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View Full Version : The Fed Audit : $16 trillion in Secret Loans to Bail out American and Foreign Banks



megimoo
07-21-2011, 11:59 PM
The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. "As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations...


http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3

megimoo
07-22-2011, 12:04 AM
The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. "As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations...


http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3

The $16T is for interest payments on credit derivatives and credit default swaps with no actual bailouts in the form of debt reductions. The process has to be repeated to...infinity. As the value of the supposed collateral is suspected or known to have decreased, the interest payments go up. The world’s tax bases are completely inadequate for the interest payments. The unwinding of unimaginable amounts of credit derivatives is in progress with unmanageable rollovers. The Bank of Int’l Settlements, a non-regulatory advisory bank estb. in 1930, receives voluntarily supplied reports from central nation-state banks on the volume and assumed notional values of credit derivatives. Two years ago they were reporting approx. $1.26 Quadrillion of derivatives, using the risk exposure of 5 year rollover periods (short term rollovers for long term debt. To lessen the psychologial and financial impact of Quadrillions, the reporting period was reduced to a 2.5 year interval which produced estimates of $700-600T in derivative exposure. Today, there are more derivatives as ever, subprime mortgages are still being issued in the US, and it is estimated that a 5 year rollover/risk period of derivatives is now about $1.5 Quadrillion. The world’s GDP and wotld tax bases cannot support the interest liability of these derivatives as they unwind. Tip of the iceberg, INDEED.

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Our 5 biggest financial institutions have $223T in credit derivative assets (US comptroller data 2010). Now, if we audit the actual gold held by the US, the Fed Reserve (not audited since 1955), we might get an idea of how much the banks are overleveraged and what basis we have for underwriting the national debts with our gold. We talk of national debt as about $15T, while the IMF, of which the US is the largest voting shareholder of about 17%, considers the national debt as actually over $200T with outstanding social liabilities included. The IMF has issued a statement that it considers the US....bankrupt.

The 5 biggest financial institutions in the US (Morgan Stanley, BofA, JPMorgan, Citibank, GOldman Sachs) hold 93% of the US credit derivatives ($223T as reported by the Comptrollers Office in 2010), and, added to the IMF national debt figure, totals $223T plus $202T = $425T. Mind boggling.

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megimoo
07-22-2011, 12:07 AM
Another eye opener by the Mogambo Guru...note the approx Trillion of dollars in actual circulation...very small:

There are $1.36 quadrillion in notional derivateves estimated by the BIS, and, they can confirm by voluntary accounting only $6-700 trillion of them.

http://news.goldseek.com/RichardDaughty/1274335320.php

“If you want a way to understand leverage, remember there is only $927.6 billion in actual US coins and paper money in existence. Thanks to the insanity of derivatives like massive fractional-reserve banking (where the fraction of deposits that are held in reserve against about $12 trillion in US bank loans and leases, and another $12 trillion in deposits, steadily ran less than the mere pittance of $40 billion for over a decade, thanks to that bastard Alan Greenspan at the Federal Reserve at the time. And bank reserves are still only $65 billion under Bernanke!), this little bit of cash money was morphed into $17 trillion or so in the stock market, plus another $14 trillion or so in the bond market, plus a housing stock valued at $17 trillion or so, plus a couple of hundred trillion dollars in bizarre derivatives here and there.

In short, this piddly $927.6 billion in actual cash has been multiplied thousands of times over, so that people could go into debt to pay for all these things and so, so many more. And all of this in a $14 trillion GDP!

So you can see that derivatives dwarf everything else. The true size of the total of derivatives outstanding is understandably hard to compute, and that is why it was interesting that the Bank for International Settlements (BIS) calculates that there are about $620 trillion of derivatives floating around the world, and some estimates from others have gone as high as the incomprehensible $200 quadrillion, all of which seems Too, Too Bizarre (TTB) for words since global GDP – the sum total of all the goods and services produced by the Whole Freaking World (WFW) in an entire year – is only around $60 trillion!

But the BIS’s estimate of $620 trillion in derivatives means that there are over $10 in derivatives for every $1 of global economic activity, which is like one guy at the roulette table betting $1 while 5 guys around him are each betting each other $2 on whether the guy wins or loses!

I say this without fully understanding anything, which is OK with me since I am kind of stupid and would probably get it all wrong, anyway, but I feel very confident in my universal condemnation and disgust with the whole mess, mostly since I never heard of anybody saying, “I got rich from derivatives!” and, in fact, the opposite is manifestly true.

But this financial insanity is just a small, small part of the Sheer Economic Insanity (SEI) of the Federal Reserve creating So Freaking Much Money (SFMM), and as to the implications, I join with The International Forecaster in saying that “if people truly understood the implications, they would be buying gold and silver by the truckload, along with their related shares, which together comprise your only salvation at this point.”

I know what you are thinking. You are thinking to yourself, “Well, maybe they are both just saying that because The International Forecaster is as stupid and crazy as that Mogambo lowlife idiot!”

Well, I doubt that, especially since I never heard my wife yell at them for being idiots, or heard her say how the only real idiot around here is her for putting up with them all these years, or go into one of those episodes where she ends up crying out, “Oh, death, where is thy sting?” about something they did, or didn’t do, but should have or shouldn’t have, depending.

Well, questions of my mental capacity aside, to buttress our joint opinion about gold, they note that inflation in prices is showing up in imports, as “The import price index reached 0.9% in April compared to 0.5% in March”, which is bad enough inflation in prices to give you the shakes, but, worse, “Over the year, the import price index registered 11.1% in April.” Yow!

And if the horror of 11.1% inflation in prices, or the looming horror of disastrous hyperinflation in prices thanks to the central banks of the world creating So Freaking Much Money (SFMM) is not enough to scare you into getting into your car to drive like a maniac in a screaming frenzy to buy more gold, zooming down the street and even onto the sidewalk when you have to (Honk! Honk! “Outta my way, morons!”), then remember that the Treasury says they only have 260 million ounces of gold (and this is assuming that all the gold is still there, which I don’t believe for a second), which, at the ludicrously low price of $1,230 an ounce, is worth only $319 billion!

Thus, all the gold in Fort Knox is worth, at these low prices, less than a fifth of one year’s deficit-spending in the Obama budget! Wow!” the Mogambo Guru

http://www.freerepublic.com/focus/f-news/2752150/posts