HUMANITY AT A CROSSROADS: THE BANKS ARE COLLAPSING THE MARKET TO GET NEGATIVE INTEREST RATES TO STEAL YOUR MONEY!

Humanity At A Crossroads: Deliberately Created Systemic Risk Coming Apart. By Gregory Mannarino

 In recent months a number of the world’s central banks have veered into territory once unimaginable to most economists: negative interest rates.
Standard textbook theories hold that negative interest rates are infeasible because depositors always have the outside option of holding onto cash, which is storable and therefore pays an effective interest rate of zero. Recent experience and some expanding research suggest that zero is in fact not a binding floor on interest rates.
In our increasingly complex financial and monetary systems, currency is relatively unimportant and transactions costs mean that depositors may be willing to accept small negative rates of interest. In recent days, Fed Chair Janet Yellen has at least opened the possibility of the Fed following in the steps of some of the world’s other central banks in moving policy rates into negative territory.
The danger of negative interest rates
http://www.cnbc.com/2016/02/10/the-danger-of-negative-interest-rates-commentary.html

Bank of Japan adopts negative interest rate policy
http://www.cnbc.com/2016/01/28/bank-of-japan-adopts-negative-interest-rate-policy-reuters.html
Negative Interest Rates
http://www.bloombergview.com/quicktake/negative-interest-rates
BoJ Adopts Negative Interest Rates, Fails To Increase QE
http://www.zerohedge.com/news/2016-01-28/markets-turmoil-after-nikkei-reports-bank-japan-discussed-negative-interest-rate-pol
Small Swiss bank become first to hit savers with negative interest rates – CHARGING them to take their money
http://www.thisismoney.co.uk/money/news/article-3329324/Swiss-bank-ABS-hit-savers-negative-rates.html
Jamie Dimon Thoughts On Negative Interest Rates
http://seekingalpha.com/article/3665056-thoughts-negative-interest-rates

TT

The Crash In US Bank Stocks Is Only Half-Way Through

It appears by the total lack of coverage that the utter collapse of Europe's banking system is entirely irrelevant to the "fortress-like" balance sheets of US banks... but it is not. Once again today, US financials saw bonds dumped across the senior and subordinated segments...


...and while US financial stocks have fallen hard year-to-date, if credit is right - and it usually is on a cyclical basis - US bank stocks have a long way to go (as believe in book values is battered).


Of course, the CEOs will all tell investors there is nothing to worry about - just as David Stockman warned...

"in my experience is that when the crunch comes, bank CEOs lie"

The Most Ominous Warning That Oil Storage Is About To Overflow Has Arrived

It was just last week when we said that Cushing may be about to overflow in the face of an acute crude oil supply glut.

“Even the highly adaptive US storage system appears to be reaching its limits,” we wrote, before plotting Cushing capacity versus inventory levels. We also took a look at the EIA’s latest take on the subject and showed you the following chart which depicts how much higher inventory levels are today versus their five-year averages.

And now with major US refiners dumping crude, as we detailed overnight, those fears are surging.

U.S. Energy Information Administration data on Wednesday showed inventories at the Cushing, Oklahoma delivery hub hit a record 64.7 million barrels last week - just 8 million barrels shy of its theoretical limit - stoking concerns that tanks may overflow in coming weeks.

And now, given the "super-contango" in 3-month it is extremely clear that storage concerns are at their highest in 5 years...

Simply put, as one trader noted, speculators are now "making the leap to Cushing storage never being more full... will actually overfill, or even stop taking crude oil deliveries outright."

Central Bankers Losing Control, Now Bad News Is Actually Bad News.

Among the many themes we might pick for the market turmoil – energy, margin debt retreating, currency gyrations, emerging market disarray – the one that will be the most punishing is when people lose faith in central bankers to control the markets and steer certain outcomes. As I noted in a recent piece: However, there’s a new fault line that’s opened up and it’s quite serious. As we’ve noted previously, the immediate reaction to Japan’s negative interest rates was for the share prices of Japanese banks to get crushed (even as the rest of the Nikkei spiked upwards, briefly). The big banks are increasingly unhappy and the already-wounded Deutsche bank is even angrier: [article on DB] Ah. Now we’re getting somewhere. A schism has finally appeared. A fault line that could lead to real change; quite possibly, disruptive change. This emerging friction is between the big client banks and the central banks. They are no longer on the same page. Self-interest and self-preservation have reared their ugly heads, as they always do when the financial system is placed under stress. Central bank policies are now crushing the big banks and the little people alike, so now they finally care. The gravy train for big banks is over. (Source) This idea of s schism between the big banks and the central banks is really a very big deal. I’m not sure where the Bloomberg journalist got this idea, but it’s focusing on a really important theme: Stock Rout Deepens, Bonds Jump as Faith in Central Banks Falters Feb 10, 2016 Financial markets are signaling that investors have lost faith in central banks’ ability to support the global economy. U.S. stocks joined a rout that has global equities poised to enter a bear market, as investors ignored Janet Yellen’s signal that the Federal Reserve won’t rush to raise rates in the face of market turmoil. A selloff renewed in risk assets from bank shares to crude oil and emerging-market currencies. Lenders led European stocks toward their lowest since October 2013. It’s even worse than “investors” (speculators is the correct term) losing faith in the ability of central bankers to support the global economy, they are beginning to lose faith that the central bankers can support the asset markets. That’s the major sin at the moment. So – poof! – just like that several years of ‘gains’ in the stock market have been wiped out. And there’s more to come until and unless the central banks intervene and give the junkie another big fix of monetary heroin. Which will, by the way, only makes things worse over the long haul even as it shores things up for a while. This next quote from the above article captures the sentiment well I think: “Over the last few years when we got bad news, equity markets would rally because they would interpret this as potential for central banks to go more dovish,” said Mohit Kumar, head of rates strategy at Credit Agricole SA’s corporate and investment bank unit in London. “Now that correlation is shifting to bad news is actually bad news. Investors are concerned over central banks’ policy options given the market is driven by factors over which they have little or no control.” Yes, now bad news is actually bad news. Just like it used to be and arguably should be. This whole fixation on the Fed, et al., cajoling and pumping markets ever higher and “doing whatever it takes” will be more widely recognized as being utter intellectual rubbish that has caused and will continue to cause major economic, monetary and social damage. Chris

Pivot to Nowhere as the World Awaits the Next Big Crisis

But at least there's still occasionally good TV

Originally appeared at Strategic Culture Foundation

Let’s start with the IMF «reform» which will be in full effect in a few weeks. Even this mini «reform» had been repeatedly vetoed by the Empire of Chaos. Washington still holds the largest quota and voting shares in the IMF, ahead of Japan. But now China is in the 3rd place and BRICS members Brazil, Russia and India are in the top ten.
This does not spell out radical change though. The US government still refuses to implement a full reform that will end up reducing the IMF's global power. China, meanwhile, advances with facts on the ground such as the Asian Infrastructure Investment Bank (AIIB), and the BRICS with their New Development Bank (NDB), a serious attempt at breaking the stranglehold of a fraudulent – and hyper exploitative – monetary and financial system.
Bretton Woods may be dead but the world is still encumbered with its corpse. The same applies to the larger Washington Consensus – as much as deadly chickens are increasingly coming home to roost.
An avalanche has been building up since the Reagan years – that late Cold War show neatly immortalized in the new TV series Deutschland 83.
In the go-go 1980s, the US government cut taxes for the wealthy and attacked organized labor. Then, in the 1990s, it outsourced good paying manufacturing jobs to Mexico, China and other low wage platforms and deregulated finance – via the repeal of Glass Steagall and the passage of the Commodity Futures Modernization Act of 2000 under Bill Clinton.
The Afghanistan and Iraq wars, in the early 2000s, cost US taxpayers at least $3 trillion – and paved the way for the massive 2008 financial crisis, which is still ongoing and about to metastasize into an even bigger crash.
After all, in «response» to the crisis, the Fed, followed by the European Central Bank (ECB) and the Bank of Japan, went all out quantitative easing (QE) – essentially transferring trillions of US dollars from taxpayers to prop up (still) insolvent banks.
This tsunami of cash obviously did not sit idle, but was channeled into dizzying scams maximizing returns, inflating stocks (via corporate stock buybacks) and providing ultra-cheap money to invest in real estate.

The state of play in the US – which Il Generalissimo Trump scholarly describes as «nothing works in this country» – spells out high unemployment; anemic job growth (90% of «new jobs» are temp with low pay, few benefits and zero job security); and exploding deficits.
US foreign policy under the lame duck Obama administration – in commercial terms – is now resumed to pushing «NATO on trade» pacts; the TPP and TTIP, which include the EU and Japan, both stagnating and/or declining, while excluding China. This means both pacts are virtually, eventually DOA; no one can increase economic growth anywhere by excluding China.
In Cold War 2.0 terms, US foreign policy now entails a US/NATO latent war theater engulfing the Maghreb, the Horn of Africa, the Levant, the Caspian Basin, the Persian Gulf, the Indian Ocean, the South China Sea, and the whole of Eastern Europe as far as the Russian borderlands.
Predictably, US taxpayers are financing the Cold War 2.0 mindset with the Pentagon keeping very much alive the possibility of direct military confrontation against the three key hubs of Eurasia integration; Russia, China and Iran.
Pivot to nowhere
The myriad of economic problems confronting US turbo-capitalism are structural and absolutely insolvable under the economic/political system in place, which is in fact a Washington/Wall Street crypto-consensus. Fissures among the Masters of the Universe themselves are about to explode in the open as the planet embarks on a tectonic shift towards a more multipolar economic and political order centered on Eurasia.
Geopolitically, the best the Obama administration could come up with was the 2011 «pivot to Asia» which has translated so far into sporadic US Navy bullying in the South China Sea, converted into a new prime tension region even before the US had managed to extricate itself from the Middle East quagmire.
Beijing, meanwhile, puts the pedal to the metal on the restraint front, while accumulating political – and economic – capital as it enhances pan-Eurasian economic interdependence. Not only the AIIB but also the Silk Road Fund, and even the NDB bank in the future, will all be geared towards bringing about the One Belt, One Road vision; the New Silk Roads which will be the lifeblood of an integrated Eurasia.
China and the BRICS’s strategy of establishing a rival international monetary, financial, diplomatic, trade and geopolitical system is the ultimate nightmare of the Masters of the Universe – as divided as they may be. So no wonder the only visible reaction – via Pentagon / NATO – has been to ratchet up fear and/or warn about impeding chaos if the hegemon is not trusted to impose its version of order.
It’s as if the whole planet would be fatalistically waiting, in suspension, for the next big, inevitable crisis. The real suspense is whether this new metastasized crisis will doom for good the hegemon’s financial and military domination. Meanwhile, we watch Deutschland 83.

Gold To Be Revalued Big Time When World Economies Fail

New study finds that Dodd-Frank has promoted industry consolidation and killed community banks

By Todd Zywicki February 9, 2015

A new study by Marshall Lux and Robert Greene reports that since the enactment of Dodd-Frank community banks have lost market share at twice the rate that they did prior to Dodd-Frank.
The authors note that many of the regulations implemented pursuant to Dodd-Frank are not linked to the size of the institution, thus there are economies of scale in regulatory compliance. Thus, regulatory costs tend to fall proportionally heavier on smaller banks, which, in turn, tends to promote consolidation of the industry (as I noted several years ago when I predicted that Dodd-Frank would promote industry consolidation).
The study has lots of interesting data on the industry patterns of lending by various types of banks as well, most notably that large banks tend to make fewer agricultural loans than community banks.

WTF Was That?

Sorry for the language, but something just happened…all of my stocks feeds popped at once…especially for the financials…

I guess it was the OPEC rumor…again…strange that it is now rumors of oil supply cuts that can whip around trillions in market cap.

I’m not sure how any of this is supposed to seem healthy, but that’s the world in which we currently live.
Chris

Deutsche Bank Burns – Silver Is The Trade Of The Decade

If I’m right and this is the start of what happened starting in late Oct.2008, guys like Bron and [Jeffrey] Christian and Trader Dan are going to end up looking like the biggest assholes in the world.  Although I think that trip is booked and the train has already left the station, no matter what the price of gold does.  – comments from me to some long-time colleagues
Deutsche Bank management spent Tuesday and Wednesday trying to make the case that it had plenty of liquidity and a gameplan to address structural issues.  They threw the hail Mary yesterday when they announced the possibility of using available “liquidity” to repurchase a few billion euros worth of senior bonds.  I have quotes around “liquidity” because, as I outlined in my blog post about this yesterday, DB is technically insolvent.
What has unfolded this week at the zombie bank is almost exactly the path to collapse taken by Bear Stearns.  In fact, just like he did with Bear Stearns when he issued a table-pouding, booyah screaming buy on Bear Stearns about two weeks before it collapsed, Jim Cramer was out earlier this week telling investors not to worry about Deutsche Bank and that, “the European banks have a plan. The government has a plan…This is not 2008, because they learned from 2008.”
Cramer has proved to be a remarkably accurate contrarian indicator on stocks just ahead of a collapse in price.  DB stock has already partially collapsed since August, falling more than 50% since then.
If you want to dismiss my view, that’s fine.  But ignoring the action in the credit default swaps is a big mistake.  The CDS on DB’s subordinated debt have gone parabolic, jumping to a spread over Treasuries of well over 500 basis points today.   Over the past week, the CDS spread on both the senior and subordinated debt of DB has gone parabolic.  This is the clearest possible signal, other than the truth from upper management, that DB is on the ropes.
CDS investors are among the smartest in the market because they tend to be closest to the real inside information at banks.   I know this because when I traded junk bonds which, prior to the proliferation of CDS, were the “smartest” eyes in the market, our desk was right next to the bank debt trading desk.  The bank debt crew always had access to internal numbers on the companies they traded.  We were very tight with the bank debt traders, if you know what I mean.
This leads me  to silver. I’l be going on record tomorrow in a podcast with Silver Doctors that silver is the trade of the decade.   Also, the LBMA silver fraud fix was the cartel’s last gasp effort to grab as much physical silver as cheaply as possible.  That silver fix event was outright theft of silver from the sellers of physical silver on the LBMA that day.
I believe, just an educated guess, that the accumulation of silver was out the necessity to make deliveries under paper obligations –  LBMA contracts, Comex futures, OTC derivatives.  I believe the looming shortage in physical silver is worse than in physical gold and last summer was an omen of what’s coming.
The ratio of price appreciation in today’s trading for gold:silver is 95:1.  A normalized GSR is 16 or lower.  The GSR hit 32 when silver was approaching its top in 2011.  My point here is that they are throwing the kitchen sink at silver right now to keep the price down as much as possible in order to limit the potential damage that is going to occur to the banking entities that are perilously short paper silver, while their counterparties are starting to pound on “the door” looking for deliveries.
We are likely transitioning into the third and final leg of the precious metals bull market.  I believe that the smart money will eschew all fiat currencies and move their capital into the best possible contra-fiat currency asset:  gold and silver.  Today, for instance, the dollar is down on a day when typically the dollar is used as a flight to safety.  Gold is up $60.   The smart money will get the train wheels rolling and the retail crowd will pile on about 2/3 of the way through the ride, paying extraordinary premiums to get physical gold and silver in their hands.
All fiat currencies are backed by nothing but promises from Governments that are leveraged up to their eyeballs.   Physical gold and silver do not have any counterparty risks as long as you do not buy them on margin and keep them in a custodial account.  The margin risk is obvious, for most people the custodial risk is non-obvious but very real.  Just ask the traders who owned physical silver in MF Global’s Comex warehouse account…

Dave, I wouldn’t be surprised if half of the JPM silver “horde” doesn’t exist and that they’ve screwed clients ala Morgan Stanley (the only mega investment bank to have been officially busted in the last 50+ years for not having customer precious metal in allocated and segregated accounts).  Ted Butler et al. have this wrong too.   It’s not clear how much fraud we’re talking about, but hey, we’re talking JPM.  – a well known market analyst and blog host and silver market expert

As Central Banks Dim, Gold Brightens

Why Buying Gold Won't Save You from the Zombie Apocalypse ... Despite any advice you might have heard to the contrary, gold bullion is far from a good investment, even if the world is coming to an end. The idea of having a hedge against the end of the world and the collapse of our financial institutions might be alluring. But actually, buying and storing significant amounts of gold bullion won't do you any good in that unlikely event, despite any advice you might have heard to the contrary. – Fool.com
Of course the above excerpt is brought to us by the Motley Fool, one of the bigger mainstream investment web destinations. The description is entirely predictable and could have found a home at Bloomberg, CNN or even CNBC. Gold is always to be portrayed as a Keynesian "barbaric relic."
In fact, we learn later in the description that there are specific assets you should own "in the event of an apocalypse." Gold is not one of them.
The featured expert, John Maxfield, has a thing or two to say about gold.
"Here's how I think about gold, and this is how I would recommend that investors think about gold, or anyone who's thinking about buying gold for any type of investing purposes. As a general rule, investing in gold is a bad idea, and here's why.
"When you invest, your biggest ally is compound returns, because that grows the size of your returns without you doing anything on an annual basis, and pretty soon, your small returns of 1% or 2% a year turn into 50%, 60% a year on your original basis. But in order to tap into compound returns, you've got to be invested into an income-earning asset. And the problem with gold is it doesn't own any assets."
Maxfield does grant that gold is a "hedge against anarchy" but says if society is really collapsing, you probably want to stock up on medicine and antibiotics rather than gold.
Ironically, another anti-gold epicenter – Reuters – provides us with a rebuttal to the Fool. In a post just today entitled, "Central banks and Chinese buyers helping to spur gold demand," Reuters is uncharacteristically upbeat about the yellow metal's prospects going forward.
Buying by central banks as well as Chinese investors seeking protection from a weakening currency helped lift demand for gold in the final quarter of last year and the trend looks set to continue, the World Gold Council said ...
China remained the world's biggest consumer of gold last year, ahead of India, with economic headwinds influencing purchasing, the WGC said in its annual "Gold Demand Trends" report. The WGC's members include the world's leading gold mining companies. Chinese demand for gold coins surged 25 percent in the fourth quarter from a year earlier as consumers sought to protect their wealth after Beijing devalued the yuan currency.
It's not just physical gold. Miners are up and silver is up, too. Oddly enough, it is central banks that have been leading the charge toward gold.
Reuters: "Central banks have been buying gold to diversify their reserves away from the U.S. dollar and their purchases edged up to 588.4 tonnes last year, second only to a record high 625.5 tonnes in 2013."
Turmoil in the markets, falling oil prices and a potential global recession have all contributed to a positive precious metals outlook, according to WGC.
Well ...
We agree about gold – we can see and sense the resurgence of the price against the dollar – but we disagree that the world is going back into a recession.
In fact, we think the world is in a kind of greater depression and that the golden bull goes all the way back to the early 2000s after the dotcom bust.
But let's go back even farther.
Central bank business cycles are manufactured ones and if you really want to make sense of where we are today, you have to start after World War II when the global economy was "reset."
The paraphernalia of the modern world was created after World War II, including the IMF, the World Bank and the United Nations. The Bank for International Settlements was rejiggered as well.
The later 1940s were a time of gathering energy and then the '50s and the '60s were explosively "prosperous" in the US and even the West. There were many books written about the "miracle" of the US economy and the superior model of US capitalism itself.
We've called this period in the US – and the West – "dreamtime."
That's because a good deal of the prosperity was due to money printing and other kinds of financial manipulation. In 1971, when France attempted to take delivery of the gold it was owed, the US promptly went off the gold standard and Nixon created the petrodollar.
The 1970s reverberated with the monetary sins of the previous decade. Keynesians discovered "stagflation," which wasn't supposed to exist. And as price inflation rose, so did middle-class anxiety.
Enter Paul Volcker, David Rockefeller's right-hand man. Early in the 1980s, Volcker did what most thought was impossible. He raised rates near 20 percent and froze the dollar in its tracks. Banks foundered and another Great Depression loomed. But instead, the economy recovered.
Post-Volcker, the next great Paper Bull arose. Wall Street shone and securitization boomed. For another 20 years, through 2000, the Paper Bull roared. But that was the end of it.
The dotcom crash definitively crumpled the Paper Bull. Gold began an unstoppable rise that culminated at the end of the decade near US$2,000.
Of course, most believed we were in "another" recession by then, post-2008. But really it was just a continuation of what was begun in 2001.
Everything else is just a manipulation.
Bernanke screwed rates down to a point where he created a faux recovery in the mid-2000s. But it didn't last because it couldn't.
The great gold plunge was likely a manipulated one, further confusing people's perceptions of what was really going on.
Today, people speak confusedly about a "recession" and the "recovery" of gold.
In truth, the "recession" began in the early-2000s and is more of a "greater depression."
The "recovery" of gold well may be simply the reassertion of reality.
Gold will return to where it should be against the dollar – at US$2,000 or more. Some say the dollar should be trading against gold at US$5,000.
From our perspective, this makes what's going on now a good deal clearer – along with the inevitable results.
There have been two great Paper Bull runs in the 20th century. And now in the 21st, the Golden Bull dominates.
In fact, this is the reason for so much unease in the financial community. The Golden Bull is rampant and they know it.
Conclusion: 
The Golden Bull probably will not be turned aside again. Make your plans accordingly.

Negative Rates for All: The next Central Bank weapon

 This week’s show https://youtu.be/D3vncKu0K-o
Have Gold Mining Shares signaled a bottom?
The last two paper manipulations have failed to slow Gold’s rise
Negative Rates for All: The next Central Bank weapon

YOU MESSED UP, YOU TRUSTED THEM: Yellen: Persistent economic weakness could slow rate hikes. Summer of recovery #8 coming up!

The economy isn’t suffering from a shortage of money. It’s suffering from nothing profitable to do with money.

There’s nothing profitable because of regulation raising the cost of operating a business. Just start with the health care requirements.

Most businesses operate on the edge of solvency. Changing the cost of doing business shuts down a huge number of businesses if you raise it, and opens a huge number of businesses if you lower it.
Obama has always raised it.
Money supply doesn’t affect that.
from AP:

Federal Reserve Chair Janet Yellen cautioned Wednesday that global weakness and falling financial markets could depress the U.S. economy’s growth and slow the pace of Fed interest rate hikes.

But Yellen made clear that the Fed won’t likely find it necessary to cut rates after having raised them from record lows in December. She did concede, though, that negative rates, which central banks in Japan and Europe have recently imposed, are a tool the Fed has at least studied.

In her semiannual report to Congress, Yellen offered no major surprises. And she reiterated the Fed’s confidence that the U.S. economy was on track for stronger growth and an increase in too-low inflation. At the same time, she noted the weaker economic figures that have emerged since 2016 began and made clear the Fed is nervous about the risks from abroad.

Her concerns about the perils to U.S. growth contrasted with the Fed’s statement eight weeks ago, when it raised interest rates for the first time in nearly a decade and described economic risks as “balanced.”

In her testimony to the House Financial Services Committee, Yellen also:

– Expressed sympathy with committee members who raised concerns about chronically higher-than-average unemployment among black Americans. Members of an activist group, the Fed Up coalition, attended the hearing wearing T-shirts emblazoned with the messages “What Recovery?” and “Let Our Wages Grow.” The group has been urging the Fed to delay further rate hikes until the job market improves further, especially for minority groups.

ECONOMIC COLLAPSE: US DEBT ON TRACK TO BREAK 30 TRILLION

 

Sputnik reports, For the first time in history the US national debt has exceeded 19 trillion dollars. That’s more than 58 thousand dollars per person living in the US – including children.

According to the President of American Action Forum think-tank, Douglas Holtz-Eakin, the US is likely to face an even more negative economic outlook in the future.
See the report here:
https://youtu.be/619LYBVGXv0
Read more:
http://sputniknews.com/us/20160208/10…

anking Crisis Alert: China Bank Losses May Top 400% of Subprime Crisis, Deutsche Bank $55 Trillion Derivatives Bomb Is Set to Explode… Hedge Fund Managers: Some Banks May Drop To Zero.

There was a story in the Yahoo Financial section yesterday about how Deutsche Bank was just fine, everything was great and they had enough capital to survive the end of the world…

It brought to mind the spin the MSM tried to put on Lehman eight years ago…when they say, don’t worry…that’s when you fuckin’ worry!!!

Banks: Red Alert
The share prices of banks plunge worldwide on some historic lows. That could be a bad omen. Threatens a new financial crisis, which will be even more catastrophic than 2008/2009? – Hedge fund managers: Some banks may drop to zero.
In the interview, the founder of Global Macro Investor says that one or more banks could fall to zero are on the list of the distressed banks.:
German Bank
UniCredit SpA
Banca Carige SpA
Banco Santander
Bankia SA
Banca Monte dei Paschi
Royal Bank of Scotland
Barclays Capital
https://translate.google.de/translate?sl=de&tl=en&js=y&prev=_t&hl=de&ie=UTF-8&u=http://www.mmnews.de/index.php/wirtschaft/64967-banken-gefahrenstufe-rot&edit-text=&act=url
http://www.mmnews.de/index.php/wirtschaft/64967-banken-gefahrenstufe-rot

Deutsche Bank $55 Trillion derivatives bomb is set to explode
Touchy derivatives market spreading Deutsche Bank waves
YOICHI NAGAI, NQN senior staff writer
TOKYO — Doubts about Deutsche Bank’s creditworthiness are rocking financial markets, amplified by investor insecurities about the massive global derivatives industry.
Shares in the German bank plummeted Monday as analysts signaled doubts about its ability to make coupon payments in 2017 on debts issued to shore up its capital ratio. The shock stirred up turbulence in the U.S. stock market the same day and made waves in Tokyo on Tuesday as well.
http://asia.nikkei.com/Politics-Economy/Economy/Touchy-derivatives-market-spreading-Deutsche-Bank-waves
Tick… tick… tick… tick… tick… tick…
Stiglitz:
“In retrospect, we can see that our financial markets misallocated capital, mismanaged risk, created risk, and did it all at high transaction costs. It’s very clear that they were involved in trying to maximize transaction costs. That’s their revenues; that’s their profits.… these derivatives are instruments for gambling: non-transparent, difficult to see what’s going on. And in that case, they are increasing risk, diverting attention from the real functions of the financial markets and leading to poor performance of the economy.
Without regulation, you’re going to wind up with the negative aspects of derivatives and not the positive aspects. And that’s precisely what happened. So while they were a potential instrument for improving financial markets, if they are not used correctly, they are a potential — as somebody said — weapon of mass financial destruction. And that’s what they turned out to be.

As seen on ZH….Deutsche Bank at the beginning:

Derivatives: The Unregulated Global Casino for Banks
http://demonocracy.info/infographics/usa/derivatives/bank_exposure.html
China Bank Losses May Top 400% of Subprime Crisis

• Manager says 10% asset loss would cut equity by $3.5 trillion
• China would have to print $10 trillion to recapitalize banks

Kyle Bass, the hedge fund manager who successfully bet against mortgages during the subprime crisis, said China’s banking system may see losses of more than four times those suffered by U.S. banks during the last crisis.
Should the Chinese banking system lose 10 percent of its assets because of nonperforming loans, the nation’s banks will see about $3.5 trillion in equity vanish, Bass, the founder of Dallas-based Hayman Capital Management, wrote in a letter to investors obtained by Bloomberg. The world’s second-biggest economy may end up having to print more than $10 trillion of yuan to recapitalize banks, pressuring the currency to devalue in excess of 30 percent against the dollar, according to Bass.


 

Comex Silver Gold Still Bleeding Out From The Vaults

Cracking Down on Abusive Debt Collectors

Have you ever picked up your phone to find an aggressive voice on the other end demanding payments on a debt you know nothing about? You’re far from alone.

Once you’re in the sights of a debt collector, the impact on your life can be devastating: Your wages can be garnished and your credit ruined. You might lose your driver’s license, or even your job.
And it could happen over a debt you don’t even owe.
In a recent analysis of 75,000 complaints about debt collection practices submitted to the Consumer Financial Protection Bureau — just a sample of the total number — this was the most common complaint by far. Over 40 percent of people being harassed by collectors said they didn’t owe the debt in the first place.
Other complaints charged that the collectors made false statements or threats to coerce people to pay.

Wikipedia

The government created the Consumer Financial Protection Bureau — or CFPB ­— to address abusive financial practices after the 2008 financial crash. This year, the bureau is considering strengthening rules to protect consumers from deceptive and aggressive collection practices.
Abusive collection tactics impact people with all kinds of debt — including credit card debt, medical debt, payday loans, student loans, mortgages, and automobile loans. Collectors often strike when people are most vulnerable, such as when they’re recovering from illness or desperately seeking work. They aggressively target the poor, immigrants, and people of color.
About 77 million people — or 35 percent of adults in the United States with a credit file — have a report of debt in collections. That alone makes a compelling case for the bureau to crack down on abusive tactics.
When my organization, the Alliance for a Just Society, analyzed the complaints for our new report — Unfair, Deceptive, & Abusive: Debt Collectors Profit from Aggressive Tactics — we tallied the complaints in the database and built a list of the 15 companies with the most complaints.
The list is topped by heavy-hitting debt buyers like Encore Capital Group and PRA Group, whose business models hinge on buying portfolios of consumer debts for pennies on the dollar and then wringing payments out of alleged debtors. Both of these companies more than doubled their profits from 2010 to 2014.
Major student loan servicer Navient (formerly Sallie Mae) also makes the top 15 list for complaints about its debt collection tactics.
But it’s particularly worth noting that six out of the top 15 offenders on this list are original creditors, not third-party collectors. They include Citibank, JPMorgan Chase, Capital One, Wells Fargo, Bank of America, and Synchrony Financial (the largest issuer of private label credit cards).
This is important, because the primary protection most consumers have against unfair collection tactics — the federal Fair Debt Collection Practices Act — applies only to third parties, not original creditors. This is a troubling double standard.
The new rules must also to apply to the original creditors — including payday lenders, credit card companies, and big banks — along with third-party collectors and debt buyers.
The rules should limit phone calls to prevent harassment and require collectors to have complete documentation before attempting to collect. The rules should prohibit selling, purchasing, and attempting to collect old, paid, or expired “zombie” debt.
Finally, the bureau should toughen the penalties for collectors breaking the rules.
Living with debt isn’t a personal failing — it’s a national crisis. The bureau needs to stand up for everyday people and put a stop to abusive collection tactics.
The post Cracking Down on Abusive Debt Collectors appeared first on OtherWords.
This piece was reprinted from Other Words by RINF Alternative News with permission.

Reversal Of Fortunes: Capital Pours Out Of Banks And Into Gold

by John Rubino

For banks, the recent news is pretty grim. But it’s about to get much worse, based on the following:

Yield Curve Flattens: Now 10-Year Yields Just 1% More than 2-Year

(Barrons) – Ye olde yield curve keeps getting flatter. Wednesday continued the trend — which is most pronounced between two and 10-year maturities. At 2:30 p.m., the two-year note was at .71%, 1.6 basis points higher than Tuesday’s close, while the 10-year was 2 basis points lower at 1.71%.That’s just 1 percentage point of spread between the two-year and ten-year Treasury notes.
Peter Boockvar of The Lindsey Group says this flattening is “the most noteworthy event” in the bond market in the past week. He believes investors are saying something about the U.S. economy. He said of the 2s/10s spread:
It is down from 103 bps yesterday, 108 bps the day before and versus 116 bps just one week ago. There is no question that the longer end of the curve has gotten a firm bid from the spillover effect from the continued easing in Japan and soon to be more from the ECB and the crushing of yields those regions have seen but I believe it is also a message from market participants of how they feel about the US economy.

A flattening yield curve squeezes bank profits, making an already tough environment even tougher. And that’s before the mountain of dicey paper (issued in more innocent times) starts blowing up. See:
Is the market in European Coco bonds about to pop?
Liquidity woes hit non-energy junk bond issuers
Move over Greece, it’s Italy’s turn – George Friedman sounds the alarm on European banking crisis
All this stress and complexity is being reflected in bank share prices this morning:

But it gets even more complex and stressful when you consider who owns these suddenly-imploding equities:

The Crowded Trade in Bank Stocks Among Oil-Rich Countries

(Bloomberg) – When it comes to the selloff in bank stocks, there’s plenty to blame: credit concern, earnings, negative interest rates, and souring sentiment.Another theory: Burned by the rout in crude, oil-rich nations have been pressured to dump their shares. What do such funds, which make up about 5 percent to 10 percent of global assets, count among their biggest holdings? Financial firms.
Take the Gulf states:

And while the world’s biggest sovereign wealth fund has said it’s sitting out the selloff, it also has a sizable exposure to banks:

“Just because of the sheer size of their portfolios, and the proportion of their holdings in the financial sector, things would get even worse if sovereign wealth funds need to cut their exposure,” said Peter Garnry, head of equity strategy at Saxo Bank A/S in Copenhagen.

The thing to understand about sovereign wealth funds is that they’re just as easily panicked as any other money management shop, and perhaps more so given the autocratic governments most of them serve. So a lot of these bank stocks are about to be dumped on an already-reeling market.
Where is the newly-freed-up capital going? Where it always does in crises: to cash, high-grade government bonds, and gold:

Lines Around the Block to Buy Gold in London…Banks Placing “Unusually Large Orders for Physical”

“It’s been crazy – it’s been the best week since 2012. We’ve had people queuing round the block…” 

Submitted by Michael Krieger, Liberty Blitzkrieg: 

First, let’s look at the improved fundamentals. Gold bugs will exasperatingly proclaim that fundamentals have been great for the past four years yet the price plunged anyway, so who cares about fundamentals? To this I would respond with two observations. First, large institutional investors and sovereign wealth funds have been anticipating a rate hike cycle for a very long time now. They didn’t know when, but they expected it. The fact that the gold bugs never believed this is irrelevant; what matters is that big money believed it, and it was perceived to be very gold negative. In their minds, this anticipated rate hike cycle would confirm that things were getting back to normal, and if things are normal you don’t need to own gold, right?
The problem is that this assumption is quickly being called into question. Sure the Fed hiked rates once, but it is starting to look more and more like a policy error. Meanwhile, other major central banks around the world are going in the opposite direction, toward negative rates. I am a huge believer in market psychology, and the psychology dominating the minds of most institutional investors over the past few years has been that things were slowly getting back to normal. This has weighed on institutional demand for gold in a big way, and been a meaningful factor in the bear market (manipulation aside). If this psychology shifts, the shift back into gold could be very meaningful.
While that backdrop is interesting in its own right, what may make the move into gold that much more explosive is the lack of alternative investments…
– From the February 3, 2016 post: GOLD – It’s Time to Pay Attention
What a difference a couple of weeks can make. The Telegraph reportsthe following:

BullionByPost, Britain’s biggest online gold dealer, said it has already taken record-day sales of £5.6m as traders pile into gold following fears the world is on the brink of another financial crisis.
Rob Halliday-Stein, founder and managing director of the Birmingham-based company, said takings today had already surpassed the firm’s previous one-day record of £4.4m in October 2014. 
BullionByPost, which takes orders of up to £25,000 on the website but takes higher amounts over the phone, explained it had received a few hundred orders overnight and frantic numbers of phone calls this morning. 
“The bullion market has been building with interest since the end of last year but this morning things have gone bananas,” said Mr Halliday-Stein. “Some London banks are placing unusually large orders for physical gold.”
London-based ATS Bullion added it had been inundated with orders for the past week. The firm has sold 4,000 gold bars and coins since February 1, a 40pc rise on the same period a year ago when it sold 1,500. 
“It’s been crazy – it’s been the best week since 2012. We’ve had people queuing round the block,” said Michael Cooper of ATS Bullion, a family run firm that trades online and also from an outlet in the West End.

But that’s just part of the story. As reported by the World Gold Council, the buying really started to pick up in the fourth quarter, courtesy of the Chinese and central banks. Reuters notes:

Buying by central banks as well as Chinese investors seeking protection from a weakening currency helped lift demand for gold in the final quarter of last year and the trend looks set to continue, the World Gold Council said on Thursday.
Chinese demand for gold coins surged 25 percent in the fourth quarter from a year earlier as consumers sought to protect their wealth after Beijing devalued the yuan currency. But stock market turmoil and a slowing economy knocked consumer sentiment and Chinese demand for gold for jewelry fell 3 percent from a year earlier, WGC said. 
Central banks have been buying gold to diversify their reserves away from the U.S. dollar and their purchases edged up to 588.4 tonnes last year, second only to a record high 625.5 tonnes in 2013, the report showed.
Central bank buying accelerated sharply in the second half of last year and jumped 25 percent in the fourth quarter, from a year earlier, as the need to diversify was reinforced by falling oil prices and reduced confidence in the global economy, WGC said.

Chinese demand for gold totaled 985 tonnes last year, followed by India on 849 tonnes. They accounted for nearly 45 percent of total global demand, with consumer demand up 2 percent and 1 percent respectively in those countries.

Think about the lack of gold buying from the U.S. relative to its global wealth and it becomes quite easy to see where the fuel for the next bull market will come from.
Meanwhile, on the supply side…

Global supply of gold fell 4 percent last year to 4,258 tonnes, partly because of slower mine production. Mining companies have scaled back since 2013 in a bid to slash costs and mine production shrank in the fourth quarter of 2015, the first quarterly contraction since 2008, WGC said.

For related articles, see:
GOLD – It’s Time to Pay Attention
4 Mainstream Media Articles Mocking Gold That Should Make You Think
In Liberty,
Michael Krieger

Universities must reach out to the poorest in society – for everybody’s sake | Jo Johnson

Last week, the prime minister gathered university leaders at Downing Street as part of a move to break down the barriers blocking under-represented young people from going to university. Now, we are taking action – publishing the first new guidance on fair access in five years.

Related: A university funding system designed to crush the aspirations of the poor

Huge progress has already been made. We have announced new measures to support the part-time students who are more likely to be from under-represented groups. We have asked universities to work towards the introduction of a name-blind system of admission by 2017.
We have also pledged legislation that will shine a spotlight on the whole applications process, exposing where offer rates for the poorest students are particularly low. And by delivering on our manifesto commitment to end the artificial cap on student numbers, the government is ensuring that more places are available than ever before – helping universities play their role as engines of social mobility.
Record numbers of students secured places last year, including record numbers from disadvantaged backgrounds. But there is more to do to meet the prime minister’s ambitious goal of doubling the proportion of young people from disadvantaged backgrounds going to university by 2020.
The new guidance we are issuing to the director of fair access asks him to push universities to go further, act faster and focus their efforts more effectively in return…

Deutsche Death Watch

A write-down of this magnitude would imply that DB has a NEGATIVE net worth of 238 billion euros.
In other words, DB is technically insolvent.

Submitted by Dave Kranzler, IRD: 
That place has been on death-watch forever. However bad it was before Anshu Jain was fired, it has to be worse now.   – Former insider

Deutsche Bank stock has popped 6% today and the move was attributed to an announcement in the Financial Times that DB was looking at buying back several billion in senior bonds in the market at a discount – Financial Times

Before I get to the bond buyback farce, it’s safe to say the jump in DB’s stock is fully attributed to the rumor floated in Europe that the ECB was going to consider buying big bank stocks in an effort to shore up the appearance of a “healthy” banking system.
Furthermore, DB has been relentlessly sold and shorted since the beginning of 2016, down 31% in 25 trading days.  It was due for a technically-driven, dead-cat, short-covering bounce.  Central Bank intervention rumors being the perfect catalyst to frighten hedge fund computers into covering shorts and moronic perma-bulls into buying the dip.
Let’s first examine this notion of a bond buyback.  The first item that will be pointed out by Wall Street puppets is that a bond buyback would enable DB to book accounting gains, thereby padding net income and book value.  But the idiocy of this logic is that gains recognized from buying back bonds at a discount are 100% non-revenue, non-cash generating events.  In fact, a bond buyback is a use cash – it further erodes the liquidity of the entity buying back bonds or stock.
In addition, if DB were to buy back its bonds in the market, why on earth would it pre-announce this?  The only result this accomplishes, other than a brief surge in foolish optimism issued by perma-corrupt stock analysts, is to trigger front-running into DB’s bonds thereby increasing the overall cash cost of the bond buyback.
DB’s announcement was first reported in the Financial Times.  You’ll note the FT asserts that “banks can generate capital gains my buying back bonds at a discount to their face value.”  However this is highly misleading because the only “gains” generated are a non-cash generating accounting “gain” that is now permitted.  It was an accounting change that was passed after the 2008/2009 collapse which gave banks the ability to fabricate net income for the purposes of padding their retained earnings and therefore their book value. It’s nothing more than legalized fraudulent accounting.
Curiously, Reuters referred to DB’s announcement as an “emergency buyback plan on senior bonds.”
The FT alludes to DB having 220 billion euros of liquidity reserves with which to use for a bond buyback.  However, glancing at DB’s latest balance sheet, I can only find 102 billion consisting of 27 billion euros in cash and cash due from other banks plus 75 billion euros in interest bearing deposits with banks.
Notwithstanding the risk embedded in “cash due from others” plus “deposits” with other banks, if DB truly had 220 billion euros of “reserve” liquidity, we would not be having this conversation, DB’s senior credit default swaps would be trading at +100 spread instead of +250, it’s subordinated CDS would be trading at +200 instead of +450 and the stock would still be well above $20 instead of staring down the barrel at $10.
But let’s take a closer look at DB’s overall balance sheet, something which clearly no Wall Street analyst or financial bubblevision moron has ever experienced.   DB’s latest balance sheet from 9/30/15 shows “total financial assets at fair value” of $881 billion euros; 71 billion euros of “assets available for sale; 428 billion euros in “loans:” and 153 billion euros in “other assets.”  All told it reports 1.7 trillion euros in total assets, leading to a declaration of 68 billion euros in “total equity” (book value).   That’s an eye-watering leverage ratio of 25x.
Now let’s take a look at the quality of the assets listed above.  DB has very heavy asset/loan exposure to emerging markets, energy, peripheral European credits (like Greece, Italy and Spain),  commodities, Glencore and leveraged finance/high yield.  And of course there’s the 60 trillion or so in derivatives.  But we are leaving that out for purposes of this analysis.
Although DB made a big production out of the 6 billion write-down and loss it would take in its third quarter, 5.8 billion of that was a write-down of goodwill and intangibles.   Considering DB’s exposure to the collapsing asset sectors listed above, this 5.8 billion write-down of what amounts to thin air anyway is nothing short of shocking.  I would conservatively estimate that the 1.53 trillion euros of financial assets + for sale assets + loans + other assets should be written down by at least 20%.   That would imply that, conservatively, DB could write-down its assets 306 billion euros and likely still be overstating the value of its total asset base.  A write-down of that magnitude would imply that DB has negative net worth of 238 billion euros.
In other words, DB is technically insolvent.  When I did this exact same analysis in early 2008 on JP Morgan, Lehman, Wash Mutual and Countrywide, my write-down estimates turned out to be exceedingly conservative.   I would wager anything that my analysis above is “exceedingly conservative” x 2.
Keep in mind this entire analysis does not include DB’s derivatives.  It’s fine with me if DB management wants to puff up its image by taking a few billion of liquidity that it technically does not have and buy back some of its debt.  I could care less.  But anyone who is not selling their stock into this rally is a complete moron.
The only thing demonstrated to me by DB’s bond buyback bravado is that investors learned nothing from 2008/2009 and bank upper management and directors are even more corrupt now than they were 8 years ago.

“It May Take Less Than 48 Hours to Take it ALL Down” – Bill Holter

Whether you want to see it or not, the financial system is in a forced unwinding.
It took some 70 years to build this great credit edifice.
When it goes it may take less than 48 hours to take it ALL down.


Submitted by Bill Holter, JSMineset:
After my last article we received two logical questions from readers. The first one pertaining to “gaps” and the Deutsche Bank derivative exposure, the second pertaining to Japan’s strong currency with negative yields while the debt to GDP levels are astronomical. Below is the first question;

“In the past you have warned about derivative exposure and now gapping.

One of my worst fears as a day trader on a derivatives platform is gapping. That is why I will never have an open position when the market is closed. Even then, that is not guaranteed.
A lot of trading platforms got hammered when the Swiss franc was revalued.
Could you put out a letter for your readers explaining why for example the Deutsche Bank derivatives exposure is so dangerous in terms of gapping.”
In my opinion, this is a very astute observation. The reader will not carry overnight positions because as he says, “the Swiss franc revaluation killed many” within less than 10 minutes of the markets opening. That said, even if not in any overnight position and the great leveling moment comes, how does anyone know if their broker even survives the carnage …with YOUR MONEY?
But this is another topic entirely.
As for Deutsche Bank, we know they have been recently screaming about negative interest rates hurting their operations. This very well may be so, but it is my opinion it is not so much negative interest rates killing them. I believe it is off balance sheet derivatives. Not only has DB denied any problem, the German finance minister has now chimed in with reassurance! http://www.zerohedge.com/news/2016-02-09/german-finance-minister-joins-db-ceo-says-not-worried-about-deutsche-bank Where have we seen this before? Does Bear Stearns or Lehman Bros. ring a bell?  Doth the Germans protest too much? By the way, their credit spreads are stretching out, and stock price has now taken out the 2008 lows!
The second question regarding confusion of Japan’s 10 yr. yield hitting 0% and their currency strengthening while being the fiscal basket case of the world is also a good one but very simple to explain. http://www.zerohedge.com/news/2016-02-08/japanese-10y-yield-hits-zero-first-time-ever-yen-strongest-2014-stocks-crash. Japan has a debt to GDP ratio of 260%, if you add in corporate debt it approaches 400%, how could they not have a crashing currency and 20% (or higher) interest rates? The simple answer is this, the global “carry trade” is unwinding. The Japanese yen was a major tool used to create and float the carry trade which inflated assets. Now, as asset prices are falling, this trade is being unwound (think of it as a margin call). Previous yen that were borrowed are now being bought back to settle the trade. This was a synthetic short similar to the dollar short being covered. A quick question and very short answer, why would anyone in their right mind invest money for 10 years at zero percent in a currency who’s issuer publicly states their goal is to grossly debase? Answer: BECAUSE THEY HAVE TO!
The problem is this, as the yen strengthens from short covering it is putting more and more of these carry trades under water and actually forcing more sales of assets and more buying of yen. This will end in one of two ways …both badly! Either the trades get unwound with asset prices collapsing and the yen at truly stupid levels, or someone “fails” and the derivatives chain breaks. I would personally bet the farm on option number two.
While writing this, CNBC is parading guest after guest as to whether a recession is “likely”.   This is not about a “recession”, this is about whether the entire system fails or not!
Can Deutsche Bank “fail” while being counter party to over $70 trillion in derivatives? Can even a small counter party fail without causing a cascade? Just look at the volatility in markets, junk bonds are collapsing, credit spreads blowing out, currencies making wild swings, $7 trillion worth of sovereign debt trading at negative interest rates …not to mention stock markets moving from all time highs into bear markets within just a couple of months. (While editing this, CNBC is actually questioning if DB is a “one off” situation? Is this even possible? Do they even understand what they are asking?!!!)
Do you think “someone” might have lost some money since January 1st? Enough to bankrupt them?  THIS is the question! The answer in my opinion is this, there are dead bodies strewn all over the place yet are hidden from view. They are being hidden from view because if they are seen, the entire system comes into question with answers being delivered within probably a 48 hour period. The answer of course will be the biggest “gaps” in all of history …both in price AND time! By this I am saying the re-opening gaps will be larger in percentage and the time to reopen longer than ever before.
Whether you want to see it or not, the financial system is in a forced unwinding. It took some 70 years to build this great credit edifice, when it goes it may take less than 48 hours to take it ALL down. To finish I leave you with a short clip of what the collapse might look like …and how quickly it can get there! https://www.youtube.com/watch?v=KUsj7EdZigM
Standing watch,
Bill Holter
Holter-Sinclair collaboration
Comments welcome!  bholter@hotmail.com

Central Banks Are Trojan Horses, Looting Their Host Nations

A Nobel prize winning economist, former chief economist and senior vice president of the World Bank, and chairman of the President’s council of economic advisers (Joseph Stiglitz) says that the International Monetary Fund and World Bank loan money to third world countries as a way to force them to open up their markets and resources for looting by the West.
Do central banks do something similar?
Economics professor Richard Werner – who created the concept of quantitative easing – has documented that central banks intentionally impoverish their host countries to justify economic and legal changes which allow looting by foreign interests.
He focuses mainly on the Bank of Japan, which induced a huge bubble and then deflated it – crushing Japan’s economy in the process – as a way to promote and justify structural “reforms”.
The Bank of Japan has used a heavy hand on Japanese economy for many decades, but Japan is stuck in a horrible slump.
But Werner says the same thing about the European Central Bank (ECB).  The ECB has used loans and liquidity as a weapon to loot European nations.
Indeed, Greece (more), Italy, Ireland (and here) and other European countries have all lost their national sovereignty to the ECB and the other members of the Troika.

ECB head Mario Draghi said in 2012:

The EU should have the power to police and interfere in member states’ national budgets.
***
“I am certain, if we want to restore confidence in the eurozone, countries will have to transfer part of their sovereignty to the European level.”
***
“Several governments have not yet understood that they lost their national sovereignty long ago. Because they ran up huge debts in the past, they are now dependent on the goodwill of the financial markets.”

And yet Europe has been stuck in a depression worse than the Great Depression, largely due to the ECB’s actions.
What about America’s central bank … the Federal Reserve?
Initially – contrary to what many Americans believe – the Federal Reserve had admitted that it is not really federal (more).
But – even if it’s not part of the government – hasn’t the Fed acted in America’s interest?
Let’s have a look …
The Fed:

• Bailed out foreign banks … more than Main Street or the American people.  The foreign banks bailed out by the Fed include Gaddafi’s Libyan bank, the Arab Banking Corp. of Bahrain, and the Banks of Bavaria and Korea

• Offered to bail out Mexico, if it would agree to join the North American Free Trade Agreement (NAFTA)

• Threw money at “several billionaires and tens of multi-millionaires”, including billionaire businessman H. Wayne Huizenga, billionaire Michael Dell of Dell computer, billionaire hedge fund manager John Paulson, billionaire private equity honcho J. Christopher Flowers, and the wife of Morgan Stanley CEO John Mack

• Bailed out wealthy corporations, including hedge funds, McDonald’s and Harley-Davidson

• Artificially “front-loaded an enormous [stock] market rally”.  Professor G. William Domhoff demonstrated that the richest 10% own 81% of all stocks and mutual funds (the top 1% own 35%).  The great majority of Americans – the bottom 90% – own less than 20% of all stocks and mutual funds. So the Fed’s effort overwhelmingly benefits the wealthiest Americans … and wealthy foreign investors

• Is largely responsible for creating the worst inequality in world history

• Turned its cheek and allowed massive fraud (which is destroying the economy). Fed chair Greenspan took the position that fraud could never happen.   Fed chair Bernanke also falsely stated that the big banks receiving Tarp money were healthy when they were not

• Acted as cheerleader in chief for unregulated use of derivatives at least as far back as 1999 (see this and this), and is now backstopping derivatives loss

• And for subprime loans

• Allowed the giant banks to grow into mega-banks, even though most independent economists and financial experts say that the economy will not recover until the giant banks are broken up. For example, Citigroup’s former chief executive says that when Citigroup was formed in 1998 out of the merger of banking and insurance giants, Greenspan told him, “I have nothing against size. It doesn’t bother me at all”

• Argued that economists had conquered the business cycle, and that modern, technologically advanced financial markets are best left to police themselves

• Preached that a new bubble be blown every time the last one bursts

• Had a hand in Watergate and arming Saddam Hussein, according to an economist with the U.S. House of Representatives Financial Services Committee for eleven years, assisting with oversight of the Federal Reserve, and subsequently Professor of Public Affairs at the University of Texas at Austin.  See this and this

• Intentionally discouraged banks from lending to Main Street, which has increased unemployment and stalled out the economy

Moreover, the Fed’s main program for dealing with the financial crisis – quantitative easing – benefits the rich and hurts the little guy, as confirmed by former high-level Fed officials, the architect of Japan’s quantitative easing program and several academic economists.  Indeed, a high-level Federal Reserve official says quantitative easing is “the greatest backdoor Wall Street bailout of all time”.  And see this.
Some economists called the bank bailouts which the Fed helped engineer the greatest redistribution of wealth in history.
Tim Geithner – as head of the Federal Reserve Bank of New York – was complicit in Lehman’s accounting fraud, (and see this), and pushed to pay AIG’s CDS counterparties at full value, and then to keep the deal secret. And as Robert Reich notes, Geithner was “very much in the center of the action” regarding the secret bail out of Bear Stearns without Congressional approval. William Black points out: “Mr. Geithner, as President of the Federal Reserve Bank of New York since October 2003, was one of those senior regulators who failed to take any effective regulatory action to prevent the crisis, but instead covered up its depth”
Indeed, the non-partisan Government Accountability Office calls the Fed corrupt and riddled with conflicts of interest. Nobel prize-winning economist Joe Stiglitz says the World Bank would view any country which had a banking structure like the Fed as being corrupt and untrustworthy. The former vice president at the Federal Reserve Bank of Dallas said said he worried that the failure of the government to provide more information about its rescue spending could signal corruption. “Nontransparency in government programs is always associated with corruption in other countries, so I don’t see why it wouldn’t be here,” he said.
But aren’t the Fed and other central banks crucial to stabilize the economy?
Not necessarily … the Fed caused the Great Depression and the current economic crisis, and many economists – including several Nobel prize winning economists – say that we should end the Fed in its current form.
They also say that the Fed does not help stabilize the economy. For example:

Thomas Sargent, the New York University professor who was announced Monday as a winner of the Nobel in economics … cites Walter Bagehot, who “said that what he called a ‘natural’ competitive banking system without a ‘central’ bank would be better…. ‘nothing can be more surely established by a larger experience than that a Government which interferes with any trade injures that trade. The best thing undeniably that a Government can do with the Money Market is to let it take care of itself.’”

Earlier U.S. central banks caused mischief, as well.  For example,  Austrian economist Murray Rothbard wrote:

The panics of 1837 and 1839 … were the consequence of a massive inflationary boom fueled by the Whig-run Second Bank of the United States.

Indeed, the Revolutionary War was largely due to the actions of the world’s first central bank, the Bank of England.   Specifically, when Benjamin Franklin went to London in 1764, this is what he observed:

When he arrived, he was surprised to find rampant unemployment and poverty among the British working classes… Franklin was then asked how the American colonies managed to collect enough money to support their poor houses. He reportedly replied:
“We have no poor houses in the Colonies; and if we had some, there would be nobody to put in them, since there is, in the Colonies, not a single unemployed person, neither beggars nor tramps.”
In 1764, the Bank of England used its influence on Parliament to get a Currency Act passed that made it illegal for any of the colonies to print their own money. The colonists were forced to pay all future taxes to Britain in silver or gold. Anyone lacking in those precious metals had to borrow them at interest from the banks.
Only a year later, Franklin said, the streets of the colonies were filled with unemployed beggars, just as they were in England. The money supply had suddenly been reduced by half, leaving insufficient funds to pay for the goods and services these workers could have provided. He maintained that it was “the poverty caused by the bad influence of the English bankers on the Parliament which has caused in the colonies hatred of the English and . . . the Revolutionary War.” This, he said, was the real reason for the Revolution: “the colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money, which created unemployment and dissatisfaction.”

(for more on the Currency Act, see this.)
And things are getting worse … rather than better.  As Professor Werner tells Washington’s Blog:

Central banks have legally become more and more powerful in the past 30 years across the globe, yet they have become de facto less and less accountable. In fact, as I warned in my book New Paradigm in Macroeconomics in 2005, after each of the ‘recurring banking crises’, central banks are usually handed even more powers. This also happened after the 2008 crisis. [Background here and here.] So it is clear we have a regulatory moral hazard problem: central banks seem to benefit from crises. No wonder the rise of central banks to ever larger legal powers has been accompanied not by fewer and smaller business cycles and crises, but more crises and of larger amplitude.

Georgetown University historian Professor Carroll Quigley argued that the aim of the powers-that-be is “nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.” This system is to be controlled “in a feudalist fashion by the central banks of the world acting in concert by secret agreements,” central banks that “were themselves private corporations.”
Given the facts set forth above, this may be yet another conspiracy theory confirmed as conspiracy fact.