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Marketing Treasuries
I love watching the press struggle with the issue of Asia buying U.S. debt. You can look at three different papers in a two day period and get three different answers on the topic. They are buying more. They will sell it all. They are doing nothing. We are fine. We are fucked. Who the hell knows?
As it happens, for as many years as I can remember I have been looking for some kind of solution to the problem of financial illiteracy when it comes to debt, specifically in the United States but more importantly in Asia. It turns out that these two problems are mirror images of each other, as you will see. Ok, ok, I admit that I can't remember a number of years owing to a long string of booze, drugs, and sex, usually in that order. My point stands. So I did what any finance professional would do. I spent dozens of hours using my employer's Bloomberg subscription to come up with the answer. I have it now. To survive, we must keep Asia "treasury illiterate" and simultaneously get the U.S. financially literate.
Listen jackass, you laugh like that again while I am presenting and I will remove, and then feed you your own spleen with a Kentucky Fried Chicken spork while your precious kittens watch the proceedings. Then, depending on my mood, I may feed them the scraps so they don't starve before the ASPCA finally arrives. Got it? Good.
Besides, I don't know how else we are going to saunter down the critical path of debt-financed consumerism that needs sauntering. We have to:
- Get the money we need to fund our luxury-driven lifestyle and preserve the alienating standard of living promised us by the Bill of Rights
- Fail to spend it all in one session like a pit trader with a seizure disorder, before...
- ...we manage to create a socialist paradise and lay a bunch of billion-dollar, high-speed rail to Indianapolis that no one but disgraced CEOs will use because anyone headed to the Indy 500 is doing it in a blueish-smoke belching, American-made light truck
Actually, building useless high speed rail is what socialist paradises do, so I guess that last part is redundant.
I got the inspiration from PBS and from Fox. You know your solution is solid when you draw it from two polar opposites within the cultural zeitgeist. The socially liberal PBS for educational classics like 'I'm just a bill' and 'Conjunction Junction' and the right-wingnut Fox for its ability to grab the young audience and strangle them into obedient little short-term consumerists who buy more gasoline, dammit. We must harness this limitless power. And not just to create free and clean electricity for the entire country. I mean, really. It is time for California to give something back to the nation over and above Tony Hawk. Something that contributes to our dealings with other sovereigns. So here it is:
"Beverly Hills 10004."
Roll with me here a minute.
Brandon, Brenda, Kelly, Steve, Andrea, Dylan, David, Donna, Valerie and Clare blow off the plastic of the left coast to hit the big rotten apple. Brandon, Steve and Dylan hit 85 Broad, Steve almost blows it with a MD's underage daughter, Valerie gets dinged first round but sluts her way right into JPM. This sets up a 3 season inter-firm rivalry. David is shot the first episode when trying to pursue his hip-hop (rap?) music career. (East Coast/West Coast, you know. Bad move trying to 'keep it real' and represent the West coast scene in New York, David). He dies. In slow episodes his ghost can haunt the upstate stables where Tori Spelling beds down at night.
Speaking of Donna, she has to work for a living now that her "sing sing for the bling bling" is a slab of cold kosher roast. Tell me you didn't just know that Donna's family was the new money posers, even among the faux-class of the California "elite." With the credit crisis and real estate plunge, they are far from sending Donna any green from across the continent. What better place for the plastic blond than private wealth management? Brandon, he is the most conservative of that inner circle, hits the fixed income desks. Steve is Sales and Trading (duh!) and Dylan is the smug, under-qualified IB prick you always knew he had to be. You just know Kelly is the blond coke-whore banker and bimbo hanger-on. Maybe we can hook her up with a hedge fund manager. Tom Hudson would fit the bill. That would pull the buyside into the arcs. Clare is boring, so she is the show's nag. (Think of a Greek chorus, or your ethics professor, but dumber, less likely to try to feel you up during office hours, and with better skin).
Still with me?
You can see the opportunities immediately. Who didn't learn all they needed to know about life from 90210?
- Money corrupts. Remember Dylan's inheritance?
- Guns are bad. Multiple shootings over multiple seasons cemented that lesson.
- Members of the tribe can't manage nightclubs. Think David and the Peach Pit.
- You can fuck anyone and still be friends (with benefits) next season. Everyone. Every episode.
This will have consequences that are good for us.
- By demonizing money we encourage Asian cultures to invest instead in treasuries
- Fewer will join the People's Liberation Army
- They will stop pouring their money into restaurants
- They will continue to breed at an alarming rate and produce a robust second generation of treasury buyers
Seriously. Good stuff. Sticky lessons... uh, so to speak.
True, Spelling may have inflicted Starsky and Hutch and T.J. Hooker on us, and we may never forgive him for having to look at Tori, but that boy could slip a subtle moral message in every episode, boy howdy! Regular Chinese fortune cookie factory in Korea, that guy. And here is where the rubber meets the shattered auto glass on the road. The entire series is a big infomercial for U.S. treasuries. The genius here is that the show will never play well in the U.S., but Asia will eat up syndication like it is preferred stock in financials. It is easy to coat the entire show with the overly sweet caramel of that enviable American standard of excess living the East so craves. And then, line our particular brand of nauseating prosperity right up with the purchase of treasuries. All we have to do is have Brandon's parents, Mr. and Mrs. Walsh, caution the kids over the phone about one-third of the way through each episode. I mean, can't you see their worried looks on the split screen as Steve cockily smacks the speakerphone button from his VP suite?
Observe his wrinkled brow on discussing the dangers of emerging market equities, a lack of geographical diversity and the toxicity of derivatives. Ah yes! Programming perfection, as Jim Walsh, the show's straight man, is an accountant already. Yes, yes, I hear you. A tragic episode on mark-to-market would be an ideal way to bury that destructive standard forever. What better way to kill the Tori character off? A rogue accountant! I love it!
Back to the Walsh purity for a minute. I mean, the guy is perfect. Picture Warren Buffett in his prime, but less horny. His professional and logical scolding ("But it carries the full faith and credit of the United States!") is always ignored. Though, not for the reasons it should be. The kids blow a lot of OPM, and blow a lot of blow, having to head to the safety of treasuries over and over to salvage things every week and avoid looming lawsuits.
On the logistics front, getting the producers to work directly with the treasury shouldn't be a problem if we give Geithner a recurring role as a VP at Goldman. Who wouldn't jump at that chance? I hear you, he is way too young looking to pull off the MD thing and he will whine for several weeks at the VP title, but he is going to be looking for a job soon anyhow so this is perfect. The entire production season can be synchronized to the many new treasury product offerings we are sure to be seeing every week in the months to come. Tons of opportunity for guest spots so that the Administration can pump the latest good news.
We all know that it is going to take this kind of out-of-the-box thinking to keep things on an even keel and feed our appetite for cheap debt right up to the very end. I want half a billion potential treasury customers watching this stuff by late 2009, priming them for the massive treasury offerings we will need to pump out in 2010 and 2011 to avoid dining and ditching while the middle class is in the bathroom and sticking them with the check before they realize we have lifted their wallet. Really, it should be easy. China will ban it right away, making it more popular than ever. Japan will follow it ravenously and we may even suck Mrs. Watanabe aboard in large numbers.
Let's get on it.
Oh, remind me next time to tell you my "sex, drugs and photographs" plan to get all my outstanding LIBOR+ rate based loans down with a quick trip to London.
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Finally, a comment on international finance my 23 year old, brilliant young wife can relate to!
Who didn't learn all they needed to know about life from 90210?
* Money corrupts.
* Guns are bad.
* Members of the tribe can't manage nightclubs.
* You can fuck anyone and still be friends (with benefits) next season. Everyone. Every episode.
Being 32 years old than my wife, I was never in the demo for this program. The things we miss, simply by aging.
A 1%er writes it down. hehe
I am Miles Kendig and I love a good inside story.
"Beverly Hills, 90210." Never heard of it. Had to look it up.
boring.
munt
This post is the best post, of all the posts.
WTF! No Donny Deutsch?!
HFT could be a great herd misdirection flourish..whatever the resolution and regulation, the apologies are easier than asking for permission. GSuxJPM's schtick will claim that this was actually permitted and pay some fraction of the value add. GSux's SLP provider function is just possibly acting on their unknowable prerogative as the only permitted short entity since the broker loans are all called in as-if..and after this rally looks like the great inevitable, the HFT will turn off, liquidity will disappear, and they will have engineered a great round trip...just thinking around the corner.
Do I have to disagree to qualify for that spork thing? I mean, it sounds kind of sexy..
tl;dr
real anon is real
thank you, didn't think anyone else would say tl;dr
@Marla #19579:
Yeah, until the obligatory monthly derailment sends his smug ass through a window onto the oncoming tracks...
Yo DB do you write elsewhere? I want more.
Great post! I needed this
Thanks
It's not building new rail lines to Indianapolis it's putting back what used to be there. Indianapolis had the worlds largest interurban rail network with 17 different lines. The benefit for everybody is that I can live for cheap in Indy, make twice what I do now commuting on high speed rail to Chicago in about an hour, and my wife can keep her academic job. With the extra cash from both of us being fully employed and living in an inexpensive area we can buy our 6000sqft home, actually pay the mortgage, and have left over cash for some wanton consumerism.
The problem is that you expect it to get built with federal monies. You want it you pay for it. Or get your own dang helicopter to power commute.
You and 22 other high-speed rail regulars in your position will be living in hog heaven!
So be it, I'm willing to make you pay for it.
What drivel!
Excellent excellent excellent post. I could plaster the walls of my cave with your sense of humor. I did not realize how easy it is to become financially literate. If I had professors with your talent for getting the point across when I went to college I might have been learned something.
However, you will never get the white boys with little pee-pee's to pay you any attention. They are too busy painting themselves for their 15 minutes of fame on Monday night football. Financial literacy in America is dependant on TV. That is why the Viagra commercial says that if you have an erection for more than 4 hours, switch hands or find a woman who does booze, drugs, and loves sex. You are welcome at my place, but you will have to check your guns, knives at the door. But your bullwhip tongue will always be welcome.
Yeah Amtraks are really fast.... -dvol
Yeah remember Scott shot himself.
There's potential here. We could also do Sex in the City meets the Forex crowd. And Fresh Prince of the Bronx and the hip-hop equities markets. Nice subtle pressures to get out of those markets and even further into Treasuries.
Is this EP's Laura the debt bitch?
MEET MY NEW GOD(DESS)
Don't quit your day job, if you happen to have one. Same to your friend Muffie, who was last heard from in May interviewing Ben Dover.
Ben: Loveya, but it's time to take a break, buddy!
loveya back, you know who...
Multiple high points - could actually see Kelly giving gratuitous cleave shot bending down to grab her b berry at four seasons... Valerie pushing through a very awkward moment with MD's wife by be-friending her in an oh so evil way, and finally, the dramatic pull away shot (cue the music) as David is dumped in the East River. Thank you for the early morning escape...
Fun.Thanks.
God it's so damn depressing and spookily eerie to have all this information exchange in bits and bites repeated day after day. Fucking technology has hijacked my life, my retirement and invaded my god damn mind. Please please, everyone shut the fuck up, I think we've reached the singularity.
11000011010111101010010011111111001010000100100010101000100100
She said "zeitgeist"
The US-China Ponzi scheme
China stepped on the landmine. If it lifts it foot it will be blown up.
http://articles.moneycentral.msn.com/Investing/SuperModels/mad-world-chi...
so telling the chinese "it's not that simple, there are a lot of complicated things going on" won't work like it does on us? certainly the chinese will understand that it isn't as simple one number for debt and that it is in their best interest to...oh.
A swing and a miss. I want my 2 min back.
Pretty much everybody in Wall Street is a VP. There are VPs and then there are janitors below them.
Geithner's title at GS should be Indentured Servant, and they occasionally show Lloyd bringing him out of a dungeon in shackles.
http://blogs.cfr.org/setser/
The best on this topic. (next to you of course)
'Actually, building useless high speed rail is what socialist paradises do'
yep.never a truer word said in jest
Dear DB:
It might be pedantic of me, but "Conjunction Junction" and "I'm Just a Bill" were from "School House Rock" on ABC. Though, I guess your larger point, i.e., "polar opposites" still holds...
send me your address. my spork and i will be right over.
Where's Nat?
Um, you kinda lost me after 90210 (hey, I still can’t believe David from that show is banging Megan Fox in real life)
At any rate, back to foreign debt purchase...I think the US government has found the goose that lays the golden egg in globalization. It takes two to tango. As long as Americans are willing to import Asian goods, they’d be willing to purchase our crappy debt and keep our interest rates artificially low.
I am not saying that this will last forever, but I am pretty sure it will continue much longer than most people expect, because these Asian countries don’t have anywhere else to export their goods to.
Also, another aspect of this relationship that most people fail to realize is that most of these countries have benefited greatly from globalization and are not going to abandon the system anytime soon. The vast majority of the population from these countries would be living in utter poverty had it not been for globalization. Think about it for second, what’s better: 1) have half of your population work in farms, raise chickens and live in poverty, or 2) have them work in high tech manufacturing plants, but operate with very low profit margins (via a cheap depreciating foreign currency)?
Free trade. Asian countries sell us pretty electronic gadgets which make us feel rich. We sell Asian countries pretty green pieces of paper which make them feel rich.
Your last paragraph is such a generalisation it's a joke. Yeah, globalisation will continue as long as the 740+ military bases are maintained.
In case you don't get it yet buddy, your patronising attitude is why the US is despised around the world, and why no-one will cry when Uncle Sam goes down.
Agreed. And as their currency appreciates....they need look no further than their own domestic consumption. They dont need to expert their goods to us anymore. ~1.5billion people need only to increase consumption very little to account for 300 million consumers going broke across the pacific.
Excellent point. Further, when Bernanke goes too far and the dollar crashes the Chinese aren't going to be happy watching their investment tank. Wars are fought over these types of events, not to say China will attack the US if the USD fails, but we are in very dangerous times.
THAT IS THE BEST , MOST BIZARRE THING I HAVE READ IN A LONG TIME...... YOU ARE WASTED IN YOUR DAY JOB
LOL awesome ,,, Debt Bitch i think im in love with you ...
LOL WUT