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Everyone Is Now Selling Dollar Bonds
The Fed's scheme to destroy the dollar is taking the world by storm with everyone now taking advantage of the soon to be issued $100 trillion Federal Reserve Note, and issuing wallops of dollar denominated bonds. Robert Mugabe gets the memo last and launches an all out campaign to convert all Z$ based securities into US Dollars. And with that the wholesale debasement of all US dollar debt is off to the races. From Bloomberg:
Germany and Austria led governments
and companies in Europe selling $21.7 billion of bonds in the
U.S. currency this week to take advantage of the reduced cost of
exchanging the proceeds back into euros.
The sales were the most since February, according to data
compiled by Bloomberg, and also allowed nations including Spain
and Belgium to attract a wider range of investors at a time when
they need money to fund fiscal-stimulus programs amid the
deepest recession since the 1930s.
European nations sold $10.4 billion of bonds in the U.S.
currency this week, the most since Bloomberg began compiling the
data in 1999 and beating the previous record of $9.2 billion in
January. Sales by the governments, as well as companies
including The Hague, Netherlands-based Royal Dutch Shell Plc,
added to the $358 billion of issuance in 2009, up 38 percent
from last year, Bloomberg data show.
Germany’s $4 billion three-year bond issue on Sept. 14, its
first deal in the U.S. currency since 2005, came as the nation
plans to sell 346 billion euros ($506 billion) of debt this
year, the most ever and almost half of it in bonds.
The government may issue more dollar bonds “if the
arbitrage opportunity is as good as it is today,” Daube said.
Central bank "arbitrage" proceeds are no doubt used to purchase Kindles, houses built by Toll Brothers, and iPhones. And it continues:
Belgium’s $1 billion sale of five-year bonds on Sept. 8
also took advantage of the relative cost of raising dollars
versus euros, according to Anne LeClercq, head of the treasury
and capital markets division of the nation’s debt agency in
Brussels. The nation plans to also sell 30.5 billion euros of
domestic bonds and 3 billion euros of notes to foreign investors
this year.
Austria sold $1.5 billion of three-year bonds. Martha
Oberndorfer, managing director of the Austrian Federal Financing
Agency, declined to comment on the sale beyond the government’s
press release. Spain issued $2.5 billion of three-year bonds
Sept. 9.
Yet another job well done by Chairman Ben.
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Well I guess it was only a matter of time before europe and japan started puking up dollars. They're getting rid of them like they're going out of style.
They are going out of style.
LOL
+100
+1000
+1000?
You denominating your kudos in dollars now, GG?
So this pressure is inflationary, correct? Seems like the winds change every day..I still see deflation for some time to come...12-18 mo?
Hyperinflation and depression are not mutually exclusive, as much as Shedlock, et al would like to have you believe otherwise. Ask Argentina.
At this point, follwing the advice (of hoarding paper cash) as per Shedlock/Denninger/Prechter will not just mean that you have "missed out" on some "gains" in Gold/Silver etc. but will actually result in MASSIVE losses in purchasing power. It will leave you DANGEROUSLY unprepared for what's coming. We are now, I believe, in the beginning stages of a hyperinflationary depression.
when I read these posts I can't help but think ... Mike Myers, stroking his "gold member".
And where is everyone going to get all of these inflated dollars to buy all of these inflated goods?
Ask Argentina; get back to me on "why it can't happen here."
+100
I am sorry, but "everyone" is not going to "get" any dollars. The people who matter, i.e. the oligarchs, already have them by the boatload. Get ready for the biggest wealth transfer in history friend-o.
" And where is everyone going to get all of these inflated dollars to buy all of these inflated goods? "
Those who are TBTF banksters, and/or savers who have already converted their hoard into foreign currencies or PMs will be the ones doing the buying and spending.
The rest of us will be joining the queue for the soup kitchen.
I agree, I think the end point (or beginning point) is soon upon us. My unique view as to why that is, is due to the state of Fannie and Freddie - the Fed will have to keep buying their MBS unless and until there is real reform there. This continued buying, even in the face of a dying dollar, will put the nail in the coffin.
On top of this, the gov't is essentially "buying" the risk on the other mortgages that get originated - FHA loans. The govt takes all the credit risk, and only the risk-free asset is left. Thus, buying a Ginnie Mae MBS is the functional equivalent of buying a UST.
After Gideon's, I mean Ben's, announcement on March 18th that he would be buying up the entire MBS new issuance market this year, I immediately moved my dollars into hard assets like Oil, and in the intermediate term some asset-backed currencies like USD/AUD (since closed those positions).
Now I am starting to move into gold and other PM's. Ultimately the "oil as currency" trade is going to play out, as there isn't enough demand for oil to support current valuations, but the demand for gold is only going to increase, as people look to move their wealth into the true universal currency.
heh heh
Deflation ?
Folks,
This reminds me of Brazil in the 70s when the currency was called the Cruzeiro. I read an article about a guy who used his savings to buy a new car and kept it in the garage. He figured it was the only way to preserve the value of his savings. Normal grocery prices were 'adjusted' two to three times a day.
The Fed may need to call on the Zimbabwe Reserve Bank for advice.
Although it appears to me, the Fed is doing a fine job as I feel I'm getting shafted with my savings in USD.
Thanks Ben. You a$$h%le
Would it be safe to say then that Hyperinflation is a monetary event while Depression is an economic one? One the blood, the other the body?
Depressions are also generally deleveraging events which is reflected in an economic decline or shrinking of GDP. The problem is that the U.S. as many other western nations, manipulates the data to such an extent real GNP has nothing in parallel with any historical measurements and requires a ton of research to determine the truth. Jim Puplava has called 2009 a "mini-depression" to which I would agree with his points. The problem we are entering into now is that instead of resolving the over leveraging within our economy, we are postponing it for a later time and restructing our economy to accomodate a government sponsored stop-loss program to allow the weak sisters of the banking system to survive. This modification of the banking system will end poorly and in the end we will end up as a second world basket case with far reaching consequences much worse than the Argentine model.
Semantics are of course the issue here:
Remember, "inflation" is frequently meant to represent a rise in prices.
But classical inflation is measured by an increase in the supply of money and debt.
There can be (and often is) a rise in prices even when there is a decrease of money and debt. This is caused by supply-chain interruptions, and supply shortages in some areas which are brought about by demand destruction in others.
So is this a case of bad money driving out good? Borrow and spend it while you can, it will be a cinch to pay off later.
Alternatively, what if this is a development that actually increases the denominator and counteracts the impact of excessive dollar creation. If the world really became dollarized, the fed's balance sheet or the general money supply would not look so out of whack. If you can grow the population or transactions that use dollars the economy can absorb a lot more of them without creating inflation.
If they're offering us$ bonds with australian interest rates that's actually quite important. By eliminating the need to convert to aud to invest in the spread, they are mitigating the currency damage the money flows between currencies would do. Even better since the buyers wouldn't need currency protection and could just buy it straight.
This is soaking up the supply of dollars no? Whoever is buying these bonds will be paid back in worthless toilet paper when the bonds mature. Good deal for the governments, bad for whichever idiot buys the bonds.
I suspect the group buying these bonds are the original supplier of the same bonds - the US.
"Robert Mugabe gets the memo last and launches an all out campaign to convert all Z$ based securities into US Dollars"
ouch. brutal.
Yes but at least he has collateralized the $100,000,000,000,000 with those three rocks.
+10,000, due to kudos inflation. Prior to GG's kudos QE, you would have earned a solid +1.
LOL!
If I have 10 kudos, can I keep one in reserve and lend out 90?
You can lend a million on zero reserves if you prefer the American way.
More prudent than prudential. LOL
Isn't it just a way to get out of the trade without officially selling their dollars?
I mean the transaction is the same. Give me money in my national currency and I'lll give you dollars back. So they are selling their dollars, just holding the payoff until later.
I guess most people don't realize the run on the dollar has begun.
If that is correct, Dragon selling a dollor bond will be the event to watch out for.
The real question is: who the hell is buying?
What did you think all those Fed foreign currency swaps were for?
US fund managers buy the dollar denominated foreign bonds.
http://debtsofanation.blogspot.com/2009/09/debts-of-
spenders-german-government.html
I can certainly see the logic for foreign governments SELLING bonds denominated in dollars.
What I would like to know is, who are the idiots that are buying them and what can they possibly be thinking?
you are...via the FED putting all that foreign currency from those neverending swap lines to good use of course.
Maybe this is helpful, yesterday on Bloomberg about Germany's Second Dollar bond sale:
http://www.bloomberg.com/apps/news?pid=20601100&sid=aV0cLrKm4mm8
Goes into a little more detail of what Germany is thinking and other Euro nations:
But maybe someone smarter than myself reads it another way?
The largest QE honey pot/liquidity pool on the planet. Why not take a bath?
" I can certainly see the logic for foreign governments SELLING bonds denominated in dollars.
What I would like to know is, who are the idiots that are buying them and what can they possibly be thinking? "
Perhaps they are 'investing' in those bonds for YOUR 401k ?
What are the maturities on those bonds....I'd like to buy $$ right before maturity
Sounds like a plan.
Dumb question: When these bonds are purchased, are they purchased in the home currency or in US$?
The buyer would be purchasing the bond (for a fixed amount of dollars) using the home currency of the country issuing the bonds at the present exchange rates. At maturity, the buyer of the bond would paid back alongwith interest in depreciated dollars (relative to the home currency) - or at least that's the plan.
Seems they are borrowing in $ and immediately converting- buying- Euro and repaying in dollars at the future exchange rate. Obviously $ will continue to fall w/respect to Euro so it will be cheaper to repay...precisely what Hungarian borrowers thought when they borrowed in HUF at low rates and repaid in Swiss Francc and Euro. Oh, wait, that didnt work so well for them.
If this is indeed how it works then wouldn't that serve to put a bid under Euro and drivee down the $?
Personally I think this back fires on these countries......the dollar rises and it costs them a whole hell of a lot more to repay.
Think you can fuck with the US???? guess again boys!
Yeah I agree, I think they´re all going to lose money on this. Then when the dollar gets strong again they´ll all come running back to USTs and Fed notes and it will be in that moment that they´ll lock the doors (capital controls, bank holiday) and firebomb the casino (Argentina style rapid deval).
Like Samuel Jackson said in Pulp Fiction before breaking into the apartment, shooting the yuppies and taking the briefcase full of gold: "Lets hang back, ain´t quite time yet."
Ben is already doing that f******g. It never ceases to amaze me that people actually think that the USD will strengthen at the rate at which he is printing when you consider it relative to GDP growth.
The only problem with your theory is that the dollars aren't getting to the consumer, they are essentially dissapearing into a black hole. The inflation is going to come in further down the road. Right now the concern is short term (3-10 years) of consumer deleveraging.
Anyways, to goose the dollar they just need to perform a float drain like they did in october before the crash. That will cause another crash and scare everyone back into USD/UST.
I would suggest that the issuers immediately swapped the USD into their home currency. That way, the far end exchange rate is locked in. They will have to give back Euros to the IB and get USD - which will be used to pay back the bond investors.
i'm with the clown... remember that there have been some fairly major currency crises when foreign countries have issued USD denominated debt in the past. this puts "present day" pressure on the dollar as they'd be selling $'s to convert to their own currency, but the flip side of that is there would be back-end loaded $ demand as they pay USD coupon and return principle in USD... hopefully for them it doesnt come at a time when the USD gets stronger.
Ummmm
People. You're still thinking outrageous inflation... the defects of deflation have not yet taken their toll, this movement towards risk in dollars that are psychologically inflated (instead of fundamentally) should give you pause. Remember Giselle Bundchen? "I only want to be paid in Euro's!" What happened then. Additionally if *EVERYONE* is short dollars, who is taking the other side of that trade? I mean it's a "gimme" right? So who is taking the other side????
Oh... The Fed.
Isn't the Fed a bank?
Aren't banks out for profit?
How can the Fed profit then?
If inflation hurts the lender (i.e. The banks could charge a higher rate of interest on a higher priced asset at a later date instead of today), what would be their motivation to lend?
But if DEFLATION hurts the buyer?
Things that make you go "HRMMM". Do your homework folks.
Ezekiel 7:12
'The time has come, the day has arrived. Let not the buyer rejoice nor the seller mourn; for wrath is against all their multitude.
Right you are. Just as that idiot Giselle said that, the dollar left this galaxy. Now, you are seeing our European counterparts doing it.
When deflation takes a stranglehold, the dollar is the only game in town.
The Fed isn't out for a profit.
They are gunning for wealth redistribution.
Just wanted to clarify a minor flaw in your reasoning.
Uhhh, the Rothschilds are out for a profit, the Rothschild dynasty owns the Federal Reserve, the Rothschild want to be richer, make the country poorer, and then say war is the best way to get an economy running. They give a shit about wealth redistribution, as far as we're concerned, they just want us poor.
Question is if Obama follows suit.
Getting more green rectangles is not making a profit if you already own the printing press and can make an infinite amount of green rectangles.
Profit is what you get when you trade those rectangles for real things.
*sigh*
When will people realize.... THERE IS NO PRINTING PRESS.
The only time new physical currency enters the market is when the US Treasury issues new debt. Lowering the rate of interest does not create money... it creates the desire to obtain new credit in those who believe they can beat the rate of interest... this desire creates new credit, this new credit is then distributed through the market.... BUT THERE IS NO MORE MONEY THAN BEFORE.
Seperate debt from Money. They are not the same.
If debt implodes, the dollar is less leveraged. If the dollar is less leveraged, it is worth more.
When will people realize.... THERE IS NO PRINTING PRESS.
Yes, there is. Actual currency in circulation has been increased. But your point is well taken; Ben can, and has, clicked more than a trillion dollar-thingies into existence with his mouse, and placed them in bank accounts, without "printing" anything. Latest data for physical currency (good thing they don't call it "money") is 2008.
http://www.federalreserve.gov/paymentsystems/coin/currcircvalue.pdf
While I'm on the Fed's web site, this is interesting, too: segniorage. http://www.federalreserve.gov/paymentsystems/coin/data.htm
The Fed reports approx $500 Million in printing costs for 2008, and the currency in circulation goes up by more than $50 Billion. Pretty good gig when you can get it. If anyone else did this they'd be arrested for counterfeiting.
Seperate debt from Money. They are not the same.
That's for sure. Debt instruments are called "notes". As in, Federal Reserve Notes. Does this mean they're not money? Borrowed into existence, then leveraged through fraudulent-reserve banking?
awesome links, thanks. Point taken about the notes, however since it's the debt instrument that is not openly discounted at t = 0 (it is in reality however).
And even though Ben created those reserves, he did not distribute them to anyone but the banks... who in turn have them at the Fed earning interest... however he does have the right to print them since the Gov't took out so much debt.
Inflation erodes the value of wealth, but not if everyone is positioned to protect themselves from inflation. In that situation, the best way to steal the wealth of the masses is through deflation.
On top of that, lowering the rate of interest does not create more money. It sucks money out of the system. The only way new money enters the system is when the gov't issues debt or Ben illegally prints it. Notice though, America has produced over 1.2 trillion in new debt.... yet physical currency only increased by 60 billion.
That's a definite skew to more debt and less dollars. So when you have to pay back, especially after your local credit union went under and that 500k worth of credit you took out is now only worth $250k.
Btw: Coins are actually liabilities of the Treasury, not the Fed...
Reading you guys is like watching a dog argue with its tail. I don't know which outcome is most probable, and over what time frame - and neither do you. None of the following is what any of us would call a "good" outcome:
1. Meaningful price deflation (in the GD it bottomed at 25%)
2. Meaningful resource scarcity (those of us who worked for a living during the OPEC Oil Embargo can explain)
3. Meaningful price inflation (ditto)
4. Meaningful credit contraction (called "the real deflation" by some)
5. Meaningful rise in unemployment (in the GD it peaked at 35%)
Any of these is a real possibility for the long-term, and the exact course of the dollar's "value" (normally meaning foreign exchange for trade purposes, but all over the map in this discussion) is the LEAST direct cause and MOST OBSCURE in its predictability (you can throw away your classical econ texbooks, since they predicted that as a result of growing trade deficits for the last 40 years the dollar should have already depreciated in exchange value to a point where inflation would be in triple digits unless interest rates were approaching triple digits). The only thing we know for sure is that no existing models, theories, or geo-historical analogies can predict what will happen.
1. The House generally wins.
2. When everybody runs one direction, run the other way.
Do all of you seriously think that there isn't a plan? The powers that are, are simply carving up who is getting what. (IE- like silly things--removing weapons systens in exchange for other favors, that sort of thing. If you are small countries near Russia and China..b nervous.
Its interesting that no one seriously considers the fact that all of this hasn't been carefully considered and planned.
I wouldn't declare the USA dead yet. (Just morally compromised, but whatever).
I won't
" The only time new physical currency enters the market is when the US Treasury issues new debt. "
Guess I'm the last to know.
Why didn't anybody post that the US has gone into surplus again ?
Now, I KNOW how the Administration can AFFORD to pay for the stimulus programs.
Damn good thing, I've got all my savings in dollars too.
Now, all you goldbugs are gonna get slaughtered !
Thank you, Turbo Tim.
What don't you understand about wealth redistribution?
The Rothchilds' desire to take what little else is left from middle class wealth and use the Fed as a mechanism to enrich themselves is... wealth redistribution.
If the Rothchilds were actually putting down fresh capital and the Fed was being used as a mechanism to generate more revenues than expenses... then that would be a... profit.
The Fed is simply taking assets as collateral that are not worth the capital they are injecting into the banking system.
All the Rothchilds are concerned about are that the losses realized from the bad colleteral are borne upon the poor huddled masses... and not themselves.
And they will likely get their way.
Oh I get wealth redistribution, but you act like that's the PURPOSE.... No, the Fed gives a shit about who gets the money, they just want everyone poor and working and more importantly, a country in war.
So the governments are in collusion with our central bank, pushing these (future) worthless securites on unsuspecting citizenry.
It's called the Group of Thirty. No secret, they've had their own web site for quite some time, and published for many years (originally created by a 1978 initiative from the Rockefeller Foundation - quite predictable, that!).
Group of Thirty, Peterson Institute for International Economics, Bretton Woods Committee, individual securitization forums around the planet (in the US, it's called the American Securitization Forum).
All aboveboard, all screwing us....
Dollar won't be destroyed. Bernanke doesn't have the balls to go much further with this. Destroy the buying power of a country of 300m people who are used to at least a decent lifestyle, and all hell will break loose.
What's the alternative?
The one thing politicians (i am including brenanke in the category) have been able to count on, is the apathy of the majority of Americans.
Look at what has gone on in the United States over the last 10 years. Where was the mass public outcry and/or mass public demonstrations?
As long as they got 200 channels of shit on the tv and their super sized meal cost's under $10, you can COUNT on NO hell breaking loose.
"Where was the mass public outcry and/or mass public demonstrations?" Maybe not over the last 10 years, but your last sentence just blows my mind!!
Where the hell were YOU on 9-12-09??!! Washington, D.C., ring any bells for you?
One rally does not a mass movement make.
Considering that the majority of Americans cannot define fiat currency, and have no idea what the Federal Reserve does, any mass movement is going to have to, by definition, include a huge learning curve.
You see people giving up dancing with the biggest loser the bachelor edition, to protest the declining US dollar, when they couldn't get off their asses to protest the Iraq War and/or protest sanctiong the use of torture by the US government ?
One rally does not a mass movement make.
No, it doesn't. But, on the other hand, it would be inexcuseable to dismiss a spontaneous movement, of historically significant size, made up almost entirely of the middle class. And trust me, that's exactly who was there. First they ignore you, then they ridicule you, then you win.
Nobody would like to see them win (although i am not even sure how to define win in this context), more than me.
However, the best predictor of future behavior, is past behavior.....
When the sheeple actually elected Bush (for the first time) in 2004, well lets just say i lost a bit of faith...
win: verb
1. Liberty breaks out all over the place.
Get into the mix and help turn it into something you can be proud of. Peeling people out of the false left-right paradigm is job #1.
Love that defination!
The least thing he is thought likely to do:
Raising interest rates by 25 bp.
As long as they got 200 channels of shit on the tv and their super sized meal cost's under $10, you can COUNT on NO hell breaking loose.
Oh ye, of little faith. The downturn, and the awakening it begot, is only beginning.
Or, more simply: "It's on."
They have already built the internment camps and are actively recruiting nat guard to man.In addition there are 2 laws courtesy of executive order and the patriot that gives the president the ability to negate posse commitatus and declare martial law.
http://www.infowars.com/ron-paul-on-martial-law/
As if anyone in the military is going to follow Owebama's orders against The People? And the corps he wants to recruit is up against those of us who support the 2nd Amendment with existing arms and ammunition. Lots of both.
Trust me, the Obambaton legions would lose that fight ugly.
They may be banking (heh) on the famous American tendency toward being afraid of rocking the boat.
Not much threat, there. Well not until 300mil people go without a meal.
cougar
Pleez, 300M, of which 290M are fucking clueless imbeciles, the type of people who think gubermint can save them.
Nothing but a Bell Jar.
The trade to watch is dollar = oil. Oil is the new gold. Resistance has been $75 a barrel on the upside, rather than $71 on the dollar index (down).
There probably isn't a lot of upside to crude since a spike would cause knock- on defaults and spur a flight to 'quality'.
Excuse me, I have to laugh now.
At $1,000+ per ounce, I'd say that "gold is the new gold".
Even with its 2009 rebound, oil is still off more than 50% in the past 14 months.
Agreed, the oil trade is getting long in the tooth, I am shifting my oil positions directly into gold. As hyperinflation/USD destruction picks up the pace, you will want to be as close to a pure source of wealth as possible.
Exactamundo! Commodities are the only currency today.
yes, i was just thinking yesterday i had to load that 55 gallon barrel of oil onto the roof of my car to take it down to the local safeway to buy groceries. barter should definitely replace currency as the lubrication of the economy.
hey pivot,
maybe instead you should figure out how to power your gasoline engine by burning your used coffee grounds?
not as difficult as you think:
http://www.youtube.com/watch?v=q6xuDY6MFN4
Ben, is that you? I've been looking all over for you. I keep getting the same PC load letter error message, wtf is that?
I mean, how stupid are these people that would prefer tangible assets to slips of paper that have value insomuch as other people believe they do. hahaha. Fools! Everyone knows that paper is the only true measure of wealth. Ima go print some now!
agreed with steve.
sorry gold, while nice & shiny & evoking fond memories of the good ol' days, can not power internal combustible engines.
what we find interesting is how oil's been hovering slightly above $70 leading up to G20.
if we remember correctly, $70 a barrel is the breakeven point for russian & venezuelan crude due to its molecular structure.
maybe iranian too but we're not so sure about that.
a kind gesture to vlad the imposter and comrade hugo?
Just a quick note from one of the "sheeple" - me.
Yes, it often takes me hours of research just to understand just one of the posts here, but I am here - trying to get clued in to what is happening. I assume there are quite a few other sheep lurking too.
We are losing our small businesses, houses, healthcare and confidence in our country. We are indeed ignorant, but as the saying goes, "we ain't stupid". Yes, we're pissed about the bankers getting bailed out, the gutting of the Constitution, etc. etc.. However, these things have not been enough to make us revolt and overthrow the powers that be.
Their plan to keep us too busy working, trying to making ends meet works pretty well. We're tired.
We don't have stocks, T-bills, bonds or gold (except for that Walmart wedding ring). We don't understand them (though we should) and couldn't give a cr#*p if they skyrocket or plummet. We do use a lot of gas though.
The price of gas/energy will be the "trigger event" that causes us all to turn off the TV and riot in the streets. The whispers started among us when gas hit $4 a gallon.
See what happens if prices go that high again.
The Fed is the hub of the global central bank inflaton ponzi. Remember when Central Banks from South Korea to Brazil were gasping for Dollars like a water-boarded terrorist? The BRL/$ lost 70% in a matter of months. Who stepped in with swap lines but Uncle Ben. Of course the party can go on for some time so who knows when the music will stop. Speaking of which- what are evryone's top "canaries in the coal mines?"
Delivery run-arounds on COMEX is not anecdotal, they are putting up a high barrier with regard to shipping delivery to Europe (with regard to forms and secured shipping). First hand info, not anecdotal.
A soverign default, period
That is the one thing guaranteed to send us into a deflationary spiral. More broadly, anything that incites mass margin calls.
Watch out for Spain. Some kinda scary noise coming from that corner.
Though a Spanish soveriegn default might not be big enough to destroy things outright.
It will be interesting to watch the international central bankers react to a "minor" sovereign default in, say, eastern Europe or maybe Ireland, debt denominated in EUR or CHF, watch the firewalls burn down.
Who is buying is also the big question here. I can only think of players who are long US in combination with short USD. On the other hand, with USD sentiment that bearish we just could see a reversal, although I am not betting 1 cent on it. With regard to the "big" news a couple of days ago that the Dow closed at 9506, exact the level of 8 years ago, let me show you how that looks to a European investor: Sep01 eur/usd 0,88 = EURdow 10.795 sep09 eur/usd 1,47 = EURdow 6.460 G-d what a fucking mess this is.
Federal Reserve is buying?
Serious question: Who and/or what is buying the dollar bonds that Europe is selling?
Idiots?
There is a lot of demand presently from investors for USD-denominated bonds issued by quality names.
Clearly they want the USD asset to offset USD liabilities, or they don't expect it to tank.
One source of buying (refer to the post a couple days ago) are investment professionals with the idea that deleveraging will lead to reduction in money supply will lead to deflation, which will be good for long term treasuries. Don't ask me if I understand it though.
" One source of buying (refer to the post a couple days ago) are investment professionals with the idea that deleveraging will lead to reduction in money supply will lead to deflation, which will be good for long term treasuries. Don't ask me if I understand it though. "
Thank God, the Treasury is willing and prepared to deal with this 'global savings glut'.
And its not like the Treasury NEEDs to borrow this money, so there's no inflation because somehow or other this debt NOW in existence does NOT get into circulation.
All these 'stimulus programs' cannot cause inflation because the corporations and workers who earned THAT money just keep it in their mattresses.
Hey, debt is not money, right ?
Yup, sounds about right to me.
What do I know ?
I'm not an economist.
Wow, We know your currency is fucked so we are going to get all out up to our asses in $ debt so we can buy our way out in Euros and watch you wallow like a pig in the Weimar of your own creation.
Um. Thanks. I think.
No wait, screw you too.
;-)
Isn't this a similar activity to the 1970's, when foreign nations utilized the US's link to gold as a means to get safety AND improved returns on their currencies?
Didn't that lead to the removal the gold exchange?
Didn't that lead to inflation?
I may be wrong, but while we no longer have the same link to gold we once had due to Bretton Woods, there are other ways to have the same effect, and this is one of them.
Never gonna end well for us. See you in the banana grove.
Ok...I'm selling bonds ( in us dollar) that I just printed out of some templates I found over the net. If you are interested get in line because a whole bunch of people already made their bid.
This window opportunity will end up soon !
A few weeks ago Canada did this as well (couple of billion USD) - I suspect the BOC is just trying to lower CADUSD.
Does this not create a constant demand for dollars in the form of interest payments? The paying of debt is deflationary.
Isn't this is the problem we currently face, people extended too much debt, and know that no one is there to extend more and it has to be paid back people are scrambling for dollars?
Hyperinflation won't happen until de-levaeraging is complete.
All the smug gold bugs may have a $147 oil moment.
All the smug gold bugs may have a $147 oil moment.
Sure, at $8000 per ounce. Then they will be rich, smug gold bugs.
Here here...I see this market move as the ultimate inflationary headfake before the ultimate deflationary death spiral before the ultimate hyperinflation...point is this is a long process and the market is not going to firmly reflect any one scenario in the short term.
Totally off topic, but did you see Wolf Blitzer on Jeopardy, got beat bad by Andy Richter, to funny!!
http://www.politico.com/click/stories/0909/wolf_bombs_on_jeopardy.html
Selling junk S&L assets at the bottom of the market.
Selling central bank gold at the bottom of the market.
Restructuring Treasuries maturities to the short end
at generational lows in long end rates. PBGC going
big time into the stock market promptly before the deluge.
New Jersey issuing bonds to gamble in the stock in vain attempt to shore up pension funds just before the dotcom bust. Topping off the Strategic Oil Reserve at $150/bbl. Central bank and government financial decisions are
better faded than coat-tailed.
The buyers of $bonds are the holders of $.
These buyers go by the name "Asians". They generate even more $ holdings day in and day out.
You would call them "idiots"?
The Asians need to recycle their $ holdings outside of their own currencies (to prevent their own currency from rising against the $).
The Eurolands are about as addicted to debt as the Yanks,
so the Eurolands are taking on the role of global debtor.
They are bidding up the euro by recycling these $ and the "socalled idiots" [Asian buyers] are laughing. The Euro goes up which impedes euro-based exports to the US while the Asians can keep their $ peg. The Asians recycle their $ in Euroland and knock Euroland out of the competition to export to $-land at the same time. :-O
If i were Asian, i would rather loan my excess $ to Euroland than the USGovt. Of course, were i a large holder of $, i would look for a way out. But i hear, if ya got a trillion $ [the Asians do, donT they?] and you generate more $ profits every-single-day, there ainT no [easy] way out...
The foreigners always buy at the top & sell at the bottom. Im starting to rub my hands together in expectation of a good feed.
DonT get your hopes up too high.
The Asian foreigners are not buying $. And Euroland is selling the $ to get euros to spend.
They sell products in the US and earn $. Lots and lots of $.
These Asian $bond buyers are not traders. You are a trader, i presume. They are not trading into the the $ from another currency. The Asian $bond buyers are Walmart manufacturers.
They trade cheap plastic or textile products for their $.
They need to do something with their $. But they donT want the $ to go down in value against their own currency. So they dump them in Euroland for a while.
But you are probably right about the direction of the $, just i donT see your "feed".
I know how criminal the US bankers and politicians are but hmmmm I would not bet on the European governments being any smarter anytime.
I'd say the US banksters would win a fight the the European anyday with their hands down.
Europe will loose this trade(I don't know it) it's history, like when the English sold gold at 250 an ounce..
Hmmm, where have I heard this before? Oh yeah, Icelandic mortgages issued in Euros...how did that work out? This will mark the bottom of the dollar.
When it mentioned printer friendly version
i thought it was part of the article!!
fred bristol u.k.
IMF selling gold.....everyone selling $'s.....drinkable water will become the next hard currency...
The end game will be when the G8/G20 start agreeing to write off large chunks of nationalised private sector Debt. (Ireland testing the water )
Thats when your inflation starts.
"shaky pudd'in" is the only true currency. It can always be used to barter for gold and trinkets and food and a night on the town.
McLuvin you are right....
The Asians have no desire for the $ to go down.
See "The Revived Bretton Woods System:
Alive and Well" from Deutsche Bank (google it, i assume i cannot post a link?). The essay is 5 years old, but still current in a sense.
Many of you (currency-traders) are fixed on the idea that a foreigner must first buy $ to buy these $bonds. But these foreigners are already holding $. As you know, the $ is the reserve currency; which means the $bond-buyers already have the $ they are using to buy these $bonds. They are not really going long the $. They are already "stuck" with them.
The foreigners can park these $ with the Fed/Treasury Cartell or they can park these $ in Euroland.
They cannot quickly exit the $ because they have too many of them.
So ... Euroland is competing with the Fed/Treasury for $debt.
And remember before you short, an entire continent of peoples (Asia) does not want the $ to go down [not yet anyway].
But it's not like they can prevent it. Those chinese students who laughed at Geithner should have screamed "you lie!". lol
"you lie, timmy".
Sweet,
A $100 Trillion Dollar Federal Reserve Note!
Who says Bernanke doesn't know how to run a Banana Republic,
goes along well with our own personal Mugabe in Chief!