REVEALED: HOW BERNANKE PROPPED UP THE STOCK MARKET

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NEW REVELATIONS SHOW MARKET STITCH-UP BETWEEN US FED & BANKS

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‘Stealth QE’ in fact never ended

Shock exposures circulating in the US last night seem to show clearly that a covert operation between the United States Federal Treasury and Wall St’s major banking firms not only produced a falsely inflated stock market ‘rally’ this summer, and as late as last month: it also continued an undercover QE programme without the knowledge of either Congress or the taxpayer.

American QE1 officially ended last March, but between April 1st and 22nd July, the Fed’s own stats show that it greased the New York markets by continuing to buy Wall St banking debts – to the tune of $130 billion during that four-month period. Over a year, given lighter trading in some summer months, that would be equivalent to a half-trillion dollar QE exercise. QE1 contained $1 trillion worth of expiration purchases – so in real terms, a secret arrangement has continued QE at a roughly 50% level. The mini bail-outs ended in August – by which time the White House team had already decided on some form of QE2 anyway – details of which The Slog covered yesterday.

What makes the allegations especially damning is that ALL the big Federal Treasury bank payments were made during weeks when loss-making options were due to expire. Thus the major banks had most of their trading mistakes settled….the price for this action being that the monies must go back into stock purchases. This they duly did – creating the rally that never was. Effectively, investors who became bullish during that time have been cheated by the US Government….a scam the taxpayers underwrote without any knowledge of it.

While firms such as Goldman Sachs, Credit Suisse, J P Morgan and BoA were paying their staff vast bonuses, ordinary Americans were struggling to avoid foreclosure – but unwittingly ensuring the payment of those bonuses. The banks simply couldn’t lose.

Now, however, Slog sources in the US insist that Ben Bernanke’s secret slush-fund operation started up again last week, when some $15-20 billion were again ‘given’ to the primary banks.

“It’s a sweet deal,” an informant told us, “in that just like with the banks buying low-cost US securities, everyone wins. The Feds clear all the debts and the Banks keep buying the stocks.”

The story in its most cogent form can be read at US professional website Zero Hedge, but during the last 24 hours The Slog has used a combo of maths and contacts, both of which support the story’s veracity. In turn, the ZH piece also confirms the extra ‘pumping’ done by the Fed last week ‘to ramp up the market’.