Archive for the ‘Federal Reserve’ Category

Money for Nothing

The German government is now getting buyers (in large numbers) for their ZERO PERCENT (0%) return bonds. 

Essentially they are offering to keep your currency from vanishing … like any of the fiat currencies have any hope of NOT doing a disappearing trick in the next decade.

Indeed the story has elements that say the coming bond issue will include NEGATIVE real returns, just imagine, we promise to loose less than you will anywhere else!

More on Zero Hedge

Wall Street Journal

Irish Times

Alternative Economics

The Guardian

Bloomberg

Tired of these sort of return tales?

Contact us: info@rsreal.com; there are alternatives to watching your money (currency) vanish ….

No Comments »

Financial Ponzi Scheme : sorting it all out

No Comments »

Greek exit from EU now openly debated …

According to Guardian:

The fate of Greece is, on Tuesday night, in the hands of the leader of a far-left party who launched the quest to form a government by declaring the country could no longer commit itself to the terms of an international loan agreement keeping its economy afloat.

After accepting a mandate to create a multi-party administration following inconclusive elections, Alexis Tsipras sent shockwaves through financial markets by announcing the pledges Athens had made to secure rescue funds from the EU and IMF were null and void.

“The popular verdict clearly renders the bailout deal null,” said the politician, whose stridently anti-austerity coalition of the radical left, known as Syriza, sprung the surprise of the weekend’s poll, coming in second with 16.8% of the vote. “This is an historic moment for the left and the popular movement and a great responsibility for me.”

No Comments »

SILVER LIBERATION ARMY

Max Keiser – Silver Liberation Army

No Comments »

The stage 4 CANCER of the currency system:

By Graham Summers of Seeking Alpha

Cancer of the currency

Cancer of the currency

Friday I noted that the “addict/dealer” metaphor for the Fed’s intervention in the markets was in fact not accurate and that the Fed’s actions would be more appropriately described as permitted cancerous beliefs to spread throughout the financial system, thereby killing Democratic Capitalism which is the basis of the capital markets.

Today I’m going to explain what the “final outcome” for this process will be. The short version is what happens to a cancer patient who allows the disease to spread unchecked (death).

In the case of the Fed’s actions we will see a similar “death” of Democratic Capitalism and the subsequent death of the capital markets. I am, of course, talking in metaphors here: the world will not end, and commerce and business will continue, but the form of capital markets and Capitalism we are experiencing today will cease to exist as the Fed’s policies result in the market and economy eventually collapsing in such a fashion that what follows will bear little resemblance to that which we are experiencing now.

The focus of this “death” will not be stocks, but bonds, particularly sovereign bonds: the asset class against which all monetary policy and investment theory has been based for the last 80+ years.

Indeed, basic financial theory has proposed that sovereign bonds are essentially the only true “risk-free” investment in the world. While history shows this theory to be false (sovereign defaults have occurred throughout the 20th century) this has been the basic tenant for all investment models and indeed the financial system at large going back for 80 some odd years.

The reason for this is that the Treasury (US sovereign bond) market is the basis of the entire monetary system in the US and the Global financial system in general. Indeed, US Treasuries are the senior most assets on the Primary Dealers’ (world’s largest banks) balance sheets. To understand why this is as well as why the Fed’s policies will ultimately destroy this system, you first need to understand the Primary Dealer system that is the basis for the US banking system at large.

If you’re unfamiliar with the Primary Dealers, these are the 18 banks at the top of the US private banking system. They’re in charge of handling US Treasury Debt auctions and as such they have unprecedented access to US debt both in terms of pricing and monetary control.

The Primary Dealers are:

Bank of America (BAC)
Barclays Capital Inc. (BCS)
BNP Paribas Securities Corp. (BNP)
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc. (C)
Credit Suisse Securities (USA) LLC (CS)
Daiwa Securities America Inc. (DSECF.PK)
Deutsche Bank Securities Inc. (DB)
Goldman, Sachs & Co. (GS)
HSBC Securities (USA) Inc. (HBC)
J. P. Morgan Securities Inc. (JPM)
Jefferies & Company Inc. (JEF)
Mizuho Securities USA Inc. (MFG)
Morgan Stanley & Co. Incorporated (MS)
Nomura Securities International Inc. (NMR)
RBC Capital Markets
RBS Securities Inc. (RBS)
UBS Securities LLC. (UBS)

I’m you’ll sure you’ll recognize these names by the mere fact that they are the exact banks that the Fed focused on “saving” thereby removing their “risk of failure” during the financial crisis.

These banks are also the largest beneficiaries of the Fed’s largest monetary policies: QE 1, QE lite, QE 2, etc. Indeed, we now know that QE 2 was in fact was meant to benefit those Primary Dealers in Europe, not the US housing market.

The Primary Dealers are the firms that buy US Treasuries during debt auctions. Once the Treasury debt is acquired by the Primary Dealer, it’s parked on their balance sheet as an asset. The Primary Dealer can then leverage up that asset and also fractionally lend on it, i.e. create more debt and issue more loans, mortgages, corporate bonds, or what have you.

Put another way, Treasuries are not only the primary asset on the large banks’ balance sheets, they are in fact the asset against which these banks lend/ extend additional debt into the monetary system, thereby controlling the amount of money in circulation in the economy.

When the Financial Crisis hit in 2007-2008, the Fed responded in several ways, but the most important for the point of today’s discussion is the Fed removing the “risk of failure” for the Primary Dealers by spreading these firms’ toxic debts onto the public’s balance sheet and funneling trillions of dollars into them via various lending windows.

In simple terms, the Fed took what was killing the Primary Dealers (toxic debts) and then spread it onto the US’s balance sheet (which was already sickly due to our excessive debt levels). This again ties in with my “cancer” metaphor, much as cancer spreads by infecting healthy cells.

When the Fed did this it did not save capitalism or the Capital Markets. What it did was allow the “cancer” of excessive leverage, toxic debts, and moral hazard to spread to the very basis of the US, indeed the entire world’s, financial system: the US balance sheet/ Sovereign Bond market.

These actions have already resulted in the US losing its AAA credit rating. But that is just the beginning. Indeed, few if any understand the real risk of what the Fed has done.

The reality is that the Fed has done the following:

1) Set itself up for a collapse: at $2.8 trillion, the Fed’s balance sheet is now larger that the economies of Brazil, the UK, or France. And with capital of only $54 billion, the Fed is leveraged at 51 to 1 (Lehman was at 30 to 1 when it failed).

2) Called the risk profile of US sovereign debt into question: foreign investors, now fully aware that the US’s balance sheet is suspect (the US has lost its AAA credit rating), are dumping Treasuries (see China and Russia). This has resulted in the Fed now being responsible for the purchase of up to 91% of all new long-term (20+ years) US debt issuance.

3) Put the entire financial system (not just the private banks) at risk.

The financial system requires trust to operate. Having changed the risk profile of US sovereign debt, the Fed has undermined the very basis of the US banking system (remember Treasuries are the senior most asset against which all banks lend).

Moreover, the Fed has undermined investor confidence in the capital markets as most now perceive the markets to be a “rigged game” in which certain participants, namely the large banks, are favored, while the rest of us (including even smaller banks) are still subject to the basic tenants of Democratic Capitalism: risk of failure.

This has resulted in retail investors fleeing the markets while institutional investors and those forced to participate in the markets for professional reasons now invest based on either the hope of more intervention from the Fed or simply front-running those Fed policies that have already been announced.

Put another way, the financial system and capital markets are no longer a healthy, thriving system of Democratic Capitalism in which a multitude of participants pursue different strategies. Instead they are an environment fraught with risk in which there is essentially “one trade,” and that trade is based on cancerous policies and beliefs that undermine the very basis of Democratic Capitalism, which in the end, is the foundation of the capital markets.

In simple terms, by damaging trust and permitting Wall Street to dump its toxic debts on the public’s balance sheet, the Fed has taken the financial system from a status of extremely unhealthy to terminal.

The end result will be a crisis that makes 2008 look like a joke. It will be a crisis in which the US Treasury market implodes, taking down much of the US banking system with it (remember, Treasuries are the senior most assets on US bank balance sheets).

I cannot say when this will happen. But it will happen. It might be next week, next month, or several years from now. But we’ve crossed the point of no return. The Treasury market is almost entirely dependent on the Fed to continue to function. That alone should make it clear that we are heading for a period of systemic risk that is far greater than anything we’ve seen in 80+ years (including 2008).

The Fed is not a “dealer” giving “hits” of monetary morphine to an “addict”… the Fed has permitted cancerous beliefs to spread throughout the financial system. And the end result is going to be the same as that of a patient who ignores cancer and simply acts as though everything is fine.

That patient is now past the point of no return. There can be no return to health. Instead the system will eventually collapse and then be replaced by a new one.

No Comments »

GOLD going to move, U$D under more pressure

Iranian oil will move to India and China using gold for settlements.

Iranian Oil for Indian & Chinese GOLD

Expect this to cause GOLD to have more upwards pressures and the demand for US dollars to decrease.

No Comments »

Worthwhile learning and sharing

The creation of ‘currency’ often called ‘money’ is a simple act, sadly it has become trapped in the ultimate ponzi scheme that ties interest to that creation.

All fiat currencies die

<iframe width=”640″ height=”360″ src=”http://www.youtube.com/embed/TfHEz4plxtg?feature=player_embedded” frameborder=”0″ allowfullscreen></iframe>
No Comments »

The Greatest Daylight Robbery … ever.

Bloomberg reported on the 18th of October that Bank of America holding corp was getting support from the Federal Reserve to move at least some of the $74 TRILLION (with a T!) derivatives account holdings to an FDIC secured trading unit.Pen is mightier than the sword

The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counter-parties, said the people, who asked to remain anonymous because they weren’t authorized to speak publicly. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn’t believe regulatory approval is needed, said people with knowledge of its position.

The FDIC regulators are being overwhelmed by the savvy and strategic positioning of their opponents in the Federal Reserve and Treasury Department.

This action amounts to the largest single ‘heist’ in financial history, done in daylight, and likely to end up being forced into approval via the Treasury, as they work with great diligence to complete the looting of the US public purse.

The neuveau barbarians are not at the gates any more, they are in command of the world economy and moving it towards a planned collapse that leaves the minority IN CHARGE. Bank robbers no longer need guns to effect their shakedowns, though history shows that such events never go quietly.

No Comments »

Ultimate Political Theater

The Debt ceiling ‘debate’ and goings on in Washington DC is the ultimate in political theater. It is like pro wrestling for the politics junkie.

This is an example of the kind of pressure then release that is being done to draw attention to the dance of politics in the beltway.

The power to create ‘money’ rests with the state, what is more on show here is that the ‘state’ is something of a house divided and the particular political hot potato has a fuse on it … sadly if it is permitted to explode ~ something that I have a view that it will be permitted to go boom ~ then hundreds of millions of others will suffer so that the political, financial and military elite of the US and western world can ‘prosper’.

At least one other commentator has stated that World War III is starting out as an economic war, just as nearly every other global conflict of the past 300 years has…

No Comments »

Debt Ceiling Debate or Political Theater?

When considering the Debt Ceiling Debate in the USA, keep in mind that the ‘congress’ actually holds the power to print money.


More at The Real News

All they need to do is awaken to this fact again and tell The FED and their ilk where to go and how to get there.

No Comments »

WP Login