99
buzzsaw99's picture

I wouldn't buy a used car from Bernanke so I damn sure ain't gonna buy any junk bonds from hizass.

Mon, 05/10/2010 - 17:39 | 342138 ghostfaceinvestah
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Why bother with the charade?  Just start buying MBS again, there are 3.5T worth that he doesn't own.

Mon, 05/10/2010 - 17:41 | 342142 DaveyJones
DaveyJones's picture

All good dogs go to heaven
All good taxpayers go to hell

Mon, 05/10/2010 - 17:42 | 342145 USCDoctor
USCDoctor's picture

No joking... when is this shit going to end? I sold half of my BRKb today and am about 1% up from the march lows. I'm done. The rest is short positions and cash. Is the NWO the next thing to happen? How is this good news?

Mon, 05/10/2010 - 17:49 | 342158 Fraud-Esq
Fraud-Esq's picture

I sold mine too. After years of thinking he was so very different, I just didn't like his excuse in the shareholder letter that he reviews "every derivative personally". He's TOO OLD to be saying that shit to me making those kinds of insurance bets. It may pan out for him, but he definitely changed the buffett brand overnight, didn't he.

Mon, 05/10/2010 - 17:57 | 342171 whatsinaname
whatsinaname's picture

Buffett bought most of his holdings in and around 1974 (around the OPEC embargo) and equities were in very bad shape. Then in 1982 the 401k programs started and sheeple started pouring buckets of cash into equities. Things got worse in 1993 as banks were allowed to join the equity party via a repeal of Glass Steagall.

All of the above certainly made Buffett look like a genius. To his credit he held onto a lot of his long term holdings and never tried to bet against the market (and hordes of sheeple). If and ever sheeple catch onto this charade watch out equity markets (with or without the shenanighans of the powers-that-be)

Mon, 05/10/2010 - 18:02 | 342182 Cheeky Bastard
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Mon, 05/10/2010 - 18:19 | 342206 Rainman
Rainman's picture

Reminds me that Bubba really had to sell the farm to avoid Senate conviction for that pesky Monica blow job business. He signs off on the G-S massacre, then wheels right into signing CFMA 2000 on his way out the WH door. Now the asshole walks around like a benevolent world diplomat.

Mon, 05/10/2010 - 19:05 | 342293 A Nanny Moose
A Nanny Moose's picture

saying, " I didn't know better" and attempting to apologize.

Mon, 05/10/2010 - 20:40 | 342496 MountainHawk
MountainHawk's picture

It now all seems so crystal clear...

Tue, 05/11/2010 - 08:55 | 343182 fallst
fallst's picture

+1,000,000  ..  But Goldman is providing him with a son-in-law.

Tue, 05/11/2010 - 08:57 | 343186 fallst
fallst's picture

+1,000,000  ..  But Goldman is providing him with a son-in-law.


Replying to Rainman....fix this please

Mon, 05/10/2010 - 19:08 | 342299 Common_Cents22
Common_Cents22's picture

Will there be any investigation into Buffet selling his Moody's shares, what, a day after Moody's received their Wells notice?  Something that wasnt publicly disclosed until today?

Buffet should be up for best actor for the role of "America's jolly investing grandpa".   He is a corrupt insider.



Mon, 05/10/2010 - 20:45 | 342507 MountainHawk
MountainHawk's picture

Buffets next book should be titled "The Warren Buffet Way...Memoirs of the World's Whealthiest Prisoner"

Mon, 05/10/2010 - 21:37 | 342595 SteveNYC
SteveNYC's picture

That's what you get for pretending the danger's not real.
Meek and obedient you follow the leader
Down well trodden corridors into the valley of steel.
What a surprise!
A look of terminal shock in your eyes.
Now things are really what they seem.
No, this is not a bad dream.


Pink Floyd - Sheep

Mon, 05/10/2010 - 18:00 | 342180 ghostfaceinvestah
ghostfaceinvestah's picture

NWO is the plan - one world government coming your way.  This weekend was a big step in that direction.

Mon, 05/10/2010 - 18:06 | 342186 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

This is the New World.

Mon, 05/10/2010 - 22:35 | 342680 Howard_Beale
Howard_Beale's picture

I think the power is going to shift from the West to the East in the next 5's a cycle thing. And we are certainly doing every idiotic thing we can to make it happen.

Mon, 05/10/2010 - 23:05 | 342713 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

In terms that the West has to now leave its Ivory Tower and live in the third world, and that the new living standards of the East will be on parity to the West, I would agree that the East comes out ahead.  In real terms, I think we are all out of luck; East and West.

We are doing everything we can to dig deeper into idiocracy, agreed.

With that in mind, I have been scoping the store for my soon to be had birthday!  I am going to ride into the New World Order in style!

Tue, 05/11/2010 - 03:36 | 342926 AnAnonymous
AnAnonymous's picture

Surprising. We can witness continued statements that power relies in the Western part of the world. Still people keep thinking of a power shift to the East?


How will this shift in power happen?

Mon, 05/10/2010 - 17:43 | 342146 Thoreau
Thoreau's picture

"Who's on first?"

Mon, 05/10/2010 - 18:32 | 342232 Frosty_The_Snowman
Frosty_The_Snowman's picture

Evers to Tinkers to Chance

Mon, 05/10/2010 - 20:00 | 342419 mtguy
mtguy's picture

More like< Hope to Change to Oh shit!

Mon, 05/10/2010 - 17:47 | 342154 lucky 81
lucky 81's picture

pitchforks and 6 feet of rope should do it . jesse says it well.

Mon, 05/10/2010 - 17:49 | 342160 Cursive
Cursive's picture

U.S. congressional elections in November, huh?

Mon, 05/10/2010 - 17:54 | 342170 Duuude
Duuude's picture

"If They're In Vote Them Out."

Mon, 05/10/2010 - 18:03 | 342183 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I say we don't "vote".  I say we take over the place ourselves.  100 Sen and Four hundred odd Congress...that is about the same number as frequent ZH posters.  I bet America would love us.

Mon, 05/10/2010 - 18:10 | 342192 ColonelCooper
ColonelCooper's picture

The way things are headed, we'll be lucky if elections aren't suspended until martial law is repealed.  Martial law will remain in effect until our benefactors decide it is no longer in our best interest. 

Mon, 05/10/2010 - 18:33 | 342233 ghostfaceinvestah
ghostfaceinvestah's picture

My guess is the 2012 elections will never happen.  This year could be your last chance to vote.

Or we will do what every other banana republic does and just stuff the ballot boxes (which is much easier with electronic voting machines).

Mon, 05/10/2010 - 19:07 | 342297 A Nanny Moose
A Nanny Moose's picture

Voters don't win elections, counters do :)

Mon, 05/10/2010 - 19:19 | 342317 Rick64
Rick64's picture

Diebold the modernization of voting. Even if you pick the wrong guy they will correct it for you.

Mon, 05/10/2010 - 20:41 | 342493 tip e. canoe
tip e. canoe's picture

you mean they haven't already?  why do you think mr. kerry conceded without so much of a peep?  they weren't ready to cook the golden goose perhaps?

damn, there goes another pink elephant racing by....

Mon, 05/10/2010 - 17:50 | 342162 Fazzie
Fazzie's picture

  Feel like Im slippin into the twilight zone. The entire western economy in a deflationary death spiral, plastered over with liquidity that can never be repaid.

 Good thing its a complete farce recovery because any real recovery will be self extinguishing.

Mon, 05/10/2010 - 17:56 | 342164 Duuude
Duuude's picture

US banks are about to earn an additional $1.25 billion a year risk-free courtesy of US taxpayers

And how much is the Fed/Bankster/Treasury Repo Scam costing us? Tad more than a piddly $1.25 bil while financing WS risk-free horseshit as well, while covering tha Banksters' bonuses.

Mon, 05/10/2010 - 17:54 | 342166 Ned Zeppelin
Ned Zeppelin's picture

I can't even imagine the circumstances that would have to be in place for the Fed to start disgorging itself of all of the rotten assets it has acquired.  If we knew what all was in there, we could guess at the unrealized loss that already exists there, living in that zone beyond the Monetary Event Horizon. In fact, I have a new vision: it's really a sort of Debt Rapture that is occurring, with all of the debt rising up into the air, winged bonds, notes and coupons, secured, unsecured and guaranteed, all in response to Ben's call, to seek solace there in those vaults beyond the sky, to be called Home. 

Mon, 05/10/2010 - 18:12 | 342196 ColonelCooper
ColonelCooper's picture

I think your Debt Raptor just shit on my windshield.

Mon, 05/10/2010 - 21:39 | 342598 IQ 145
IQ 145's picture

 That's great, I liked that. I think we have a "Thelma and Louise" government re-financing plan in operation.

Mon, 05/10/2010 - 22:19 | 342650 Hulk
Hulk's picture

Turn DC into one big garage sale. I can see the hand painted signs, written in black crayon, on every telephone pole in America, pointing to DC, Anything not sold gets thrown in the Potomac

Mon, 05/10/2010 - 17:58 | 342176 BlackBeard
Mon, 05/10/2010 - 18:05 | 342185 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

They will tell us after the SHTF, around the same time we are shown the documents about JFK, RFK, MLKjr, and 9/11.

Mon, 05/10/2010 - 19:22 | 342325 Rick64
Rick64's picture

I think they only got $10 to investigate it. They had to wrap up the investigation fast.

Tue, 05/11/2010 - 00:51 | 342817 BlackBeard
BlackBeard's picture

HAH! good one! $10, just enough for coffee and no danishes.

Mon, 05/10/2010 - 18:07 | 342188 lizzy36
lizzy36's picture

The circle jerk takes on new momentum.

Government bails out banks, who bail out the government (who else buys UST these days), who bail out the banks.......

And those who are not in lucky 20,000 households at the top, well they are the ones getting bent over, absent k-y, on an hourly basis. 

It is a ponzi to behold.

Mon, 05/10/2010 - 18:21 | 342208 The Rock
The Rock's picture

a circle jerk is exactly what it is, with a western grip i might add. 

and we are the ones in the middle who get creamed on in the end.


Mon, 05/10/2010 - 18:34 | 342235 ghostfaceinvestah
ghostfaceinvestah's picture


It’s all been done by smoke and mirrors. The governments bailed out the banks in September 2008, and again in various increments through the Spring of 2009. The great Keynesian stimulus that was supposed to guarantee recovery left most industrial countries with government deficits in excess of 10% of GDP. How does the US finance a deficit equal to 12% of GDP with a savings rate of 2.5%? By bank leverage. The banks, once bailed out by the governments, in turn bail the governments out. And when the weaker governments threaten to go belly up, the banking system freezes up.


The cost of insurance against defaults by European banks reached an all-time record for that reason last Friday, and banks stopped lending to each other on the interbank market – portending an imminent collapse of the financial system. That was not a drill. It was the real thing. And that is why the European governments shifted from official complacency only days ago to total mobilization mode.

Now the government are going to bail out the banks again, with money raised–from the banks. I’m holding my gold positions. This is truly ludicrous and may lead to a decline in confidence in all major currencies.

Mon, 05/10/2010 - 18:07 | 342189 mikash99
mikash99's picture

"Too Big To Fail" Has Just Morphed into "Too Big To BAIL".  RIP

Mon, 05/10/2010 - 18:57 | 342287 reading
reading's picture

I hope that has already made it onto one of Howard's shirts!

Mon, 05/10/2010 - 18:09 | 342190 Simon Jester
Simon Jester's picture

Ok, I'll say it out loud...(and probably be banned for life)

At what point do you admit the inevitabe and simply stop paying your taxes??

P.S....I'm quickly running out of care as far as who reads this, so do your best...


Mon, 05/10/2010 - 18:16 | 342203 Dr. Richard Head
Mon, 05/10/2010 - 18:31 | 342228 Conrad Murray
Conrad Murray's picture

About 2 months ago.  EXEMPT, ftw

Mon, 05/10/2010 - 19:10 | 342301 tmosley
tmosley's picture

When you either a. lose your job, or b. expatriate.

Mon, 05/10/2010 - 19:42 | 342373 Simon Jester
Simon Jester's picture

Something tells me that both of those "loopholes" will be closed soon enough...

Mon, 05/10/2010 - 22:50 | 342702 Iam_Silverman
Iam_Silverman's picture

Hey, why don't we just expatriate everyone who doesn't pay taxes?

Mon, 05/10/2010 - 20:18 | 342454 Rick64
Rick64's picture

Everyones afraid of the IRS Gestapo. Even if you win they tend to ruin you financially. We have to be ready to do something of this magnitude to stop the madness.

Mon, 05/10/2010 - 20:45 | 342509 tip e. canoe
tip e. canoe's picture

you can do it legally...stop working for a corporation and become like a charm.

Tue, 05/11/2010 - 02:44 | 342899 merehuman
merehuman's picture

simon jester , i am with you. 59, never gonna see ssi.Owe 15 g plus in taxes, cant pay as business died. Like you, i dont see a future in staying the course.

Mon, 05/10/2010 - 18:10 | 342193 Oquities
Oquities's picture

who would have thought that we could just manipulate our money supply, magnifying it SO much while having a negligible inflationary impact.  if we had printed (archaic) all these dollars in the 80s or 90s we could have purchased most of the world's assets for a trifle.

they underestimated the gullibility of the masses, who grasp so vaguely how money works.  it seems now that governments recognize that gullibility and are taking full advantage.

Mon, 05/10/2010 - 18:56 | 342257 John McCloy
John McCloy's picture

Good point but do not go giving them any other brilliant ideas like printing to purchase the African continent. Speaking of printing to alleviate debt..umm..why can they not print our tax revenues? Only seems logical since we actually do productive work for the blood money their receive yet they create money without any manufacturing or production of goods.

Mon, 05/10/2010 - 20:14 | 342443 silvertrain
silvertrain's picture

 They are getting ready to , Cal , ill, ny , mi .. All of them now has an open line of credit now..I mean , we can help greece out surely we can help our own people...

Mon, 05/10/2010 - 20:32 | 342484 cougar_w
cougar_w's picture

[we can help greece out surely we can help our own people]

You are confused. We are not helping Greece. This will be obvious by summer, though you might have to watch Russian TV to see it.


Mon, 05/10/2010 - 20:49 | 342513 tip e. canoe
tip e. canoe's picture

"Did you know that Greece alone has 14 times as much gold per capita as China? Do you realize that your "PIGS" actually have the same amount of gold per capita as the US claims to still have? (PIGS=25 tonnes/million people; US=26 tonnes/million people) And did you know the PIGS combined have 34 times as much gold per citizen as China? Astonishing really."

Mon, 05/10/2010 - 19:14 | 342307 Common_Cents22
Common_Cents22's picture

It's not even printing anymore.  It's copying and pasting electrons to infinity.  As long as you keep the money out of the hands of the people you can copy and paste to the moon w/out inflationary outcomes.

Mon, 05/10/2010 - 20:33 | 342486 cougar_w
cougar_w's picture

+1 important

Mon, 05/10/2010 - 21:56 | 342618 A_MacLaren
A_MacLaren's picture

The "inflation" is manifesting itself in the prices of equities and so-called risk-free debt securities.


Mon, 05/10/2010 - 18:27 | 342210 John McCloy
John McCloy's picture


“But they were, all of them, deceived, for another Currency was made. In the land of Jekyll Island to control all others. And into this currency Ben poured his greed, his malice and his will to dominate all currencies. "One Currency to rule them all." One by one, the Free Markets of  Earth fell to the power of the Earth Dollar. But there were some who resisted. A Last Alliance of Austrian Economists and Patriots marched against the armies of the NWO and on the slopes of Mount Rushmore, they fought for the freedom of Earth. Victory was near.But the power of the Currency could not be undone.

Borrowed from another poster but cannot recall his name but seemed fitting for the day.


Mon, 05/10/2010 - 18:28 | 342220 ExistentialSkeptic
ExistentialSkeptic's picture

Love it!

Someone here on ZH recommended "The Creature from Jekyll Island" -- was it you? I found the story fascinating and I have to say that I'm still recovering from the revelations. 

Any suggestions out there for further reading?

Mon, 05/10/2010 - 18:38 | 342240 ghostfaceinvestah
ghostfaceinvestah's picture

Rothbard's The Case Against the Fed was similar but a bit more academic (in a good way).

Mon, 05/10/2010 - 19:21 | 342323 A Nanny Moose
A Nanny Moose's picture

A great follow-up (or starter) is Hazlitt's "Economics in One Lesson". Both are easy reads in their brevity.

Mon, 05/10/2010 - 18:41 | 342248 John McCloy
John McCloy's picture

  Pretty much everyone on here has recoed Creature but I did state that it should be required reading in all economics classes and I will go so far as to say it should have it's own class. To give you and example of the textbooks I have been subjected to as I ented my last semester I had courses on Macro & Micro with a Krugman text and just finished Money & Banking with a Mishkin text. This is how I sought out a site like Zerohedge because I felt like I was reading Kenyesian porn and my brain would not allow me to accept their teachings. I then arrived here and was forced to swallow the red pill and have been trying to give it to as many in my life as I possibly can. My education in finances is mostly fundamental text formulas and self teaching and there are many on here who still use terms I am unfamiliar with but that is why I love this place. I have learned more from Zero Hedge in 9 months than I possibly could in school for 18 years. 

I did read "Too Big Too Fail" which I enjoyed however I think a sequel is on the horizon because ACT III is about to begin. Aside from that I stick to the history of our nations foundings and their leaders in order to understand their logic and appreciate their bravery. Decision in Philadelphia, John Adams, Tesla "A Man ahead of his time" (Excellent novel in understanding how ruthless elitists could destroy the most brilliant man to walk the earth from a scientific innovation standpoint, The Real Lincoln, Andrew Jackson: His Life, Peter Schiff and definitely pick up The Next 100 Years by Friedman. Many on here aside from me are more qualified to give books in relation to finance than I but I did just get Atlas Shrugged because of a reco on here. 

Oh an the U.S. constitution. And if you could forward a copy of that to our lawmakers that would be of great

Mon, 05/10/2010 - 19:23 | 342326 ghostfaceinvestah
ghostfaceinvestah's picture

Yes, good recommendation, the Brands biography of Andrew Jackson is excellent.

Mon, 05/10/2010 - 19:26 | 342337 A Nanny Moose
A Nanny Moose's picture

Kudo's on Atlas Shrugged. Great book. Everybody who sees me reading it seems to concur, which baffles me as to how we got here.

Mon, 05/10/2010 - 22:58 | 342707 Gully Foyle
Gully Foyle's picture

Atlas Shrugged is a tad wordy and repititious.

The Fountainhead is more precise.

Kesey's Sometimes A Great Notion has a similar theme and compliments Rand nicely.

Then you get into the Illuminatus Trilogy and Still life with the Woodpecker.

Top it off with Meetings with Remarkable men and Manhood of Humanity & Science and Sanity.

Changes ones outlook radically.

Mon, 05/10/2010 - 23:49 | 342765 dumpster
dumpster's picture

reismans   capitalism .. 900 pages  ,,not a quick read , takes some concentration but pick and choose the chapters..


it is available on line free


makes quick shrift of the Keynesian muck,

tells about gold , shows the division of labor concepts .

many points of discussion about the history and development if the austrian method.

and it makes a good paper weight for the living room table

reisman will show how we got where we are now.



blasted to heck the shibboleths of modern day economic thought

Tue, 05/11/2010 - 03:43 | 342930 AnAnonymous
AnAnonymous's picture

When a site supposedly on capitalism starts to distribute stuff for free, you can smell propaganda.

Mon, 05/10/2010 - 19:36 | 342362 Fraud-Esq
Fraud-Esq's picture

The Creature from Jekyll Island, old but excellent. 

Secrets of the Temple, old and good.

Anything by Janet Tavakoli, recent and CDO expert

13 bankers, good, recent. 

Econned, recent, full of detail.

Read them all! TBTF was entertaining but full of the lies of the principals. Look, all the bankers went to the book opening party. That says it all.  

Mon, 05/10/2010 - 20:55 | 342528 tip e. canoe
tip e. canoe's picture

+1 tesla coil on 'man ahead'

thing is: his papers are still sitting somewhere in a vault somewhere on this continent.  maybe just maybe they'll be unearthed just in time.  maybe they already are, just not on this continent.

Mon, 05/10/2010 - 19:42 | 342374 Freewheelin Franklin
Freewheelin Franklin's picture

One of my favorites is AN INFLATION PRIMER by Melchior Palyi.


Free download here [.pdf 6MB]

Mon, 05/10/2010 - 22:24 | 342662 Hulk
Hulk's picture

Suicide for Dummies may come in handy one day...

Mon, 05/10/2010 - 23:33 | 342748 Crab Cake
Crab Cake's picture

I recommend a good long playlist, a good bottle, some smokes, some good drugs, and some quality time in your car with the engine running and the garage door closed.

I call it pink, but painless.

Hush little baby don't say a word....

Tue, 05/11/2010 - 01:39 | 342860 JethroBodien
JethroBodien's picture

Existential then this will interest you.  Edward Griffen the author of Jekyll Island


Mon, 05/10/2010 - 20:03 | 342416 puckles
puckles's picture

I doubt that even the Creature from Jekyll Island will be capable of slaying its own creation, the massive deflationary debt death spiral.  It may not appear so now, but when the devil's spawn takes charge, every asset class will be crushed in its path.  I have seen various estimates of the relative values of worldwide holdings of derivatives; the truth is that nobody really knows what's out there, but it's easily in excess of a couple hundred trillion $.  When those dominoes begin to fold, they will not stop.  And that's not even counting sovereign debt.  This is why all the central banks are panicking, of course, and have refused to realize losses here in the USA in real estate--keeping zombie assets on the books and letting the so-called "owners" reside without charge--but the Fed will be unable to print enough fast enough to cope with this vast amount of worldwide debt.  There is so little velocity in the money supply as it currently exists--do they really think that even more supply in the midst of total chaos will result in greater velocity?  They must be totally nuts if they lend this credence.  The banks that service commerce are not lending now; it's going to improve under stress?  Considering the amount that has already been "printed," we should have double-digit inflation already--but we don't.  Without credit expansion, there is no velocity, and no true inflation.  What has been created has been  put into markets, and when they fail it will disappear as quickly as it was created.

 The Squid undoubtedly understands this all too well, and likely has secreted its golden assets in its ink be dealt again under the NWO.

Mon, 05/10/2010 - 22:09 | 342639 A_MacLaren
A_MacLaren's picture

we should have double-digit inflation already

You're not looking in the correct places if you don't see the double digit inflation already.

Mon, 05/10/2010 - 22:23 | 342661 Madcow
Madcow's picture


So what happens? Assets go back to 1970 levels in an uncontrollable chain of bankruptcies and debt repudiation? Theoretically, a single one-dollar bill would eventually be worth all the goods and services ever produced.  

I understand the arguments for transitioning to hyper-inflation, but i don't see the transmission mechanism. How does that money get into circulation? Or does it stay out of circulation - and does the national guard simply try to manage rampant bankruptcy, foreclosure, and destitution?  

Sorry for all the questions. I thought your post made a lot of sense and hope you've got some more answers ! 



Mon, 05/10/2010 - 22:59 | 342708 Freewheelin Franklin
Freewheelin Franklin's picture

Spiraling deflation is a myth.


The deflation-phobia of our elites is therefore the rational reaction of those who profit from the privileges that our present inflationist regime bestows on them, and who stand to lose more than any other group if this regime is ever reversed in a deflationary coup. Perennial inflation is based on monopoly. Deflation brings in the fresh winds of the free market. True elites would welcome deflation for precisely this reason, because they owe their leadership positions exclusively to the voluntary support of other members of society. They have nothing to fear from deflation – a shrinking money supply – because their leadership is grounded on the useful entrepreneurial services they provide to their fellow citizens – services that would subsist through any changes in the money supply or in the price level

But large parts of our present-day elites are “false elites” or “political entrepreneurs.” These men and women owe a more or less great amount of their income and decision-making power to legal privileges that protect them from competition and which enrich them at the expense of all other people. The fortunes of many political entrepreneurs are directly or indirectly attributable to the money monopoly of the Federal Reserve System. It is only because of this monopoly that the Fed could create a near boundless expansion of the money supply. And it is this inflation that in turn has financed a near boundless expansion of the activities of the federal and state governments, and of those who rely essentially on their lobbying effort with the Fed, rather than on the quality of their products, to reach and maintain leadership positions.



Mon, 05/10/2010 - 22:03 | 342631 Broker NotBroke
Broker NotBroke's picture

Where do we find 2 pothead midgets to save us?

Mon, 05/10/2010 - 18:29 | 342221 hambone
hambone's picture

Remember in the old days of '08/'09 when we worried about housing, showed charts of resetting/recasting mortgages, worried about bank solvency.  Ha, like that mattered...Ben bailed it.  These things are now more or less backburner topics (not resolved or restructured, just backstopped).  Then we talked about when nations would collapse until they Ben and Tricky Trichet bailed it.  So, what is our next chapter?  UK???  US???  Nah, nothing to see there.  Could it be that we come full circle back to realizing the initially backstopped housing market (plus CRE) and banks aren't responding to multiple doses of hopium and bailoutium?  Strangely, incomes falling and rising real unemployment do matter?  Stimulus and social welfare receding does matter?  Rising oil prices and food prices do matter?  Wouldn't it be funny if housing led a new leg down...and the reaction would be?  Calling Ben, Fannie, Freddie.  Seems this may go a few loops before reality sets in.

Mon, 05/10/2010 - 18:29 | 342223 puckles
puckles's picture

I'm surprised the IRS isn't issuing regulatory-sized KY jelly tubes with each return these days--it might make the process a trifle easier, and after all, the .gov has our best interests in mind, always...

Mon, 05/10/2010 - 18:30 | 342225 BlackBeard
BlackBeard's picture

Retardo extraordinaire Ron Insana explains how ECB QE is a "good" thing:



Mon, 05/10/2010 - 18:46 | 342259 Entremanure
Entremanure's picture

If Ron Insana is so smart, he should leave CNBC and go start a hedge fund or something.  (Oh...he already did.)

Simon Hobbs is the UK's version of Bob Pisani.  Douche-bags deluxe the both of them.  Right up there with Mark "I have a law degree" Haines.


Mon, 05/10/2010 - 19:17 | 342312 Common_Cents22
Common_Cents22's picture

Insana is the smartest of the talking heads that doesn't know anything about real investing.    Insana is a useful idiot to the fat cats using him to talk their book and spread propaganda.  He thought he was part of the insiders and use his super connections and media savvy to start a fund of funds.  Did he raise 5 bucks or so?

Mon, 05/10/2010 - 18:37 | 342239 wang
wang's picture

Max Keiser

Posted on Monday, May 10th, 2010

High Frequency Terrorism: How the Big Banks and Federal Reserve Maintained Their Death Grip Over the United States

In a market where 70% of all trades are executed by computer algorithms via High Frequency Trading (HFT), Goldman Sachs has the power to make the market crash or rise at will. In fact, Goldman has a major Weapon of Mass Destruction in its Program Trading monopoly of the New York Stock Exchange, as Tyler Durden described on Zero Hedge:...


For further investigation, I turned to Max Keiser, who has written and authored similar Program Trading and HFT computer algorithms. I asked him if he thought this was an attack, here is what he had to say:

“May 6th was an unequivocal act of domestic financial terrorism in America. A day that will live in infamy.

To scare the lawmakers, themselves large owners of the very banks and stocks that they are supposed to be regulating, a financial Weapon of Mass Destruction was put to their head and they acquiesced.

As the inventor of the continuous double-auction, market-making technology (VST tech. US pat. no. 5950176) that is referenced 132 times by program trading and HFT patents since 1996, I can tell you that Goldman, JP Morgan and the gang simply...

Mon, 05/10/2010 - 18:54 | 342277 John McCloy
John McCloy's picture

Good find. Does anyone else on this site doubt that Goldman was complicit with John Paulson in naked shorting the markets into submission by destroying competitors like Bear, Lehman, AIG and WAMU in order to force a payout on their CDS?

May 6th was clear proof they were also using the crash to prevent legislation against them and scare the Eurozone into doing precisely what they did today. For this act of treason Goldman needs to be seized otherwise we my as well not even have a government. Their act of desperation is refreshing to me and shows we are getting closer by the day. I am ashamed of our lawmakers but I know good men like Barofsky know how blatant these actions were and it will be Goldman's undoing. Keep in mind it also moved the GS charges off the front page. 

Mon, 05/10/2010 - 19:32 | 342348 Rick64
Rick64's picture

 IMO the Wells notice to GS was also a distraction and introduced to appease the general public outcry. Why was it just released lately when they have known about it for months. Its seems like they held it as the ace up their sleeve to appease negative public sentiment. Then in succession you have Moodys being served and then JPM being investigated. While I applaud these moves I am leary that it is a ploy to distract the masses from the Audit the FED legislation. IMO they will sacrifice GS in a heartbeat if it means saving the FED.

Mon, 05/10/2010 - 19:35 | 342360 Rainman
Rainman's picture

+ 100. The acts we used to believe were random are really well devised strategies. I am a believer.

Mon, 05/10/2010 - 19:58 | 342417 thesapein
thesapein's picture

This story line has been coming along nicely, but I'm not so sure of this latest addition covering the last week's events. It has that too obvious smell about it.

Does anyone else out there think that last week's crash was a natural looking event and that the months before are actually the unnatural phenom to be rationalized?

Separate question: If GS is propping the market up, is it an "attack" when they decide to let it fall?


Mon, 05/10/2010 - 21:51 | 342613 Rick64
Rick64's picture

Separate question: If GS is propping the market up, is it an "attack" when they decide to let it fall?

When they control 60% of the trades on NYSE, and shut down at the time when liquidity is most needed. Their whole objective is to provide liquidity. answer yes.

 This would be comparable to having our military stand down while terroists flew planes into tall buildings.

Tue, 05/11/2010 - 01:11 | 342841 thesapein
thesapein's picture


I'm confused about something.

If the fed provides liquidity to save the economy, well, that's bad, right?

If GM provides liquidity to save the market, this is supposed to be equivalent to stopping a terrorist attack?

Why the double standard?



Tue, 05/11/2010 - 02:22 | 342886 GoodBanker
GoodBanker's picture

It's all bad... oh, and the Fed's liquidity provisions debase the currency, whereas GS's don't, though the distinction is immaterial in the context of your inquiry. GS providing liquidity is not akin to stopping a terrorist attack; rather, benefiting from the rebates inherent in serving as a primary "liquidity provider" while occassionally (last Thursday) eliminating said liquidity in a heartbeat so as to catch the unwitting public with its back turned is akin to patroling the skies of the U.S. for peculiar air traffic on a daily basis, only to stop doing so on the most pivotol of days. Becoming an institutionalized crutch or safety net (at least that's the sales pitch) implies that you won't periodically take out life insurance policies on the masses and remove the crutch while they're crossing the street.

Thus, Fed "providing liquidity" = bad due to currency debasement and selective distribution of said liquidity


GS "providing liquidity" = bad (if we truly understood the meaning of dealing with the devil), but GS providing liquidity and then periodically pulling it in an instant = much worse, just as if the Fed were to flood the system with liquidity, drop interest rates to 1%, wait until everyone's leveraged to the hilt with adjustable-rate financing, and follow up by jacking ST interest rates over 5%... oh wait.

Tue, 05/11/2010 - 12:38 | 343746 thesapein
thesapein's picture

Thanks so much for that response.

I'm also curious about something else. Just a year ago, I barely knew anything about GS. So this sort of control over the stock market is news to me. Is it also news to the public at large? I can't tell by reading others if this is one of those, "Oh, yeah, we've known about GS's control since its beginning," or, "We suspected such but now we know for sure." 

I'm curious because, to me, it's remarkable. To pull off such a scam right under the microscope of public trading, for everyone to see and to even ask for it. Wow. Brilliant.



Tue, 05/11/2010 - 11:05 | 343438 Rick64
Rick64's picture

GS stands for Goldman Sachs, they are a designated market maker for the NYSE. They provide liquidity for this exchange. It has been documented that they amount to 60% of the volume traded on the NYSE. I never mentioned GM or the FED. The fact is they didn't provide liquidity when it was most needed on May 6th. They shut down their machines at a time when liquidity was most needed. Their whole objective as a Market Maker is to provide liquidity on the NYSE and they failed. My analogy was the terroist attack. They both (GS and the MILITARY stood down at a time when they were most needed) Double standard? HUH

Tue, 05/11/2010 - 12:03 | 343651 thesapein
thesapein's picture

Sorry about the typo from GS to GM.

Thanks for expanding on GS role, too.

I should probably admit that I'm one to think the stock market is a credit bubble, is "the madness of crowds," and ought to suffer some truly wonderful crashes. So this kind of makes me a terrorists, by your analogy.

Should we part ways now?

Tue, 05/11/2010 - 12:11 | 343692 Rick64
Rick64's picture

Should we part ways now?

By no means.

I don't view you as a terroist. We need some reality to hit the markets. I am insinuating that both GS and the military(on Sept. 11) purposely didn't do their duties. Why is the question.

Tue, 05/11/2010 - 13:18 | 343840 thesapein
thesapein's picture

I guess I don't quite understand how providing liquidity fends off an attack, if said attack is the action of people who are heading for the exits. Does it simply allow more borrowing for more investing so that more credit fills the void as people sell?

I'm also reminded of how the fed is blamed for the crash during the Great Depression by not providing liquidity given that they kept rates low. So it's like they get blamed either way.



Tue, 05/11/2010 - 14:10 | 344030 Rick64
Rick64's picture

Simply put, GS provides the buys and sells on a stock. When the buys or sells are non existent then the stock will fall or rise because there is no support. As for The Great Depression that is a long conversation. They were enacted in 1913 to provide stability to the monetary system. In 1929 we had a market crash and The Great Depression. Did they fail? Of course. Was it orchestrated? Yes. There are a lot of informative posts and comments on this and I suggest you educate yourself. I am not trying to be condescending just trying to encourage you to do some research.

Mon, 05/10/2010 - 23:31 | 342745 JR
JR's picture

The people that allowed this are more crooked than JP Morgan Chase; these people should be in prison for rest of their lives.  They have ruined lives, destroyed their country, and some of them sold out for nothing more than some kind of weekend extravaganza.  Most politicians and regulars sell out dirt-cheap to the wannabe despots…  Truly, they are some of the lowest life forms on earth.

And for those people who say that HFT keeps the market in equilibrium or that it justifies itself by enabling “real-time risk management by detecting minute threats to financial stability,” well, we should just put the cuffs on them.  The lies are getting so bad they don’t even hold water, anymore; I mean, it’s getting to be that they can’t even lie properly…  It’s obvious the entire enterprise has become a scam. The house is betting against you and the game is rigged, and as Kaufman says, "posing a systemic risk to the overall marketplace."

Take Blankfein. I’m reading Khrushchev Remembers.  If Khrushchev were here that guy would be gone in days… on the basis the country couldn’t afford him.

I can hear ol’ Nikita saying: It seems there are some irregularities with Blankfein. And the next day, there’s no Blankfein.  With Stalin, the Party didn’t even make an arrest; it got to the point the Party simply picked someone up, and shot him.

Writes Khrushchev: “All of us around Stalin were temporary people.  As long as he trusted us to a certain degree, we were allowed to go on living and working.  But the moment he stopped trusting you, Stalin would start to scrutinize you until the cup of his distrust overflowed.  Then it would be your turn to follow those who were no longer among the living.”

Hopefully, Americans will shake off the threat of financial despotism and the final meltdown before absolute despotism takes hold.

Tue, 05/11/2010 - 02:15 | 342883 laughing_swordfish
laughing_swordfish's picture


You make an interesting comment. If say, GS were a Russian bank and they tried to pull this shit in Moscow, Blankfein, Cohn, Viniar and and about a hundred others would be immediately in Lefortovo, pending permanent transfer to the Gulag.

No notice, no warrants, no investigations ... just never-ending show trials on CNN as Blankfein, Timmay, Bennie and the others beg People's Court #2 for their lives, pleading guilty without prompting to "Crimes against the state", "Crimes against the People", and "Crimes against Humanity".

And how should they end up? Like Benito Mussolini and Clara Petacci or Nicolae and Marina Caeucescu ....


KrvtKpt laughing swordfish

DKM trading division

caught the upwave nice today

Mon, 05/10/2010 - 18:46 | 342256 JonTurk
JonTurk's picture

Mon, 05/10/2010 - 18:46 | 342260 JonTurk
JonTurk's picture

Mon, 05/10/2010 - 18:49 | 342263 JR
JR's picture

If the Fed and its failed TBTFs had the kind of power they say they do, then the central bankers would have fixed this financial crisis under the table long ago. Their only solution is the Stalin Solution:  to lie, to pretend that their monetary manipulation is working.

Under the same pretense, that the Soviet System was working, Stalin and his propagandists claimed the Union would enjoy the world’s biggest and best; and then they gave each other medals for “meeting” their Five Year Plans while the people starved.  Stalin, by instituting police terror in the early 1930s, managed to gain control of the resources needed to accumulate capital for “expansion” by selling consumer goods at enormous profits and by levying a heavy tribute on crops.  He drove workers under fearful conditions into the factories and mines and prescribed heavy fines for tardiness and jail sentences for absenteeism.  Periodically he raised the work quotas and lowered the pay scale.  And, then, at the very moment the nations composing the Soviet Union could break away, they all split. And all this wonderful story of “everything’s great” just fell apart, even after Khrushchev finally decided that some degree of economic decentralization was necessary after Stalin’s death.

And that is exactly what we’ve got going under the central bankers’ world monetary system –and all the while, the central planners just keep repeating, the problem’s going away.  The proof that the crisis is not going away is that the money manipulators didn’t perform their monetary magic earlier. What they did do, however, was to make matters much worse.  They told the profligate nations on Sunday not to worry, that no matter what we do and regardless of what we say, no austerity is necessary.  Do you now think Spain thinks there’s any danger at all in the short term of being ostracized or being cut off from the EU because of her profligate ways? No.  Now, when Spain goes into session in Brussels, Spain is strengthened.  It’s the same as taking a high school class with a lot of failing students and passing all the students, and then telling prospective employers you can hire any of these people, they’re all good. 

It’s papering over a problem and not only does is not solve the problem, it makes the problem considerably worse. There’s no more discipline. Why? The disciplinarians just said discipline doesn’t matter.

And can you believe the timing, the day after German elections?

You know what would’ve made everything right?  If there had been a huge increase in the profits and growth and prospects of European companies and, then, the markets went up.  But, to say we have to get money from all over the world and we have to bring that money into the Eurozone to pay the debt to keep the system going and then we’re going to be okay, only underscores the crisis— a crisis that no matter how bad, no matter how crooked, the system guarantees it.

That’s not good market news for any system. As Tyler said: It is the “imminent collapse of the fiat system… There is now no risk left, but it only means that eventually all the risk will come back and lead all capital markets to zero. The result will be the end of Keynesian economics as we know it.”

Mon, 05/10/2010 - 19:25 | 342334 ghostfaceinvestah
ghostfaceinvestah's picture

You start off with the wrong assumption - that they WANT to "fix the problem". 

They want to control all the world's wealth.  And they are playing their cards perfectly.

Mon, 05/10/2010 - 21:05 | 342544 Papasmurf
Papasmurf's picture

Exactly.  And each of these manufactured crisis have the same solution of the poor and middle class accepting austerity while the fat cats make out big. 

Mon, 05/10/2010 - 21:31 | 342580 ghostfaceinvestah
ghostfaceinvestah's picture

Yeah, funny about that.  Note that Bernanke has already mentioned cutting back on entitlements.

But hasn't said a word about banker bonuses.

Mon, 05/10/2010 - 19:40 | 342371 Fraud-Esq
Fraud-Esq's picture

The creditors and capital class just can't take a loss and a change of lifestyle. The politicians agree because EVERYONE's in the stock market one way or another. Therefore, the lie is a political issue. It's the perfect ugly. Somehow, people started to think, a long time ago, that a rising stock market was a marker for the health of "society" or the nation. That was the first lie.  

Mon, 05/10/2010 - 20:40 | 342498 JR
JR's picture

Ghost and Fraud, Yes. I agree. And if they aren’t stopped, we’ll have a police state, where a few dominant men tell you where to work and what to do and when to sleep and whom to salute and how long to march.  There’s something more than riding along and making money with them.  It’s breaking them.  This is a bad time to follow Leo’s philosophy, IMO:

Leo Kolivakis  Mon, 05/10/2010 - 07:33 #341186

 I have refrained from posting here, but basically you were all wrong! The "imminent collapse of the fiat system"?!? Give me a break. This will never happen, we are not going back to bartering and gold, so everyone take a deep breath and stop seeing dark doom everywhere. The sun is still shining, especially in the solar sector.:)

We have to have people who will whack at them and expose them for what they are.

The good news is that most people are coming to Zero Hedge to find out if there is some true information exposing what’s going on economically and politically because they're no longer interested in the political line.  In the past year, the circulation of the LA Times owned by the bankrupt Tribune Co. has dropped 14.74 percent and that of the San Francisco Chronicle–the city’s only morning newspaper—by nearly 23 percent (down 25.8 YOY percent the preceding year), i.e., they’re on the way out.

The volatility is caused by the crisis.  At this critical time in the recession all the fault lines are brought out.  And one is the corruption of the banks, such as Goldman Sach, and the inefficiency and corruption of the Greek political system and the failures of socialized, i.e., centrally controlled, governments, and fiat money systems run in secret by private bankers.  Tax receipts are down, it’s a tough time for homeowners and wage earners and savers and pensioners and legitimate investors and graduates and males (One in five men in the U.S. is not working contrasted with the 1960s when 95% of men of that age-group worked—Larry Summers at Davos 2010): the Federal Reserve has ruined sound money worldwide and confidence in the currency and markets. All is at a low point, and THAT is the point at which everything starts to break. 

The nations, including America, are in for increasing volatility, and I don’t just mean volatililty in the securities market.  As for placing a bet on the winner at the end of the day--the central bankers versus the people--I place my bet on the people.

Mon, 05/10/2010 - 21:32 | 342586 ghostfaceinvestah
ghostfaceinvestah's picture

The next major concern is when they shut down the Internet.  It's coming.

Tue, 05/11/2010 - 01:06 | 342833 JR
JR's picture

This would make an interesting discussion, ghost.  I’m no expert, but I know that it is possible for the U.S. government to turn off the Internet within the U.S.  China, of course, and others nations, would never allow U.S. control over their information highways. However, it’s extremely unlikely that the U.S. would shut down its Internet system, IMO. And if it did, many could find Internet access within hours. Companies such as Google, say, could provide Internet access to their information in a myriad of ways and, thus, override the government. With Internic, of course, that keeps track of every single web address, the government can literally come in at any time and turn you off.

IOW, it is my belief the government can interrupt Internet service but it can’t kill it.  And, also IMO, service of some sort would be quick to return.

Commerce also plays a major role in this.  The government would have to be in pretty dire straits or takeover determination to shut off the Internet. If it did, most all major companies such as General Electric, with all these people sitting in their offices doing business with the Internet, would all stop.  The Internet is their way of talking. All the stores selling would shut down.  All the banks would shut down.  All companies would be cut off from headquarters and each other.  A single hour of shut down, IMO, would cost trillions.

There are current means of overriding a shutdown via private ways to reach private satellites, and as we go along, particularly in these times, I believe there will be more and more methods developed for the people’s protection. Hopefully, it is happening now.

And, should the government shut down the Internet, it shuts down its own networks, to the Pentagon, to the Congress, to the Fed, to the states…

This, ghost, is a topic worthy of ZH investigation. 

Wed, 05/12/2010 - 09:46 | 345934 tip e. canoe
tip e. canoe's picture

"This, ghost, is a topic worthy of ZH investigation. "

indeed.   agreed that they can't shut down the net.   what they can do is choke many of the access points (like all the corporate-owned ones).  this is why finding ways around the roadblocks might be a very useful skill.   hackers are your friends.   hopefully there are a few around here lurking.

Mon, 05/10/2010 - 23:13 | 342721 Gully Foyle
Gully Foyle's picture

The Great Leap Forward reveals Mao’s fevered and unhinged approach to “industrialization.” Among many harebrained growth schemes, a few must be mentioned. First, Mao sanctioned multiple canal and lake excavation projects, using primitive means, resulting in many peasant deaths. Yet, most either failed or were abandoned. Another strange plan was ridding China of the “Four Pests,” being rats, sparrows, flies and mosquitoes. Unfortunately, when Chinese sparrows were wiped out by rabid crowds of broom-waving peasants, it was only then discovered sparrow “pests” actually reduced real insect menaces. Many died when pestilence broke out, writes Halliday.

Another astounding plan was the “Make Steel” program. Since existent Chinese steel mills couldn’t upgrade fast enough, Mao ordered private citizens to build foundries. These “backyard furnaces” were constructed by 90 million peasants encouraged to melt down any metal available, including farm implements. Mao bragged China’s steel output would excel Britain’s in three years, and America’s by ten. Instead, an absurd failure resulted, revealing Mao’s utter misapprehension of scientific or economic principles. Heaps of brittle, useless pig-iron resulted, destroying countless important household implements, claims Halliday. This well-illustrates the impetuous, smug and illogical mindset of Mao.

Tue, 05/11/2010 - 01:17 | 342853 JR
JR's picture

Great post and description of central planning.  Reminds me of Lenin’s improvisations as he went along that initially left the factories in the hands of untrained party members. Production rapidly declined, consumer goods all but disappeared and the currency became almost worthless.

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