47 online
 
Most Popular Choices
Share on Facebook 10 Printer Friendly Page More Sharing
Exclusive to OpEd News:
OpEdNews Op Eds    H2'ed 9/3/10

An analysis and expose' of the ongoing bank bail-out and associated rip-off

By       (Page 3 of 4 pages) Become a premium member to see this article and all articles as one long page.   13 comments
Follow Me on Twitter     Message Richard Clark
Become a Fan
  (108 fans)

3) Unbeknownst to the public, a devious scheme was devised by the Federal Reserve (led by Bernanke) to assist the big banks in unloading to the Fed these toxic assets . . so as to allow these banks to: a) comply with reserve requirements under the fractional reserve banking system, and b) continue their banking business. This is the heart of the reason for the bailout of the big banks by central bankers.


4) This devious scheme was effected by means of the Fed's purchase of toxic assets from these banks, a.k.a. quantitative easing (QE). In order to make this gigantic purchase, the Fed created money out of thin air and used this "money" to buy the toxic assets at face value (book value) from these banks, notwithstanding that all these toxic assets were "junk' and were, at the most, worth maybe ten cents for every dollar of the price paid for them by the Fed. Result: the Fed is now loaded up with toxic assets once owned by these big banks. However, these banks cannot publicly declare and/or admit to the truth of what took place, for the following two reasons. (Hence, this financial charade must be maintained.)

1) All this new cash was supposed to enable the global banks to lend to desperate consumers and cash-starved businesses. But the money did not go out as loans. So where did the money go?

2) Most of it was deposited, by the big banks, back into the Fed, there to be proclaimed as excess reserves. The Fed had purchased trillions of dollars worth of toxic waste, and this "money" (now merely entries on the Fed's books) that these global banks had deposited, was treated by the Fed as "Excess Reserves." This provided the ILLUSION that the banks were cash-rich and that they would be able to lend out trillions in loans. But they did not loan out anything like that amount. Why not? Because the global banks still secretly have trillions of dollars worth of remaining toxic waste on their balance sheets. They are still insolvent under the fractional reserve banking laws. However, the public must not be allowed to know this because if they did, it would trigger a massive run on all global banks.

Bernanke, the US Treasury, and the global central bankers have consequently all been praying that, given enough time (their estimation was 12 to 18 months), the housing market would recover and that housing asset prices would again rise to the levels they were at before the crisis, thus magically transforming the banks' remaining toxic waste into real, salable assets. .

Why this hope and/or belief is pie in the sky

Say a house was purchased for $500,000. The borrower has a mortgage of $450,000, but the salable, market value of the house is now $200,000. Now multiply this discrepancy between 450K and 200K by the millions of houses sold between 2000 and 2008 and you will appreciate the extent of the financial black-hole the big banks (and thus we as a nation) are in. There is no way that any of the global banks can get out of this gigantic mess unless housing prices come back to what they were. And despite the prayers of Bernanke and the owners of the big banks, those prices are not coming back to what they were. In addition, there is no way that the Fed and the global central bankers, by way of Quantitative Easing (QE), can continue to buy such toxic waste without tipping their hand to the public and exposing as a lie the claim that these banks are solvent.

To fully bail out the big banks, the Fed would have to QE up to $20 trillion at a minimum. But neither the Fed nor any other central banker could "create such a huge amount of money out of thin air" without arousing suspicion, and complete panic, among sovereign creditors, investors and depositors. It would be tantamount to officially declaring that all the big banks are BANKRUPT!

Next Page  1  |  2  |  3  |  4

(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).

Rate It | View Ratings

Richard Clark Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've (more...)
 

Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Follow Me on Twitter     Writers Guidelines

 
Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

STAY IN THE KNOW
If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
Name
Email
   (Opens new browser window)
 

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Was Pat Tillman Murdered by an American Sharpshooter to Shut Him up?

New JFK assassination bombshells

Two U.S. presidents implicated by ex-CIA black-ops assassin

The cholesterol - heart disease scam: How the medical-industrial complex is raking in billions at our expense

Four Ticking Time Bombs That Will Soon Ignite a Revolution

The Ultimate Goal of the Bankster-led Political-economic Warfare Being Waged Against Us Is . . . ?

To View Comments or Join the Conversation:

Tell A Friend