Is This The Chart That Scared Bernanke Straight?

Tyler Durden's picture

With the confusion over Bernanke's comments - "have no fear as the economy is bad enough that the Taper will never come" confused with "the economy is picking-up and that's great so we don't need the Fed anymore" - one has to ask, as we have numerous times, is there another reason for the Fed to start the ball rolling on the Taper talk? In the last few weeks, the Treasury market's yields have risen notably but much more critically, the fails-to-deliver has surged.

This critical indicator of both collateral shortages and technical carry trade unwinds is a little-discussed indicator of just how broken the market is thanks to the overwhelming ownership of the Fed. It's getting worse - as Barclays warns the weakness in bonds is feeding on itself as more people want to short and so the need to borrow from the Fed (as dealer inventory is so low) increases and raises the cost (special-ness) of that short.


Simply put, the main reason the Fed is tapering has nothing to do with the economy and everything to do with the TBAC presentation (rehypothecation and collateral shortages) and that the US is now running smaller deficits!!!

Source: NY Fed

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transaccountin's picture

running smaller deficits

i lol'ed

bigdumbnugly's picture



the dulcet and reciprocating tones of Benny and the Bankster Bastards.

right here at 14700 on your dial...

Stackers's picture

Time for the New New Deal Mega Shovel Ready Infrastructure Plan

NotApplicable's picture

Do failures to deliver even matter anymore?

ZerOhead's picture

Not sinc 'Failures to even care"  became the standard operating procedure of the markets...

disabledvet's picture

And of the US economy at large. What a scam. Working and paying into this? Really? The only good news I see IS the war. (Or should I say "the war machine." Hmmmm.)

Troll King's picture

Has everyone been short bonds?  Bond traders?

Raymond K Hessel's picture

I don't see anything to worry about here.


If the volume exceeds $500,000 million, then yes.  But as it stands, it's just too soon to get me nervous.

knukles's picture

This had nothing to do with it.
Nowhere in the entire study of the Great Depression, neo-Keynesian economic dogmata, nor likely discussed about the conference table interspersed with the details of equities being a leading indicator, or in fact leader, or the veracity of Operation Twist, nor an in-depth discussion of the Liquidity Trap, has fails to deliver been a center of attention.

I deeply doubt it....

Oh regional Indian's picture

Hah K, think Benny is all white-knuckled about all this?

I doubt it. This is a majufactured liquidity crisis, to push things over the edge so to speak.

Ben is not confused, his statememnts are purpously confusing.

The world can go from over liquid to illiquid really fast, especialy in the dreivative bonfire of bankster vanities.


Troll King's picture

You show the lights that stop me turn to stone You shine it when I'm alone And so I tell myself that I'll be strong And dreaming when they're gone
espirit's picture

I do believe they have exhausted all fucking collateral.  Derivative upon derivative upon derivative upon rehypothecated upon rehypothecated itsy bitsy collateral.

I probably have more collateral free and clear than they do.

Molon Labe.

Just saying, NSA.

Troll King's picture

Where's the god damn trade!  I want to make some money!!

Al Gorerhythm's picture


"Do failures to deliver even matter anymore?"

Not since Nixon closed the gold window, creating a completely fiat currency, has there been a settlement. It's turtles all the way down! The only thigs that are delivered in modern transactions, are the end products of the workers and wealth creators. What is left outstanding in the transaction is the settlement transfer of something tangible and of equal value, not just a printed piece of paper that promises to deliver.... something?......sometime........  It can deliver nothing but one thing; a loss of trust between parties and their money certificastes.


Iam_Silverman's picture

"Do failures to deliver even matter anymore?"

Nahhh.  Just one more reason for them to legalize naked shorting.

kaiserhoff's picture

Smaller deficit on a cash basis, but still running 1 trillion, with the actual GAAP an order of magnitude higher than that.

Bernanke isn't as stupid as he looks.  Obozo care will crash it all, if something else doesn't get there first.

Ben doesn't want to be on the wrong end of a treason trial.  That's why he is getting some religion.

lasvegaspersona's picture

I'm a physician and have not been paid by Tricare (service members healthcare off base) for goods and services provided and rendered since April 1, 2013. Something is fishy. I wonder if they are correctly accouting for this. They say it is a 'credentialling' problem but it is not just my office.

Herd Redirection Committee's picture

Now now, its not yet 90+ days!

You are now a short-term financer of Tricare.

SAT 800's picture

How can you complain? you're getting the standard interest rate for short term financing/ Zero.

espirit's picture

Most .gov contractors have 180 days written into the fine print.

Did you read "between the lines"?

Doubleguns's picture

short term financer of the Govt. 


Fixed it.


Buckaroo Banzai's picture

...and as a taxpayer, I thank you for your support!

Jack Burton's picture

Tricare? I wonder how well this modern service member's health care service is compared to just going to the Navy Doctor when I was in the service or going to the Veterans Service Doctor afterwards?

Quality of care could be vary wildly, but it was a simple in house health care. I imagine the administrative costs were minimal. Often the Corpsman could do your problem, he screened patients for the Doctors. If he couldn't handle it a Navy nurse would usually do. But anything of real substance went to Doctors. At least the Doc knew he was seeing carefully screened patients in need of his professional skills.

Moe Howard's picture

Tricare on post is more or less the same as for service members. Off post you pick you "network" normal civilian provider.

Common_Cents22's picture

im sure wall street will securitize this receivables and sell them to some schlubs.

Blizzard_Esq's picture

Tricare got cut by $3.2 BILLION when sequestration started then. Officials said in testimony on Capital Hill that the DOD is delaying payments to those who treat TRICARE patients. I recall something about not being paid until August. If you see medi-care patients on tricare there was also a 2% cut. 

Complain to your Congressman and join the resistance. 

beaker's picture

Margin calls/collateral shortages is rarely good news

for gold prices going up.

oddjob's picture

Better pile into CRE then.

Stoploss's picture

That appears to have escalated quickly.

Al Huxley's picture

Damn those politicians in Washington!  Surely they can figure out a way to spend EVEN MORE money they don't have, where will the good collateral come from, if not from debt pretending to be money to pay for shit we can't really afford?

disabledvet's picture

eh..."just fire schoolteachers and all will be well" right?

max2205's picture

Naked shorts....roast them muthers

rbg81's picture

The problem is that the "recovery", as mild as it has been, is driven primarily by massive deficit spending.  That spending in turn, enabled low interest rates on Government debt, which keeps debt payments artificially low--making the deficit appear "affordable:.  Once the cost of interest starts to rise, the deficit will again explode in a way that can't be masked anymore.  Then things get really interesting.   

If the Government is spending all its $$ on debt service, it has got to cut back on spending or spend even more . However, if it chooses to spend more, it won't be long before interest consumes 100% of revenue--at that point, the System will collapse of its own weight.

Let's assume the Government chooses the responsible path and cuts spending.  The more it cuts back on spending, however, the worse the situation becomes.  Right now, a significant majority of Americans depend on the Government for their livelihood.  It is THE economic engine.  Beyond the  Government employees, pensioners, and welfare queens, there are many (many) Government contractors .  And there are those who make their living selling to those.  Again, this is probably 66% or more of the Economy at this point.

If the Government is forced to cut back on spending, we are looking at a Depression, plain and simple.  The whole point of the Stimulus was to avoid this.  The Fed could only pull this trick once and Bernake shot his bullets.  The Deficit will be the monster that eats everyones lunch.

LawsofPhysics's picture

Wrong.  The problem is idiots who really believe you can grow the economy indefinitely with finite inputs and barely enough excess energy available to keep the lights on for the current businesses.  Only "financial products" don't require any real inputs, because they are of zero fucking value (bullshit paper promises, nothing more).  Given this truth, ask yourself one question;"Why are these paper-pushers compensated so well?"

Roll the motherfucking guillotines already.  Nothing changes otherwise.

Now that fraud is the status quo, counterparty risk and collateral become very fucking real.  Possession is the law.

prains's picture

da ponzi garden don't grow no taters no mo!!

Yes_Questions's picture



God Damn Laws of Physics!


Not you, the laws.


StychoKiller's picture

TPTB have been studiously ignoring reality for quite some time, but Mother Nature is fed up with taking wooden nickels...

moneybots's picture

"If the Government is forced to cut back on spending, we are looking at a Depression, plain and simple.  The whole point of the Stimulus was to avoid this. 

We ARE in a depression.  It began in 2008. 

Meremortal's picture

"We ARE in a depression.  It began in 2008." 

Correct. And it will last until 2022-25, though the last 5 years or so should be rather mild.

And Bernanke is dancing to the tune of the bond market, and he has no choice in the matter. That's why he's jawboning. The only problem with jawboning is the effect doesn't last.


prains's picture

ah no!

we are now moving from DEpression    to    REpression  (a.k.a US of NSA)


depressions are U or V shaped, we are presently blowing the fuck right by that on the express elevator to an open police state, soon to be called


The Great Repression



Meremortal's picture

Depression - Repression.


Yep, some of both. It's the collectivist way!

rbg81's picture

In a real depression, people feel real pain.  They go without--and that includes cell phones, cable TV, and eating out.  That hasn't happened yet, because programs like SSI and food stamps provide a cushion.  When those things disappear and people are REALLY living in the street and knocking on doors for food, its a DEPRESSION.

Yes_Questions's picture



Don't forget the $billions each month people are NOT paying toward mortgage payments while living in homes the bond markets have decoupled from debt.


The real pain has been exported to other parts of the world this time around, btw.   

Yes_Questions's picture



If the US Government's spending was actually governed by tax revenue, this argument may make sense.


The problem with all this is people are led to believe the US Government is like other entities when it comes to debt and spending. 


It is not. 


The US Government is quite different, especially once the Petrodollar and its supremacy as world reserve currency came into play.


Factor in a military with the use of atomic weapons in its DNA, its current inventory of hardware, and the fact sociopaths have captured the whole system, and the stupid deficit fades as a topic of worry outside of academics pretty quick.  


Write this on a rock:  The US Government does not need Taxes to Spend.

nmewn's picture

Write this on a rock:  The US Government does not need Taxes to Spend.

Exactly right, its beyond dispute.

The obverse being...taxes, fines, fees, levies, permits, licensing etc...are used for control purposes...not for the operation of government.

Yes_Questions's picture



Thank you my friend.