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

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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 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.

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).

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!

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.

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.

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



Tuco Benedicto Pacifico Juan Maria Ramirez

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


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

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


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


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...

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