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Central Banks’ Latest Move Shows Desperation

George Washington's picture





 

The coordinated swap line bailout by the Federal Reserve Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank- and China’s reduction of reserve requirements by .5% – shows desperation. (For background on swap lines, see this, this and this.)

The Street notes:

Don’t get flustered by the terminology of “dollar swap lines” above. Here’s a more simple explanation: Central banks around the globe have acted in desperation to boost liquidity in the system, which has sparked a rally in equities.

In a separate article, The Street points out:

What’s great for the banks isn’t so good for everyone else, though. Investment strategists already are noting the desperation of the move, adding that flooding the banking system with liquidity doesn’t do anything to solve the real problem of ballooning, unmanageable debt levels.

Ron Paul said today:

The Fed’s latest actions in cooperating with foreign central banks to undertake liquidity swaps of dollars for foreign currencies is another reason why Congress needs enhanced power to oversee and audit the Fed. Under current law Congress cannot examine these types of agreements. Those who would argue that auditing the Fed or these agreements with central banks harms the Fed’s independence should reevaluate the Fed’s supposed independence when the Fed bails out Europe so soon after President Obama promised US assistance in resolving the Euro crisis.

 

Rather than calming markets, these arrangements should indicate just how frightened governments around the world are about the European financial crisis. Central banks are grasping at straws, hoping that flooding the world with money created out of thin air will somehow resolve a crisis caused by uncontrolled government spending and irresponsible debt issuance. Congress should not permit this type of open-ended commitment on the part of the Fed, a commitment which could easily run into the trillions of dollars. These dollar swaps are purely inflationary and will harm American consumers as much as any form of quantitative easing.

 

The Fed is behaving much as it did during the 2008 financial crisis, only this time instead of bailing out politically well-connected too-big-to-fail firms it is bailing out profligate government spending. Citizens the world over deserve better than this. They deserve sound money that cannot be manipulated and created out of thin air by central planners who promise printed prosperity. Fiat money caused this European crisis and the financial crisis before it. More fiat money is not the cure. The global fiat currency system has proven itself a failure, we need real monetary reform. We need sound money.

As I noted last year:

Ron Paul points out that the Fed opening its swap lines to Europe violated its promise to Congress not to do so. Paul also says the bailout will help lead to the destruction of all fiat paper currencies, ensuring that “gold will rule the roost”.

 

***

 

Many have predicted that it is only a short-term measure to kick the can down the road. But the numbers themselves show that the bailout might not even be having a sufficient short-term effect.

 

For example, as the following Euro to Dollar chart shows (courtesy of Finviz), the Euro rallied, and then sunk back almost all the way to it’s pre-bailout level today:

 Central Banks Latest Move Shows Desperation

 

[And see this.]

 

(The Euro’s rally against the Japanese Yen didn’t last very long, either. And Morgan Stanley’s Stephen Hull thinks any rally in the Euro will be short-lived, anyway.)

 

As Bloomberg notes, bank swap and libor rates show that the bailout might not be enough to stem the sovereign default crisis:

 

Money markets and the cost of protecting bank bonds from losses show investors are concerned the almost $1 trillion rescue plan announced by European leaders may not be enough to contain the region’s sovereign debt crisis.

 

A credit-default swaps index linked to European banks that usually trades tighter than an investment-grade benchmark is 30 basis points higher, according to CMA DataVision. A measure of banks’ reluctance to lend remained three times higher than it was in March.

 

***

 

The difference between [libor] and the overnight indexed swap rate, the so-called Libor-OIS spread that rises as a signal banks are less willing to lend, climbed yesterday even after the rescue announcement. The rate advanced to 18.83 basis points, from 18.11 at the end of last week and 6 basis points March 15.

Morgan Stanley emerging market strategist Rashique Rahman says that – even after the bailout – Europe’s troubles are growing:

Liquidity provision or not, sovereign credit risk has not gone away. Our work suggests ongoing deterioration of DM sovereign creditworthiness going forward, manifested by further downward credit rating pressure. Additionally, the transference of periphery Europe indebtedness to that of core Europe via the stabilization fund – and further, via ECB purchases – bears very close monitoring. Contamination to the core (of DM) lies at the heart of contagion for EM – which again is manifested through DM funding market stresses.

Nouriel Roubini told Bloomberg that the bailout is not a cure-all:

The implications of the plan require fiscal austerity and higher taxes, damping growth and possibly extending economic hardship, Roubini said.

 

“In the short term, raising taxes and cutting spending is going to imply further recession and further deflationary pressures in the euro zone,” Roubini said.

 

Greece, Spain, Portugal, Italy, Ireland and other members of the euro zone may struggle to comply with the fiscal requirements and to restore competitiveness after years of an appreciating euro boosting growth, Roubini said. Euro zone countries’ ability to act may be hindered by divided governments such as the U.K.’s hung parliament, German Chancellor Angela Merkel’s weakened clout, and the continuing protests in Greece, he said.

In the longer-term, Simon Johnson points out that the bailout creates huge moral hazard risks:

This is a whole new level of global moral hazard – the result of an alliance of convenience between troubled governments in the south of Europe and the north European banks (and implicitly, north American banks) who enabled their debt habit. The Europeans promise to unveil a mechanism this week that will “prevent abuse” by borrowing countries, but it is hard to see how this would really work in Europe today.

 

***

 

The European Central Bank intervention and this package raise enormous moral hazard issues. The ECB’s management was forced into this kicking and screaming. It was only when they realized that the whole euro zone financial system was at risk of collapse that they threw the kitchen sink at the problem. This can now go two ways: either they tighten fiscal policy across the eurozone, and introduce much more rigorous and enforced rules on deficits and profligate credit through banks, or, they let a system persist which is another “doomsday machine” that will live again to grow, and could one day topple them.

And Johnson notes that the bailout might for even more painful decisions in the long-run:

As Willem Buiter (formerly Bank of England, now at Citigroup) remarked last week, you have the greatest incentive to default when you are running a balanced primary budget (i.e., after substantial budget cuts) and still have a large government debt outstanding. His point is that the incentive structure of these programs means they will postpone a decision to default which would otherwise be rational now.

 

***

 

The underlying fiscal problems in Europe could fester – and the “rules” designed to limit moral hazard may turn out to be a complete paper tiger. In that case, the Europeans again have to make a fateful decision: Do they try to inflate out of the debt burdens of their weakest member countries; or do they instead try to manage selective default, keeping in mind that most Greek debt at that stage will be held by other eurozone governments.

As Yves Smith notes:

The real problem is that there appears to be no impetus towards a longer term solution. How do solve imbalances within the eurozone? Without a plan to develop a plan on that front, this simply rearranging the deck chairs on the Titanic.

 

Of course, the myriad fraudulent schemes (using derivatives and other means) to hide the problems of Greece, Italy and other countries are still continuing to some extent. And the size of the too big to fails means they can take down companies or nations using high-frequency trading, short-selling, credit default swaps and other means. Indeed, Jim Rickards argues that the bailout won’t really help because “Goldman can create shorts faster than Europe can print money”.

 

Therefore, without fundamental reform of the financial system, there can be no true and lasting European recovery.

Indeed, the fact that China coordinated its big cut in reserve requirements on the same day that the big Western central banks and Japan extended swap lines shows the magnitude of panic among world economic leaders.

Is history repeating?

BUT AT LEAST A HANDFUL OF INSIDERS WILLMAKE OUT LIKE BANDITS

 

Jim Quinn writes:

When you see such coordinated action by all the major Central Banks in the world, you know the situation is much worse than you are being told by the ruling oligarchy. The confidence and trust is gone. Every major bank in the world is insolvent, whether it be in the U.S., Europe or China. These Central Banks are owned and controlled by the very banks they are bailing out. They are telling you they have it under control. They do not. They have lost control. The debt is too great and will destroy the economic system of the world.

 

This is a last ditch effort by those in power to grab the last vestiges of middle class wealth. The stock market will soar today, benefitting bankers, politicians, and the 1%. They have solved nothing. The debt remains. The debt will not be paid.

 

Oil, food and commodity prices immediately soared on this announcement. Again, the wealthy will get richer and the average American will be destroyed by inflation on the things they need to live. The game goes on.

Indeed, just as with Hank Paulson’s little tip to the big boys – which is nothing new – some insiders probably made a killing by being tipped off about the swap lines. See this and this.

This isn’t a financial crisis … it’s a bank robbery.

 


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Thu, 12/01/2011 - 12:10 | Link to Comment tony bonn
tony bonn's picture

when the president (in this case an illegal alien of indonesian citizenship) and the military can declare you an enemy of the state without cause, then worrying about inflationary effects of more criminal activity by the terrorist plutocrats is like worrying about the deck chairs on the titanic.....

Thu, 12/01/2011 - 11:49 | Link to Comment steve from virginia
steve from virginia's picture

 

There is a lot of hyperventilating about what actually is taking place, so far nothing new.

Swap lines have been open for awihile. It is likely the Fed has been supporting euro-denominated bond prices for awhile, since the last spasm of Eurofear.

The Fed can provide almost unlimited liquidity by re-discounting but only for short periods, it can only effect solvency in limited amounts over the longer term. It cannot do both at the same time.

Only Congress can authorize creation of new money and will not bail out Europe ... unless it is threatened by Communists. Right now it is threatened by capitalists!

Also, the Fed isn't in a position to elbow the ECB aside. It is hard to imagine the Fed doing what the European bank clearly is reitcent to do on its own.

Certainly the Fed cannot shove an easy money policy down the throat of Germany.

Germany wants tight money in the Eurozone and it can push the Fed aside very easily: there is no treaty right for the Fed to stand in the place of the ECB. The Germans have proven to be contentious with the rest of the Eurozone they can be so with Bernanke.

Easy cash is a myth anyway: the entire world economy is cash-constrained largely because of anit-inflation puahback by 'hard money' (plutocracy) advocates. 16% U-6 American unemployment is cash-constrained ...

Neither the Fed nor the Treasury nor the ECB or any individual European state dare create new fiat as to do so would undermine the support for debt money system.

George Washington -- who is practically an agitator for the #OWS -- demands tight money: this is asinine. Go sit in the corner with a dunce cap on your head!

The Fed has + 200 bn euros in its vaults in flight capital, the central banks' JOB is to send this capital back the Europeans who desperately need it. The Fed is a central bank,, not a wealth management firm for frightened Europeans.

When Ron Paul and others demand that central banks stand aside and not provide liquidity during a money panic as lenders of last resort, they are demanding a depression for the support of the liquid few. There is already have one such individual in charge of money flows in a major policy area -- Angela Merkel -- we don't need any more of them.

Be careful of what you wish for. A depression will leave many in destitution, Et tu?

 

Thu, 12/01/2011 - 12:53 | Link to Comment Winston Smith 2009
Winston Smith 2009's picture

"Swap lines have been open for awihile."

Exactly!  So, why did they have to be supplemented suddenly?  And why did the Fed announce this action a week after the optimum time to implement it.  That's what leads Karl Denninger to suspect that it was done because one or more big banks inEurope were about to blow up and set off the CDS WMD:

http://market-ticker.org/akcs-www?post=198374

 

Thu, 12/01/2011 - 13:23 | Link to Comment steve from virginia
steve from virginia's picture

UPDATE from 'I told you so' dept:

Merkel tells Bernanke 'shove off':

http://www.bloomberg.com/news/2011-12-01/merkel-rejects-ecb-role-in-favo...

 

 

Thu, 12/01/2011 - 11:31 | Link to Comment tliberty
tliberty's picture

This is all such easy stuff to predict. That is the beauty of free market economics. And I am not talking about Republican rhetoric, I am talking about the real Free Market. As an economic theory it acts as an eerily accurate crystal ball from which regular people like you and me can easily see what is coming.

www.golddeputy.com

Thu, 12/01/2011 - 09:42 | Link to Comment yabs
yabs's picture

Elvis

the end is near as inflation is now hurting them ie high PMs prices and oil

if they let deflation take hold their buddies in banks go under but print and Pms go up and the system is screwed anyway

its reached the point now that whatever they do its f*cked

Thu, 12/01/2011 - 09:28 | Link to Comment yabs
yabs's picture

Elvis the end game is approaching

the problem thje cartel now have is the porice of gold and silver and oil also zooms up when they print

I believe 5thats why they took out MF global so a lot ofcommodity speculators were taken out

thats the fix they have

they need t5o print top bail out their bansta buddies but at the same time the things that ALSO threaten the system go up in price

With oil at 100 dollars, and gold and silver zooming

they need a bit of deflation but then the banks go under

they have to control the periods of deflation and then control the inflation but I do not think they can do it that precisely to win

we aRE FAST APPROACHING the tarin wreck when the fo4rce of deflation is so great it threatens to wreck the system but also the price of oil and PMs is so high that aolso threeatens the system.

Basically if they print more the system dies, if they do not eh system dies

thyey are f*cked and they know it

in 2008 oil and gold both crashed back to levels that did not threaten the system

they donot have that luxury this time

Thu, 12/01/2011 - 09:41 | Link to Comment midtowng
midtowng's picture

Coordinated central bank intervention only happens when things are seriously out of wack.

My guess is that MF Global wasn't the only big investor in European debt. A bunch of major banks are betting on the Euro too...and they are losing.

Thu, 12/01/2011 - 05:11 | Link to Comment acapulco
acapulco's picture

30 November 2011 - George Washington's Blog: "The coordinated swap line bailout by the Federal Reserve Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank- and China’s reduction of reserve requirements by .5% – shows desperation. The confidence and trust is gone. Every major bank in the world is insolvent, whether it be in the U.S., Europe or China. These Central Banks are owned and controlled by the very banks they are bailing out. They are telling you they have it under control. They do not. They have lost control. The debt is too great and will destroy the economic system of the world. This is a last ditch effort by those in power to grab the last vestiges of middle class wealth. The stock market will soar today, benefitting bankers, politicians, and the 1%. They have solved nothing. The debt remains. The debt will not be paid."

It surely can't come as a surprise that in this tragic times, somebody has put an effort in explaining the difference between the state and the mafia, which can be found on the Internet by Googling "10 Reasons Why The Mafia Is Better Than The State". Have you ever dared to imagine how your life and business would have been like if the state and the mafia would not interfere in it?

Alternative Currency: Sovereign Money In Sovereign Accounts Of Sovereign Men

Thu, 12/01/2011 - 04:51 | Link to Comment caerus
caerus's picture

angry guy walks into a bar, says "gimme a beer!" takes a drink then shouts "bankers are assholes!"

guy at the end of the bar shouts "take that back!"

angry guy asks "what are you, a banker?"

guy says "no...I'm an asshole!"

 

Thu, 12/01/2011 - 01:46 | Link to Comment caerus
caerus's picture

fwiw...(at least) four conspicuous upside ES moves since august (december contract)

8/9  +5.47%

8/11 +4.03%

10/27  +3.64%

11/13 +4.14%

the first three failed to produce any significant sustainable gains...

Thu, 12/01/2011 - 01:03 | Link to Comment knukles
knukles's picture

Horseshit.  It's all Horseshit from here on out.

It's all done, just as one would have expected if one had simply read and digested that here discussed over the past 2+ years.

Anything else is pabulum, a way to spend time.  Everybody's had time to get set.
This is gonna make Lehman look like a charity practice round.
Lehman was a simple relatively singularly small domestic brokerage firm compared to the Whole of Fucking European Continent, the banks, brokerages, agencies and Countries going under together.

Big
Bad and gonna Be Painful.

Remember 2007-9?
Whatever you wish in retrospect that you may have done then, give reflection to the same now.  Maybe will, maybe won't but it waddles, quacks and looks to me like a duck, again, part 2.
But what do I know?  Probably wrong as all hell.  My simple idle dinner conversation opinion.
Just don't fucking blame me.  I'm tired of being the one accused of pessimism, being a conspiracy theorist, nut job, whatthefuckever.

Fuck it.

It's all Horseshit from here on out.

PS Horseshit as I said it today in emphasis of a point during a very serious meeting, is pronounced  Hor-se-shit with the cheeks being blubbered back and forth as if imitating Richard Nixon from the "r" through the "se" to the start of "shit".  Sorta comes out like Willlllllbur form the Mr. Ed talking horse show.
Please if you use it, do it proper justice.

 

 

Thu, 12/01/2011 - 02:09 | Link to Comment ElvisDog
ElvisDog's picture

I understand it's unsustainable, it's gonna crash, yada-yada-yada. The question that I want an answer to is "when?". It's very clear that the Oligarchs around the world are very much in control of things, and it's equally obvious (to me anyway) that they are confident they can keep the plates in the air indefinitely. And you know what? Looking back to 2008 or even earlier when the same "it's unsustainable" arguments were being made to today when the status quo is still in place, the Oligarchs may be right.

Thu, 12/01/2011 - 16:13 | Link to Comment unnamed enemy
unnamed enemy's picture

based on real life experience, in failed eastern european states, i think americans havent seen anything yet - the looting will continue longer than any of us here can stay alive, things will deteriorate slowly, 20 - 30 years, and most liekly wont improve in our lifetime.

at some point they will change the dollar, the conversion rate will be something like 100 or 1000 old dollars to 1 new dollar. when this happens people holding dolars will go to bed middle class and wake up poor the following day.

Thu, 12/01/2011 - 10:35 | Link to Comment mick_richfield
mick_richfield's picture

When you ask 'when?' you always have to accept some error radius.  And the radius of error you can accept depends on the event's footprint in time.

For example, if you live on the coast and you are worried about a tsunami, you have to figure out how long it takes you to get to a safe distance.  If it takes an hour, there's no sense asking when-to-the-minute will this happen?  Because if the answer comes back "in 5 minutes", you have no more choices left to make except where to die.

The 'time footprint' of that event is one hour.

Everything I can see suggests that when the Collapse comes, it will be very big indeed.  Big enough so that you may need years to prepare.

I don't mean prepare by figuring out which shorts are best to get into, I mean prepare by having 2 years worth of food, a reliable source of water, and heat.  And if you're an optimist, as much junk silver coinage as you can afford.

The 'time footprint' of the coming Collapse is large enough that the answer to "when?" is, effectively, "now".

Thu, 12/01/2011 - 15:05 | Link to Comment Transformer
Transformer's picture

Look, the answer to when is very simple.  Within the next week, unless thely can figure out another delaying tactic.  When they can figure out no more moves to delay things, then it will happen within a week.  So the real question is, how much longer can they delay it?  And of course every new tactic they come up with that delays it for another week, makes the ultimate result a little worse.

 

Thu, 12/01/2011 - 07:41 | Link to Comment nowhereman
nowhereman's picture

As to timing, I can only observe that the interval between desparate measures is decreasing rapidly.  It's becoming a negative exponential.  So, soon maybe sooner than you think.

Thu, 12/01/2011 - 05:24 | Link to Comment The Navigator
The Navigator's picture

Don't worry ElvisDog as to the when, it's coming. Soon, depends on your definition of soon. When the can is so freaking big that it takes the whole football team to kick it 5 yards, it's still being kicked down the road. But eventually, 10 teams can't kick it 2 inches - and finally BANG.

I wish I had the date, so I could set sail and leave the day before the SHTF - but not even the Gangsta Govt or TPTB can dial in a precise date. They preare with their underground bunkers and we prepare with Ag Au PB and scopes, so when they emerge from their bunkers we can do a 1,000 yard hit. And hopefully one day we will be rid of the genes of these fucksters that want to 'control/dominate' sheeple. 

Make a plan for both staying and leaving, in case one or the other is the only alternative. In either case, Ag, Au, Pb and other prepping items are worth while. Then you can rest assured and not worry about the (exact) when.

Semper Peratus, The Navigator

Thu, 12/01/2011 - 12:27 | Link to Comment my puppy for prez
my puppy for prez's picture

I would bet the "date" will include the number "11" in it somewhere....the masons et al like that number very much...

Thu, 12/01/2011 - 00:01 | Link to Comment Wags
Wags's picture

So Uncle Ben & his BFF Bankers got togther & created more decimal places today. Did they create anything? Did they make anything? Nope but hundreds of millions of dollars were made on Wall Street. For what?

Some like to complain of Occupy is filled with people not working. Well I see money & profits being created with no work either.

Thu, 12/01/2011 - 00:01 | Link to Comment janxeh
janxeh's picture

Coordinated money printing is the last phase of the currency wars and last turn in to inflation straight, where the pedal gets put to the metal.

 Begun, the currancy wars have...

Thu, 12/01/2011 - 09:27 | Link to Comment Money 4 Nothing
Money 4 Nothing's picture

Will the timeline be like "The Fed who stole Christmas?" Or sooner?

Wed, 11/30/2011 - 23:59 | Link to Comment janxeh
janxeh's picture

Coordinated money printing is the last phase of the currency wars and the last turn in to inflation straight, where the pedal gets put to the metal.

 

As yoda would say....

 

Begun, the currancy wars have

Wed, 11/30/2011 - 23:59 | Link to Comment non_anon
non_anon's picture

get ready for the holiday, bank that is

Wed, 11/30/2011 - 23:41 | Link to Comment Fix It Again Timmy
Fix It Again Timmy's picture

Everyone is so worried that the government will clamp down, martial law, confiscation, etc.  When was the government ever wildly successful at anything except screwing up.  I rather like Ringo's Theorm: "Everything the government touches, turns to shit."  When the wheels fall off the bus, do you expect them to succeed at anything? 

Thu, 12/01/2011 - 00:34 | Link to Comment steelrules
steelrules's picture

I recall something about a gold seizure in the 30's, that was successful was it not?

Thu, 12/01/2011 - 12:23 | Link to Comment my puppy for prez
my puppy for prez's picture

And then there was the interment of ALL Japanese, citizen or not, under FDR....lest we forget!

They will use camps again...I promise!

Thu, 12/01/2011 - 07:36 | Link to Comment Optimusprime
Optimusprime's picture

Not very.  Apparently only 22% of the gold coinage extant was gathered by the gov't goons.  Even then, a lot of people took their chances on maintaining possession.

Thu, 12/01/2011 - 10:20 | Link to Comment Widowmaker
Widowmaker's picture

There is and has always been only one way to protect your freedoms, assets and future -- shoot to kill.

Anyone telling you protection doesnt occur at the end of a gun is a thief, their lies will die with them accordingly.

The America I know (not the leagues of young cock-sucking fags on both coasts) is literally waiting with clenched teeth and fingers on the trigger.  The only thing preventing the ungluing is mutual respect, which is eroding quickly in every community one can find being undermined by Federal ANYTHING.  Look for yourself.

Washington be damned, all are impotent cowards of the system they created, and will perish from.

Thu, 12/01/2011 - 02:21 | Link to Comment donsluck
donsluck's picture

Very successful. You should sell all your gold to me. I know what to do with it.

Wed, 11/30/2011 - 22:53 | Link to Comment wattsnotsaid
wattsnotsaid's picture

The above graph of today's EUR/USD is for may 10, 2010

Wed, 11/30/2011 - 22:52 | Link to Comment nah
nah's picture

how do they all make so much money

.

-George Washington lol

Wed, 11/30/2011 - 22:51 | Link to Comment High Plains Drifter
High Plains Drifter's picture

central banks never act in desperation.  the people who own the world financial system are not stupid and are not desperate.    if you believe this, then keep on telling yourself that to make yourself feel better , i guess.  but it doesn't matter what we think or what we write. what will happen will happen because it is the time for it...

Wed, 11/30/2011 - 22:31 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

So how many central bank(s) are there?

Thu, 12/01/2011 - 12:21 | Link to Comment my puppy for prez
my puppy for prez's picture

who cares?  

One is TOO MANY!

Wed, 11/30/2011 - 22:14 | Link to Comment Bansters-in-my-...
Bansters-in-my- feces's picture

While ANY Federal Reserve Central Banks are standing.....suck it up,Buttercup.

Wed, 11/30/2011 - 21:59 | Link to Comment Bansters-in-my-...
Bansters-in-my- feces's picture

I like the "fEDERAL rESERVE bANK OF cANADA "LINE

Most Canadians don't have a clue they have been sold out....

Wed, 11/30/2011 - 21:27 | Link to Comment El Oregonian
El Oregonian's picture

I beg to differ, The Central Banksters KNOW exactly what they are doing. This whole crisis "Event" was manufactured to drag all sovereign countries into debtor's hell... Forever...

Their mission will be accomplished by removing all sovereignty and enslaving nations and their peoples of their God given rights as expressed in our Constitution.

With these Banksters nothing happens by accident.

Wed, 11/30/2011 - 22:25 | Link to Comment DavidPierre
DavidPierre's picture

 

The Crash of '29--A Federal Reserve Production

The Wall Street Crash is the opening act in the Great Depression, the latest production of the boys in the back room who own the private company operating under the deceptive name of the Federal Reserve.

The Federal Reserve was supposedly created to prevent such things as the Wall Street Crash happening. But, from 1921 to 1929, the Fed dramatically increases the U.S. money supply, fueling massive speculation.

Throughout the 1920s, Americans with modest income and savings are lured into the stock market in large numbers by the ruling class including the Rockefellers, the Morgans and the Dillons.

People who know nothing of the true forces and limitless skullduggery behind financial markets and cannot afford to lose the money they invest are persuaded to pay artificially inflated prices for hundreds of millions of shares. Suckers are lured into the market with the trick of buying on margin. A purchaser puts down ten percent of the value of the shares being bought and then counts on the continuing inflation of share prices to make a profit. It's like getting something for nothing.

With millions of suckers lured into the market, share prices are driven up and, for a while, John Q. Sucker, looks like coming out ahead.

However, that is not the nature of the financial world.

In fact, the Rockefellers, the Morgans, the Dillons and their minions are fleecing ordinary Americans of hundreds of millions of dollars in an orgy of financial scams many of which will be later uncovered in the long-suppressed Pecora Hearings.

Massive manipulation and speculation drives share prices to unsupportable levels. A few months before the Crash, word has it that the Rockefellers, Joe Kennedy and all the other scam artists quietly exit the market, selling when the artificially inflated prices are sky high. On October 24th, the big banks, owned by the same unindicted co-conspirators, call the loans to the suckers. Invevitably, a selling panic ensues and the whole house of cards collapses.

Gee, what a surprise.

It is seldom considered, however, that most of the shares which crashed on October 29 and in the next two weeks had been bought for some thirty billion dollars more than they were ultimately sold for, an astonishing amount of money in 1929, most of which ended up in the pockets of some individuals in the know.

Neither is it considered who rushed in to buy up the vast numbers of shares being dumped during and after Black Tuesday, acquiring companies and their assets for pennies on the dollar. The Crash and the Depression which followed were, for some, not so much a disaster as simply another business opportunity in which they could snap up assets for a fraction of their true value and, simultaneously, and very importantly, drive down the cost of labor.

"The way to make money
is to buy
when blood
is running in the streets."    John D. Rockefeller...     Of course, it helps if you are in a position to make the blood run in the streets. Over the next ten years, tens of millions of Americans will pay the price in untold misery and hardship for the accumulation of yet more wealth by the handful of families which constitute the American ruling class.

Following the Crash, the boys who run the Federal Reserve contract the money supply, plunging the U.S. into the Great Depression and making it possible to snap up anything they want including farms, businesses and land for pennies on the dollar. Not coincidentally, hundreds of small banks which provide the big boys with a bit of competition, are also driven to the wall and snapped up.

The Crash and the Great Depression which follow come after almost a decade of economic rule by multi-millionaire banker and oilman Andrew Mellon as U.S. Treasury Secretary.   Mellon, one might assume, knew exactly what he was doing. In was during Mellon's tenure that the rampant manipulations and scams which led to the Crash were allowed to be carried out. Mellon dramatically reduced taxes on the wealthy and ultra-wealthy, including inheritance taxes, to the point where many paid no tax at all. Mellon, of course, increased those taxes largely paid by the poor and working class, such as excise tax.

As a little gift to his oil industry buddies and to his own Gulf Oil, he also introduced the "oil depletion allowance", a cute little accounting scam which reduces the taxes paid by oil companies almost to zero. The multi-millionaire Mellon claimed to be a believer in the so-called "trickle down" theory of economics under which, if you make the ultra-wealthy even wealthier, tiny drips of cash will theoretically "trickle down", sooner or later, to the underclass. Mellon refused to give tax breaks to the poor on the perfectly understandable grounds that they would just piss it away on food, clothing and shelter.

Mellon clearly recognized that, for some, the Great Depression was a good thing, a fine business opportunity, and made no bones about it. "People will work harder, live a more moral life," the millionaire Mellon pontificated as the Great Depression deepened. "Enterprising people will pick up the wrecks from less competent people."

"This American system of ours,
call it Americanism, call it capitalism,
call it what you like,
gives each and every one of us
a great opportunity
if we only seize it with both hands
and make the most of it."
Al Capone
By 1933, the value of the shares on the New York Stock Exchange is less than a fifth of what it had been at its peak in 1929. Businesses close their doors, factories shut down and banks fail. Farm income falls by fifty percent. By 1932, approximately one out of every four American workers is unemployed and many of those who have jobs are working for a fraction of their pre-Crash wages.

Between 1929 and 1933, forty percent of all the banks in the United States, some 10,797 out of the 25,568 existing in 1929, fail, taking their depositors' savings with them. As is the case with the stock market crash, in bank failures, for every loser, somewhere there is a winner. Every single dollar deposited by the Americans who lost everything in the bank failures ended up in someone's pocket somewhere. And, as a nice little benefit for the Rockefellers and Morgans, forty percent of competing banks in the U.S. ceased to exist.

The U.S. economy's output of goods and services (GNP) declines by thirty percent between and recovers to the 1929 level only in 1939 with the boom times of World War Two. Prior to 1939, business investment in the U.S. comes almost to a standstill; the Rockefellers, Harrimans, Duponts, Fords, Mellons and the rest of the U.S. ruling class have other priorities: investing vast sums of money in Nazi Germany and the arming of Adolf Hitler.

When voters give Mellon and Hoover the boot in 1932, Roosevelt's New Deal relieves some of the suffering of ordinary Americans through extensive public works programs. As many as twelve million Americans work at some time on public works or in relief jobs. What ultimately ends the Great Depression however, is the fabulous business opportunity known as World War Two.

"It was a carefully contrived occurrence.
International bankers sought to bring about
a condition of despair
so that they might emerge
the rulers of us all."

Congressman Louis McFadden
In the next few years, McFadden, who is an outspoken critic of the Federal Reserve and the families who own it, will be the victim of a shooting attempt and will then be poisoned at a political banquet but, hey, these things happen in a free country.

"The real menace of our republic is this invisible government which, like a giant octopus, sprawls its slimy length over city, state and nation. Like the octopus of real life, it operates under cover of a self created screen....At the head of this octopus are the Rockefeller Standard interests and a small group of powerful banking houses generally referred to as international bankers.

The little coterie of powerful international bankers run the United States government for their own selfish purposes. They control both political parties."

New York City Mayor John F. Hylan, 1922

Thu, 12/01/2011 - 09:51 | Link to Comment flattrader
flattrader's picture

>>>Massive manipulation and speculation drives share prices to unsupportable levels. A few months before the Crash, word has it that the Rockefellers, Joe Kennedy and all the other scam artists quietly exit the market, selling when the artificially inflated prices are sky high.<<<

I remember Joe Kennedy remarked that he saw something in the FX space that tipped him off when to exit.  It had something to do with the British Pound Sterling.

Does anyone know what it was?

Wed, 11/30/2011 - 22:55 | Link to Comment High Plains Drifter
High Plains Drifter's picture

yep, they use the same old plays from the same playbook and the sheep never notice..........

 

this business with iran is just some more of their bullshit.  

 

its like worrying about who will be president, like that is supposed to really mean anything to any of us. it won't. they control the process and control almost all politicians if not all of them. 

left , right, this or that, it means nothing.  

Thu, 12/01/2011 - 01:20 | Link to Comment DavidPierre
DavidPierre's picture

The 1933 Pecora Hearings lasted over a year and provoked outrage among Americans. The stupefying greed and criminality of the ruling class so clearly exposed by Pecora, led to the Crash of 1929 and plunged the U.S. and much of the world into the Great Depression, causing untold hardship and misery for hundreds of millions of people.

But like so much of American history, the findings of the Pecora Hearings and even the fact that they were held, are virtually unknown in the United States.

When asked by Pecora if he paid any income tax in 1930, J.P. Morgan Jr. replies, "I cannot remember."

Neither could Morgan remember if he had paid any income tax in 1931 or 1932. In fact, of course, he had paid not one red cent. Question after question was answered with "I cannot remember."

Pecora reveals that all of the Morgan family and their partners in their vast financial empire had paid no taxes in the previous five years on hundreds of millions of dollars of income. And, it was all thanks to Treasury Secretary Andrew Mellon who had crafted U.S. income tax law so that the very wealthy, himself notably included, seldom paid any taxes at all.

The financial gangsters who had brought ruin to so many came to be known as "banksters".

One of the slickest banksters to be summoned before the hearings was Clarence Dillon (nee Lapowski) of the "financial house" of Dillon, Read, by the time of the hearings heavily involved in financing the rise of Adolf Hitler and the Nazis in Germany.

Nazi public relations specialist Ivy Lee is hired to "prepare" Dillon for his appearance before the Committee. Among Lee's other esteemed clients are Nazi fuel supplier, William Farish of Standard Oil and the Rockefellers' partner in crimes against humanity, IG Farben.

Clarence Dillon and his son C. Douglas had been directors of United States and International Securities, a massive speculative pyramid scam which swindled Americans out of hundreds of millions of dollars.

Miraculously, Dillon, Read insiders cashed in their chips just before the Crash, walking away with $6,844,000 for stock which had cost them $24,110, a return of 28,000%.

Ain't "free enterprise" wonderful?

Thu, 12/01/2011 - 09:59 | Link to Comment flattrader
flattrader's picture

And the Walker Bush families were the tools for some of the investments in Nazi Germany.

They ran Union Bank in NY for the truly wealthy.

They were so stupid and greedy that they refused to stop investing with Nazxi Germany after the US declared war following the attack on Pearl Harbor.

Union Bank was one of two banks seized under the Trading with the Enemy Act.

Prescott Bush went on to become a Senator.  His evil spawn--son and grandson--became US Presidents.

Wed, 11/30/2011 - 21:14 | Link to Comment Buck Johnson
Buck Johnson's picture

They are desperate and it's showing in the market.  They have nothing left to use.

Wed, 11/30/2011 - 21:12 | Link to Comment blue
blue's picture

funny thing is... no one is in control, it's a kneejerk reaction to bad long term planning...good nite

Wed, 11/30/2011 - 21:06 | Link to Comment Everybodys All ...
Everybodys All American's picture

What bank is failing in Europe? That is the only relevant question now.

Wed, 11/30/2011 - 22:12 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

BNP Paribas

Wed, 11/30/2011 - 21:05 | Link to Comment YesWeKahn
YesWeKahn's picture

phuck Bernanke!

Wed, 11/30/2011 - 22:21 | Link to Comment MarketTruth
MarketTruth's picture

Actually DEATH TO THE BERNAK as the Founding Fathers' 1792 Coinage Act Section 19 says that any one devaluating the currency... "every such officer or person who shall commit any or either of the said offenses, shall be deemed guilty of felony, and shall suffer death."

Wed, 11/30/2011 - 20:28 | Link to Comment DavidPierre
DavidPierre's picture

 

Who didn't see this one coming?

The world's central banks announced this morning that they will "provide liquidity" where it is needed. The Fed is breaking out the old fire hose and going to spray Dollars everywhere to extinguish the deflationary flames.

Well duh, who didn't see this coming?

What choice did they have... other than giving up the farce and adding a few zeroes to Gold's price... other than "The Big Print"? This will last a week or two until they are forced into The Bigger Print and then The Biggest Print.

No matter what The Fed did, they could not fix "the problem" with more liquidity because this is not a liquididty problem. It is a SOLVENCY problem.

You cannot make bad loans good with liquidity, you can buy some "time" which they have but you just cannot magically make malinvestment good by creating more currency. This is exactly as Jim Sinclair has written, "QE to infinity". Yes, they can and will destroy the currencies so that the debts become "payable".  But what good is that if it will cost $100,000 for a cup of coffee? Again the choice of Richard Russell's "Inflate or Die" has been offered to the the central banks and again they chose to INFLATE, a no brainer.

This, now 3+ years after the global debt bubble has burst, is just another episode of The Fed banging their head against the same wall and expecting a different result.

There will be no different result, derivatives have expanded another $130 Trillion over the last 6 months as the banks and brokers desperately try to "book profits" even though there is no real cash flow. Hooking a bigger pump with more airflow WILL NOT reflate a balloon that aleady has gaping holes in it. Expect more of the same until the current monetary system is scrapped.

The ONLY answer is to revalue Gold to such a level where the existing reserves are valued high enough to reset the system and refill the existing deflationary black holes of insolvency. In a real system with real money the current scenario could never have occurred, bankruptcy and liquidation would be allowed to cleanse the system. This "print" is further proof that cleansing the system is not allowed.

In truth, today is merely the latest "panic" by central banks. Things behind the scenes must have again been up against the wall and central banks "blinked", they have panicked before the the market was allowed to. They cannot allow a market panic to ensue because they are totally powerless to stop it now.

We are too far down the road and the system has gotten too big and leverage too great to allow anything resembling a 15-20% correction to get started now because once started it cannot be stopped.

We will now see "interventions" on a much more frequent basis to "prevent" reality from occurring. The credit markets have breathed a small sigh of relief here but this will not last. The fact remains that even sovereign governments are past the point of no return and cannot pay back what they already owe, borrowing more will only make them more insolvent.

Bet that the credit markets will again start to seize up before the equity markets do and probably before Christmas.

It's all about credit. The quality of credit today is bad and the amounts of credit are ludicrous.

MORE credit does nothing except dilute existing credit, and thus the currencies, lower the quality of existing credit and make the original cause of the problem ...bigger.

Do you now see why Gold and Silver were "attacked" and put in a hole?

 Were this latest round of QE to be launched with Gold at $1,900-2,000 bid we would see $2,500 in a flash and $3,000 within a several weeks. Do you think the powers that be are worried about losing $1 Billion, $10 Billion or even $100 Billion shorting naked contracts to suppress Gold's price?

It's chump change in relation to anything and everything paper and an absolute MUST to keep Gold under wraps...until it is decided to what is necessary.

 Revalue Gold to save, reset, restart and retain control of the system and the power.

The coordinated moves today reveal just how dire the situation is all over the place. What will they do next?

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