over the numerous BS excuses that US Dollar destroyer extraordinaire Ben
Bernanke has made for QE enough times that today I’d rather simply focus on the
REAL reason he continues to funnel TRILLIONS of Dollars into the Wall Street
this analysis before. But given the enormity of what it entails, it’s worth
repeating. The following paragraphs are the REAL reason Bernanke does what he
does no matter what any other media outlet, book, investment expert, or guru
printing money and funneling it into the Wall Street banks for one reason and
one reason only. That reason is: DERIVATIVES.
the Office of the Comptroller of the Currency’s Quarterly Report on Bank Trading and Derivatives Activities for the
Second Quarter 2010 (most recent), the notional value of derivatives held by
U.S. commercial banks is around $223.4 TRILLION.
account for 95% of this. Can you guess which five?
Looks a lot
like a list of the banks that Ben Bernanke has focused on bailing out/
backstopping/ funneling cash since the Financial Crisis began doesn’t it? When
you consider the insane level of risk exposure here, you can see why the
TRILLIONS he’s funneled into these institutions has failed to bring them even
to pre-Lehman bankruptcy levels.
is a stooge and a fraud, but he is at least partially honest in his
explanations of why he wants to keep printing money. The reason is to try to
keep interest rates low. Granted he’s failing miserably at this, but at least
he understands the goal.
Bernanke tells the public and Congress that the reason we need low interest
rates is to support housing prices. He doesn’t mention that $188 TRILLION of
the $223 TRILLION in notional value of derivatives sitting on the Big Banks’
balance sheets is related to interest rates.
TRILLION. That’s thirteen times the
US’s entire GDP and nearly four times WORLD GDP.
course, not ALL of this money is “at risk,” since the same derivatives can be
traded/ spread out dozens of ways by different banks as a means of dispersing
However, given the amount of money at
stake, if even 4% of this money is “at risk” and 10% of that 4% goes wrong, you’ve
wiped out ALL of the equity at the top five banks.
way, Bank of America, JP Morgan,
Goldman, and Citibank would CEASE to exist.
If you think
that I’m making this up or that Bernanke doesn’t know about this, consider that
his predecessor, Alan Greenspan, knew as early as 1999 that the derivative
market, if forced into the open and through a public clearing house would
“implode” the market. This is DOCUMENTED. And you better believe Greenspan told
light all of Bernanke’s monetary policies and efforts are focused on doing one
thing and one thing only: trying to shore up the overleveraged,
derivative-riddled balance sheets of the Too Big to Fails.
that the bank executives taking this money and using it to pay themselves and
their employees record bonuses only confirms that these folks have NO interest
in taking care of shareholders or their businesses. They’re just going to take
the money and run for as long as this scheme works.
I don’t know
when this will come unraveled. But it WILL. At some point the $600+ TRILLION
behemoth that is the derivatives market will implode again. When it does, no
amount of money printing will save the Too Bloated To Exist banks’ balance
point, it’s game over for Wall Street and the Fed.
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