This page has been archived and commenting is disabled.

You Fail at Failed Treasury Auctions

Marla Singer's picture




 

For some reason Zero Hedge is prone to take a great deal of heat (both directly radiated and reflected) whenever we opine on the (rather obvious to us) prospect that interest rates might actually (quelle surprise) rise in this environment.  Today, rather than engage in "we told you so" gloating, or endure the repetitive pleadings of commentators that this or that Treasury auction was really a success if you just look a little deeper at the figures, we'll just quote Bloomberg quoting other fixed income observers on today's auction of two years, in an article "ambiguously" titled "U.S. 2-Year Yields Highest Since October After $44 Billion Sale."

Treasury two-year note yields reached the highest levels since October as an investor class that includes foreign central banks bought the least of the debt in five months at today’s record-tying $44 billion auction.

 

Indirect bidders purchased 34.8 percent of the notes, the lowest amount since July, and below the average for the past 10 sales of 45 percent. Treasuries of all maturities have fallen 3.6 percent this year, according to Bank of America Merrill Lynch indexes. That would be the worst performance since at least 1978, when Merrill began collecting the data.

We aren't really sure how this will be spun into a "good thing,"™ but we are sure that someone will find a way.  Back to you, CNBC.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 12/28/2009 - 15:42 | 176102 TraderMark
TraderMark's picture

Completely off topic, but $600M by healthcare industry buys a heck of a healthcare bill - for them.  Revolving door between Congress, and ex-Congressional workers spinning like Macy's NYC door 3 days before Christmas.

http://www.fundmymutualfund.com/2009/12/healthcare-interests-spend-600m-to-sway.html

Mon, 12/28/2009 - 23:44 | 176503 Anonymous
Anonymous's picture

also, off topic but here is Turbo_Tim's email:

Geithert@bloomberg.net

reach out Zeros....
keep your subject lines succinct though

Tue, 12/29/2009 - 03:55 | 176572 Anonymous
Anonymous's picture

Also completely off topic but slightly more interesting...

Passport is going to request delivery for the gold contracts of investors in its $1.2 billion Global Strategy hedge fund:

http://www.marketwatch.com/story/passport-capitals-gold-experiment-2009-...

Tue, 12/29/2009 - 09:21 | 176621 bb5
bb5's picture

Thanks for great link!

Mon, 12/28/2009 - 15:46 | 176106 Grandpa Bear Hug
Grandpa Bear Hug's picture

In 1789 George Washington stated in a letter to James Madison, "no generation has the right to contract debts greater than can be paid off during the course of its own existence".

Clearly, 220 years later, our administration and "representatives" have a much different view of future generations.

Keep up the great work Zero Hedge as 2010 will likely prove to be a most interesting year for all generations!

Mon, 12/28/2009 - 15:51 | 176111 Daedal
Daedal's picture

Grandpa,

Clearly you're a dilettante of modern economics. As has been stated by our knowledgeable leaders, the only way to a fiscally responsible future is by increasing both our deficit and our unfunded liabilities.

Mon, 12/28/2009 - 16:15 | 176132 Grandpa Bear Hug
Grandpa Bear Hug's picture

Your sarcasm does bring a smile however do not assume that grandpa does not have serious intentions. My kids and  grandchildren remain my focus and the energy expended on their behalf is not deemed dabbling...

Keep up the posts...and imagine the impact Zero Hedge could have on congress if they knew how to read. Clearly they have a reading disorder given the fact that they continue to pass legislation without reading the bill...

Mon, 12/28/2009 - 16:39 | 176157 Daedal
Daedal's picture

I hear you, friend.

Behind my sarcasm is a cynical immigrant who finds bitter irony in residing within a country that is rapidly transforming into the country he once fled.

Mon, 12/28/2009 - 17:09 | 176194 besodemuerte
besodemuerte's picture

lol your welcome Daedal!  Just wait until you see what surprise we really have in store for you once our financial system deteriorates!

Mon, 12/28/2009 - 20:45 | 176386 Cursive
Cursive's picture

@ Daedal

How far we have fallen.  We were once the envy of the world, now we are the envy of world corruption.  Although I must endure snickering every time I say it, a better future awaits America once we rid ourselves of the current cancer.  Things will get much darker from here, but I believe there is a light at the end of this tunnel.  Unfortunately, some of us won't make it all the way, but future generations will thank us.  ZH is a big contributor to that brighter future.

Tue, 12/29/2009 - 09:00 | 176612 Daedal
Daedal's picture

How far we have fallen.

No doubt. But I must acknowledge that I fall into the "we" category, for I was in the states since 1990, and have already spent most of my life, and all of my adult life, in America as an American citizen. Undoubtedly I am very much Americanized, but I still have a frame of reference of the communist hell that my family escaped, and I find it sadly ironic that the word 'communism' continues to have a negative connotation amongst most Americans, even though many of them embrace communist ideals, with the President (former and present) notwithstanding.

Tue, 12/29/2009 - 03:50 | 176569 Andrew_Miller
Andrew_Miller's picture

Uzhas_sovka, is that you? We miss you in livejournal.

Tue, 12/29/2009 - 08:55 | 176609 Daedal
Daedal's picture

A Miller,

Net, I'm not Uzhas. Sorry to disappoint.

Mon, 12/28/2009 - 17:54 | 176239 novanglus
novanglus's picture

I believe it was that great economist (who has an MBA from UCLA, donchaknow), who said that debt is a measure of how wealthy we are! 

http://www.zerohedge.com/article/congressman-pete-stark-explains-leverag...

 

Tue, 12/29/2009 - 19:19 | 177256 Anonymous
Anonymous's picture

"debt = wealth" sounds incredible, but I think that central banks such as the Fed with its monetarists at helm, makes no distinction between debt and equity. The current folks and most commentators in MSM (Krugman, Martin Wolf, all the major banks' chief economists) are upholding "print into a glorious future", with an occasional lip service to "exit strategy". I keep reading that we would get out of this debt circle, but I really don't see how. Someone knows how, please speak so we can act, instead of just writing more comments.

Mon, 12/28/2009 - 17:00 | 176178 Anonymous
Anonymous's picture

It would be moral to simply repudiate the debt.
It would ethical to simply repudiate the debt.
It would be legal to simply repudiate the debt.
It might result in a total clusterfuck to repudiate the debt.

Mon, 12/28/2009 - 20:48 | 176390 Cursive
Cursive's picture

@Anon.

Lulz.  Like it.  Yeah, clusterf*ck to be sure.  Probably the end of the financial world as we know it.  And talk about production following off of a cliff....

Mon, 12/28/2009 - 15:47 | 176107 Fidel Sarcastro
Fidel Sarcastro's picture

Point of order Marla - I believe the Lame Stream Media (LSM) outlet you mentioned is CNBS. 

Mon, 12/28/2009 - 15:59 | 176119 johngaltfla
johngaltfla's picture

Thank you Bloomberg for stating what many of us have been saying for a long time. If the Fed won't set rates, the markets will bulldoze over them and tell the truth. And the reality is they are tired of being told that worthless crappola RMBS and CMBS is equal to a US Treasury. Thus the world will simply adjust the values of our Treasuries to equal in yield what the crappola is worth. I can see a 6.5% yield on the 10 year in 2010 EASILY. Maybe even a 7.5%. That should cluster up Geithner and Co. pretty severely if the Fed doesn't start monetizing at light speed to keep it under 6.

Mon, 12/28/2009 - 20:49 | 176392 Nikki
Nikki's picture

Makes my TBT look good.... and I suspect from your logo it is you I owe a thank you to....

Mon, 12/28/2009 - 23:29 | 176499 Rusty_Shackleford
Rusty_Shackleford's picture

Hey Nikki,

You know everything

That there is to do.

 

Tue, 12/29/2009 - 03:04 | 176555 DoChenRollingBearing
DoChenRollingBearing's picture

TBT and (physical) gold are my best suggestions that I have bought to get us through this nightmare we are looking at.

Disclosure: like many of us I hold stocks, bonds and real estate.  But my best guess is that GOLD will see us through.

Best of luck!

Mon, 12/28/2009 - 15:59 | 176120 Cognitive Dissonance
Cognitive Dissonance's picture

"We aren't really sure how this will be spun into a "good thing,"™ but we are sure that someone will find a way.  Back to you, CNBC."

There is no doubt that we have left reality behind and are completely and utterly in the Twilight Zone. I spent the weekend reading up on the 70's and early 80's (when "deficits didn't matter") the last time we tried a similar experiment in excessive printing and delusional thinking.

The parallels are fascinating, both in how similar they are with that time period (in some respects) and how completely different they are in other ways. Back then we still had some trust in the world, both with other nations and with our leaders, at least economically. Back then, we had a population that wasn't completely seduced by the TV, wasn't in way over their head in debt and were savers more than spenders. The same can't be said today.

The next few years will be interesting. A lot of third rails are not only going to be touched but ripped up and thrown overboard. There is no way we will be able to service our national debit without slashing social programs. But don't you dare touch the military. Gotta keep the soldiers paid and equipped if you're going to keep order in the states.

Mon, 12/28/2009 - 16:22 | 176140 DaveyJones
DaveyJones's picture

only now we wear bailbottoms

Mon, 12/28/2009 - 17:18 | 176205 Anonymous
Anonymous's picture

lol! au contaire! now there appears to be no bottoms to these bails....

Mon, 12/28/2009 - 20:21 | 176366 Crime of the Century
Crime of the Century's picture

and smoke hamp

Tue, 12/29/2009 - 00:01 | 176508 Anonymous
Anonymous's picture

viva la hamp. dude your name in swedish would be " arhundretts brott".

Mon, 12/28/2009 - 16:39 | 176159 jbc77
jbc77's picture

The seperation from reality, entering the twilight zone that has become U.S finance still amazes me....less so today than it did say five years ago. The greatest thing to ever come from the internet is simply the truth. No longer do the masses need to beleive whatever they hear on TV. I just wish more serfs sought out the truth that is found on zerohedge and like minded sites.

We are all in for a day of reckoning. The only question is when.....

 

Mon, 12/28/2009 - 16:56 | 176176 Psquared
Psquared's picture

CD, just curious, but what did you read? I have begun several books but many of the recent ones are rubbish. Chancellor's book on booms and busts ("Devil Take the Hindmost") is readable and lays a good foundation on which to analyze the subprime/real estate speculation bubble.

I also have Kindleberger's book ("A History of Financial Crises") and one by John Lubetkin on the panic of 1873. ("Jay Cooke's Gamble")

Another one that was recommended to me was "The Myth of the Rational Market" by Justin Fox

Maybe ZH will post a reading list.

Mon, 12/28/2009 - 17:21 | 176212 deadhead
deadhead's picture

i read the J. Fox book and it was very unimpressive sad to say.

Mon, 12/28/2009 - 17:25 | 176216 Cognitive Dissonance
Cognitive Dissonance's picture

Psquared,

I didn't read a "book" but rather spent Saturday and Sunday using that wonderful thing called the Internet. I would do a search for "inflation during the 1970's" or "deficit spending during the 1970's" and then start clicking.

The great thing about doing it this way is the wide variety of subjects, authors and opinion you dig up. And always always always, one click brings you to 10 more possible and potential clicks. Yes, you dig up a lot of garbage. But you can quickly tell which is which and dispense with the dead ends.

While I still read "books", as I said in my last article, all writers are propagandists and what I really want to read is their source material, not their opinions. Sometimes I will go to the library and have the librarian direct me to the latest economic or history books. I immediately flip to the back and copy the reference material used. From there the sky is the limit.

I have learned over the past few years that I'm more than capable of making up my own mind concerning any subject I wish to explore. All I need do is some research. Of particular importance to me is what the writer/author doesn't tell me rather than what s/he does. Items omitted are often far more important to me than items acknowledged. If I'm a writer and I wish to promote my opinion, I'm certainly not going to include information contrary to my thesis. Not if I wish to sell the book to a wide audience.

It's the contrary information I want to see, the small unmarked paths and walkways that lead to new and clearer understandings. The conventional wisdom has no attraction to me and most books that are widely published and accepted are exactly that, (re)packaged conventional wisdom with a few "surprises" to attract the flies.

Mon, 12/28/2009 - 18:07 | 176256 Psquared
Psquared's picture

I am very much the same way. I will read contrary opinions sometimes to see where they diverge. Often they are not as dogmatically opposed as one might think.

I agree as well that historians have a way of stating their own predilections in their accounts. (Which are mostly their opinions anyway.) Philosophically, I am not so certain that there is such a thing as truth in this life. We can approximate it, but there is always a "black swan."

Let me rephrase that ... I don't think it is possible to discover the "absolute truth" in this mortal life. Whether there is/are some absolute truth(s) is more a matter of religion than some dialectic.

I also agree that the source material is crucial. But even more important is the interpretation put on that material - both by some author and by you/me as the reader. But sometimes source material is not readily available, or it requires extensive study and expertise. Then I find it useful to read what someone else has written about that source material. Clearly it is important to know who the author is and what bias he/she may carry.

For example, if you were to read something by Gary North it would be crucial to know that he is considered by many to be a "Christian Reconstuctionist." It would also be important to know that he is opposed to fractional reserve banking and that he considers himself to be a Christian Fundamentalist and an adherent of "natural law."

It takes a lot of discipline and years (age) to not be too influenced by a writer's "opinions."

Tue, 12/29/2009 - 03:21 | 176562 DoChenRollingBearing
DoChenRollingBearing's picture

Kind of close to your reading, I like to read the EXTREMIST posts/rants.  I find many ideas among them.  I have gotten a few very useful tips to make me money or give me good perspectives from those with views outside the box.

Exploration of unmarked paths (and similar) has provided me, as an individual investor scared off his butt, alternatives in keeping my individual butt safe in these scary times.

Mon, 12/28/2009 - 17:08 | 176185 Lux Fiat
Lux Fiat's picture

I hope that this is a redux of the 70's (which ultimately had a reasonably good ending after a lot of pain), and that there is the willpower to slash those social programs currently on auto-pilot.  Unfortunately, due to our low savings and high debt, it will cause a lot of distress for those who entrusted their retirement security to the government.  In case the willpower does not materialize, my weekend reading is going to be on the Argentinean debt crisis that started a decade ago.

God only knows what is going through Paul Volcker's mind.

Mon, 12/28/2009 - 17:15 | 176200 Mad Max
Mad Max's picture

The "good ending" was a combination of chance and one very firm-willed individual (Volcker), who is marginalized today.  No one really in power today would have his firm will.  The 70's ended on the verge of hyperinflation.  Without the good luck and resolute individual, I think our sequel will go all the way.  Timing unknown.

Mon, 12/28/2009 - 19:51 | 176344 brodix
brodix's picture

Does it occur to any of the economic minds here that Volcker curing inflation is as much propaganda as any thing else?

 Inflation is caused by loose money, but higher rates reward those with money to lend, while penalizing those wanting to borrow it and causing a recession. How do you cure an oversupply of capital by destroying demand for it?

 What's the difference between the Fed selling debt it is holding and the Treasury issuing fresh debt? The Fed retires the money it gets and the Treasury spends it. Now which would be more effective in getting the economy moving and thus increasing the demand for capital to bring it in line with supply and curing inflation? 

 The problem is that, by the Fed's very own logic, if there is a surplus of money in the economy, it is in the hands of savers. Remember that when the Fed sells debt to draw down the money supply, it sells it to those with the money to buy them. The high priests of our national religion cannot admit that large pools of excess wealth are the equivalent of fat cells in the economic system. As the old saying goes, money is like manure. Spread it around and it makes good fertilizer, but put it in a big pile and it just smells.

 

Mon, 12/28/2009 - 21:34 | 176427 KevinB
KevinB's picture

How do you cure an oversupply of capital by destroying demand for it?

Perhaps you should read up on fractional banking and how it works.


Mon, 12/28/2009 - 22:23 | 176458 phaesed
phaesed's picture

+1

Mon, 12/28/2009 - 17:19 | 176209 Anonymous
Anonymous's picture

Even the Caesars knew better than to bring a hardened army home to a restive populace.

Mon, 12/28/2009 - 18:17 | 176269 SWRichmond
SWRichmond's picture

A thought has (finally) occurred to me regarding the military and the end of empire.  Political leadership will not be willing to sacrifice empire as readily as they are to sacrifice young lives.  As the economic situation deteriorates, conditions within the military will deteriorate more rapidly.  The politicians know that the global perception of the American empire crumbling will accelerate the crumbling of the currency, and so on, and they will not be willing to admit (allowed by their handler bankers to admit) the empire cannot be maintained.  What this means is very simple: the military will be put under increasing pressure to do more and more with less and less.  Fewer troops, spread more thinly, with less equipment and with equipment in increasingly poor repair as the years drag on.  Incrementally more and more dangerous for them.

We need to bring them home sooner rather than later.

 

Mon, 12/28/2009 - 18:28 | 176284 Anonymous
Anonymous's picture

you mean from all of our 1500-2000 bases spread
over the globe?

Mon, 12/28/2009 - 19:58 | 176351 Psquared
Psquared's picture

Yeah ... thats what he means.

I read somewhere that we have somewhere near 3/4 a million military personnel stationed outside of this country in all those bases. (I assume that includes support and logistics.) If social order breaks down you would only want the most loyal troops at home. Seems to me keeping all those troops overseas serves two domestic purposes. One, it keeps the populace distracted and two the non-career military might side with the "people" so best keep them on foreign soil.

Tue, 12/29/2009 - 04:44 | 176580 mikeyv1970
mikeyv1970's picture

+1*i Psquared

Mon, 12/28/2009 - 20:08 | 176357 B9K9
B9K9's picture

Sigh, I expected more from you. (And for those of you wishing & hoping for some type of end-of-70s/Volcker outcome as well.)

Here's how it plays out: US military planners are well aware that our economy, as it is currently constructed (ie with key industries nationalized) does not, and cannot, generate sufficient real "wealth" production to afford both guns & butter. Riddle me this: Which duty is specifically proscribed in the Constitution, that "dead letter" to which all servicemen & women swear allegiance?

The types of news items & trends that are discussed ad infinitum @ ZH and across the interwebs are not only more than well understood by the officer corps, but have probably been war gamed an endless number of times, by RAND & other think tanks, with the same exact set of outcomes: Fail.

As Trav and a few other macro aficionados have noted, just possessing/controlling the ME oil reserves (yes, Virginia, now you know why we are there) only maintains the status quo. Without some key technological breakthroughs, it doesn't buy you shit in terms of the oh-so-necessary pyramiding of new debt tranches to keep the fractional reserve system going.

So guess what happens when the great engine begins to really slow down and show some wear & tear? With US nationalization of key industries & massive, unfunded social programs scarfing up all available investment capital, where is the next "big thing" gonna come from to save our collective bacon this time around? What if there isn't anything? Then what gets cut first & foremost? Defense? LOL!

The real shit has yet to even be extruded, much less hit the fan. Unless things turn around pretty quickly, many cannot comprehend how readily & rapidly our society can fail - as all others have done throughout recorded history. If/when our security situation becomes untenable, that's when we'll really begin to see a full range of outlying possibilities suddenly become our reality.

As for you 70s buffs, try this on for size:

  • US domestic peak oil production had only been reached a few years before
  • US auto mfg still had something like an 80-90% market share
  • US off shoring was only a dream in some financial engineer's head
  • US demographics still provided for only a "slightly" bankrupt SS, not the complete & utter shell that it is today

The 10s are going to look nothing like the 70s; they are going to look like the 90s. That is, the 1790s in France. Bring it on, bitch.

Mon, 12/28/2009 - 23:26 | 176497 SWRichmond
SWRichmond's picture

You continue to read something into my posts that just isn't there, and it's a mystery to me why you do it, but w/e.  They will run out of ability to fund the military, but will try to keep the missions the same, even if the end of that ability comes quickly.  Even the status quo cannot be maintained with the current, degenrating fiscal situation.

I know why they're being kept overseas: ther's no jobs for them here, and they're "too easily radicalized".  I want them home because they don't belong there, period.

Mon, 12/28/2009 - 23:56 | 176505 B9K9
B9K9's picture

Who is they? That is, those who, in your words:

will run out of ability to fund the military

The MIC? I wish ZH space monkeys would wake and realize that the first group in line for whatever welfare spending remains will be the military. Even if it requires a coup.

Walk through the logic. Both guns & butter cannot be supported under the current economic model. Even worse than nationalization (the short-term effect) is the longer-term effect of diverting capital away from crucial, yet to be developed/discovered technologies & industries.

This has been extensively modeled - it's not like the guys at RAND are sitting up, going, wow that B9K9 is really insightful. LOL! Thus, one has to give way to the other. Which one is specifically referenced as a direct Constitutional duty? Which group actually has the guns?

Unless we come up with something really damn clever that can produce the necessary economic output required to support another layer of debt that is essential to the fractional reserve (Ponzi) model, this fucker is coming down.

Wake up. Even many of those at ZH are still walking around thinking that things could return to normal. Sure. And the Reich was supposed to last 1,000 years, while the USSR could barely muster 70.

What got us here was 180 degrees opposite to what we are currently doing. Command economies have never worked in the entire history of mankind. We're supposed to think that this time is gonna be different?

Watch the big trends. If something doesn't come up pretty quickly, that noise you hear is a 225 year-old society rolling over and going tits-up.

Tue, 12/29/2009 - 01:18 | 176530 SWRichmond
SWRichmond's picture

for whatever welfare spending remains will be the military.

You seem to think that some will remain.  Then you argue that this fucker is coming down.

So what are you trying to say?  You seem to be saying that you believe the military has the ability to declare martial law and control the entire country while at the same time fighting foreign wars, all while "this fucker is coming down".  Did I get that right?

Tue, 12/29/2009 - 08:18 | 176604 Anonymous
Anonymous's picture

B9K9.

The only other ZH reader yet that I know gets it.

"I got a war to sell yah." - Obama

-MobBarley

Mon, 12/28/2009 - 16:03 | 176121 naiverealist
naiverealist's picture

Pardon the stupid question, but what does the Fed want to do with all the Treasuries it is buying?

Foreclose on the gold in Fort Knox, buy the Navy/Marines, take over California and Iowa???

What are these private bankers trying to get from the US by buying the Treasuries?

Mon, 12/28/2009 - 16:10 | 176127 Greyzone
Greyzone's picture

They are trying to keep the system afloat long enough for another "bull market" to resume, so they can suck another liter of blood from their victims.

Anne Rice didn't need to write fictional stories about vampires. All she needed to do was go watch Wall Street in action.

Mon, 12/28/2009 - 16:26 | 176143 Cognitive Dissonance
Cognitive Dissonance's picture

Sadly, that is exactly what "they" are doing, with the full support of wall street AND main street. All those mom and pops out there are not going to retire to Florida without the bull market resuming. This is why the corruption and deceit are not opposed by anyone other than a few outraged citizens. The consumers are too busy looking for the next meal.

Deep capture at it most basic. Every one's best interest lay in the resumption of the insanity. Everyone is thinking ultra short term. Just get me to the next statement, to the next payment, to the next meeting.

This will not end well but it most certainly will end. The question is, will it be a slow unravelling or a violent explosion/implosion?

Mon, 12/28/2009 - 17:02 | 176182 cougar_w
cougar_w's picture

There is a third way out: immediate evaporation.

I feel like the systems currently in motion are beginning to freeze up in place. All the past frantic effort to keep the wheels turning is near an end. There will be neither a gradual stop nor an explosive ending. Everything could just stop. Cold. And once stopped, the "machine" that was effectively defined by all that motion simply is not there anymore.

A wave moving across water has a mathematical structure and unique physics until it is not there. Until it hits an opposing harmonic and evaporates in mutual cancellation. Things that seemed real can be manifestations of other things which might not be real either, and when the relationships fall apart and the wheels come off they evaporate and are not there anymore because they never were real to start with.

Our entire economy could evaporate in a few short days, and afterwards people would be so entirely un-done by this that they literally could do nothing at all. Not even riot. Not even loot. Not even anything else but scramble for rapidly vanishing food and water.

In a vague way it even sounds like a preferred outcome among many. The global System Reset.

cougar

Mon, 12/28/2009 - 17:18 | 176207 Anonymous
Anonymous's picture

Nature abhors a vacuum. While I do hope for the "all stop" I would caution you to suggest that we would just fall into instant anarchy. Other nations have experienced the full stop before, it didn't go Mad Max. In the West, we have misallocated capital and resources to a degree that I only thought possible in command economies such as the USSR. That is simply not the case. The basis upon which many assumptions have been built--what career path to take, for example, has faltered and will ultimately fail. Malinvestments have to be wiped away, and that will indeed require a system reset. The good news is, nothing is destroyed as it is in war (although to a Keynesian, that is probably a bitter outcome). So we will survive, but only if a majority of people can see statism for what an enormous lie it really is and come to repudiate it.

Mon, 12/28/2009 - 17:35 | 176224 Psquared
Psquared's picture

Interesting. Have you read, "The Road?"

What you describe is the condition of the world in McCarthy's book. The difference is that the cataclysmic event that brings life on the planet to a grinding halt is some external event. (We are led to believe anyway.)

You realize that people in "third world countries" (including most of China) would not even notice. Food supplies would come to a halt, but in many cases that was not reaching the starving anyway. Life would go on as it was.

We, on the other hand, would have a huge adjustment. Most westerners would not make it.

Mon, 12/28/2009 - 18:36 | 176290 Rusty_Shackleford
Rusty_Shackleford's picture

"Most westerners would not make it."

 

Thanks to my tutilage my son's a level 6 survivalist.

He's been trained to use westerners as food and shelter

Mon, 12/28/2009 - 19:25 | 176318 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

Ummm, tastes like chicken?

Mon, 12/28/2009 - 19:38 | 176330 Miles Kendig
Miles Kendig's picture

Just like Diamondbacks and Copperheads... The veal principle still applies.

Tue, 12/29/2009 - 04:24 | 176577 Howard_Beale
Howard_Beale's picture

Hi Miles,

I'm getting kinda blown away by all the new names here! Wezza gettin' popular, this ZH mutha. But I would say one thing about this original post...the bidders on the auction do not all have a holiday week. China is not on holiday. The biggest buyers of the 2 year are still at their desks, albeit in a coma in NYC. So, to be realistic, a shitty 2 year in this "quiet holiday week" is just a tribute to Benny and the Jets hoping everyone just doesn't give a shit.

Happy New Year My Dear One,

Little Sis

Tue, 12/29/2009 - 16:25 | 177066 Miles Kendig
Miles Kendig's picture

Greetings Howard, 

So good to see you!  I agree there is a great deal of texture being reflected in that auction.  And I suspect that The Jets are looking for denial and acceptance to replace willful ignorance. There are many newer names on these ZH threads and I suspect that this growth reflects the possibility that The Jets will have to contend with far more rejection and debate than their models indicated.

Have an awesome New Year as well lilsis.  Peace

Mon, 12/28/2009 - 20:03 | 176355 Psquared
Psquared's picture

Holy crap guys ... I do hope you are all joking. :-(

I do own 3 guns and a closet full of canned goods and ammo so don't come lookin for a fight with me ... I'll give you plenty!! ;-)

Mon, 12/28/2009 - 21:37 | 176433 Argos
Argos's picture

The typical adult American's body is so rife with chemicals, that I doubt any cannibals long term survival.

Tue, 12/29/2009 - 03:39 | 176565 DoChenRollingBearing
DoChenRollingBearing's picture

I just read McCarthy's "The Road" 2 days ago.  The bleakest fiction I have read in a long time.  I woud be curious if any .govs or other knowledgeable folks out there see such an apocolyptic event happening....

Rich or poor it looks to me like difficult times come soon.  Buy gold, silver, food, and guns.  Only two of which I have done.

Oh, why, why, has America led itself into such peril with debt and spending...?  By lack of morality (see American Purgatory posted here a few days ago)?

I don't know how we get out of the box of spending, debt, morality, personal ethics, etc.

May God help us in our hours of need, and may each of us who are aware of the risks ahead be ready, and ready to help later on...

Tue, 12/29/2009 - 10:46 | 176656 Psquared
Psquared's picture

Very well said ... especially the last paragraph. We are in transition right now and transitions are always painful. Since WWII we have embraced the "me" lifestyle and that has to end. We simply cannot survive if we stay in the "box of spending, debt, morality and personal ethics."

As I see it there are two main avenues from here. The first is we take the same road as the Romans and go from  the American Republic to the American Empire and ultimately collapse; or, we evolve into a society that cares more about people and relationships and less about "things" and "causes."

I pray it is the latter.

Mon, 12/28/2009 - 17:09 | 176195 Psquared
Psquared's picture

This is exactly RIGHT.

I am not wealthy (in fact, I am downright poor) but I have some very wealthy relatives and they are all breathing a sigh of relief over the market rally this year. All they want is to buy a new Beamer ever 2 years, spend summers at the beach and go to Europe 2-3 times a year. (And keep their children in the "Polo shirts" and Country Club lifestyle.)

Let them do that and they won't rock the boat. When I try to engage them in a meaningful conversation about what went wrong and why long term economic health means short term pain and their eyes glaze over. They don't want to pay attention long enough to grasp it.

I am definitely beginning to get the feeling that this market rally is, as you say, BY DESIGN. A few pissed off peons like us won't make much difference (Funny how you can ignore 1 million+ people in Washington, DC isn't it?) but you start pissing off the "upper crust" and things get dicey for the Federales.

Mon, 12/28/2009 - 17:21 | 176214 Anonymous
Anonymous's picture

I can demonstrate that it is "by design"--go look at the 1 min. chart for FNM or FRE and you will see computerized trading for weeks and months. Now, this past week, with so little volume on the S&P, you can now see the same mechanized trading behavior there, too.

Mon, 12/28/2009 - 19:18 | 176314 SWRichmond
SWRichmond's picture

Excellent excellent excellent point.  A perfect illustration of the "conspiracy of interests".  The wealthy all have a vested interest in the status quo.  Obviously, they believe that, as long as the status quo isn't overturned, there will be no sustainable move to radical change.

In other words, this is class warfare.

Mon, 12/28/2009 - 19:39 | 176331 Cognitive Dissonance
Cognitive Dissonance's picture

Absolutely. We are experiencing the worlds largest, most comprehensive, transfer (better yet, redistribution) of wealth from the middle class to the financial elite. This even eclipses what went on during the great depression by a country mile. Even the so called upper middle class will not be spared.

The scope and breadth of this wholesale theft staggers the mind if you sit down and think this through to it's inevitable conclusion. The process has started, there is no turning back, the powers-that-be are all in. This is why the level of looting and corruption has skyrocketed over the past 18 months to 2 years. Those who can steal are stealing. The end game is upon us. Get now while the getting is good or get gotten yourself.

Mon, 12/28/2009 - 20:10 | 176360 Psquared
Psquared's picture

"Even the so called upper middle class will not be spared."

They won't be spared, but they will be saved for last leading them to think they have been spared. That is why they won't rock the boat.

Bankers always overreach ... even moreso now that they have allowed them to act like riverboat gamblers. They would do well to read about the depression of 1873 when "overspeculation" on railroads led to gangs going into banks and hauling out officers and lynching them on lampposts.

They have overreached this time as well and it will not end in their favor. Just like it never has before. They may think the army and police will protect them ... and they might for a time ... but public hangings will become common very quickly if this all goes to the shitter abruptly.

Mon, 12/28/2009 - 19:40 | 176335 Miles Kendig
Miles Kendig's picture

How about the class of ideas...  After all, you have provided us lots this year. Especially on point.

Mon, 12/28/2009 - 17:21 | 176213 Anonymous
Anonymous's picture

"Every one's best interest lay in the resumption of the insanity. "

Ouch! I don't like the sound of that at all.

Mon, 12/28/2009 - 16:32 | 176149 MarketTruth
MarketTruth's picture

Fort Knox has tungsten-plated gold bars. Until a full an complete audit including the fittness of said bars is done, it could very well be empty... or all the gold (if there is any) could already be promised to other entities.

Why is it Ft. Knox has not been audited for many decades for a reason...

Mon, 12/28/2009 - 18:44 | 176295 Anonymous
Anonymous's picture

Oh, really??
And I always thought it were gold-plated tungsten bars!
+1

Mon, 12/28/2009 - 18:59 | 176304 Hephasteus
Hephasteus's picture

Because it's been stolen and the people who stole it are findable and punishable. Plus the fed owes the US a buttload of gold which it has nothing but stupid government pensions and Goldman bonuses and Rothchilds and Rockefellers buried treasures to pay up wth. Plus the Firestones stole some and got caught in the 70's I think. Plus firestone tires blow out and suck. But that's a steel belted delamination problem not a gold problem.

Mon, 12/28/2009 - 19:51 | 176343 A Nanny Moose
A Nanny Moose's picture

Now The Firestones dabble in alchohol production in Central Calif.

Perhaps they figure drunks are less prone to pick up pitchforks. Good luck with that.

Mon, 12/28/2009 - 20:21 | 176365 dnarby
dnarby's picture

Ehh...

Sorry, but Firestone tires only blow out if they are dangerously underinflated and driven 75MPH on a heavy vehicle.

Ford blamed their engineering failure on Firestone (and it was really a user error, but precipitated by their pushing safe tire inflation to the very limit to make up for the fact a truck rides like, well...  A truck).  The press focused on Firestone (suprise surprise).

As a result, Firestone (or Bridgestone) no longer supplies Ford with anything.  I don't blame them.

Mon, 12/28/2009 - 20:53 | 176393 Crime of the Century
Crime of the Century's picture

I think GLD is holding the W

Mon, 12/28/2009 - 16:33 | 176151 Anonymous
Anonymous's picture

the fed HAS to buy a sizable amount of the treasuries so that the current celebrity-in-chief (coward-in-chief?) can pay for a fancy website that makes up "job creation" data: www.recovery.gov

the initial reason provided under the term "quantitative easing" was really to artificially increase demand for the treasuries, as these yields are linked to borrowing rates. higher demand therefore pushes yields and interest rates down further, and this would in turn cause people to borrow more, and spend more money that they DO NOT have (just like their own big brother has been doing).

unfortunately, americans were under the impression that "change" would be for the better.....instead it is just more of the same garbage.....and the only "change" is that it is in higher quantities, and at accelerated rates that the irresponsibility is being perpetuated by our disgustingly ignorant, naive, and corrupt politicians.

Mon, 12/28/2009 - 19:54 | 176349 A Nanny Moose
A Nanny Moose's picture

It costs like $10/day for somebody in India to code that....maybe it's Mil. Spec.?

Mon, 12/28/2009 - 21:28 | 176418 Anonymous
Anonymous's picture

Don't think anonymous really meant that the federal government is spending hundreds of billions on a website. Pretty sure he/she was just indicating that the money is being wasted.

Mon, 12/28/2009 - 16:05 | 176122 Anonymous
Anonymous's picture

You Bond Bears are misguided. When it becomes obvious that we're in the midst of a Double Dip Recession, the long end of the treasury curve will come down dramatically. I predict a 3.25% Long Bond within 12 months. Mark my words.

Mon, 12/28/2009 - 17:29 | 176220 Anonymous
Anonymous's picture

double dip recession, or double decade recession like japan???

Mon, 12/28/2009 - 19:22 | 176316 SWRichmond
SWRichmond's picture

Consider your words marked.  Maybe you can answer this, since no one else seems able to: once the double dip starts, and tax revenues sink further, and demand for social programs increases further, and deficits projections get blown out of little timmy's ass, how does the U.S. make interest payments ten years from now?

Mon, 12/28/2009 - 23:16 | 176493 KevinB
KevinB's picture

Ten years from now? How about two?

Mon, 12/28/2009 - 19:52 | 176341 Miles Kendig
Miles Kendig's picture

I suspect that there is one more good run to the dollar left which will provide a fine definition of a crowded trade.  It is the next swing away from the dollar that I am considering. Especially since I believe that competitive devaluation will become a dominant fixture then. 

Tue, 12/29/2009 - 10:18 | 176643 Cognitive Dissonance
Cognitive Dissonance's picture

I agree. The masters of the universe are focused on the dollars relative value compared to other currencies. Forget what the dollar formally bought 20 years ago. Just focus on what the dollar can buy compared to the Yen or Sterling or Euro today.

You will never be hung for being insane as long as you are no more insane (or for that matter, saner) than the others.

Mon, 12/28/2009 - 20:19 | 176364 Psquared
Psquared's picture

Could be ... I am not smart enough to know. I do know this though ... when these fraudulent auctions continue to fail the fed will have no option but to monetize debt directly rather than buy government paper. When that happens the dollar will suffer devaluation and hyper-inflation will hit.

Some might say the dollar has been devalued several times already but you can't tell because it is relative to all other fiat currencies which have also been devalued. However, the sheer volume of US Treasuries which will have to be sold in the coming months and years just to pay interest will consume and overwhelm the worldwide demand for government debt resulting in lower and lower bid to cover and higher rates. (just like today)

When that happens you will be able to tell regardless of the euro or pound or yen.

Mon, 12/28/2009 - 21:30 | 176420 QuantumCat
QuantumCat's picture

We can have a recession/depression, increasing dollar value, AND rising long term interest rates.  Rates can rise not only as a function of inflation, but also as risk of default.  This is the corner the US has backed itself into.  Unless the FED is willing to destroy itself, there will be no capacity to print money, credit will contract, and we will have a deflationary depression that proves the 99% hyper-inflationary crowd wrong.  If the FED decides to destroy itself, then I'm wrong. 

Mon, 12/28/2009 - 16:06 | 176123 Shameful
Shameful's picture

What I want is to talk to a guy who is actually buying this garbage with his own money.  I'd love to hear the rational, after all someone has to be buying with their own money, right?

Mon, 12/28/2009 - 17:09 | 176193 Anonymous
Anonymous's picture

Purchasing longer-term Treasury ETFs is rather like buying VXX. The Morgan Stanley-estimated $2.55 trillion of Treasuries being issued this coming year, without the Federal Reserve as majority buyer, is going to 'bogart' the entire credit realm. That competition for capital, and an ever-higher interest rate drift (also creating more loan losses for banks) will induce increasing stresses upon equity markets. These factors, in addition to many others (e.g., banks issuing more shares to increase capital) will lead to an abandonment of equities (again), and a replay of the quest for liquid, stable assets. (The Treasuries market is much, much, much more liquid than the gold market, which is why we see such a sell-off in gold when the market is in a moment of crisis recognition.)

Leadership. Morals. What's my cut?

Mon, 12/28/2009 - 20:23 | 176370 Psquared
Psquared's picture

Oh my ... surely you don't mean an orchestrated market crash to create artificial demand for the worlds most stable fiat currency?

They wouldn't do that .... naaaa ... not in a million years.

Take our 401ks too? They wouldn't do that either ... would they?

Tue, 12/29/2009 - 03:39 | 176564 Mark Beck
Mark Beck's picture

Do you have a link to the Morgan Stanley $2.55T Treasury total notational estimate? or did you hear this first hand? from who if I might ask?

I am just looking for another reference for my report.

Thanks,

Mark Beck

P.S.

My feeling is, after a pullback in Gold, more tied to short term strength in the USD, Gold will then trend higher after FED announced QE2. QE2 end of May?

Wed, 12/30/2009 - 00:23 | 177457 ZeroPower
ZeroPower's picture

QE2 in Q1 2010...that is, a QE on top of a QE.

Just like the CDO^2 we had in the subprime mess.

Mon, 12/28/2009 - 17:12 | 176198 Oso
Oso's picture

I moved all my money to treasuries last week and through today.  I promise you rates will get crushed when equities collapse, or when QE 2.0 gets announced.  High rates is not an option until the marginal risk buyer is fully exhausted out of risk (SP closer to 600 than where it is now).

Mon, 12/28/2009 - 17:36 | 176225 Shameful
Shameful's picture

While I agree that if/when equities collapse there will be a flight into treasuries but don't you think that QE will force rates up?  Or if rates do not move up under QE it will because the monetization of the bonds and the FED being the first, last, and indeed only buyer.  Under that case your right yields would go down but the underlying asset the dollar will get hammered so clipping coupons would be useless. 

Am I right to assume that in the case after a equities collapse or after QE that you will jump out of treasuries and into other assets?  I'm trying to figure to the play and why people would do this.

What do you do if equities are held up by massive liquidity and the QE 2 is not offcially announced?

Mon, 12/28/2009 - 18:26 | 176280 Oso
Oso's picture

Yes, you are correct to assume that i will get out if and when yields again collapse.  The problem as i see it is, there is no other real way to play both an announcement of QE and risk-aversion at the same time, one of which has to happen.

"What do you do if equities are held up by massive liquidity and the QE 2 is not offcially announced?"

well, if we assume the Fed isnt doing covert purchases (just go with it for a second), then yields will continue upwards, and that will then crush the economy even more, which will cause yields to come back down as people move out or risk.

 

honestly, i dont think equities are being held up by anything but people wanting to show holdings at 12/31.  As yields keep increasing, marginal buyer of risk moves towards non-risk.

 

Mon, 12/28/2009 - 19:50 | 176342 Anonymous
Anonymous's picture

+1

Mon, 12/28/2009 - 20:27 | 176374 Psquared
Psquared's picture

So next week should be interesting ... with all the window dressing finished now everybody has to start looking around to see what they REALLY want to buy.

Can anyone look me in the eye and say with a straight face ... "I really want to buy some stocks now."

Come on ... don't be shy. You can say it .... I   REALLY   WANT   TO   BUY  SOME  STOCKS  NOW.

Tue, 12/29/2009 - 03:47 | 176566 DoChenRollingBearing
DoChenRollingBearing's picture

Not me.  Just physical gold and TBT for now,

Mon, 12/28/2009 - 19:48 | 176340 Anonymous
Anonymous's picture

You've got the gist of it. Timing the
jumps is your problem:)

Tue, 12/29/2009 - 01:21 | 176533 rapier
rapier's picture

One common supposition is that there is not enough liquidity to support Treasuries and equities now that QE is winding down. That might be true if you don't consider possible ROW inflows.  If something happens and I have no clue what it might be but if something  or things happen to bring hot money into the US then rates could stay stable or drop and equites could continue to rise in not launch.

I've spent the better part of a decade counting on liquidity crunches and except for the mother last year I've learned one thing. It's always something. Something comes up to keep the money flowing. 

If the stupd Fed had not abandoned the Open Market operations leaving the PD's starved when Ben turned to his alphebet soup the crash would not have been a crash probably. Given enough cash the PD's can keep stocks healthy 95% of the time.

 

No predictions here. Just saying.

Mon, 12/28/2009 - 16:08 | 176124 phaesed
phaesed's picture

ZH, y'all know I respect you guys like crazy, but bragging about making the same call as any idiot on CNBC is truly beneath you guys.

The 13 Week T-Bill since 1934

http://alfred.stlouisfed.org/graph/?chart_type=bar&s_1=1&s[1][id]=TB3MS&s[1][vintage_date]=2009-11-02&s[1][line_color]=%230000FF&s_2=1&s[2][id]=TB3MS&s[2][vintage_date]=2009-12-07&s[2][line_color]=%23FF0000&s[1][range]=Max&s[2][range]=Max

 

Mon, 12/28/2009 - 16:09 | 176126 phaesed
phaesed's picture

and hey, I know I'm not one to talk either :P

Mon, 12/28/2009 - 16:10 | 176129 Anonymous
Anonymous's picture

Want to double your money in 15 years guaranteed? Buy a 15 yr. Zero Coupon Treasury. That's right. What else do you feel comfortable doubling in 15 years? Real Estate? Stock prices? Gold (bubble will burst in 2010....LOL!!).

I'm buying 5% long term Zeros right now. I'll be selling them to the Sheeple at 3% yields for massive cap gains. Tonight I'm drinking Macallan 25 yr. Scotch.

I don't often drink beer, but when I do......

Tue, 12/29/2009 - 03:47 | 176567 Mark Beck
Mark Beck's picture

This is the first I have heard on someone investing in STRIPS at ZH for a long time, maturity in 15 years.

Is this a joke? or are you really doing this?

Mark Beck

Mon, 12/28/2009 - 16:30 | 176146 orangedrinkandchips
orangedrinkandchips's picture

Marla-

hey...screw them all! youre doing the right thing and it is SO obvious. Please dont give up....this is a cross we all bear.

 

the auction was a joke. That money goes DIRECTLY into the futures market. Period.

 

Imagine: higher interest rates on all that debt...game over.

 

What I now admire about our South American brethren is that the politicians are as corrupt as they are here BUT THEY ARE HONEST ABOUT IT. (i.e. they will just say it...im a pig...so what?)

 

Nothing left here to do but smile, smile, smile....

Mon, 12/28/2009 - 16:34 | 176152 Anonymous
Anonymous's picture

2yr Tbills at 1% is hardly an ominous indicator for US borrowing, rates, or anything.

1%... and you cant really make any money shorting them, bc funding rate is zero so they roll down pretty hard and in the meantime you carry poorly.

So if your short, best case is that the rate is 2% in 1-yr and you make the funding rebate (~25 bps). Worst case they roll down to 0.5% 1-yr bills and you lose (-150 bps).

Tough trade.

Mon, 12/28/2009 - 16:39 | 176158 Anonymous
Anonymous's picture

Wow! Great call!

You mean the 3 month might increase from .044 or the 30 year from 4.69?

Gutsy one to go all out on the edge there.

Mon, 12/28/2009 - 16:41 | 176162 phaesed
phaesed's picture

What amazes me is how fervently people are advocating higher interest rates which is right in line with what the Bankers want.

You do realize higher interest rates mean higher interest costs, tons of profits for the banks who are shorting short-term t-bills (even as they have to purchase them to maintain higher asset reserves), higher tax rates to pay for the higher interest costs (let's be real, the chances of us paying down this debt in this century is near zip - and this century just started), not to mention that the indirect bidder methodology was changed this year or the idea that sentiment is always wrong at the turning points or even the fact that all the bankers are on vacation in the Hamptons spending their year end bonuses funded by the taxpayer.

*shrug*

Oh... CNBC will be right back with a piece on higher interest rates on Treasuries.... what perfect timing (as if they don't repeat that mantra all day every day in their "unbiased" Banker dictated approved topic list).

Mon, 12/28/2009 - 16:52 | 176170 Shameful
Shameful's picture

Those of us who are savers would love higher rates.  I can't hold money in a bank, I get killed by the printing press.  By having low rates we play into the finance oligarchs hands by being forced into the global casino.  I'm not a stupid man but I feel unqualified to properly navigate the casino, so what chance does Joe Sixpack have?  The best he can to is entrust his money to a fund who will ass lance him.  Studies say he would be better served by picking randomly..so the only way to preserve wealth is to gamble?

I agree that higher interests rates mean higher carry costs on debts.  But i also maintain that the debts are bad and must be defaulted on, particularly government debts.  The USA will NEVER pay its debt legitimately, even if the USA is around for another 1000 years.  We can extend and pretend with low interest rates or we can own up and face the music now.  I would rather take the hit now and not try to carry this shell game forward and try to force it onto the children and grandchildren of the irresponsible masses.

Mon, 12/28/2009 - 17:08 | 176191 harveywalbinger
harveywalbinger's picture

The other day somebody wrote: "Gold, Bitches".  

Then again somebody also wrote that pleasuring another man with a socked foot doesn't make you gay. Not that there's anything wrong with that.

Mon, 12/28/2009 - 18:47 | 176297 Rusty_Shackleford
Rusty_Shackleford's picture

It's a line from a Family Guy episode, by the way. 

It's funny.

(It's also 100% true in my experience.)

Mon, 12/28/2009 - 19:39 | 176333 harveywalbinger
harveywalbinger's picture

+1000 Peter Griffin

Tue, 12/29/2009 - 03:52 | 176570 DoChenRollingBearing
DoChenRollingBearing's picture

As various have said here:

Gold, bitches!

5% - 10% of anyone (who reads ZH) ought to be in physical precious metals.

I am an Asian Rolling Bearing.

Mon, 12/28/2009 - 17:54 | 176243 phaesed
phaesed's picture

So I realize this might be sacriligeous, but how about instead of giving your money to a bank since you're "saving", why not help support the dollar and the market by buying a 10 year Treasury bond instead?

 

I guarantee that you'll get a better rate today than in 5 years from now (like the banks will ever give you 5.25% on a savings account within the next five years, lol). Plus you get the "pull to par" effect as it reaches maturity....

And a bit of news.... when the debt rolls over, our kids will get hit with the higher costs anyways.

Mon, 12/28/2009 - 19:55 | 176350 Shameful
Shameful's picture

The core of my problem is I don't trust the Federal Reserve.

I would love to buy treasuries, but what guarantee do I have that Zimbabwe Ben won't run the presses faster then my coupon?  Sure there are TIPS but only a fool would trust the gov to provide accurate numbers about it's own inflation.

As to being "patriotic" and supporting the dollar why would I do that?  Our leaders are dead set on destroying it, and the Asia's are trying to save it.  So wouldn't it be more patriotic to help destroy it because that is what our "wise leaders" want?

Now I can see investing in some treasuries, like maybe the Swiss or Canadian treasuries but the Fed has shown a willingness to fire the presses up that would keep me out of dollar based bonds.  And yes I fully know that the Swiss franc has had QE to but I still trust them more then the Fed Reserve.  The important thing to remember is inflation is a monetary phenomena, we can see it in prices but the increase in money supply is the problem.  And yes I'm aware of the deflationary aspects for credit destruction, however since all Uncle Ben needs to do literally create quadrillions of dollars is to tap on his keypad I know that he can and will defeat all deflationary pressure at his leisure.

I actually completely agree I expect that yields will go down.  After all when the Fed steps in and buys all issuance's why not have super low rates? The dollar has been steadily losing value a lot of years.  To me buying an asset that is constantly in a decline, with nearly infinite supply, and with shrinking demand, does not seem like a good trade to me.  But I'm not a professional so I could be wrong.  The only way I could buy into treasuries now would be with the express purpose of selling them sometime this year assuming we do have equity problems and then dump my money into commodities or possibly equities.  To my perspective US treasuries are a great place to lose money over the long term.  I've read many instances where peopel lost their shirt in treasuies but very few were non reatliers made a fortune in them.

Mon, 12/28/2009 - 22:44 | 176468 phaesed
phaesed's picture

Those of us who are savers would love higher rates.  I can't hold money in a bank, I get killed by the printing press.

- Okay I got that.

I would love to buy treasuries, but what guarantee do I have that Zimbabwe Ben won't run the presses faster then my coupon?

- So lemme get this straight.... You're a saver who wants higher rates and likes to put your money in a BANK, but you don't trust the Fed and worry about inflation. It sounds like you need to figure out which you're more afraid of. Oh... ps, coupon reinvestment rocks.

I've read many instances where peopel [sic] lost their shirt in treasuies [sic] but very few were non reatliers [sic] made a fortune in them.

- I'm a retailer and I trade options on the TLT, it's how I pay rent and grocery bills. My speciality is in Interest Rate theory with an obvious concentration in central banking mechanics (I wouldn't call myself an expert, but I can damn sure guarantee that I know a shitload more than most considering I've read all of Fisher's work) and experience in the actuarial field (valuation was my particular focus). So between a solid knowledge of technical analysis from the MTA and personal research and a firmly solid grasp of economic theory based on more than "Economics in One Lesson" and a few websites and "conventional wisdom", I continue to make this call against EVERY person that I consider to be a sage in Technical Analysis. Of course, CNBC repeating this "Are Treasuries the Next Bubble" mantra about 60 to 80x per day (or per hour depending on the banking cartel's daily topic list) should give SOME type of clue.... Unless of course they're right on the mark.

I'm not saying that rates CAN'T go up... they most likely will, but consider that it wasn't until 1977 that rates started to rise while the crashes were in '69/70 and '74 if you want to look a recent history, or until 1938 in you want to look at ancient history (you know, the stuff that the Fed has severely restricted information dissemination on).

Tue, 12/29/2009 - 06:00 | 176587 Rick64
Rick64's picture

Good observation. By the way Greenspan and Rubin have even more credentials than you. They were wizards.

Tue, 12/29/2009 - 10:44 | 176648 phaesed
phaesed's picture

yahhhh, but I grew up on welfare and dealing drugs as a teenager.

I knew the kiss of a Smith and Wesson by age 14.... so I guess I know what reality could be about. But hey, I happen to be a deflationist while y'all are what.... inflationists? So ummm, you're long stocks? Or short bonds? Or... hey what the fuck are you?

 

Anyways, this conversation is boring because y'all don't do your own work.... keep following general convention fellas, Mark Haines has great investment advice too.

Tue, 12/29/2009 - 15:57 | 177021 Rick64
Rick64's picture

Didn't say you were wrong. Just noting that credentials don't necessarily give you an advantage. I'm short equities. No need to get an attitude. Living in both environments definitely should give you an edge.

Tue, 12/29/2009 - 20:05 | 177288 phaesed
phaesed's picture

Ahhh, well I am an asshole who's just kinda tired of hearing the "higher yields" argument.

Especially from people who've never done their own work and who are citing "precedent". I don't mind the argument, but since people have decided to act as if any idea to the contrary is absolutely acinine, I've decided to bring the ass out of the nine. There are so few deflationists left, while everyone is arguing for the stagflation side.

 

Mon, 12/28/2009 - 16:55 | 176175 Hansel
Hansel's picture

Higher interest rates would devalue all the assets currently sitting on bank balance sheets.  To profit from higher interest rates, banks would have to engage in new lending at higher rates and have those loans stay current over time to collect the higher interest payments.  The banks are and would be insolvent way before they see the benefits of higher rates.

Mon, 12/28/2009 - 16:58 | 176177 phaesed
phaesed's picture

1. The banks are already insolvent.

2. The largest insolvent bank of all time would be the beneficiary, our own Federal Reserve.

Mon, 12/28/2009 - 16:50 | 176169 Anonymous
Anonymous's picture

The reason you get heat on this subject, ZH, is because
if the USA can't sell its debt at cheap rates, it's all
over. Apparently this hasn't dawned on the 19-year
olds gaming equities yet (or their bosses).

Mon, 12/28/2009 - 17:38 | 176227 deadhead
deadhead's picture

+1

Mon, 12/28/2009 - 19:11 | 176311 Anonymous
Anonymous's picture

The US "selling its debt" is vastly overstated as a potential problem.

First, about 1/2 the national debt is "internal" meaning it is just a transfer owed from one account to another (mainly from excess social security taxes that has been spent).

Of the $8T in external debt, about 1/2 is in T-bills. These seem to sell with abandon at very close to zero interest. This is basically global "cash". In our wallet we hold $100 bills, in global accounts one holds $100M in Tbills. No problems selling this. This leaves $4T which is split about 1/2 in Notes (2-5yr) and half in bonds (10-30yr).

Of course, because of the longer duration of the Notes and Bonds this stuff RARELY comes up for significant auction. Do the math: if 25% is in Bonds with average maturity of 10-yrs than roughly 2.5% of US Debt comes up for a Bond auction annually. If you consider the 50% internal debt, about 1.25% of the typically cited debt ($15T) comes up for a long-term bond auction. Who's worried?

Another thing, is that there are only 2 things that can be done with $1. You an SPEND it. Or you can LEND it.

If you are worried about "the Chinese" not lending, then they must be SPENDING right? Ironically they should've been spending 1-yr ago when the USD was very strong and global demand was very low. They were not. They are happy to hold USD for security and be bled slowly by very low rates. They are not risk takers.

Mon, 12/28/2009 - 21:04 | 176400 Cursive
Cursive's picture

@Anon

Let me make you aware of some math.  At the current pace, we are running annual budget deficits of $1.5T per year.  That is simply unsustainable.  Now, I don't subscribe to your theories of "internal" whatever, but more importantly, our debt is growing exponentially.  But, you keep spending and buying stocks and spending and buying stocks...

Mon, 12/28/2009 - 16:55 | 176174 harveywalbinger
harveywalbinger's picture

I'd like to see a critique of Bill Still's ideas for eliminating the Fed & instead having US Treasury issue greenback currency notes (as Lincoln did) without a central bank acting as a profiteering middle man. Currency issues at 0 interest would ease the burden on the taxpayer. Is this possibly Obama's end game once we the current "Hope & Change" cycle of impoverishment is complete ? Perhaps once there are no jobs left & everyone is reliant on the state for their subsistence ? Anyone care to comment ? http://www.youtube.com/watch?v=evLowIEbnIQ&feature=related http://www.youtube.com/watch?v=_doYllBk5No Not sure that Still's ideas aren't grossly oversimpified, but there does seem to be a lot of relevant history... the overriding theme being that the banking families have been working since the 1600s to get exactly where they now find themselves (directing policy in pretty much every nation in the world).

Mon, 12/28/2009 - 17:43 | 176233 Greyzone
Greyzone's picture

Napoleon tried that. The result was all the bankers of Europe lined up against him to take him out and force France back on the banker's teat. I'm not saying Napoleon was a nice guy, just that the bankers even then weren't going to passively allow a major economy to avoid paying tribute to their banker overlords. This cannot end well. The only question is how it will end.

Mon, 12/28/2009 - 18:19 | 176272 harveywalbinger
harveywalbinger's picture

Andrew Jackson battled the central bank and won, then he paid off the national debt.  There was no central bank for ~75 years thereafter as I understand it.  Eliminating the Fed IS an option even if banking interests don't like the idea.  

 

Though your point is taken that many would be mobilized to defeat such a crazy notion, including  many within congress...   and Ron Paul, Alan Graysen, et al who oppose the Fed would probably all suffer "unfortunate accidents" soon after introducing legislation that would end the Federal Reserve.  

Mon, 12/28/2009 - 19:02 | 176305 ahab
ahab's picture

Paul has been introducing legislation for years to abolish the Fed-  never gets anywhere

Mon, 12/28/2009 - 19:29 | 176320 harveywalbinger
harveywalbinger's picture

OK.  If legislation ever gains traction (it very well may if we are able to get an audit), the accidents will probably begin soon after.  

Do you disagree with ending the Fed, or perhaps have a better idea ?  Or are you just without hope that the country can be saved...

Mon, 12/28/2009 - 21:18 | 176409 Cursive
Cursive's picture

@harvey

Glad you enjoyed the link.  Bill Still shows the historical perspective that we don't need a central bank (e.g. FBR).  More importantly, we've already tried every other money system in existence.  In the history of our fine republic, we've had gold-backed currency and we've had silver-backed currency.  We've had actual value coins in circulation.  We've also had a completely fiat money, the Greenback.

We could try any of these alternatives without the FBR.  I favor a fiat system (as oppossed to the current debt money system), because gold and silver are too scarce and can be easily manipulated by outside interests.  Under a fiat system, the American people would have exclusive control of the money supply via the U.S. Treasury.

Debt is the tool that central bankers use to control the world.

Mon, 12/28/2009 - 21:38 | 176431 ahab
ahab's picture

yes- I do agree w/ ending the Fed- I wish it could be done tomorrow- however Paul has been a lone voice in the Wilderness for years-

only now getting traction- hopefully more will people will get on board

Tue, 12/29/2009 - 06:19 | 176591 Rick64
Rick64's picture

It would probably take 5 yrs. to do an audit of the FED if any legislation was passed, then who would do the audit? Some organization that probably has a congressman, tied to a lobbyist representing a Corporation that gives them huge business. Then 1 yr. later a documentary airs on Frontline exposing it all, but who's watching PBS when Dancing with the Stars is on. Then the Senate has to act like they're doing something about it so the conduct hearings where nobody answers the questions or answer without saying anything, then out of nowhere comes a distraction a really big story :

The Spice Girls are reuniting for a world tour. finally they turned off that spotlight,  "Hearings adjourned".

Tue, 12/29/2009 - 12:22 | 176746 harveywalbinger
harveywalbinger's picture

You make good points & I pretty much agree across the board.  Some say the policies of Hope & Change (TM) will ruin this country and they certainly have put the pedal to the metal driving down the road to ruin.  But lets not kid ourselves, the two major political parties both serve the same master.  The government takeover occurred nearly 100 years ago.  Recent government bailouts amount to nothing more than coordinating for payment of the gambling debts of the money elite.  

In regards to liberty & the pursuit of happiness, I think we're fucked.  And there's essentially nothing we can do about it.  The rot runs too deep.  On a positive note, it's not so bad being poor in the USA compared to elsewhere...  Poor people from all over the world endeavor to be a poor person in the USA.  Enjoy life as best you can while life remains easy (but make sure you've gathered provisions for the times that lie ahead).  It'll get worse before it gets better.

Mon, 12/28/2009 - 17:01 | 176179 Steak
Steak's picture

The part of that article that I find most interesting is this from the bloomberg story:  <Treasuries of all maturities have fallen 3.6 percent this year, according to Bank of America Merrill Lynch indexes. That would be the worst performance since at least 1978, when Merrill began collecting the data.>

The biggest bubble of all, Treasuries has been in a 30 year bull market (as many of the fine contributors and commenters here have noted).  I certainly do believe there will be a day when there is a bona-fide crash in Treasuries but cracks are likely to appear incrementally over a long period of time.  Having the worst performance in Treasuries in 30 yrs right after it was the bset performing asset class in 2008 definitely has all the makings of an inflection point. 

Lest we forget that those short Japanese debt in the 90's was probably the worst trade in history, but from where I'm sitting 2% yield on the US 10yr does seem mighty compelling as marking the peak of the Treasury bubble.

Mon, 12/28/2009 - 19:33 | 176325 Anonymous
Anonymous's picture

Gilts, Bunds, and Treasuries are all
getting hammered.... so either we're all
going up in smoke together OR it's the
global signal for the banksters to
boogie out of equities and get their
reserves into bonds so 10 year yields can
go back down to 2% as this global sham recovery ends.
Perfect spot for the banks to enter and
get another freebie forbearance profit
courtesy of the central bankers.
Tinfoil hat? Nah, not after watching
these jokers engineer equities for the past
9 months. Buy some zeros as the man
above recommends.

Mon, 12/28/2009 - 19:45 | 176338 Anonymous
Anonymous's picture

Don't forget we haven't done our time
in the penalty box (Japan's last 20
years) yet.....after we do, I'll agree
2% yields may be the peak. Where are
JGB's right now....about, 1.5% I think.

Tue, 12/29/2009 - 03:58 | 176573 DoChenRollingBearing
DoChenRollingBearing's picture

Steak, my perspective seems similar to yours.  How do we speculate vs. (bogus) Treasuries?  I like holding TBT as well as physical gold or other PMs.

Mon, 12/28/2009 - 17:03 | 176184 Anonymous
Anonymous's picture

So, a little off topic but definitely linked cause interest rates likely effected by the following...early consensus of the Fred / Fan cap change is to allow principal reductions to homeowners w/out MBS issues. Setting aside the issue of 500B to 1Trillion cost to tax payers w/out any hit to the originators of these loans, is this the right thing to clean up the housing market? Seems to help destroy housing debt but at whose expense? Is this a transfer of debt or real destruction of debt? Thoughts on this topic?

cH

Mon, 12/28/2009 - 20:43 | 176382 Psquared
Psquared's picture

To me it is just another manifestation (or is that INfestation) of wealth transfer. That is, any effort to artificially stabilize the real estate market plays to the interests of those who own real estate. This is where government interference actually mucks things up. Real estate values must fall to 3 x average annual income. Using FNM/FRE caps means the government writes a blank check to cover those principal reductions but the market never sets rates or prices.

It is all artificial and designed to cover losses instead of price discovery.

Mon, 12/28/2009 - 17:17 | 176203 deadhead
deadhead's picture

wow, the Fed and its agents purchased about $700 million in spy in the latter part of the session...someone trying to keep it propped today.

 

 

Mon, 12/28/2009 - 17:41 | 176230 ghostfaceinvestah
ghostfaceinvestah's picture

trying to take some of the sting out of that "worst decade for stocks, ever" statistic.  not great for marketing mutual funds.

Tue, 12/29/2009 - 04:06 | 176575 DoChenRollingBearing
DoChenRollingBearing's picture

Yeah, DH, it looks like the Fed (et al) really wants to keep the markets propped up...  Why, well I do not know, but do not trust the bast***s any more than I could throw them.

At this point, I like physical gold (and other PMs) as well as actual cash (FRNs) for quick deployment after the deflation I see ahead.

Although I do have stocks, bonds and real estate that I own.  At this point, though,any new cash I get from the above goes to cash (FRNs for now) and Au, Pt, and AG.

Mon, 12/28/2009 - 17:34 | 176222 Anonymous
Anonymous's picture

have no fear, the govt will take in enough donations to fix this mess:

bottom of the page: http://www.treasurydirect.gov/govt/resources/faq/faq_publicdebt.htm

How do you make a contribution to reduce the debt?
Make your check payable to the Bureau of the Public Debt, and in the memo section, notate that it is a Gift to reduce the Debt Held by the Public. Mail your check to:

Attn Dept G
Bureau of the Public Debt
P. O. Box 2188
Parkersburg, WV 26106-2188

Note: The Bureau of the Public Debt's Office of Public Debt Accounting maintains this FAQ. Keep in mind that these questions may not fit all situations and are only intended as a guideline.

Mon, 12/28/2009 - 23:05 | 176472 phaesed
phaesed's picture

psss..... instead of a Donation, how about American's actually owning more than 50% of our debt?

*GASP* But that would violate the American National Anthem! You know, the new version that Clinton & Greenspan passed.

"What that nigga want God?
Word up, look out for the cops (Wu-Tang five finger shit)
(Cash Rules) Word up, two for fives over here baby
Word up, two for fives them niggaz got garbage down the way, word up
KnowhatI'msayin?
(Cash Rules Everything Around Me
C.R.E.A.M. get...)
Yeah, check this ol fly shit out
Word up
(Cash Rules Everything Around Me) Take you on a natural joint
(C.R.E.A.M. get the money) Here we here we go
(dolla dolla bill y'all) Check this shit, yo!"

 

And if any of y'all were wondering.... yeahhhhhh I'm this much of a sarcastic asshole in real life also :) Good thing I have friends who'd die for me and I for them :)

Tue, 12/29/2009 - 12:21 | 176745 Anonymous
Anonymous's picture

asside from the 36 chamber reference.....what does that all mean?

Tue, 12/29/2009 - 20:00 | 177285 phaesed
phaesed's picture

It means that Americans don't think about anything but money, money, money.... even the people who have more of it than they need.

Mon, 12/28/2009 - 17:41 | 176231 Anonymous
Anonymous's picture

They buyers apparently were gone for the Holidays.

Mon, 12/28/2009 - 17:54 | 176241 Anonymous
Anonymous's picture

Interest rates are going to be much higher than what people want to believe....

The reason....????

A 0% forced rate....and all the happy talk around it....

Risk is way way overpriced....

And....will be more appropriately priced when 2 year rates
are about 15%....????

Why....????

Because 2 years will be the longest term anyone will buy....

What fool is going to buy 5% long term monopoly money....????

Answer....NOBODY.....

Do NOT follow this link or you will be banned from the site!