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Grandest of All Ponzi Schemes? Foreign Central Banks Begin Buying US Stocks

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It is becoming ever more apparent that we have an economic system increasingly rigged for the benefit of the superrich, who own most of our members of Congress, and are, by that means, able to continuously inflate the value of their holdings at the expense of everyone else.   

To wit:   

Next leg of the grandest of all ponzi schemes:   foreign central banks to begin buying US stocks outright, starting today!   

From Bloomberg:   

"The Bank of Israel will begin today a pilot program to invest a portion of its foreign currency reserves in US equities.   

The investment, which in the initial phase will amount to 2% of the $77 billion reserves, or about $1.5 billion, will be made through UBS AG and BlackRock Inc. (BLK), Bank of Israel spokesman Yossi Saadon said in a telephone interview today.   At a later stage, the investment is expected to increase to 10% of the reserves.

 

A small number of central banks have started investing part of their reserves in US equities.   About 9% of the foreign- exchange reserves of Switzerland's central bank were invested in shares at the end of the third quarter, the Swiss bank said on its website.

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The investment will be made in equity index trackers and will include between 1,500 to 2,000 shares, among them stocks like Apple Inc. (AAPL), Saadon said."   

 

From Globes: Israel's Business Arena:   

"The Bank of Israel today began investing a small part of its $77 billion in foreign currency reserves in US stocks.   The central bank's latest Markets Division report states that the new Bank of Israel Law (5770-2010) allows the Bank of Israel to make equity investments, and that it began to do so today.   

The Bank of Israel will invest $1-1.5 billion in US stocks, 2% of its portfolio.   The report adds that the Bank of Israel has been investing in public bodies in developed countries since 2010."   

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While the Fed's charter forbids it from buying US equities outright, it certainly can promise that it will bail out such bosom buddies as the Bank of Israel, the Swiss National Bank, and soon everyone else, if and when their investment in Apple should go sour.   

This means that the exponential phase in risk is approaching, as everyone will now scramble to front-run central bank purchases no longer in bonds, but in stocks outright, leading to epic surges in everything risk related.   This will be followed by a collapse that will force the Fed to issue tens of trillions to bail everyone out all over again.  The long overdue systemic reset is finally approaching.  

 

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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...)
 

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Brilliant essay Richard. It's all so fake and out ... by Elizabeth Hanson on Saturday, Mar 3, 2012 at 11:09:28 PM
Is the Fed propping up our stock market, a... by Richard Clark on Sunday, Mar 4, 2012 at 8:30:35 AM
ie), when the rest of the World will nolonger exch... by Paul Repstock on Monday, Mar 5, 2012 at 2:33:59 AM
Right on target. We cannot deliver too many scathi... by Jack Flanders on Sunday, Mar 4, 2012 at 8:32:14 AM