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$10 Billion Four Week Bills Close At 0.005% With Just 2.86% Allotted At High
The good news: it is an improvement from last week's rate of 0.000%. The bad news: the yield was 0.005%. And only 2.86% were allotted at high (the median rate was 0.000%)! So essentially another 0.000% auction. Too bad auctions can't close at a negative yield. Primary dealers submitted a whopping $46.5 billion of orders, and took down $6 billion. A little too much excess cash anyone? Indirect interest was a tiny $3.5 billion, resulting in an indirect bid to cover of 1.29x.
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Could it just be the same 'cash on the sidelines' that gets recycled every week?
Gold trade... that looks over. China burst would equal lower commodities, lower rates, lower gold... and yet could be ok for non-bubble economies.
Hi, Tyler Durden,I am from China,very big fans of you.I want to send you email discussing some topics,would you please tell me your email address? Can not find it ,mine is susiesss910@gmail.com
Keeping the Banks Honest with Some Public Competition
In President Obama’s July 17 weekly address, he repeated his call for a public option in health care, in order to “increase competition and keep insurance companies honest” and to “put an end to the worst practices of the insurance industry.” The same call needs to be made for a public option in banking. In some countries, publicly-owned banks have operated alongside privately-owned banks for decades; and in those countries, the current crisis has served to show that public banks generally do a better job of serving the people and protecting their interests than their private counterparts.
In Canada, the trendsetter in public banking is the province of Alberta. Alberta’s publicly-owned banking system, called Alberta Treasury Branches or ATB, was initiated during the Great Depression to give the private banks a run for the public’s money. According to a government publication titled “These Are the Facts: An Authentic Record of Alberta’s Progress, 1935-1948”:
“The Treasury Branch system enables the people to pool their financial resources and to use these resources for their mutual benefit thereby enabling them to progressively free themselves from the stranglehold of the existing financial monopoly. These Treasury Branches provide effective competition for chartered banks thereby ensuring banking services at reasonable rates.”
From 1929 to 1933, the average annual income in Alberta had fallen from $548 to $212, a staggering 61 percent drop. Interest payments continued to bleed the farmers of cash, and taxes had increased. In 1935, Albertans decided they wanted a change and swept the Alberta Social Credit Party into power. In 1938, the system of Alberta Treasury Branches was set up literally as a branch of the provincial government. The stated goal of the ATB was to “provide the people with alternative facilities for gaining access to their credit resources.” Bankers initially scoffed at Alberta’s attempts to establish a competing economic system, but Albertans had high hopes and rushed to deposit their meager savings in the Treasury Branches. The government invested in the ATB only once, contributing $200,000 in 1938. That was all that was necessary, as the system was self-funding after that. By 1946, the ATB was turning an annual profit of $65,000. According to a booklet titled “Albertans Investing in Alberta 1938-1998,” by 1998 the ATB had remitted $68 million to the provincial government.
In India, public sector banks also operate alongside private sector banks. Privatization has made significant inroads into India’s banking system, but fully 80 percent of the country’s banks are still government-owned. Before the current crisis, neoliberals criticized India’s public banks for being oriented more toward serving the customer than turning a profit; but studies showed that the public sector banks were out-performing the private sector banks in terms of customer satisfaction. Today, when the credit crisis has hit the aggressive private international banks particularly hard, customers are fleeing into the safety of India’s public sector banks, which have emerged largely unscathed from the credit debacle. The public banks have been credited with keeping the country’s financial industry robust at a time when the private international banks are suffering their worst crisis since the 1930s.
In China, private-sector banking has also made some inroads; but state-owned banks still predominate. In a June 2009 article titled “The Chinese Puzzle: Why Is China Growing When Other Export Powerhouses Aren’t?”, Brad Setser noted that nearly all countries relying heavily on exports for growth have experienced major downturns and remain in the doldrums -- except for China. When China’s external markets fell off, the government turned its credit machine inward to domestic development. Its state-owned banks engaged in a huge increase in lending, with local governments and state enterprises borrowing on a large scale. The result was to create a real fiscal stimulus that put workers to work and got money circulating again in the economy.
In the United States, the trendsetter in public banking is the state of North Dakota, which has owned its own bank for nearly a century. North Dakota is one of only two states (along with Montana) that are currently not facing budget shortfalls. Ever since 1919, North Dakota’s revenues have been deposited in the state-owned Bank of North Dakota (BND). Under the “fractional reserve” lending scheme open to all banks, these deposits are then available for leveraging many times over as loans. Other banks in the state do not see the BND as a threat because it partners with them and backstops them, serving as a sort of central bank for the state. BND’s loans are not insured by the Federal Deposit Insurance Corporation (FDIC) but are guaranteed by the state. North Dakota has plenty of money for student loans, makes low interest loans to startup farms, has the lowest unemployment rate in the country, and is generally not feeling the pinch of the credit crisis at all.
From 1911 to 1967, the federal government operated, through the Post Office, a bank in which one could deposit money in return for a guaranteed two percent return. The system was especially popular before the creation of the FDIC as it was the only bank whose deposits were protected by the government.
http://en.wikipedia.org/wiki/United_States_Postal_Savings_System
http://www.usps.com/postalhistory/_pdf/PostalSavingsSystem.pdf
That is the real problem. There is an enormous amount of money out there and the people that have it don't have anything productive to do with it. It just sloshes around in a speculative way mucking things up. It's not being used to finance anything productive.
Until the excess money is somehow destroyed, the economy will not heal.
I suspect that most of that sloshing is from excess credit(from excess debt) rather than excess money. Trouble is, as we can see, is that it competes for real returns and real resources just like real money. It's a great system if you're a recipient of that government largess but it's a bitch if you had to work for that real money.
We the people need to play the bankers’ game ourselves. Even corporate giants such as General Motors and WalMart have now gotten into the banking game and are easing their credit problems by forming their own banks. The U.S. public sector is late to the party. States, counties, public universities could take the lucrative system the private banking industry has created for itself and turn it to productive use in the public interest.
+11
State banks will come. Only viable option to fight the tyranny. Back 'em with Silver, Gold, and Commodities (Hemp?).
Better than a negative rate. Anywho, we may have China by the balls when it comes to holding our lame debt, but their next step will be to funnel all of those lil rays of light into the one big ray of light. The philosopher's stone only "works" so long, because sooner or later the dupes find out.