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Fed May Inject Over $1 Trillion To Bail Out Europe

Tyler Durden's picture


As first reported here, two weeks ago European banks saw the amount of USD-loans from the Fed, via the ECB's revised swap line, surge to over $50 billion - a total first hit in the aftermath of the Bear Stearns failure prompting us to ask "When is Lehman coming?" However, according to little noted prepared remarks by Anthony Sanders in his Friday testimony to the Congress Oversight Committee, "What the Euro Crisis Means for Taxpayers and the U.S. Economy, Pt. 1", we may have been optimistic, because the end result will be not when is Lehman coming, but when are the next two Lehmans coming, as according to Sanders, the relaunch of the Fed's swaps program may "get to the $1 trillion level, or perhaps even higher." As a reference, FX swap line usage peaked at $583 billion in the Lehman aftermath (see chart). Needless to say, this estimate is rather ironic because as Bloomberg's Bradely Keoun reports, "Fed Chairman Ben S. Bernanke yesterday told a closed-door gathering of Republican senators that the Fed won’t provide more aid to European banks beyond the swap lines and the discount window -- another Fed program that provides emergency funds to U.S. banks, including U.S. branches of foreign banks." Well, between a trillion plus in FX swap lines, and a surge in discount window usage which only Zero Hedge has noted so far, there really is nothing else that the Fed can possibly do, as these actions along amount to a QE equivalent liquidity injection, only denominated in US Dollars. Aside of course to shower Europe with dollars from the ChairsatanCopter. Then again, before this is all over, we are certain that paradollardop will be part of the vernacular.

Historical ECB swap line usage with the Fed, and projected assuming $1+ trillion in use. Just to put it all into perspective.

For all those lamenting the ECB's lack of willingness to print, fear not: the almighty Chairsatan has vowed to valiantly take his place when needed. As in 2 weeks ago. From Bloomberg:

European financial companies led by Royal Bank of Scotland Plc were borrowing about $538 billion directly from the Fed when the central bank’s emergency loans to all banks peaked at $1.2 trillion on December 2008, according to a Bloomberg News examination of data released by the Fed under last year’s Dodd- Frank Act and earlier this year under court-upheld Freedom of Information Act requests.


The Fed hasn’t provided any estimates of how large the swap lines might get, said David Skidmore, a Fed spokesman. He declined to elaborate.


“To get above $600 billion wouldn’t be a stretch,” said Desmond Lachman, a former International Monetary Fund deputy director who’s now a resident fellow at the American Enterprise Institute, a conservative public-policy center in Washington. “You’re talking about a European banking system that is huge in relation to that of the United States.”


Josh Rosner, a banking analyst with New York-based Graham Fisher & Co., said the Fed’s swap lines may end up helping Europe support banks that might not deserve emergency loans.


“As a result of this commitment of financial support, we’re now supporting undemocratic approaches implemented largely by authorities who have demonstrated an ongoing inability to either recognize the scope and scale of the problems or come to a consensus on the proper approach,” Rosner said.


The ultimate size of the swap lines is “unknowable at this point,” he said.

For those wondering what all this means, we remind you that there was a roughly $6.5 trillion synthetic (duration mismatch) USD short as of 4 years ago, as we reported at the time. That short has gotten substantially larger following a 4 year regime of the USD as a funding currency courtesy of ZIRP. Which means that any time the liquidity shortage threatens to collapse the system, the first thing to go stratospheric will be the USD as the global financial system scrambles to cover its short. It also means that anything the Fe and/or ECB can do from a pure printing standpoint will be peanuts compared to the utter carnage unless the dollar short is not preserved. Which naturally means that it is up to the Fed to continue drowning the world in either nominal dollars, or swapped ones, such as under the form of a USD-EUR swap, which is nothing but a forward operations. In essence, with the FX swap lines, the Fed engages in the ultimate currency warfare tool: it sells dollars to the entities most needy. And it does so, because if it doesn't, said needy entities will implode, and the hollow financial dominoes will topple, leading to a mess that not even infinite synthetic or real printing of binary of paper dollars, euros, or anything else will do to fix.

Which is why all those wondering if gold should be bought now or the second after the ECB starts printing, we have one piece of advice: just look at the chart above. It says all one needs to know.

Lastly, since the Sanders testimony is worth a read in and of itself, we recreate it below. Some of the choice selections:

The Eurozone is teetering on collapse and it has been decades in the making. The cause of their problems is 1) excessive government spending leading to 2) excessive government debt coupled with 3) slow GDP growth.


If we look at Household and Financial Debt in addition to Government Debt, the UK’s Debt to GDP ratio exceeds 900%. Japan is over 600% and Europe is almost 500% Debt to GDP. The U.S. is over 300%. In summary, Euro, Japan and the U.S. are drowning in debt. And a recent article from economists at the ECB that finds:


The European Union will unify, break up or downsize. But regardless of what option they choose, they still have too much spending and debt relative to the ability to pay for it: GDP growth. But additional debt is not the answer. It is the problem.


The obvious solution is austerity (reduction in government spending). But  making loans to the European  Central Bank or individual countries doesn’t solve the underlying structural problems; it only makes the Debt to GDP problem even worse. It is simply a short-term solution and actually encourages the  Eurozone to delay making the hard decisions.

Full testimony:


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Sun, 12/18/2011 - 22:23 | 1992678 Spitzer
Spitzer's picture

Dollars to be printed to bail out Europe.

The ECB has the Fed by the balls.

Sun, 12/18/2011 - 22:28 | 1992683 Ahmeexnal
Ahmeexnal's picture

Gold is collateral in this particular bailout.

Who's the smartguy here, Bernanke or the ECB?

All euro gold are belong to Ben!

Sun, 12/18/2011 - 22:33 | 1992702 High Plains Drifter
High Plains Drifter's picture

no, all gold belongs to the rothschilds in the city of london...........

Sun, 12/18/2011 - 22:53 | 1992758 LasVegasDave
LasVegasDave's picture

couldnt resist another anti jewish dig, could you?

Man those Jews really have you beat down, dont they?

Cant say I'm surprised.

Sun, 12/18/2011 - 23:53 | 1992980 The Big Ching-aso
The Big Ching-aso's picture



 Europe will just give us I.O.U.'S.      I.O.U.'S in Europe stands for I Owe U Shit.

Mon, 12/19/2011 - 00:53 | 1993228 goldfish1
goldfish1's picture

Jim willie has a great essay on these events:

Pathogenesis of Central Bank Ruin

Mon, 12/19/2011 - 06:42 | 1993547 GetZeeGold
GetZeeGold's picture

Taxation without representation.....seems we've been here before.


Time to bring out the muskets again.....just in time for the new Gitmo law.

Mon, 12/19/2011 - 19:46 | 1996010 vipobviously
vipobviously's picture

Damn, I'm fresh out of flintlocks... anybody seen my powderhorn around here, I hear hostilities are afoot and I still need to sew my trouser button back onto me trousers. At least i figured out a way to eat gold

Mon, 12/19/2011 - 03:49 | 1993451 RemiG2010
RemiG2010's picture

Well, it can be used as a fertilizer so defacto it's priceless!



Sun, 12/18/2011 - 22:35 | 1992709 Spitzer
Spitzer's picture

France destryed the gold standard by pulling out of the London gold Pool. They sent a ship to New York to pick up the gold.  It will be no diffrent this time.

The Fed needs to bail out Europe to save primary dealers.

Sun, 12/18/2011 - 22:56 | 1992766 Ahmeexnal
Ahmeexnal's picture

like they saved MFGlobal?

Sun, 12/18/2011 - 23:23 | 1992910 Tijuana Donkey Show
Tijuana Donkey Show's picture

larger primary dealers

Sun, 12/18/2011 - 23:17 | 1992867 dick cheneys ghost
dick cheneys ghost's picture

The fed will claim a bailout of europe, but the fed is only acting to protect the big banks that it serves........


jim rickards interview.........from friday..........

Sun, 12/18/2011 - 23:49 | 1993027 LookingWithAmazement
LookingWithAmazement's picture

The opposite: the French sent a ship for their gold because and after the Yanks destroyed the gold standard. De Gaulle was right.

Mon, 12/19/2011 - 01:28 | 1993297 Spitzer
Spitzer's picture

The LGP collapsed when france pulled out

Sun, 12/18/2011 - 22:31 | 1992694 Scottj88
Scottj88's picture

Ho Ho Ho....

Looks like there will be plenty of paper for the bonfires to keep us warm.

Here comes the Santa-Claus rally....

Mon, 12/19/2011 - 00:08 | 1993095 Long-John-Silver
Long-John-Silver's picture

1 FED note = 12.44 BTU

This allows easy calculations of how many dollars you'll need for the stove.


Sun, 12/18/2011 - 23:39 | 1992986 phungus_mungus
phungus_mungus's picture

How the fuck does anyone really think they are going to pay this back? 

Mon, 12/19/2011 - 00:02 | 1993072 SAT 800
SAT 800's picture

Please, don't be naive. Who gave you the idea anyone was going to pay anyone back?

Mon, 12/19/2011 - 00:53 | 1993229 xela2200
xela2200's picture

Just like the Jones next door. Once they realized that they won't be able to pay their debts, they maxed all credit cards before declaring bankruptcy.

Mon, 12/19/2011 - 19:50 | 1996021 vipobviously
vipobviously's picture

Could you name a time when any govt. has paid back its debts.. well i guess germany did that whole reparations thing, then sent the survivors repaid a tax bill with penalties for not declaring their"profits"

Mon, 12/19/2011 - 00:06 | 1993089 SAT 800
SAT 800's picture

"On the Fed side, it is clear that loans to the Eurozone could be problematic to the taxpayers"; uh-huh. Yepp. I call it bailing out the bond owning class at the expense of the taxpaying class.

Sun, 12/18/2011 - 22:23 | 1992679 johngaltfla
johngaltfla's picture

WHEN, not IF they do it, the end of U.S. sovereignty can now be declared once and for all.

Perhaps a review of the Boston Tea Party story would be in order also.

Sun, 12/18/2011 - 23:08 | 1992802 Dr Paul Krugman
Dr Paul Krugman's picture

That's ridiculous.  The Fed is swaping dollars for Euros.  It is an investment from which both will benefit.  The Euro will rise, making the Fed money, and Europe has liquidity, which they need to fund their banking system.

Since the Euro technocrats weren't going to solve the problem someone had to.  It's a good thing if the Fed has stepped in.

Sun, 12/18/2011 - 23:28 | 1992934 q99x2
q99x2's picture

The Fed has lost its ability to support politicians. A new year is around the corner. God damn Mayans.

Sun, 12/18/2011 - 23:39 | 1992985 redpill
redpill's picture

Ben Bernanke should be tried for treason.

Sun, 12/18/2011 - 23:43 | 1993000 The Big Ching-aso
The Big Ching-aso's picture



Maybe he thinks the U.S. isn't his country so he can't be tried for treason.

Mon, 12/19/2011 - 01:10 | 1993243 xela2200
xela2200's picture

The Fed and the Treasury with SDRs have in effect shorted the dollar. Euro under 1.30 for extended period of time will force the FED's hand. The currency war is a race to the bootom after all.

Mon, 12/19/2011 - 02:11 | 1993364 StychoKiller
StychoKiller's picture

The Stupid is strong with this one...

Mon, 12/19/2011 - 08:18 | 1993614 jcaz
jcaz's picture

Wow Dr Paul-  you're a really smart guy.... Doctorate?  Of what-  Religion?


Mon, 12/19/2011 - 10:57 | 1993929 my puppy for prez
my puppy for prez's picture

"Solve the problem" should immediately be replace with "kicked the can down the road".

Mon, 12/19/2011 - 19:55 | 1996031 vipobviously
vipobviously's picture

Hey John,

Does this mean states begin printing continentals or the like again? Do individual states loose soverienty, or just corrupt us gov departments? Do the people loose soverienty?


" the Revolution, the sovereignty devolved on the people; and they are truly the sovereigns of the country, but they are sovereigns without subjects...with none to govern but themselves; the citizens of America are equal as fellow citizens, and as joint tenants in the sovereignty." CHISHOLM v. GEORGIA (US) 2 Dall 419, 454, 1 L Ed 440, 455 @DALL 1793 pp471-472

The people of this State, as the successors of its former sovereign, are entitled to all the rights which formerly belonged to the King by his prerogative. Through the medium of their Legislature they may exercise all the powers which previous to the Revolution could have been exercised either by the King alone, or by him in conjunction with his Parliament; subject only to those restrictions which have been imposed by the Constitution of this State or of the U.S.
Lansing v. Smith, 21 D. 89., 4 Wendel 9 (1829) (New York)
"D." = Decennial Digest
Lansing v. Smith, 4 Wend. 9 (N.Y.) (1829), 21 Am.Dec. 89
10C Const. Law Sec. 298; 18 C Em.Dom. Sec. 3, 228;
37 C Nav.Wat. Sec. 219; Nuls Sec. 1`67; 48 C Wharves Sec. 3, 7.
NOTE: Am.Dec.=American Decision, Wend. = Wendell (N.Y.)

Sun, 12/18/2011 - 22:27 | 1992682 ultimate warrior
ultimate warrior's picture


Sun, 12/18/2011 - 22:27 | 1992685 High Plains Drifter
High Plains Drifter's picture

buy buy buy...........

Sun, 12/18/2011 - 22:28 | 1992687 AssFire
AssFire's picture

Oh the ECB is TBTF as well?? Those slimy bastards are well on there way with the open window. This should cause an uprising.. calling all balls, calling all balls!

Sun, 12/18/2011 - 22:44 | 1992727 hack3434
hack3434's picture

Oh the ECB is TBTF as well?? 


Well 50X or so leverage  (LT)ECB  IS the world's 2nd biggest hedge fund. 

Sun, 12/18/2011 - 22:28 | 1992688 honestann
honestann's picture

End all central banks.
End the federal reserve.
End all fractional reserve practices.

Mon, 12/19/2011 - 10:55 | 1993921 my puppy for prez
my puppy for prez's picture

Great ideas.  But the PROBLEM is this:  You have a world full of people who have ZERO knowledge about these evils, so they don't have the first clue that they should only elect politicians (like Ron Paul) who are passionate about doing the above!

As long as governments are full of fiat-enablers, there will be NO real solutions!

And that is tragic...

Sun, 12/18/2011 - 22:30 | 1992692 rocker
rocker's picture

And Why Isn't Big Ben in Jail?

Sun, 12/18/2011 - 23:06 | 1992806 MsCreant
MsCreant's picture

Because he has the printer.

Sun, 12/18/2011 - 22:31 | 1992695 gbresnahan
gbresnahan's picture

Surely not. Wouldn't this be considered treason?

Sun, 12/18/2011 - 22:32 | 1992697 user2011
user2011's picture

Is 1 Trillion is enough ? Greek, Spain, Portugal, Ireland, Italy, etc...

I thought it needs may Trillions.. 1T will only kick the bucket down a bit further.

If 1T fixes everything, China would have stepped in and buy some heroic points. I thought China, with 3T reserves, wouldn't even touch Europe with a long pole.

Someone correct me if I am wrong.

Sun, 12/18/2011 - 22:40 | 1992721 max2205
max2205's picture

Np... 1 trillion at 40x leverage = 40 Trillion. Problem solved

Sun, 12/18/2011 - 22:53 | 1992728 FEDbuster
FEDbuster's picture

Rehypothecation, bitchez.

Mon, 12/19/2011 - 00:56 | 1993237 goldfish1
goldfish1's picture


Mon, 12/19/2011 - 00:54 | 1993231 rosiescenario
rosiescenario's picture

"Now notional GDP is not the same as real GDP.  In other words, notional GDP is real GDP plus inflation.  If the Fed targets NGDP, what they are really saying is they don’t care about inflation anymore, they’ve given up.  I’ve said all along the Fed wants inflation and this is a way of getting it.  It’s also a way of destroying the debt by cheapening the dollar."


All you really need to know are the answers to these 2 questions:


1). Who benefits most from inflation...the debtor or the creditor?

2). Who has the printing press?


Though with this circle jerk of the Fed. buying Euros and the foreigners printing same as quickly as possible, maybe one doesn't need one's own printing press???

Mon, 12/19/2011 - 01:03 | 1993249 xela2200
xela2200's picture

Jim Rickards makes a lot of sense. This video is a little dry at the beginning, but it gets very interesting at the end. This is the presentation he did for the military and other "intelligence" agencies. After watching it, I HOPE we really have gold at Fort Knox.

Sun, 12/18/2011 - 22:33 | 1992700 NumNutt
NumNutt's picture

So let me understand this...The FED will print a large some of monopoly money and give it to their European gang members at the ECB, so that they can then hand it out to the fools that run the in debt Euro nations. They will then in turn spend it like drunken sailors until it is gone in say..... a year? Maybe?  Then what? Oh yeah that's right now I remember! Then all of us tax payers can bend over and take it in the ass.  Hope they provide us all with the local rape crises 800 number so we have someone to talk to after this happens.

Mon, 12/19/2011 - 00:58 | 1993244 goldfish1
goldfish1's picture

After an infusion of $40 trillion monopoly money, they can buy your little house and hotels easily  now...all they gotta do is up the property tax so you HAVE to sell. Game over.

Mon, 12/19/2011 - 01:05 | 1993258 xela2200
xela2200's picture

Wrong! Drunken sailors actually spend THEIR OWN money.

Mon, 12/19/2011 - 10:13 | 1993787 MonsterBox
MonsterBox's picture

Hey!  why so harsh on the drunken sailors?

Sun, 12/18/2011 - 22:33 | 1992703 Josh Randall
Josh Randall's picture


Sun, 12/18/2011 - 22:40 | 1992718 FEDbuster
FEDbuster's picture

Let's just consider it a trillion dollar donation to "The Human Fund".

Sun, 12/18/2011 - 22:44 | 1992734 Ineverslice
Ineverslice's picture

And now, to the feats of strength...

Sun, 12/18/2011 - 23:16 | 1992862 FEDbuster
FEDbuster's picture

We have already heard the airing of grievances.

Mon, 12/19/2011 - 00:50 | 1993217 XitSam
XitSam's picture

You ain't heard nothin' yet.

Sun, 12/18/2011 - 22:34 | 1992706 Careless Whisper
Careless Whisper's picture

Of course the Fed is going to bail out the European banks. If some of those banks fail they could have a negative impact on JP Morgan, Goldman, Bank of England, Rothschilds, and the rest of the crew that the Fed is in business to protect. This is so obvious.

Sun, 12/18/2011 - 22:48 | 1992744 JustObserving
JustObserving's picture

There are $707 trillion in unregulated derivatives.  The Fed has no choice but to bail out European banks as every US major bank has large derivative exposure to European banks.

$1 trillion may not be enough though - not for long anyway.

Mon, 12/19/2011 - 00:57 | 1993241 rosiescenario
rosiescenario's picture

Sure they have a choice let them fail, but that would be biting the hand that feeds them.

Sun, 12/18/2011 - 22:39 | 1992708 DormRoom
DormRoom's picture

Hey Fed, for $1T, the US could fund all post secondary education, making it free for  four years


Why (foreign) bankers get all the free money, and  future generations get debt slavery?

Sun, 12/18/2011 - 23:09 | 1992823 HellFish
HellFish's picture

That MAY be a nice idea if it was for an actual hard science degree.  Economics?  Art History?  Women's Studies? Better off burning the cash than waste it on a liberal major.

Mon, 12/19/2011 - 08:54 | 1993643 weinerdog43
weinerdog43's picture

Maybe someday, you'll finish high school and can attend that manicure school you've been dreaming about.

Mon, 12/19/2011 - 11:57 | 1994205 kinganuthin
kinganuthin's picture

i'll take the Asian nail salon profits over a professors tenure any day.

Mon, 12/19/2011 - 00:05 | 1993088 rufusbird
rufusbird's picture

Students don't make campaign contributions...Bankers do...

Sun, 12/18/2011 - 22:38 | 1992714 RobotTrader
RobotTrader's picture

Does this mean Treasuries start going parabolic and oil, gold, and grains suffer more downside?

Sun, 12/18/2011 - 22:45 | 1992730 gangland
gangland's picture



  (             )
 `--(_   _)--'
     /     \
      `--'.\                     ,
        |   `.__________/)


Mon, 12/19/2011 - 03:38 | 1993440 Sudden Debt
Sudden Debt's picture



Is this the kind of picture where you need to guess what you see?



Mon, 12/19/2011 - 09:33 | 1993697 VisualCSharp
VisualCSharp's picture


Mon, 12/19/2011 - 10:00 | 1993749 Everyman
Everyman's picture

I don't see the whipped cream at all!

Sun, 12/18/2011 - 23:05 | 1992799 Careless Whisper
Careless Whisper's picture


Dewd, there is NOTHING that you, or anyone else, could say that would get me to sell my gold.

Sun, 12/18/2011 - 23:06 | 1992805 Shadowsil
Shadowsil's picture

This is not the Old robo, who is this robo imposter?

Your comments and Esprit De corps have changed over the past couple days it seems.


Mon, 12/19/2011 - 00:05 | 1993085 pods
pods's picture

Robo needed a bit of rest and respite after selling a kidney to get in on the Zynga IPO.


Mon, 12/19/2011 - 01:42 | 1993321 old naughty
old naughty's picture

Good mention of Esprit.

Did they change from gaining from Euro fx?

Poor merchandising policy.

Mon, 12/19/2011 - 00:08 | 1993097 rufusbird
rufusbird's picture

The most likely thing to happen will be that which will confound the highest number of people...

Mon, 12/19/2011 - 08:20 | 1993616 jcaz
jcaz's picture

LOL- it's a cinch that YOU don't know, Robo....

Sun, 12/18/2011 - 22:38 | 1992715 ZeroPoint
ZeroPoint's picture

Can someone explain to me how the printing of US Dollars is going to save the Euro and Europe?

Sun, 12/18/2011 - 22:42 | 1992725 FEDbuster
FEDbuster's picture

Our funny money is better than theirs (for now anyway).

Mon, 12/19/2011 - 03:40 | 1993441 Sudden Debt
Sudden Debt's picture




Sun, 12/18/2011 - 22:49 | 1992737 NumNutt
NumNutt's picture

It won't, it is kind of like the trick of putting saw dust in a old almost dead car transmission. It will seem to work well for a little while, and will probably get you to your destination. But then after that it will take a large shit and never function again.  In this situation the destination is the US elections in November......Does that help?

Sun, 12/18/2011 - 22:52 | 1992755 infinity8
infinity8's picture

that's fucking awsome! - never heard of this saw dust trick and called my car know-how friend. He confirmed like it was yesterday's news. And also said that it "would get you home". live and learn, live and learn. tx!

Sun, 12/18/2011 - 22:39 | 1992716 High Plains Drifter
High Plains Drifter's picture

and we go to kitco and look at the metals and we see a sea of red.....yep that makes a lot of sense. sure does.......i am not surprised........

Sun, 12/18/2011 - 22:52 | 1992752 navy62802
navy62802's picture

That's what we call a buying opportunity. Capitalize on the idiocy of others.

Sun, 12/18/2011 - 22:40 | 1992719 navy62802
navy62802's picture

Is anyone on ZH surprised? As has been stated and restated over and over again on this site, the only answer that global central banks have left is to print. It shouldn't really be that shocking to anyone.

Sun, 12/18/2011 - 22:42 | 1992723 gangland
Sun, 12/18/2011 - 22:44 | 1992729 Caviar Emptor
Caviar Emptor's picture

I see your $1 Trillion and I raise you $ 5 Trillion

Mon, 12/19/2011 - 05:12 | 1993502 The Navigator
The Navigator's picture

I see your $5trillion and raise to $50trillion, easily $50 trillion if not $100Trillion

$1Trillion is peanuts, since I can print trillions, quadrillions, and centillions - I am the Fed.

Sun, 12/18/2011 - 22:44 | 1992731 williambanzai7
williambanzai7's picture

Do you beeeeelieeeeeeeeve in the power of Ponzi?


Mon, 12/19/2011 - 01:35 | 1993310 old naughty
old naughty's picture

Of course.

Its the only game [left] in town.

Mon, 12/19/2011 - 01:44 | 1993324 old naughty
old naughty's picture

BTW, WB, why they have their masks off?

Eyes wide shut?

Sun, 12/18/2011 - 22:47 | 1992732 kato
kato's picture

Let them ruin their own money, Germany included; although I do feel kind of bad for Germany, they signed up for the deal they deserve. America did not sign up for the Euro. KEEP the United States OUT OF IT. It is going to end badly no matter what they and 'Economist' magazine say. Please don't let Ben don his "UNDERDOG - I AM HERE TO SAVE THE DAY" costume and pork the poor of the land with food, fuel, etc. that they - WE - cannot afford. Let the failed businesses called banks fail and quickly nationalize them. This just gets more and more stupid every failed 'summit'.

Sun, 12/18/2011 - 22:45 | 1992735 Dr. No
Dr. No's picture

Not a big surprise.  Bernank is a Bilderberger and does not put America before the NWO.  The unification must move forward at all costs.

Sun, 12/18/2011 - 22:46 | 1992738 navy62802
navy62802's picture

The only advice I can think of at this point is to prepare yourselves. This isn't going to end well for anyone.

Sun, 12/18/2011 - 22:47 | 1992742 midgetrannyporn
midgetrannyporn's picture

The bernank sings "I'm an Asshole":

Sun, 12/18/2011 - 22:52 | 1992751 Caviar Emptor
Caviar Emptor's picture

The beauty of it all: spend a trillion to save banks today, and watch debt/GDP become even worse tomorrow, then you need to spend three trillion to accomplish the same thing the day after tomorrow

Sun, 12/18/2011 - 23:06 | 1992809 topcallingtroll
topcallingtroll's picture

Greenspan's put sure is awfully expensive.

However it is more like the Fed sold a CDS and has to put up increasing collateral requirements.

Maybe we should call it the Bernanke debt swap.

Sun, 12/18/2011 - 23:12 | 1992840 Caviar Emptor
Caviar Emptor's picture

Worse than expensive, that's how a death spiral gets going. Each time the Fed "bails out" the banking system will ensure that they'll need to do it again at higher cost and with less in return. 

Sun, 12/18/2011 - 23:12 | 1992843 MsCreant
MsCreant's picture

As long as the general public keeps "buying it" why not?

Sun, 12/18/2011 - 22:52 | 1992754 TSA gropee
TSA gropee's picture

I'm surprised, surprised that it's only $1T. Shit, come to think of it, why stop at 1? if you're stealing taxpayer money or printing your own, just go wide open. 

Sun, 12/18/2011 - 23:15 | 1992856 MsCreant
MsCreant's picture

I hear you and agree. At the same time, if you think about it, your response is a symptom of just how innured we have become. Let me demonstrate.

TSA gropee, you have just won One Trillion Dollars.

Lot of damn money, eh? (If this is MsCreant, she is gasping and making hacking sounds).

Kind of like the spigot is wide open, eh?

Mon, 12/19/2011 - 01:39 | 1993315 old naughty
old naughty's picture

Thats just the first course. Keep feeding us until we all accept (give up?).

Mon, 12/19/2011 - 09:26 | 1993689 kralizec
kralizec's picture

No shit!  If $1T is good, $2T would be great!  $3T would be fantastic!  $4T would be super-freakin' awesome!


Sun, 12/18/2011 - 22:58 | 1992756 topcallingtroll
topcallingtroll's picture

A careful reading shows the title may be incorrect. Anthony Sanders was not discussing the bailout of Europe, but the consequences to the usa should the eurozone undergo severe crises/ bank collapse/eurozone breakup scenarios. The two Lehmans he is referring to were clearly implied to be in the usa and the scenario was subsequent or coincident with a eurozone emergency.

Sun, 12/18/2011 - 22:54 | 1992759 iLoveMisesToPieces
iLoveMisesToPieces's picture

Does anyone know the story behind Bernanke?  Is he just a puppet that TPTB thought fit their mold perfectly or is he more than that?  I'm guessing puppet but what makes me wonder is why wouldn't you pick a better puppet?

Sun, 12/18/2011 - 23:02 | 1992788 topcallingtroll
topcallingtroll's picture

Could he not just be a well meaning academic type? A technocrat?

Sure he was chosen because he follows neo keynesian orthodoxy to socialize losses and solve each crises with more liquidity, but doubtful he has secret meetings with the banker cartel where he laughs sinisterly about the grand conspiracy while they eat children.

Mon, 12/19/2011 - 00:24 | 1992792 bob_dabolina
bob_dabolina's picture

So I get into this conversation today about inflation vs. deflation with a couple close people I know tonight. To be honest it was more of an intellectual argument. 

Inflation vs. Deflation: which is worse

The delfation argument was that if you don't print money than many jobs will be lost and it will cause a depression. The act of printing money in this argument was justified under the thought that policy makers (central banks) have "tools" at their disposal like...raising interest rates, etc should inflation get out of control. 

My argument was that printing money to avoid a depression creates malinvestment and not only moral hazard but also moral turptitude. This causes a degradation in society. More importantly however, once a loss of faith in the currency occurs, policy makers have NO tools and a complete breakdown in society occurs. In addition I had to explain that countries have never collapsed under deflationary circumstances, only under inflationary to hyperinflationary circumstances (the title of this article references TRILLION) 

On another note we both agreed that the term "crony capitalism" should be replaced by what it really is in the news medium...fascism.

Merry Christmas.


Sun, 12/18/2011 - 23:08 | 1992800 Caviar Emptor
Caviar Emptor's picture

I'm only the messenger: cost of loans for oil and gas drilling and exploration are rising significantly due to global financial turmoil (now up to Libor +4.5). Biflation: the worse the economy, the higher the cost

Sun, 12/18/2011 - 23:05 | 1992801 Caviar Emptor
Caviar Emptor's picture


Sun, 12/18/2011 - 23:09 | 1992810 the grateful un...
the grateful unemployed's picture

Aside of course to shower Europe with dollars from the ChairsatanCopter.

and Jerry Sandusky showers at that

Sun, 12/18/2011 - 23:09 | 1992820 Snakeeyes
Snakeeyes's picture

Wow. Thanks for mentioning me (Anthony B. Sanders) in a Zero Hedge article. Here is my blog ( hated by The Fed):



Sun, 12/18/2011 - 23:16 | 1992859 mailll
mailll's picture

I hope the tax payers aren't going to get stuck paying for all that printing press ink! 

Mon, 12/19/2011 - 00:02 | 1993069 DarkStarDog
DarkStarDog's picture

Tax payers did not lose a penny on TARP. lol. This will be no different, we will lose hundreds of billions.

Sun, 12/18/2011 - 23:17 | 1992864 ZachGreen30
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"Which is why all those wondering if gold should be bought now or the second after the ECB starts printing, we have one piece of advice: just look at the chart above. It says all one needs to know."

Im sorry but im not smart enough to look at that chart and see its correlation to gold prices, could someone please explain this to me in leymans terms? (Should I buy now or after the ECB starts printing?) Thanks a ton!

Sun, 12/18/2011 - 23:21 | 1992899 Zero Bid
Zero Bid's picture

gold now, unicorns after

Sun, 12/18/2011 - 23:59 | 1993059 SAT 800
SAT 800's picture

Now; this is a valid major bottom, or dip. In my humble opinion.

Mon, 12/19/2011 - 10:39 | 1993872 my puppy for prez
my puppy for prez's picture

Do you want it in LAYMAN'S terms or LEHMAN'S terms?  jk

Sun, 12/18/2011 - 23:18 | 1992875 Atomizer
Atomizer's picture

But, Jim Cramer told us Europe was contained and go long on all casino holdings. I'm so confused. hehe

Sun, 12/18/2011 - 23:24 | 1992909 nostromo17
nostromo17's picture

Eh, whats another trillion dollars...

-that would be "A thousand billion" for you numerically challenged Brits.

Sun, 12/18/2011 - 23:44 | 1992996 Uncle Remus
Uncle Remus's picture

Yes Virginia , there is a fascist  state called America.

Sun, 12/18/2011 - 23:55 | 1993046 jack stephan
jack stephan's picture

Dr. Gonzo: We won't make the nut unless we have unlimited credit.
Raoul Duke: Jesus Christ, we will, man. You Samoans are all the same. You have no faith in the essential decency of the white man's culture.

Sun, 12/18/2011 - 23:58 | 1993054 DarkStarDog
DarkStarDog's picture

Yawn.... Wake me up once the revolution begins.

Mon, 12/19/2011 - 00:01 | 1993064 pakled
pakled's picture

Question A: Do we really get Euros on these swaps, or are we just playing "pretend"? In other words, does Europe really honestly truly have to set aside there half of the swap? And if so, where the hell do they get it (or pretend to get it) since they dont have a Ben machine? (semi speculative question)


Question B: Does the swap engage before or after a European sovereign default (or similar calamity)? (full blown speculative question)

Mon, 12/19/2011 - 00:05 | 1993087 PulauHantu29
PulauHantu29's picture

Saving the Euro is crucial to avoid a more severe global depression. If the euro tanks, the RMB and USD will soar crushing the related economies by closing down their exports which will skyrocket in costs....then create even worse unemployment imho.

I say Print on, McBernank!,

Mon, 12/19/2011 - 00:25 | 1993152 Hoody Who
Hoody Who's picture

That tapping sound you here is Ben hitting the Zero on his keyboard.

To Infinity!!!!

Mon, 12/19/2011 - 00:25 | 1993153 devo
devo's picture

What is up with gold and silver? Liquidation/fear or what? I don't want to stupidly sell, but I'm feeling pressure and pain (i.e. losing massive purchasing power).

Mon, 12/19/2011 - 00:27 | 1993159 devo
devo's picture

Also, something I don't understand about gold "manipulation": if JP Morgan et al didn't want people to own gold, wouldn't they let the price rise to where the average person couldn't afford it? Seems that would keep more people out of the market than lowering the price.

Mon, 12/19/2011 - 00:28 | 1993164 slewie the pi-rat
slewie the pi-rat's picture

we now have a zH trollTM who is in the congressionalRecord w/: 

The European Union will unify, break up or downsize. But regardless of what option they choose, they still have too much spending and debt relative to the ability to pay for it: GDP growth. But additional debt is not the answer. It is the problem.

well, if he gets too far out, they know where to find him!


Mon, 12/19/2011 - 01:04 | 1993254 gwar5
gwar5's picture

I like the part where he says "austerity" is the obvious answer, ie., "reduction in government spending".  Paging Dr. Krugman...  paging Dr. Krugman....

Duh. We all knew that 20 years ago when it would have been prudent. Now the spending is the only thing between the next snowflake and the avalanche.  



Mon, 12/19/2011 - 00:51 | 1993218 cathrynm
cathrynm's picture

Let me think.  European banks borrow dollars, and exchange dollars for Euros -- so this would make the Euro rise relative to the dollar, right?

Mon, 12/19/2011 - 00:52 | 1993226 gwar5
gwar5's picture

It's the two-fer thing. FED can debase the USD and strengthen the EURO at the same time with such a move. The whole EU is the new Greece. FED cannot inflate the USD debt away with a collapse of the EURO. The EU mess has been crapping all over the TimnankeSachs' plans. Robottrader will no doubt be pleased though.


Meantime, the Bilderbergers are also floating the rumor that there's really 2 million tons of gold vaulted away and all is well, ie., all the money printing is not really fiat currency. See, that's the reason they've been so secretive for so many decades, it's all been for our own good.

(check: or David Wilcock re: trillion $$ lawsuit.  Weird: also has tangential ties to the wild case of the $135 billion in bonds nabbed from the two Japanese caught at the Italian/SUI border in June 2009.... remember that one?  This just gets better and better... or, shall we say, more desperate?)







Mon, 12/19/2011 - 10:36 | 1993863 my puppy for prez
my puppy for prez's picture

I just don't believe that Fulford storyline, as nothing seems to happen and the story just gets weirder and weirder....and I am saying that as one who is willing to think outside the box....I'm a 9/11 "truther" and have come to realize that many "conspiracy" theories actually are real.  But the White Dragon stuff just doesn't sit right with me...but I could be wrong.

Mon, 12/19/2011 - 01:07 | 1993261 EZYJET PILOT
EZYJET PILOT's picture

This is about devaluing all currencies, they are all relative to the weak dollar. What will the banks use this money for if as Tyler alludes the MF global trade is not coming to town? Bonuses, risky assets?

It makes me sick when I think about how these bastards are rehyopthecating the hell out of everything and at the same time claiming virtually free money from Bernanke. This cures absolutely nothing but we all know that. In 6 months time the money would have run out, they will still have Euro bonds on their balance sheets plus the deriavtives will be up at around 800 Trillion, the shadow banking world would have shrunk even more then they will be shouting out for more free money, which the fed will dutifully give them in the name of protecting Europe

Mon, 12/19/2011 - 01:30 | 1993303 besnook
besnook's picture

if you are a usa taxpayer you now own a bunch of marked to fantasy euro debt  to go with all the marked to fantasy mbs debt.

leaving prudence aside, this is really a brilliant end around merkel. the eurozone gets to print through the bernank. the usa owns the eurozone now. even the chinese get bailed out indirectly because their best customer gets bailed out.

Mon, 12/19/2011 - 01:11 | 1993273 besnook
besnook's picture

anyone care to guess what is being swapped for dollars.

Mon, 12/19/2011 - 01:12 | 1993275 BluPoint
BluPoint's picture

Oh when will this paper ponzi end?  This long drawn out script is killing me.

Mon, 12/19/2011 - 01:21 | 1993287 yogibear
yogibear's picture


Let Bernanke and the Federal Reserve expand and print to try and save the EU. Bernanke and the Federal Reserve want to save the world. Take advatage of it before there is a run on the US dollar and a loass in confidence of the US dollar and the federal reserve. Run the US into the ground first by causing  Bernanke to save 10s of trillions in bad derivatives! One way to take down the US federal reserve.

Mon, 12/19/2011 - 02:09 | 1993362 Weisbrot
Weisbrot's picture

perpetual doom and gloom? some how those in charge seem to be keeping things going far longer than many have expected. Obviously they know things that most of us dont seem to realize.

Mon, 12/19/2011 - 02:16 | 1993370 HungrySeagull
HungrySeagull's picture

They bail out nothing in Europe.

Congress cries out for money publicly while passing the binary behind secret doors.


I hate to say this, but I think now the Fed Reserve has lost sight and focus of the Charter and should be removed.


Otherwise the People will remove the failed US dollar from thier every day life.

Mon, 12/19/2011 - 03:38 | 1993439 jonjon831983
jonjon831983's picture

"we may have been optimistic, because the end result will be not when is Lehman coming, but when are the next two Lehmans coming"


I feel better already.

Just say: "It'll be like Lehman X 100!"

Mon, 12/19/2011 - 03:40 | 1993442 robertocarlos
robertocarlos's picture

We can't stop (spending), we have to slow down first. 

Mon, 12/19/2011 - 04:29 | 1993469 ebworthen
ebworthen's picture




Time to max out those credit cards!

Debt!  It's the new GREEN!

Mon, 12/19/2011 - 05:13 | 1993497 jmc8888
jmc8888's picture

"The obvious solution is austerity (reduction in government spending). But  making loans to the European  Central Bank or individual countries doesn’t solve the underlying structural problems; it only makes the Debt to GDP problem even worse. It is simply a short-term solution and actually encourages the  Eurozone to delay making the hard decisions."

Wrong.  The obvious solution is to implement Glass-Steagall, implode the fraud, the scams, and haircut the debt that was inflated by the system along the way.  Even legitimate debt has been inflated because it was in the system where everything that was taken fedback into the loop causing legitimate debt to be larger than it should of been. Thus haircuts need to be applied in conjunction with the other measures.

So what does the author mean by austerity? He says gov't spending.  Well there's the legitimate and the fraudulent.  Conflating the two as equal (on multiple levels) is piss poor and confusing to many....not to mention flat out wrong and destructive to the physical economy humans need to survive let alone have a functioning economy at large.

'Hard decisions' = code word for making the people pay for the fraud.

None of that is needed.  The hard decision is the easy decision.  Take the economy back from the imperial monetarists and focus it back onto the legitimate.  The physical economy is real, monetarism isn't.

Our problems are structural *and ideology based...monetary ideology. We legitimized fraud.  We let it impact the legitimate to poison it.  Cancel the fraud, cancel the poison from the legitimate with haircuts.  It's so fucking simple to understand, and the solutions are quite easy to understand as well.   Especially here in the USA because we are FOUNDED on being anti-monetarist and physical economy based.

The founding fathers weren't Keynesian, they weren't Austrian.  Because they weren't monetarists.  Those schools are MONETARY schools.  Monetarism is an IDEOLOGY where all the branches of monetarism are still tethered to the root bullshit.

We've also been in the throws of monetary induced depressions before, and we used Glass-Steagall to sort things out before, when monetarists ran amok relatively similarly to what we are currently enjoying.


Impeach Obama


American Credit System

...not bullshit 'hard choices' and wrongfully combining all 'spending' by gov'ts as the same, as well as the impact of the monetary folly on skewing what 'debt' needed to be created for legitimate purposes because the monetarists folly created dollars inflated the amount that needed to be created to service the legitimate physical economy.

Mon, 12/19/2011 - 10:28 | 1993836 my puppy for prez
my puppy for prez's picture

So basically what you're saying is that the world (at least financially) is operating via a false premise, and every "official" explanation/solution is based on this false premise aka monetarism?

I think you make some great points.  I have to admit that I haven't done much reading about a "credit system".  Would Lincoln's "greenbacks" be an example of this?  How does this system work in a nutshell?  What is the unit of exchange backed by?

I would love to read more extensively about credit systems, but I have a huge stack of geo-political books to read, first!

Mon, 12/19/2011 - 07:10 | 1993561 MFL8240
MFL8240's picture

Can someone tell me the purpose in American workers paying taxes to a goverment that can create Trillions at will?  This whole situation makes no sense anymore.

Mon, 12/19/2011 - 07:27 | 1993575 gridlocked
gridlocked's picture

I'd love to see this in the Fed's job description.

Mon, 12/19/2011 - 07:37 | 1993587 Freewheelin Franklin
Freewheelin Franklin's picture

So, what? The EU will declare USD legal tender?

Mon, 12/19/2011 - 08:25 | 1993621 jcaz
jcaz's picture

Sure the Fed can print.... Then Obama, Congress, and Senate will send nice fat checks to the middle and lower classes to insure re-election...

"Let them eat cake"- the 300 year-updated version.....

Mon, 12/19/2011 - 10:01 | 1993755 Everyman
Everyman's picture

And these idiots (proposing endless bailouts and debt forgiveness) are not asking to be shot in the fucking head?

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