PIN THIS!! WE ARE FUCKED - If you own ANY stock market shares READ THIS

You should earn pins like I do. Sheesh...

Fed has bought $1.6 trillion in bonds with QE &QE2 due to the fact no one else would buy the debt. The Debt brought on By QE & QE2 is part of the debt ceiling it, does exist. The bonds held by the Fed are literally money that the government owes to itself.


like I said in 2007 the fed owned less then 4% of the bonds, today they hold 43% of all issued bonds.


Everything changed in 2008, hard to find any link at all that I like on the subject, this one is ok.



Article:The Fed can issue non-interest bearing debt now. This is the Federal Reserve notes that we use as a medium of exchange. When the Fed buys things like Treasury bills, commercial paper, junk bonds, stocks, or many other securities, it pays by creating reserves for banks that can be cashed out, if desired, as Federal Reserve notes. The Fed has created a ton of potentially inflationary reserves lately. It is paying interest on these reserves in order to "sterilize" them, that is, prevent them from being cashed out and from being used to make an excessive amount of new loans. It's trying to save the banking system without causing inflation. It appears that the proposal to issue interest-bearing debt is a variation on this scheme.

The basic scheme that is now in place is that the Fed wishes to support security markets that are under pressure. It buys mortgage obligations, for example. The sellers deposit their checks. The Fed clears them by crediting the reserve account of the member banks making the deposits. Ordinarily, as the bank lends, the multiplicative effect of fractional-reserve banking kicks in. The money supply rises. At present, the Fed is trying to short-circuit that process by paying interest on the reserves. Their success at this manipulation will end when the banks start making loans that pay interest higher than what the Fed is offering. At that point the Fed will have to sell loans so as to drain reserves from the system, if it wishes to stem inflation. The Fed will be reluctant to do this. It has fewer Treasury bills than it used to. Its loans are too illiquid to sell. The Fed must overcome this problem or risk much higher inflation.

Enter the new scheme. The Fed issues interest-bearing debt. Whoever buys this, whether an investor or a bank, they pay with a check. When it clears, some bank's reserves decline. This absorbs reserves and/or cash from the system. The banks, for example, use their reserves to buy the Fed's debt. It carries a higher interest rate than what the Fed pays on the short-term reserve accounts. This deters the banking system from using all those reserves in an inflationary manner. In short, the Fed is re-financing the liability side of its balance sheet. It is converting short-term debt (bank reserves) into long-term debt (its own bonds.) By funding its troubled assets with long-term debt, the Fed signals that it intends to hold these assets for a long time. It is now thinking about funding these long-term assets with long-term debt. The banking system is being induced to convert short-term liquid reserves into long-term Federal Reserve bonds.

The big picture here is something like this. The banking system has a lot of lousy loans on its books. It didn't mark them all down or fully because that would reveal that many banks are insolvent. They would need to be re-organized. The insolvent banks didn't want this done. The Fed rode to the rescue by exchanging its good securities for bad loans from the banks — some of them, not all. Meanwhile, bad loans began to crop up elsewhere in the system. The Fed took on some of those too. In the process, it has created far too high a level of bank reserves, a level that is highly inflationary if put to work making new loans. By issuing long-term debt, the Fed would complete the process it began. The banks would now have as assets the better securities the Fed loaned them plus they would have Federal Reserve bonds.

As for the Fed, its balance sheet would now carry as assets many troubled loans that the banks once held. On the liability side, the Fed would have issued its own bonds. Its financial leverage would have increased dramatically even as its asset quality decreased dramatically. Some of the shakiness of the banking system would be transported into shakiness of the Fed as a bank. This would not resolve all the problems because the total amount of shaky debt in the system, in the U.S. and worldwide, is so great that the Fed can absorb only a small fraction of it.

An interesting thing to wonder about is the risk of the Fed's bonds. The riskiness of liabilities derives from the riskiness of assets. Since the Fed has taken on numerous questionable loans (and refuses to be transparent about those loans), its assets have risen in risk as compared to when it held mainly Treasury bills. If the cash flows of the Fed's bonds are to be serviced by the cash flows of these assets, then those bonds will not be risk-free. But the Fed has the power to buy any security it wants to. It can buy its own bonds in the market and support the price (although this raises bank reserves and defeats the purpose of the bonds). It can make them risk-free, although this is unlikely.

50% rule

[link to www.lewrockwell.com]


This below is the new scheme dated just 11 days ago.

reverse-repos

[link to tv.ibtimes.com]

Just got a call from a manager in SoCal wanting to know if I read Hussman's report this week.

They're all freaking at his office.


I sent him here to see what the reactions to the report were.

BTW: He thinks this site is a trip.

OMG!! THAT is great brother!

Here is an "Adda-boy" for ya!

No. Just some hard working, money grubbing asshole like most of them.

Nice guy to have a drink with though.

I'll tell you guys some SHOCKING secrets about the stock market that I learned around 1998-2003 when I was trading and working closely with stock promoters (pump and dump).

The ENTIRE stock market is a scam and any stock that is not a "blue chip" is a super DUPER scam.

In a nutshell, the PRIVATE wall street banks have figured out how to STEAL money STRAIGHT from the government and private citizens by using the stock market.

Here's how it works in braid strokes: The *underwriters* - private wall street banks - conspire to issue a stock.

They have a monopoly on this scam and own all of the stock that they create out of thin air.

Then, at the IPO, most of that stock is "sold" to the general public. The *underwriters*, of course, give large amounts of stock to the people who started and own the company, but MOST of the actual cash money goes right into the pockets of the *underwriters* within a day of the IPO.

The *underwriters* have now divested themselves of the worthless paper (stock) they created, and everybody else is left holding the bag.

However, there is VAST profit to be made by *underwriters* staying in the game. They can purchase more stock (or keep some) that they use to MANIPULATE the market, always paying less to buy and always selling at a higher price than ANYBODY else. Period.

But that's not even the really slick part.

The really slick part is that the *underwriters* have figured out how to use government money, drug money, public money, make believe money and media to create profit out of thin air.

They leverage (derivative) things like federal FHA loans to move markets. They conspire with the CIA to put huge amounts of cocaine money into propping up the market. They use media and fake "ratings" to dupe the public into buying when they should sell and selling when they should buy.

The play book is about a mile thick, but rest assured it is all a scam and if you play, it is pure chance if you make a profit.

Many of you will argue and point to people that make money, but that is only because they were lucky to get on the right side of the scam.

Once have heard the *underwriters* speak plainly about their contempt for the stupid public and the profits reaped, you will never look at the stock market the same way.

OK. I'm a tard with this kind of stuff so I'm going to ask even if it sounds stupid to those of you who do understand this kind of financial doom.

If Face Book is over valued and it crashes - what will happen to FB itself? Will it go away?

Junk bond index tanking now, down futures were positive and dow now -98. Credit event could be in near future. JPM loss could be over 5b now(it will be much, much more). Facebook flapped and so it should have. Look out below great find OP.

This is a website that hedge fund and private equity managers wait for on Sunday mornings to come out.

It is not a simple read BUT very well worth the time. Time for patience in reading.

Basically the market is SO over leveraged and has lost SO much value, it is going to tank BIG TIME!


[link to www.hussman.net]


This post should NOT be buried

If you did not see this coming, you deserve it for being willfully ignorant.

Nice! I'd like to have a drink with a GLP'er sometime!

We knew it was coming, but not quite so soon. This fall maybe, but not very early summer. That is the surprise.

Should never be surprised by anything though.

So how do we tell the average sheep who still thinks their retirement is safe until they retire in 20-30 years? My Father in Law has about 250k in his union pension and he said he can't touch it. Is this true, I assume nothing is safe from the collapse?? I also have a good friend was in a motorcycle accident and almost died who got a 300k settlement and invested most of it. Should I tell him to get his money out of there or what? I don't talk to him much but he knows nothing of what is "REALLY" going on in this world...

Nice! I'd like to have a drink with a GLP'er sometime!

Nice! I'd like to have a drink with a GLP'er sometime!

I prefer the term: DEAD CAT BOUNCE. +1