Will Uncle Benny Fix the Markets Today? Or Are We Trading Up On A Hope & A Prayer?

They are letting it fall for one reason and one reason only.

So they can start QE3.See there is no political will for the FED to start it with inflation so high.They let things collapse a little,then step in with the "miracle" to prop up the markets.The "miracle" of course is the FED buying all the bad mortgage backed securities from the banks dollar per dollar.Making there banker friend rich while shifting the toxic waste to the US taxpayer via Fannie and Freddy.

In short get ready to take it up the ass as the banks unload a few trillion in toxic mortgage debt thanks to the fed to the US tax payer.

But not to worry.Should be a GREAT year end(if you are a banker).

Oh...this has to happen before the close of the quarter....otherwise the to big to fail banks will...well fail due to there toxic balance sheets.

None of you get it............do you you ?

The question was "Uncle Bernie Not Fixing the Markets This time. Is the Fed Ready to Let it Crash??"

I read through every post here and not one person mentioned that the FED has "no choice" but to fix the markets.

Why ?

Because the U.S. Dollar is the "Worlds Reserve Currency" and intern "is" the "Petrodollar" 99% of americans have no clue that these two "gifts" bestow the American dollar.


Understand that the dollar is the defacto “Reserve currency – Petrodollar” that the world uses to transact business. As that dollar becomes more encumbered with "leverage" it's ability to be a store of value has less conviction and faith. The "only" value that a fiat paper currency can retain "is" that conviction and faith.
Also the demand for dollars in the reserve currency stature gives it it's strength. If no one needs it the Dollar is worthless.

So, let's look at the reason all faith will be lost in that currency at some point in the future. Since the creation of the FED in 1913 the currency (Dollar) value has been controlled through inflation/deflation. In 1944 the U.S. Dollar through the Brenton Woods agreement was granted “exclusive reserve currency status”.(that status meant that any country wanting to buy oil, food or commodities would have to buy dollars “first” and then they could go into the world market to make their purchase “on” the world market (with those reserve currency notes)That means they cannot purchase commodities "In their own currency" also it meant that "If" any country lost faith or trust (through debasement or any other reason) in that currency they could go to "any" central bank in the world and trade that paper currency (dollar) for physical Gold of equal weight value.
(Good as Gold)
In 1971 Nixon suspended Brenton Woods and took us off the Gold Standard telling other nations that they could not "now" exchange the dollar for Gold as previously promised, but it retained it's status as the worlds reserve currency.

Here is the key to it's downfall:

The U.S. dollar (debt) from 1971 through around 1995 was able to be removed from a balance sheet with little implication through accounting techniques claiming (debt) as a loss and could be written off and that was the end of it.

Here (around 1995) comes Blythe Masters from JP morgan and she creates what is called a "Credit Default Swap" This is essentially an insurance policy on a default to pay back a debt or loan. So, lets say for shins and giggles Greece is lent 1 trillion dollars by another country. They promise to pay that money back at a set interest rate over time. The CDS (Credit Default Swap) enables financial institutions to purchase a put (Default insurance or a bet against the underlying asset (loaned debt) never being paid back). This would be OK if only "ONE PUT" was taken out against the chance of that debt not being paid back. The problem "of the whole planet situation right now" is that this debt can be "leveraged" by 100 "PUTS" or in laymens terms (for each dollar that was lent to Greece there are $100 betting against "each" one of the dollars lent, that it will default and not be paid back) So, now you have 100 Trillion Dollars leveraged against the default of a 1 Trillion dollar loan. So, now Greece cannot payback the loan (debt) triggering the CDS and now everyone that bought a "PUT" want's to get paid on their bet. The next problem is that those financial institutions that sold those "PUTS" are only required to have a 6% reserve (Money held in escrow to pay claims) So, in reality those institutions only have .06 cents per dollar to pay those claims and not the “whole” dollar "required or needed" to pay those claims.

This is why all of these bailouts are created so "NO ONE" is allowed to fail "Triggering" these Credit Default Swaps. The original debt is maintained through interest payments from "newly created" debt (bailouts) because the money to pay those (Claims) does not exist.........Yet.
So, you say why can't they just unwind them.
Answer, is that you can't because everyone that purchased these "PUTS" – “CDO’s” wants’ to get paid because they are classified as an asset on "their" balance sheets. Also the fact that the people that wrote these derivatives were only required to have a 6% reserve to pay a claim. ( they only needed .06 cents per dollar to cover the full (dollar) value of claims) So you see the money does not even exist....yet to pay these claims if the CDS's are triggered.

There are 1.5 Quadrillion of "known" CDS's that have been sold. The un-known amount is still a secret. That’s 1,500 Trillion……………

So you can see that the FED will do what ever is necessary to keep the "World Reserve Currency Status" / "Petrodollar"
Because it controls all the worlds financial markets.

No Dollar = No control

So the answer is "YES" they will rescue it and not let it crash. Or the U.S. is "DONE" as we know it.

IMO QE is coming, the likes of which yet to be seen. Find a way to siphon some into your coffers. The QE will create another temporary boom just as the other bailouts and QE II did.