Guest Post: A Raging Case Of Bailout Fatigue

Tyler Durden's picture

From Doug Hornig of Casey Research

A Raging Case of Bailout Fatigue

I’ve used the term outrage fatigue on numerous occasions in this forum as a way of trying to explain why there has been such a muted outcry from the general population as the tally of financial atrocities committed against American citizens has exploded.

August 22 was just another average day with another average headline that could easily have been ripped from some radical economic watchdog website (liberal or conservative, either one): Wall Street Aristocracy Got $1.2 Trillion from Fed.

But the line wasn’t the work of someone out there on the anti-capitalist or anti-government fringe. It was attached to an article from the very mainstream Bloomberg News.

Bloomberg has been engaged in a long, frustrating FOIA litigation battle with the Federal Reserve over that entity’s reluctance publicly to reveal what it has been doing with our money. Slowly, the stone wall has been coming down. And looking at what’s behind it, it’s pretty obvious why the Fed would have preferred to keep its deeds locked away from all prying eyes.

Thus the above headline. And here’s an ugly truth that goes along with it: It’s a near certainty that the vast majority of those who saw it – probably not too many in number, since the story got scant coverage on the network news – said to themselves, Yeah, we already knew that. Ho hum.

Call it bailout fatigue.

Because, guess what? This is not a recycled story from last year. This is news that we didn’t know before the 22nd.

This money is not a part of the $16.1 trillion in emergency loans the Fed handed to US and foreign financial institutions between Dec. 1, 2007 and July 21, 2010, according to figures produced by the first-ever, one-time-only GAO audit of the central bank ordered by Dodd-Frank. Nor is it part of the $2 trillion quantitative easing program. Nor is TARP’s $700 billion in there, either.

Read that again. This $1.2 trillion – and perhaps we also have trillion fatigue, because that’s a lot of money – is separate from all that other stuff. It’s another hitherto secret funding program that we never would have heard of if Bloomberg hadn’t torn it from the Fed’s mouth like a rotten tooth.

The list of who got the bucks is a basic guide to the American banking industry. $107 billion to Morgan Stanley. $99 billion to Citigroup. $91 billion to Bank of America. Over $75 billion to State Street and just under that to Goldman Sachs and JPMorgan Chase. And the list goes on. And on. And on. Even the disgraced Countrywide Financial got in on the act, claiming about $12.5 billion.

In addition, as the Fed was bailing the leaky American boat, it must have asked itself, Why stop here? There are foreigners out there who need our help just as much.

So, almost half of the Fed’s top 30 borrowers were European firms. They included the Royal Bank of Scotland, which was propped up to the tune of $84.5 billion, the most of any non-US lender, and Zurich-based UBS, which got $77.2 billion. The big foreign borrowers also included Dexia, Belgium’s biggest bank by assets, the French Société Générale, Deutsche Bank, Barclays, and Crédit Suisse.

“These are all whopping numbers,” says Robert Litan, a former Justice Department official who investigated the savings and loan crisis in the 1990s. “You’re talking about the aristocracy of American finance going down the tubes without the federal money.” 

So much for the free market, where failed business ventures … well, fail. But not to worry, the Fed did it all for us.

“We designed our broad-based emergency programs to both effectively stem the crisis and minimize the financial risks to the US taxpayer,” says James Clouse, deputy director of the Fed’s division of monetary affairs in Washington.

Furthermore, the Fed’s official line now is that “nearly all of our emergency-lending programs have been closed. We have incurred no losses and expect no losses.” In fact, $13 billion in interest income was supposedly realized.

That works out to an average of, yes, one percent.

Now that’s a pretty nice loan rate if you can get it. They could, and they did. Citigroup, for example, was the most frequent US borrower, in hock to the Fed on seven out of every 10 days from August 2007 through April 2010. On average, the bank had a daily balance at the Fed of almost $20 billion.

And the ability to raise truckloads of money for almost no interest raises another disturbing question: Did the banks really need this cash to stay afloat?

University of Pennsylvania finance professor Richard Herring, an authority on financial crises, is suspicious, saying that some banks may have used the program to maximize profits by borrowing “from the cheapest source, because this was supposed to be secret and never revealed.”

But regardless of whether banks needed the Fed’s money for survival or used it because it offered the opportunity to turn a quick, easy buck, the central bank’s lender-of-last-resort role amounts to a free insurance policy for banks, Herring notes.

Access to Fed backup support “leads you to subject yourself to greater risks,” Herring says. “If it’s not there, you’re not going to take the risks that would put you in trouble and require you to have access to that kind of funding.”

All of this might conceivably make citizens revolt against an entity that uses their money to secretly fund the “Wall Street aristocracy.” It might make them vote for a Gary Johnson or a Ron Paul, someone who favors dismantling the Fed.

Or not. When a story as big as this one generates a bare minimum of media coverage, you know it’s probably headed for that huge waste bin in the corner of the parking lot. The one marked Bailout Fatigue.

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Highrev's picture

Market Ticker Heightened Scrutiny Alert in forum [Bulletins]

The TOS prohibits partisan sniping and similar except in three specific subareas, all of which are explicitly labeled for political content.

Given where Tickercon is, the stupidity being displayed by both political parties here (and all of them in the world in general) and my generally-foul mood resulting from the fact that the world appears to be about a day and a half from going off a cliff that we may not recover from, I will make this crystal clear:

If you violate the TOS in this fashion and I see it or it gets flagged you will permanently lose posting access in the area(s) in question. There will be no warnings, second chances, ifs, ands or buts and if you protest my decision - anywhere on the forum or even in private message you'll lose your account.

This warning is perpetual and will remain in effect until I decide to lighten up. The way events in the world are transpiring these days you can count on that happening sometime after the Second Coming of Jesus.

In short I'm tired of the crap; it is not only against the rules you explicitly agreed to it is corrosive to progress and evidences a juvenile inability to reason and debate.

Everyone here is presumed to be an adult.

Either act like an adult or take your discourse over to Daily Kos.

By the way, for those who haven't figured it out yet my intolerance for juvenile behavior is not limited to political snipes.

If Karl feels this way, I reserve the right to be wrong.

(Granted, there are two issues there that he's talking about. Don't know for the life of me why his site attracts so many plants and shills. But that's the secondary point he's making. I think it's the primary point that makes you stop and think.)

Lord Welligton's picture

This warning is perpetual and will remain in effect until I decide to lighten up. The way events in the world are transpiring these days you can count on that happening sometime after the Second Coming of Jesus.

And he didn't mention anal intercourse once?

Are you sure it's Karl?

spongeBOB's picture

Or "Ocular Penetration" ! 

Lord Welligton's picture

Ocular Penetration.


I was very touched by this passionate speech on the subject in Congress.


whstlblwr's picture

How is it different from all other Karl rants. Do opposite of what he is doing and you will make money.

What I want to know from Bailout Fatigue article, we know banks paid back Fed loans. No one talk about how they did it, taxpayer expense. Look at gas today.

People who visit blog, get to work, send this out on tweet, talk about on facebook.

Talk about Fed lending money to banks at no interest, inflating stock market, inflating food, inflating gas.

Clorox Cowboy's picture

Where is the hacker community?  I'm issuing a call to Anonymous, Lulzsec, prove you're not really a govt psyop by getting us some Federal Reserve emails, some damning DoD evidence...anything really besides dicking around with Sony's online gaming community.  Please...grow some balls and take on the beast itself.

Clorox Cowboy's picture

And no, defacing their websites or using DDoS attacks will not suffice!!  We're getting down to the end-game so how about stepping it up and getting the people some actual EVIDENCE of SERIOUS govt/financial dirt-baggery that will finally break through the bad-news fatigue and get Americans out in the streets.  I'm calling you guys out as a bunch of third-rate, amateur geeks if you can't pull off something bigger than the pathetic hijinks we've seen so far.

SheepDog-One's picture

Yep, hacking online gamers accounts or putting a clown face on the SEC website is bullshit....lets see you big hackers pull down some HFT computers or something like that. Make yourselves useful, slackers.

Clorox Cowboy's picture

Or Wikileaks with their "nuclear option" that they'll release if they feel threatened.  Release it already!  People are dying around the world because of our "leaders".  So if this information is so powerful (I'm thinking some 9/11 false flag memos?), let it out so people have a reason to get angry enough at their governments and the banks to end this charade!  If you have the ability to do something REAL about the situation and all you do is play kids games then you're as bad as TPTB!

MachoMan's picture

If they want to do a denial of service attack that would likely get people in the streets demanding change, then wait til the first of the month and jam up SS, SNAP, et al...  of course, the only change that would happen is more internet controls, crackdowns on anyone that knows how to use a computer, and an extra helping of entitlements to go along for their trouble (whether wanted or not).

pods's picture

Sorry to break it to you.  All this information IS out there.  People are not in the streets.

People will NEVER be in the streets to protest the FED.  

Why would they?  The FED allows most to live above their means.

Self deception is what keeps this place glued together.  (See CDs dissertations on that)

There could be a video of the members of the NY FED eating a baby at a meeting and nobody would give a shit.  

NOBODY wants to know about all the icky stuff going on.  Well, almost nobody.

Us crazies do, but realize that this is a war you cannot win by protest.  You withdraw from the system.


Highrev's picture

I seriously agree that the best advice one can give (besides balance portfolio money management) is to progressivly get off of the grid (as much as you can given your particular situation), and it's not an all or nothing proposition: every little bit counts and you can do it little by little.

Clorox Cowboy's picture

Agreed, I split my time between self-sufficiency planning and hoping that somebody with some mad computer hacking skills will let the truth out.  I feel bad for people who don't know enough to prepare and I think they deserve a reason for striking back before it's too late (for them's already too late for the system).

pods's picture

Agreed.  I am off credit.  Garden, PMs, semi-pms, etc.  Bug out spot that is (semi) secure, water.   

All one can do.  The system will collapse on its own.  


Gohn Galt's picture

Outstanding, I thought so.  Me too.  Oh and by the way for everyone else, for the ones who stood up during the abuses of 9/11 or before, you were detained, joined the government in some way or you were destroyed, your family too if he first steps didn't work.  A small number is unaccounted for.

As far as the self sufficiency, I have a had a lot of progress in smaller communities, church, shelters where people have time and some land but little money or hope.  And of course myself.

Reach out for me if you need help, I will do what I can.  Anonymously on hushmail.  Is there a Zerohedge anonymous message system in the works?


Clorox Cowboy's picture

There could be a video of the members of the NY FED eating a baby at a meeting and nobody would give a shit.  


But that's where you're wrong...release an email from Benny to Barry saying something like "of course QE3 would never work, but it's all we can do.  We're pretty much screwed."  or some CIA plans for placing demolition charges in WTC 7 and you will see some anger.  Maybe not enough to end the farce, but release enough of it and the cumulative effect will do the trick.

pods's picture

Well, there would never be that email, and 99% of the population does not know what QE even is.  Why not?  Cause they don't want to know.

WTC 7?  Do you really think people need to see charges placed to realize how it fell like that?

And when people do act out, the 4th branch of government is there to villify them.

If you want to do something, stop using credit.  Avoid financing anything on credit.  Simple.  

When you issue debt at interest, the exponential equation will collapse on itself if the debt does not expand exponentially.

Emails will only get rid of Barry or Ben.  The system does not rely upon individuals to survive.  It does not need to. It relies on the human emotions of greed, fear, and self-preservation.


Clorox Cowboy's picture

So you're telling me taking down Sony for 5 minutes is the best we can hope for...that's sad.  If our IT infrastructure is as vulnerable as certain reports would indicate, then let's see something bigger.  Don't ask me what...I shouldn't have to come up with the game plan, I'm just saying the preceding actions are a waste of time...may as well just stick to playing Warcraft.

pods's picture

No, what I am saying is that there will never be that one piece of information that makes people "get it."

I went through that phase. Tried to connect all the dots so people would just get it.

One day I realized that people just do not want to get it.  If the defense mechanisms are internal, it is up to them to take them on.  And that is not about information.

I also realized that by withdrawing from their system, it IS doing something.  Debt enslavement requires you to issue the debt everytime you get a loan.  That you can control.  So that is what I tell people now.

Banks don't lend money.  They let you do it.

So far I have gotten through to probably 4 people who have done something.  It is a start.


American Dreams's picture

I do not agree pods, to withdraw is fine but this system needs to be brought down.  The grid needs to come down, we do not need to withdraw and hide, we are the thinking ration beings in the room and we need to break the back of this corrupt system.  Rand's dream of withdrawal is lovely, no mistake, but it is unrealistic in our day and age.  Sure we would not be having these lovely chats infront of a faceless monitor but we may just have the very same conversations with our neighbors or family, I love you guys but all the better if this were to vanish.  With a black heart, I say bring it down.

Know your enemy


pods's picture

Maybe I am misunderstood.  And this might bring the junks, but I have never read atlas shrugged, nor do I hold Rand in particular regard.

I only have withdrawn from the self-enslavement part of society.  Credit snares us.  And we allow it.  

I also share all my (limited) knowledge with others freely, give away proceeds of my garden as well as start extra seedlings each spring to help others gain a bit of information about where food comes from.

I have always stayed pretty close to the land, and was really surprised at just how ignorant most in society are when it comes to food.

I am withdrawing TO bring this thing down.  I learned that by avoiding credit, it will bring the system down.

In 2008 private credit expansion started to roll over.  Look at the fun that caused.  Now the has stepped in to keep credit expanding.  When they can no longer expand (close now), the thing goes boom.  Nothing the can do about it.

I think that this place is valuable, and if we were all face to face it might not be too much fun with the outlooks and collective knowledge we have.  And the provocateurs would also be there too, egging us on to be the next extremist to be filleted on the news.

I have also started the long journey into knowledge of the law.  To discover if there really is anything to the real splinter in my mind, are we true sovereigns, or are we acting in a trust under corporate law?


BayAreaAlan's picture

Perhaps the reason you do not hold Rand is exactly because you have not read _Atlas Shrugged_.

fyrebird's picture

Nice. The problem is, Anon could breach the Fed in all three holes, dig up more dirt on their fraud than you can read out loud in a year, and still not reach anyone in the peanut gallery.

The Fed is invisible. You cannot see it even if you are looking at it. The Fed is cloaked with scary shit like monetary policy and forex. And boring shit like ZIRP. People do worse than glaze over when confronted with Fed reality; their brains freeze up. On teh noes tis maths! Fuck me but don't let me see teh maths! I iz will essplodings!!11!

Clorox Cowboy's picture

Then as I said earlier...don't give them the math.  Just dig up some dirty emails or cables that are in plain English...I can't believe there's NOTHING like that floating around out there.  Nixon was stupid enough to make the Watergate can't tell me Odumbo, Dubya or Bernankenstein are any smarter.

Clorox Cowboy's picture

Dup machine basically sucks.

Clampit's picture

Caution: The Fed may suddenly accelerate to dangerous speeds. 

The Fed contains a liquid core, which, if exposed due to rupture, should not be touched, inhaled, or looked at. 

Do not use The Fed on concrete. 

Discontinue use of The Fed if any of the following occurs:




tingling in extremities

loss of balance or coordination

slurred speech

temporary blindness

profuse sweating

or heart palpitations.

If The Fed begins to smoke, get away immediately. Seek shelter and cover head.

Ingredients of The Fed include an unknown glowing green substance which fell to Earth, presumably from outer space. 

Do not taunt The Fed.

pods's picture

You forgot:

The condition known as "hotdog finger"

and demonic possession.

And the ever present line:



jekyll island's picture

I think Ron Paul needs to convene another secret meeting on Jekyll Island to undo the damage that was done by the first group 100 years ago.  The Fed can give away over $1 Trillion and expect that nobody should question it?  We clearly have lost control of our government and the quasigoverment agencies that have been spawned to support it.



Leopold B. Scotch's picture

Time to buy those guns I've been putting off buying.

SheepDog-One's picture

Thats it, youre grounded again Butters.

Belarus's picture

What's new, these guys are so brazen that they think they can get away with anything they want--and they do, although it doesn't mean they win their futile battle. And anyone that beleives they aren't pulling out all the stops to prpp up the markets via connect the dots from Ben to HFT land still's believes in the tooth fairy. 

Dr. Richard Head's picture

They are indeed pulling out all of the stops, but the problem is a population that continues to scream to Washington to DO SOMETHING.  I am no fan of Paul Ryan, but his recent town hall had protestors screaming at Paul "Where are the jobs?!?!  When are you going to do something about jobs?!?!?!"

As long as the mentality of the main population consists of the ideas that Congress has the ability to do something, bailouts will continue and the Fantasy Football leagues will play on. The bailouts will continue as Congress will then be able to say, "See????  We are doing something."

Belarus's picture

....don't forget that "other" category on the Federal Reserve balance sheet, of which no one knows what the fuck they've done with it. Calls on ES more than likely on those days where the market really needs it or not. 

fyrebird's picture

It's not fatigue as such. It's raw terror. People want things to get better -- to go back to how they were -- and will stand in the street like deer in the headlights if there is any way or chance that things can go back. Pay the Wall Street bonuses, if those fuckers can con the world into buying our debt. Build the roads to nowhere, if it means WalMart can roll the goods fifty cents cheaper for another month. Invade Europe, burn the ME, nuke China. No skip that, we need China. Nuke Canada. Whatever it takes to create the illusion that hard decisions are being made at someone else's expense so that hapless Americans can focus on important shit like football (not that other kind, real football with shoulder pads and concussions.)

The Bernanke is a genius, so long as there are 500 channels on cable TV and another iPad rev every six months.

This is the cost of fear. Or part of it; the full cost is yet to be realized. But give it another year. Or two. You aren't going to recognize the place by then.

stormsailor's picture

this is a bs rally, you want risk, how about this.  short 50 /es at 1198.

blunderdog's picture

I think in general there's just no way to come to terms with any of this.  A lot of people's lives were totally shitty back in '06.  So now after trillions of dollars of theft, their lives are...totally shitty.

If our wealthiest corporations and individuals can steal trillions of dollars and it has little *immediate* impact on most people's lives, what's another trillion or two here and there?

Coupled with the fact that most human beings will *never* have any intuitive and reflexive understanding of the magnitude of the phrase "trillion dollars," and I think it's easy to understand why this sort of news doesn't attract much attention.

SheepDog-One's picture

Theyre making damn sure theres no way out, look what theyre doing in Europe. Same thing here, when it all suddenly collapses, the only answer will be under a world govt body lending out 1 currency. 

fyrebird's picture

Yeah that's bad. The bankers would have shit for arbitrage.

SheepDog-One's picture

Who cares when you completely control all the worlds assets with an iron fist?

Hook Line and Sphincter's picture

That's definitely the plan. Still, it exludes the knowledge that Wills always compete with each other. We'll see how well this works out for them. Lots of pain and death in the process. These oligarchs are the detritus of humanity.

JW n FL's picture


All of this might conceivably make citizens revolt against an entity that uses their money to secretly fund the “Wall Street aristocracy.” It might make them vote for a Gary Johnson or a Ron Paul, someone who favors dismantling the Fed. Or not. When a story as big as this one generates a bare minimum of media coverage, you know it’s probably headed for that huge waste bin in the corner of the parking lot.

I want to know how many innocent people will need to be hurt.. (Think Camping on Wall Street and the like) before real men get involved and bring this bullshit to an end?

what does it take to get everyone up? and committed to a plan of action that dethrones the Wall Street Lobby Whores along with the whole apparatus that keeps this cluster fucking "We the People" in place.


When will enough be enough?

How many innocent people will be hurt? before popular opinion stays the same because of the Corporate owned media keeping the attention of the nation on some wanna be feel good story all the while the same people that own the media outlets are out robbing "We the People" blind?


Austerity! thats what we need!

the fact that the Manufacturing Base was shipped off to a foreign Country and the Corporations Lobbied their way into it all with Tax Breaks!!

Our entire manufacturing base and a HUGE amount of our tax base.. GONE! POOF!! Disappeared!! for some lobby dollars!

The leaders! voted into power! voted to GUT! America!

All in favor of a service economy! say Aye!

Fucking idiots! and in the same breath will sell the sheep tax breaks for the Job Creators! LOL!!

I honestly had always hoped people were just smarter than all this.. that I was one of the less informed and therefore the end result would be better than I could have imagined.. WRONG!


Obama is a Lobby Whore! just like all the others before him.. save JFK who already had billions, maybe JFK wanted to much money for his services because he understood the value of his reach.. or maybe he watched superman cartoons to, too much and really believed that he could fight the forces of evil without a Secret Service Stand Down.


Whatever! Let's just pray for Austerity like that in Michigan.. who will have jobless, hungry people looking for ways to feed their families. Let's hope you dont live in Michigan! because the crime rate there is about to go up! people killing people over McDonalds Hamburger money! GREAT IDEA!!


And for all of you cowards living in the woods sitting back and secretly wishing for the City Folk to suffer the onslaught of the darkies! You should be more worried about me knowing that you sat and did nothing and wanted this shit to happen.


honestann's picture

You are so damn right.  The vast majority of humans are such abject failures, it is difficult to find words strong enough to describe.  As you imply, even a extremely tiny percentage of mankind could completely erase the predators-that-be from existence, but for some reason they cannot organize or collaborate [effectively]... perhaps because too many accept delusions like "we can fix this by working within THEIR system - as judged by THEIR co-conspirator justice-departments and courts".

I am so disgusted that I suspect our only hope is to develop a "new frontier" somewhere - a place that acts like the americas of the 1500s ~ 1800s where alert, honest, competent, self-confident people can go their own way and work without the deadweight of predators-gone-wild and their supporting parasite-class that keeps them in power via the fraud of voting AKA tacit approval in exchange for [supposed] freebies.

Unless we go the frontier route, the honest beings on this planet better find a way to eliminate the disease destroying [all that is good in] mankind.

Kayman's picture


For the longest time I believed we needed some form of grass roots action to make changes.  But I have now come to believe that the financial criminals and their political whores have shit their own pants and grangrene has set in.

Sitting back, reducing your footprint while their gangrenous asses rot off is the best plan.   In fact, watching the mad scramble to patch up the day-to-day crises is entertaining.

Let the paper tigers fuck around manipulating prices.  In the end when all real investors/people get off the carousel the game ends.

Food, clothing, shelter, friends and family.  All the rest of it is an optional extra. And salty Russian fish eggs can't hold a candle to home-made antipasto.

Helix6's picture

Re: "Let the paper tigers fuck around manipulating prices.  In the end when all real investors/people get off the carousel the game ends."

Nope.  That's when the SWAT teams come out and take whatever property you have left.

GCT's picture

JW the answer you seek will not come until people cannot afford to feed themselves and their famlies.  Look around several investors and economists were predicting these problems back in 2007 including the lehman brothers and the housing crash.  Did people care not really as they were unaffected.  Although millions are affected with housing, they know they can walk away and still feed their families.  People are basically greedy and want to keep up with the Joneses.  The only people protesting really are union folks.  Why because they are fricking greedy like the rest.  They want more and will get more mark my word.

I wish I could give you the answer you seek but currently the sheeple of the USA are for the most part content with the exception of fuel prices.  Now if the economy does not turn around you may see riots. They will disorganized and mostly will be looters and be put down quickly.  The middle class will actually have to rise up for something to really happen.  I do not see this happening in my lifetime but then I am an ole fart.   

jekyll island's picture

Just for clarity, our manufacturing base has not fallen significantly but we have lost tens of thousands of manufacturing jobs.  Efficiency has improved and automation has replaced many of the jobs workers used to do, so production has not fallen significantly even with the loss of so many jobs.  Ironically, automation may be our best strategy to compete with China.  Robots do not call in sick and can work 24/7.  Wouldn't it be ironic if China started losing plants to the US because we could do it cheaper than their suppressed wage scale workers?  

We are in transition into a new economy.  If your measuring stick is manufacturing jobs then you will be misguided, the market for nonskilled labor is drying up, only reason China is not experiencing this is because they force their citizens to accept standards of living we would never tolerate.  Sad but true for US blue collar worker.  New manufacturing plants will replace 1000 employees with 50 and have same production.  That is the new reality.   

TwoHoot's picture

<< We are in transition into a new economy. >>

I may have a spontaneous orgasm! Somebody else gets it! I may only read HeadSack avitars from now on.

During the transition from the Agricultural age to the Industrial Age, Agricultural employment went from 98% of the workforce to 2% and Agricultural production INCREASED several orders of magnitude.

Look for the same to happen as the Industrial Age ends, ushering in the Information Age where Knowledge is wealth.




buzzsaw99's picture

I for one welcome our alien lizard overlords.