The Fed's Bailout Of Europe Continues With Record $237 Billion Injected Into Foreign Banks In Past Month

Tyler Durden's picture

Last weekend Zero Hedge once again broke the news that just like back in June 2011, when as part of the launch of QE2 we demonstrated that all the incremental cash resulting form the $600 billion surge in the Fed's excess reserves, had gone not to domestically-chartered US banks, but to subsidiaries of foreign banks operating on US soil. To be sure, various other secondary outlets picked up on the story without proper attribution, most notably the WSJ, which cited a Stone McCarthy report adding the caveat that "interpreting the data released by the Federal Reserve is a bit challenging" and also adding the usual incorrect attempts at interpretation for why this is happening. To the contrary: interpreting the data is quite simple, which is why we made an explicit prediction: 'We urge readers to check the weekly status of the H.8 when it comes out every Friday night, and specifically line item 25 on page 18, as we have a sinking feeling that as the Fed creates $85 billion in reserves every month... it will do just one thing: hand the cash right over straight to still hopelessly insolvent European banks." So with Friday having come and gone, we did just the check we suggested. As the chart below shows, we were right.

Another way of showing what has happened: in the past 4 weeks, the Fed has injected a record $237 billion of cash into foreign banks with access to the Fed's excess reserves: a number greater than both the cash influx surge seen after the Lehman collapse, and faster and more acute than the massive build up of cash during the spring and summer of 2011 when all the Fed's brand new QE2 cash was once again, solely used to overfund European bank cash.

Another way of showing precisely what we said would happen, and what is happening: in the past month, as $237 billion in cash was being handed over by Ben Bernanke to foreign banks, cash to both small and large domestically-chartered banks declined.

The result is that of the record $1.8 trillion in cash sloshing within the US financial system (consisting of US and foreign banks), a record $955 billion, or 52.6% of total is now allocated to foreign banks.

Do we know that the cash in the US financial system is purely a result of the latest open-ended QE? Yes we do, because as the chart below shows, every dollar change in excess reserves created by the Fed is tracked tick by tick by the total amount of cash held by US and foreign banks. And as the yellow area - foreign bank cash - in chart further shows, all the cash generated by QEternity has gone straight to foreign banks.

Another way of showing this correlation: the change in excess reserves vs just the change in cash assets held by foreign banks. There is no doubt on which banks' balance sheets the Fed's "excess reserves" are appearing as cash.

Finally, as a reminder there was a second part in our forecast as to what these European banks will do with this fresh prop-trade funding cash courtesy of Bernanke - they will "push the EURUSD higher, until, as in the summer of 2011 it goes far too high, crushes German, and any other net European exports, and precipitates yet another wholesale bailout of Europe by the global central bankers. Just as the Fed did in 2011."

Sure enough, it required the intervention of none other than Mario Draghi last Thursday to stop the massive, sharp ascent in the EUR in the past two months, which as we showed in the morning before the ECB's announcement on Thursday, had resulted the EUR surge by over 10% on trade-weighted terms. The reason for this intervention: to prevent the collapse of what little is left of Europe's export economy. However, unlike previously, now that Japan is also actively crushing its own currency to promote its exports over those from Germany and France, things will be just a little bit more acute as everyone scramble to be the exporter of only resort to what little import demand remains in a world where everyone is desperate to grow their trade balance through currency manipulation.

So whether European banks will continue buying the EURUSD, or redirect their Fed-cash into purchasing the ES outright, or invest in other even riskier assets, remains unknown.

What is, however, known beyond a reasonable doubt is that at least through this point, the sole beneficiary of the Fed's open-ended quantitative easing which launched in September of 2012, and which was supposed to help lower US unemployment and raise inflation (it will certainly succeed in that eventually, and what a smashing success it will be), are once again solely foreign - read almost exclusively European - banks.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
q99x2's picture

Bernanke needs to be arrested--NOW.

I think I need to buy a gun's picture

What happened to the KWN website? apparently your computer gets destroyed if you go to the site?

ziggy59's picture

Nothing happens except what is supposed to happen... Link opens up normally

gwar5's picture

Just use DuckDuckGo and all is well.  I am only blocked by Google with those malware warnings. Censorship and desperation?


medium giraffe's picture

DuckDuckGo for the win.  Not recording your search against your IP? Hurrah!

I know online privacy is important, but since most of us aren't trying to find secret blueprints or instructions on how to build things that go bang, it does make me chuckle when I think of all of those DHS data warehouses that have had billions spent on them storing petabytes and petabytes of mostly cats and porn.  Good luck MIBs :)

This just in's picture

Are you accusing us of viewing cats online?!  THem's fightin' words, giraffehole!

medium giraffe's picture

hahahaha! strictly one-handed surfing kind of fella eh? :)

well, someone out there must be looking at a shitload of cats:

CH1's picture

Sure, just use a different search engine and it will fix everything!

Everything on the Internet can be done for free!

Free lunches forever!!

CheapBastard's picture

Can also use Startpage by Ixquick and no worries, Mon:



It's like DuckDuckGo.

Pegasus Muse's picture

Strange.  My post from Sat, 02/09/2013 - 18:13 (Post 3229438) disappeared.  So did the post of another ZH-er who commented on it.  Wonder how that could have happened? I'm reposting my orginal post.  Curious to see what happens.


This video expands on the history presented by G. Edward Griffin in his book/video The Creature from Jekyll Island

 All Wars are Banker’s Warsfocuses on how privately-owned Central Banks and their mega-wealthy private owners (the Rothschilds, Warburgs, Rockefellers, Lazards, Brown/Harriman [the GW Bush family], Schiffs, etc.) use war to force countries to adopt their dishonest monetary system so these families can thieve those countries’ natural resources and honest labor, “paying” for it with worthless pieces of paper called fiat money.  Recent Bankster Wars include the Iraq War (Saddam wanted to sell Iraqi oil for gold, cutting out the US Dollar) and the Libyan Invasion (Gaddafi wanted to establish the gold dinar as the foundation for all currency on the African continent and he wanted payment in gold  for Libyan oil).  This video discusses how the bankers were behind the War of 1812, the American Civil War, and both World Wars.  Interesting stuff. 


All Wars Are Bankers' Wars

Written and spoken by Michael Rivero. The written version is here:

video: (44 min)

Silver Bug's picture

It's QE to infinity. They aren't going to stop until it all blows apart.

SheepleLOVEcheddarbaybiscuits's picture

Central banks have paved the way for a complete global financial collapse. What will set it off? Rising interest rates. This collapse is less than 2 yrs away.

Debeachesand Jerseyshores's picture

No the collapse is less than 200 base points away.

Deacon Frost's picture

The Federal Reserve Cartel is more secretive than the CIA and more powerful than the President or Congress and for that matter the world.

This is product of hundreds of years of refinement and the pinnacle of scientific oligarchic tyranny.




ISEEIT's picture

That's like arresting just the street dealer. The BIS is his boss so............

ISEEIT's picture

I guess my point is that Bernanke is just an actor...Just like bushy, both clintons, obammy, and so many of the other stooges who have sold out humanity on behalf of the bankster/communist elite.

They all need to go.

LongSoupLine's picture

Holy Fucking Shit!



This is nothing other than pure fucking High Financial Treason against the fucking United States and it's fucking taxpayers.  This motherfucking treasonous asshole must be fucking stopped.


You fucking full fucking plate of hot shit eating subhuman ass.  You fucking deserve everything that's fucking coming to you dickhead, and it's going to make fucking hell look like one of your fucking bank bitch sucking vacations to Davos, you Ivy league fucking puke.

Fucking eat hot european banker shit and die Bernanke.

WillyGroper's picture

LSL, dude you really need a powder or take up smoking. You're wound like an 8 day clock.

H E D G E H O G's picture

WTF! Keep it up 'soup, I like it, and besides, it saves ME alot of typing :) Say what the fuck you want to say, I happen to agree with each and every word........

Colonel Klink's picture

Posted somewhere else before on ZH too.  It's not treason as defined.  It's "high crimes and misdemeanors" against the citizens of the US.  Same as for our elite politicans.

When will someone stand up and finally charge many of those in Washington with those very crimes?

Colonel Klink's picture

But, but, but, Bennocio said he wasn't lending to foreign banks!  He said it!  And before CONgress no less!  I read it on the internets, it MUST be true!

Stoploss's picture

==========================FUCK THE FED=============================

ArkansasAngie's picture


This is getting ridiculous.  I do not concent to giving money to europe.  I don't

I normally don't say this but ... WTF!

dick cheneys ghost's picture

suck having the worlds reserve currency, dont it

HoaX's picture

I could link you some Rick Astley to cheer ya up?

Oldballplayer's picture

You do not have to consent.  The Fed is an independent bank that is only quasi government.   

They sit around in their mahoganey panelled rooms, smoking Havanas...reading Zero Hedge, laughing and screaming, "Fuck YOU, asshole.  Here hold my congac and watch THIS!"

sessinpo's picture

Government or not, you don't have to consent. But you will face the consequences, regardless.


And that my friends is why the 2nd Amendment is so important. At some point, enough people will be willing to give up their lives to fight the corruption and defend the other Amendments.

Colonel Klink's picture

The burning (powder) question is when?

Seeking Beta's picture

Hahaha...Wonder if they have strip pole inside the Fed?

medium giraffe's picture

Know where you are coming from, but I don't think it's about America's banks / Europe's banks staying afloat as entities anymore, it's likely a lot more to do with systemic risk. 

I think at this stage they might just be trying to stop this beast from imploding:


Mongo's picture

You have to decide... End the Fed or Fuck the Fed ... you can't have both

cossack55's picture

Au contraire, you can end it by fucking it to death. 

neidermeyer's picture

Three guys got stranded on an island. Two of the three were wimps and the other was a tough, strong guy.
One day, they met a tribe. The tribe chief told them that they could either have Death or Bunga-bung. He asked the first wimp: Death or Bunga-bunga? The wimp replied: Well, I want to live so I guess Bunga-bunga. He got ass raped.
The Chief asked the second wimp: Death or Bunga-bunga? He replied: I don't want to die, so Bunga-bunga. He got ass raped.
Then the Chief asked the tough guy: Death or Bunga-bunga? He replied: I don't want to get ass raped so I'll take Death! Everyone in the tribe then chants: Oooooooo! He choose Death! Death! Death by Bunga-bunga!!!

neidermeyer's picture

F'em to death with regulations , make them bleed cash until every last person involved in their management is on food stamps and reduced to an efficiency apartment in the wrong neighborhood.. make the regulations retroactive by simply enforcing any of the thousands of regs that are currently ignored and going after all management in place since the 1990's no matter where they moved on to. 

LongSoupLine's picture

End the Fed or Fuck the Fed ... you can't have both



Oh yes you can...End the Fucking Fed.

Coinage Act of 1792 -

sessinpo's picture

In the current environment with a vast majority of ignorant, propagandized citiizens. The most likely outcome is that the FED, or FRB will fuck itself while fucking the citizens, and in turn end itself.


This charade could have been ended a long time ago by the populace.

Silverhog's picture

Creating a World Utopia has it's costs.

fourchan's picture

As fiat money replaced hard or honest money the controls or constraints on population size, welfare state size, and land use exploded.

In this explosion the quantity of everything went up, and the quality went down.

This can be seen in the development of humans fed the slurry of welfare, resulting in a backwardization or de-evolving of those

consuming this socialist slop, the poor of the nation with bred in ever lower low iq's.

Blacks Mexican and white trash are now the republic turned democracy's majority and norm.

 You can thank the Federal Reserve and its real owners for what this country has become.

I think I need to buy a gun's picture

thats an awesome viewpoint fourchan,,,,never looked at it from that view

Manthong's picture

C’mon now, don’t be such a Debbie Downer.

Look at the bright side of the brave, new world.. kids can now have three parents.

Whiner's picture

Give me control of your nations currency and I'll make anything I want out of it. I can most quickly destroy it. Thank you Greenspan and Bernanke. You sold us like your Tribe's Joseph into slavery. You will be judged with wrath and the second death.

sessinpo's picture

' You can thank the Federal Reserve and its real owners for what this country has become."


And you can thank modern day liberalism/progressives for that. The idea that Government knows better and should control its people.  Large institutions like the FED are tools used against people. They wouldn't exist if the population had a mindset that big government was bad and self responsibility was good.

YouAreBliss's picture

The GOP is in pocket of the Banksters...remember it was Dubbya and Uncle Hank who delivered the audit/oversight free TARP!!!!

ATM's picture

Must crash the entire Western World together!