Federal Reserve ends quantitative easing (QE3) bond-buying program

Finally! QE3 is over! I can almost hear the booming voice, “Step away from the money-printing machine!” Now  that QE3 is done, what’s next? Is this a sign of better things to come? Look at all of the distractions we’ve had in the last couple of days…  -LW


 

Federal Reserve Chairman Janet L. Yellen. (AFP Photo/Darren McCollester)

Federal Reserve Chairman Janet L. Yellen. (AFP Photo/Darren McCollester)The Federal Reserve has officially announced an end to its quantitative easing bond-buying program, but economists are split over whether the central bank’s decision will help or hinder post-recession recovery.

As expected, the Fed said Wednesday afternoon that it’s third and most recent round of quantitative easing, QE3, would come to an end.

“The Committee judges that there has been a substantial improvement in the outlook for the labor market since the inception of its current asset purchase program. Moreover, the Committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability. Accordingly, the Committee decided to conclude its asset purchase program this month,” reads part of a statement released by the Fed on Wednesday. “The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.”

The confirmation surprised few since the Fed was largely reported ahead of Wednesday’s decision to be considering making such an announcement. As far as what the result will be, however, is up for debate as economists weigh potential outcomes ranging from outright optimism to doom and gloom.

Combined, the three rounds of QE undertaken by the Fed since 2008 have generated trillions of dollars for the American economy through a process in which the central bank has perpetually pumped money into long-term government bonds and bonds backed by home mortgages. But David Wessel, the director of the Hutchins Center at the Brookings Institution, told NPR recently that the three-and-a-half-trillion dollars’ worth of bonds purchased during that six-year span has been “far more than anybody inside or outside the Fed expected when this all began.”

AFP Photo

AFP Photo

Indeed, the Fed has twice announced an end to its bond purchasing programs, only to soon after start again when it was realized that the desired effect failed to be achieved. Six years later, though, the end to QE3 might once and for all be the final nail in the program’s coffin.

In 2009, Ben Bernanke, then the chairman of the Fed, said that quantitative easing would only end “when credit markets and the economy have begun to recover,” at which point the central bank would resume business as usual.

“As the size of the balance sheet and the quantity of excess reserves in the system decline, the Federal Reserve will be able to return to its traditional means of making monetary policy–namely, by setting a target for the federal funds rate,” he said. “In considering whether to create or expand its programs, the Federal Reserve will carefully weigh the implications for the exit strategy. And we will take all necessary actions to ensure that the unwinding of our programs is accomplished smoothly and in a timely way, consistent with meeting our obligation to foster full employment and price stability.”

Today, the American economy is statistically sounder than six years ago: not only have three rounds of QE allowed faltering banks to get boost after boost from the government, but, partially as a result, jobless claims are down drastically from post-recession figures.

Nour Eldeen Al-Hammoury (Image from nourhammoury.com)

Nour Eldeen Al-Hammoury (Image from nourhammoury.com)

Nevertheless, optimism isn’t universal when it comes to what ending QE3 means for the world economy.

“Well there are some improvements, but we can’t say that it is recovering as everyone hoped,” Nour Eldeen Al-Hammoury, a chief market strategist at ADS securities in Abu Dhabi, told Euro News recently. “GDP is growing based on the inventories, which doesn’t mean that sales are increasing. The slack in the economy remains and so far there is no clear strategy on how this slack will be resolved. Moreover, the slowing down in Europe and Asia will be something to consider as the US economy is unlikely to grow on its own.”

According to Al-Hammoury, markets the world over may suffer as a result of ending QE3. “It is not the Middle East markets only, it is global markets and especially the emerging markets,” he said. “Let’s say, for example, Dubai — Dubai stock market was one of the best performers in the world. However, we will see some more declines at the end of the year. These markets are again sensitive to any events. However, these Middle East markets may benefit again from what’s happening in Europe. I mean the outflow that is happening in Europe and also don’t forget that this region has also opened its doors to foreign investors so with the Fed ending QE we might see some declines again, and if the global slowdown continues, global markets, including the Middle East, may continue with the current downside correction.”

Even in the west, that pessimism is present: Pedro Nicolaci da Costa wrote for The Wall Street Journal this week that the Fed may deploy another round of quantitative easing if the decision to end the third series proved to be unsuccessful, which, according to his report, may be the case.

“Many of the studies of large-scale asset purchases, known as quantitative easing or QE, agree they worked very well to prevent deflation and stabilize the financial system during the 2008 crisis, but disagree about how effective the programs have been in boosting growth since then,” da Costa wrote.

Although Bernanke has attributed QE with cutting unemployment, da Costa wrote, Fed researchers and academic economists have for years studied the practice and are split with regards to how successful the rounds have been, and what the eventual outcome will be when all is said and done.

“I do think they’re overly optimistic,” Barbara J. Cummings of the Boston Private Bank & Trust Company told CNBC this week. “The market and the Fed are definitely saying two different things. And the market is right. It usually is.”

To some, the outcome is even drearier. “Without another dose of stimulus, the US will likely slide into recession,” Worth Wray, chief strategist at Mauldin Economics, predicted to Equities earlier this month.
Source.

Some Results from This Month’s Financial War Games

Earlier this month, “Financial War Games” were held in the United States and European Union. Here, the EU results as analyzed, and it seems they were anything but legit. -LW


Another Unbelievable Stress-Free Test; Whitewash Math and Deferred Tax Assets

In an effort to fool the public into believing the latest round of bank stress tests were actually designed to find stress, the ECB found 25 scapegoats, with the biggest losers in Italy and Greece.

Interested parties may wish to slog through the full 178 page Stress Test Report.

Capital Shortfalls


Non-Performing Loans

Here’s a chart from PDF page 75 (report page 67) with thanks toZeroHedge.

There is €879 billion in nonperforming loans but the report concludes bank assets are only €48 billion overstated. Apparently we are to believe there are adequate loan loss provisions for rest.

Reuters reports ECB Fails 25 Banks in Health Check but Problems Largely Solved.

 Roughly one in five of the euro zone’s top lenders failed landmark health checks at the end of last year but most have since repaired their finances, the European Central Bank said on Sunday. Italy faces the biggest challenge with nine of its banks falling short and two still needing to raise funds.

“This seems as if it has been pretty unstressful,” said Karl Whelan, an economist with University College Dublin.

“The real issue is the size of the capital shortfall and that is very, very small. I don’t feel a whole lot more reassured about the health of the banking system today than last week.”

€48 Billion Shortfall

The Financial Times reports ECB Says Banks Overvalued Assets by €48bn.

 The European Central Bank’s dissection of the books of the eurozone’s biggest banks has found lenders overvalued their assets by €48bn.

The results of the ECB’s examination of balance sheets worth €22tn, known as the Asset Quality Review, will require the 130 lenders who took part in the exercise to adjust the value of their assets in their accounts or prudential requirements.

A quarter of the reduction, €12bn, will fall on Italian lenders, an amount just short of 1 per cent of their risk-weighted assets. Greek banks will have to lower their asset values by €7.6bn, or almost 4 per cent of their risk-weighted assets.

Philippe Legrain, an economist and former adviser to then European Commission president José Manuel Barroso, described the tests as a “whitewash”.

“The ECB singles out less important banks in less important countries and gives the German banks a clear bill of health,” Mr Legrain said.

German lenders will have to lower the value of their assets by €6.7bn and their French counterparts by €5.6bn.

The AQR reviewed 800 portfolios, which together made up more than 57 per cent of banks’ risk-weighted assets. The ECB said they examined 119,000 borrowers and valued 170,000 items of collateral. Supervisors also built 765 models to challenge banks’ estimates of their provisions.

The 130 banks account for 81.6 per cent of all eurozone assets.

Whitewash Math

Non-performing loans total €879 billion out of a total balance sheet of about €22 trillion. That’s approximately 4% of loans.

Of the 130 banks, 25 failed. That seems like a lot. However, the total amount of under-capitalization is a mere €48 billion. That is an overall asset overvaluation of a mere 0.218%.

Anyone seriously believe that €48 billion is credible with France, Italy, and Spain in or near recession (and Germany heading there)? I don’t. It’s not even a generous rounding error.

Have Spanish banks written off 100% of their bad property loans? What about sovereign bonds assumed to be 100 percent risk-free? Didn’t Greece prove bonds payments are not sacrosanct?

What happens when the eurozone splinters? Here’s the answer: German banks are going to take a massive hit.

Deferred Tax Assets 

Huky Guru has some interesting figures about Spanish banks.

About a year ago, Guru reported that a Reclassification of DTAs(Deferred Tax Assets) provided an extra €30 billion capital for Spanish banks.

Guru brought up the subject again today in Putting the Stress Tests in Context.

Paraphrasing Guru … Accounting magic and government decree has allowed banks to compute an extra €30 billion in capital for Spanish banks via DTAs. Without that €30 billion, the average Tier 1 capital for Spanish banks would have fallen from 9.1% to 7.1%. More than one bank would have failed the test.

Spanish Banks Plow Into Spanish Sovereign Bonds

Guru notes “Spanish banks hold Close to €231.519 billion in Spanish bonds, almost twice around the capital of the Spanish banking system.

At least six Spanish banks have massive leverage in bonds. Catalunya Banc and NCG are particularly exposed.

Conclusion

The entire exercise was another stress-free farce.

Mike “Mish” Shedlock

http://globaleconomicanalysis.blogspot.com

Source.

Ron Van Dyke and “The Ambassador” Discuss the Federal Reserve and Global Affairs

Ron and “The Ambassador” discuss the Chinese acquisition of the US Federal Reserve, and the coming changes. The Ambassador advises listeners not to get overly excited, saying that “baby steps” are being made. He makes it quite clear that the Chinese government is a wing of the Dragon Families.

Ultimately, The Ambassador feels that humanity will prevail over the greed and corruption that have plagued us. What do you think? Do you agree with the Ambassador? -LW

Video Description

This is one we’ve been waiting for! Yes, the Ambassador confirms that the Family is now the lawful owner of the Federal Reserve that has waged war on humanity for over 100 years. They are responsible for operating the largest and most oppressive criminal operation, an extortion racket and human slave trade, in the history of the world. They totally failed in their mandate to serve humanity; and their mandate has not been renewed. Instead, steps are being taken to transform society, restoring people’s natural rights along with principles of limited government (Republics) outlined in the founding documents of the united States in America. Again, he admonishes us to look in the mirror and to stop aggression, greed and the illusion of self-importance.

Update from Neil Keenan, via Drake

I’m not sure where Neil gets his information, but I don’t ever remember him talking about the GCR/RV. Maybe the Ambassador contacted him, as well as Dave Schmidt. I honestly don’t know. Regardless, it appears that the Keenan Team sent the following internet chat transcript to Drake, and it is getting people excited in Dinarland and NESARA/GESARA-land. -LW


[7:42:15 AM] Neil Keenan: HAIL HAIL TO THE REPUBLIC OF THE UNITED STATES OR NOT?????????  HAS THE CORPORATION FINALLY STEPPED DOWN?  THIS IS WHAT I HAVE FOR NOW.

[2:28:08 PM] Neil Keenan: Listen I am not sure if this is true or not but I believe not and I bring it to you so you know what it is like to wait for the rightful answer.

in its entirety…..I will know for sure later but for now this is what I have received and I doubt if true but you never know.  I know some of the names and some are and some are not real players and have been involved in things off color over the years.  Here you are.  We are on top of it.

[2:28:17 PM] Neil Keenan: BREAKING NEWS:

1. At 2 pm Obama signed with the Chinese, bankrupting the Federal Reserve and the Federal Reserve is being swallowed up by the UST under new leadership.

2. At 6 PM PST, Robert Won is going to go in and sign over the gold.

3. At Midnight EST the Organic Act of 1871 is repealed and the US Corporation is NO MORE. Long live the REPUBLIC OF THE UNITED STATES, ONE NATION UNDER GOD WE TRUST!

4. At Midnight PST, “the Admiral” goes in.

5. At midnight PST, IRAQ goes in to include the REINSTATEMENT rate of 3.58 internationally and with a $6 – 8.00 US rate, to gather in IQD for oil credits.

6. General Ham is taking over the US Government and Commander Fairfield is taking over the Treasury.

[2:28:31 PM] Neil Keenan: I will let you know asap…..

Source.

Financial War Games or Cover for Something Else?

Banks in the US and UK are planning a disaster recovery drill on Monday. What do you think they’re not telling us? Will this be a re-boot of the banks? Will this be the cover story for cleaning-out everybody’s bank account(s), like they did in Cyprus? -LW


Chris Giles
October 10, 2014
Financial Times

Jason Hawkes | Iconica | Getty Images

Britain and the US will stage the first transatlantic simulation of a crisis in a large bank on Monday, in a sign of growing confidence that the authorities can now deal with the failure of large institutions.

All of the main players who would need to be involved in a failure of companies such as Bank of America, Goldman Sachs, Barclays or HSBC will gather in Washington DC to make sure they would know what to do, who to call and how to inform the public.

The move reflects the authorities’ view that they are getting close to solving the “too big to fail” problem, even for cross-border banks, outside a full-blown system-wide crisis.

George Osborne, UK chancellor, announced he would be taking part in the “war game” along with Jack Lew, US Treasury secretary, Janet Yellen, head of the Federal Reserve, Mark Carney, Bank of England governor and other senior officials from both countries.

The simulation will not mimic any particular banks but the authorities will run through the procedures they would follow if a large UK bank with US operations failed and those for a significant US bank with a British presence. Unlike domestic war games held before the financial crisis, Mr Osborne pledged to publicise the results.

Source.

Alien Agenda VI: The Worm Has Turned (Soft Disclosure)

This is a great article about Disclosure, the alien agenda, 9/11, and Sandy Hook. -LW

The Coming Exposure, Containment and Deconstruction of the Illuminati

by Preston James

 

Note: This article is written for retired military and Intel with advanced knowledge of Secret Space War matters. Its purpose is to provide information about a certain group of notably evil Alien ET visitors who formed a long-term association with Super-elite criminally-insane Psychopaths who hijacked America in 1913. These super-elite Deviants were given incredible power and authority in exchange for enacting the evil Agenda of this Alien ET group best described as Cosmic Parasites. This group of super-elite Deviants is best referred to as the Ruling Crime Cabal (RCC) AKA the “Illuminati”.

If you are not aware of the background information and evidence that is available about this ongoing Secret Space War, you are probably wasting your time reading this and it won’t fit into your mind.

The Ruling Crime Cabal (RCC) has done their best to keep you from knowing about Secret Space War matters. There has been a long term energetic effort to keep this information from “We the People” as well as anyone including the High Military Command who does not have what they define as an “absolute need to know”.

Recently during the last several years Majestic-12 (AKA MAJIC), the Secret Group that has maintained authority over all Alien ET matters since it was created by President Truman in 1947, has apparently voted to allow public disclosure.

The Ruling Crime Cabal (RCC) is comprised of a Working Alliance between the Bush Crime Cabal (BCC) and the International Zionist Crime Syndicate (IZCS). This Ruling Crime Cabal/Coalition is best described as the Illuminati because that is what they call themselves and prefer to be called by Insiders.

This RCC gained power in three major Coup d’ Etats, the first in 1913 with the illegal, Unconstitutional passage of the Federal Reserve Act, the second with the Assassination of President John F. Kennedy, and the third with the deployment of a Gladio-style, False-Flag Inside-job Nuclear Attack on America on 9/11/01. It was during this time that Israel used nuclear blackmail to coerce the US Administration and top USG officials to allow the creation of Homeland Security (DHS).

The creation of Israeli-controlled Homeland security (DHS) provided an illegal, Unconstitutional consolidation of all American Alphabets, Law Enforcement and most Intel into one large, easy to control Israeli occupying Police State Army inside America.

This article will claim that the “Worm has Turned” at a very high level and the RCC is now being contained, dis-empowered and deconstructed piece by piece due to an interesting convergence of various forces and entities including the US High Military Command. Because this article contains information leaked by insiders and as well as numerous speculations, use your own judgment to evaluate what is presented and come to your own conclusions.

Be aware that many good individuals have been seriously harassed, stalked, threatened and even murdered to bring you this kind of information because the Ruling Criminal Cabal (RCC) does not want you to have any of this information about Secret Space Wars or Alien Agenda matters. The reason? This will be explained in the article and is best summarized that full public disclosure will likely result in a major immediate loss of power for the RCC at every level and will create a complete disruption of the Alien Agenda they are working so hard to fulfill which is about as anti-American and anti-human as possible.

Full Article.