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And The Biggest Beneficiary Of QE3 Is...
Aside from the S&P 500 of course, which made billionaires out of millionaires (even if it failed to make billionaires into trillionaires this time around - we will have to wait for QE4 or QE5 for that), some may wonder: who was the biggest beneficiary of QE3? It certainly wasn't the US middle class, which has seen its real wages decline in 6 of the past 7 months, and its disposable income is back at levels not seen since the mid-1990s. No, the biggest winner of QE3 is the same entity that we noted benefited the most from QE over the past 6 years, and which even the WSJ realized was the primary beneficiary of the trillions in cash created out of thin air by the Fed, when in late September Hilsenrath wrote "Fed Rate Policies Aid Foreign Banks"... something we first said back in 2011 with "Exclusive: The Fed's $600 Billion Stealth Bailout Of Foreign Banks Continues At The Expense Of The Domestic Economy, Or Explaining Where All The QE2 Money Went."
So when it comes to the Fed's QE3 generosity to foreign banks, what was the real number?
Here is the answer.
The first chart below shows that since starting in December 2012, when QE3 was formally launched, and continuing through today, the Fed injected some $1.3 trillion reserves with banks, which has manifested as extra cash held by various banks operating in the US, both domestic, but most importantly, foreign.
So how does this increase in bank cash assets look like when broken down by banking group? The answer is shown below:
And the bottom line:
- Small domestic banks, such as your mom and pop regional bank which is anything but Too Big To Fail: change in cash: zero.
- Large domestic banks, think JPM's CIO group, i.e., its London Whale division which used precisely this "excess" Fed cash to try to corner the IG market and blow up in the process: call it just under $600 billion in cash as a result of QE3.
- And the winner, with over $700 billion in extra cash added thanks to QE3, is: foreign (mostly insolvent European) banks.
So yes, European banks: feel free to send your thank you cards to the Fed: without its $1.3 trillion cash injection who knows how many of you would have passed the ECB's "no deflation to model" most recent Stress Test.
A word of warning: let's all hope that now, with some $1.5 trillion in Fed cash on foreign (most insolvent European) bank balance sheet, or just about half of all QE liquidity injections since the start of QE1, European banks are finally solvent. Or else, deflation, inflation, stagflation, hyperinflation, or what have you, the Fed will be storming right back in to bail out Europe's insolvent banks the US middle class all over again.
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what a surprise.
you foreign banks owe us. wait a minute, not us. them.
yea, you guys owe them lotsa mario euros!
Tyler did you just delete a spammer? You did didnt you...
Awesome!
That saves me the time of verbally kicking their balls through the roof of their mouths.
RIPS
QE 3 ends. Market goes down .1% Big fucking shit.
All they did was pause the OPEN market operations.
Mr Yellen may have let go of the bike, for a moment, but the training wheels are definitely still in place.
Meant to post it on this topic, not in another topic.
Anyways, QE enslaves the poor, impoverishes the middle class, enriches the wealthy.
Risk off my ass. Ekm is right, this entire markets are a fuckin video game. The people running the show has unlimited lives and can keep restarting from the same point the next day. While the suckers who play the game have 1 life and has to PAY more to continue to play...only to lose everything.
"Fed Rate Policies Aid Foreign Banks"
And "who" owns or is "behind" the "Foreign Banks"?
More distract, deflect, obfuscate, dilute, redirect....
You don't have ADHD....you are just reading "anything" these days....
These reptiles are experts of hiding the truth...but they thrive on the pain of others....from a hidden dimension...
Nobody believes it...and yet without this explanation...
....nothing makes sense.....
A black swan is about to land, can't you hear the flapping of wings? They control things when things stay within the lines. Someone's pissed and things are about to change.
When you read this thread in conjunction with the thread about the ECB stress tests and the fact that deflation is becoming inevitable in the Eurozone, driven by low oil and driven by sanctions and lack of consumption. This means we are dead on for a collapse anytime in the next 12 months and likely dead on for QE 4.
Germany and the US must be exchanging blows right now about monetary policy, sanctions, NSA spying and Gold lol, all this while putin offers his hand to Merkel to join the eastern revolution. I wouldnt want to be Merkel right now, either way she gets fucked, either zee germans will get rid, or zee bankers will get rid. Lose / Lose scenario but she may do go down in the histroy books! (hopefully for the right decision)
What a fucking shit show, circle jerked gang bang!
Fuck the financial markets!
But they did get the ringinig endorsement of another surge in the USD and a kick in the nuts to gold. Every fuckin day they win. It must get boring for them. For me its more infuriating than boring ...
Come on Putin, China, someone, shake something up. Hubris must have its nemisis!
Slaughterer,
Wait 6-9 months.
The market will either crash or QE will restart. I am willing to wager you that.
Kinda dumb to make a quick judgement before the effects of QEpause go in effect.
It won't take that long. Wait until after the elections
bullshit. look at the chart the biggest winners were us large banks.
correct if you look at % change in holdings.
Anyone naive enough to believe the elections will change anything?
For who? You? No.
Next time out and about around a group of people, just watch them for about 2 minutes. Then ask yourself that question.
Yes. It has the potential to stop Dear Leader from appointing another leftist nut-job, anti-Constitution, Supreme Court member. As we have seen, the Constitution and laws don't matter if judges (for life) ignore them.
Amen! Surrender, throwing in the towel is always the easy choice. Was it over when the communists bombed Pearl Harbor?
Communists? As I recall it was the Japanese.
The Germans
(Reference John Belishi in Animal House.)
You mean the same ass holes that voted for Citizens United.
maybe ... on ESPN this morning something about a bill in congress on taking the NFL on re Redskins name change ... if Rs win ... bill probably disappears ...
Elections will ensure the .001% benefit greatly....then we get to look forward to the next Clinton/Bush election....face it we're completely kornholed at this point.
We have been wrestling hard with that question, and have some broken furniture to show for it. And you know what? The "it only encourages them" side lost. That's right, we'll be voting R down the line so junk away if it pleases you. Do we feel it will have any impact on the cartel/shadow gov.? Of course not! But it can have an impact LOCALLY. D.C. Is gone, finished, out of control.... However, if we can get rid of our POS DimCom Senator and Governor these will be victories, and not small ones. Minions of our Governor pulled some shit on Saturday that had they been Rs would have made national news. Sick of it! So if you sit this one out, and your local DimComs gain even more power and use it to pass legislation which allows them to part your clinched cheeks and breach your bunghole, well, don't come crying to us.
You still actually believe that political parties have different agendas? You still actually believe that these parties define the Government?
After the 2012 election, we stated right here on ZH that BOTH parties were "finished". We took some flak: How could the Dims be finished with Barry "winning" (ha) re-election? We argued that there should be at least three parties or maybe parties should be done away with. But that's not going to happen over the next six days, is it? Choosing an option that isn't available is childs play. The Ds are now presided over by Ayers/Alinsky communists who hide behind the "progressive" banner. Communism is the antithesis of a Constitutional Republic. Our Founding Fathers tried their level best to create a system which guaranteed our God-given, inalienable rights. Of course, the money-changers swooped right in like vultures. Today, they sit on the board of the Fed and are the "dual citizens" in Congress. So if you consider the Tea Partiers Rs, as they sure ain't Ds, then yes, there is a difference. A monumental difference.
I've been anticipating the Hilary and Jeb farce since W. was in office.
I'm no math expert but if there was $1.3T minus $600B for US banks and $700B for Foreign banks leaves $0 for Main St.....Next time can we simply send every household a tax refund of $20,000 which WOULD start spending which is appropriate now that according to stress tests, Banks are recapitalized and ready for the next recession.
Unfortunately, that would lead to real hyperinflation. You unwashed are sooo stupid like that.
-Ben Shalom.
Hyperinflation is a POLITICAL event, not something a bankster would do to themselves. You will only have hyperinflation when a State tries to print away the debt entirely screwing the lender. The banksters have the politicians by the balls for now but when the politicians take to printing their own currency with which they have nothing to back you will have your hyperinflation.
That is what the FED want!
By the time you get your "20K" it will worth only 5K and you will be screwd again by the big bank as they already have it in a still deflationary environment.
Deflationary environment?? Been to the store lately??
Does appear that Draghi is going to have to unleash at least $1T QE immediately or those foreign banks are going to be in a world of hurt.
** Bingo **
The ugly American is bailing out the EU not only militarily but also financialy. Soon enough we will have to pay for their welfare too... What good is that EU, again ?
Guess we get to find out, but remind me, which one (U.S. or the E.Z.) has a trade deficit again?
Fed gives $ to EU banks, EU banks buy EU bonds... We're already paying for their welfare. If that weren't needed... Greece would be solvent.
designed to fail.
I see a trend developing ... we give money to weak Europeans, they go belly up ... Russia takes them over, we default and China takes us over
So....Vicky Nuland is the modern Cassandra? So, that means the modern Priam is the Fed Gnome? Kinky....
You think the American central bankers are acting out of charity? Nope! And here is why:
- European banks were heavily shepherded into so-called toxic assets prior to the subprime mortgage crisis. This is true. European banks who wanted a slice of the US market were told to invest in the local financial economy and then repatriate any profits from the investment.
- Ridiculously pathetic lending standards and greed meant that the accelerated liquidity from European banks could be quickly turned around and used to lend out more mortgages which were pooled, chopped up, and packaged into "low risk" derivatives.
- The poor lending standards which were politically motivated originated in the US. Europe provided the fuel, but the US sparked the match that nearly crashed the entire developed world financial system.
That is a major, if not the prime, reason why the European banks are under capitalized, and since the US and Europe are bed partners, an unraveling banking system in Europe is bad for the US.
Edit: Plus, let's not forget that most of those big recipients are probably blockholders in the Fed.
any chance Sage will take a GoPro with him to a party ... and, if so, will he put it on youtube?
Could be post edited and set to "Habits (Stay High)" by Tove Lo.
"Small domestic banks, such as your mom and pop regional bank which is anything but Too Big To Fail"
WTF are those? I think Bonnie & Clyde put those out of business way back when
Credit unions.
Which, btw, have seen asset holdings and membership explode post 2008.
It was a joke I advised my mom [back in 2008] to transfer any of her 'bank account' type assets from a TBTF to a Credit Union back in 2008
5 Star Bank NA
Just took out a HELOC to pay off the one at CHASE, a couple extra points on interest but at least us "hicks" own the bank...
btw just using the money to renovate the house next door that we purchased to lease out.
I'm getting suspicious here.
Seems to me that ending QE is happening because someone
is benefiting in real terms ( which is fine) , but the "system"
isn't getting its cut, so they end QE to move the wealth to
where the PTBs want it.
Afterall, QE served to move Main St wealth to Wall St. do
cutting QE at this point means WS has somehow disproportionately
benefited at the expense of the "somebodies". So now they knock
the legs out from under the market. And this seems to benefit
"cash" holders... oh wait, there you are!!!
"disproportionately benefitted"
There is no sense of fairness from anyone involved here.
Just my meandering to the figure out the point. ;)
If you actually end QE, this benefits cash holders.
Why do that? Well, with Greenspan saying QE is a bust,
you might want to up the credibility of cash, otherwise
Greenspans "buy gold" recommendation becomes a
self fulfilling prophecy. Something we just
can't have here now can we???
No one can assume that QE is going to end after the announcement of the end. The Fed was running the QE program long before the official announcement in March of 2009.
Blurp
Bank, banks, banks. What about citizens. Aren;t we on the list. /s
Sorry it was just so baltently obvious and in my face.
No crash? What gives? That is all I have heard now for five years.........
STFU - try to get an edu_feckin'_macation by reading here you dumb fuck.. Another statement like that and you will not deserve any insights gleaned from ZH.
Why does anyone suppose the wheels haven't come off Europe yet? The fact that the Feds balance sheet has stopped expanding means that Europe will have to print now to carry them along. Expect the dollar to keep strengthening, the Euro to weaken and the Yen to play back and forth.
Juggleing crystal balls now are we?
So the fed buys US bonds (and other stuff?) from Euro banks, I don't figure the fed just handed out cash. Of course the Euro banks might have sold the fed some trillion dollar coins for all we know.
Again, lack of fed transparency leaves us all guessing.
I was thinking all the shit MBS we sold them..just a guess
But But But....CNBC told Peter Schiff yesterday......
So this is how "Belgium" is buying
beat me to it
Quid pro quo
All we know is that $700 billion was sent to "foreign" banks. What we don't know is how much of that money was used to pay off US issued debts.
Surely that cash isn't just collecting dust at Monte dei Paschi. Oops, they're broke. Anyway, you know what I mean.
So, more debt was created to pay off the current debt?
more debt to service the exisiting debt and existing debt with higher yields was rolled over into new debt with lower yield
the principal of all debt has grown to the point where servicing that debt even at low low rates is a pain in the butt
of course all the foreign banks holding that crummy, subprime MBS paper needed to be balanced up.
otherwise, the whole system was going to implode, right?
Everyone likes QE.
WE are so screwed.
https://www.youtube.com/watch?v=Arp4xMbt5Rw&index=11&list=UUHMJsns2MeqLv...
Now that wee gave Europe a chance and they failed at it how about give Americans a chance. Maybe start off with the local bank you know you can trust. I am now taking all my money out of TBTF. They have not only failed me but this so called government has as well. Time's up.
People often forget that there are two $USD systems out there, with the eurodollar system at times exceeding the size of the much more regulated domestic system. The Fed must pay attention to both as bank runs through the eurodollar system drain funds from the domestic system, thereby impacting the FX markets. The OP here provides a nice reminder.
The Fed must maintain liquidity of its member banks, of which many have significant eurodollar engagement. When foreign banks are building reserves faster than domestic banks, this suggests anticipation of defaults coming through the eurodollar system.
Also, for those wondering about what foreign banks are likely to be swapping onto the Fed's books in exchange for fresh reserves, QE2 provides a likely answer. During QE2 the Fed purchased TSYs but not MBSs (unlike QE1 & QE3 which were split between TSYs and MBSs) and, as ZH reported on, reserves were accumulated almost exclusively by foreign banks.
So foreign banks prefer to sell TSYs to build liquidity whereas domestic entities swap both TSYs and MBSs (which includes the GSEs Fannie, Freddie and Ginnie, that continue to bleed but few still talk about in their focus on Treasury).
These two asset classes are the only ones that matter when considering QE as they comprise ~99% of the Fed's $4.2T in security holdings.
i thought the fed. was forced to admit they sent 2 trillion to ebc before qe1 started, to buy back toxic mbs's, that were sold to them.
nobodys going to know how many trillions of tax-dollars were thrown around from 10-08 thru 12-09.