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Did The Fed Quietly Bail Out A Bank On Tuesday?

Tyler Durden's picture




 

Over the past month we have been closely documenting a major funding squeeze in the all important shadow economy - the "synthetic liquidity" conduit which far more than traditional sources of cash, has become all important for proper bank functioning over the past decade. Courtesy of adverse development in Europe, one by one various components of this unregulated funding scheme have become frozen necessitating the first of many central bank interventions on November 30 to provide liquidity to global banks, primarily to offset such shadow conduits as locked up commercial paper, repo and money markets. Logically, as noted over a week ago, European banks scrambled to obtain cheap dollars by borrowing over $50 billion from the Fed, and plug dollar shortfalls. Yet as all band aid measures designed to offset a broken liquidity equilibrium fail eventually, it was only a matter of time before we saw a direct bail out by the Fed of one or more banks in the aftermath of the November 30 global "bail out." Sure enough, we have our first clue that "something" happened in the week ending Wednesday December 14 that involved an upgrade of the Fed's indirect (and thus untargeted) bailout of global banks, to a focused, and very much targeted rescue of one (or more) banks. And with some additional diligence, it may be possible to narrow down the date of an actual bank bailout: Tuesday, December 13.

Exhibit A - Reserve Bank Credit

Two years ago, when discussing the transition of the world to one coordinated, centrally-planned regime we said that the only financial statement of any importance, updated weekly, is the Fed's H.4.1, or the "Factors Affecting Reserve Balances" which traces that flow of "last resort" cash from the Fed to the various organization that make up the reserve bank, primary dealer, and various other financial entities under the Fed's Lender of Last Resort umbrella. Simply said, anything abnormal in this weekly report of "flow and stock" (a simplistic distinction where the Fed is far more focused on what the absolute level of reserve numbers is, whereas Zero Hedge and the market believe it is the "flow", or marginal change, that determines, artificially, asset prices) would confirm our speculations that the Fed has stepped into into its now traditional role of bailing out the world.

The first thing that caught our attention was the all important total reserve bank credit - the most important big picture metric announced by the Fed on a weekly basis. As the chart below shows, after having plateaued with the End of QE2, and remaining stable during the duration of the "sterilized" Operation Twist (as it should), in the week ended December 14, total reserve credit soared by a whopping $81 billion or the most since May 27, 2009 when the Fed was actively undergoing the early stages of QE1 damage control.

So what was the reason for this huge jump in reserve credit? Two things - on one hand we had the already long-ago telegraphed increase in Fed liquidity swap lines by over $50 billion, or from $2.3 to $54.3 billion to be exact. However that does not explain the remainder. So where did the other $30 billion in credit expansion come from?

Exhibit B - The Plot Thickens: First Net MBS Bulk Purchase Since QE1

It appears that in addition to reverting to such an "old school" QE1 global bailout mechanism as FX swap lines, the Fed also did something it had not done in a long time, or since QE1 to be exact: it bought a boatload of Mortgage Backed Securities, an act it last engaged in on a net basis back on August 11, 2010, which in turn was a delayed settlement of an earlier purchase. As a reminder, the Fed's balance sheet settles any MBS purchases on the mid-month update so while the big spikes in the chart below between January and July 2010 are indicative of broad MBS purchases by the Fed under the auspices of QE1, when it was out purchasing a total of $1.25 trillion in MBS in hopes of lowering mortgage rates and stimulating housing, and thus employment (something it failed at miserably), in the mid-month week just ended, the Fed bought, and settled concurrently, an unprecedented $31 billion in MBS.

Obviously $31 billion jump in settled MBS purchases is notable considering the pattern of previous MBS net flows since August 2010. But under what auspices did the Fed go ahead and buy this whopping amount of Mortgage debt? And why?

As New York Fed itself tells us:

Agency MBS Tentative Purchase Amounts and Historical Operational Results

 

The Desk’s tentative agency MBS purchase amounts associated with the reinvestment of principal payments from agency debt and agency MBS in agency MBS are shown in the table below. The numbers listed are subject to change, should the Federal Open Market Committee (FOMC) choose to alter its guidance to the Open Market Trading Desk (the Desk) at the New York Fed during the monthly period or if market conditions warrant. The amounts listed are approximately equal to the amount of principal payments from agency debt and agency MBS expected to be received over the monthly period, adjusted for any variations from prior periods, as described more fully in the FAQs.

 

In addition, in order to ensure the transparency of its agency MBS transactions, the Desk will publish historical operational results, including information on the transaction prices in individual operations, at the end of each monthly period.

Specifically, in the period between December 13 and January 12, the Fed had permission to buy, wait for it, $30 billion.

And yet, there is a discrepancy as in a subpage detailing gross and net purchases the Fed reveals only $7.550 billion in net MBS purchases for the week ended December 14.

So obviously while the temporal matching is still not precisely clear, what is clear is that in the week ended Wednesday, The Fed provided a whopping $81 billion in additional reserve credit between FX swaps and MBS purchases, the latter having no other purpose than to release even more liquidity to banks which have simply converted one illiquid security, into another: cash. This answers the important question of "why" the Fed did what it did. It is also unclear whether this outlier transaction was demand driven or forced by the Fed. All that will be confirmed once we get the official breakdown of MBS POMO on January 13. Incidentally, here is what typical MBS purchases and sales look like on a monthly basis (excel table).

While these two balance sheet outliers would have in themselves made for curious observations, if insufficient to draw any particular conclusions, it is Exhibit C that puts things into perspective.

Exhibit C - Average Discount Window Borrowings

When the Fed updates its H.4.1 every Thursday at 4:30 pm, it provides two sets of data: an average over the period, and a period end number. And if one was looking to find a flashing red light within Bernanke's book, which has always without fail been a big change in Discount Window borrowings (either Primary, Secondary or Seasonal Facility), looking at the period end number would have shown nothing out of the ordinary: there was a modest $42 million borrowed from the Primary Credit Discount Window facility on the day ending December 14, Wednesday, far less than previous 2011 outliers. However, things rapidly change when one observes the average usage of the Discount Window for the past week.

The result is as follows: a $393 million surge in average borrowings:

And since we know that of the 7 days that make up the average period, one can be eliminated (as there was no borrowings on Wednesday), the implication is that on one day in the week ended December 14, the Fed lent out up to a whopping $2.5 billion (as the $393mm is an average 6 day number) to a bank in the form of last recourse cash via the Discount Window.

Confirming just this speculation is Barclays' Joseph Abate:

After months of virtually no use of the Fed’s discount window, borrowing jumped to an average of $400m/day in the week through Wednesday. The Fed reports only the weekly average of daily borrowing and the daily amount outstanding on Wednesday. From these figures, we estimate that on one day last week, total discount window borrowing reached $2.5bn. Of course, the same $400m/day weekly average could have been achieved with a bank borrowing $900mn on Friday. It is unclear what prompted this pick-up in borrowing from the Fed. There was neither a spike in the fed funds rate nor any disruption in the repo market, so we are a bit puzzled. Of course, under Dodd-Frank, the borrowing bank’s name will be released – after two years.

Yes, the name of the bank that received what amounts to a Fed bailout will be released in two years, but no, we disagree that there was no disruption in the Repo Market. Perhaps Joseph forgets that the Fed lends out Discount Window cash to "eligible" entities out of Europe... where the repo market is in total collapse and wholesale disarray.

Furthermore, the borrowing was from the Primary Credit facility, or that reserved for stable banks, not Secondary Facility eligible names which have to pay an addition 50 bps in punitive interest. And since the bulk of Primary Credit eligible banks domestically already are swimming in $1.6 trillion in fungible excess reserves (which is the reason why discount window borrowings have been so modest ever since QE1 unleashed a liquidity tsunami for the bank, which serves no other reason than to plug capital shortfalls - it certainly is not being lent out) it is obvious that the Fed is now back to its old job of bailing out banks. And not just any banks - European banks.

Some appropriate reminders from the Fed on the "lender of last resort" discount window use:

Terms & Features
To access the Discount Window, eligible depository institutions first must execute the necessary documentation and pledge collateral to the Federal Reserve.

Feature
Primary Credit
Secondary Credit
Rate
Above the FOMC's target for the federal funds rate. Primary credit rate plus 50 basis points

Term
Overnight Short-term, usually overnight. Can be extended for a longer term if such credit would facilitate a timely return to reliance on market funding or an orderly resolution of a failing institution, subject to statutory requirements (FDICIA restrictions).

Eligibility
Depository institutions in generally sound financial condition; same as eligibility for daylight credit. Depository institutions that do not qualify for primary credit.

Use
Generally no restrictions.
May be used to fund sales of federal funds.
As a backup source of funding on a very short-term basis, or to facilitate an orderly resolution of serious financial difficulties.

Administration
Ordinarily no questions asked. Reserve Banks will collect information necessary to confirm that borrowing is consistent with regulatory requirements.


Eligibility
Depository institutions to which the law grants access to the Discount Window and which the Federal Reserve deems generally sound are eligible to obtain primary credit. Reserve Banks determine eligibility on an ongoing basis using supervisory ratings and capitalization data; supplementary information, when available, may also be used.

Examination Rating
(CAMELS or equivalent)
Capital
Designation
Generally
Eligible for
1, 2, or 3
Adequately or well capitalized
Primary credit

4 or 5
Any
Secondary credit

Any
Less than adequately capitalized
Secondary credit

Common Borrowing Situations
The new Discount Window programs offer an enhanced opportunity for eligible depository institutions seeking an efficient solution to meet unexpected, short- term funding needs.

Likely Situations for Borrowing Primary Credit


Generally, there are no restrictions on borrowers’ use of primary credit. Here are some examples of common borrowing situations:

  • Tight money markets or undue market volatility
  • Preventing an overnight overdraft
  • Meeting a need for backup funding, including a short-term liquidity demand that may arise from unexpected deposit withdrawals or a spike in loan demand
  • Arbitrage opportunities

 

Conclusion

We know two things with certainty: In the week ended December 13 (14th excluded) one or more banks, most likely European, borrowed up to $2.5 billion from the Fed's Primary Credit Discount Window. And since US banks are drowning in dollar-based liquidity, any need to approach the Discount Window now, in the context of trillions of Excess Reserves, carries with its exponentially greater stigmata than it ever did during Lehman days. Also, in the week ended December 14, the Fed did a mid-month settlement of $31 billion in MBS purchases - a transaction which allowed a Primary Dealer to source critical liquidity, based on $30 billion in buyback authorization granted for the period beginning December 13. What we do not know for fact is whether the $30 billion in MBS purchases was completed on Tursday or Wednesday, and whether this is a delayed settlement for previous purchases, although due to the mid-month settlement process, it is possible that any transaction could have settled immediately. And for those seeking a specific "bank bailout" date, the 13th looks quite reasonable: it was the first day when an MBS purchase was permitted and it was the last day when a bulk Discount Window loan could have been performed.

But wouldn't the market learn of even a hushed European bailout? And wouldn't there be a massive sell off if it became clear that exactly two weeks after the Fed's coordinated broad bailout of European banks, it had to engage in another, far more politically tenuous bailout, this time via a $2.5 billion free money loan to a cash scrambling bank? Well, if the news was leaked at 2pm on Tuesday it sure would explain the market reaction...

So while much of the presented above is circumstantial, perhaps the next time Congress is debating with Ben Bernanke just how good it is for the US taxpayers to bail out European banks, someone can ask him just who it was that the Fed once again bailed out the week of December 14. Because America obviously does not have enough problems of its own...

 

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Sat, 12/17/2011 - 15:12 | 1990112 Randall Cabot
Randall Cabot's picture

That operative Don Black tried that last time and it didn't work.

Sat, 12/17/2011 - 19:09 | 1990422 Jones79
Jones79's picture

yes, they are going to blackball him somehow, doesn't matter if it's true.  him being on leno last night (didn't see it yet) smelled awfully fishy to me.

Sat, 12/17/2011 - 19:53 | 1990472 BoNeSxxx
BoNeSxxx's picture

DING DING DING! We have a WINNER.

Spot on.  That is why every talking head who gets a crack at any Redpiller like Celente or Alan Watt ALWAYS asks some inane question about aliens or lizard people.  It's by design.

Anyone who thinks they haven't been the victim of massive propaganda and psy-ops since birth has some awakening yet to do.

Sat, 12/17/2011 - 14:44 | 1990062 Global Hunter
Global Hunter's picture

When the shoe drops you'll be frightened and it takes a brave man or woman to confront fear.

Sat, 12/17/2011 - 14:56 | 1990082 gangland
gangland's picture

behold the normalcy bias of a plebe.

apparently the only thing holding us back is europe and after ron paul gets elected, we can all go back to catching rainbow farts and skittles.

 

Sat, 12/17/2011 - 15:03 | 1990100 lizzy36
lizzy36's picture

"As soon as the European  drama concludes"............

Question:how and when do you see it concluding?

Have you actually run through the numbers? Because I for one one love to your calculations on the conclusion of the Europeam drama.

If you actually disagree with Tylers conclusions, write a post saying why, with numbers to back it up. It will be posted.

PS- i don't think anyone is hoping for economic collapse. I think what they are hoping for is a return to some sort of financial stability and respect for the rule of law. With that transformation will come some social dislocation.In Europe social dislocation, is generally much more violent than in North America. That isn't sensationalizing anything, that is history.

I look forward to reading your post.

Sat, 12/17/2011 - 15:52 | 1990173 GMadScientist
GMadScientist's picture

How long can they 'roll' before the wheels come off?

They hope to avoid haircuts and will be disappointed.

Sat, 12/17/2011 - 16:37 | 1990237 GeneMarchbanks
GeneMarchbanks's picture

'Man they sensationalize shit to the extreme

RON PAUL 2012'

That was Robo-level crazy. Classic stuff man, get an avatar and post more often.

Sat, 12/17/2011 - 17:44 | 1990322 gangland
gangland's picture

agitprop 101, call it and by extension, its users extreme and link it to rp and his supporters by extension.

Sun, 12/18/2011 - 01:35 | 1990784 Calmyourself
Calmyourself's picture

easier without an avatar, can't tattoo myself either... ymmv

Sat, 12/17/2011 - 20:21 | 1990469 falak pema
falak pema's picture

the only way your thesis could come true, is that it woud occur in a highly policed environment whereby the Oligarchy completely freezes market moves; makes interest spreads zilch and allows the Oligarchy banks/sovereigns to rebuild health over 5-10 years, all the while allowing controlled debt deleveraging. "The big market chill scenario". Its the crazy socially explosive game that the central banks are trying to play in totally unstable equilibrium. With great consideration only for the TBTF. 

As already indicated, this means asset levitation via currency devaluation, all the while keeping the lid on first world salary, pension, health expenditures; so that in a fiat devaluation scenario relative to BRIC economies, the buying power/living standards of first world fall, with unemployment at extremely high levels for many years.

This is an explosive social scenario. Also, sooner or later, even if oil falls initially, it will rise and make all commodities, even essential ones, inflate fast, increasing social pain. The Oligarchs want this to be the way to go. The politicians will follow as they have no real power anymore. 

Will the people also?? 

And in the interim period, will the Oligarchy be able to juggle all the balls to keep accumulated debt within limits compatible with controlled deflation? The math looks redoubtable even assuming the social explosion does not occur. 

But this means the end of democracy, both the illusion as the reality. IMHO we are already there. Unless the social revolt begins.

We are really entering into the NEW FEUDAL AGE where there are two alternatives :

1° The Oligarchy manages to install the iron control of all vital assets to create a NWO in a global framework. It is the worst scenario of all IMO. As we could call it for want of a better reference PUTINISTAN. No more needs to be said about this, its implications world wide clear. BRUTAL. HOPELESS. With the possibility of extreme Oligarchy wars amongst rival countries.

2° The Globalization deflates. And Continental economies decouple violently, with many local wars for RM. But the geopolitical puzzle breaks up into LOCAL power structures and initially, during transition, decentralised austerial monetary/barter trade structures, autarkical economies, appear; awaiting a NEW Renaissance age. Each continental economy then moves based on its own momentum. International labour arbitrage and global trade dies. This is much closer to the OLd feudal age as we knew it and social/economic disparities increase between continents once again. But the level of social pain will be less than that imposed by the NWO in centralised transitional mode which will bleed the people to dissolve debt; as they will never relinquish their own profits. In this 2nd scenario the Oligarchs LOSE central control on each continent, especially those which have developed economies. As the people take back their own power and natural resources.

Its too early to say which of these trends will prevail.

There may be a third route based on a new technology paradigm which releases new human energies in unsuspected fashion to attain new economic wealth creation. Obviously, human invention must not be discounted.

Sat, 12/17/2011 - 13:58 | 1989967 the grateful un...
the grateful unemployed's picture

and they said they wouldn't which mean they would...

Sat, 12/17/2011 - 14:03 | 1989968 Cult_of_Reason
Cult_of_Reason's picture

Also, on the following day, December 15th, IMF's Lagarde said that the "Situation is Similar to the 1930s" and "Europe Crisis is Escalating" (most likely she knew about this EU bank in need of urgent ICU care and life support from the Fed)

BTW, here is evidence in support of "Situation is Similar to the 1930s" claims:

http://chart.ly/uploads/i6cscnd.png

Sat, 12/17/2011 - 14:05 | 1989982 Dr. Kananga
Dr. Kananga's picture

Too bad Ian Fleming isn't alive today--these guys would make great Bond villains.

Sat, 12/17/2011 - 14:12 | 1989991 ISEEIT
ISEEIT's picture

Imagine a world where all this talent, character, intelligence, and effort 'misallocated' in tracking the criminal ponzi cartel was instead focused on bettering the human condition? Granted, the disease must be treated first, and thank whatever you choose that such passionate pitbulls as the TD crew are on it, still the potentials lost? Can't know. 

We are very lucky. I feel that history is a karmic loop. Nothing really ever changes much. ZH (no, not trying to kiss yer' ass) really does represent the rebels of times past. Truth is the great leveler, which is why the cartel is so insidious in it's attempts to distort, obscure, and manufacture a conterfit version of her.

Free people and deciet cannot coexist.

Which explains why we are no longer free people.

 

Sat, 12/17/2011 - 14:43 | 1990058 machineh
machineh's picture

'Imagine a world where all this talent, character, intelligence, and effort 'misallocated' in tracking the criminal ponzi cartel was instead focused on bettering the human condition?'

Heck, imagine if the hundred-times-larger crowd engaged in value-subtraction activities such as central banking, designing exotic derivatives, and developing picosecond HFT platforms were instead inventing new antibiotics, upgrading infrastructure and rescuing economics from medieval superstitution.

We'd be so rich, we'd have to use surplus gold as paperweights and door stops.

Sat, 12/17/2011 - 15:05 | 1990104 ISEEIT
ISEEIT's picture

Part of why this is so sweet. What I failed to mention is mentioned by you.

++

Sat, 12/17/2011 - 15:01 | 1990095 Jena
Jena's picture

Imagine a world where all this talent, character, intelligence, and effort 'misallocated' in tracking the criminal ponzi cartel was instead focused on bettering the human condition?

Oh... you!  Just kidding, if we could corral the bastards and give them what they fairly deserve under the rule of law, society would be better off.  And resources could be better spent elsewhere.

On a different note, on the rare occasion that ZH takes extra time to load, it flashes through my mind that TPTB finally said 'enough'.  Knock on wood that never happens because I'd hate to be cut off from this source of broad, reliable and cutting edge real news and analysis.  Not to mention the fun.

Sat, 12/17/2011 - 15:06 | 1990105 rgilliam37
rgilliam37's picture

Jena

 

Totally on the mark!!!  If we used all the brainpower and money being used to keep this PONZI scheme alive. We would probably have faster than light drive and colonies all over the galaxy.

 

 

Sat, 12/17/2011 - 15:11 | 1990110 ISEEIT
ISEEIT's picture

Ditto.

No shit. They are itching to kill the net. People will find a work around but we may as well make the best of it while we still can.

Sat, 12/17/2011 - 21:39 | 1990581 ISEEIT
ISEEIT's picture

Very sincerely, I've had a fear of the same. We know for damn sure that this site is closely tracked. Lot's of other sites poke holes in the regimes version of reality, but no other site has the hard core legitimacy of ZH. I've got reason to believe that at one point it was in the cards for ZH to evolve into a typical subscription newsletter format. It appears that the Tyler's decided that going after the beast was preferable to cashing in. I really do hope that people appreciate what we have here. Nothing else comes close. ZH is bigger than we know. They don't talk shit because they don't need to prove a damn thing. ZH is the real deal. A key word for me is AUTHENTIC. Think about that word and what it really means today.

AUTHENTIC. REAL. LEGITIMATE. TRUE.

Sun, 12/18/2011 - 00:19 | 1990727 w a l k - a w a y
w a l k - a w a y's picture

as a long-time observer of events and reader of ZH, it was with great pleasure to give you're comment its first up vote.

 

(bnstb?)

Sun, 12/18/2011 - 11:01 | 1991349 ISEEIT
ISEEIT's picture

(nope).

Sat, 12/17/2011 - 14:13 | 1989995 Milton Waddams
Milton Waddams's picture

No doubt Ben wakes up every morning feeling both relieved and amused that he is not behind bars.

"Patman, sitting as chair of the House Banking Committee in the early 1970s, "snarl[ed] at then Fed chairman Arthur Burns, before him to give testimony, 'Can you give me any reason why you should not be in the penitentiary"

Sat, 12/17/2011 - 15:04 | 1990101 Jena
Jena's picture

Great question.  One that ought to be used more often.  Do you happen to know what the answer was?

Sat, 12/17/2011 - 14:26 | 1989996 ebworthen
ebworthen's picture

Foreign banks, eh?

Did the FED lend the balance of the mortgage overnight at 0.05% to any underwater homeowners in the U.S.?

How about struggling small businesses that employ regular folks?

No?

About time we END THE FED.

Sat, 12/17/2011 - 14:17 | 1990005 integrale
integrale's picture

This is incredible. This makes me furious. We need debt forgiveness/haircuts, not government-sponsored rollovers. Let the banks fail, let's get this over with.

Let's see real defaults. If we do it in an orderly way, China and Russia will take over. Come on, bernank.

 

Sat, 12/17/2011 - 14:19 | 1990009 Zero Govt
Zero Govt's picture

The Fed, the Fed, the Fed is on fire

Sat, 12/17/2011 - 14:20 | 1990010 geno-econ
geno-econ's picture

Greece rolling over a lots of debt next week exposing a lot of ass with few takers.

Sat, 12/17/2011 - 14:20 | 1990011 buzlightening
buzlightening's picture

We can only thank ZH for pointing out what many have known for years.  dead head fed are pumping out; pimping out easy hot money to primary dealers under the table.  Markets would have imploded long ago with any transparency. vampire squids doing all the work of saving the imploding system in the dark of night.  When it all goes up in flames and down in ashes; dead head feds better have a couple dozen madoff's & martha stewart's to throw in jail.  The Cloak of public deception will no doubt be WWIII.  March anyone with any knowledge of what the dastardly fed has done in bringing down our nation financially off to war or nuke them at home under homeland security terrorist enforcement.  Shine up your jack boots, break out your goose stepping music, and get lock step with the beast or die. 

Sat, 12/17/2011 - 14:22 | 1990017 slewie the pi-rat
slewie the pi-rat's picture

well, that narrows it down to a coupla dozen banks!
great chart erections!
and this!
The Fed provided a whopping $81 billion in additional reserve credit between FX swaps and MBS purchases, the latter having no other purpose than to release even more liquidity to banks which have simply converted one illiquid security, into another: cash.
L0L!!!

we've been hearing about the FED purchasing these MBS for a while and bill gross even confirmed...

the EU bond financing party is just beginning. spain had a decent week; mebbe the "bailout" was passed thru the banksters to the pols?

Sat, 12/17/2011 - 14:25 | 1990021 jon
Sat, 12/17/2011 - 14:29 | 1990033 Bansters-in-my-...
Bansters-in-my- feces's picture

Fucking Criminals.

Not much more to say.

Sat, 12/17/2011 - 14:30 | 1990036 vipmoneymachine
vipmoneymachine's picture

"quitely", they can do it in open and not a damn thing anyone can do. Fed was audited and did anyone go to jail ? Nothing to see here, just move on.

Sat, 12/17/2011 - 14:33 | 1990040 swani
swani's picture

@buzlightening 

That was uplifting. 

Sat, 12/17/2011 - 14:35 | 1990041 XRAYD
XRAYD's picture

Ben will no doubt explain that ZH's analysis is based on a "misperception"!

Sat, 12/17/2011 - 14:46 | 1990065 Ralph Spoilsport
Ralph Spoilsport's picture

No doubt. But it's encouraging that these articles and comments hit so hard that they attempt to discredit ZH. Even Flush Bimbaugh had to acknowledge on air that ZH was a "creditable source". Not that he spends much time on anything important these days. All the talking heads of the Far Right are going to take a huge hit if Ron Paul wins Iowa and beyond.

Sat, 12/17/2011 - 16:56 | 1990273 CrazyCooter
CrazyCooter's picture

Rush Limbaugh is part of the divide and conquer scheme. Does he have a lot of listeners? Yeah. Does he represent the broad "right"? No. But the left will see all on the right as being of Rush Limbaugh.

That is why Ron Paul is so dangerous, because many sane individuals on the right (a lot) can sign up for his brand of politics. Further, there are many on the left who will do the same. RP, in a way, is actually representing a broad swatch of America that the establishment has actively tried to sweep under the rug FOR DECADES.

I give $25 to each money bomb; hasn't broken me yet. I love seeing him slowly rise to the top, DESPITE all the opposition from entrenched media interests. Only happens for one reason ... revolution baby. :-)

Regards,

Cooter

Sat, 12/17/2011 - 14:42 | 1990057 TooBearish
TooBearish's picture

I m thinking it was MS- 3 week MS paper trades in excess of 2%....

Sat, 12/17/2011 - 14:46 | 1990067 lemosbrasil
lemosbrasil's picture

thats a big shit !

So.....crash is very, very close

there is a insane similarity between movement of july and now.

there was a double top and was a MACD sell sign  in july and after crash.

Now, we have the same movement !!

See here: http://pracompraroupravender.blogspot.com/2011/12/apenas-as-festas-salvarao-o-crash-dos.html

Sat, 12/17/2011 - 14:48 | 1990069 devo
devo's picture

Can ZeroHedge organize a movement? Like...it's great to inform us, but let's mobilize this shit. OWS is ignorant to the finer details of economics. We have charts, we read balance sheets, etc. The movement should begin here. I'm ready to do what is needed, just contact me, boys.

Sat, 12/17/2011 - 15:36 | 1990147 Ragnar24
Ragnar24's picture

Been trying to figure out how to utilize this smart group myself (while somehow maintaining the anonymity). I almost want to post a "meetup" group for different regions and see who shows up.

Sat, 12/17/2011 - 16:02 | 1990183 devo
devo's picture

The problem with that is people will show up posing as ZHrs, but in reality they'd be government spies. We'd wind up in Guantanamo Bay eating cockmeat sandwiches.

Facebook, Google, etc are our enemies. I think the only way is via a word of mouth/recruiting, just like Cuba in the 50s. Zerohedge should probably move behind a proxy server, too, if they already haven't. Actually, we all should. If anyone sets up a ZH proxy please email the details! With that new law passed, I am sure in this bizarro world we're all "terrorists"...

Sat, 12/17/2011 - 18:52 | 1990393 smiler03
smiler03's picture

"Facebook, Google, etc are our enemies"

This sounds disturbingly like the attitude of regimes in the Middle East 

Sat, 12/17/2011 - 20:01 | 1990484 BoNeSxxx
BoNeSxxx's picture

It's difficult to tell from your post what you mean by "This sounds disturbingly like the attitude of regimes in the Middle East"

Devo is correct (and funny I almost pissed myself -- cockmeat sandwiches, lol).

Google and Facefuck are gathering imense amounts of data on you and feeding it to the NSA.  In fact, I read from a reliable source that some recent ITunes and Java updates have traces of trojan horse programs -- also bearing NSA signatures.

Sat, 12/17/2011 - 22:53 | 1990642 lotsoffun
lotsoffun's picture

hi, mr/ms smiler03 - but this time it's different? really?

exxon and gm already told you - 'no global warming'.  mcdonalds and coke told you 'good to eat'. disney and mtv told you 'violence and stupidity in the media has no effect on individuals'.  lovely.  consume on.

please tell me, what's so good about facebook that sending my friends a christmas card didn't do?

 

Tue, 12/20/2011 - 16:34 | 1998754 smiler03
smiler03's picture

I am no fan of Facebook, whatever gave you that idea?

I simply believe in the freedom of "speech". If somebody decides that Google or Facebook are not to their liking and declare them as "enemies" then that is a very similar attitude to dictators around the world.  

Sat, 12/17/2011 - 22:53 | 1990644 lotsoffun
lotsoffun's picture

hi, mr/ms smiler03 - but this time it's different? really?

exxon and gm already told you - 'no global warming'.  mcdonalds and coke told you 'good to eat'. disney and mtv told you 'violence and stupidity in the media has no effect on individuals'.  lovely.  consume on.

please tell me, what's so good about facebook that sending my friends a christmas card didn't do?

 

Sat, 12/17/2011 - 14:55 | 1990077 Jumbotron
Jumbotron's picture

I'll just cut and paste what I said on 12/13/2011 concerning the posted article entitled "To QE3 Or Not To QE3" on ZeroHedge......

 

QE3 is happening as we speak.....it's called the EU bailout.  Bernanke is backstopping the world.

And now with the revelation that the housing collapse was FAR WORSE than first reported.....see link....

http://www.cnbc.com/id/45659547

....then domestic QE3 in the form of MBS buybacks are a foregone conclusion.

 

2 people jumked me for this back then.....how would you two like your shit served to you before you die....warm or cold?

Sat, 12/17/2011 - 15:10 | 1990109 topcallingtroll
topcallingtroll's picture

Hehe good point.

I junked u cuz it seems to bother you.

See? That didnt hurt.

Sat, 12/17/2011 - 16:26 | 1990189 Jumbotron
Jumbotron's picture

Yeah it did.....where's my lollipop?  :)

Oh...by the way....I was not the one who junked you....I thought is was funny.

Sat, 12/17/2011 - 20:01 | 1990481 El Hosel
El Hosel's picture

   No shit, its all QE all the time .Only the names have been changed to mislead the innocent. Market futures go green every morning at 4am, trillions of dollars are being pumped in every direction all the time. No matter what is said or what name it is given the flood of liquidity is the only game in town. Extend and pretend because it beats the shit out of the alternative for those in power.

Sat, 12/17/2011 - 14:58 | 1990085 Global Hunter
Global Hunter's picture

Perhaps I'm missing something in the analysis I find it detailed and I'm trying to keep up, but are we perhaps looking in the wrong area in regards to the 31bn in MBS purchases?  Could the MBS contagion which has been kept in check for the most part since 2008 or so be hitting other nation's banks that were up until now considered safe banking jurisdictions and have not been hit with massive real estate devaluation?

I'm thinking Scandanavian banks (bank runs in Latvia on Swedebank), Australian or Canadian to name 3?

Sat, 12/17/2011 - 15:01 | 1990093 Snakeeyes
Snakeeyes's picture

Bernanke and Dudley say plans to bailout Europe, but Primary Credit spiked last week.  What a pair.

Bank Reserves, Capital and Europe’s Solvency Crisis – A Stark Warning

http://confoundedinterest.wordpress.com/2011/12/17/bank-reserves-capital-and-europes-solvency-crisis-a-stark-warning/

Sat, 12/17/2011 - 15:01 | 1990094 chindit13
chindit13's picture

While I am hesitant to get in the way of the ZH readerships’ kneejerk anger, I’m not sure the MBS changes are so out of the ordinary.  The numbers change quite regularly, and even today remain below October levels.  I don’t know if MBSs are included in Operation Twist, but if so, it is possible that the MBS increase was a result of re-investing the proceeds of matured paper.  I’m not saying that the article is wrong, just that there may be another explanation slightly less insidious.  Also, given the Fed’s authority to purchase such an amount over the next month, coupled with Europe’s liquidity situation and the desire/need of Eurobanks to both shrink their balance sheets and find sources of dollar funding, it would not be surprising to see the Fed frontload its authorized purchases at a time of tight liquidity and strain in the international system, even if it would amount to a band aid on a shotgun wound.

The increase in borrowings under the Primary Credit Facility is more puzzling.  Given that this item was noted by a regular Fed watcher (Abate of Barclays), while the change in MBS did not seem to raise his suspicion, this $2.5 billion seems of greater import.  It is not a particularly large number in the overall scheme of things (appreciating it is on the margin), and it could be just another indication of the tight liquidity situation in Europe (and somebody‘s desire to get the cheapest funding possible in a tight market), rather than an outright bailout.

If this was indeed a bailout, word will most surely leak out in the next few days.  Perhaps it is sad to say that there is money in death, but a near-failed bank offers great profit making opportunities for the trading community, so it is in somebody's vested interest to make sure such news becomes public.

Sat, 12/17/2011 - 16:48 | 1990260 Tyler Durden
Tyler Durden's picture

Interesting you should note the Abate miss on the MBS hike. Here is Stone McCarthy's (another professional Fed watcher) note on the H.4.1 update:

The Federal Reserve's balance rose $69.2 billion in the week ended Wednesday, December 14. The increase was mainly due to a steep rise in central bank liquidity swaps (+$52.0 billion). However, there were also increases in Agency MBS (+$13.1 billion) and "other" Federal Reserve assets (+$4.3 billion)

Granted they look at period averages instead of period end. Point is, it has been noted. That it has not been commented on is a different matter. Although you are correct: in the absence of the Discount Window surge, the MBS liquidity bomb likely would not have been as notable. One thing is certain - the MBS push came after over a year of net liquidity extraction due to MBS prepays.

Mon, 12/19/2011 - 01:09 | 1993250 Cadavre
Cadavre's picture

"other" Federal Reserve assets

Trying to remember the answer to a "trick" question that went something like: "When is an asset a liability?"

Sat, 12/17/2011 - 15:02 | 1990097 rgilliam37
rgilliam37's picture

The FED is an institution that is out of control. How can a private institution print VAPOR dollars to bail out everyone who's a BANKER. 

This will continue until the FRN is not the reserve currency for the world. The moment that happens we (USA) are complete and utterly screwed. Since Mr. Bernanke's only solution is to print money to fix a problem he needs the reserve currency status to do so. The moment he loses that status he will be seen for being a completely shallow empty shell of an economist we all know he is!!

The Eurozone and the Euro need to survive as that currency has the potential to be a reserve currency. The minute a viable reserve currency appears the FED as a central bank will be finished.

Mr. Bernanke thinks of himself as an expert on the Great Depression and how it was handled. History will look on the Great Recession (we know its a depression!!!!!!!!) as a complete and utter FAILURE of the FED and Ben as a central bank in actually addressing the problems but instead to protect the special interest and politicians while bankrupting the middle class and turning this nation into a 2nd or 3rd tier country.

 

RON PAUL 2012  IS OUR ONLY HOPE

 

 

 

Sat, 12/17/2011 - 15:04 | 1990102 onlooker
onlooker's picture

 

Having been a ZH reader for a couple or so years, this does not come as a complete surprise. But, it is kind of like Texas where you see tornadoes on the news, hear personal accounts and see areas of complete destruction first hand. Full understanding does not arrive until it is totally black with a freight train to the 10th power on top of you with speed of light wind and horizontal rain and trees bent over at 60 degrees. You should have been there, and it appears that we are almost there.

 

I think it is understandable why the rulers in chief are attempting to distort the accurate picture of where we are and where we are headed. However, given the basics of how this Nation was founded and the commonly understood rules of the road about how this Democracy should function, it appears we are past a cross road of loosing control of the Nation within which we live. And unfortunately it appears there is no easy solution.

 

Why, with our Uncle Sam on his death bed, why do our potential and current leaders bicker over trivia like abortions and gun control? Being a good conservative or a leading liberal. Being a Republican or Democrat. Although the last Fox debate did highlight what appeared to be relevant and important topics, the old bullshit was still there.

 

Our Uncle Sam is about to go dead if help for him does not come soon. With his death goes our Nation. Either buck up and get involved in this most important election or get ready for a trip to hell in a handbag. The fat lady is on stage.

Sat, 12/17/2011 - 16:42 | 1990208 Jumbotron
Jumbotron's picture

"The fat lady is on stage."

What....do you mean her.....http://peterlbrandt.com/wp-content/uploads/2011/10/10.2-Fat-Lady-Sings1....

or maybe her......http://www.exposay.com/celebrity-photos/wynonna-judd-cmt-giants-honoring...

I know....it's her.....http://onthetrail2008.files.wordpress.com/2008/02/hillary-clinton-ps.jpg

Nope....it's her.....http://1.media.collegehumor.cvcdn.com/19/59/ec090d33c3f2b8d2bd2eba246fb3...

Welll...on second thought maybe it's her.......http://www.fistofblog.com/wp-content/uploads/2008/10/fat_lady_sculpture....

I know...definitely her.....http://www.jillstanek.com/marie%20claire%202.jpg

Sorry.....just wishin I had made her fat like that.....

Ok.....here it is.....the definitive fat lady singing.........http://exclaim.ca/images/shatner.jpg

Sun, 12/18/2011 - 09:43 | 1991208 flattrader
flattrader's picture

>>>Why, with our Uncle Sam on his death bed, why do our potential and current leaders bicker over trivia like abortions and gun control?<<<

Perhaps it is because over 50% of the population may need an abortion at one point or another in their lives

and

250 million of us have privately-owned firearms and want to keep it that way.

Hardly trivia.

Sat, 12/17/2011 - 15:10 | 1990108 Alcoholic Nativ...
Alcoholic Native American's picture

If we don't bail out a profit driven system with an unlimited budget then shit will collapse fools. All hail our philanthropist overlords doing christ's work.

Sat, 12/17/2011 - 15:22 | 1990123 Atomizer
Atomizer's picture

If I recall correctly, December 13, 2011 is when the currency swap began and the market was experiencing alleged computer problems. Fuck these cunts and their unlawful actions.

Counting Bodies Like Sheep to the Rhythm

Sat, 12/17/2011 - 15:30 | 1990136 Lilguy
Lilguy's picture

Great forensic analysis, ZH!

We need more of this & a little less opinion/vitriol.

Please keep it up!

Sat, 12/17/2011 - 15:34 | 1990140 Snakeeyes
Snakeeyes's picture

But with the top six banks heavily exposed to Europe, it really doesn't matter. It is all Euro-related.

http://confoundedinterest.wordpress.com/2011/12/17/bank-reserves-capital...

Sat, 12/17/2011 - 15:51 | 1990172 Georgesblog
Georgesblog's picture

Banking and diplomacy complete the picture of a dog, chasing it's tail. As we have seen in both areas, actions are quietly taken long before they are officially announced. It should be no surprised that we see banking gravitate toward a future, yet unformed and un-formalized, central entity. Debt is a black hole, drawing all wealth to the point of no return. The currency collapse will only be the beginning of the formation of that central entity. We should look at the news as an event horizon, evidence of activity that is not directly observable.

http://georgesblogforum.wordpress.com/2011/11/02/the-daily-climb-2/

Sat, 12/17/2011 - 18:19 | 1990358 Schmuck Raker
Schmuck Raker's picture

-1 SHILL

Still no native readership at your blog George?

Sat, 12/17/2011 - 16:02 | 1990186 Seasmoke
Seasmoke's picture

keep socializing the toxic losses and privatizing the gains........what could ever go wrong ?

Sat, 12/17/2011 - 16:17 | 1990207 jg
jg's picture

Wow! You guys are GOOD!

Sat, 12/17/2011 - 16:30 | 1990224 nowhereman
nowhereman's picture

My bet is that the lost Corzine money miraculously reappears, beecause there ain't no way they will allow one of their own to take the hit.

Seriously, I read somewhere that Corzines bets would have paid off if given the time.   The Fed buys these bets, cashes them out and poof the money appears, and Corzine walks.

Sat, 12/17/2011 - 16:31 | 1990225 Ag1761
Ag1761's picture

I was at a shopping centre in UK yesterday and Gold, 18 carat was being bought for £19 per gram cash. The place looked like it was doing steady business. Cant say much about the rest of the shops, seemed quiet for this time of the year.

Q1 and Q2 in 2012 is going to be a tough time for traders.

Sat, 12/17/2011 - 18:22 | 1990360 richard in norway
richard in norway's picture

thats a good margin, i work it out to be about $1200 an oz

Sat, 12/17/2011 - 16:40 | 1990240 electronpaul
electronpaul's picture

Yet another example of why we need to ELECT RON PAUL. Audit the Fed, COMPLETE transparency or abolish it.

Sat, 12/17/2011 - 16:43 | 1990251 israhole
israhole's picture

Thanks, ZH. 

Sat, 12/17/2011 - 16:45 | 1990254 Caviar Emptor
Caviar Emptor's picture

European Banks Stop Serving American Customers

European banks are dumping clients with US citizenship due to a new American law meant to curb tax evasion. The law would require financial institutions around the world to report on certain client activities. Compliance, say many banks, is way too expensive.

 

 German financial institution HypoVereinsbank has informed its customers that it will no longer offer certain services to its US-based clients or to US citizens as of Jan. 1. Deutsche Bank told the paper that it already cancelled such accounts held by American citizens in the middle of 2011. Germany's second largest bank, Commerzbank, is considering a similar move. 

http://www.spiegel.de/international/business/0,1518,803742,00.html

Sat, 12/17/2011 - 16:46 | 1990255 Waterfallsparkles
Waterfallsparkles's picture

Now we know why Santa Clause is not comming to town this year.

Sat, 12/17/2011 - 16:51 | 1990264 Waterfallsparkles
Waterfallsparkles's picture

WHAT NO 13 BILLION IN CHRISTMAS BONUSES FOR WALL STREET?

Sat, 12/17/2011 - 16:53 | 1990267 sabra1
sabra1's picture

max keiser: WARNING!!!

Trustee to Seize and Liquidate Even the Stored Customer Gold and Silver Bullion From MF Global
Sat, 12/17/2011 - 17:05 | 1990283 Waterfallsparkles
Waterfallsparkles's picture

Interesting.  I am not sure if this is good or bad.  It would appear that the Gold price that people were optioning for was a lot higher just one week ago.  Now they are going to sell the Gold the price has dropped by about $300 an ounce.  Coincidence?

Sat, 12/17/2011 - 20:34 | 1990532 jomama
jomama's picture

if you don't hold it, you don't own it.

(i'm looking at you, GoldMoney)

Sat, 12/17/2011 - 17:00 | 1990278 Waterfallsparkles
Waterfallsparkles's picture

Must be so nice to be a TBTF Bank.  Yet, there are so many Americans that have no one to rescue them from their underwater Mortgages, the loss of their Jobs, their Student Loans, the continual rise in Heating Oil, the higher cost of food and Health Care costs including Insurance costs.

There has been so much given from the Coffers of the Government thru the Fed to keep the Banks alive but nothing has been done to keep American's and their Families alive.

A true travesty.  Kind of like the Chicken and the egg theory.  Are Bankers more important than the People in America that use them?  Or are the People more important than the Banks that need them to survive.

Sun, 12/18/2011 - 19:42 | 1992361 slewie the pi-rat
slewie the pi-rat's picture

either way, don't do the crime if you can't do the time...

Sat, 12/17/2011 - 17:08 | 1990281 Curtis LeMay
Curtis LeMay's picture

A very well written post, asking a heck of a lot of worrying questions...

Odd, (or is it?), I was watching PIMCO's Gross on CNBC Europe not 24 hours after the $30 billion MBS action by the Fed, and he stated:

Mortgage-Backed Securities Are a Good Bet Now: Gross

Now, isn't PIMCO nowadays Allianz's bitch? Allianz in facts owns PIMCO.

Why the sudden BS from Gross hyping MBS's as now being magically "good bets"? Coincidence? Probably not.

Me suspects Allianz (on behalf of the Brussels Politburo and their deluded EUnuch collaborators in despotism) maybe demanded Pimco take on a lot more MBS. Gross said go to hell, but then Allianz had Gauleiter Rehn or maybe even Draghi himself call Uncle Ben & Co regarding a very heavily MBS exposed euro bank, you know, to "do him a favor"?

Euro banks have no fucking collateral left, short of dung in wheelbarrows, to bring to the ECB window, right? It stands to reason that lots and lots of shitty US MBS's got sold to euro banks at hefty discounts recently (who else would take them?). What else can they buy as they are cash starved; so that they could in turn then go back to the ECB with accetaptable (to ECB) dung.

Maybe Target2 is far more insolvent than ZH argued (brilliantly) last week as well? 

The euro and their so-called euro "elite" are now implementing the final stage of the road to Armageddon. This shit stinks to high heaven and we are all in deep, deep shit.

BUT, until the euro goes once and for all, the chance for any of us to have even a prayer of pull ourselves out of this kamikaze mission is zero...

Sat, 12/17/2011 - 17:11 | 1990289 CustomersMan
CustomersMan's picture

Here is an interesting update of the "Liquidation" of the gold and silver at MF Global

 

*********************************************************************

17 December 2011

Trustee to Seize and Liquidate Even the Stored Customer Gold and Silver Bullion From MF Global

The bottom line is that apparently some warehouses and bullion dealers are not a safe place to store your gold and silver, even if you hold a specific warehouse receipt.  In an oligarchy, private ownership is merely a concept, subject to interpretation and confiscation.

Although the details and the individual perpetrators are yet to be disclosed, what is now painfully clear is that the CFTC and CME regulated futures system is defaulting on its obligations.  This did not even happen in the big failures like Lehman and Bear Sterns in which the customer accounts were kept whole and transferred before the liquidation process.  

Obviously holding unallocated gold and silver in a fractional reserve scheme is subject to much more counterparty risk than many might have previously admitted.  If a major bullion bank were to declare bankruptcy or a major exchange a default, how would it affect you? Do you think your property claims would be protected based on what you have seen this year?

You always have counter-party risk if you hold gold and silver through another party, even if they are a Primary Dealer of the Federal Reserve. As Ben said, the Fed offers no seal of approval.  

If a Bankruptcy Trustee can pool your bullion into the rest of the paper assets and then liquidate it at prices that are being front run by the Street, you will have to accept whatever paper settlement that they give you.

The customer money and bullion assets are not lost, or rehypothecated or anything else.  This is a pseudo-legal fig leaf, a convenient rationalization. 

The customer assets were stolen, and given to at least one major financial institution by MF Global to satisfy an 11th hour margin call in the week of their bankruptcy, even as MF Global was paying bonuses to its London employees.

And now that powerful financial institution does not want to give the customer money back.  And they are so powerful that the Trustee and the Court is reluctant to try and claw it back.  And so in the great Wall Street tradition they are trying to force the customers and the public to take the loss.   The regulators and the exchange are aghast, and are trying to imagine how to resolve and spin this to preserve investor confidence and prevent a run on the system.

'Let them eat warehouse receipts.'

For many this would have been unthinkable only a few months ago. They had been cautioned and warned repeatedly, but chose to trust the financial system. And now they are suffering loss and anxiety, frozen assets, and the misappropriation of their wealth.

How more plainly can it be said? The US financial system as it now stands cannot be trusted to observe even the most basic property rights as it continues to unravel from a long standing culture of fraud.

Get your money as far away from Wall Street as is possible.  And if you want to own gold and silver, take delivery and store it in a secure private facility outside the fractional reserve system.

Barrons
The Silver Rush at MF Global
By ERIN E. ARVEDLUND
December 17, 2011

It's one thing for $1.2 billion to vanish into thin air through a series of complex trades, the well-publicized phenomenon at bankrupt MF Global. It's something else for a bar of silver stashed in a vault to instantly shrink in size by more than 25%.

That, in essence, is what's happening to investors whose bars of silver and gold were held through accounts with MF Global.

The trustee overseeing the liquidation of the failed brokerage has proposed dumping all remaining customer assets—gold, silver, cash, options, futures and commodities—into a single pool that would pay customers only 72% of the value of their holdings. In other words, while traders already may have paid the full price for delivery of specific bars of gold or silver—and hold "warehouse receipts" to prove it—they'll have to forfeit 28% of the value.

That has investors fuming. "Warehouse receipts, like gold bars, are our property, 100%," contends John Roe, a partner in BTR Trading, a Chicago futures-trading firm. He personally lost several hundred thousand dollars in investments via MF Global; his clients lost even more. "We are a unique class, and instead, the trustee is doing a radical redistribution of property," he says.

Roe and others point out that, unlike other MF Global customers, who held paper assets, those with warehouse receipts have claims on assets that still exist and can be readily identified.

The tussle has been obscured by former CEO Jon Corzine's appearances on Capitol Hill. But it's a burning issue for the Commodity Customer Coalition, a group that says it represents some 8,000 investors—many of them hedge funds—with exposure to MF Global. "I've issued a declaration of war," says James Koutoulas, lead attorney for the group, and CEO of Typhon Capital Management.

At stake is an unspecified, but apparently large, volume of gold and silver bars slated for delivery to traders through accounts at MF Global, which filed for bankruptcy on Oct. 31. Adding insult to the injury: Of the 28% haircut, attorney and liquidation trustee James Giddens has frozen all asset classes, meaning that traders have sat helplessly as silver prices have dropped 31% since late August, and gold has fallen 16%. To boot, the traders are still being assessed fees for storage of the commodities...

 

Sat, 12/17/2011 - 17:20 | 1990302 Tyler Durden
Tyler Durden's picture

There is nothing odd about this at all - once a company enters bankruptcy, all liabilities (yes, including paper and physical ones) become a general unsecured claim even if one has a clear lien or ownership rights on it. (the case where HSBC sued MF Global for gold bars which had commingled ownership on them is a totally separate issue). This is purely a function of the US bankruptcy process, where there is equitable treatment of claims according to general pre-petition priority status. Once the company emerges from bankruptcy either through liquidation or restructuring, all GUCs receive a cash equivalent to their pro rata claim.

Don't like it? Should have pulled your money, and or assets out of the company before it filed.

And yes, many more cases like this will emerge, and soon everyone will be a bankruptcy expert.

Sat, 12/17/2011 - 18:20 | 1990359 Waterfallsparkles
Waterfallsparkles's picture

Tyler,

There were a lot of People that tried  before bankruptcy.  But the the people that had their money wired went thru but was later reveresed.  Plus, anyone that got a check for their balance bounced.  So many did take action but their money got clawed back.

Sat, 12/17/2011 - 22:37 | 1990628 lotsoffun
lotsoffun's picture

this is the new tyler....

 

Sat, 12/17/2011 - 17:15 | 1990292 robertocarlos
robertocarlos's picture

I wouldn't say the Feb "bought" any MBS, they merely took some 30 billion in MBS as collateral for a loan. It happens all the time. 

Sat, 12/17/2011 - 17:20 | 1990300 ES-Sniper
ES-Sniper's picture

Again, outstanding research and presentation by ZH and staff.

As we approach the end of another year of trading, it's time give ZH the STANDING OVATION

you deserve! Let me be the first of many to say Thank You for a job very well done in 2011.

 

 

 

Sun, 12/18/2011 - 18:52 | 1992263 slewie the pi-rat
slewie the pi-rat's picture

i'm sure that if tyler were sober, he would thank you himself

now that you've squeezed off the second post in almost a year, go wipe that stuff off yer nose, ok?

 

Sat, 12/17/2011 - 17:39 | 1990320 robertocarlos
robertocarlos's picture

Can a bank put you into bankruptcy by calling in a small (relative to your net worth) unsecured loan that would force you to liquidate your assets but you then find there is no market for your assets?

Sat, 12/17/2011 - 17:46 | 1990328 JR
JR's picture

What Zero Hedge is doing is carrying a torch into a dark cave; we don’t know what’s back there but it’s this search for information that begins to identify where the financial crisis is centered.

IMO, the money tyrants are cornered like lions in a cave and they will fight like beasts to remain covered by the darkness.

The recent actions of the money rulers are not normal operations, but have the definite look of emergency moves. Now that Ron Paul is being taken more seriously in the top tier, the financiers of the empire and their mouthpieces are frantic to derail this campaign.

Ron Paul’s consistent campaign for greater transparency of the Fed, if successful, would uncover the hands on the levers belonging to Goldman Sachs and others at the core. The defenders of the empire - which includes a rush to war in the Middle East - are so desperate that Ron Paul’s strength in Iowa has caused them to begin discrediting Iowa as important in the GOP race. At the debates, had her rhetoric been an automatic weapon, Michele Bachmann in the interests of Israel would have started the war by herself.

In fact, Fox’s Chris Wallace says if Ron Paul wins Iowa, “It will discredit the Iowa caucuses.”  Almost with a frantic disregard for their audiences, Mark Levin and Rush Limbaugh are blasting Ron Paul as never before.

Sun, 12/18/2011 - 04:38 | 1990996 thegr8whorebabylon
thegr8whorebabylon's picture

Or it's Plato's cave, and the truth in the end is shadows and dust.

RP forever.

Sat, 12/17/2011 - 17:54 | 1990331 GONOB RADIO
GONOB RADIO's picture

Gonob Radio predicted this deflation in October 2011

 

 

Sat, 12/17/2011 - 17:55 | 1990332 Papasmurf
Papasmurf's picture

I demanded delivery of certain stock certificates from my cash account today from TD Ameritrade.  They decline, saying they can't.  They refer me to transfer agents that I have no business relationship with.  They also refused to answer questions if they have hypothetcated, rehypothecated or otherwise encumbered my cash property.  Several times, I asked for my cash on deposit and they won't answer that either.  They only say a manager will call monday. 

If trouble gets worse, I will do a youtube. 

Sat, 12/17/2011 - 17:55 | 1990333 GONOB RADIO
GONOB RADIO's picture

Sat, 12/17/2011 - 17:56 | 1990335 s2man
s2man's picture

Why does this remind me of payday loans?

Sat, 12/17/2011 - 18:09 | 1990349 New American Re...
New American Revolution's picture

Your on it Tyler, great article!

Sat, 12/17/2011 - 18:38 | 1990379 jomama
jomama's picture

you're*.

Sat, 12/17/2011 - 18:38 | 1990377 Mr_Wonderful
Mr_Wonderful's picture

Another great effort by Mr. Banzai.

Dance of the Douche Bags

http://www.flickr.com/photos/expd/6525722795/in/photostream/

Sat, 12/17/2011 - 18:39 | 1990380 jomama
jomama's picture

thank you again for doing diligence, TD et. al. @ ZH.  

we are definitely in the end-game when the slaves no longer need to be told of the load being piled high on the backs of our ancestors.

Sat, 12/17/2011 - 19:42 | 1990463 smiler03
smiler03's picture

"on the backs of our ancestors"

Cool idea, time travel backwards and transfer debts to ourselves to come.

Sat, 12/17/2011 - 20:28 | 1990523 jomama
jomama's picture

i meant descendants. mutley.

Sat, 12/17/2011 - 21:49 | 1990593 Incubus
Incubus's picture

don't just don't get any ideas about scamming libyans out of plutonium in exchange for a nuclear bomb, or anything.

 

 

Sat, 12/17/2011 - 18:44 | 1990382 Georgesblog
Georgesblog's picture

No, I've actually seen commercial space converted into homeless shelters and day centers.  All of those unemployed people that don't figure into the unemployment statistics have to go somewhere.

http://georgesblogforum.wordpress.com/2011/11/02/the-daily-climb-2/

Sat, 12/17/2011 - 19:33 | 1990448 Waterfallsparkles
Waterfallsparkles's picture

Good idea.  I have been thinking about this.  I have an apartment for rent and there are a lot of people looking for a room to rent.  Not an apartment.  I know that it is lucrative to rent rooms in a building but I do wonder in my area if I could get a permit for such a residence.  Maybe a commercial location would make it easier.

This is probably an untaped market in these ecomomic times.  Thanks for the thoughts, I am going to look into this option for income options.

Sat, 12/17/2011 - 18:49 | 1990387 bigdumbnugly
bigdumbnugly's picture

even wimpy logic is turned on its head.

i'll gladly pay you tuesday for a bailout today

has become i'll gladly take a bailout tuesday for payback whenever.

 

Sat, 12/17/2011 - 19:02 | 1990409 Seize Mars
Seize Mars's picture
Did The Fed Quietly Bail Out A Bank On Tuesday?

Good Lord I love Zero Hedge.

Sat, 12/17/2011 - 19:05 | 1990418 kevinearick
kevinearick's picture

on the margin, what is the amount of forgone mortgage payments by the banks?

Sat, 12/17/2011 - 19:42 | 1990461 mt paul
mt paul's picture

hedgeless

best financial info

on this planet....

blatant facts

woof

Sat, 12/17/2011 - 20:06 | 1990494 Scrilla
Scrilla's picture

RBS > BNP.

Sat, 12/17/2011 - 20:16 | 1990507 Alpacanio
Alpacanio's picture

Hell, you can't even take your money out if you wanted to! Let me guess... MF Global's gold and silver will end up in JPM's new vaults. 

Sun, 12/18/2011 - 03:40 | 1990946 delacroix
delacroix's picture

it's already in the jpm vault

Sat, 12/17/2011 - 20:32 | 1990531 bugs_
bugs_'s picture

And Hoenig @ FDIC on the 13'th too.

Sat, 12/17/2011 - 20:38 | 1990537 dizzyfingers
dizzyfingers's picture

 

IT'S ALL ONE BIG HAPPY FAMILY.

(Part one of a four-part series)

 

The Four Horsemen of Banking (Bank of America, JP Morgan Chase, Citigroup and Wells Fargo) own the Four Horsemen of Oil (Exxon Mobil, Royal Dutch/Shell, BP and Chevron Texaco); in tandem with Deutsche Bank, BNP, Barclays and other European old money behemoths. But their monopoly over the global economy does not end at the edge of the oil patch.

 

According to company 10K filings to the SEC, the Four Horsemen of Banking are among the top ten stock holders of virtually every Fortune 500 corporation.[1]

 

So who then are the stockholders in these money center banks?

 

This information is guarded much more closely. My queries to bank regulatory agencies regarding stock ownership in the top 25 US bank holding companies were given Freedom of Information Act status, before being denied on “national security” grounds. This is rather ironic, since many of the bank’s stockholders reside in Europe.

 

One important repository for the wealth of the global oligarchy that owns these bank holding companies is US Trust Corporation - founded in 1853 and now owned by Bank of America. A recent US Trust Corporate Director and Honorary Trustee was Walter Rothschild. Other directors included Daniel Davison of JP Morgan Chase, Richard Tucker of Exxon Mobil, Daniel Roberts of Citigroup and Marshall Schwartz of Morgan Stanley. [2]

 

J. W. McCallister, an oil industry insider with House of Saud connections, wrote in The Grim Reaper that information he acquired from Saudi bankers cited 80% ownership of the New York Federal Reserve Bank- by far the most powerful Fed branch- by just eight families, four of which reside in the US. They are the Goldman Sachs, Rockefellers, Lehmans and Kuhn Loebs of New York; the Rothschilds of Paris and London; the Warburgs of Hamburg; the Lazards of Paris; and the Israel Moses Seifs of Rome.

 

CPA Thomas D. Schauf corroborates McCallister’s claims, adding that ten banks control all twelve Federal Reserve Bank branches. He names N.M. Rothschild of London, Rothschild Bank of Berlin, Warburg Bank of Hamburg, Warburg Bank of Amsterdam, Lehman Brothers of New York, Lazard Brothers of Paris, Kuhn Loeb Bank of New York, Israel Moses Seif Bank of Italy, Goldman Sachs of New York and JP Morgan Chase Bank of New York. Schauf lists William Rockefeller, Paul Warburg, Jacob Schiff and James Stillman as individuals who own large shares of the Fed. [3] The Schiffs are insiders at Kuhn Loeb. The Stillmans are Citigroup insiders, who married into the Rockefeller clan at the turn of the century.

 

Eustace Mullins came to the same conclusions in his book The Secrets of the Federal Reserve, in which he displays charts connecting the Fed and its member banks to the families of Rothschild, Warburg, Rockefeller and the others. [4]

 

The control that these banking families exert over the global economy cannot be overstated and is quite intentionally shrouded in secrecy. Their corporate media arm is quick to discredit any information exposing this private central banking cartel as “conspiracy theory”. Yet the facts remain.  http://www.globalresearch.ca/index.php?context=va&aid=25080

Sun, 12/18/2011 - 02:03 | 1990820 aerojet
aerojet's picture

If this grand conspiracy is true, home come Lehman  Bros. went tits up in 2008?  Did the Lehman's piss somebody off?  Do they still get to go to the Bilderberger conference and Davos?  Or are they out of the tennis club in Monaco?

Sat, 12/17/2011 - 20:45 | 1990539 Jlmadyson
Jlmadyson's picture

It's a small miracle a big bank in Europe has not sunk yet. They can run on for a long time......but sooner or later.....

 

BAC getting real close to that 4 handle again. If it hits the US banks soon the crap will hit the fan real quick.

 

By the way this is so mirroring 2008 at this point it's just crazy nuts. Swap lines, downgrades, secret bank bailouts. Euro banks are on the brink though this time as well as all those countries with all that sovereign debt.

 

There ain’t no TARP to save the day this time however.

Sat, 12/17/2011 - 20:46 | 1990544 uno
uno's picture

very good video about bailouts

http://dont-tread-on.me/?p=11456

 

Sat, 12/17/2011 - 22:41 | 1990631 Paul Thomason
Paul Thomason's picture

2 good articles worth a read summarising the current alarming situation - redux 2008 vs 2011.  If Santa doesn't make an appearance soon, it is looking more and more likely that it might be lights out for global markets before year's end!.

1. The alarming similarities in credit markets between 2008 and 2011;

http://www.elliottwavemarketservice.com/2011/12/2008-vs-2011-redux-what-economists-do-not-see-again/

2. The alarming similarities between the WSJ economist survey results of 2007 and 2011;

http://www.elliottwavemarketservice.com/2011/12/2008-vs-2011-redux-what-economists-do-not-see-again/

Not sure what 'Benny and the Inkjets' have up their sleeve, but it's probably time to get moving! 

 

Sun, 12/18/2011 - 00:44 | 1990744 Colonel
Colonel's picture

Time for Atlas to shrug?

 

Mr. Rearden," said Francisco, his voice solemnly calm, "if you saw Atlas, the giant who holds the world on his shoulders, if you saw that he stood, blood running down his chest, his knees buckling, his arms trembling but still trying to hold the world aloft with the last of his strength, and the greater his effort the heavier he world bore down on his shoulders - what would you tell him to do?"

"I... don't know. What... could he do? What would you tell him?"

"To shrug."

Sun, 12/18/2011 - 01:58 | 1990814 cw10304
cw10304's picture

So did the FED buy 7.5 bil or 30 bil in MBS last week?

Sun, 12/18/2011 - 10:08 | 1991233 flattrader
flattrader's picture

And after all of this ZH ranting and raving...nobody really knows.

Sun, 12/18/2011 - 03:13 | 1990928 steveo
steveo's picture

Indian Christmas
I just sent a present to my homeland, my domicile area.

To my brother, and I labelled it "Indian Christmas" since he can only keep it for a few months.    A fantastic telescope.

Celestron C8 SGT XLT

Then I thought...how politically incorrect.   Those poor Indians.    Indeed.    When you are robbed and then you have some "life saving" gifts granted back to you with conditions...indeed....there can be nothing worse.     The Indians, the Hawaiians.    They are screwed as a people, screwed because they are accepting these "gifts"  as their "birth-right".

Better to know that  a gift is only temporary, and not your "right".   Living on the Dole is terrible, it destroys your life spirit, a slave to gifts.

Viewing the heavens is an important way to realize there is something bigger than ourselves.   Try it, I have to wait a few months, since I Indian'd away my own Christmas present.

Wow, I ought to stick to ranting about Wall Street!

Here is a Video that shows some close by astronomy items viewed with my scope.

http://oahutrading.blogspot.com/2011/12/indian-chistmas.html

Sun, 12/18/2011 - 04:40 | 1990999 robertocarlos
robertocarlos's picture

I'm looking for another planet in 2012.

Sun, 12/18/2011 - 04:37 | 1990994 VyseLegendaire
VyseLegendaire's picture

The incubus is guarding the henhouse.

Sun, 12/18/2011 - 04:50 | 1991003 caerus
Sun, 12/18/2011 - 10:18 | 1991253 Rockfish
Rockfish's picture

 

 

Oct 31, 2011

 

 

MF Global has been deleted from the list of primary dealers, effective October 31, 2011.
Revised Primary Dealers List ››

 

  Feb 2, 2011 MF Global Inc. and SG Americas Securities, LLC have been added to the list of primary dealers, effective February 2, 2011.
Revised Primary Dealers List ››

source:http://newyorkfed.org/markets/pridealers_current.html

Sun, 12/18/2011 - 10:55 | 1991332 dcb
dcb's picture

I am in no way as good an invewstigative journalist as the OP, but for the 31 billion purchase. @We know the big boys do the repo 105 at end of quarter. this would in theory help lower long tern treasuries as they are buying them as well, then end of the quarter bust out when they sell them they have now added 31 billion in profits back to the banks for a run up in the market.  I have been looking at tlt this week and been thinking it is really trading funny. we we just about tpo break out of the up trned, so there is another reason for the big firepower. Because we can't have that happening. targeted large purchase at the right time could continue this trend as well.

Sun, 12/18/2011 - 11:39 | 1991448 falak pema
falak pema's picture

Here is a new twist to the Euro ponzi from MSM :

 

Why The European Debt Crisis Might Actually Be Over...

 

Read more: http://www.businessinsider.com/why-the-european-debt-crisis-might-be-over-2011-12#ixzz1gtuGfQ5U

Now that should please "Looking with Amazement... "so boring, the world"...

Sun, 12/18/2011 - 13:35 | 1991718 Winston Smith 2009
Winston Smith 2009's picture

Kyle Bass would laugh his ass off reading that ignorant article.

Sun, 12/18/2011 - 15:58 | 1992018 pineyard
pineyard's picture

I consider the forwarded Article to be a PONZI SCHEEME in it self.

I do NOT understand all the Financial Hokus Pokus presented

I note that the article  mainly is an essay of SPECULATION

Speculation with arguments  .. NO-ONE .. probably even  the author himself.. cannot look through

THE ARTICLE IS NOTHING BUT ..FINANCIAL DES-INFORMATION

I prefer FACTS : so much plus ..so much minus.. then I can do the arithmetics.. myself

 

Sun, 12/18/2011 - 19:23 | 1992317 slewie the pi-rat
slewie the pi-rat's picture

but, the subject is the FED

and so much is secret

that when the data comes out, everybody tries to figure wtf happened and what hare-brained hypothesis could possibly explain things

so tyler wants to get out there, too, and give us a chance to figure out what these numbers could mean

the pioneers, mountain men, and guides called it "reading sign"

for example if that is mountain lion scat, and it is really, really fresh...

Sun, 12/18/2011 - 17:59 | 1992202 I got the Bull ...
I got the Bull by The Horns - HELP's picture

Australia's Bendigo-Adelaide Bank bought the Bank of Cyprus Australia business for $130 Million.

The business was quite stable and profitable. Why woulf Bank of Cyprus sell a profitable international asset?

Do NOT follow this link or you will be banned from the site!