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The Primary Dealer Scramble To Dump Recent Issuance Continues

Tyler Durden's picture


Today's POMO closed, with Frost Sack playing the F-E-D chime and not only buying up $8.412 billion in bonds, but paying Primary Dealers about $50 million in commissions. Not a bad deal for 45 minutes worth of work. We have already discussed that issue extensively and at this point it is up to Congress to deal with it. And while they are at it, perhaps they can also address the flipping churn of recent issuance that is just getting ridiculous. As the chart below shows, of the $8.4 billion in bonds, a whopping $3.8 billion was represented by just one issue: the 2.750s of 12/31/2017. This is the bond that was issued two short weeks ago, on December 29, 2010. Nobody even pretends not to be throwing the Treasury's feces right back at Ben Bernanke. And if the PDs can pocket billions in the process courtesy of a bunch of NYU students, and an "algorithm" running the whole process (in the absence of Bloombergs), so be it. It is not like anyone will ever make a fuss. After all the US is now just one Mutually Assured Destruction threat away from a complete and total dictatorship.


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Thu, 01/13/2011 - 12:26 | Link to Comment unwashedmass
unwashedmass's picture


so much for the POMO, the market is at a dead standstill......

the only thing trading is the HFT game in BAC.

so, what,? does Ben want the market to freeze at this level? looks like it.

this is getting really scary...

Thu, 01/13/2011 - 13:29 | Link to Comment fuggetaboutit
fuggetaboutit's picture

pretty fascinating article on bberg today comparing salaries from different industries

Cut to the chase, a BRAIN SURGEON who has 10 years of experience makes about $600K a year. A FOUR STAR GENERAL makes $180K.

A "trader" makes over $1M.

If you took the brain surgeon and the 4 star general, how many minutes you think would take them to figure out how to "be a trader" (single digits is the answer)

How long would it take a dope who pushes buttons all day to open a skull and operate? Or deal with the intricacies of massive troops deployments?

This all comes crashing down so very soon

Thu, 01/13/2011 - 15:12 | Link to Comment MachoMan
MachoMan's picture

Already happened with real estate agents...  And, alternatively, the only thing needed to be an FDIC auditor is an accounting degree...  everything doesn't collapse at once, despite virtually all aspects of this madness being built upon a house of cards.

Thu, 01/13/2011 - 12:29 | Link to Comment gwar5
gwar5's picture

Thanks for keeping up with this everyday, Tyler

Thu, 01/13/2011 - 12:31 | Link to Comment Id fight Gandhi
Id fight Gandhi's picture

Good work Tyler.

When can we expect our new dictator overlord?

Thu, 01/13/2011 - 12:32 | Link to Comment unwashedmass
unwashedmass's picture


so what do we think here? they are terrified to let the market decline even 100 points because they know there is nothing but air beneath and they can't control it?

that's my bet.

Thu, 01/13/2011 - 12:32 | Link to Comment Dr. Sandi
Dr. Sandi's picture

Let me know when they open my chest cavity to rip out my heart. I can't watch this anymore.

Thu, 01/13/2011 - 12:34 | Link to Comment unwashedmass
unwashedmass's picture


feel the same way, sandi. Ben is destroying the middle class with the raging inflation (yes, virginia, there is inflation), and now, when this explodes....he's going to take away whatever remains of their retirement savings.


Thu, 01/13/2011 - 13:06 | Link to Comment Internet Tough Guy
Internet Tough Guy's picture

Oil over 93.

Thu, 01/13/2011 - 12:40 | Link to Comment AGoldhamster
AGoldhamster's picture

yes it's a ponzi in pure daylight on the highest possible level ... there are no words anymore for this. Except that it still will get MUCH MUCH worse ... if S. Puetz with his UCT cycle is right. And I think he IS right.

Or is there anybody in believe that those in power (congress etc.) will anytime soon wake up? The opposite is true - as there are no limits anymore for the lobbies, they just wait for the next donation.

Thu, 01/13/2011 - 12:42 | Link to Comment Sig Sauer
Sig Sauer's picture

i estimate about a $33m profit alone just from the issue price of 99.495 two short weeks ago.  straight from the taxpayer pocket into the PDs' pockets.


Thu, 01/13/2011 - 12:43 | Link to Comment Cdad
Cdad's picture

And today's cover for criminal syndicate Wall Street banker crimes comes from another central banker criminal in Europe that promises that 2% inflation there is temporary...but if not....he'll do something.  Really?  We are all moved by that promise.

And L.Blankfein Wildest Dreams Park [oil futures] lights up, while said bankers short our currency into oblivion without the slightest whiff of conscience about the fact that whether it is the dollar, the euro, oil, naked short selling of silver, the impending collapse of bonds, whatever...nothing bothers the criminal syndicate known as Wall Street.

Which is why Tyler is right, if DC is unable to overcome their fear of the threat of, hold on now, "If you don't give us billions, we will sell our stocks"--if DC cannot get past this stupid threat, and soon, we are simply done in this nation.

Just look at today's oil futures bid.  There is no reason for it, none associated with supply and demand.  No, criminal syndicate Wall Street bankers at L. Blankfein Wildest Dreams Park are simply frontrunning Average Joe into the ground as usual...because Ben Bernanke gave them enough bananas to do so.

OK then...back to important headlines crossing the tape at the Blow Horn [CNBC] about sales of cheap crap at Target.  Sweet! 

BTW, I've made my appointment to have my government tracking chip Tuesday.   Catch me if you can....

Good grief [and by that I mean where is my puke bucket?]


Thu, 01/13/2011 - 12:44 | Link to Comment whatz that smell
whatz that smell's picture

INPUT: chime

OUTPUT: btfd


Thu, 01/13/2011 - 12:48 | Link to Comment papaswamp
papaswamp's picture

Well at least they aren't hiding it anymore....blatant monetization. 

Thu, 01/13/2011 - 13:11 | Link to Comment oklaboy
oklaboy's picture

how do we get into this action

Thu, 01/13/2011 - 13:17 | Link to Comment Sophist Economicus
Sophist Economicus's picture

What do we expect?

'We the People' LET a private bank (the FED), whose shareholders are a bunch of large banks (mostly the Primary Dealers), print our MANDATED 'legal tender money' at will.   The scum in Washington NEED this money to bankroll their pet projects for 'We the people' -- the gold standard long being TOO CONSTRAINING for the a-holes, so we have the POMO rig-a-marole.   

Taxpayers ARE NOT funding any commissions to the Primary Dealers.   The FED is just CREATING federal reserve notes for the commissions.   And, oh by the way, gives all of the 'interest' it collects on the notes back to the Treasury (of course, this private bank now has DIBS on the USA - at least in theory -- before the pitchforks appear)

What is evil about this POMO crap is that 'WE THE PEOPLE' need to expend our labor (i.e. our waking hours), take REAL risks in the marketplace (i.e., a REAL risk of failing if we are wrong) and are last in line to receive diluted pieces of paper that MUST be used in transactions because they are legal tender AND must pay a tribute to the asses in Washington on all income and services we receive WHILE these insiders basically run amok risk free.

Thu, 01/13/2011 - 13:27 | Link to Comment Harndog
Harndog's picture

"As the chart below shows, of the $8.4 billion in bonds, a whopping $3.8 billion was represented by just one issue: the 2.750s of 12/31/2017. This is the bond that was issued two short weeks ago, on December 29, 2010."

The whole thing reminds me of the Popeye cartoon and the character "Wimpy." From the website, :

Wimpy, more formally known as J. Wellington Wimpy, is notoriously thrifty but loves to eat and do things that cost money. He often says "I'll gladly pay you Tuesday for a hamburger today". This parsimony doesn't just apply to hamburgers - Wimpy tries to get it all for free. Despite this, when Popeye and Bluto are business competitors, they always seek Wimpy's patronage. Wimpy wears a bowler hat and is rotund in stature.


Thu, 01/13/2011 - 13:30 | Link to Comment Cdad
Cdad's picture

Look at that 30 year T freakin' Bill fly...looks like a short to me...on an auction based reversal.  Unless, of course, this is the fear trade ahead of the Roach Motel [SPY] suddenly bursting into flames from a faulty mirror ball bulb.

More bizzaro world brought to you by the front running criminal syndicate known as Wall Street. It goes on and on...

Thu, 01/13/2011 - 13:31 | Link to Comment Argonaught
Argonaught's picture

I know it won't do anything, but I wrote my congress person about this today.  While not liking much from Washington in the past 10 years, at least I could wrap my head around why, no matter how misguided, it was happening.

With this, I am at a total loss.  I can't honestly figure out of congress is too stupid to understand it or if they are too corrupt to stop it. 

Thu, 01/13/2011 - 13:50 | Link to Comment Dr. Porkchop
Dr. Porkchop's picture

Any citizen maintaining less than 50% of their credit card limit is guilty of terrorism.

All citizens will recieve monthly statements listing the discretionary goods they are required to purchase.

All paychecks will be held in trust by Bank of America to ensure each citizen is spending their money to keep America strong, rather than hoarding cash. Only banks are allowed to hoard cash.

Paying down of debt early will be considered an act of terrorism.


Thu, 01/13/2011 - 14:06 | Link to Comment whatz that smell
whatz that smell's picture

selling = terror = bear market = terror = bearish forecast = indefinite detention = waterboarding = war of terror = bull's in control

Thu, 01/13/2011 - 16:43 | Link to Comment asteroids
asteroids's picture

The first one of these PD's that says "no" and dumps everything wins. They are thinking it. Thus the bribes keep on going up and are more frequent.

Thu, 01/13/2011 - 17:03 | Link to Comment andyupnorth
andyupnorth's picture

The world will suffer massive inflation. It seems like this year will see gas prices double in developed countries, and foodstuff quintuple in poor countries :-(

It seems like the USA will be relatively spared from inflation for the short/mid future.

Thu, 01/13/2011 - 20:58 | Link to Comment AUD
AUD's picture

But gold falls $20?

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