You can’t make this stuff up!
– Next Leg Of The Ponzi Revealed – Foreign Central Banks To Begin Buying US Stocks Outright Starting Today (ZeroHedge, Mar 1, 2012):
We were speechless when we read this from Bloomberg.
The Bank of Israel will begin today a pilot program to invest a portion of its foreign currency reserves in U.S. equities.
The investment, which in the initial phase will amount to 2 percent of the $77 billion reserves, or about $1.5 billion, will be made through UBS AG and BlackRock Inc. (BLK), Bank of Israel spokesman Yossi Saadon said in a telephone interview today. At a later stage, the investment is expected to increase to 10 percent of the reserves.
A small number of central banks have started investing part of their reserves in equities. About 9 percent of the foreign- exchange reserves of Switzerland’s central bank were invested in shares at the end of the third quarter, the Swiss bank said on its website.
The investment will be made in equity index trackers and will include between 1,500 to 2,000 shares, among them stocks like Apple Inc. (AAPL), Saadon said.
More from Globes:
The Bank of Israel today began investing a small part of its $77 billion in foreign currency reserves in US stocks. The central bank’s latest Markets Division report states that the new Bank of Israel Law (5770-2010) allows the Bank of Israel to make equity investments, and that it began to do so today.
The Bank of Israel will invest $1-1.5 billion in US stocks, 2% of its portfolio. The report adds that the Bank of Israel has been investing in public bodies in developed countries since 2010.
The Bank of Israel said that the investments in US stocks would be made through UBS AG (NYSE; SWX: UBS) and BlackRock Inc. (NYSE: BLK) The Bank of Israel’s Markets Division, which specializes in bond investments, will not be handling the equity investments. It added that the traders will have very limited discretion, and that they may only quote leading indices, in order to reduce the risk.
“We have almost no exposure to countries with big problems. We constantly examine where we invest the foreign currency reserves, and I can promise you that you can relax,” Governor of the Bank of Israel Prof. Stanley Fischer said at a closed conference in mid-January.
“The Bank of Israel does not disclose the currency composition of its portfolio, especially not the composition of its equity portfolio,” says the Bank of Israel. At the January conference, Fischer said, “Imagine if we were to begin publishing where you invest, so when you stop buying the bonds of a particular country, and this is published, we’ll get complaints. That is why we do not publish.” He added, “We have an external committee that conducts the examinations. You can assume that we’re aware to the fact that there are problems in certain countries.”
In other words, while the Fed’s charter forbids it from buying US equities outright, it certainly can promise that it will bail out such bosom friends as the Bank of Israel, the Swiss National Bank, and soon everyone else, if and when their investment in Apple should sour.
Luckily, this means that the exponential phase in risk is approaching as everyone will now scramble to frontrun central bank purchases no longer in bonds, but in stocks outright, leading to epic surges in everything risk related, then collapse and force the Fed to print tens of trillions to bail everyone out all over again, rinse repeat, until this chart becomes asymptotic. We say luckily, because it means that the long overdue systemic reset is finally approaching.
Chart: Diapason
Since 2010, the US dollar has been banished from trade around the world. Albo trade alliance consisting of 12 South American, Caribbean (and Cuba )nations, banned the use of the dollar, established their own electronic currency SUCRE for all these nations to trade using their own currencies. There are other nations in the area considering how best to join with them now.
18 months ago, China and Russia got together and established their own trade agreements using their own currencies, leaving the US dollar out of their transaction.
Thanks to the added sanctions on Iran, India and Japan have just joined with them and will continue to trade with Iran. Iran, thanks to the Iraq war, is a very wealthy and fruitful trading partner. Israel and US governments want them to trade elsewhere, but they are not going to do it. India gets 12% of its energy sources from Iran, they are not going to interrupt it because the US wants them to do so.
These four nations are the most powerful trading partners the US has, and they are tired of US invasions and endless sanctions on their good trading partners. Iran just announced they will trade with all nations using their currencies or gold.
Iraq and Libya wanted to remove the US dollar from the world standard currency and replace it with gold. We saw what happened there. Iran has spoken up for the same, so here we go again.
This time, it won’t work. China, Russia and India have all told the US to back off. Now, they are no longer using our dollars. The fools in power have taken us over the cliff, it is all over but the falling. Our leaders seem oblivious to it, they are too greedy and stupid to recognize they will suffer, too.
Prices for energy and food will spike as we have never seen before in this country. Our long running status as the world standard currency has washed away with our regulations, credibility and world respect. We are now seen as a rogue nation, no longer a leaders.