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Bill Gross Warns QE3 Is Coming In The Form Of "Operation Twist" For The 2 Year

Tyler Durden's picture




 

Bill Gross released a very troubling tweet earlier:

Why is it odd? Because as David Rosenberg predicted two weeks ago when he expected that Operation Twist could be coming back with the Fed "capping" the 10 Year, Bill Gross, who has Larry "Fed Expert Network" Meyer in his ear and thus knows better than most what is coming, is predicting some "Twisting" though not at the 10 Year mark, but at the very short end. This is very disturbing. Because as we suggested at the end of May, QE3 will in reality be Operation Twist 2...

This means that Rosie's prediction that "the Fed would basically lose control of its balance sheet" could be about to come true, and in fact be far worse than expected, because it would mean that not only is the Fed no longer able to control the 10 Year but is concerned about controlling the 2-3 Year sector, a place on the curve that the Fed chairman has typically never had much to worry about.

Incidentally, we wondered earlier why not a single OTR 2 Year bond was tendered to the Fed during today's POMO. Here is you answer: why sell today at 0.44% when you can wait a month and sell them back to Brian Sack at 0.00%

Below we repost the article from May 31, as this topic may suddenly be everything that people are talking about.

 


In Preparation Of The Fed's Last Doubling Down: David Rosenberg Believes QE3 Will Be Nothing Short Of "Operation Twist 2"

 

It is no secret that to a deflationist like David Rosenberg bond
yields have to go lower... Much lower. With the 10 Year flirting with a 2
handle one would think he would be content. Alas no. In fact, as he
suggests in his piece from today, Rosie is convinced that the next
iteration of QE will be nothing short of a redux of the 1961 initiative
to kill the then gold exodus known as "Operation Twist" (recently dissected
by the San Fran Fed). Incidentally it was the same Fed that compared
QE2 to Operation Twist. It is only logical that Rosie would then suggest
that QE3 would be nothing short of a complete clearing of the 10 Year
bond in the market via the Fed in order to anchor expectations that the
10 Year rate would never go up (or reasonably "never") in the
biggest gamble of all: that the Fed will attempt to both control its
balance sheet and target Long-Term interest rates, a mission doomed to
fail...But not like that will prevent the Fed from setting off on such a
mission, especially following today's official confirmation of the
Housing Double Dip (someone page Jim Cramer). As Rosie says: "Now it is
doubtful that the Fed would ever target the long bond. In fact, the Fed
may even want it to be higher in yield to ease the pressure on radically
underfunded pension funds. While the Fed can either target its balance
sheet, which it has been doing with these QE measures, or target
interest rates, it cannot do both at the same time. So the next 'QE' will not be called 'QE' but rather something else — maybe Operation Twist 2 (OT2 — you heard it here first). The Fed would buy up all the 10-year notes needed to clear the market at the target "price" (yield). So depending on supply conditions and demand from the private sector, the
Fed would basically lose control of its balance sheet, but if in return
this policy is the one that blazes the trail for a turnaround in the
housing sector and a durable revival in the economy, so be it
." And keeping in mind that the true unspoken reason for Operation Twist 1
was to terminate the outflow of gold from the US to foreign bank
vaults, we find ourselves agreeing with Rosie that an insane idea such
as OT2 is precisely what the Fed would do to avoid a recurrence of the
1961 gold exodus (and attempt to give housing one last failed boost). As
many birds would be killed with one stone, the only downside, that of a
complete balance sheet implosion following OT2, certainly seems quite
acceptable to a central bank now officially run by sociopaths.

From Breakfast with Rosie:

Since
just about everything that has to do with the economy is either
directly or indirectly priced off the 10-year part of the curve, it
stands to reason that this is the segment that matters most for the
economy.
The 10-year part of the curve is the oxygen tank for
the market and macro backdrop, yet the Fed in its latest QE round
centered its efforts more on the front- and mid- part of the curve.

There
is little doubt that the housing market is suffering from a variety of
obstacles, but what is clear from the consumer survey data is that households do not believe that interest rates will come down any further.
The Fed can only do so much to deal with a de facto vacancy rate of 10%
for the homeownership sector (double the norm) but every little bit
helps at the margin and certainly it can do a much better job at
influencing affordability levels to stimulate some demand growth.

People
need to be convinced that once they make the decision to finance a
purchase that they won't run into a period of rising rates that could
impede their debt-servicing capabilities
. This is where
the Fed can play a role in influencing expectations and it is critical
(this is particularly true for borrowers who are up for variable-terms
mortgages).

Look, we know that: (i) Bernanke is a
disciple of Milton Friedman, and (ii) one of Friedman's classic pieces
of economic research pertained to the 'permanent income hypothesis',
which postulated that it is changes that are deemed to be permanent, not
temporary, that induce a permanent change in economic behavior. This is
why the "permanent" Bush income tax cuts in 2000 worked so much better
than the temporary rebates unveiled in early 2008.

Therefore, at
the margin, in order to do even more to solve the ongoing depression in
the housing market, which continues to pose as a dead-weight drag on the
entire economy, it may well behoove the Fed in its next round of
stimulus, whenever that may occur (but it will, just not at 1,330 on the
S&P 500), to signal to the public its intent to take down and hold
down the most critical interest rate of all for the mortgage market — and that is the 10-year note.

Don't
think for a minute that this not being discussed — Bernanke talked
about embarking on such a scheme, if necessary, when he was still
governor back in 2002:

Because
long-term interest rates represent averages of current and expected
future short-term rates, plus a term premium, a commitment to keep
short-term rates at zero for some time — if it were credible — would
induce a decline in longer-term rates. A more direct method, which I
personally prefer, would be for the Fed to begin announcing explicit
ceilings for yields on longer-maturity Treasury debt ... Lower rates
over the maturity spectrum of public and private securities should
strengthen aggregate demand in the usual ways and thus help to end
deflation. Of course, if operating in relatively short-dated Treasury
debt proved insufficient, the Fed could also attempt to cap yields of
Treasury securities at still longer maturities ... Historical experience
tends to support the proposition that a sufficiently determined Fed can
peg or cap Treasury bond prices and yields at other than the shortest
maturities. The most striking episode of bond- price pegging occurred
during the years before the Federal Reserve-Treasury Accord of 1951.
Prior to that agreement, which freed the Fed from its responsibility to
fix yields on government debt, the Fed maintained a ceiling of 2-1/2
percent on long-term Treasury bonds for nearly a decade.

Ben Bernanke, Deflation: Making Sure "It" Doesn't Happen Here, speech to the National Economists Club, Washington, D.C., November 21, 2002.

This
was otherwise known as 'operation twist'. There is certainly nothing
preventing the Fed from targeting the 10-year Treasury-note any more
than the Fed funds rate. But the funds rate is already near zero and as
such there is no incremental move there that can benefit the economy. But
targeting the 10-year note in much the same fashion is probably worth a
try and if there is anything else we know about Ben Bernanke. It is
that...

(i) he will be late, not early. So, by
the time this comes the economy may well be back in recession, which in
balance sheet cycles tend to occur every three years, so mark 2012 down
in your calendar;

(ii) he is willing to be very
aggressive when the time comes — he has certainly proven that. Back in
2007 or 2008 for that matter, who believed that short rates were going
to vanish entirely and that the Fed would be buying assets by early 2009
?

Now
it is doubtful that the Fed would ever target the long bond. In fact,
the Fed may even want it to be higher in yield to ease the pressure on
radically underfunded pension funds. While the Fed can either target its
balance sheet, which it has been doing with these QE measures, or
target interest rates, it cannot do both at the same time. So the next 'QE' will not be called 'QE' but rather something else — maybe Operation Twist 2 (072 — you heard it here first).

The
Fed would buy up all the 10-year notes needed to clear the market at
the target "price" (yield). So depending on supply conditions and demand
from the private sector, the Fed would basically lose control of its
balance sheet, but if in return this policy is the one that blazes the
trail for a turnaround in the housing sector and a durable revival in
the economy, so be it.

If the Fed were to be concerned
about the impact that any further balance sheet expansion could have on
the U.S. dollar, it could always nudge the short end of the Treasury
curve up in support of the greenback (short-term spreads matter more in
the FX market). By doing this, the Fed would also lend some much-needed
support to the troubled money market fund industry (for more on this
front, have a look at Low Rates Put Pressure on U.S. Money Markets Funds
on page 13 of today's FT). So much can be accomplished with such a
policy—the upside potential will be worth it.

However,
politically, the Fed has to wait for the next downturn in economic
activity and reversal in the stock market so that those on Capitol Hill
that are lamenting the Fed's interventionist efforts end up begging for
more. This could come sooner than you think, but likely not until we see
the whites of the economy's eyes — and early signs are showing a
visible sputtering in growth.

One last item to note. If, say,
the 10-year note were to be capped at 2 1/2%, where it was at ahead of
the QE2 program last fall, compared with the current 3%-plus level, the
total return for a 10-year strip would come to over 10% in a 12-month
span. Now put that in your pipe and smoke it!

 

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Tue, 06/14/2011 - 15:14 | 1368563 baby_BLYTHE
baby_BLYTHE's picture

they are going to keep printing. I don't know why anyone still doubts this

Tue, 06/14/2011 - 15:31 | 1368621 nope-1004
nope-1004's picture

So by capping the short end of treasuries, the objective is higher bond yields, and thus inflation?  Can someone help me with this?

If that's correct, then the USD is on even thinner ice right now, is it not?

 

Tue, 06/14/2011 - 15:32 | 1368641 gmrpeabody
gmrpeabody's picture

That isn't ice..., it just really cold water.

Tue, 06/14/2011 - 17:15 | 1369025 mkkby
mkkby's picture

This is actually funny.  As long as the Fed, or China, or some idiot is willing to buy treasuries at absurdly low yields the US gets essentially free money.  It's never gonna be paidback -- this is just Greece on steroids. Every dollar lent to the US is free military, welfare, social security and everything else.  Bring on free health care, please!

The US is able to spend double the taxes taken in.  As a taxpayer I love the half off sale.

Tue, 06/14/2011 - 17:23 | 1369048 falak pema
falak pema's picture

That's how the mafia hooks the junkies...free powder...until he's hooked...then you pull the plug and he's cooked good. Classic ploy. The payout is huge. 

Tue, 06/14/2011 - 18:33 | 1369194 masterinchancery
masterinchancery's picture

The free booze is great, but the hangover is a killer.

Tue, 06/14/2011 - 21:05 | 1369519 tiger7905
tiger7905's picture

Yra Harris believes they msy also fix long term rates.

http://goldandsilverlinings.com/?p=1219

Tue, 06/14/2011 - 21:11 | 1369530 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

As in "half off" your purchasing power since 2001!?

 

Tuco Benedicto Pacifico Juan Maria Ramirez

Wed, 06/15/2011 - 03:54 | 1370183 XPolemic
XPolemic's picture

Reminds me of an old saying:

If you borrow 1000 bucks and can't pay it back, you have a problem.

If you borrow 10,000,000,000,000 bucks and can't pay it back, your creditors have a problem.

Wed, 06/15/2011 - 06:53 | 1370293 Urban Redneck
Urban Redneck's picture

How is the half-off food and gasoline working?

Tue, 06/14/2011 - 15:36 | 1368646 buzzsaw99
buzzsaw99's picture

The Corleone family wants to buy you out (of the t-bond market bitchez).

http://www.youtube.com/watch?v=aiZYhhE1HVU

Tue, 06/14/2011 - 15:57 | 1368734 Arius
Arius's picture

but, i am not selling...

Tue, 06/14/2011 - 16:36 | 1368893 buzzsaw99
buzzsaw99's picture

i don't want to go on the cart!

http://www.youtube.com/watch?v=grbSQ6O6kbs

Tue, 06/14/2011 - 16:52 | 1368971 swmnguy
swmnguy's picture

That's what you think.

Tue, 06/14/2011 - 15:47 | 1368692 Concentrated po...
Concentrated power has always been the enemy of liberty.'s picture

higher bond yields would indicate investors wanting compensation for higher inflation expectations.  But it's usually a lag on the way up due to inability of the fed to push the brakes on the economy.  Volker got ahead of it and produced a positive real return and killed inflation for a bit.

But it's not happening that way this time.  It's wag the dog.  The solvency issues will push the long end up but not for inflation expectations.  Instead for hyperinflation, loss of confidence.

Tue, 06/14/2011 - 15:44 | 1368693 Bam_Man
Bam_Man's picture

"So by capping the short end of treasuries, the objective is higher bond yields, and thus inflation? Can someone help me with this?"

No, the objective is to give the banks a steeper yield curve and thus a more lucrative carry trade.

The Fed is clearly in the process of "giving up on a housing recovery" by deciding to re-capitalize the banks over a longer period of time via a UST carry trade.

Tue, 06/14/2011 - 16:07 | 1368775 chumbawamba
chumbawamba's picture

"The Fed is clearly in the process of 'giving up on a housing recovery' by deciding to re-capitalize the banks over a longer period of time via a UST carry trade."

In other words, it's time to kickstart the next phase of The Plan.

I am Chumbawamba.

Tue, 06/14/2011 - 16:32 | 1368834 swissinv
swissinv's picture

riding the yield curve

 

Wed, 06/15/2011 - 04:04 | 1370190 XPolemic
XPolemic's picture

No, the objective is to give the banks a steeper yield curve and thus a more lucrative carry trade.

That would imply that there are still borrowers to take the long end, and that people will pay their mortgage.

Tue, 06/14/2011 - 15:49 | 1368697 swissinv
swissinv's picture

just listen to good Tyler and focusing on the 10Y

Tue, 06/14/2011 - 16:21 | 1368825 Banjo
Banjo's picture

Wasn't this article saying the Fed is going to buy the 10yr bond and allow shorter term less than 2yr bonds to rise?

 

Fri, 06/17/2011 - 23:47 | 1379557 American Dissident
American Dissident's picture

Google Financial Repression.

Tue, 06/14/2011 - 15:31 | 1368637 trav7777
trav7777's picture

I don't know who this idiot is in this article who thinks that people aren't buying houses because they are worried about fking future interest rates rising!??!

People aren't buying houses because they are POOR credit risks due to lack of savings and income.  There are plenty of NINJAs willing to robobuy as many houses as necessary, but they can't be lent to at ANY rate.

We LONG ago passed through all of the ablebodied homebuyers.  There are too many houses and too few buyers.  The market must clear to find a real level of demand.  Gov't has been pumping the housing market for well over a decade.  That distortion will take a LONG time to burn through.

For someone who has savings and income, looking at locking up 30 yrs of interest payments for an "asset" that has shown to be a crapshoot is not a good decision.  The market will find a price level where houses sell; we are far too high for that and rates mean jackshit when the income can't pay any coupon

Tue, 06/14/2011 - 15:50 | 1368704 dick cheneys ghost
dick cheneys ghost's picture

Shiller says housing could go down for another 20yrs........and some are saying another 8 million foreclosures yet to hit....

Tue, 06/14/2011 - 16:53 | 1368955 ZeroPower
ZeroPower's picture

Exactly right trav, for those able to anyway, absolutely no reason to try their hand at the property market again, after virtually everyone who bought in '06 and after got literally hosed. Not to mention the flippers, but fuck them in the first place.

As for a further 20yr housing prices depression, unlikely as i believe prices shouldnt take that long to bottom (what is that, 5 adminstrations?) but clearly these aren't the droids were looking for.

Tue, 06/14/2011 - 21:41 | 1369596 Bicycle Repairman
Bicycle Repairman's picture

Prices will take 20 years to bottom, because that's what they want.  The government will keep intervening to slow the slide.

Tue, 06/14/2011 - 17:54 | 1369131 wintermute
wintermute's picture

It's not even that good. 4 million of the foreclosures you mention will be stalled in "quiet title" cases clogging the legal system for decades.

Fannie, Freddie, JPM, Citi, BoA et. al. have subverted the whole system of property transfer in order to churn, secondary market and securitize mortgages.

Denninger has been pointing out this financial H-Bomb for a long time.

http://www.market-ticker.org/akcs-www?post=188065

Tue, 06/14/2011 - 15:52 | 1368714 fuu
fuu's picture

The government has been pushing on that string for 20+ years according to that median home price / gold chart from yesterday.

Tue, 06/14/2011 - 16:10 | 1368785 macholatte
macholatte's picture

the so called "double dip" in housing is just a blip on the chart because there was no serious recovery anyway so the entire discussion about housing is really just blather.

http://www.jparsons.net/housingbubble/

Interest rates are a factor, but not the primary driver. People do not believe that there is a reason to to buy a house or pay their mortgage, so they don't.  And all the hype did not change sentiment.  The country would have been way ahead of the game had TPTB simply worked a way to reduce mortgage principle for main street instead of the continual game of feeding the dead cats, Freddie and Fannie, etc. ..... but if mom & pop actually got some help there wouldn't be any way to swindle the tax payer.

 

 

Tue, 06/14/2011 - 16:47 | 1368935 Ergo
Ergo's picture

Jobs, Jobs, Jobs --- No job security means can't buy a house.  The Fed fails to realize that structural economic problems of this magnitude can't be cured with loose money to the elite.  The issues here are fairness and rule-of-law.  And we threw those out. 

Renting is cheaper, and it let's you leave if you have trouble.  And there are lots of rentals out there, especially from people who are trying to avoid a foreclosure, and are smart enough to turn their house into a tax deduction if they do have to sell for a loss.  (can't deduct losses from your residence, but you can from rental properties, or so I hear). 

 

Tue, 06/14/2011 - 17:05 | 1369012 NotApplicable
NotApplicable's picture

The Fed fails to realize? HA!

These people have built entire careers around apathetically clinging to false belief systems. Why? Because it works for them. There is nothing to gain by rocking the boat (that just splashes water on everyone else, making them mad at you).

In other words, lack of realization is their success, not their failure.

Tue, 06/14/2011 - 18:41 | 1369207 Ergo
Ergo's picture

Good points.  Or, maybe the Fed realizes all too well, and their purpose is to loot as absolutely much as possible for the elite few. 

Tue, 06/14/2011 - 21:03 | 1369523 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Bingo!!!!!!!

 

Tuco Benedicto Pacifico Juan Maria Ramirez

Tue, 06/14/2011 - 18:44 | 1369225 Lord Koos
Lord Koos's picture

Of course... but that would be SOCIALISM.  AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAH!

Tue, 06/14/2011 - 16:22 | 1368838 1100-TACTICAL-12
1100-TACTICAL-12's picture

That's the way I see it also. Everyone who has credit & want's a house has one..

Tue, 06/14/2011 - 17:03 | 1369005 mkkby
mkkby's picture

Maybe you are right, Trav.  Idiots are in the majority and they buy houses because they are approved for a large enough loan.  Smarter people know rates can't be manipulated forever.  And buying when rates are historically low is a trap, which will cause your asset value to lose 10% for every 1% rate increase.

Tue, 06/14/2011 - 21:21 | 1369551 taxpayer102
taxpayer102's picture

@trav7777
In this area of Georgia the top reason homes aren't selling is due to buyers not having adequate credit to qualify for a loan.  "Under contract" signs frequently get replaced with a new for sale sign when the buyer isn't able to qualify.
About 60% of homes that do sell here are bought by America's new middle-class - active duty military, civil service and military contractors.

Tue, 06/14/2011 - 15:17 | 1368569 max2205
max2205's picture

Yield curve to go vertical from 5 yr to 30 yr

Tue, 06/14/2011 - 15:52 | 1368709 Boston
Boston's picture

Very possible.

After riding the 7-10yr notes up for three months, I got out and put the entire position into sub-5 year notes.

If this is true, I will thank my lucky stars and just ride the curve down over the next 6-12 months.

 

Tue, 06/14/2011 - 16:02 | 1368755 chdwlch1
chdwlch1's picture

Can't help but think of Top Gun...

Maverick-"He's going vertical, so am I"

Goose-"We're going ballistic Mav go get him"

Maverick-"No way Jester, You're mine"

Goose-"Come on Mav do some of ..."

Tue, 06/14/2011 - 15:13 | 1368572 lizzy36
lizzy36's picture

Great.

Now i have a visual of Bernanke and Gross playing operation twister, and Leisman watching from the sidelines.

Even my visuals are being perverted. DAMN.

Tue, 06/14/2011 - 15:27 | 1368594 hedgeless_horseman
hedgeless_horseman's picture

Cramer has the spinner in hand and he is again saying, "Everyone gets long here and nobody gets hurt."  This time, however, he means Treasuries, not stocks.

How is the SEC's investigation into Cramer's company, The Street, proceeding?  Was his "get long" call the Get Out of Jail Free card he hoped it would be?  Seems to be so.

Tue, 06/14/2011 - 16:06 | 1368782 chumbawamba
chumbawamba's picture

"'Everyone gets long here and nobody gets hurt.'  This time, however, he means Treasuries, not stocks."

Oh, thank goodness, because based on Lizzy's comment I thought you were talking about cocks.

I am Chumbawamba.

Tue, 06/14/2011 - 16:07 | 1368758 Cognitive Dissonance
Cognitive Dissonance's picture

With everyone in bed with the twisted Fed why not have some Twister Ponzi fun?

The pictures on the night table are a nice touch Ben.

Tue, 06/14/2011 - 16:10 | 1368789 chumbawamba
chumbawamba's picture

That can't be Ben's bed.  There aren't any butt plugs anywhere.

I am Chumbawamba.

Tue, 06/14/2011 - 16:51 | 1368967 bigdumbnugly
bigdumbnugly's picture

ohhhhhhhhhhh

all this time i thought congressman frank was talking finances when he asks for a hand out of the red and into the green.

i shoulda known...

 

Tue, 06/14/2011 - 21:02 | 1369513 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Ever notice how Barney Frank always talks like has something in his mouth like a cigar or something??

 

Tuco Benedicto Pacifico Juan Maria Ramirez

Tue, 06/14/2011 - 16:15 | 1368801 GeneMarchbanks
GeneMarchbanks's picture

I swear that is Timmy in the picture!

I see nobody giving props to Rosie. I mean, the man called it!

Tue, 06/14/2011 - 16:34 | 1368879 Problem Is
Problem Is's picture

Lil' Wanker Timmay? Nice call...

Tue, 06/14/2011 - 15:15 | 1368578 swissinv
swissinv's picture

and here we go - thx ZH

Tue, 06/14/2011 - 15:19 | 1368580 disabledvet
disabledvet's picture

thank God!  something we've never seen before!  here's what actually going to happen:

http://www.youtube.com/watch?v=8Bd1hqHrUPU&feature=player_detailpage

Tue, 06/14/2011 - 15:21 | 1368585 buzzsaw99
buzzsaw99's picture

This was obvious and inevitable. bonds bitchez

Tue, 06/14/2011 - 15:21 | 1368596 Cone of Uncertainty
Cone of Uncertainty's picture

I'll give that little fucking biatch a twist all right.

I'll twist an snap his shit in a fucking figure four leg lock like Tito Santanna.

 

Tue, 06/14/2011 - 15:25 | 1368600 malikai
malikai's picture

So, if they cap the rate and its still net negative, who is going to buy the bonds?

Tue, 06/14/2011 - 15:29 | 1368613 buzzsaw99
buzzsaw99's picture

the fed's ginormous glubber gut. lol

Tue, 06/14/2011 - 15:32 | 1368644 malikai
malikai's picture

The world is awash with USTs, I don't know what the fuck they're pretending to be smoking, but its not working.

They have to seriously crash things hard and make the US look like a safe haven to get people buying US paper, and even when they do that, it won't last long. Either these guys are the dumbest bunch of fuckwits, and we deserve them. Or, they are by far the most cleptosociopathic masters the world has ever seen and we should submit to them as our overlords and evil gods, for we deserve them.

Tue, 06/14/2011 - 15:40 | 1368661 gmrpeabody
gmrpeabody's picture

All of our 401Ks and IRAs will be buying.

Tue, 06/14/2011 - 16:03 | 1368759 malikai
malikai's picture

Not my 401k or IRA. I cleaned them out and put that in real assets already. I'll smile and laugh the day the GRA is law. Maybe you're right though. GRAs would make for a great treasury scam, just like the SST.

Tue, 06/14/2011 - 15:44 | 1368681 buzzsaw99
buzzsaw99's picture

I'm afraid that you are missing the point. This move is not intended to induce people to buy Ts, in fact, quite the opposite.

Tue, 06/14/2011 - 16:03 | 1368760 swissinv
swissinv's picture

the American way how to buy time - I hope OT 2 is not getting hacked

Tue, 06/14/2011 - 15:22 | 1368605 redpill
redpill's picture

Because price fixing always works out so well in the end...

 

Tue, 06/14/2011 - 15:42 | 1368670 francis_sawyer
francis_sawyer's picture

So this is was what he decided to "fix" in 15 minutes...

Tue, 06/14/2011 - 15:23 | 1368610 Cdad
Cdad's picture

Yes...sure...why not?  Cap the yield.  Just line up the Fed police force in front of the bond pits and demand sub 2% on whatever junk you are printing.  Of course.  Why didn't I think of that?

But is anybody going to cap the retail price of an Abercrombie t-shirt, though?  That is the real issue facing Americans...how to look cool...and avoidably so.  

Price control!  I want it now!

Hello fucking cosmic bunny hole.

Tue, 06/14/2011 - 15:32 | 1368643 Cdad
Cdad's picture

Thanks, BlowHorn, for hiring a 16 year old girl to tell me that, "Markets are liking the upbeat economic data."  Huh?  I guess they figure that her translation of "less than abysmal" is more forgivable because...well, because she is 16.

In the meantime, utter blather continues to poor through my screen, the Blinky Bot gods apparently un fucking concerned despite how Bernanke literally has cornholed the entire congress with the "cut the budget or else...but if you cut the budget...either case an asteroid immediately impacting Wall Street."  Ok...sure...

Price controls, yield controls, and what next....gold redistribution?

What the fuck is going on?

Cue up Maria "no longer curious about anything" Bartiromo [but man that woman has got hair] and a dance line of criminal syndicate Wall Street bankers that will surely say, "Go long EVERYTHING."

Helloooooooooooo

Tue, 06/14/2011 - 15:40 | 1368659 Cdad
Cdad's picture

And coming up on the outside rail....of course...Mutual Fund Redemption!

Who will come out on top...Crocodlile Algo or Mutual Fund Redemption.  The entire "Investing World" is on edge, like a super exciting episode of Dancing with the Stars, and over there, Ma Kettle is blowing on her IRA dice.

What the fuck is going on?  

Tue, 06/14/2011 - 15:50 | 1368722 Ricky Bobby
Ricky Bobby's picture

LOL Great Rant! Rack it.

Tue, 06/14/2011 - 16:15 | 1368768 Cdad
Cdad's picture

Behold...the power of the crocodile algo as it pertains to the Roach Motel [SPY] as it swallows the bile of today's utter nonsense...without so much as a gag reflex.

Who believes in this market anymore?  

And from the Blinky Bot gods, "Get out of our old traditional ways of fighting over raising or lowering taxes."  Right.  That'll fix things.  Do nothing...'cause the bond market says everything is just fine.

Never mind that institutions are throwing their money at bonds with the promise of just above zero yield.  That always signals the beginning of bull market runs...the kind that end up on the floor before you can reach the can.

Cue Bill "I should have stayed on leave" Griffith, and give him a godlike echo effect on his mic, and have him call the great price action on equities...as if the price action was the story...not the symptom...of the crocodile algo, of course, which is kickin' ass on Mutual Fund Redemption...another great stock market sign...right before every fucking thing goes black because some messaging system somewhere has an aneurysm.

I'm sure investors are clamoring for more.  Of what, they are not sure.  T-shirts, maybe...

What an absolute joke the syndicate is pumping these days.  If there is even one person in this country who is fooled by any of this, he should report to the starting line at the front end of the Greek escape tunnel...which I understand is about to get very fucking crowded.

 

Tue, 06/14/2011 - 15:43 | 1368689 francis_sawyer
francis_sawyer's picture

"what next....gold redistribution?"

---

PEOPLE redistribution... (into FEMA camps)... And leave your gold at the door on your way in...

 

Tue, 06/14/2011 - 17:51 | 1369125 g speed
g speed's picture

as in gold teeth?

Tue, 06/14/2011 - 22:14 | 1369715 Yits and the Yimrum
Yits and the Yimrum's picture

+10

LMAO

do you get a credit at the snack bar FEMA for leaving your Eagles at the check in?

just like summer camp of old, with a little HFCS added to the mix

Tue, 06/14/2011 - 15:31 | 1368620 falak pema
falak pema's picture

TD : ZH has coverage on Business Insider. Good Job.

Tue, 06/14/2011 - 15:32 | 1368631 Tyler Durden
Tyler Durden's picture

Inverse good job you mean.

Tue, 06/14/2011 - 15:39 | 1368671 falak pema
falak pema's picture

Pray explain? Don't you want coverage of your article by other media?

Don't get that.

Tue, 06/14/2011 - 15:54 | 1368712 Concentrated po...
Concentrated power has always been the enemy of liberty.'s picture

I would say he views his work as something better than click-bait.  I know I do.

 

i.e. the typical businessinsider headling "The Dow is going to 64356543, find out what stock to buy now!  And also why your Financial Advisor won't help you."

Tue, 06/14/2011 - 15:54 | 1368737 falak pema
falak pema's picture

Yes, OK. But on this occasion it was the whole ZH article w/o any BI comments or spin...Pure reporting IMHO. So the BI reader gets 100% TD input and 0% BI spin...

Tue, 06/14/2011 - 15:56 | 1368727 buzzsaw99
buzzsaw99's picture

i boycott b.i..

Tue, 06/14/2011 - 15:59 | 1368745 falak pema
falak pema's picture

The target isn't BI, the target for ZH is BI readers...ordinary people who don't read ZH. Not every body in main stream USA reads ZH.

Tue, 06/14/2011 - 16:19 | 1368814 buzzsaw99
buzzsaw99's picture

i detest blodget.

Tue, 06/14/2011 - 16:52 | 1368974 Problem Is
Problem Is's picture

Blodget: Howdy Doody or Opie Cunningham?
But Blodget is such a nice clean cut boy...

"He was ranked the No. 1 Internet and eCommerce analyst on Wall Street by <INSERT PHONY GROUP HERE>."

He was "keelhauled" by the dirty, prostituting Spitzer fellow...

"He was later keelhauled by then-Attorney General Eliot Spitzer over conflicts of interest between research and banking and booted out of the industry."

Since Opie failed to address any of the facts in this hammed up self bio... I am quite sure he wasn't guilty of anything...

Tue, 06/14/2011 - 20:54 | 1369497 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Bloomberg, Fox, CNN, ABC, NBC......are the old corporate dinosaur "establishment" dying media.  ZH, Infowars...are the "new" media and quickly becoming the real "mainstream" media at least until the CIA can put together a cyber false flag to shut them and us down. 

 

Tuco Benedicto Pacifico Juan Maria Ramirez

Tue, 06/14/2011 - 16:06 | 1368771 swissinv
swissinv's picture

congrats tyler that you made it into Bloomberg ;)

Tue, 06/14/2011 - 15:33 | 1368624 Fancy Bear
Fancy Bear's picture

At least priorities are starting to be rearranged.

For recovery: jobs market>housing market>stock market

Tue, 06/14/2011 - 15:32 | 1368630 thetrader
thetrader's picture

experts experts, do ypur homework and trust your self;

http://www.thetrader.se/2011/06/14/study-charts-and-dont-get-confused-by-experts/

Tue, 06/14/2011 - 15:29 | 1368636 Silverhog
Silverhog's picture

Too late to place a cap on this mega deficit. There is no chance of austerity and massive taxes on a sputtering economy is suicide with deflation. Cutting taxes this late in the game would require several years for business to gear up and hire. Only real answer is to continue the dollar flood until the economy vomits with hyperinflation.

Tue, 06/14/2011 - 15:36 | 1368645 trav7777
trav7777's picture

cutting taxes lol...will that print us up more oil?

Tue, 06/14/2011 - 16:21 | 1368821 tmosley
tmosley's picture

How much oil does the US government consume every year?

Wouldn't it be better if that oil was used for productive purposes?

Here's a hint: taxes are a means of transferring purchasing power to the government, allowing those governments to compete for real goods like oil and food.  Cutting taxes, while holding other variables steady, decreases the government's allocation of oil.

But then, a death worshipper like you doesn't really understand that.  You just want us all to pay 100% taxes so you can force everyone to submit to your megalomaniacal plan to sterilize 50-97% of the human population.

Tue, 06/14/2011 - 16:23 | 1368843 bob_dabolina
bob_dabolina's picture

Christopher Langan whom has between a 195-210 IQ and regarded as the smartest man in America (same level as Rene Descartes and Leonardo Davinci) is saying the same thing.

You should look him up.

Tue, 06/14/2011 - 16:46 | 1368932 tmosley
tmosley's picture

I believe in the theory of evolution, but I believe as well in the allegorical truth of creation theory. In other words, I believe that evolution, including the principle of natural selection, is one of the tools used by God to create mankind. Mankind is then a participant in the creation of the universe itself, so that we have a closed loop. I believe that there is a level on which science and religious metaphor are mutually compatible.

LOL, yeah, this guy is teh smrat!

Seriously, this guy is dumb as dogshit.  He claims you can prove the existence of God with mathematics.  Let's see the proof, douchebag!  But he won't post it, because it's bullshit, and would be instantly torn apart by any real mathematician as bullshit.

Shit like this is why IQ should never be used as a measurement for anything other than placement of children in special needs classes (both for gifted and retarded children).  Fuck, my IQ has been measured at 161, by professionals.  Given that, you and Trav should throw out your whole theory about IQs, since I am a "dumbshit".

The fact is that IQ is important only to children.  It has an effect on how quickly you learn.  As you get older, you either choose to continue learning, or you choose not to.  The tortoise and the hair is instructive.  The smartest person in the world is totally worthless once he accepts a false axiom as truth, and seals himself off from the possibility that he is wrong.  Just like Marx, who was a smart guy, but totally screwed up his assessment of humanity by the acceptance of a false axiom: http://fofoa.blogspot.com/2010/07/debtors-and-savers.html  This lead directly to the deaths of hundreds of millions of people.  Just like Trav who would commit demographic suicide (how are you going to support 6 billion old people with only 210 million young people?) to "save" us from peak oil (the same dumbshit solution every Malthusian has defaulted to for hundreds of years).  Or like Ben Bernanke, who IS smart, regardless of how he is characterized here, but he has fallen for Keynesianism totally, and beyond redemption.

Tue, 06/14/2011 - 16:49 | 1368959 tmosley
tmosley's picture

I should also note that there is NO WAY to know what the IQs of DaVinci or Descartes were.  They never took the damn tests!  What they did do is keep learning, keep studying, keep thinking EVERY day.  Sure, they were certainly above average, but there is ZERO evidence that they had astronomically high IQs.

Tue, 06/14/2011 - 17:14 | 1369024 falak pema
falak pema's picture

The illuminati had a way of measuring a man's intelligence using a old instrument called an astrolabe and a plumb line...Based on the angle of the dangle of the plumb line and the angle of the sextant deviation to vertical that was projected on the ground  at mid-day precise when the man in question placed the plumb line over his reclining body exactly above his navel...they could determine his mental acuity to call that deviation between dangle angle and sextant deviation. Using pi squared and psi cubed divided by pythagoras's theorem square-rooted and divided by two thirds they could obtain a result that was precise to within one percentile range level. Now, amongst those to whom the question was thus put using this time honoured method by the jesuit monk, who was expert in contraption dangling and sextant angling, the hit parade of Illuminati ratings known to date were as follows :

Copernic : 169

Galileo : 175

Newton : 181

Descartes : 187

DA Vinci  197

Mona LIsa :201

That explains why Mona Lisa'a painting never left the great master; she was his master.

Tue, 06/14/2011 - 17:38 | 1369076 tmosley
tmosley's picture

They see me trollin'...

Tue, 06/14/2011 - 18:55 | 1369260 Lord Koos
Lord Koos's picture

I always thought it was Wan Hung Lo who came up with "the angle of the dangle" theory.

Tue, 06/14/2011 - 20:24 | 1369426 ElvisDog
ElvisDog's picture

Oh, get out, DaVinci invented the helicopter in 1500-something. He had to be a genius. Anyone who sports that head of hair has got to be a genius.

Tue, 06/14/2011 - 23:01 | 1369632 gall batter
gall batter's picture

Chris Langan:

People who wanted to have children would apply to make sure they have no diseases. Why do we have to do it through genetic engineering? Well, we have to let only the fit breed…. Freedom is not necessarily a right. It is a privileged [sic] that you have to earn. A lot of people abuse their freedom and that is something that people have to be trained not to do.

Interviewer:

But who? Who does this training?

Chris Langan:

Well, I’d be perfectly willing to do it myself. Just put me in charge.

 

Tue, 06/14/2011 - 19:15 | 1369295 Vagabond
Vagabond's picture

The nail just got whacked on the head.

Tue, 06/14/2011 - 15:53 | 1368732 Hacked Economy
Hacked Economy's picture

+1, Silverhog.

Austerity measures at this point are not only politically volatile, but mathematically moot.  As so many of us here on ZH already understand, the remaining options are being logically drawn down to only two:  hyperinflation or default.

I personally believe we're going to see both within the next few years in the U.S., as some programs or debts are defaulted upon (or delayed, which is arguably a form of default in itself) to some degree, while Big Ben and Tiny Tim print us enough money to carry us over into the next year.  When we finally run out of road and find ourselves staring at the can we've been kicking for decades, it'll be game over for the U.S. dollar as we know it.

Cool avatar pic, Silverhog.  Makes me wonder if the pooch is trying to wiggle his way into a bite of the hot dog on my plate.  :)

Tue, 06/14/2011 - 18:55 | 1369262 blindfaith
blindfaith's picture

I say hyperinflation wins, and no one can pay their taxes as a result......which begs the question, who the hell in their right mind would want to run for President?

Go down in US history ( if there is one) as the fall guy for the end of a constitutional experiment.  Must be the perks, and directorships waiting in the wings.

Everyone knows what the answer is, there is no choice but to get it from the ultra rich one way or the other, of close up shop.

And, yes, if you freeze up the 10 year yield there is  chance the homes might start moving...provided ( of course) someone still has a fucking job to qualify for a 'pretty please' loan.  But, fear not the Chinese are buying US real estate ( just like the Japanese did).

Tue, 06/14/2011 - 15:39 | 1368657 treemagnet
treemagnet's picture

When the headline scanning bots at skynet figure out the first to sell wins - then it'll get interesting.

Tue, 06/14/2011 - 15:37 | 1368662 Missiondweller
Missiondweller's picture

Sounds bullish for gold & silver.

Tue, 06/14/2011 - 15:38 | 1368666 unum mountaineer
unum mountaineer's picture

effin shit. no zh-er should be surprised. billy gross' sources are the best out there in the expert network field. The Takeaway is that a compounding of the qe programs will happen. By compound I mean qe1 never really stopped. The faucet has been running all this time and the metaphorical sink is overflowing.  

Tue, 06/14/2011 - 15:40 | 1368673 scatterbrains
scatterbrains's picture

How did the 61 version of op twist stop the escape to gold again?

Tue, 06/14/2011 - 15:54 | 1368740 gwar5
gwar5's picture

Interesting description is in the link in the text above.

 

Tue, 06/14/2011 - 16:14 | 1368796 Strike Back
Strike Back's picture

"The idea was that business investment and housing demand were primarily determined by longer-term interest rates, while cross-currency arbitrage was primarily determined by short-term interest rate differentials across countries. Policymakers reasoned that, if longer-term interest rates could be lowered without affecting short-term yields, the weak U.S. economy could be stimulated without worsening the outflow of gold."

 

So this is a flipped operation twist.  Which means the Fed is saying fuck housing, fuck business investment, and PMs to the moon?

Tue, 06/14/2011 - 15:44 | 1368679 Missiondweller
Missiondweller's picture

Tyler,

Are more T-shirts/hoodies being printed? I looked the other day and most products were out in small & medium. I'd love to make a contributiuon through a purchase.

Tue, 06/14/2011 - 15:55 | 1368726 Tyler Durden
Tyler Durden's picture

That's our way to make sure readers go to the gym more often and stay in shape. Never know when one will need to put a smiley face on a building.

And yes, we will get some more soon.

 

Tue, 06/14/2011 - 15:59 | 1368742 Hacked Economy
Hacked Economy's picture

Cool beans.  I'll be checking out the store as well.  It's time for me to finally become involved on the "support" level, too.

Tue, 06/14/2011 - 19:57 | 1369361 famousamos
famousamos's picture

<removed>

Tue, 06/14/2011 - 19:56 | 1369364 famousamos
famousamos's picture

The 80's called... 

Tue, 06/14/2011 - 19:58 | 1369365 famousamos
famousamos's picture

temporary bizzaroland multi post. Love the ZH app, BTW.

Tue, 06/14/2011 - 19:14 | 1369288 CrankItTo11
CrankItTo11's picture

Why is there not a ZeroHedge app yet? I'd pay for it, or you could make it free and let ads do the rest. Just saying... I think it's a good idea.

Tue, 06/14/2011 - 19:24 | 1369313 Vagabond
Vagabond's picture

It already exists, look for it.

Tue, 06/14/2011 - 20:01 | 1369375 CrankItTo11
CrankItTo11's picture

Thanks :-) Didn't realize there was one for Android already...

https://market.android.com/details?id=com.Jaybus.app.ZeroHedge&feature=search_result

Tue, 06/14/2011 - 15:45 | 1368684 kito
kito's picture

instead of viewing it as the fed worried about short term demand, cant we take the position that targeting the two year be logical and less burdensome for the treasury? it keeps short term lending rates very low and pushes other buyers into longer maturities that the treasury doesnt have to deal with on an immediate time line. 

Tue, 06/14/2011 - 16:01 | 1368748 InconvenientCou...
InconvenientCounterParty's picture

There are a number of benefits including the one you mention.

Fed using PD's to veil debt monetization

PD's (mal) investing in equities

PD's agreement to write 100x levered shorts on commodities at just the right time..

playing teeter-totter with FX pairs at opportune times

As long as bennie bux trade for crude, the game continues.

Tue, 06/14/2011 - 15:41 | 1368686 Archimedes
Archimedes's picture

I admit I am no Bond expert but I am confused. Why would they try to cap the two year? Are they now just trying to buy time for the US and hope things turn around in a year or two? Is this a hail Mary?

Why wouldn't they target the ten year to keep interest rates low. Are they admiting housing is a lost cause?

By manipulating the short end wouldn't they cause the long end to blow out causing housing to get worse and stocks to go down? Is Bernanke now forgetting about the wealth effect and now concentrating on keeping America solvent?

Any Bond experts out there that can shed some light?

 

Tue, 06/14/2011 - 15:49 | 1368701 Concentrated po...
Concentrated power has always been the enemy of liberty.'s picture

because the trillions in US Debt are all short duration.  Bernanke is pissing down his leg and Geithner is rolling around in it.

Tue, 06/14/2011 - 15:53 | 1368730 Archimedes
Archimedes's picture

Thanks! That is what I thought. I remember Tyler saying a long time ago the US has something like 2 Trillion due in the next five years or something like that. Maybe it was 5!

Tue, 06/14/2011 - 16:42 | 1368910 SDRII
SDRII's picture

Banks already threatening to hold more treasuries for collateral into August + Basel III liquidity = bid for belly of curve? If bernanke comes in 2 yrs does it really help the banks who see some pickup on the funding side but aruguably given totality of events coming get no major pickup on the asset side? Does force the banks out the curve perhaps and help Treasury move out the WAM?

Tue, 06/14/2011 - 20:36 | 1369457 Dr Zaius
Dr Zaius's picture

The TreasuryDirect web site says that $8.4 trillion (yeah $8.4 trillion) in Treasuries were auctioned in 2010. It doesn't take a genius to figure out that the vast majority of government debt is wrapped up in very short maturity, very small yielding Treasuries. Seems to me, the government and Fed is scared silly that such Treasuries will soon have to yield much more if they are to be sold into an honest market. If the government is paying $380 billion a year with most debt at around 0.25%, guess what the hell happens when those rates revert to normal and go up by a factor of 10x if not 20x or 30x. Kaboom!!! goes the deficit.

Tue, 06/14/2011 - 15:53 | 1368710 Bam_Man
Bam_Man's picture

The Fed is evidently "throwing in the towel" on housing.

Instead they will re-capitalize the banks more slowly over time via a steeper yield curve and thus a more lucrative UST carry trade.

Tue, 06/14/2011 - 16:04 | 1368780 QQQBall
QQQBall's picture

The corner (the market) will throw in the towel, but trying to offset bank losses on RE loans while at the same time real estate continues to divebomb is a fool's errand... or a the Bernank's Errand if you will?

Tue, 06/14/2011 - 15:52 | 1368713 Iceobar
Iceobar's picture

Maybe they're trying to make the inverted yield curve 'illegal'....;>)

Tue, 06/14/2011 - 15:57 | 1368750 topcallingtroll
topcallingtroll's picture

If ben is going to attempt to control rates thruoughout the maturity spectrum then he can cap ten years and maintain a positive yield curve.

If he is just going to buy ten years he risks a yield curve flattening.

Tue, 06/14/2011 - 17:02 | 1368988 ZeroPower
ZeroPower's picture

Simple.

Inverted yield curve = best forward looking tool that signifies an oncoming recession. Not inverted, "all is well".

Tue, 06/14/2011 - 17:45 | 1369101 Iceobar
Iceobar's picture

Yup.....you got it! Recessions will  now be made 'illegal'....;>)

Vive the recovery!!!!

Tue, 06/14/2011 - 15:49 | 1368716 gwar5
gwar5's picture

OT2. 

Bernanke: "Hal, please que the Chubby Checkers and shut down all non-essential functions to preserve oxygen."

Tue, 06/14/2011 - 15:54 | 1368724 topcallingtroll
topcallingtroll's picture

I cant see ben messing with the ten year. I dont see the logic.

He will obviously concentrate on the short end.

Otherwise he risks flattening or inverting the yield curve, a major no no in central banking.

Either the troll is having a brain fart or the logic here is incorrect.

Help me understand.

Tue, 06/14/2011 - 16:16 | 1368819 Arius
Arius's picture

bill gross, pimco..you

get my grip.... if i was a betting man (which i am) would bet against you... that does not mean you have to change your bets though...

you might keep fighting the fed...

myself, definitely woud not...

hope it helps///

Tue, 06/14/2011 - 16:45 | 1368926 buzzsaw99
buzzsaw99's picture

1) ben has inverted the curve before but isn't likely to again.

2) hockey stick is what we are talking about here.

:kissy:

Tue, 06/14/2011 - 17:49 | 1369118 Iceobar
Iceobar's picture

....but....is he left...or....right handed??.....lol 

Tue, 06/14/2011 - 18:06 | 1369153 buzzsaw99
buzzsaw99's picture

bennie has a huge collection of right handed sticks but he skates like a girl.

Tue, 06/14/2011 - 16:01 | 1368754 Greeny
Greeny's picture

Rate caps on 2-3 years treasuries?

They are already too low..

Nothing to worry about at least for now.

Unless Markets go up another 1000 points, maybe then..

Tue, 06/14/2011 - 16:40 | 1368894 ssp2s
ssp2s's picture

But when QE2 is removed (or about to be removed -- i.e., now), rates would be expected to go up.  So pinning the 2 yr keeps that from happening, at least at the 2 yr.  The rest of the curve "twists".

Tue, 06/14/2011 - 17:03 | 1368994 ZeroPower
ZeroPower's picture

Can't twist it enough, unfortunately. See my comment above re inverted YC.

Tue, 06/14/2011 - 16:02 | 1368769 QQQBall
QQQBall's picture

10-year Twister would help CRE mortgage rates more?

Tue, 06/14/2011 - 16:03 | 1368776 xamax
xamax's picture

Who cares about printing even more ?

It is not my problem, future generations shall pay for it.  

Tue, 06/14/2011 - 16:10 | 1368788 TooBearish
TooBearish's picture

Why would gross be short the 5yr if so....don't add up

Tue, 06/14/2011 - 17:13 | 1368827 roymunnson
roymunnson's picture

Bleah

Tue, 06/14/2011 - 16:14 | 1368808 alangreedspank
alangreedspank's picture

 

Operation Twist had the goal of flattening the yield spread between short term and long term debt.

 

My question is: Does this that equate to making the returns relatively the same for lending money to the government on a short term and long term ?

 

 

Tue, 06/14/2011 - 16:43 | 1368937 ssp2s
ssp2s's picture

In the 60s, they were buying the long end and selling the short end, so I believe they were twisting to try to make the curve flat.

The suggestion is that this time they will buy the short end at the 2 yr, so they will twist the curve the other way and make it steeper.

The problem is (among other things) that they may have to buy a lot.

Tue, 06/14/2011 - 17:07 | 1369017 ZeroPower
ZeroPower's picture

The problem is (among other things) that they may have to buy a lot.

Aint no number too big for Benny Boy.

Tue, 06/14/2011 - 16:23 | 1368830 web bot
web bot's picture

We're (#ucked)*100000000000000000000000000000000000000000000

There is no other way to put it.

Despite what we say about Bernanke and his ilk, they are smart people and know that they are running out of options...

This is unbelievable.

Tue, 06/14/2011 - 16:26 | 1368836 CreditcalMass
CreditcalMass's picture

I'm sure our Chinese overlords will be delighted by this development, higer prices on USTs will make it harder for them to play their currency games...

Tue, 06/14/2011 - 16:30 | 1368860 Raging Debate
Raging Debate's picture

 I am a tech guy and marketer. So in 1999 guys like me were supposed to learn economics at the PhD level to understand what Greenspan, the Keating 5, Larry Summers and Bob Rubin were up to when they rescinded safeguards of what caused the last Great Depression seventy years earlier?

But now that I learned economics at the PhD level and am one of a handful that called the W dip in 2008 within weeks of up/down/up timing I am doing all I can do to serve my countrymen, hell the global citizen.

 But I deserve sociopathic leadership acting like the Vikings doing their ass-raping thing? Unless you can explain what you were doing about it in 1999 yourself, fuck you Malaki! Pain is the catalyst of evolution retard. Ahh fight club, a great place to let it all hang out.

Sat, 06/18/2011 - 06:06 | 1379853 malikai
malikai's picture

The fact that your post doesn't even show up threaded to mine and you seem unable to spell displays what I was talking about. I'm a tech guy too. In 99 I was busy hacking, doing all the drugs I could get my hands on, and dipping into every sexy piece I could get wet with. I spent not one second trying to be an Econ PHD, yet I could see the nature of the situation then only slightly less than I can see it now. I'm sorry you wasted your time and money. I suggest you go back to Univerity of Phoenix or just say fuckit and turn on MTV. If you turn the sound off it's a little less painful.

Tue, 06/14/2011 - 16:36 | 1368868 PulauHantu29
PulauHantu29's picture

No one wants a house now..with rising maintenance, taxes, etc...and plunging prices.

Renting is 40% cheaper and falling...and you can move anytime giving you max flexibility.

Plus, think of it...you will NEVER be able to sell it for years to come.

 

Tue, 06/14/2011 - 18:01 | 1369143 Bam_Man
Bam_Man's picture

2004 - "BUY NOW OR BE PRICED OUT FOREVER!"

2011 - "SELL NOW OR BE STUCK UPSIDE DOWN FOREVER!"

Tue, 06/14/2011 - 16:36 | 1368890 So Close
So Close's picture

The debt is too big...  We all agree on that...  The ways out are the follwoing...

1.     Grow your way out.   Not this time.

2. Deafult.   Proably not.

3. Hyper-inflation.  Not the plan but possible.

4. Financial repression.  Bingo...

Check out....

http://historysquared.com/2011/06/03/carmen-reinhart-discusses-financial-repression/

and or 

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/6/4_Jim_Rickards_files/Jim%20Rickards%206%3A4%3A2011.mp3

Comments welcome.

Do NOT follow this link or you will be banned from the site!