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Another Conspiracy Theory Becomes Fact: The Fed's "Stealth Bailout" Of Foreign Banks Goes Mainstream
Back in June 2011, Zero Hedge first posted:
which we followed up on various occasions, most notably with
- "How The Fed's Latest QE Is Just Another European Bailout" and
- "The Fed's Bailout Of Europe Continues With Record $237 Billion Injected Into Foreign Banks In Past Month."
With the following key chart:
Of course, the conformist counter-contrarian punditry, for example the FT's Alphaville, promptly said this was a non-issue and was purely due to some completely irrelevant microarbing of a few basis points in FDIC penalty surcharges, which as we explained extensively over the past 3 years, has nothing at all to do with the actual motive of hoarding Fed reserves by offshore (or onshore) banks, and which has everything to do with accumulating billions in "dry powder" reserves to use for risk-purchasing purposes (alas understanding that would require grasping that reserves are perfectly valid collateral to use as margin against purchase of such market moving products as e-mini futures, which in turn explains why traders usually don't end up as journos).
Fast, or rather slow, forward to today when none other than the WSJ's Jon Hilsenrath debunks yet another "conspiracy theory" and reveals it as "unconspiracy fact" with "Fed Rate Policies Aid Foreign Banks: Lenders Pocket a Spread by Borrowing Cheaply, Parking Funds at Central Bank"
Wait... the Wall Street Journal said that? Yup.
Banks based outside the U.S. have been unlikely beneficiaries of the Federal Reserve's interest-rate policies, and they are likely to keep profiting as the Fed changes the way it controls borrowing costs.
Foreign firms have received nearly half of the $9.8 billion in interest the Fed has paid banks since the beginning of last year for the money, called reserves, they deposit at the U.S. central bankaccording to an analysis of Fed data by The Wall Street Journal. Those lenders control only about 17% of all bank assets in the U.S.
Moreover, the Fed's plans for raising interest rates make it likely banks will see those payments grow in coming years.
Hmm, we almost feel like we should bring up the dreaded "P" word considering the bolded sentence is a recap of what we said in February of 2013 in "How The Fed Is Handing Over Billions In "Profits" To Foreign Banks Each Year." That's ok, though: imitation, flattery and all that...
So here is Hilsy "figuring out" what we have been explaining for over 3 years!
Though small in relation to their overall revenues, interest payments from the Fed have been a source of virtually risk-free returns for foreign banks. Large holders of Fed reserves include Deutsche Bank, UBS AG, Bank of China and Bank of Tokyo-Mitsubishi UFJ, according to bank regulatory filings. U.S. banks including J.P. Morgan Chase, Wells Fargo and Bank of America Corp. are also big recipients of Fed interest payments, according to the filings.
"It is a small transfer from U.S. taxpayers to foreign taxpayers," said Joseph Gagnon, a former Fed economist at the Peterson Institute for International Economics. The transfer, he added, was a side effect of Fed policy, not a goal.
Actually it is a goal, but that would lead to a whole lot of embarrassing congressional hearings which the Fed would rather avoid, plus nobody really "gets" it. The reason why? Apparently things are so "complex" that anyone who figured it out years ago was clearly a conspiracy theorist:
Behind the payments is a complex interplay between new government regulatory policies and new methods the Fed has developed to control short-term interest rates.
The Fed has pumped nearly $3 trillion into the banking system since the 2008 financial crisis, increasing banks' reserves, in efforts to stabilize markets and boost economic growth.
Since 2008, it has paid banks interest of 0.25% on those reserves. The Fed affirmed this month that the rate it pays on reserves will be the primary tool it uses to raise short-term borrowing costs from near zero when the time comes, likely next year.
In part because regulatory requirements discourage domestic banks from holding more cash reserves than they need, many of the reserves created by the Fed are held by foreign banks.
In other words, the Fed-funded risk-free carry trade finally goes mainstream. Of course, all those who read ZH in 2011 will know all of this by now:
The interest payments totaled $4.7 billion so far this year and $5.1 billion last year, and will increase over time as the Fed raises rates. The Fed remits most of its profits to the U.S. Treasury, and the rising cost of the interest payments could put downward pressure on the amount the central bank sends to taxpayers each year, the Fed has said.
Some observers say this could become a political challenge for the Fed, especially the payments it makes to foreign banks.
"The fact is that the Fed is going to be paying very large amounts of interest to banks," said William Poole, a senior fellow at the Cato Institute and former president of the Federal Reserve Bank of St. Louis. "It's highly likely that some politicians will notice that and given the proclivity of some politicians anyway to demagogue issues, the Fed is going to have some political explaining to do."
Some Fed officials also have expressed concern about how these payments will look. "I think the optics are very difficult to defend and might get us into trouble," James Bullard, president of the Federal Reserve Bank of St. Louis, said in an August interview with MarketWatch.
Since 2009, foreign banks have earned roughly $5 billion by borrowing dollars cheaply, often at less than 0.10%, in short-term funding markets and depositing those funds at the Fed for 0.25%, according to the Journal analysis. That estimate doesn't take into account the costs of raising money through other means, overhead and taxes, which affect net income.
But don't blame the banks - they are merely doing what the Fed is encouraging them to do. And after all who wouldn't collect billions in risk free cash?
A spokeswoman for one bank engaged in the trade, Bank of Tokyo Mitsubishi, said that the growth of excess reserves parked at the central banks is a natural consequence of the Fed's policy. "The share of excess reserve balances held by BTMU has been in alignment with its business footprint in the U.S.," she said.
Deutsche Bank, which had one of the largest reserve balances at the Fed as of June 30, declined to comment. UBS didn't respond to requests for comment. A Chinese official close to Bank of China said it has been parking funds at the Fed in order to help it comply with liquidity requirements in its home market.
The foreign banks' activity is "entirely legitimate because they are providing a financial service and they are taking a spread," said Lou Crandall, chief economist at research firm Wrightson ICAP.
Sadly, the WSJ ends just before it gets good. So without further ado, here is what happens if and when one extrapolates a rising rate environment in terms of Fed handouts to foreign banks, from what we said in February of 2013:
We show the surge in the foreign bank cash level, as well as the cumulative cash interest paid to these banks assuming a weekly cash interest payment. What the chart shows is that from December 2008 through the last week of January, the Fed has paid out some $6 billion in cash (red line) to European banks simply as interest on excess reserves.
But that's just the beginning. If we are correct in assuming that QE3 will be a replica of QE2 when all the new reserves created ended up as cash on foreign bank balance sheets, it means that we can quite accurately forecast what the total foreign bank cash position will be on December 31, 2013 (as the Fed will certainly not end its open ended monetization of the US deficit before then, or likely, ever). The result: just under $2 trillion in cash held be foreign banks operating in the US, which also means that in calendar 2013, the Fed will fund and subsidize foreign banks a blended interest payment of $3.5 billion! This is entirely separate from the $2 trillion liquidity subsidy that Bernanke will also have handed out to keep these banks afloat, and is $3.5 billion that will flow right through the P&L and end up in the pockets of offshore shareholders who otherwise would very likely be wiped out had it not been for the Fed's relentless efforts to bailout foreign banks.
And since it is improbable that excess reserves held by any banks will decline at all in the coming years, one can also assume that the annualized interest paid to foreign banks, which would amount to at least $5 billion pear year, every year, will continue indefinitely as a direct Fed subsidy to the bottom line of Foreign banks.
All of this, of course, ignores what happens should the Fed hike interest rates across the board, which will also mean rising the rates on IOER, once inflation finally strikes: simple math means a 1% IOER means some $20 billion in interest paid to foreign banks, 2% - $40 billion, 5% - $100 billion paid to foreign banks, and so on. Putting these numbers in perspective, let's recall that Italy's third largest bank just got a €3.9 billion bailout (its third), and has a market cap of some €2.9 billion.
We can only hope someone in Congress asks Ben Bernanke in two weeks just under which Fed charter it is that the Fed is more focused on generating profits (not just trillions in excess liquidity) for European banks, than on opening up consumer lending which has been stuck in "petrified" mode for the past 4 years, with the total amount of loans outstanding currently at all US banks - foreign and domestic - at levels last seen the week Lehman filed for bankruptcy.
Obviously, nobody asked Bernanke and nobody has asked Yellen this simple question, because until last night apparently nobody aside from the Zero Hedge community had any grasp of what is going on.
That said, we doubt that anyone in control will ask any related questions in the near of not so near future even with Hilsenrath's "How The Fed Is Bailing Out Foreign Banks For Dummies" primer, because let's not forget - the same banks that control the Fed are also the same banks that purchase politicians at every possible opportunity (see for example: With Cantor Down, Which Other Politicians Has Goldman Invested In?).
In fact, the only good news from Hilsenrath's report is that yet another conspiracy theory has been documented as unconspiracy fact. Then again, Zero Hedge readers knew all of this over three years ago, for free.
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Well, I guess allies don't come cheap
and que the Reverse Repo freak out in 3, 2, 1....
Banksters helping Banksters...
Old news(except to the media induced sheep)
Cause we love getting raped?
no pun intended but the term "foreign bank" is misleading ... there is no such a thing.
banks are international corporations owned by who knows where .... all of them.
it could be based in london, switzerland, luxenburg etc... do you think JPM is owned only by american citizens? i doubt it ...
Bernie S.: Tell us who you lent $2.2 trillion dollars to
Benny B.: No
https://www.youtube.com/watch?v=rCWXrMCGJT4
transfer payments
the whole machine just collects rent, then transfer-pays it to absentee landlords
but boy, are they in for a big surprise when nobody can pay the rent any more! that will teach them a lesson!
If the EuroZone couldn't just print more money itself, I guess somebody else had to do it for them. This just shows you how integrated this global clusterfuck actually is.
I thought it was already well known the fed did this. At least a year or so ago.
I'm sure Obongo's teleprompter has a good explanation on how this helps the middle class.
The interest paid on deposits is one thing.
What about the hundreds of billions of garbage that the Fed bought from these foreign banks at par to create these deposits?
Yeah the stuff that sent Bill Gross running down the street screaming.
Time to fire up the bankster oligarch woodchipper - it's the only rational solution.
Please feed bankers in feet-first so their final sight in life will be their fat asses (and wallets) going into the rotating blades.
And no cheering. We're not barbarians. Much.
QE, Shmooie..
Where do you think half the initial TARP, TALP, TARC, FART, SCHARK digits went?
I think I am up for a Belgium Waffle.
As the world's reserve currency, the Fed was obligated to re-capitalize foreign banks for their dollar denominated trash paper.
"was a side effect of Fed policy, not a goal."
and YES, the FED is a bunch of DICKS
Yellen from the rooftops!
We were lucky so far that they only made us pay for their interest. They will be asking more soon. And please remember that "War is Peace, Freedom is Slavery, Ignorance is Strength".
It's no wonder all those Merikans are outraged and protesting in Times Square ......
... mmmm ... wait, a sec ....
Only well known to the ZH-ers aka bearish, doomsdayer, conspiracy, crazies.
Stupidity is knowledge.
Less is more.
Government is good.
there you go my man ... good for you.
love the federalies ...
Orwell was an optimist....
It feels like I stumbled into ZH at just the time.
It was about a year ago... when conspiracy theories suddenly started becoming conspiracy facts.
Next thing I expect to hear is that Santa really doesn't slide down the chimney on christmas! oh noes!
or that bond market collateral shortages are preventing the Fed from more QE! double oh noes!!
somehow the latter case seems like it would result in far more chaos than the former.
good job, ZH.
S.A.N.T.A. (Sanctioned Anti National Terrorist Agents) kick in the front door and take your shit. Opposite of kiddo Santa.
@ safelygraze "in for a big suprise"
with all due respect i doubt it ...no suprise for this crew ...
now the circus is playing in your town ... my guess is that this show has been playing many times in other places before ...
This
Will not end well.
(as in- dear american people- you know that money we borrowed on your behalf which your descendants will be paying back in taxes for....ever- ya that- well we took it and gave it to our sister banks in other countries across the atlantic who are even more corrupt than we are. your welcome).
I don't know why everybody is getting their panties in a wad. The United States has plenty of money to throw some pocket change to our less fortunate neighbors and friends...
/sarc. ;-/
This is not a bail out or helping neighbours ... this is purely about supporting the dollar.
If all those dollars go into non bubble investments then that just snowballs the current account deficit. They'll cut the fund rate at the height of mania, get all those dollars into the bubble and pop it ... that's how the US has repatriated dollars and kept it's trade deficit somewhat sustainable for half a century now.
Thanks Marco,
I've looked at the global socio-economic situation six ways from Sunday and for the life of me, I cannot see a graceful way out. Humanity has painted itself into a corner and only time will tell the whole tale.
In the near future we will have to re-evaluate all (and I mean ALL) the paradigms that we have treated as absolute. It should be clear to everyone that reads ZH on a regular basis that >>> man cannot rule himself <<< We cannot and should not expect our leaders in .gov, .biz, and .effingmedia to get us out of this mess we have created with the runaway technology train. Technologically, we are like little children with a loaded gun and we have no idea just what destruction it can wreak. It looks for all intents and purposes that we will collectively have to learn the "hard way".
Mankind stands on a razor's edge. On one side is oblivion and on the other is the stars. The decisions we make over the next twenty years will decide our ultimate fate as a species. If we are lucky we will have a massive catharsis and the ones remaining alive will understand the importance of setting limits on our behavior. If we do not corral fear and greed, we will not survive.
Our best prospect for survival is to create an AI to be master over us so that we can proceed into the future. What we need is a good Gort.
http://en.wikipedia.org/wiki/The_Day_the_Earth_Stood_Still
Pranayamas,
When you have a system built on debt you will reach an end game when the growth of debt is no longer sustainable. We are near that point currently.
Technology has been feared as doomsday since the dawn of machines. It has always been thought to destroy livelihoods and impoverish large swaths of th epopulation but it has always done the opposite.
What you shoud really fear is what I think you are trying to advance - centralization of control. Humans have shown one thing over time, centralized power ultimately leads to death, destruction and poverty.
We already have a Gort, problem is he ain't so good. The Re-evaluation will be provided with the paint. Good luck with the Fear a Greed Corral. 6.06
Thanks you guys,
You can superimpose the technology curve right on top of the population curve. We're on the vertical part of both. I will stand by my assertion that the real danger to humanity is our control over technology.
We have had endless cycles of elites appear and disgrace themselves. That's what our Gort will take care of...
;-D
OBTW: If we ever do come up with some super smart and capable robot to lord over us, we should definitely name it Gort...
AlGort?
Sorry...
Artificial Intelligence and there is a link to the Gort article above... ;-)
There is no graceful way out. Go read Mary Shelley's "Frankenstein". The story isn't about the monster but Frankstein's incredible hubris. The FED has created its own insatiable monster and the ending will be no better.
Thanks for the reply.
Actually, I do see a way out. What we need to develop is a benevolent and incorruptible AI to enforce the law. Judge Dredd meets Gort... We have at the outside 50 years to solve this problem. If not, I'm guessing we're toast as a species...
<<What we need to develop is a benevolent and incorruptible AI to enforce the law. >>
I have a better idea: you go develop that technology and publish it on the internet.
I'm not a coder, but the heuristics are doable... ;-)
Here's a bit more: We have a problem with laws and we have a problem with the enforcement of same. Adding Gort to the equation takes out one variable...and what I expect we will eventually find out is that when the laws are properly enforced, we will become much much more careful about what kinds of laws we write... As an aside, this will utterly destroy elitism...
I had a high school teacher who had the opinion that strict law enforcement was what allowed the Nazis to attempt to exterminate the Jews. What you describe is a nightmare, the ultimate culmination of minimum sentencing laws. As Ghandi said, just as there are unjust people, there are unjust laws.
This is nothig more than a thought experiment. I was clear that man cannot rule himself. With the system I describe, the Nazis would not have been able to perpetrate the holocaust. The unjustness occurs because man does not have the will to equitably enforce the laws.
https://en.wikipedia.org/wiki/Colossus:_The_Forbin_Project
DUDE! That was one of the cheesiest and most MCV (Male Chauvenist Pig) movies I have ever seen. It's so bad it's funny... ;-)
yep but it had a point and the book is worth reading....
Yeah, I agree with you. The path to our solution is narrow and full of pitfalls. Using ZH's own motto: On a long enough timeline, the survival rate for everyone drops to zero.
Most thought experiments end up with advanced civilizations being rare in the universe. Most wink out at just about this point in their historys.
Here's another thing: TPTB are shackled by three chains. Wealth, Power, and Fame. Wealth is a golden chain, Power is a steel chain, and Fame is a silk chain. Dragging those chains, they can run, but they cannot hide... Make of this what you will. ;-D
banks are international corporations owned by who knows where .... all of them.
Mostly Jewish networks with a few shabat goyim willing to lie thrown in the mix? Exactly which owners get bailed out and is there any ethnic tribalism in it?
I don't know. I'm just asking, who exactly is it that formed "cabals" of insider traders or begun acting like some sort of financial Wizard of Ponzi this time?
Yes, raped is correct. They print money of out thin air, to hand to foreigners, meanwhile that DEVALUES all of OUR hard earned dollars. Then, gas and groceries cost MORE. Cause and Effect. Joe 6 Pack takes it up the ass again!! And yet most J6P's clamor for MORE government control!!
I'm blowing my whistle.....but nothing seems to be happening.
Has to be a reason Hilsy, I mean the Fed, is telling us this
Want the world to continue using dollars? flood the world with dollars. simple and direct.
Now we have alphaville? As with your highness, or better known in grad school as Your Aness.
This is just a plug for the PetroDollah.
<a reminder that the world revolves around the USSA- /sarc>
Oh, and keep stacking - Beans, Boolits, Bullion.
I didn't know why my Butt hurt so much....
Now I know; it's the Fed farking me!
Hilsenrath is just doing what those in the propaganda business call a "modified limited hangout".
It's the printing of money of out thin air that devalues existing dollars, doesn't matter where the dollars go, print/double the number instantly and you halve the real value, just most people don't realise. Whilst that money sits on some bank books it doesn't have much effect but when it gets out into the real world then the values of those dollars is reduced so more must be used to pay for real things. In the short term markets can be intervened with to give the impression all is well, even a bit of deflation may occur but then inflation will come back. If you are close to the source of the money like the banks then it costs you nothing unlike Joe 6 Packs from all countries who don't get any of this money.
The MIC are laughing all the way to the bank, encourage a few rag-heads to decapitate a couple of foreigners and threaten world domination and the sheeple cry out for a generational war. Expensive bombs or missiles away, money in the bank for years to come. Works every time.
Thats exactly my point. Gas didn't go over $4 a gallon because it was in short supply. It was because of money printing. The big banks invested that money somewhere---and alot of it went into commodities. Why do you think propane skyrocketed so bad last year? I live in Minnesota, and I read about the high prices but never heard of anyone being unable to get propane. Just the mere talk of a shortage caused the big banks to buy paper propane, meanwhile J6P had to pay thru the nose to afford real propane. The banks never burned a cubic meter of propane, but they profited nicely on it.
Better take away Joe Sixer's guns. He might be tough to stop once he figures it all out and has nothing left to lose (no job, no wealth, hungry family).
The Fed pays a 0.25% interest, the EU gives the US 33% more actual products than it receives for that paper they store at the Fed to get some more paper ... who exactly is getting handouts here?
.
Debt (compound interest) grows exponentially.
Economies (the ability to repay) grow arithmatically and can't keep up.
Something has got to give and always does.
Fed bailouts to foreign banks propels the ponzi, 'cause that's what they do.
I think ZH sees Ponzi's a little too much, but here I have to agree ... this is a Ponzi and the US is at the top of the pyramid in this particular one and that's why it's so important to the US to keep it all going.
The Ponzi is oil driven and the Ponzi machine is the top producer now, so we can full steam ahead into the twilight zone without the house of Saud.
Whats that smell? Oh ya, just the smell of modern Rome burning and it smells like refineries.
dupe
don't piss down my back and tell me it's raining.
More of the same. This is what I love. Are we sheep really as stupid and simple minded as perceived? The powers that be must think we are all fucking powerless Cro Mags.
It pains me that people can't even begin to understand the shellacking we are taking.
And it all ties into 9/11.
2.7 Trillion dollars Pentagon debt wiped away.
The 7/7 bombing in the UK to get our allies behind the lie.
Afghanistan war was ready to go b4 9/11. Rumsfeld asking how do we tie this into Iraq? The war that GWB wanted from day 1 all ready to go.
remember the Prague meeting that never took place?
All the scandals and records of the scandals wiped away. Was it really necessary to wipe out WTC7? Where was flight 93 really headed?
Larry Silverstein invests a few million and he walks with Billions.
War Machine profits a thousand fold.
The PNAC crew gets their wet dreams protecting "our friends" and those with dual citizenship.
oh and the American Tax Payer gets handed a bill for AIG & Gold Nutsacks. How did they bamboozle us into that? I don't remember being asked to vote for
that ass fucking.
AND The Libor scandal. But the little guy is too stupid to comprehend what LIBOR is or the billions made illegally by putting the interest rate wherever the banksters made the best VIG.
Draconian Laws passed while the sheep are sleeping- Patriot Act, NDAA, Obamacare midnight Christmas break legislation hurry hurry! don't read it, fucking just sign it! Don't worry their is a ton of shit in there that has
nothing to do with forced health insurance.
The American Tax Payer bails out the world and reduces their standard of living for what? FOR WHAT?
Guess who is going to be expected to pick up the tab for the Derivatvies Bubble? I'll give you three guesses.
maybe we deserve it because we are too goddamn afraid to demand answers to pointed questions.
Our disgusting bought and paid for Congress. Don't get too close to the third rail...
And the really funny part, the motherfucking HI lar - i - ous part, is that the cabal and banksters are sooooo comfortable and sooooo not worried about jail that
they are just gearing up for the next royal screw.
You got that kids?
Aunt socila +10 for Outlaw Josey Wales reference
+1 for Cro Mags, great band.
Yeah my kids do get this and that sucks.
+1 for reality.
What does the Fed balance sheet (consolidated) really look like??????
this type of thing is only fodder for zerohedge bitchez. everyone else is too stupid or too cognitively dissident to realize what this implies.
im really waiting for the "another conspiracy theory becomes conspiracy fact, WSJ: 9/11 was a mossad/neocon zionist/military industrial complex job". let me know when that one comes out and maybe ill think things have changed enough to consider returning to the country.
9/11? What does that mean?
It means that at the center of the universe there is a man holding a rubber chicken. This is all just a cruel joke played by the old gods because we stopped believing in them.
It is out.
http://stateofthenation2012.com/?p=7858
Why can't you buy stock in the fed?
A: coz all we do is win.
You can, you just have to start a bank and then buy shares from other member banks that are selling. I think???? It does pay a 6 perceent dividend. Try finding that on wall street. 6.06
Infinte blowjobs. Infinite, infinite, infinite blowjobs.
No industry demands real restructuring/being taken over by the machine, mass layoffs, quite like banking. Nowhere is as overbanked as Europe. These European institutions needed to fail decades ago. You have to see this as a "make work" policy for upper middle class Europe. It's a very long, involved way to keep a ruling cohort well fed and compliant. But, to what end, really? Meanwhile we are basically creating a raging disaster on every one of their borders.
I wonder what happens when the world discovers that the BOJ owns some ES through its stock buying program.
So I like I was saying, We need to end food stamps. Fucking handouts to Americans is total bullshit!
The best friends money can buy....
Probably one of the years best ZH posts! One sentence, and one that says it all!
Of the banks, by the banks, for the banks.
The people? Not so much.
It's the modern version of the Holy Trinity.
it is about people. of course, people working in banks
define foreign banks. some of the "foreign banks" that were "bailed out" had tens of thousands of employees in the US, and most of it's management from the US, even when residing in London
have a good look at the masters of the universe. note how many of them are Americans, and leading "foreign banks". probably the only megabank that is somewhat a foreign bank is Nomura, and perhaps it should not even be counted as megabank
but it's a good "rah rah" thing, the FED "Stealth Bailout of Foreign Banks"
there is one litmus test for FED status: Primary Dealership of US Treasury Bonds. Now of course you could question why "foreigners" should get this status
Didn't Obama say it was UNPATRIOTIC to invert your business??? Burger King or Medtronic does it and its all bad, bad, BAD.....the banks do it, and crickets chirp.....
Shirley God's work is exempt.
Nomura...maybe. But JA the farmers coop definitly is. But shush, it's a secret.
Ghordius, I define Foreign bank as DEXIA, as you have admitted in other threads your selective vision missed the point..our FED is held as an American government run central bank by the ignoratii here in ol USSA.
news and threads such as this only help to open a few eyes wide shut over here..in the EU you are paid not to notice. here we pay to support the corruption called international finance.
So, because Deutsche has employees state side, and some of its management is from or has studied in the US, they are actually international banks, and thus not a new story?
Comeon Ghordo, this is a stretch.
Deutsche Bank is a perfect example of megabank monstrosity
it is managed by two CEO's. one in London, Indian born, managing the investment banking side, and one in Germany, German born, keeping the Germans in the dark
But the reason why it's important for the FED is that it is a primary dealer. The LLC that fulfils the PD thing is a big American bank for itself, and TBTF on it's own
and every morning on ZH we read from Jim Reid, an American working from his London City office
Yes, I am quite familiar with DB's corporate structure. Irrespective of who is running the company, (an Indian in London or a German in Germany) the fed owing 10 digits to them per annum is a large story, and directy counteracts the narrative Bernanke/Yellen et. al. have been promulgating.
If nothing else, it should force people who have downed the coolaide to either quit consuming and think, or force them to drink some more.
You're an intelligent fellow, surely you can see this. My question is why do you refuse to acknowledge it.
I have been building a theory about you -- I get the feeling if you were to ever spill your real name on here -- we would all recognize it instantly.
Deutsche Bank these days is an investment bank from the City of London (not: England), who has a huge retail branch in Germany. They are just part of the international bankster cartel that has no nationality at all. The only purpose that they have their formal seat in Frankfurt/Germany is to have the German government/taxpayer at the hook in case things go terrible wrong. Gosh, i hope the German government will have the balls to let them fall over the cliff one day, so this will crash the bankster cartel as a whole.
so you support a story based on it's merits of getting people off the koolaid. me, it reminds the old adage of the road to hell being paved by good intentions
ok, a counterstory for you, and a very scary one: the FED has no FX reserves. the FED is the only major central bank of the whole frigging world that has no brakes whatsoever, only an oversized accellerator
and the funniest thing about that is that nobody cares, in fact last time the FED had 50bn of foreign denominated assets - which are one month of average "tapering", the same people that are doing this "FED is helping foreign banks" were saying "the FED is doing... blah blah blah ... foreign assets"
it should scare you. it should scare every man, woman and child in the US. but it won't. it completely zips over all heads. busy over the FED's "help" of "foreign banks"
so perhaps I should support this story too. down with Yellen/Bernanke "supporting" "foreign" banks! is this btw a call to nationalize the FED? because that would be very un-American, I guess
I have my priorities.
Destroying the bankster cartel I have over apple pie and baseball.
If nationalizing the Fed would do that -- then I am all for it, but seriously, could you imagine the American Congress running the Fed?
We'd have hyper-inflation in a few years as the shitheads running my country would quickly, having control of the monetary base and the federal spending power would pull some crazy shit to buy votes, and have the USD pay for it. It would end badly, then again, maybe thats what is necessary at this point.
EDIT - The fed holding no FX doesn'T scare me. We have the largest gold reserves in the world. /sarc
the bankster cartel rules by deception*. the more you stray from the naked, ugly truth of facts... the more they win
note this part of the article "We can only hope someone in Congress asks Ben Bernanke in two weeks just under which Fed charter it is that the Fed is more focused on generating profits (not just trillions in excess liquidity) for European banks, than on opening up consumer lending which has been stuck in "petrified" mode for the past 4 years"
you know what Yellen could do to mitigate this little thing? remember, it's all about bank reserves held at the FED. instead of paying banks, she could charge banks. yes, like the ECB is doing, it's called NIRP. suggest this, and watch them howl
(*) now I find this sounds very "conspiracy theorist-like". but yes, it's the way I see it
You don'T sound like a conspiarcy-theorist. You sound pretty rational here.
NIRP in Rainbowland USA -- lol, I could see it.
DOW 30,000!
Ghordius, I am scared of what the real american is capable of ..we all know if life is tolerable the majority will abide much, give up our virgin daughter to the god (insert name here), send our sons to fight for country (insert name of war here)..we know even if 50% of usa public knew the facts about the fed and bailouts it would only increase football viewership. seach us demean us to travel, while unk's skip across our borders and we do nil. MSM sees to it that sheep stay calm stay calm.
+1,000
Ghordius smug factor was a dead give away weeks ago.
I noticed that too! Been on the end of that smugness several times. And condescending to a fault as well. But he seems to have given up on me a long time ago.
I see as my greatest fault my... arrogance. so I can understand the "condescending" part. have to work on that, every day. but "smug" is a surprise, to me. have to think about that. thanks for the input
I haven't given up on you, though. you are a veteran, and so you hold a special place in my heart. I remember for example this discussion where I suggested that a draft would reduce - in my humble opinion - militarization
and every morning, without fail, as soon as the trader sits his *ss in his london chair at 4AM EST, the futures ramp begins.
There are like 10 FOREIGN banks that are "primary dealers" of the Federal Reserve !!
and... China, too
please explain why we should have "bailed out" any bank. If you are paying massive bonuses...then you have to survive on your own. This is why the banks should be broken up.... Banks charters aren't to allow banks to rape people...it is giving them special priviledge so they can make modest sums helping their communities. Nothing could be farther from the truth today. All banks should have been forbidden to give bonuses....post crisis.
of course they should have been broken up. but nobody had the guts of watching how at least 200'000 bankers went from a very high income to zero
in Europe, the EU Parliament is trying to cap banker bonuses, btw. The City is valiantly fighting against it
What good does a banker bonus cap have anything to do with breaking up the TBTB and TBTF?
venturen wrote "All banks should have been forbidden to give bonuses....post crisis" and I was answering
the idea behind a bonus cap - brought us by the Green Parties of 8 countries, btw, the same political groups that Putin hates and fights tooth and nail because they protest about human rights in Russia, but readily accepted and supported by both socialists and conservatives of even more countries - is that banking is a privilege granted by the state, and should function like a facility
so if you take away the incentive to be too bright, you take the incentive away to invent new ways to create debt where none should be created in the first place
it all goes back to the idea that banking used to be 2% of GDP, in an intermediary role. then investment banking was unshackled, the masters of the universe emerged, and banking became 10-12% of the GDP in some countries
would be interesting to see if this idea works, wouldn't it? of course if you are a bright, inventive investment banker you ought to hate it
most of these banks have" board of directors" yet I remember not one international bank on this side of pond, having ANY Board member question :the dirivatives and cdo's the high margin bets and demand ceo's and cfo's take responsibility, not one board member spoke out about the failures of top people , but in the hight of adding insult to injury they approved RECORD Bonus packages for CEO's who brought thier banks to near BK..and not one lawyer has brought suit against any bank board..I stand stupified at the power behind the curtain called wall street and banking.
if there was a moral compass and people of honor in charge, instead of thieves and cowards, it would be easy to get things on track:
- one week bank holiday, two if necessary
- by presidential decree define that all futures markets and derivatives have to be cash settled and no rolling over of contracts can take place. agreement with UK on this matter, london subs cannot be bailed out and vice versa.
- guarantee all bank deposits (deposits only!) of commercial banks
- immediate ban on HFT and algos, prosecute if activity persists moving forward
- nationalize banks that become insolvent immediately, wind them down
- NY FED's trading operations are to be halted for the duration of the bank holiday (no backdoor bailouts)
- re-open banks that are declared solvent, reinstate glass steagall
- remove money monopoly from NY FED, divide trading activity equally between several regional FED offices (Dallas, SF, Chicago, etc) - better yet to end the FED, but this is even more improbably than all of the above
venturen, sure your:
"All banks should have been forbidden to give bonuses....post crisis. "
But in a sane non corrupt country>>Every management person should have been removed before any bail out.
but hank paulson saw to it that he could do anything with tarp and never be questioned or held accountable, and congress rubber stamped it, come to think of it, that is the FEDs responce to congress, the old bernake you ain't got a right to know answer..sick is it not?
A sane non-corrupt country wouldn't have government.
Government is about control and the ability to steal.
A cunt is a cunt. American or not. Fuck em' all!
It's a bank cartel. It was designed that way from the beginning.
Where do you think OPEC got their idea from?
International, Blood Sucking, War Mongering, Banking Cartel is what it was designed to be from the beginning.
The only people who refuse to tell us it's a cartel is the cartel.
Write your Senators. Let's get at least one of them to ask Yellen on the record if it looks like a cartel, acts like a cartel, and smells like a cartel, then is it a cartel?
OPEC sets attempts to set the price of oil. If we are not at their target they either raise or cut production
The Fed attempts to set the price of US money. IF whe are not at their target, they either raise or cut printing.
Sorry, but I don't own any Senators. And if I did, I wouldn't trust them to stay honest.
When a bank becomes more important than a human life.
It's time to fire the bank.
Literally and figuratively.
Maybe get some of those ISIS guys to fire a couple RPG's that way.....?????
What the FED is doing is a crime, aided and abetted by progressive FEDGOV criminals.
Something has to be done to stop them and prosecute them. Like right now.
Grimaldus.
I wish more places would accept gold and silver as forms of payment.
Perhaps the gun vendors, who are having trouble with the credit card companies, can begin a grass roots movement to accept gold and silver, as well as make change in gold and silver.
They have the safes on site for storage of the metals.
It could spread from there.
Galt's G&S Bank could emerge to service these businesses.
It has a good ring to it, those bags of gold and silver coins being picked up and delivered.
You mean like a bank?
"It's time to fire the bank." edit: "It's time to open fire on the bank."
There you go.
Agenda 21 in action?
Pretty much.
Do you have a problem with them taking all your stuff?
The games central bankers are playing in supporting their and other currencies has reached a dangerous level, we may be in the "red zone". Currencies are important chips in the commerce of government and the business of running a country. History has shown that in the past both leaders and governments have fallen with the demise of their coin.
If people lose faith in the system it could just come crashing down around our ears. At a time when billions of dollars can be traded in just the blink of an eye imagine how fast things could go to hell. More on this subject in the article below.
http://brucewilds.blogspot.com/2013/01/currencies-games-in-danger-zone.h...
Down voted because you're tired of ATs constant spamming
Down voted because you think AT doesn't know what he's talking about
Yeah, about 3 yrs. behind the curve is about right. Hell in early 2009 you could still read how brilliant it was that BAC picked up Countrywide so cheap.
What mainstream media network is reporting on this? Sorry, I don't see how it's "gone mainstream".
FAIL
WSJ is practically the propaganda arm of the Fed
Now WSJ is being used as propaganda against the Fed
This is significant
If it is from the WSJ, and it's propaganda, it's for the benefit of the Fed.
We just do not know how they are going to use it to their advantage.
You couldn't be more wrong. This is just another limited hangout in order to normalize behavior in the past in order to help them prepare our acceptance of whatever scam they run next.
You really need to put the Kool-Aid down and step back from the script, as your belief that the banksters are being taken down by MIC is seriously clouding your perspective.
"This is just another limited hangout in order to normalize behavior in the past in order to help them prepare our acceptance of whatever scam they run next."
Ding ding ding! We have a winner.
They could report on it and it wouldn't matter. Most people have no clue how the whole system works. If their "fearless leaders" tell them it's good for them, they will accept it unconditionally anyway. They are too stupid to realize they are getting it up the ass with no lube. As long as the Stawk Market is at all time highs, they are A-OK with it. Why do you think its so hard to convince your wife you aren't a conspiracy theorist?
"Most people have no clue how the whole system works."
I believe that includes those who work within the system itself, up to and including the highest levels.
We are witnessing the transisiton from a hierarchal system of global economic management to a distributed system where no single entity has absolute control. The distortions we see in international banking and finance are the result of resisting this trend on the part of vested interests whose time is about to pass.
The trend is already present in manufacturing where production of basic goods is spread across multiple international sources, and where the raw inputs (energy, metals etc) are essential international trade goods. Thus, everything produced and distributed to meet economic needs is dependant on symbiotic relations between global producers, consumers, and providers of global capital.
This situation never existed before. Until now, we've had a predominately mercantilist/colonial system, where depending which side of that divide you were on, you were relatively better, or worse off. Aging and obsolescence on the mercantalist side, combined with the distributive effect of new technolgies on the colonial side are now leveling the playing field. The more this trend is resisted, the greater the financial stress and accrued damage to the systems of hierarchal control. Eventually these will be overturned as they exhaust their ability to project power, and their various subterfuges are undermined by an increasing number of players (Russia, China, etc) who recognize the inevitability of distributed vs hierarchal economic systems.
I don't expect J6P to rise up - the little people are oblivious to the trend - their thinking (such as it is) is informed by the old system of hierarchal control and is, for the most part, backward looking (gold standard for eg.).
The transistion will come about as a result of the breakdown in international trade, and the inability of key economic players to obtain critical inputs. At a certain point in the crisis, the so called PTB, will be sidelined, and eventually overturned by an emerging system of distributed national interests that form cooperative alliances to resist economic imperialism. We're already seeing the start of this in the east and south, and I believe the trend is irreversable for the simple reason that no single power block can continue to dominate in the face of rapid technological advancement, and its virtually instantaneous application on a world wide scale.
I wish I could be more succinct in my description of what I think is happening, but it would take more time than I presently have <looks at clock> and so I'll just leave it at that.
At some point this will all reach up to Janet Yellen. I share the disgust of many Americans to hear confirmed Federal Reserve regulators were in bed with the enemy or at best asleep at the wheel. While pondering the ruckus being made over revelations and tapes that Fed regulators were to darn cozy with Goldman Sachs I found myself wondering if Janet Yellen might be forced to resign.
I concede it may be rather early to start asking this but if a full scale scandal does develop over these revelations she has a problem. Yellen and the Fed lack a strong political base if the blame-game kicks into overdrive. More on the logic of this somewhat remote scenario in the article below.
http://brucewilds.blogspot.com/2014/09/yellen-could-be-forced-to-resign....
Why do you act as if the machinations of political theater are representative of reality? If any scandal evolves, it will be (as always) yet another distraction from an even bigger crime in progress.
Politics is nothing more than a con-game, with politicians being smoke and mirrors personified.
The world is run by the mafia. Tapes or not, I'm guessing both Lloyd Bankfiend and Ole Yellen sleep well at night.
The fact that Hilsenrath and WSJ were allowed (or rather TOLD) to publish this article means that bank lobby is on the way to obliteration
Bank lobby is now even losing major media influence. Huge hit on them
We could hold a bake sale to help them out....but it's illegal where I'm at.
That's saying a lot....cause I live in Flyover country.
WSJ is practically the propaganda arm of Federal Reserve
WSJ writing this, means that Fed is in deep trouble with Congress
Dude....the Fed owns Congress.
...and someone owns the Fed....and I'm going there. Not today anyway.
No. It's the opposite
Congress owns the Fed. Fed has no army, no guns. It's just a bunch of academics nobody cares about
A lobby has to own congress in order to own the Fed, and that's what bank lobby did.
They owned congress and white house, hence they own the Fed.
Thinks are changing though..............fast, very fast
Lol... The CONgress owns the fed. Now you're just making shit up. You've got to do some reading.
that is what is currently happening
You want to own the Fed?
No problem
Buy congress first and white house second. Bank lobby has both, currently, but it's changing
it's just banksters war between europe banksters and usa banksters, nothing more
Why would you want to "own" a bunch of losers? Their approval rating is about to go underground, I wouldn't touch that filth with a 20 foot pole.
ekm1 is of the opinion that gold is debt. It should not suprise you when he's making shit up.
Sir, all money is debt, otherwise it can't exist.
If you hold gold as money, then society owes you goods and services to get that gold.
All money is debt, any money is debt.
The whole point of owning gold, is that anybody will give you his/her output for that gold, hence gold claims other's output, hence it is debt.
You should see the crazy things they do for drugs, it absurd.
That does not sound like debt. Nobody is morally obligated to do trade with YOU specifically just because you have gold in your hand.
Your equivalency of money with debt does not square with how people trade.
ekm1: "Congress owns the fed"
Eric DiCarbonnel of Market Skeptics would agree with you when he stated the U.S. Treasury runs the fed. He has a good series of videos at his site from a few years ago. Interesting stuff.
Since a long time ago
Geithner was the actual Fed chairman giving orders, not Bernanke.
Saying the Fed has no guns is completely wrong. http://uspolice.com/united-states-federal-reserve-police
From that web page:
"The United States Federal Reserve Police is an agency that acts as the law enforcement department of the Federal Reserve System. As the agency that protects the central banking system of the entire nation, officers have many highly important duties and responsibilities. "
What does it do when it "acts as the law enforcement department"? What laws does it enforce?