Frontrunning Today's POMO Taxpayer Rape

Tyler Durden's picture

Today, the Fed's openly fraudulent operations desk will buy back $6-8 billion of bonds maturing between 01/31/2015 – 06/30/2016 starting at 10:15 am Eastern. Below we present a table showing the 10 cheapest CUSIPs that the Fed SHOULD be buying, considering that it should be monetizing, as it is supposed to, the best bang for the buck bonds. Note that nowehere in the list is CUSIP 912828PM6 due 12/31/2015 or the last 5 Year auctioned off, which is in fact one of the bonds trading richest relative to the entire spline. In other words, if the Fed ends up accepted a bulk of PM6, someone in Congress should really pretend they give a rat's ass about the 300 million or so US citizens raped daily by the kleptocratic elite, before said (mostly armed) 300 million finally realize what a complete criminal fraud the PD-FED complex is.

Here are the 10 CHEAPEST bonds:

Note the relative RICHNESS of PM6.

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Contura's picture

Isn´t fraud a felony ?

I tought US were the good guys.


Sudden Debt's picture

Even Hitler and Stalin thought they where the good guy.


untill the world turned against them.

erik's picture

That's what I always say.  Do you think the people we call crazy sit around and tell their cohorts "yeah, we're batshit crazy huh?".  Bin Laden doesn't think he's crazy.  Neither did Hitler or Stalin as you mention.

I'm not saying they weren't crazy, simply that they themselves do not (did not) believe they were crazy, they believed they were doing the right thing.

A Man without Qualities's picture

No they didn't - they thought they were a hero to "their people"...

SheepDog-One's picture

Hitler AND Musolini were both Time men of the year. Google it.

asteroids's picture

I bet if you asked the average Congresscritter to explain POMO and how it effects the debt you might be surprised by blank looks.

Misean's picture

"before said 300 million finally realize what a complete criminal fraud the PD-FED complex is."

If that were even remotely possible the cost of the blatant fraud would be worth it. However, I suspect that, with all the snow, the 300 million will likely never take notice.

Xibalba's picture

Welcome to the END

Racer's picture

Keep up the great work TD, We NEED you!

Cursive's picture



Did Japan have anything like ZH? Paging Ron and Rand Paul....

TruthInSunshine's picture


Not just "rape," but anal rape of taxpayers, sans lubricant.

Thank The Bernank, The POTUS, and the absent-minded Congress, asleep at the wheel.


erik's picture

Keep your eyes fixed on the 20 day moving average in S&P ~1275-1276 and/or a re-test of the 1296 highs today.  Preliminary indicators suggest that 1276 is absolutely in play today, though of course there are no guarantees these indicators will stay where they are right now.

SheepDog-One's picture

Yep, and no guarantee these indicators will not within 10 minutes experience a -40% flash crash.

erik's picture

The USD has given back its overnight gains since the open, thus providing some footing for the market.  The rest of the day should depend on if the USD can gain its strength back or not.

On the flip side, believe it or not, the Euro is about to test 1.37 thanks to Trichet's inflation remarks.  Who knew it was that easy?

Robslob's picture

Until ZeroHedge has it's own TV channel it is not likely to be noticed...

When ZeroHedge does get it's own TV channel it will already be over : (

Hero Protagonist's picture


There is so much discussion of POMO, I'm wondering if anyone can help this neophyte to better understand the "POMO effect".

Here's what I think I know: A Primary Dealer has a billion dollars in something (let's say stocks) and decides to buy a billion dollars in treasuries. So the billion dollars in stocks is sold exchanged for US Dollars and the PD turns around buys the treasuries in exchange for the Dollars. A few weeks later the fed "creates" Dollars and buys the treasuries from the PD. The PD now needs to place the Dollars somewhere and where ever it's placed has an impact on that market and that's the POMO effect?

However, if the same PDs are buying the treasuries at auction and turning around selling them to the fed, isn't that a zero sum game at least for it's impact to markets outside treasuries? 


Is that in order for there not to be systemic failure the market MUST absorb the treasury issuance and without QE the PDs would be forced to spend a larger portion of their funds on Treasuries instead of stocks, commodities, etc.? Without the burden of treasury purchases, they're free to try and gain better returns in other markets?


101 years and counting's picture

Exactly what i've been saying.  The PD's are selling treasuries to the Fed so they can buy future treasuries at auction, which they are required to do.  Without all this money, the PD's are left holding larger share of treasuries and eventually would "run out " of capital and there would be a treasury auction failure.



MrVincent's picture

"Fed's openly fraudulent operations desk"


Miss America's picture

Can someone do me a favor???

Can somebody calculate what the 2 scenarios of buybacks look like for a $6billion sample? 

Sample 1, showing the POMO of one of the listed cusips that should be bought back.

Sample 2, showing the POMO of PM6 I can see what the Net vs Net for the brokers and the taxpayers/Gov't.

I would do the work myself, but I genuinely don't know how the calculations work.  (I can assume, and do my own math, but I'd hate to work with incorrect figures)


Thanks in advance ZH society. 

All the best,

Rich H - Miss America

Miss America's picture

I guess the way I see it is this: 

It still just amounts to a term Repo.  (as opposed to overnight repo, TD, CD, MMKT)

The Primarary Dealers who are borrowing at 0-ish rates, are just cashing in on the interest float they get...  and this float is the profit.  As to whether they profit/rape us on the higher or lower yielding T's seems minor in comparrison to the overall process of keeping the liquidy machine running. 

The buyback just funds the next auction?  Doesn't it?  (ya see...  my lack of knowing the official numbers and needing to see a sample of the 2 scenarios is why I keep thinking that I am missing something.)

Thanks again...





Salinger's picture

Hey MA  good to see you here - I imagine you know that London Banker is blogging again lots of the old RGE group have been turning up there

Miss America's picture

I did not know...   I just checked in there.  Thanks a bunch!!!

No Mas's picture

Too funny.  The idea that 300 people, much less 300 million people have any idea of what is happening with the Fed is just too funny.  Not to mention that they wouldn't give a damn even if they did.

Here is what is important for the next few weeks.  It is called the Super Bowl.  Now if you mess that up, or take out the funny commercials, then you might get 300 million people pissed off.

But for now, BTFD.  The Fed has won ZH.  Your diatribes are funny to read but in no way reflect reality.

Johnny Lawrence's picture

So, you're saying it's different this time?

ebworthen's picture

Yes, the bleating and fleecing will continue as long as there is a dog or two but especially food.

When the dogs lose their loyalty and the sheep get hungry the story may quickly change.

The people in the U.S. are like a lazy sleeping giant; once you rouse them and really piss them off it won't just be a bar brawl.

Cursive's picture

@No Mas

Was your dad also rooting for the guards at Auchwitz? Go fuck your evil-enabling self.

plocequ1's picture

I guess that means the market is up today.

Stuck on Zero's picture

It appears that between the Government, the Fed, a few Wall Street Banks and a handful of billionaires the United States economy is complete.  The GDP of just this group alone is the largest on earth.  The remaining 320 million people can be made up for with a few more POMOs and Treasury swaps. 

RicktheDick's picture

TD how else is the Federal government supposed to filter enough cash to the banks so that they can continue to adequately prop up the markets...

collegepunk's picture

Yay for all the new jobs we're creating!!!

gwar5's picture

Don't ever stop Tyler. What you do lives on the internet forever. There will be a reckoning. 

The bankers are acting like someone running up the credit cards right before filing bankruptcy



tomp1's picture

Dear Mr. Pitt,


I think your work here has merit - now here is how it is - there is futures talk - which I am pretty good at, there is swap talk which I suck at but am learning. Then there is cash talk which is what I think you do probably pretty well. Anyway if you could enlighten me. When you refer to the spline - please break it down to a 5th grade level - and that's 5th grade circa 1965 or there abouts - not these modern 5th graders that probably think life is some sort of reality show - or will be thinking that way shortly.

But seriously I would like a better grasp on the points you make on POMO. Standing by.

henry's picture

That sounds painfull

henry's picture

That sounds painful. ouch