Anyhoo.. .
Here's what stuck out for us this week here at the Poo Palace. We apologize in advance for this being a fairly dry, fairly academic piece of writing. Lotta facts to lay out. Here's what we got:
1. The Fed's Euros for Dollars Swap meet
2. Mortgage-based derivatives and other risks of modern capitalism's basis in the "Ever-expanding" human occupation of Earth
3. Obama's continuing failure to stand up to the Supreme Court
4. Obama's amazing health care Trojan Horse
5. The oceans of "dark money" floating around offshore revealed when Google, Apple, et. al. offered to repatriate $1.2 TRILLION in overseas profit, so long as they could get an 85% discount on the taxes they'd owe if they did.
6. Newt Gingrich is the frontrunner for the GOP nomination for President. ...of the United States. ...Seriously.
EUROS FOR DOLLARS
The Fed announced this week that they were expanding their policy of letting troubled European banks trade their Euros for dollars, bumping the scope of the program to "unlimited". Most commentators pegged this move to the European Economic Summit coming up this week where many predicted the "death of the Euro" would occur.
What does this mean? Well, imagine you're England or France or Germany or The Netherlands, or Luxemborg, or any of the other "strong" economies in Europe. Your fortunes are tied to the Italy and Greece and the other European countries nearing default primarily because you share a currency with them. It's like revenue sharing in American sports without the benefit of being able to kick the shit out of the revenue receiving "franchises" every couple of months. Eventually, as with n'er do well relatives hitting you up at holidays, you're going to say, "That's it! Not another dime." That's what a lot of smart people were saying was going to happen this week at the European Economic Summitt.
A couple things stand out about this Fed Action.
First, the obvious question is; if nobody in Europe wants to borrow Euros, isn't the Fed taking a HUGE huge risk by letting European banks back up the dump trucks at the US taxpayers' collective loading dock, offload them and drive off filled with freshly printed greenbacks? The answer is "possibly". These swaps have been in place for a while and have thus far been profitable for the The Fed. The deals commit the Eurobanks to buy their Euros back in dollars, plus some vig. If, however, the Euro does vaporize, it's difficult to imagine exactly how and when, and with what they will do it. More on that doomsday scenario below.
Second, as difficult as this may be to believe, the Euro is currently stronger than the dollar relative to other world currencies.
Notwithstanding the more disturbing implications of that revelation, the folks at the Fed don't seem quite so stupid now do they?
It's even deeper than that. The "QE 1" on the chart above represents the first "Quantative Easing" announced by the fed. "Quantatative Easing" is analagous to the way Hippopotumi defecate, breaking up huge chunks of poo with the violent "high-speed winshield-wiper" action of their tails (this action, in addition to marking the hippo's territory also creates food for plankton and worms and therefore, by TRICKLING UP the food chain, fish!), only in The Fed's case it's huge chunks of money, the worms and plankton wear suits and fly in private jets, and the fish have armies and air corps as well as navies.
Documents recently made public have revealed that The Fed's QE 1 represented over $16 TRILLION DOLLARS splattered out to foreign governments and foreign and domestic corporations and banks. Theoretically, it would keep the credit flowing. It hasn't worked real well apparently, hence QE 2, which kicked off in November of 2010.
For those of you scoring at home, $16 TRILLION is over $1 TRILLION more than the entire US national debt at this time. It's 7 times all the tax revenue collected by the IRS in 2010. and about a TRILLION more than the U.S. Gross National Product (as declared - more on that later) for 2010. Fox News has estimated the cost of providing Universal Health Care to all US citizens over the next 10 years at $1.2 TRILLION, less than half what Citigroup got in QE 1.
Here is a list of the recipients these 0% loans, none of which have been repaid and which, incidentally, were over and above the bailout money provided by the Bush and Obama administrations:
- Citigroup: $2.5 trillion ($2,500,000,000,000)
- Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
- Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
- Bank of America: $1.344 trillion ($1,344,000,000,000)
- Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
- Bear Sterns: $853 billion ($853,000,000,000)
- Goldman Sachs: $814 billion ($814,000,000,000)
- Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
- JP Morgan Chase: $391 billion ($391,000,000,000)
- Deutsche Bank (Germany): $354 billion ($354,000,000,000)
- UBS (Switzerland): $287 billion ($287,000,000,000)
- Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
- Lehman Brothers: $183 billion ($183,000,000,000)
- Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
- BNP Paribas (France): $175 billion ($175,000,000,000)
~~Source: The first EVER(!) GAO Audit of the Federal Reserve - page 131
Yeah, Lehman Brothers got $183 billion. What do you think are the chances we'll see any of that back? That payment alone is 366 times what we lost on Solyndra, by the way.
Yeah, Lehman Brothers got $183 billion. What do you think are the chances we'll see any of that back? That payment alone is 366 times what we lost on Solyndra, by the way.
Glad you asked.
(...next) THE EVER-GROWING PIE-IN-THE-FACE
