The Fed’s Bailout Of Europe Continues With Record
$237 Billion Injected Into Foreign Banks In Past Month
Submitted by Tyler Durden
Last weekend Zero Hedge once again broke the news that just like back in June 2011, when as part of the launch of QE2 we demonstrated that all the incremental cash resulting form the $600 billion surge in the Fed’s excess reserves, had gone not to domestically-chartered US banks, but to subsidiaries of foreign banks operating on US soil.
To be sure, various other secondary outlets picked up on the story without proper attribution, most notably the WSJ, which cited a Stone McCarthy report adding the caveat that “interpreting the data released by the Federal Reserve is a bit challenging” and also adding the usual incorrect attempts at interpretation for why this is happening. To the contrary: interpreting the data is quite simple, which is why we made an explicit prediction: ‘We urge readers to check the weekly status of the H.8 when it comes out every Friday night, and specifically line item 25 on page 18, as we have a sinking feeling that as the Fed creates $85 billion in reserves every month… it will do just one thing: hand the cash right over straight to still hopelessly insolvent European banks.”
So with Friday having come and gone, we did just the check we suggested. As the chart below shows, we were right.