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$29 Billion 1 Month Bill Prices at... 0.000%
Welcome to ACME bond auctions. This is the world of looney tunes where Tim and Ben, the rescue rangers, run the printing press and the toilet paper issuance facility.
Also, do primary dealers feel like 0.000% is an attractive rate all of a sudden? $102 billion tendered. Hmm, who'd a thunk it.
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hahah yup we live in a Command Economy, comrade Tyler! Quick, do not let the Politboro see what you have posted!
Does this mean the Fed bought the Treasury's paper? Or am I missing something? Who else would be so foolish as to do so?
Not foolish, just scared. Yield is predicated on risk. High risk will result in a low yield environment. Also, we're talking about 1 month duration here... If a certain something hits the fan, I wouldn't be surprised if the yield goes negative.
The yield in Japan has gone negative many times in the last 15 years--and stayed there for months at a time. This is about perceived risk and also obviously strong demand for a perceived safe haven.
I can think of some "fools" out there:
Some believe the dollar will have a (relative) rally ... some are anticipating a dollar carry unwind.
And there are still some folks who - believe it or not - don't think the Fed can print fast enough to overcome the inevitable massive debt deflation.
Touche'. In that respect foolish. Parker Brothers should come out with a new version of Monopoly which should include an Epson Printer.
Would that be the Great Recession Home Version, where you don't actually need money to buy Boardwark and Park Place ... until you go around the board 3 times & hope you have it in the future?
That's what the game leads to. In the first half you can mortgage your house at full value and 0.0% interest to buy another property, Boardwalk. If your teammates land on Boardwalk, and they're broke, you'll just charge them interest of 29.99% and hope that they'll be able to collect rental income from their cheaper housing units to make up interest and principal. Watch out though, if you don't make your health insurance payment, do not pass go, do not collect $200 in stimulus, go straight to jail.
"go straight to jail."
Indeed -- what's missing from our recent saga is perp walks. Trillions up in smoke and almost no one is going to do time?
That's the virtue (I'm using this term loosely) of being a banker. http://www.zerohedge.com/article/senator-sanders-place-hold-bernanke-reconfirmation-chairman-will-need-60-senate-votes-overri#comment-149890
>include an Epson Printer.
No need. An LCD with room enough for 16 digits will suffice
Well there is a potential 1.4 quadrillion in derivatives to go bust. That's the fear. Don't pump up liquidity, the derivatives bets go belly up, and you have up to the amount in derivatives lost that can dissappear, which causes a chain reaction to every bank that has loans with other banks. Any bank that has it's inflows crushed because other banks can't pay them back on other loans will be crushed. Businesses who rely on these banks, will go bust. Thus the deflation spiral.
But the other side of the coin is this. If you do try to print enough money, you get inflation.
What we're seeing is the formation of black hole number 2.
The first one, is the deflation bottomless pit. That's the big original black hole.
The other one, is the hyperinflation stratosphere black hole.
How do you stop from being sucked into a black hole? Simple, create another one that pulls you the other way.
That's what we have.
So we have the contraction of the physical economy, the true deflation, that cannot be stopped unless we fill that bottomless hole. Which cannot be.
But we're going to get hyperinflation BEFORE we can ever fill that bottomless hole.
Again, I can see gold 10k, and gold 500. I think we can get to gold 10k, and then get to gold 5 hundred. Before hyperinflation, really hits, and then it's what, gold 100k, gold 1 million? maybe it only goes down to 2k after 10k, but wild swings up and down will be the rule.
Meanwhile, the whole time our physical economy is contracting, or deflating. Job losses, less goods sold (for higher prices).
So we do have deflation and inflation. Same time, both interacting with each other, both are canceling each other out. Or so the thought. It really isn't, but they believe it is.
It's two black holes counterbalancing each other. Or attempting to. We're all stuck in the middle.
We can have one blow out (but at any time it can be EITHER WAY), but my personal expectation is we're going to get multiple blowouts, both ways. Up and down. I don't know the speed, it could be days or weeks once it really starts. But again I can see gold going up tremendously, then reaching multi-year lows, before exceeding it's previous run up, then perhaps even lower than the low point that breached the multi-year lows, etc, etc.
So if the powers that be have created a situation where things can blow out massively either way. EVERYBODY in the market can be blown out at any given time. My guess is that when things move, it'll be because the powers that be decided they had no other choice. I don't see them being on the sidelines when this happens. I think when either they jump onboard one side, or acquiesce to what must happen, is when we'll see the violent shifts. It could really be either way.
The key is to know that if you can survive the trade, it'll bounce back the other way.
So we are contracting and deflating, because no matter what amount of money we pour into it, it will not fix it. BUT, eventually that amount of money will indeed infect everywhere and the cat will be out of the bag.
In fact, part of the solution is to not let this hot money enter the hands of regular people, but without that, how can anything be solved?
So less is produced, costing more, and everyone is poorer. Less is produced, costing more, and everyone is poorer. Repeat. Repeat. Repeat. But the numbers don't look so bad.
The numbers get bigger on one end, the numbers get smaller on the other. Less business is done, and less wealth is created. Only more numbers on the books to make things look
not as bad'.
Eventually a breaking point hits.
So personally I'm in BOTH the inflation and deflation camp. I think either side is COMPLETELY wrong, but together they are right.
Overall though I think hyperinflation is the long term way. Followed by deflation of that hyperinflation that will still make the deflating hyperinflation, still up in the stratosphere. In other words think 1.1 million for gold going down to 1.050 over the course of 10 years. It's a slow deflation as the people who end up with the money after hyperinflation, can only spend what they have, and not create more.
It's not about which way is right, it's about which way is currently running things. Because both sides will have their days. Only people that see BOTH sides coming, will have a good shot at surviving.
Because as bad as it gets, it's still going to be both. No matter how far we go down, hyperinflation can kick in. No matter how far up we go, deflation can kick in.
There is no 'safe' bet. They are ALL bets. One which can be manipulated at the drop of a hat. My guess is, it will be.
Very quantum type thinking. The cat is both dead AND alive.
thank you,captured my thoughts perfect..heatmiser olsen
my thinking too anony...thank you!
you should get an online persona so we can start to imagine your character.
Very nice work there, on the black holes. :D
Sorry, thought I was already signed in :)
Nice work on the black holes.
You should get an online persona so we can start building your character. :D I'm pretty sure Chumbawamba is a 4' tall green dragon sitting on a pile of gold next to Gordon.
I guess it depends where you currently have your money. If you think that the little experiments that the Fed is running with the swaps and the Money Market funds to drain liquidity might taint your holdings in a MMF, why not move your money to short term bills? If the crap the Fed shovels in to the MMF blows up, wouldn't the MMF break the buck? Then your cash would lose value. On the other hand, at 0%, you can fully expect to get back 100 cents on the dollar from the Treasury. Make sense?
Yes. People seem to have forgotten the run on MMF's in September of 2008, which prompted Bernake to prop them up.
The only thing you left out is deflation. With prices going down, then a safe haven in your own currency at 0% looks real good.
I think so. My guess is that the big players want to keep their powder dry for the next leg down, and the Fed's inevitable raising of rates.
http://en.wikipedia.org/wiki/1998_Russian_financial_crisis
Oh no theres a financial CRISIS. I'd watch but I gotta make more predetor drones and launch more space shuttles. Call me when the IMF loans us money.
I love the IMF! Don't you dare talk bad about our global overlords! Do you hate the planet or something? Do you want the polar bears to drown, is that it?
New World Order
by Justin Fox
"In the view of many outside the U.S. (and some within), the only way to limit such excesses is through a bigger, more powerful IMF that can act as a central bank to the world--and knock heads when needed."
http://www.time.com/time/magazine/article/0,9171,1877388-1,00.html
Yes more power will fix it. In fact absolute power will fix it. In the hands of the righteous, unfallable, uncorruptable global elite, it'll work perfectly.
I'm going to go turn my lights off to save elecriticity so thier huge monsterous data centers can ferret out ALL THE WRONG DOING ON OUR PLANET.
Thank you for posting this! To many people think that this insanity is all by chance. Soros didn't back a man into the White House and not expect to profit from it! Soros says the US is a declining power, and his man is in charge, who wants to bet that Soros is wrong?
+10
the phrase alone causes me to be terrorized.
Agro. Missed you!! Big hugs.
hahahaha.Luv it!
I don't see the bid to cover. Is this the one that was over 5? I thought that's what I heard on teevee.
Bid-to-cover at 5.33:
http://www.treasurydirect.gov/instit/annceresult/press/preanre/2009/R_20091208_1.pdf
Thank you. That's crazy!
What is really crazy is that 99% of the people either don't know or don't care. They are all watching cnbc report AAPL earnings, as if that is an important indicator.
So ... is that smart money or dumb money chasing those treasuries?
Printed Money
so we got the dollar rallying massively, commodities selling off hard but the SP and Qs go flat? Worst possible situation for anyone trying to capitalize on this
I mean we got tens of billions, potentially hundreds, willing to sit parked at ZERO fucking percent? What is this, infinity leverage?
If your name is not HAL9000, you had better be sitting on the sidelines. My mattress is looking like a better and better investment with each passing day of insanity.
It's monkey games with currencies until they are about to lose control.
Then it's a deep step devaluation.
They will make you miserable about your gold positions. That is until they go nuclear on the currency.
Overnight your despair will become joy.
Hmmmm....indeed, indeed.........
This would probably be an indication that Dubai has set off a chain reaction of asset liquidation.
And people are talking about Ben raising rates. LMAO. If he does, it will just be a political stunt that further sinks the banks and floating debt holders. ROFL. BANANA REPUBLIC.
Talk about selling snow to an eskimo
Why would anyone buy Treasuries yielding 0% and denominated in USD?
Damn, I guess there is so much cash sitting around but its not in my house.
What if the t-bill buyers had counterfeit cash? An easy way to convert it?
I once read a piece about negative rates in the depression era.
Maybe zero hedge should look into that one!
The Taylor Rule suggests that rates should currently be -6%!
I'm sure the FDIC would love that.
Don't drug trafficers have houses full of cash earning no interest also? Are they the model for the US financial economy?
This sickens me...where can I borrow at 0%? I got another school bill comming up and would love to beat my fixed 6.8. Shit with the fees to by this trash it's paying someone to hold your money...utter lunacy.
Or the more realistic option Uncle Ben is just paying for it with his Fun Bux!
This is truly mind boggling. Why is everything pointing to some sort of "event" in the January to March 2010 time frame? You have 1-3-6 month yields persistenly in real negative yield territory for over 60 days now when adjusted for their inflation numbers. As mentioned above the Taylor Rule suggest a -5% real yield. Something or someone is going to hock up a hairball in Q4 or just plain die when this year is over.
Ah well, gotta get those bonuses courtesy of the taxpayers first then they can barf the system again.
Can someone please explain the meaning of johngaltfla's avatar?
Thanks
From "V for Vendetta"; see http://electricshadows.wordpress.com/2006/04/15/v-for-vendetta/
Retail bankruptcies, perhaps, after the holiday shopping season fails? Then what will that do to CRE? Just a thought.
Mr Blutarsky
But of course, thanks ex ante. Here is Ben Bernanke and what he is doing to the world's monetary system:
http://www.youtube.com/watch?v=a9JYq-mXprw
Bingo. The system broke...they strung together a whole year for cashing out and bonuses...then it's off to the bunkers and the whole thing burns.
I figure a lot of the banksters had a lot of property and bonds to get rid of, plus needed time to make exit plans.
All exit plans should now be in place.
Only question is, do they hand off the whole mess to govts/chumps/taxpayers in an orgasmic spasm or do some try to stay private and keep on milking? I bet it's the parlor conversation of the century in certain steam rooms.
Zero percent. Oh yeah, inflation is coming soon. Real soon. Yeah, right.
The last time that the 1-month T-Bill auction came in at 0.000% (12/23/08), other market data included:
TED Spread @ 1.4263
VIX @ 45.02
AA Spread @ 3.445
BBB Spread @ 7.575
Euro/$ @ 1.3947
At the close yesterday (sorry, don't have quick access to #'s for today), those same measures were:
TED Spread @ 0.2066
VIX @ 22.10
AA Spread @ 0.168
BBB Spread @ 1.878
Euro/$ @ 1.4813
Given all of that, are the markets overpricing liquidity, underpricing risk, or am I foolish to even believe that market forces are still driving prices?
There's that foolish word again, but I'm not calling you that. Just what is a market force these days?
Must be that large pile of Wall Street bonus cash going to work at 0%. Can't imagine anyone else with money.
How useful is the TED spread as an indicator when the banks are all propped up? I mean, LIBOR is a pretty irrelevant indicator now, is it not?
Amazing that no one has pointed this out yet.
It's the end of a phe-NOM-enol year for the equities markets. If you've made a killing, are you going to risk sitting in the market for the rest of the year?? HELL NOOOOOO.
Fire up the JET, we're hitting Aspen two weeks early this year!!! WOOOHOOOO!!!!
1 Month T-bills are just about the safest, most liquid security on the planet. And they make your balance sheet look all pretty for EOY reporting.
Come on, guys... put the tin-foil hats away for 60 seconds and use your brains.
I am waiting for you now at Little Nells, and wearing my Zero Hedge t-shirt and sipping on a Cognac, lemon juice, and Vermouth cocktail.
Shit man... they're sellin' t-shirts here? Where?
Haven't you all ever heard of art for art's sake? Philistines!
Merely to bid is to win, and the ineffable delight of returning to where you began, is a sublimity beyond compare, a glimpse of the immortal. But you know nothing of this. Bah!
Virtue is its own reward!
0.0% ? My take on this would be that devaluation is coming sooner than it may appear.
deflation means you will have less cash. inflation means everything you need to buy will cost much more. both will happen.
It's the patriotic thing to do.