The financial crisis: B.O.H.I.C.A.

(Those who don’t know the meaning of the acronym, see here.)

I said last night that the Federal Reserve was deliberately impoverishing American citizens to bail out banks and politicians.  The evidence of what they’re doing is becoming overwhelming – as is the evidence that this time, it’s guaranteed to fail.  Consider these reports.

1.  Egan-Jones Ratings Company (not as large as any of the ‘Big Three‘, but still an important player in the field) has just cut the USA’s credit rating.  Market News International reports:

“We are not receiving QE3 positively,” Vice President and co-manager of the ratings’ desk Bill Hassiepen told MNI Thursday, while the fiscal situation is a “nightmare.”

While the Fed is seeking to support economic growth through its quantitative easing, Hassiepen argued that the central bank’s “massive monetization” is instead causing “sluggish to stagnant economic growth.”

In fact, he expects growth to become stagnant within six months as a result of the Fed’s policy.

The reason the country does not have a weaker rating, he said, is that it remains “the only viable reserve currency in the world.”

. . .

The Federal Reserve’s “money printing,” Hassiepen said, has not “really contributed to the improvement in the general economy” so far.

Instead, all it has done is increase inflation and the cost structure in the general economy, as will the new round of QE just announced Thursday.

“We actually think this is going to cause unemployment, not employment,” he said. the Fed’s policy will reduce household’s disposable income and raising costs will also “lead companies to lay off people,” he said.

. . .

“This is going to cause the economy to completely stagnate,” he said, expecting the effect to start within three or four months.

He first expects a “rapid uptick in gasoline and food prices,” which will affect households’ disposable income. This in turn will take several months to work its way through into the general economy.

. . .

“Unfortunately we have a Federal Reserve that simply does not recognize the inflationary impact of food and energy prices any longer,” he said.

There’s more at the link.  Recommended reading.

2.  The Fed is on track to drastically increase its balance sheet – i.e. its debt, guaranteed by US taxpayers.  Zero Hedge reports (confirming what I pointed out last night, and expanding upon it):

End result: every month in 2013 the Fed will increase its balance sheet by $85 billion, consisting of $40 billion in MBS, and $45 billion in 10-30 year Treasurys, or the natural monthly supply of longer-dated issuance. The Fed will therefore monetize roughly half of the US budget deficit in 2013.

Putting it all together, the Fed’s balance sheet will increase from just over $2.8 trillion currently, to $4 trillion on December 25, 2013. A total increase of $1.17 trillion.

More at the link.  Bold print is the original article’s emphasis.

Bear in mind, friends, that you and I are on the hook for this amount.  No-one’s asked our permission to make us liable for it – the Fed has just made a decision, and whether we like it or not, we’re stuck with the consequences.  Fun, isn’t it?  B.O.H.I.C.A. indeed!

3.  Zero Hedge goes on to point out that this flood of ‘printed money’ must inevitably have an inflationary impact, raising the prices of gold, oil, etc.  Expect it to do precisely the same to every consumer commodity you buy, from grain to gasoline, from tea to tires, from shirts to soap.

4.  Marc Faber is extremely blunt about Fed chairman Bernanke’s performance:

Central bankers are “counterfeit money printers” and Federal Reserve Chairman Ben Bernanke should resign for messing up the U.S. economy so badly, Marc Faber … told CNBC on Friday.

He said Bernanke was one of the main proponents of an ultra-expansionist economic monetary policy that was to blame for the latest financial crisis.

“If I had messed up as badly as Bernanke I would for sure resign. The mandate of the Fed to boost asset prices and thereby create wealth is ludicrous — it doesn’t work that way. It’s a temporary boost followed by a crash,” Faber said.

. . .

“The money printers are responsible for this crisis. If we continue with this expansionist monetary policy we won’t be facing a fiscal cliff – it will be a fiscal grand canyon,” he added.

. . .

“If we have an economic crisis in the Western world it’s because the government makes up 50 percent or more of the economy. This is a cancer that is taking away people’s freedom,” he said.

More at the link.  I couldn’t agree more!

5.  Perhaps most interesting of all is Jeff Nielson’s perspective.

The Big Lie which the bankers tried to pass-off on us [in 2007/2008] was that History’s most-insane gamblers and reckless lenders were (suddenly) “afraid” to lend anyone money. However (as usual) the banksters’ own actions proved they were lying. Even after U.S. Big Banks had literally been guaranteed infinite, free funding (i.e. unlimited quantities of 0% loans); they still refused to do what they had promised – and lend into the broader economy.

For any banker-apologists who would still dare to suggest that the Big Banks don’t collude; the bankers have already proven you wrong. In confessing to market-rigging with respect to $500 trillion in LIBOR-based transactions; this is by definition a crime of collusion – since the LIBOR rate itself is set collectively, by these same Big Banks.

In 2012, we see the bankers and the Corporate Media again colluding. However, while in 2008 this tag-team unfailingly acted to amplify panic; today our don’t-worry-be-happy media optimists simply say to us again and again “problem solved.”

By my unofficial count, the propaganda machine has announced a “solution” to the (made-in-the-USA) “Euro debt crisis” on approximately a hundred separate occasions. That’s a very impressive performance by Europe’s bankers and Traitor Politicians – given that this “crisis” is a mere three years old.

Today, we see these fearless leaders proclaim their 100th solution: nothing less than “unlimited bond-buying” and “a soup kitchen” for all of Europe’s Big Banks. More specifically, this is precisely what European governments did during the worst of the crisis in the Crash of ’08. The only thing missing between now and then is the general panic.

. . .

In the U.S.; we have the proverbial “calm before the storm.” The government just confessed that the number of non-employed employable Americans (once known as “unemployed”) had hit yet another 30-year high. In other words there are less Americans with jobs today than there were when the “economic recovery” began in 2009.

It’s only a matter of time until even the most dim-witted American Sheep pulls out their fingers and toes and starts doing some “calculations.” When it sinks in that less people working today than in 2009 means that the U.S. economy has been steadily losing jobs throughout the last three years, they will (finally) realize that the entire “U.S. economic recovery” has been nothing but a gigantic media/government Lie.

. . .

Thus Chairman Ben secretly counterfeits U.S. dollars in order to secretly buy-up every U.S. Treasury in sight, the only way that implosion of the Treasury market Ponzi-scheme can be delayed. What the ECB has just proposed doing is exactly what Chairman Ben has already been doing for the last three years, and for exactly the same motive: to minimize interest payments for Europe’s Deadbeat Debtors.

In other words, not only does the U.S. already have its own Secret Panic, but it’s much further advanced than that of Europe. The reason why B.S. Bernanke secretly (and illegally) does what Europe is about to do openly is because the U.S. economy is in actual fundamental terms far more crippled than the economies of Europe.

Again, more at the link – and very worthwhile reading it is too!  Highly recommended.

It’s impossible to read the articles referenced above without realizing that we’re very close to some sort of denouement of the financial crisis.  This situation simply cannot continue for much longer.  Our political and financial authorities are ‘fiddling while Rome burns’.  I don’t believe that some sort of implosion can be avoided for much longer . . . and if, as I expect, President Obama is defeated in November, I fear he may go on some kind of enormous spending spree with US taxpayer’s money in the last few weeks of his Presidency (aided and abetted by the Democrats in the Senate, whom I expect to lose their majority, and who’ll want to indulge in one last orgy of spending before they lose control of the purse-strings).  I regard him as completely untrustworthy.

Duck and cover, friends.  Things are going to get messy.

Peter