Is The Fed About To Destroy America?
Market Ticker,
by
Karl Denninger
Original Article
Posted By: earlybird,
10/3/2022 2:00:56 PM
Today The Fed is holding an emergency meeting under "expedited procedures."
The actions to be considered are the discount and advance rate -- in other words, interest rates.
The rumored reason is that Credit Suisse may be in trouble -- specifically due to writing interest rate swaps, along with a number of other institutions which happens to include pension funds both in the UK and US, none of whom should ever be playing with levered instruments for the simple reason that leverage is everywhere and always speculative.
But of course they are because nobody has ever gone to prison for using leverage as a means to evade requiring the underlying organization to fund
Reply 1 - Posted by:
Ribicon 10/3/2022 2:08:53 PM (No. 1294368)
Profits are private, but losses are public. Might as well be the American mantra.
20 people like this.
Reply 2 - Posted by:
Rich323 10/3/2022 2:14:41 PM (No. 1294374)
It’s the Great Reset Charlie Brown! Brought to us by the Davos WEF team! Everyone below millionaire status will probably take huge hits while the top 1% won’t even notice of care.
36 people like this.
Reply 3 - Posted by:
Fasteddie 10/3/2022 2:29:21 PM (No. 1294381)
Worrisome. By itself, this matter isn't a big deal, but history is that major economic disruptions always start with something small.
19 people like this.
Reply 4 - Posted by:
Dodge Boy 10/3/2022 2:33:07 PM (No. 1294383)
This is exactly what brought the stock market down in 2008. Lehman Brothers triggered the 2008 financial downturn because it was way overweight in credit default swaps same as what Credit Suisse has done. Recall the near bankruptcy of Deutsche Bank a couple of years ago. In that case, the central banks including our own Federal Reserve kept DB afloat. Will the same be true for Credit Suisse? I don't know which pension funds the Market Ticker is referring to but if these pension funds are over-leveraged in CDSs of their own, this spells big trouble. Plus, it is illegal. Let's see what Jay Powell and his team of financial magicians come up with later today. My guess is a significant decrease of credit from our financial system.
18 people like this.
Reply 5 - Posted by:
felixcat 10/3/2022 2:54:44 PM (No. 1294398)
So who will keep the little guy afloat? (rhetorical question)
11 people like this.
Reply 6 - Posted by:
davew 10/3/2022 3:01:59 PM (No. 1294403)
Credit Suisse invests the pension fund money in the most secure assets available, US Treasuries. Because they have paid about 2 percent risk free and the pension funds need to get 10 percent on their money to meet their pension payouts they created securities that leveraged the bonds at 5 to 1. This works great when bond prices go up but when they plunge as they have done in the last few months it triggers margin calls on CS's accounts. By increasing interest rates the Fed signalled that bond prices were too high and should go lower. They assumed this would be an orderly process over a year or more. They miscalculated.
Smart money like George Soros and other large hedge funds saw this as a great opportunity to heavily short treasuries driving their prices through the floor and crushing Credit Suisse's and Deutsche Bank's leveraged accounts. Soros crushed the British pound in the 90's by shorting it and he's just using the same playbook, this time with US treasury bonds.
23 people like this.
Reply 7 - Posted by:
stablemoney 10/3/2022 3:12:18 PM (No. 1294409)
The President and Congress destroyed the U.S. with profligate spending, and useless nothing gained wars. The Federal Reserve just help them do it by printing the money.
34 people like this.
Reply 8 - Posted by:
wilarrbie 10/3/2022 3:17:38 PM (No. 1294413)
Maybe Joe will forgive all our mortgages.
16 people like this.
Reply 9 - Posted by:
judy 10/3/2022 3:25:42 PM (No. 1294419)
Trump made America Great Again.....Biden destroyed America!!!
31 people like this.
Well, the middle class’s savings are swishing down the drain, it has been said by some that the next process was to confiscate the savings of Regular Joe, here we go. Right before winter and Election Day, too.
18 people like this.
Reply 11 - Posted by:
Dodge Boy 10/3/2022 3:38:19 PM (No. 1294434)
And to add to #6, the UK is said to have banned Soros from ever entering the UK. If he does, he will be arrested for what he did to the Bank of England and the British Pound. Hmmm...what would the US do if Georgie Boy shorts our treasury bonds and the dollar same as he did with the Pound? Absolutely nothing, probably?
17 people like this.
Reply 12 - Posted by:
smokincol 10/3/2022 5:57:59 PM (No. 1294527)
disenfranchise the Fed and bring back the Gold Standard
23 people like this.
Reply 13 - Posted by:
lakerman1 10/3/2022 6:38:42 PM (No. 1294557)
Interest rate swaps are a lousy deal for everyone except the broker. The money squeezed out of the process and given to the pension fund or municpial bond holder is usually a minimal amount. A disgracefully small amount.
And the people who vote for such swaps-city councils and school boards, are genrally clueless as to what is being done.
10 people like this.
Reply 14 - Posted by:
MDConservative 10/3/2022 7:45:49 PM (No. 1294602)
FTA: "Never mind that exiting those positions (including at a loss) was clearly prudent in the two years after the US government along with everyone else threw trillions in printed credit into the economy as a result of the pandemic. Anyone with two IQ points to rub together had to expect that to reflect back into inflation and thus higher rates..."
And there are those who think the solution is to throw more "in printed credit" into the economy to restore their stock market losses...no, really, there are. GOVERNMENT SPENDING got us here. More isn't going to pull anyone out. And the problems created by that $14 TRILLION infusion (+ a few more over Biden's signature) are far from over. What's that dollar worth? Besides the melt value of 100 pennies, who knows?
8 people like this.
Reply 15 - Posted by:
little guy 10/4/2022 9:23:15 AM (No. 1294975)
No ... the Dems already destroyed America.
So ... you can't just print paper money to pay your debts? Just ask Venezuela or Germany circa 1920.
4 people like this.
Reply 16 - Posted by:
Hermit_Crab 10/4/2022 11:40:23 AM (No. 1295163)
They are working with (nearly) all the politicians, ALL the government agencies, the media, the 'medical' industry, the UN, the WEF etc to do so.
So yeah, the Fed could destroy the economy on their own, but they have many co-conspirators to destroy the economy, AND the social fabric of the nation.
3 people like this.
Reply 17 - Posted by:
Zigrid 10/4/2022 11:40:29 AM (No. 1295164)
Every citizen with funds in retirement groups needs to change his/her plan...WE must never trust others to play by the rules...take control of ourselves....pay up homes and cars....accumulate no new debt...pay cash for everything...and hoard gold...even gold jewelry ...OR... sit and shake your head and cry about tomorrow... your choice!!.
1 person likes this.
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