It's Official - The Fed Is Now Buying European Government Bonds

Tyler Durden's picture


As if the 'risk-less' dollar-swaps the Fed has extended to any and every major central bank were not enough, William Dudley just unashamedly admitted that the Fed now holds 'a very small amount of European Sovereign Debt'. Explaining this position, as Bloomberg notes:


Dudley, testifying to a House panel, noted that he doesn't see more efforts by the Fed to buffer the US from Europe's tempests and believes European banks are deleveraging in an orderly manner. So not only is the US taxpayer bailing out Europe via the IMF (as we noted here a week ago using Greece as an intermediary) and the Fed is providing limitless USD swap lines but now we join the ECB in monetizing European government bonds - something we warned might happen back in December 2010. As for being a small amount - wasn't MF Global's holding relatively small too? And aren't we getting a little full from all this buying?

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Tue, 03/27/2012 - 11:37 | 2294402 kaiten
kaiten's picture

So that they can convert it into gold. ............. On paper, at least.

Tue, 03/27/2012 - 11:43 | 2294439 WestVillageIdiot
WestVillageIdiot's picture

I believe this is all part of their double-secret mandate that they have withheld from the public, for our own good, of course. 

This is a trial balloon.  If they receive no punishment then they know they have the greenlight to expand teh program at any time.  They can just say, "hey, nobody told us to stop back in March 2012".  It is all so simple.


Tue, 03/27/2012 - 11:47 | 2294460 Tom Servo
Tom Servo's picture

Just the tip!

I promise!

Tue, 03/27/2012 - 11:52 | 2294483 MillionDollarBonus_
MillionDollarBonus_'s picture

This idea has been in the mix for some time, and I have complained about the lack of decisiveness of Fed officials on matters of such importance. This move demonstrates confidence, firmness and a desire to proactively solve the underlying issues in today’s global economy. The Greek CDS trigger was a truly disastrous event for American primary dealer institutions and other SIFIs since it incurred them with large liabilities. Bernanke recognizes that this has set a president for a series of cascading credit events across Europe which together could be apocalyptic for the balance sheets of our most important American financial institutions. Hence the Fed is being vigilant and taking the necessary steps to promote stability and monetary union across Europe.

Tue, 03/27/2012 - 11:53 | 2294496 Tom Servo
Tom Servo's picture


Tue, 03/27/2012 - 12:00 | 2294529 MillionDollarBonus_
MillionDollarBonus_'s picture

This may be boring to you. But it is actually of grave importance to our financial system as we know it today. You're probably one those libertarians that use the services provided by world class institutions such as JP Morgan, Bank of America and Meryl Lynch every day but then scornfully criticise these very institutions. People like you just make me sick.

Tue, 03/27/2012 - 12:03 | 2294548 knukles
knukles's picture

Have you considered capitalizing upon your ruminations whilst enlightening mankind by ghost writing for Paul Krugman? 

Tue, 03/27/2012 - 12:05 | 2294557 nope-1004
nope-1004's picture

MDB:  precedent, or president?

Are you voting for Precedent Obama?  And did you pass grade 8?


Tue, 03/27/2012 - 12:37 | 2294704 SilverTree
SilverTree's picture

!!! Just get me within range !!! 500 yards will do !!!

Tue, 03/27/2012 - 13:18 | 2294860 Bay of Pigs
Bay of Pigs's picture

"world class institutions"

MDB's sarc is actually starting to grow on me. Is that you Hamy?

Maybe ZH has multiple personality disorder trolls? 

Wed, 03/28/2012 - 11:38 | 2297436 MeelionDollerBogus
MeelionDollerBogus's picture

ok take a look: MillionDollarBonus_

vs Joe Weisenthal of Business Insider.

do you see the similarity here?

Tue, 03/27/2012 - 13:09 | 2294815 optimator
optimator's picture

I'll bet he doesn't have any capitol to invest! 

Tue, 03/27/2012 - 12:07 | 2294559 francis_sawyer
francis_sawyer's picture

You got the 'GRAVE' analogy right... Context was a little off tho... & btw... "MILLION" dollar bonus doesn't buy much these days... Might want to upgrade to a "T"

Tue, 03/27/2012 - 12:13 | 2294586 bobola
bobola's picture

Not boring to me.

I just click your red arrow and move on.

Tue, 03/27/2012 - 12:54 | 2294772 azzhatter
azzhatter's picture


Tue, 03/27/2012 - 12:13 | 2294592 Tom Servo
Tom Servo's picture

You were almost entertaining, about 2 months ago.  Diminishing returns....

Tue, 03/27/2012 - 12:26 | 2294650 Missiondweller
Missiondweller's picture

I don't understand the down votes. Doesn't anyone wonder why the CDS trigger on Greek bonds ended up being a "non-event"?



Tue, 03/27/2012 - 12:34 | 2294687 maxmad
maxmad's picture

It became a "non-event" because they said it was a non-event... The ISDA that is.... So because a murder says he didn't do it, do you just let him go????

Tue, 03/27/2012 - 12:55 | 2294774 azzhatter
azzhatter's picture

How does Dimon's jizz taste?

Wed, 03/28/2012 - 12:47 | 2297641 Cadavre
Cadavre's picture

Ask the Mohel in attendance at his bris!

Geithner and co-play thing queen for a day, the Berskank, appear to be fastidious neat-niks!

As the Zap COmix hero Capitan Piss Gums sang while burping up the chaff from a close encounter with his cabon boy's drooling zipper dragon (again):

   Over the teeth

       And through the gums

         Into the tummy

                Yumy Yum Yum

Let me see if i got this straight

1) FED Buys Euro Bonds

2) Expiration short squeeze date approaches

3) FED converts Euro Bonds to USDs


Makes perfect sense

Tue, 03/27/2012 - 12:57 | 2294781 OldPhart
OldPhart's picture

You are getting really good at this bullshit, really.  Keep practicing and you could be the next White House speech writer.

Tue, 03/27/2012 - 12:58 | 2294786 surfersd
surfersd's picture

Methinks that your parents dropped you on your head to many times.


Tue, 03/27/2012 - 13:07 | 2294806 optimator
optimator's picture

Hey, I found JP Morgan Chase, but couldn't find Meryl Lynch anywhere as no one ever heard of them.

Tue, 03/27/2012 - 15:05 | 2294833 jus_lite_reading
jus_lite_reading's picture

>>"that use the services provided by world class institutions such as JP Morgan, Bank of America and Meryl Lynch every day but then scornfully criticise these very institutions."<<


^^THIS GUY^^ really is funny! You will be getting your day, boy!!

I will say this--- what the Fed is doing is not a surprise to any of us.

Tue, 03/27/2012 - 13:44 | 2294881 cranky-old-geezer
cranky-old-geezer's picture



You're probably one those libertarians that use the services provided by world class institutions such as JP Morgan, Bank of America and Meryl Lynch every day but then scornfully criticise these very institutions.

Those "world class institutions" are looting the economy dry, preventing any sort of economic recovery, while they party high gambling with people's wealth, paying huge bonuses, and Bernanke is the one giving them trillions of dollars of people's wealth via his printing press.

They're not "world class institutions". 

They're pirates looting America dry with Bernanke's full cooperation.

And no, I don't do business with any of them, and no I'm not libertarian either.  I'm an American getting pretty damn tired of watching the value of dollars in my pocket drop as Bernanke runs his printing press giving my wealth to those pirates.

Tue, 03/27/2012 - 13:45 | 2294944 WhiteNight123129
WhiteNight123129's picture

MDB you should start a blog called "ad absurdum".

Tue, 03/27/2012 - 20:30 | 2295445 VegasRage
VegasRage's picture

I have a BofA account and a Merrill Lynch account. I use my Merrill Lynch account to exit my vested options in a company I own shares in as fast as possible. Not because I think the company is in bad shape, but rather the underlying system is in very bad shape. I then transfer my funds into my BofA account where I use that to do wire transfers into hard assets I take possession of.

Yes I scornfully criticize BofA for the massive derivative positions it holds and the bail out it begged for and received. I also criticize the FED for the huge injection of liquidity BofA got. I criticize BofA for buying US treasuries with the money and collecting huge interest and then paying off its bail out with that money at tax payer expense. IF they, and the rest of the bank and trading scums were ACTUALLY responsible entities; I would keep my money in them, I would invest in equities with them, I wouldn't feel the need to pull all my cash out of them now while I still can.

You know what makes me sick? People like you who kiss Paul Krugman's erroneous ass and carry all these worthless slobs water.

Tue, 03/27/2012 - 18:34 | 2295855 Umh
Umh's picture

Can you get sick faster! Can you get sick worse! Oh just get sick!

Wed, 03/28/2012 - 02:15 | 2296574 MeelionDollerBogus
MeelionDollerBogus's picture

The only thing I'm using Bank of America for is BAC put options.

Thanks to the possibilities of market-magic from the Fed I have not only puts but also calls for strangle-positions on both JPM and Intel.

Due soon but curious to see if a sudden market reversal will pay off my vxx call. Sold the Put already. You ought to be able to see how well that turned out.

MDB, how do you live with yourself defending Bank of America all the while it's stolen customer homes, customer funds & broken laws very frequently, like perjury? - Matt Taibbi - fraud the secret to Bank of America's success

Tue, 03/27/2012 - 11:59 | 2294532 espirit
espirit's picture

Yep, hide the pickle.

Tue, 03/27/2012 - 12:29 | 2294660 Fidel Sarcastro
Fidel Sarcastro's picture

Just by reading the title of Tyler's post one would know that MillionDollarFuckTard would be out in force to give Bermonkey a hug.  

Tue, 03/27/2012 - 11:58 | 2294504 Paul Atreides
Paul Atreides's picture

Your most important American Financial institutions have become weaponized and that IS why they are too big to fail...

Tue, 03/27/2012 - 11:55 | 2294506 Schmuck Raker
Schmuck Raker's picture


You meant, "our most 'beloved' American financial institutions." Right?

Tue, 03/27/2012 - 12:05 | 2294555 ShankyS
ShankyS's picture

It's the old reverse Ponzi trick!

Tue, 03/27/2012 - 12:06 | 2294564 ShankyS
ShankyS's picture

TD - you wasted a good caption contest photo. What are they saying hiding their mouths behind those napkins? 

Tue, 03/27/2012 - 12:10 | 2294573 V in PA
V in PA's picture



Bernake - If MDB screws up the propaganda on this one, he's fired.

Timmy - Yeah, no shit.

Tue, 03/27/2012 - 12:37 | 2294703 maxmad
maxmad's picture

Timmy;  "Yeah now that Robo is gone, who do we have left?"

Wed, 03/28/2012 - 02:11 | 2296569 MeelionDollerBogus
MeelionDollerBogus's picture

I'm starting to seriously question if MillionDollarBonus_ is also Joe Weisenthal of Business Insider.

Tue, 03/27/2012 - 13:01 | 2294788 Money 4 Nothing
Money 4 Nothing's picture

They kept their napkins over their mouths for a while so they could talk without anyone reading their lips or overhearing.

Tim, Do you think anyone will notice that bond thing?

Ben, I'm not sure, but we will know by tommorow..

Tim, Eat your Penis Pilaf and keep your head down, people are starting to look over here.

Tue, 03/27/2012 - 13:03 | 2294802 optimator
optimator's picture

"Even I get tired of nothing but lox and bagels at these meetings?"

Tue, 03/27/2012 - 12:00 | 2294540 Chump
Chump's picture

You're still off your game dude.

Oh, and you meant "precedent."

Tue, 03/27/2012 - 12:07 | 2294553 V in PA
V in PA's picture

Bernanke recognizes that this has set a president for a series of cascading credit events


That was on purpose wasn't it. You're talking about Obama. Bernake has set the President. At least the TOTUS (aka MDB) now admits it.

Tue, 03/27/2012 - 12:14 | 2294594 beaker
beaker's picture

Give me a hit of that before you throw it away....

Tue, 03/27/2012 - 12:19 | 2294617 New American Re...
New American Revolution's picture

"Bernanke recognizes that this has set a president"???   Do you mean precedent, or do you really mean Bernanke picks the President, who then picks Bernanke, and then Bernanke comes and saves the world from whoever it is that is skull fucking us all?   So many questions, so few answers, and inquiring minds want to know.   But it sounds like your complaints have been heard, and I think by the god that Goldman Sachs works for, thank you mutherfucker.   Where before they were just shaking us by our heels, now they're turning out pockets inside out while we're upside down...   And you think he's doing a great job?   Well, good things don't hurt, so shove this one up your ass. 

Tue, 03/27/2012 - 13:39 | 2294926 The Continental
The Continental's picture

Apparently, you've gotten far more than the tip.

Wed, 03/28/2012 - 02:08 | 2296566 MeelionDollerBogus
MeelionDollerBogus's picture


yer gonna force me to make shit up for you.

How about this?

Bernanke seems to like a light touch but if we want to truly further the solid but slow recovery of the world, not just America, it's time we get all the central banks together, issue SDR's and dollars at sufficiently high rates to fully recapitalize every part of the finance sector, of the efforts to spread democracy to underprivileged Muslim nations (which is the most effective way to thwart terrorism) by ensuring more cost+Plus contracts go to Raytheon and STOP WORRYING about silly budget deficits and ... finally bite the bullet and admit we have too much of a danger of deflation.


Inflation is already very low so if we can't stem the bleeding we risk gas and oil prices dropping to dangerously low levels.


Now you see what I did there mini-B?

I wasn't gonna write this shite for ya but come on ... YOU CAN DO EEEET.

Tue, 03/27/2012 - 12:01 | 2294535 knukles
knukles's picture

Oh uh, yeah, ummmm  to answer that question more directly, we hold

Chickenshit 3's of '07, that's 2107
Indacrapper 12's of 30
Updarear 17's of 3000
Apissload of zero coupon perpetuals
Holyshit 12's of 13 and
Whatthefuckisthishit 7's of 09


So yeah, I mean we didn't mislead you, the Swaps Are Riskless based upon our own judgement, it's the collateral that's fucked.  OK?

Tue, 03/27/2012 - 12:05 | 2294560 Hippocratic Oaf
Hippocratic Oaf's picture

3's of 2107? Can I get in on that?

They're at a premium, right?

Tue, 03/27/2012 - 12:31 | 2294654 knukles
knukles's picture

Senator, I'm afraid that was a one time offer made to us by the ECB with respect to the PSI in exchange for funds matched by the monies expropriated from private accounts by the Bank of Greece for which we are acting as custodian for the Rothschilds interests in the City of London.  We purchased the obligations at a dollar price of 122 1/2+ 1/164th  and in our judgement as a category 3 asset, shall be holding them at the greater of cost or market value in compliance with Generally Accepted Don't Bullshit A Bullshitter Bookkeeping Principles.


big toothy grin from ear to ear expressing a serious whatddyagonna do about it, huh attitude, mutherfucker, 'cause if you ask one more question I'll cut your Caymans and Luxembourg account payments off, asshole

Tue, 03/27/2012 - 12:35 | 2294690 Hippocratic Oaf
Hippocratic Oaf's picture

+1 knuks

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