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Fed Injects Record $100 Billion Cash Into Foreign Banks Operating In The US In Past Week

Tyler Durden's picture


Those who have been following our exclusive series of the Fed's direct bailout of European banks (here, here, here and here), and, indirectly of Europe, will not be surprised at all to learn that in the week ended February 27, or the week in which Europe went into a however brief tailspin following the shocking defeat of Bersani in the Italian elections, and an even more shocking victory by Berlusconi and Grillo, leading to a political vacuum and a hung parliament, the Fed injected a record $99 billion of excess reserves into foreign banks. As the most recent H.8 statement makes very clear, soared from $836 billion to a near-record $936 billion, or a $99.3 billion reserve "reallocation" in the form of cash - very, very fungible cash - into foreign (read European) banks in one week.

Furthermore, as we first showed, virtually all the "reserves" created by the Fed end up allocated as cash at commercial banks operating in the US: both domestically-chartered (small and large), but more importantly, foreign. And of the $1.884 trillion in very fungible cash parked in various domestic and international US banks, just half of it, or $949 billion is actually allocated to US banks. The other half, or $936 billion, is parked within, again, very fungible cash accounts of foreign (read European) banks operating in the US. This is shown in the chart below (green area is cash of foreign banks), and what is also shown is the total change in the Fed's excess reserves, which proves, once more, that the Fed continues to fund European banks with hundreds of billions in cash on a week by week basis. And what is perhaps most important, is that of the $250 billion in new reserves created under QEternity, all of it has gone to foreign (read European) banks.

It may anger American to learn that by the time the Fed is done with QEternity (if ever), all of the newly created cash will have gone to mostly European banks. Because with every passing week, whatever new reserves are created by the Fed in exchange for monetizing the US deficit, end up as cash solely at European banks: a sad reality we have seen non-stop since the advent of QE2 when US bank cash balances remained relatively flat in the ~$800 billion range, and every incremental dollar went straight to Europe.

As a reminder, we don't know how, via assorted shadow banking and other repo pathways, these banks manage to use said cash in other fungible activities. Recall that as we said, "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." It is also unknown is the Fed's reserves, reappearing as cash, and then siphoned over to European bank HoldCo via payables, is then used by, say, Italian and Spanish banks to purchase BTPs and Bonos, and give the impression that all is well. Because unlike before, keeping the EURUSD high is not as critical any more. But what is critical is to give the impression that Italian and Spanish sovereign risk is contained. And after all, let's not forget that as of January, Italian bank holdings of Italy state bonds just hit a record of EUR200 billion.

Is it possible that the Fed, in all its generosity, transferred over several hundred billion over to these same Italian banks, courtesy of the cover provided by QE, so that the same Italian banks may monetize Italian bank bonds? And the same for Spain. Any wonder then that we got news of how flyingly great Spanish and Italian bond auction were in the past week?

After all, in Europe Germany has a heart attack whenever anyone perceives the ECB as monetizing, or even greenlighting the monetization of local sovereign bonds. But Germany has never said what it thinks about the Fed, indirectly, doing the same, using Italian and Spanish banks as conduits.

Finally, while we don't know what the cash is being used for, we know that sooner or later, sometime around December 2013, when European, pardon, foreign bank holdings of US reserves, i.e., USD cash, hits well over $1.5 trillion, and when the Interest on Excess Reserves starts going up and the Fed is directly providing tens of billions in interest payment to European banks, some Americans may be angry to quite angry with that development.

But for now, everyone is blissfully unaware and even if they were, nobody cares. Why just look at the Dow Jones Industrial Average: how can one possibly allege that all is not well with the world...

Source: H.8


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Sat, 03/09/2013 - 12:00 | 3314820 Volaille de Bresse
Volaille de Bresse's picture

Thanks Merci Danke Gracias Grazie etc etc to Ben the U.S. masterprinter! :-)))

Sat, 03/09/2013 - 12:01 | 3314825 MrX
MrX's picture

no honour amongst thieves:

Sat, 03/09/2013 - 12:35 | 3314895 true brain
true brain's picture

"Why don't you change all that money into nickels and shove them up your ass?"

                              Ernest Hemingway once said to a hollywood agent. Hemingway would say the same to Bernanke if he were alive.



Sat, 03/09/2013 - 12:41 | 3314911 kaiserhoff
kaiserhoff's picture

The most essential gift for a writer, is a built-in, shock proof, bull shit detector.


Sat, 03/09/2013 - 12:47 | 3314927 Manthong
Manthong's picture

“we don't know how... these banks manage to use said cash in other fungible activities "

Hmm.. executive compensation, bonuses, lobbying and political contributions comes to mind.

Sat, 03/09/2013 - 14:06 | 3315071 Cdad
Cdad's picture

Absolutely correct on "executive compensation."  Insider sell/buy ratio just hit 50:1, just as we top out on corporate buybacks.  For all those who use the ever rising tick of the S&P [ie the market is always right] to figure out its might want to calculate just how much of the value of the biggest 500 companies has been hollowed out by this practice.

But this, in the end, is just one side note.  The larger crime is the one charted above, whereby US dollars are printed and given to foreign yet another bailout, of course.  I'd say it is a bitch to be a member of the banking oligarch, trying to float this turd as the global economy collapses....however, Ben Bernanke is making it all very easy and comfortable for them, indeed.

Anyone want to finally End the Fed?

Sat, 03/09/2013 - 14:11 | 3315084 Thomas
Thomas's picture

The US Federal Reserve does not support the US, is not Federal, and is not public. It is a global banking cartel supporting the global banking system. If it becomes necessary to throw the US under the bus, we will be looking at nothing but axels and exhaust pipes so fast we won't know what hit us. If I really expressed my views, I would be scooped up by Homeland Security and carted away.

Sat, 03/09/2013 - 14:35 | 3315168 Chupacabra-322
Chupacabra-322's picture

I've coined term to describe the Criminals as:

Global Criminal Cabal Crime Syndicate. 

Sat, 03/09/2013 - 18:39 | 3315749 .25hors
.25hors's picture

Global Criminal Cabal Crime Syndicate

at evidently such great risk to yourself . . .  how brave


naming names

Sat, 03/09/2013 - 19:09 | 3315806 Chupacabra-322
Chupacabra-322's picture

And I say onto them.  Come and get some.  I'm tired of waiting. 

Sat, 03/09/2013 - 19:27 | 3315838 Dugald
Dugald's picture

Get off your arse....go forth and meet them!!

Bumming your chat won't get it done...

Sat, 03/09/2013 - 14:35 | 3315174 I am more equal...
I am more equal than others's picture

Some one needs to inject 100 billion penises up bernake's ass because he ultra-ubber-fucked us with his dwarf penile implant. The little jackhammer of liquidity.

Sat, 03/09/2013 - 17:11 | 3315579 ebworthen
ebworthen's picture

The FED is TREASONOUS, it is TREASON what they do, therefore - EXECUTION or life in prison for the perpetrators is warranted.

Sat, 03/09/2013 - 18:39 | 3315750 chumbawamba
chumbawamba's picture

Yeah, whatever.  How many assholes reading this still have accounts with Chase, Wells Fargo, Bank of America, Citibank, etc.?  Count them amongst the enemies of the people as well, dirtbags and scallywags, the whole lot of them.

I am Chumbawamba.

Sat, 03/09/2013 - 22:57 | 3316223 archon
archon's picture

Well, I would like to hear what you really think!

BTW, this may be the right place to mention that John Williams has recently released an update where he discusses the US government's solvency crisis, and hold the line on his prediction that hyperinflation in the US is pretty much inevitable at this point.

Here's a snippet:

"There is no political will apparent among those currently controlling the White House and Congress to do so.  Accordingly, the United States will be doomed to an eventual hyperinflation, as the government prints money to meet its obligations, a process that already has started.  There is little time to restore balance to the system, as discussed in No. 485: Special Commentary."


Sat, 03/09/2013 - 23:56 | 3316301 smlbizman
smlbizman's picture

project mayhem sir.

Sat, 03/09/2013 - 16:45 | 3315520 monkeyshine
monkeyshine's picture

Is the US Fed getting some convertible bonds for The New Mar$ha££ P£an.

Sat, 03/09/2013 - 17:31 | 3315632 GoldForCash
GoldForCash's picture

And Kickbacks to Obamas offshore accounts....

Sat, 03/09/2013 - 20:14 | 3315919 NoClueSneaker
NoClueSneaker's picture

... coke & hookers ... - simplified ...

Sat, 03/09/2013 - 21:00 | 3315994 Coke and Hookers
Coke and Hookers's picture


Sat, 03/09/2013 - 12:48 | 3314929 true brain
true brain's picture

Writers with integrity like Hemingway are not found anymore. I don't see living writers today calling out the banksters, corrupt government, fraudulent Fed (correct me if I'm wrong, give me some examples.). Going against establishment will mean falling off Oprah's reading list. How pathetic.

Sat, 03/09/2013 - 13:33 | 3315006 Antifederalist
Antifederalist's picture

Taibbi, Greenwald,Paul Craig Roberts, Hedges.

All trying, imperfect, yes, but trying.

Sat, 03/09/2013 - 15:16 | 3315309 disabledvet
disabledvet's picture

you forgot me actually.
truly an outstanding video. saw Petty who was headlining with the Allman Bros not that long ago...gotta say that guy can still ROCK. lotta fun. here's a live version:
and if you want to know who "Del" is he was singing to in his car that would be this guy
Del Shannon. and i'm far from imperfect....just like these two guys.

Sat, 03/09/2013 - 20:09 | 3315906 Lost Word
Lost Word's picture

Probably meant well known popular novelists such as Dan Brown.

Sat, 03/09/2013 - 22:52 | 3316224 Pseudo Anonym
Pseudo Anonym's picture


Taibbi, Greenwald,Paul Craig Roberts, Hedges

will be perfect right after they die.  not before.

Sun, 03/10/2013 - 05:44 | 3316543 putaipan
putaipan's picture


Sat, 03/09/2013 - 14:20 | 3315118 Cdad
Cdad's picture

Robert Wenzel's concluding remarks in his address to the NY Fed:

Let’s have one good meal here. Let’s make it a feast. Then I ask you, I plead with you, I beg you all, walk out of here with me, never to come back. It’s the moral and ethical thing to do. Nothing good goes on in this place. Let’s lock the doors and leave the building to the spiders, moths and four-legged rats.

Sat, 03/09/2013 - 14:56 | 3315234 GMadScientist
GMadScientist's picture

Please do follow his model for retirement.

Sat, 03/09/2013 - 21:26 | 3316048 scrappy
scrappy's picture

True, that time was a special time for a special breed, "the lost" who see near, far, and THROUGH.

It's just happening differently this time, the media is in flux.

Though not any where like Hemmingway, I offer these contemporary titles.

You can read these books online for free, "a gift".

You will get what the "gift" means after you read them.












Sat, 03/09/2013 - 13:33 | 3315004 SandiaMan
SandiaMan's picture

Nickels are actually worth something

Sat, 03/09/2013 - 13:57 | 3315053 tiger7905
tiger7905's picture

Jim Rickards 8 min clip on currency wars, for those that don't want to read the book.



Sat, 03/09/2013 - 21:08 | 3315766 El Oregonian
El Oregonian's picture

Given that Benny Boy LOVES spreading it around and has become VERY LOOSE with our money. That ass has become SO large that Nickles won't work. Eisenhower silver dollars might even be just a bit too small...

Sat, 03/09/2013 - 12:02 | 3314826 Dr Paul Krugman
Dr Paul Krugman's picture

What would you have the Fed do?  Reject requests for needed liquidity?  Shall we nosedive back into a global depression?  Is that what everyone wants?

Sat, 03/09/2013 - 12:06 | 3314833 dick cheneys ghost
dick cheneys ghost's picture

YES......But Only if it means the end of the FRN, the end of the US dollar as reserve currency and the end of the 'petro dollar'..............Bring it on........Lets see how exceptional America is without these these constructs..........


(ps..I think we will be ok)

Sat, 03/09/2013 - 16:37 | 3315365 sunaJ
sunaJ's picture

I thought at the time (now sadder and wiser) that the Fed did the correct thing in granting needed liquidity in 2008; HOWEVER, where we are today - the way in which "liquidity" was secreted, given away, the way it was used and the way in which nothing has changed except that now all the government assets are equally and fully corrupted - where nothing has gotten better, nobody went to jail, the way of doing business is the same and now we are injecting this liquidity with increasing rapidity - tells us something very obvious...

The authority and power to drive and react to this crisis is derived from the Fed.  It is the job of elected leaders only to sell to us what the Fed does, apparently.  They have appointed a DoJ head that provides carte blanche immunity for the inner-circle and uses the reins of justice to neutralize those that would threaten their way of doing business.  Why is the Fed not screaming for "reform" of the system?  Because they can't be honest about how bad it is and frankly, they don't care.  They can create as much money as the finance industry (their industry) needs and when there are consequences there is always war and scapegoating.  It has nothing to do with what people want or what they are being told.


Your system is dying of corruption, Dr. Krugman, so speaking about more or less liquidity has the unfortunate quality of being both moot and boring.

Sat, 03/09/2013 - 16:55 | 3315543 disabledvet
disabledvet's picture

if we're talking war "it's neither moot nor boring." i think it is possible to have both the Austrians and Keynesians be right here. neither Austria nor Britain had the US dollar...though they both sure wanted it. when these two schools of thought were operating the dollar is behaving very much as it is today...probably the first time since then actually. this is an ALMIGHTY dollar...backed by NOTHING but what is written on it namley "faith and credit." in other words "if the US defaults she still gets to keep her gold" along with an ENORMITY of other assets. again...not saying "go hog wild and buy Google" here. i'm only saying "keep your cash flow clear a Government check might be coming soon." shall see of course. if Dennis Rodman is your point man for negotiations to prevent a war

Sat, 03/09/2013 - 17:01 | 3315560 Chupacabra-322
Chupacabra-322's picture

@ sunaJ,

There's that C word being misused again.  It's not corruption, we're way past that point.  It's CRIMINALLY Corrupted. 

Mass arrest followed by RICO and debt forgiveness to all nations.  Treasonist's will be held accountable and Executed. 

Sat, 03/09/2013 - 17:41 | 3315653 Go Tribe
Go Tribe's picture

Great post. 100 arrows up. It.'s about fixing the system, not preserving the status quo. The troll with the gamer tag Krugman just got ass raped by a real thinker.

Sat, 03/09/2013 - 19:26 | 3315837 Xibalba
Xibalba's picture

answer, buy gold

Sat, 03/09/2013 - 12:10 | 3314848 fonzannoon
fonzannoon's picture

That is not the question Paulie, as the fed has made it clear they are going to meet those liquidity needs. I am more interested in the consequences of going down that path.

Sat, 03/09/2013 - 12:39 | 3314910 Orly
Orly's picture

Spoiler Alert:  It doesn't end well.


Sat, 03/09/2013 - 12:49 | 3314931 fonzannoon
fonzannoon's picture

Agreed, the fact that they know it and still choose that route means the other route really does not end well.

Sat, 03/09/2013 - 15:01 | 3315247 GMadScientist
GMadScientist's picture

It takes a special kind of asshole to insist that his previous poor decision making is now justification for present poor decision making.


Sat, 03/09/2013 - 15:10 | 3315288 gould's fisker
gould's fisker's picture

GMad there's alot of that going around, it's called rational thought and analysis nowadays.

Sat, 03/09/2013 - 12:16 | 3314859 caimen garou
caimen garou's picture

hell yes you bearded idiot, how about saving the US TAPAYER instead of europe!  and why you don't just go to europe and give your stupid advice to them!  by the way paul, does shit stick to that beard of yours?

Sat, 03/09/2013 - 20:24 | 3315941 NoClueSneaker
NoClueSneaker's picture

... hmmm .... dunno, Tylers & Reggie say : short the shit out of €U-Banks who r on the tit of the Feds . GS made EMU to loot ...

Does s1 know who sucked those Bns. ? If BNParisBus, Unicredit, Intensa San Paolo, SocieteDegeneree ... than safe while broke. If Barclays, Deutsche, HSBC - SHTF ....

NWO Kaliphat of Bankrrupcy has a plan ... we just to dumb to dig it.

Let's dig the graves for the banksters - preemptive ...



Sat, 03/09/2013 - 12:19 | 3314867 gould's fisker
gould's fisker's picture

Dr Doom, there is an alternative.  The Europeans can revert to their own national currencies, admit the Union was a bad impression of a Fellini film, and they can proceed to print, debase their own currencies, and collapse in ten years rather than next year.  We've got plenty of choom printing velocity over here in the USA and can collapse on our own, we don't need the Europeans on our collective back.

Sat, 03/09/2013 - 13:51 | 3315039 max2205
max2205's picture

Do they have to pay it back

Sat, 03/09/2013 - 15:06 | 3315266 gould's fisker
gould's fisker's picture

Don't be silly, how can anyone pay back this enormous mound of steaming debt paper? They're probably planning a "do-over" this very minute. And heh, you never know where the next currency is coming from--beads, casino chips, bitcoins, or maybe this:

Sat, 03/09/2013 - 16:57 | 3315550 disabledvet
disabledvet's picture

you bet they do...

Sat, 03/09/2013 - 17:40 | 3315648 Ghordius
Ghordius's picture

They must have pledged collateral for it, don't they?

Which leads to hyrperhypothecating branches of megabanks, who are in...

Sat, 03/09/2013 - 20:13 | 3315918 Lost Word
Lost Word's picture

But that would be contrary to the NWO conspiracy plan for a One World Government and Universal Slavery.

Sat, 03/09/2013 - 12:42 | 3314913 Kaiser Sousa
Kaiser Sousa's picture

Krugman: "What would you have the Fed do....?"

ZeroHedge: "We expect you to die Mr. Krugman...."


please shut up and exit gracefully...its not funny anymore.... 

Sat, 03/09/2013 - 17:00 | 3315558 disabledvet
disabledvet's picture

my favorite scene in Goldfinger...and in all Bond movies (pun intended):

Sat, 03/09/2013 - 17:21 | 3315607 IrritableBowels
IrritableBowels's picture

Where was the pun?

Sat, 03/09/2013 - 12:43 | 3314916 nightshiftsucks
nightshiftsucks's picture

How about the truth you fat fuck and then as a country we can decide which way to go,Bernanke has no right to take me on his wild ride.I want the truth,the kind of truth when you are looking down the barrel of a Benelli M4 right before the trigger is pulled.The so called leaders of this counrtry are destroying it and they will pay.

Sat, 03/09/2013 - 18:52 | 3315741 earleflorida
earleflorida's picture

'they are not trust`worthy... nor, are their weight'd words, `not worth one's salt'-- said thusly, "Oh what a tangled web you weave when first you pactice to deceive", if one were to superimpose the word 'salt for truth'!?  indeed, this red-herring submerged in a propagandized saline panacea perfidy?! alas, spoken from these licentious savior`faire scoundrels, nesting the empty`banks, that out and about of a transient potemkin village... ferrying the river styx, hopelessly anchoring to an emptied crimsom tide long last dredged!? their creative intransigence too reality gives truthiness a tasteless diet, wanting a morsel of salt... a buncombe du`jour of indegestion always lacking salt-- that which is incomprehensible for them to imbibe?!'  

Sat, 03/09/2013 - 13:02 | 3314946 smacker
smacker's picture


Sat, 03/09/2013 - 13:06 | 3314954 Mediocritas
Mediocritas's picture

Our ZH Krugman is one of the best Poes I have ever seen. Love it PK!'s_Law

Sat, 03/09/2013 - 16:03 | 3315432 tenpanhandle
tenpanhandle's picture

So, by giving him a down arrow I'm really giving him an up arrow (in his mind).  But it is so easy to garner down arrows on this site - just say "fuck gold" and see where that gets you.  Therefore, he is garnering up arrows (in his mind) by tendering effortless banality.  Aw, that's just to easy.  Whats the alternative -give him a real green up arrow?  Fuck that, I'll stick with the down arrow.

Sat, 03/09/2013 - 13:11 | 3314971 e-recep
e-recep's picture

"Shall we nosedive back into a global depression?  Is that what everyone wants?"

the world is already in depression, dimwit. we don't need the fucking MSM or the scumbag politicians to confirm it.

Sat, 03/09/2013 - 13:11 | 3314973 optionsman
optionsman's picture

I want free price discovery of risk in the markets. Only after the markets clear can we reasonably hope for a resumption of fundamentally sound economic growth and for the restoration of the promises that Capitalism once offered to all slices of the society. The Fed and other CBs need to stop their constant and continuous involvement in the markets for that to happen as a first step.

Sat, 03/09/2013 - 16:09 | 3315438 tenpanhandle
tenpanhandle's picture

There is an old capitalist saying..."nothing in this life is free".  Quite the conundrum, eh?

Sat, 03/09/2013 - 14:12 | 3315090 Lord Of Finance
Lord Of Finance's picture

Dr Krugman: 


The depressed levels of interest show that we are not in recovery. We are depressed. The question is, "where do you percieve the growth to come from, for the fed to begin raising rates?


As for,"what do we want the fed to do?"


   Where do you expect all this liquidity to go eventually? Does it stay tied up forever on the balance sheets? Do you foresee this liquidity to be used to purchase gold? What is to stop the banks from making such purchases? Are silver and gold money in your eyes?

Sat, 03/09/2013 - 14:39 | 3315187 resurger
resurger's picture

Let the "markets" recover and heal naturally... so we know who was filthy and who was clean..

Sat, 03/09/2013 - 16:20 | 3315476 Law97
Law97's picture

The problem is those who have the power to let the markets recover and heal naturally are also those who are the most filthy. 

Sat, 03/09/2013 - 20:17 | 3315925 Lost Word
Lost Word's picture

And those who are most filthy are also those who have the most to lose in a natural economic process.

Sat, 03/09/2013 - 14:44 | 3315205 holgerdanske
holgerdanske's picture



Let the fat cats boil in their own fat. Let actions have consequences. Leave tax payers alone, hell, abolish most taxes!! Sell the FED to the Chinese pull American troops out of other countries. Make Manning minister of defence.

Introduce gold as the basis for money creation.

And as for you depression, do you really believe you are going to avoid it? You can do your best, and it will only postpone the inevitable. However with each delay, you will get a more severe dose.

And, the depression you are worrying about is already here. It still has lipstick on, but that will soon wear off. And what has this cost so far, 6 Trillion? or close.

It is criminal, it is immoral, it is theft and it is treason. The majority of the victims might not even be born yet.

I wonder how some people sleep at night.

That is just a start.


Sat, 03/09/2013 - 14:49 | 3315220 ziggy59
ziggy59's picture

You're Paul Krugman?
Just asking... And I am skeptical.

Sat, 03/09/2013 - 15:25 | 3315339 One World Mafia
One World Mafia's picture

To delay the day of reckoning with more money printing is to exacerbate the hell that one day can no longer be forestalled.

Sat, 03/09/2013 - 15:35 | 3315357 petolo
petolo's picture

Haven't you noticed all the people you pushed into your depression. Climb out of your castle doc and see the real world or maybe just jump out of the top floor window .

Sat, 03/09/2013 - 16:45 | 3315525 Kirk2NCC1701
Kirk2NCC1701's picture

No, I'd expect the Fed to honor the requests of the bank that my friends and I plan to set up offshore.  Assuming that this scheme is not enjoying only by those with a MFN (Most Favored Nation) status.  Please advise.  We'll even put you on our board, if your advice is "actionable".

Sat, 03/09/2013 - 17:12 | 3315583 NIETSNEREM
NIETSNEREM's picture

Do you want the truth about what I want the Fed and the Europeans to do? "You can't handle the truth!"

Sat, 03/09/2013 - 17:15 | 3315595 ebworthen
ebworthen's picture

"What would you have the Fed do?  Reject requests for needed liquidity?  Shall we nosedive back into a global depression?  Is that what everyone wants?"

Yes please.

And after some bankers jump from the 55th floor or are hung from lamp posts by hungry defrauded crowds of former believers and politicians and law enforcement have an epiphany that rule-of-law matters markets and economies could return to rewarding people for work rather than punishing them.

Sat, 03/09/2013 - 20:09 | 3315907 bentaxle
bentaxle's picture

You're a total fool and that's because you don't think you are!

Sat, 03/09/2013 - 20:20 | 3315933 The Heart
The Heart's picture

Hi Dr, sure hope your day gets better.

You ask, "What would you have the Fed do?"

Here is America's answer to that question:

Sun, 03/10/2013 - 00:25 | 3316323 sgorem
sgorem's picture

"What would you have the Fed do?" A fucking good start would be for EVERYONE that works for this fucking evil organization to jump head first off the top of the Eccles building, and have a volunteer group of ZHer's at the bottom for the coup de gras for any survivors.

Sat, 03/09/2013 - 13:46 | 3315031 Go Tribe
Go Tribe's picture

It finally dawned on me, and I had one of those forehead slapping moments: the Fed sends money to EU banks and the EU banks buy US stocks, thereby accounting for the rallies. All are happy.

Sat, 03/09/2013 - 14:46 | 3315210 lunaticfringe
lunaticfringe's picture

It's a dead man's party. Complete with stolen comment from McMolotov. Thank Gawd for ZeroHedge or I'd lose my fucking mind.

Sat, 03/09/2013 - 15:02 | 3315250 GMadScientist
GMadScientist's picture

Or Yen...or Italian bonds...or Bollinger.

Sat, 03/09/2013 - 16:14 | 3315455 tenpanhandle
tenpanhandle's picture

The U.S. is bailing out Euro-peon socialism.  Can't have that go kaput right when U.S. itself is going full on conversion to pure socialism.  Banksters and politicians getting rich in the process is just an unfortunate side effect.  Darn, they all say. 

Sat, 03/09/2013 - 19:53 | 3315885 Cathartes Aura
Cathartes Aura's picture

how 'bout you just accept that the Financial Class aka Bankers do not think in terms of "nationstates" and have always been about going global.

. . .and lately it's become most obvious.

nations are for farming herds via taxation.  each farm gets a flag, a military, and some sports teams.

oh, and their own fiat.  the Bankers own it all.

Sat, 03/09/2013 - 14:49 | 3315222 Stoploss
Stoploss's picture

The lone printer..

We have been bailing out european banks for four years running.

When it ends, and it will, it ends in a simultaneous global hyperinflationary meltdown.


The lone printer indeed..

Sun, 03/10/2013 - 01:56 | 3316400 CheapBastard
CheapBastard's picture
<<Fed Injects Record $100 Billion Cash Into Foreign Banks>>


I wonder if American taxpayers know how generous they are giving their money away so freely to foreigner bankers?

Sat, 03/09/2013 - 12:00 | 3314821 Seasmoke
Seasmoke's picture


Sat, 03/09/2013 - 12:23 | 3314876 scatterbrains
scatterbrains's picture

This is great as long as the banksta niggaz can hold onto power over there.

Sat, 03/09/2013 - 13:07 | 3314958 Shell Game
Shell Game's picture

100% agree.


Trea·son - Noun \?tr?-z?n\

1: the betrayal of a trust : treachery

2: the offense of attempting by overt acts to overthrow the government of the state to which the offender owes allegiance or to kill or personally injure the sovereign or the sovereign's family.


Both meanings of the word apply here.  Since the Fed is destroying our children's future, while pumping flagrant MSM propaganda, this is treachery.  And since the Fed is a private entity, they represent an outside power actively destroying our sovereignty as a nation and as individuals. 

There is no clearer case for capital punishment for all active and accessory to the crime, then End The Fucking FED.

Sat, 03/09/2013 - 14:13 | 3315099 Cdad
Cdad's picture

Treachery...yes.  Treason?  Not so sure.  In the above simple definition is the sense of overthrowing the government.  Our Fed is in engaged in supporting it.  Unless, of course, the current batch of QE goes suddenly sour, and the value of the US dollar suddenly collapses.  Then the treason part of it would be more clear.

Where it not for the Fed and QE infinity, the bond market would be, right now, correcting and corralling our idiots in Washington DC.  Rising interest rates would be forcing them to cut Federal spending and balance the budget.

Sat, 03/09/2013 - 16:19 | 3315474 tenpanhandle
tenpanhandle's picture

We the residents of these several states are the soverigns here.  Therefore, with their drone program designed and aimed at killing us (soverigns and there families) - that is treason.

Sat, 03/09/2013 - 22:14 | 3315758 RebelDevil
RebelDevil's picture

"Unless, of course, the current batch of QE goes suddenly sour, and the value of the US dollar suddenly collapses."
Keiser and Williams are both saying that will happen in the spring.

Sat, 03/09/2013 - 14:54 | 3315028 Lord Of Finance
Lord Of Finance's picture

Treason is definitely debateable. I would open a grand jury on that. So  if not treason, then certainly treachery,as mentioned above, and for Keynes himself; lechery!

Sat, 03/09/2013 - 14:57 | 3315236 holgerdanske
holgerdanske's picture

You are feeding almost one fifth of you own overgrown population which enables some of them to sit inactive and obese in front of the state sponsored/sanctioned TV channels, or roam Wallmart for the latest Chinese junk.

Handy way to keep the trash off the street, but these are the modern version of your soup kitchen queues.

The young men and women injured in your fight for "freedom" can smartly be parked here too, and, sometimes sucessfully, be kept docile and calm by the latest drugs. Except when they cannot, and then you all wonder why.?

I still wonder how some people can sleep at night!


Sat, 03/09/2013 - 15:03 | 3315257 GMadScientist
GMadScientist's picture's all lined with arsenic. Be patient.

Sat, 03/09/2013 - 14:09 | 3315077 Cdad
Cdad's picture

I'm not sure whether or not the Treason charge can be asserted here.  The activities of the Fed sure have that feel.

Would be nice if the more legally minded members of the ZH brotherhood could chime in on this assertion.

Sat, 03/09/2013 - 12:01 | 3314823 Mike Cowan
Mike Cowan's picture

Hell, why not 200 billion? 

Sat, 03/09/2013 - 12:38 | 3314907 kaiserhoff
kaiserhoff's picture

Great question.  Why not 200 Trillion, and solve all the problems at once AND FOREVAH!

Sometimes stupidity is best revealed by going with the flow, taking it to the max. 

Let's drop the big one and SEE WHAT HAPPENS;)

Sat, 03/09/2013 - 16:22 | 3315479 tenpanhandle
tenpanhandle's picture

splashback happens!

Sat, 03/09/2013 - 12:03 | 3314828 2whitedogs
2whitedogs's picture

A superior essay, which by extension may explain what the supposedly solid Canadian banks were doing taking all that cash back in 2008. And by which mechanism the loonie currently exhibits IMO controlled FX values, not being in actuality a freely-traded currency. Somewhat like the Swissy peg.

Sat, 03/09/2013 - 12:03 | 3314829 TrustWho
TrustWho's picture

This worked for Zimbabwe. SORRY, oh so sorry, this created total economic chaos in Zimbabwe with rampant looting and rape with a total loss of respect for law and order, but WE ARE DIFFERENT. We have/had the world's reserve currency (laugh, laugh).

Sat, 03/09/2013 - 12:08 | 3314842 TrustWho
TrustWho's picture

Fu*$, ZeroHedge is DOOMED. The authorities will not allow this instaneous truth to exist for long. The powers of the current structure believe printing money creates respect if only these stupid, paranoid, conspiracy theorist would just go away. OOPS, an idea for Daddy?

Sat, 03/09/2013 - 14:34 | 3315166 resurger
resurger's picture







Sat, 03/09/2013 - 19:51 | 3315881 RebelDevil
RebelDevil's picture

I'm sure the tylers have the servers beefed up with the best cyber-security. Otherwise, they would have shut it down already.

Sat, 03/09/2013 - 20:24 | 3315942 Lost Word
Lost Word's picture

Are there any Billionaires that read ZH and agree with ZH ?

If not, probably why ZH is not a problem to the Government, until Millions of people read ZH and agree with ZH.

Sat, 03/09/2013 - 20:28 | 3315944 Lost Word
Lost Word's picture


Sun, 03/10/2013 - 21:19 | 3318196 nyquil762
nyquil762's picture

Why would ZeroHedge be doomed? Most of us are to impotent to act on the truth!

Sat, 03/09/2013 - 12:05 | 3314830 rufusbird
rufusbird's picture

For some reason this made me think of past failing corporations in which the bond holders took control of the bankruptcy liquidation of the company, and the following distribution of the assets.



Sat, 03/09/2013 - 12:08 | 3314835 The Alarmist
The Alarmist's picture

Payback is a bitch.  It's how you keep the peace after collateralizing all your problems and pawning them off on the rest of the world to suck up their savings to replace those your own citizenry can or will  no longer make.  Hell, if I were a Chinaman like AnAnonymous, I'd conclude it was all part of US Citizenism.

Sat, 03/09/2013 - 12:15 | 3314838 tawdzilla
tawdzilla's picture

i'd like to see the ammortized repayment schedule for those funds...

btw, since it's my "money," can i call them and harass them if they are late on a payment?  can i put a ding on their credit?  no, if they screw up, they just get more of my "money," whether i like or not. 

Sat, 03/09/2013 - 12:16 | 3314840 fonzannoon
fonzannoon's picture

This may be an amazingly dumb question, but if the fed is printing a trillion dollars a year via QE to cover a trillion dollar deficit in the US, how is QE money also being pumped into european banks?

Regardless, things are going splendidly. Kyle Bass always notes that Europe has not recapped their banks, and he seems to imply they are a good short. I guess they are being recaitalized by the fed?


Sat, 03/09/2013 - 12:18 | 3314864 LawsofPhysics
LawsofPhysics's picture

Very easy Fonz.  You need look no further than the shareholders of all the coprorations (be it a bank or otherwise) that benefits from the largesse of the Federal Reserve Bank.  Hint; It's the same wealthy families that have been in control of real resources and power since the dawn of the slave trade.  Money is a distraction, this is about power and control, always has been.  Corporations=people but people are not corporations, the socialization of private losses continues, yet the profits always stay private.

Sat, 03/09/2013 - 12:26 | 3314879 fonzannoon
fonzannoon's picture

I guess so. I am stuck in a tangled web of shit in this rabbit hole lately.

Sat, 03/09/2013 - 12:35 | 3314899 kaiserhoff
kaiserhoff's picture

The simplest explanation is usually the truth.

Unlikely that EU banks are being recapped by the Fed.  That would show up on some pesky auditor's notes somewhere.  More likely, US Subs of Euro banks are investing in Spanish and Italian bonds and profiting (sic) off the spread.

What could go wrong?

Sat, 03/09/2013 - 13:42 | 3315016 scatterbrains
scatterbrains's picture

Imagine we'll all be corzined by the berstank after an Italian bond crash triggered by the news that the banksta nigga in charge got wacked by some rogue patriot or something.

would that be "The Godfather IV or V ?  I forget

Sat, 03/09/2013 - 23:22 | 3316254 ekm
ekm's picture

Extremely good points.


Money as a 'distraction'? Interesting.

Sat, 03/09/2013 - 12:23 | 3314874 TrustWho
TrustWho's picture

Who knows, but one way would be for the Fed to buy Italian bonds with freshly printed cash from foreign bank and the Fed trades the Italian bonds to JP Morgan for USA treasuries at a steep steep discount. The foreign (read Italian) bank has liquidity, Italian government gets subsidized and JP Morgan makes a mint because he is Jamie Dimon. This is all done out of clear thin air like magic.

Boy, would it be fun to audit the Fed books (how many do you think they keep?). Where is Ron Paul when we need him?

Sat, 03/09/2013 - 12:14 | 3314855 LawsofPhysics
LawsofPhysics's picture

There are cronies all over the world and they all wnat their "cut".  Totally fucking stupid folks, all of the money is backed by the U.S. taxpayer and their children.  Be it their wealth or blood.  Prepare.

Sat, 03/09/2013 - 14:25 | 3315136 ThirdWorldDude
ThirdWorldDude's picture

It's simple: Europe is to US as Greece is to Germany...


But that's the price of Pax Americana, LoP. USA must constantly reanimate it's entourage, because if only one of them goes down the dominoes start rolling and it's game over for FRN's status of global reserve currency.

Sat, 03/09/2013 - 15:42 | 3315381 css1971
css1971's picture

Actually the other way round. Europe has a trade surplus.

Sun, 03/10/2013 - 06:54 | 3316568 ThirdWorldDude
ThirdWorldDude's picture

I wouldn't completely agree with that. Apart from massaging numbers, Europe has a two-tier + system (plus national level) with a rather complex structure:


1. EU 27  - which is constituted of all the member-states that make European Union (shows a constant trade deficit, with some pretty staggering numbers for 2012 and you rarely see that data getting published);

2. EuroArea, or EZ, made of member-states that use the euro as a common currency. Their trade surplus is the numbers Brussels' bureaucrats serve to ignorant masses, but the tricky part is that most of that surplus comes from intra-EU trade, i.e. trade with other EU countries outside of the single currency zone;

3. Even within EZ there's a great disproportionality in member-states' trade balances, from Germany's and Netherland's perpetual surplus to Spain's, Greece's and France's almost steady deficit. To illustrate it more clearly for you 'Mericans, this would be akin of BLS presenting Connecticut's or DC's trade balance data as official numbers for the entire USA.


Lies, damn lies & statistics...

Sat, 03/09/2013 - 12:14 | 3314856 gould's fisker
gould&#039;s fisker's picture

Long Monte Paschi.  Something tells me that a rescue fund will soon materialize out of fed-thin air. Thank God! We shall all be saved!

Sat, 03/09/2013 - 12:17 | 3314862 LaLiLuLeLo
LaLiLuLeLo's picture


Sat, 03/09/2013 - 12:32 | 3314891 holgerdanske
holgerdanske's picture

Gave you an upper! sometimes silence is indeed golden! And I like your avatar!!

Sat, 03/09/2013 - 12:23 | 3314875 lasvegaspersona
lasvegaspersona's picture

Is the mechanism of the transaction clear? Are they taking Bonos as collateral or is it obscure? 

How about a nice set of balance sheet charts!

Sat, 03/09/2013 - 12:28 | 3314877 holgerdanske
holgerdanske's picture

So what have we here. Brave new world, where nothing will be "unforeseen" no interest rates will increase and no-one will ever be go bankrupt.

And how is it going to end. "Well, we didn't see that coming!"  That is how it usually ends, ---or war.

The printing of money has never, ever, saved a government, let alone the world. And obviously!!  is not going to so this time either. On the other hand, when pressed out to the farthest part of the thin twig, thy might just decide to go for it, and it will be war.

But before that, they are going to disempower you, disenfranchise you and rob you of whatever you have, that sticks above the average. They are going to try and make all the farm animals level, except the important ones. This is indeed animal farm in the flesh.

So are we going to be good horses and just let them get away with it.??

I am not. Stuff them. I am buying gold, the more they try and smash the price, the more I know that they are afraid.

Bloody criminals.

Sat, 03/09/2013 - 12:27 | 3314883 Kaiser Sousa
Kaiser Sousa's picture

ah yes...and this would explain why Gold is STILL under $1600 and Silver is STILL under $29...

yeah, right..........................


Sat, 03/09/2013 - 12:29 | 3314886 holgerdanske
holgerdanske's picture

I couldn't get myself to say that, but yes, I agree.

Sat, 03/09/2013 - 12:34 | 3314897 TrustWho
TrustWho's picture

I have heard the Federal government has used Chained CPI to calcutae the real price of gold from the time FDR conficated it. FDR II is coming and less than $1600...MUCH LESS

Sat, 03/09/2013 - 16:29 | 3315493 tenpanhandle
tenpanhandle's picture

Ya sure, you betcha!

Sat, 03/09/2013 - 12:37 | 3314890 steve from virginia
steve from virginia's picture




I get the idea that Ben Bernanke operates Zero Hedge as a red herring:


" ... the Fed injected a record $99 billion of excess reserves into foreign banks."


The banks have accounts with the Federal Reserve and the amount $99 billion is credited to these' accounts after they produced more than $99 billon in collateral.


"As the most recent H.8 statement makes very clear, soared from $836 billion to a near-record $936 billion, or a $99.3 billion reserve "reallocation" in the form of cash - very, very fungible cash - into foreign (read European) banks in one week""


Reserves are just that, the 'reallocation' is a form of depositor guarantee, it cannot see the light of day unless the demand for reserves exceeds what the bank can produce on its own ... out of deposits held as reserves ... as would be the case during a run on the bank for instance.


Should the panic end, reserves are returned to the account.


If the bank run gets out of hand, the reserves are insufficient and the Fed must lend directly from the discount window.The real problem is banks' assets are impaired and insufficient to support discount window lending, the banks are in fact bankrupt and should be closed down. Central bank lending under the circumstances is like trying to bail out the Titanic with a joint-compound bucket.


Allocations from the Fed are ledger loans, reserves are circulating money. Central banks cannot create circulating money, only the public can do so by circulating it! Yes, Virginia, there is a reason for all those pesky (relatively) poor people, they put the 'worth' in money. The rich/banks cannot do so by command.


Dollar reserves overseas can be collateral for F/X denominated loans @ market rates of exchange, but these are loans and must be repaid. Problem in the eurozone is inability of Europeans to repay ANY loans. That is the European banks' problem, not the Fed's.



Sat, 03/09/2013 - 12:39 | 3314909 TrustWho
TrustWho's picture


Sat, 03/09/2013 - 12:42 | 3314914 Tyler Durden
Tyler Durden's picture

Just like Steve Liesman you too are invited to google "Dear Steve Liesman: Here Is How The US Financial System Really Works" to finally understand what happens in the capital markets, instead of 1980s economics textbooks

Also the chart above is of CASH. the fact that it just happens to equate to reserves is what the 1980s based monetarists such as yourself would have never figured out unless they saw it in a chart clearly laid out

Finally, while googling stuff, look up "fungible"

Sat, 03/09/2013 - 13:08 | 3314964 gould's fisker
gould&#039;s fisker's picture

I'm impressed that there remains a living soul besides Krugman that still truly believes enough in the viability of our social experiment of the USG that they can still make a rational argument to explain today's goings on/monetization of all animate and inaminate objects.  It's delusional rationalization, but nevertheless it's mighty impressive!

Sat, 03/09/2013 - 15:10 | 3315285 GMadScientist
GMadScientist's picture

Junkies make excellent liars...of necessity.

Clever got me this far
Then tricky got me in
Eye on what I'm after
I don't need another friend

Smile and drop the cliche
do you think I'm listening?
Take just what I came for
Then I'm out the door again

Peripheral on the package
Don't care to settle in
Time to feed the monster
I don't need another friend

Sat, 03/09/2013 - 18:58 | 3315784 brak
brak's picture

+1 for APC

Sat, 03/09/2013 - 23:59 | 3316302 Rusty Shorts
Rusty Shorts's picture

...playing in the background as I scroll though the comment section..

The Dust Brothers- What is Fight Club

Sat, 03/09/2013 - 14:11 | 3315081 rqb1
rqb1's picture

Went back and reread the article, great stuff Tylers.

Sat, 03/09/2013 - 17:35 | 3315639 ebworthen
ebworthen's picture

"...these are loans that have to be repaid."

Do you really believe that Steve?  Who is doing the accounting again?  Have the bailouts been repaid?  Have the salaries and bonuses of the LIBOR riggers been repaid into the national debt?  Is Jon Corzine in jail yet?

You sound like a five year old explaining how Santa's reindeer fly and the elves make all the toys.

I love Santa but I have to pay bills and taxes in my world.

Sat, 03/09/2013 - 18:55 | 3315778 LawsofPhysics
LawsofPhysics's picture

Collateral? Did someone say collateral? Let's see what that collateral looks like motherfucker!!! Mark to fantasy dumbass.

Sat, 03/09/2013 - 18:59 | 3315787 Meat Hammer
Meat Hammer's picture

Marriner Eccles was the Governor of the Federal Reserve System in 1941. On September 30 of that year, Eccles was asked to give testimony before the House Committee on Banking and Currency. The purpose of the hearing was to obtain information regarding the role of the Federal Reserve in creating conditions that led to the depression of the 1930s. Congressman Wright Patman, who was Chairman of that committee, asked how the Fed got the money to purchase two billion dollars worth of government bonds in 1933. This is the exchange that followed.

ECCLES: We created it.
PATMAN: Out of what?
ECCLES: Out of the right to issue credit money.
PATMAN: And there is nothing behind it, is there, except our government's credit?
ECCLES: That is what our money system is. If there were no debts in our money system, there wouldn't be any money.

Sat, 03/09/2013 - 12:34 | 3314896 NoWayJose
NoWayJose's picture

This is known on Wall Street even if not spoken about. It is the biggest reason that there is no fear in Europe. It only props up the slowly decaying status quo in Europe but does nothing to help the economy in either the EU or US.

Sat, 03/09/2013 - 12:34 | 3314898 Kaiser Sousa
Kaiser Sousa's picture

Hey Tylers - 

cant we find a way to pass this over to Santelli...if he brought this up on air then i would be convinced he's one of the remaining good guys....

lets try at least..............

Sat, 03/09/2013 - 12:36 | 3314902 Mark123
Mark123's picture

As if the world's moneylenders even recognize political silly, quaint Americans!  All they care about is that they insert one of their central banks within your country - and then you are part of the borg for evermore!!!


Long live the money lenders!!

Sat, 03/09/2013 - 16:33 | 3315502 tenpanhandle
tenpanhandle's picture

As an american, I'll take quaint.  What else have I got?

Sat, 03/09/2013 - 12:38 | 3314905 Manipulism
Manipulism's picture

They will get angry and doin.............nothing!

Sat, 03/09/2013 - 12:38 | 3314908 the grateful un...
the grateful unemployed's picture

they in turn buy US stocks, which helps POTUS achieve his socialist states agenda for America (speaking of the wealth effect) of course Bush had a similar global fascist agenda which resulted in right of center leaders like Sarkozy being elected in Fr, and which kept Tony Blair in office. if i were Obama I would worry about who the next Pope will be. if they choose a latino it could spark some revolutionary movements at our backdoor. if its a black Pope that would be sweet.

Sat, 03/09/2013 - 12:47 | 3314921 shovelhead
Sat, 03/09/2013 - 12:54 | 3314937 falak pema
falak pema's picture

Ben's feeling groovy...spreading the "assets" around...feeling groovy.  

WS on a roll and FED ready to impose its "model" on the world; is it Ford's EDSEL or his MUSTANG?...

slight difference! 

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