For The First Time On Record, The US Government Is 'Riskier' Than US Banks

Tyler Durden's picture


During the European crisis, we saw sovereign debt yields rising way above their domestic banking sector's yields as investors feared systemic crisis and technical flows dominated the price action amid aggressive hedging. Now, with Washington looking increasingly likely to crash upon the shores of a US Treasury technical default, for the first time on record the yield on short-term Treasury-Bills is above the yield on US interbank loans. T-Bill yields (the US government's "risk") have surpassed short-term LIBOR (US Banks' "Risk")... must be a good reason to BTFATH...

The yield on Treasury Blls (US Government risk) is above that of LIBOR (US bank risk)

(of course there are many technical issues impacting this spread but the fact that this is the first time on record is critical for investors to recognize that the US equity market's nonchalance is misplaced)


and the 1m1y inversion continues to invert faster and faster... as our suggested trade pushes further into the money

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Tue, 10/08/2013 - 09:01 | 4033398 buzzsaw99
buzzsaw99's picture

Did a query on soft money contributions for John Boehner:


Contributor Occupation Date Amount Recipient BLANKFEIN, LLOYD C
NEW YORK,NY 10282 GOLDMAN SACHS 3/14/13 $5,000 Goldman Sachs
Tue, 10/08/2013 - 09:02 | 4033406 GetZeeGold
GetZeeGold's picture



Harry Reid made a fortune working for the government.....he'd rather you not look into it.

Tue, 10/08/2013 - 10:08 | 4033602 Boris Alatovkrap
Boris Alatovkrap's picture

Harry Reid work? Reid with baby soft hand of girl, work?

Tue, 10/08/2013 - 09:10 | 4033425 Shizzmoney
Shizzmoney's picture

Goldman has operatives on BOTH sides, with the GOP getting the majority of the cash, and the Dems having former employees working for the government.

Do the banks want default?  Their derivitives on interest rates may suggest otherwsie. 

Tue, 10/08/2013 - 09:12 | 4033431 jmcadg
jmcadg's picture

Shit is that all it takes to pay off a politician these days $5k.

Tue, 10/08/2013 - 10:52 | 4033789 Nothing but the...
Nothing but the truth.'s picture

 Okay , so now maybe the banks will have to bail out the government -  how can anyone ever take the US and the dollar seriously any longer ?

Tue, 10/08/2013 - 09:01 | 4033409 One And Only
One And Only's picture

Prioritising payments is a default? Huh

Tue, 10/08/2013 - 10:16 | 4033635 Jumbotron
Jumbotron's picture

How can the government be riskier than the banks when the whole thng is a circle jerk?

Tue, 10/08/2013 - 10:19 | 4033640 Jumbotron
Jumbotron's picture

Sorry bandgap......didin't see you beat me too it. pun intended.

Tue, 10/08/2013 - 11:45 | 4033951 radiotom
radiotom's picture

Agreed. Sometimes we are a little too anticipatory of a big crash on this website that we fail to see reality.

I thought this place was supposed to be alternate opinions? You know, while the MSM is talking about a default from not raising the debt ceiling, the Tylers should be telling us why that's bullshit. You don't default when you can't go into more debt. You default when you don't make debt payments. They still have enough tax revenue to make debt payments. What actually happens is they will have to cut spending or raise taxes, etc.  This was EVEN on CNN Money last night.

Can we stop the bullshit "default" circle-jerk?

Tue, 10/08/2013 - 09:03 | 4033410 Devotional
Devotional's picture

Hello, I am Ben Bernanke and you guys can suck on these two tiny gonads of mine.

<------ Stomp Ben's gonads.


Tue, 10/08/2013 - 09:03 | 4033415 LawsofPhysics
LawsofPhysics's picture

Now things get interesting.  Do the banks also have their own military?  Looks like the Federal Reserve does...

Tue, 10/08/2013 - 09:34 | 4033497 Seize Mars
Seize Mars's picture

Well, yes. It's called the US Army et cetera.
Cf. Smedley Butler.

Tue, 10/08/2013 - 09:58 | 4033576 LawsofPhysics
LawsofPhysics's picture

Wrong.  The Fed has it's own separate army.  Exactly how is this constitutional?


Tue, 10/08/2013 - 11:01 | 4033825 Seize Mars
Seize Mars's picture

Well I don't see the problem. The FED itself very unconstitutional. Their existence is a crime and their main enterprise is theft. So you are outraged that they've hired their own thugs?
Genius, the problem is not that they are criminals, the problem is that we are apparently having a very difficult time enforcing the law.
Anyways you are on a tear this morning. You need a handjob.

Tue, 10/08/2013 - 09:06 | 4033416 Defenestratus
Defenestratus's picture

Its about damn time.


Tue, 10/08/2013 - 09:06 | 4033417 Bosch
Bosch's picture

So one is supported by US Taxpayer revenue and the other is the government. 


So why are they different? 

Tue, 10/08/2013 - 09:11 | 4033420 SheepDog-One
SheepDog-One's picture

Step right up place ya bets! Treasury bawnds, or stawks, whicheva ya pick red or black is always a winna! FUK U BERNANK!

Tue, 10/08/2013 - 09:08 | 4033426 OwnSilverPlayMusic
OwnSilverPlayMusic's picture

How are they not one and the same?

Tue, 10/08/2013 - 09:12 | 4033430 LawsofPhysics
LawsofPhysics's picture

They are one and the same.  The problem for the politician (banker's puppet) is that they have to return to face the constituents whereas the bankers hide on their private islands.

Tue, 10/08/2013 - 09:10 | 4033427 Gene Parmesan
Gene Parmesan's picture

Which is funny because the banks are only deemed less risky because of an expectation that the government will bail them out again.

Tue, 10/08/2013 - 09:14 | 4033435 SheepDog-One
SheepDog-One's picture

Yep! And the same central banks which are only still alive due to politicians handing them the blank taxpayer checkbook, are now demanding the INTEREST be paid on their free bailouts! 'We have to pay our bills on time'....yea sure to CENTRAL BANKSTERS who should be locked up at least!

Like Jesse would say, 'Fuk u bitchez!'

Tue, 10/08/2013 - 09:15 | 4033439 BandGap
BandGap's picture

A true circle jerk, with a twist on top.

The goverment that bailed out the banks is riskier than the banks that got the bail out.

This administration was always about creating chaos.

Tue, 10/08/2013 - 09:33 | 4033492 Tsar Pointless
Tsar Pointless's picture

Name the last one that wasn't about creating chaos.

Tue, 10/08/2013 - 09:42 | 4033525 SheepDog-One
SheepDog-One's picture

Like the veteran NY Times reporter said yesterday, he's never seen shit this whack.

Tue, 10/08/2013 - 10:36 | 4033724 Flakmeister
Flakmeister's picture

Just to remind you that the Banks were bailed out on Bush's watch....

Hank Paulson orchestrated a goddamn financial coup d'etat....

Tue, 10/08/2013 - 10:47 | 4033768 Jumbotron
Jumbotron's picture



Tue, 10/08/2013 - 09:12 | 4033432 yogibear
yogibear's picture

After the big banks transferred all their toxic debt onto the government it's no surprise. 

Remember that weekend in 2008 when Goldman Sachs became a bank to get TARP?

Bernanke and the fed members probably laugh about dumping all the bad stuff on the taxpayer.

You'll never get Moody's S&P or Fitch to downgrade the rating of US debt. Eric Holder and the goons at the Just-Us department threatened the rating agencies.


Tue, 10/08/2013 - 09:30 | 4033481 Tsar Pointless
Tsar Pointless's picture

More correctly, Goldie Sucks became a "bank holding company" in order to access the heroin that was TARP. Yes, of course, I remember it, because it happened on my birthday.

Tue, 10/08/2013 - 10:39 | 4033732 Flakmeister
Flakmeister's picture

No, they became a bank holding company so they could access the Fed window....

Tue, 10/08/2013 - 12:53 | 4034260 falak pema
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GS now has Zoellick, ex WB head working for it.

All aboard the Titanic!

Tue, 10/08/2013 - 09:24 | 4033447 SheepDog-One
SheepDog-One's picture

'Guvt riskier' because everyone sees the taxpayer is choked one left to rob.

Tue, 10/08/2013 - 09:21 | 4033452 J Pancreas
J Pancreas's picture

Someone mentioned the easiest trade on record on ZH a couple weeks ago: go long stawks. BTD and stay long. After all these shenanigans run the course, any 5-10% correction will be met with a 15% relief rally. No way Yellen's Slophole slows down on the QE. Think this whole deal makes Chinese central bankers want moar US debt? I'd venture owning XOM or KO is a safer bet than .gov paper. Mercedes and Krupp  lasted through two world wars, a hyperinflation, reunification, etc. The Reichsmark and Deutschmark did not!

Tue, 10/08/2013 - 09:26 | 4033464 SheepDog-One
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Step right up! Place ya bet! The pirates will be GLAD to hold your money safely for you!

Tue, 10/08/2013 - 09:30 | 4033488 Tsar Pointless
Tsar Pointless's picture

Did someone say "pirates"? Go Bucs! Game five tomorrow in St. Louis, the winner to face the Los Angeles Dodgers in the NLCS for the right to advance to the World Series.

Tue, 10/08/2013 - 09:32 | 4033500 involuntarilybirthed
involuntarilybirthed's picture

Breaking News:  "The Federal Reserve may shut down the government" .  An insider stating: "we must stop it before it is too big to fail". 

Tue, 10/08/2013 - 09:37 | 4033505 involuntarilybirthed
involuntarilybirthed's picture

Printing is easier than taxing.  Advantage Fed.

Tue, 10/08/2013 - 09:40 | 4033512 Flakmeister
Flakmeister's picture

Amazing what happens when passing private obligations off to the public sector occurs...

Tue, 10/08/2013 - 09:43 | 4033520 SheepDog-One
SheepDog-One's picture

AH yes...but alas it is still but borrowed time and that always runs out. That's why this always ends in world wars.

Tue, 10/08/2013 - 10:39 | 4033682 Flakmeister
Flakmeister's picture

As a rule it was better to wall paper the Rec room with defaulted RR bonds than with Czarist or Weimar bonds, if you catch my drift...

Tue, 10/08/2013 - 09:42 | 4033526 enloe creek
enloe creek's picture

so they get the debt limit raised, say, then nothin changes for a year
then we go through the same game again. if this is not some lunatic plan by whomever, then we are drifting along toward a waterfall. If it is a plan we are paddleing like mad in the same direction. all good either way

Tue, 10/08/2013 - 12:52 | 4034251 falak pema
falak pema's picture

how can the biggest CB in the world generate negative rates with its PDs; cos this is what it means. The PDs should be lending to the FED with a positive spread! 

Upside down world.

Tue, 10/08/2013 - 13:03 | 4034315 Lin S
Lin S's picture

Thank God for ZHers.  The crap I read in the comments on MSM sites like Yahoo both disgusts and scares the crap out of me.  The legions of Kool-Aid drinking partisan IDIOTS running loose in this country are beyond frightening.

They make me long for collapse and reset.  Excepting present company, Americans have become so spoiled, self-indulgent, and above all STUPID that they hardly deserve their prosperity or liberty (well, what little remains of these things, I mean).

Thanks for listening to me rant...



Tue, 10/08/2013 - 13:58 | 4034547 f16hoser
f16hoser's picture

BULLSHIT! The US Government IS the US BANKS! Who do you think owns the US Government? Politicians? Hint, Hint, JPM, GS, Etc... An arguement can be made for Rothschilds/Rockefellers owning the US Government. But than again, who owns the Big Banks? FIAT Capitalism has reached it's limits. Best for Congress to Default and blame Obama. Or each other. It's gonna happen anyway. Best to own Gold/Silver bullion in 1-10 Oz bars. Large caliber ammo is a must. Good luck people. We will default. They have decided to default because it's the End-Game for the Petro Dollar. Sidenote; I would love to see the Saudi people storm the Royal Family and kill everyone of those derilict in-bread princes'. That would be very entertaining!

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