A Paralyzed Fed Defers Decision On Monetary Policy To Primary Dealers In an Act That Can Only Be Classified as Treason

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As if there was
any doubt before which way the arrow of control, and particularly
causality, points in America’s financial system, the following
stunner
just released from Bloomberg confirms it once and for
all. According to Rebecca Christie and Craig Torres, the New York
Fed has issued a survey to Primary Dealers, which asks for suggestions
on the size of QE2 as well as the time over which it would be completed.
It also asks firms how often they anticipate the Fed will re-evaluate
the program, and to estimate its ultimate size. This is nothing short
of a stunning indication of three things: i) that the Fed is most
likely completely paralyzed due to the escalating confrontation between
the Hawks and the Doves, and that not even Bernanke believes has has
sufficient clout to prevent what Time magazine has dubbed a potential
opening salvo into a chain of events that could lead to civil war:
in effect Bernanke will use the PD’s decision as a trump card to the
Hawks and say the market will plunge unless at least this much money
is printed, ii) that the Fed is effectively asking the Primary Dealers
to act as underwriters on whatever announcement the Fed will come
up with, and thus prop the market, and, most importantly, iii) that
the PDs will most likely demand the highest possible amount, using
Goldman’s $2-4 trillion as a benchmark, and not only frontrun the
ultimate issuance knowing full well what the syndicate of 18 will
decide in advance of what the final amount will be, but will also
ramp stocks on November 3 to make the actual QE announcement seem
like a surprise. This also means that the Primary Dealers of America,
which include among them such hedge funds as Goldman Sachs, such mortgage
frauds as Bank of America, such insolvent foreign banks as
Deutsche, RBS, UBS and RBS, and such middle-market excuses for banks
as Jefferies, are now in control of US monetary, and as we explain
below fiscal, policy.

It also means
that the Fed has absolutely no confidence in its actions, and, more
importantly, no confidence in how its actions will be perceived
by the market which is why it is not only telegraphing its decision
to the bankers, but is having its decision be dictated by them,
an act so unconstitutional it would be seen as treason in any non-Banana
republic! This is the last straw confirming that the only ones left
trading the market are the Fed and the PDs, passing hot potatoes
to each other, and the HFTs, churning the s__t out of everything
else to pretend someone is still trading.

And the saddest
conclusion is that this is the definitive end of US capital markets:
not only is the Fed’s political subordination a moot point, but
the Fed, and the middle class’ purchasing power via the imminent
dollar destruction that is sure to follow as the PDs seek to obliterate
their underwater assets by raging inflation, is now effectively
confirmed to be a bitch of Lloyd Blankfein and his posse.

The official
explanation for this unprecedented incursion by the banking crime
syndicate in US monetary policy is as follows:

Avoiding
Disruption

Treasury
officials say they want to avoid any disruption to the $8.5 trillion
market in U.S. government debt, the world’s most liquid,
as the Fed weighs restarting large-scale asset purchases. The
Treasury also doesn’t want to give any impression to investors,
particularly those based overseas, that it might be coordinating
with the Fed to finance the national debt.

“Treasury
debt-management decisions are designed to deliver the lowest cost
of borrowing over time and are entirely independent from monetary-policy
decisions made by the Federal Reserve,” Mary Miller, assistant
secretary for financial markets, said in an e-mail to Bloomberg
News yesterday. Before joining the Treasury last year, Miller
was head of global fixed-income portfolio management at T. Rowe
Price Group Inc. in Baltimore.

The Treasury
is scheduled to hold its quarterly meetings with bond dealers
tomorrow, ahead of the department’s Nov. 3 refunding announcement.

Read
the rest of the article

October
30, 2010

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