Fed insider exposes giant central bank “easing” swindle

A former Federal Reserve official who helped the Central Bank manage its bond buying program, dubbed QE, has admitted that the program is a fraud.

By: Mike Whitney, CounterPunch

Source: Press TV

http://www.presstv.ir/detail/2013/11/16/335041/fed-insider-easing-swindle-banks/

“This was a program (QE) that was devised to help mortgage lending in America…Instead, what we saw was massive Wall Street earnings.” Andrew Huszar, Bloomberg TV Interview

A former Federal Reserve official who helped the Central Bank manage its bond buying program, dubbed QE, has admitted that the program is a fraud. In a shocking op-ed in Monday’s Wall Street Journal, Andrew Huszar apologized for his role in the Fed’s $1.25 trillion asset purchase program which he described as “the greatest backdoor Wall Street bailout of all time.”

So far, no one at the Fed has responded to the charges, nor has Congress or the Department of Justice (DOJ) taken steps to investigate allegations that the multi-trillion dollar program was not intended to help Main Street as announced, but to shore up flagging bank balance sheets and zombie financial institutions that would have defaulted without the Fed’s stealth welfare program.

Surprisingly, Huszar’s credibility has not yet been challenged nor his claim that he played a pivotal role in overseeing the program. As he notes in his confession, he was “managing what was at the heart of QE’s bond-buying spree-a wild attempt to buy $1.25 trillion in mortgage bonds in 12 months.” He was asked “to quarterback” the largest giveaway to Big Finance on record. The fact that his allegations have not prompted an thorough investigation of criminal malfeasance at the Fed boggles the mind and points to a justice system that makes no pretense of operating in the interests of the people it is supposed to serve.

Huszar admits that he left the Fed -where he’d worked for seven years- because he’d “witnessed the institution deferring more and more to Wall Street”, that is, implementing policies which only benefited the banks.

“I had come to believe that the Fed’s independence was eroding,” says Huszar. These feelings were reinforced when Huszar was asked to purchase hundreds of billions of dollars of mortgage-backed securities, which according to him, put the system at risk of another crash.

“We constantly risked driving bond prices too high and crashing global confidence in key financial markets,” he said. “We were working feverishly to preserve the impression that the Fed knew what it was doing.” (“Andrew Huszar: Confessions of a Quantitative Easer“, Wall Street Journal)

The implication is clear, the Fed shrugged off its mandate of “price stability” and deliberately put the system at risk in order to assist its primary constituents, the banks.

It wasn’t long before Huszar figured out the program was a fake and that QE “wasn’t helping to make credit any more accessible for the average American. The banks were issuing fewer and fewer loans,” he said. “More insidiously, whatever credit they were extending wasn’t getting much cheaper. QE may have been driving down the wholesale cost for banks to make loans, but Wall Street was pocketing most of the extra cash.” (WSJ)

This column (Mike Whitney - CounterPunch) has been making this same point for more than two years, that all the profits on the interest rate spreads were going to the banks. QE has not led to a credit expansion nor was it designed to do so. It is a lavish subsidy to the financial elites and deep pocket bondholders who control the political-economic system. Huszar’s testimony further underscores that point.

Huszar again: “From the trenches, several other Fed managers also began voicing the concern that QE wasn’t working as planned. Our warnings fell on deaf ears. In the past, Fed leaders-even if they ultimately erred-would have worried obsessively about the costs versus the benefits of any major initiative. Now the only obsession seemed to be with the newest survey of financial-market expectations or the latest in-person feedback from Wall Street’s leading bankers and hedge-fund managers.” (WSJ)

No one cared that QE was not stimulating credit, because that was not the objective. The real goal was to boost profits at the banks so they could offset the massive losses on their trove of mortgage-backed assets which dropped precipitously following the Crash of ’08 leaving them exposed to potential restructuring and nationalization. The $700 billion from the TARP bailout merely provided enough operating capital for the banks to continue to run their businesses. In contrast, QE was a strategy to drain the ocean of red ink from bank balance sheets and restore them to profitability. What mattered was profits. Profits at the expense of employment, profits at the expense of growth, profits at the expense the nation’s economic future. Profits, profits, profits. How can anyone fail to see that now?

Huszar again: “Trading for the first round of QE ended on March 31, 2010. The final results confirmed that, while there had been only trivial relief for Main Street, the U.S. central bank’s bond purchases had been an absolute coup for Wall Street. The banks hadn’t just benefited from the lower cost of making loans. They’d also enjoyed huge capital gains on the rising values of their securities holdings and fat commissions from brokering most of the Fed’s QE transactions. Wall Street had experienced its most profitable year ever in 2009, and 2010 was starting off in much the same way.” (WSJ)

See? It was an “absolute coup for Wall Street”…the “most profitable year ever.” In other words, QE was a transparent ripoff from the get go, and the Bernanke Fed orchestrated the entire affair.

And it didn’t stop there either, because the Fed launched three more versions of QE increasing its balance sheet by nearly $4 trillion while inflating asset bubbles in US Treasuries, equities, junk bonds, farmland, housing and financial assets across-the-board. The Fed has created a gigantic bubble in long-term Treasuries which threatens the world’s biggest and most liquid bond market and puts the dollar at risk of losing its position as the world’s reserve currency.

Huszar admits that the Fed’s actions have dealt a blow to the so called “free market” calling QE “the largest financial-markets intervention by any government in world history.” He also dispels the illusion that QE spurred growth in the real economy. (“Even by the Fed’s sunniest calculations, aggressive QE over five years has generated only a few percentage points of U.S. growth.”) He also admits that the Wall Street banks are a cartel that’s been strengthened by the Fed’s actions. (“The biggest ones have only become more of a cartel: 0.2% of them now control more than 70% of the U.S. bank assets.”) And, he also suggests that the Fed suffers from “regulatory capture”, that is, that monetary policy is shaped in a way that best advances the interests of the banks. (“I had come to believe that the Fed’s independence was eroding.”)

Huszar’s testimony leaves little doubt that QE is a P.R. scam designed to pull the wool over the publics eyes. While the Fed’s critics have always said that that was the case, Huszar is the first insider to confirm those claims and to denounce the program as a blatant bailout for the banks.

So where are the regulators? Where are the investigations? Where is the DOJ or the US Congress?

Where is the outrage?

Links:

Andrew Huszar – Confessions of a Quantitative Easer – Wall Street Journal

http://online.wsj.com/news/articles/SB10001424052702303763804579183680751473884
Original Post by: Mike Whitney (CounterPunch)
http://www.counterpunch.org/2013/11/15/fed-insider-exposes-giant-central-bank-easing-swindle/

 

Super rich stash 21 trillion in offshore havens

Alex Wong / Getty Images / AFP

Source: Russia Today

http://www.rt.com/news/overshore-economy-trillions-report-789/

Wealthy tax evaders, aided by private banks have exploited loopholes in tax legislation and stashed over $21 tn in offshore funds, says a report. The capital drained from some developing countries since 1970 would be enough to pay off national debts.

­The findings show the gap between the haves and the have-nots is much larger than previously thought.

The document, entitled The Price of Offshore Revisited, was commissioned by The Tax Justice Network campaign group and leaked to the Guardian. The report provides the most detailed valuation of the offshore economy to date.

"The problem here is that the assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments," wrote James Henry, expert on tax havens and former chief economist at consultancy McKinsey in his report.

The document cites the world’s leading private banks as cherry-picking from the ranks of the uber-rich and siphoning their fortunes into tax-free havens such as Switzerland and the Cayman Islands.

The wealth of the super-rich is "protected by a highly paid, industrious bevy of professional enablers in the private banking, legal, accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy."

Henry writes that a large part of the trillion dollar hoard belongs to around 92,000 individuals, an elite class of super-rich who make up 0.001 percent of the global population.

"These estimates reveal a staggering failure: inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people," said John Christensen of the Tax Justice Network.

The report records the flow of capital from countries into offshores over the past few decades. Saudi Arabia saw almost $300 billion drained from their economy since the 1970s, while Russia saw almost $800 billion leave its economy in hidden assets since the fall of the Soviet Union. Nigeria issued a loss of $300 billion since the mid-1970s.


Henry points the finger at the world’s top ten private banks, among them UBS and Credit Suisse, for aiding wealthy clients to dodge taxes.

According to Henry’s figures, the top financial leaders processed more than $6 trillion in funds in 2010, more than double the previous year.

Banking system – rotten to the core

Last week the US Senate released a report damning the actions of the UK bank HSBC. The report highlighted evidence of the bank’s laх security policies leading to money laundering cases.

It referenced $7 billion in cash that had crossed the Mexican border into the US and been deposited in HSBC from 2007 to 2008. The report suggests that the billions of dollars could have come from drug sales in Mexico.

The probe also shed light on a number of other instances when the bank bypassed US safeguards, potentially bankrolling terrorists and drug lords in the process.

The bank had previously had to pay out $1bn to US authorities for money laundering offenses committed between 2004 and 2010.

The G20 has repeatedly made calls to end tax-free havens since the beginning of the financial crisis in 2008, but these plans have not yet come to fruition.

The Invisible Oligarchy

By: Stewart Brennan
World United News

Oligarchy: (Greek Ὀλιγαρχία, Oligarkhía) is a form of government where political power effectively rests with a small elite segment of society (whether distinguished by wealth, family or military powers). The word oligarchy is from the Greek words for "few" (ὀλίγον óligon) and "rule" (ἄρχω arkho).

Who are the Oligarchy:

The Oligarchy that controls the World economy and business direction are the majority shareholders of the corporate members of the “Council on Foreign Relations”.

Imperialism by an insatiable greedy Oligarchy is the real enemy of our World. The driving forces of this Imperial monster are today’s Private Bankers and business magnets who have their hands in everything, but especially energy.

The quest to control the Worlds wealth started over 100 years ago by a group of extremely wealthy bankers and corporate magnets, notably John D.Rockefeller, JP Morgan, and Paul Warburg. (The Oligarchy is based in North America, and Europe.)

The Oligarchs have no allegiance to country only to money and power. The system they use to invoke and gain control of wealth is Imperialism. This small group of people control the global economics and the currencies that make it run.

The monetary system is no longer based on precious metals, nor do the Governments of the Western Nations control their economies. Our money is just printed-paper! The value of the paper is controlled by the amount that is printed…and the private bankers are the ones who decide when and how much to print.

Energy is Required to Keep the Economic System Running:

Oil plays a big part in the Oligarchs plan. The American economy and Western World is heavily dependent on oil and requires oil to keep their economies afloat. Without oil there is economic collapse and Oil is a declining resource and therefore becomes more valuable as there is less of it. It is the catalyst for economic disaster, military might, and if enough of it is controlled, a way to control the Worlds wealth.

If oil does not flow constantly today, the American and European Empires crumble. Control and direction of wealth shifts to those that own the oil, such as the countries of the middle east, Venezuela, Russia, and so on...its that simple.

The War in Iraq, and the impending war on Iran is the Oligarchs push for control of this declining valuable resource. If the Oligarchy does not succeed in its goal to take the oil from the Middle East, their plan fails and the World takes a U-turn.
At stake in the Middle East is the Oligarchs quick path to World domination...one world, one currency, one controlling group. These powerful few are a very determined bunch however and are always working different business and economic angles to achieve their goals.

While the Worlds focus is on the War in Iraq and Iran, the Oligarchy is playing their power card in controlling the wealth of the Planet. Economic slump or depression is the tool of force by this group.

Watch what unfolds in the coming weeks. We might see Great Britain embrace the Euro and not far down the road after that, the emergence of the Amero (Canada, USA. and Mexico)...Asia will also move to a single currency by necessity.

China and India are the emerging industrialized nations that were built by the Oligarchs corporate money. When the coming economic slump happens, a number of Asian banks, and companies, will be turned over to these private bankers in the form of bankruptcy, which is legal theft, as immoral as it is. The Oligarchs have gained their vast wealth and power this way in Europe and America since day one.

The emergence of the Single Asian currency will be the proposed plan by the Oligarchs who will also control the printing of it. The Asian currency will most likely include Japan, Korea, Russia, China, and India for starters. To make this a reality, an inflation, or deflation of currency must happen so that the currency merger can take place. If for example one currency is very high, an economic slump is crafted to devalue that currency. Look at England and the USA right now, and then look at the value of the euro. The US dollar is worth about 60 cents in trade to the Euro. The Canadian dollar is worth 97 cents compared to the American dollar. In 2001 the American dollar and the Euro were at par, and the Canadian dollar was at 70 cents US.

Protection of the Dollar, or Destruction of the Euro Economies?

When George Bush came to power in 2000, one of the first things he did was to impose a 30% import tax on steel. Bush claimed that he wanted to protect American steel companies from European steel producers from flooding their market with cheap abundant steel. The result was that Steel prices in North America went up due to a large demand and short supply of steel by North American Manufacturers.

When I investigated which countries were subject to the 30% import tax by calling Customs Canada and US Customs, I found out that only the countries that used the Euro as their currency were affected by the 30% tax. The largest European steel producers such as Poland were not subject to the tax because their country did not have the Euro as their currency. So in effect, Poland could continue to flood the US market with their steel while Greece and other steel producers faced a 30% tax on exports to the US which severely handicapped their ability to compete.

The Oligarchs plan of replacing many currencies with three and then eventually with one currency has begun to speed up. Hundreds of Billions in American dollars have gone missing. This devalues the US dollar. How do you misplace 100 Billion dollars anyways? Unless it is by design...

Current Battle Zones:

The nations of the Middle East, Africa, Central & South America, are the current battle zones in the World right now. The battle is for complete control of their Oil. You might even call this World War three. The war to control the Worlds Oil and ultimately, of the Worlds money.

Oil is very important to the Oligarchy because the Western Economies depend on it, as do their military War machines. The very powerful few do not have complete control of the worlds oil yet, but they are close. Controlling OIL is their strength but it is also their Achilles heal.

From: Stewart

References:

Council on Foreign Relations
Trilateral Commission
Bilderberg Group
Brookings Institute
Project for the New American Century (PNAC)

J.P. Morgan

John D. Rockefeller
John D. Rockefeller Jr.
Paul Warburg
James Warburg
Mayer Amschel Rothschild

History of Central Banking in the USA