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Did Foreigners Bail Out The US Stock Market... By Dumping $56 Billion In Treasurys?

Tyler Durden's picture


Something curious happened recently: for the first time in over a decade, perhaps ever, the US saw a record $25 billion worth of Treasury bond outflows from the Treasury's custodial account in the week ended September 28. Just as curious is that in the past 5 weeks we have seen relentless selling of Treasurys from the same custodial account which, with Treasury International Capital data 3 months delayed, and largely incorrect until its annual revision, is the only real source of recent (and somewhat accurate) foreign activity in US bonds. In fact, starting with the week ended September 7, through last Thursday, foreigners appear to have dumped a massive $56 billion worth of Treasurys (don't take our word for it - check it here, courtesy of the Fed). This is quite disturbing for two reasons. One explanation for this move would be to look back to the Quant crash in early August 2007, which preceded the market's secular (and all time) high, when various quant funds blew up for reasons still not completely known. The reason why this date is important is that it was the catalyst for the next biggest concerted dump of Treasurys, when in a subsequent span of 4 weeks, foreigners sold $47 billion in Treasurys... but at least the market's precipitous move lower was prevented, if only for a few brief months. Also curious is that the recent move is in direct contrast to the Custodial Account reaction to the Lehman implosion in 2008 when 20 weeks of consecutive UST inflows, beginning September 10, saw $300 billion in "safe haven" purchases. So while the market plunge back then was accompanied by a shift into Treasurys, this time around, the biggest market volatility since Lehman has seen a record sequential exodus out of bonds. Which begs the question: did Tim Geithner make a few phone calls, and tell foreigners to dump Treasurys (knowing full well Op Twist was coming and the Fed would backstop the entire curve), and to buy stocks instead in order to prevent the next relapse of the Great Financial Crisis?

Of course, there is a far simpler explanation: the dreaded D-day in which foreign official and private investors finally start offloading their $2.7 trillion in Treasurys with impunity (although not with the element of surprise - China has made it abundantly clear it will sell its Treasury holdings, the only question is when), has finally arrived.

Either way, if this is merely a function of money's fungibility (according to , as is all too well known, capital simply shifts from one asset allocation to another), and money was forcefully "funged" from bonds into stocks (with or without the prodding of one Tim Geithner) to create a "natural" bid into the bidless market, expect to see even more bond liquidations should stocks continue sliding lower. That may be a big reason to panic as it means that finally the US has tipped its hand that its survival (read: that of the Russell 2000, thank you Ben Bernanke), is dependent on the generosity of our trade surplus partners.

If, on the other hand, the sell off is completely uncorrelated to any moves in the stock market, then the reason to panic is far, far greater, as it means that the international community no longer perceives US paper as a flight to safety...and has taken the first step to defect in the most important Nash equilibrium in modern history.

Source: H.4.1


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Sat, 10/08/2011 - 23:25 | 1753962 bigwavedave
bigwavedave's picture

I thought the new 'flight to safety' was AAPL

Sat, 10/08/2011 - 23:58 | 1754012 rocker
rocker's picture

 May Steve Rest in Peace forever for his greatest as a person worth investing in.

 That being said, Apple is now Dead Money. 

Sun, 10/09/2011 - 00:00 | 1754017 knukles
knukles's picture

So Robo'd say to swap AAPL to NetFlix?
Hey Robo, what's NetFlix ticker symbol?

Sun, 10/09/2011 - 00:29 | 1754066 strannick
strannick's picture

But then who was doing all the supposed UST safe haven buying prior to Optwist as the markets were crashing post-FOMC meeting?

Sun, 10/09/2011 - 10:00 | 1754478 knukles
knukles's picture

The people at NetFlix?

Sun, 10/09/2011 - 10:35 | 1754556 ToNYC
ToNYC's picture


Why don't they call it by the real name, "check kiting"? It's been going bang-bang like old school flashbulbs long before those nasty '91 bonds were coming due in '01

Sun, 10/09/2011 - 13:22 | 1755026 Darth..Putter
Darth..Putter's picture

This stuff is pretty much over my head but...Was it the mystery buyer out of the carribean banking cartel?


Chart of suspicious activity #9 here;

Sun, 10/09/2011 - 04:18 | 1754242 Rick64
Rick64's picture


Sun, 10/09/2011 - 06:23 | 1754283 Joshua Falken
Joshua Falken's picture

This accusation of manipulation is branded as typical conspiracy theory wacko's.

UNLESS you consider that the 12 regional member banks that comprise the Federal Reserve System are all privately owned by the very US and European banks that ex-Goldman banker and Treasury Secretary, Tim Geithner is employing to support equity markets as the last bastion of investor confidence.

Japan executed the exact same futile waste of public money to support a failing equity market between 1992 and 1994 which eventually caught out Nick Leeson.

Whatever happens, the tax payers are paying the bill to protect the legacy of vainglorious central bankers and politicians not wanting a fiscal catastrophe attached to their tenure for all posterity.


Sun, 10/09/2011 - 08:22 | 1754332 Harlequin001
Harlequin001's picture

'This accusation of manipulation is branded as typical conspiracy theory wacko's'.

UNLESS of course you consider that the Fed and every other central banks interference in both interest rate and currency markets is in itself a manipulation. Which means that by definition, the whole market is fixed, and has been for at least the last 50 years.

So who's good at stock picking then?

Sun, 10/09/2011 - 09:29 | 1754407 The Grip
The Grip's picture

Wasn't aware that Geithner was on staff at GS in the past, notwithstanding the obvious proxy.

Sun, 10/09/2011 - 11:44 | 1754703 JR
JR's picture

"U.S." Treasurer Timothy Geithner is a Rubin/Summers protégé. Rubin’s hand is still on the tiller.

Geithner, of course, is on the "staff" of Goldman Sachs.  He was, and is, actively involved in the central bank’s policy—both before and during the financial crisis.  Stephen Friedman of Goldman Sachs was chair of the NY Fed when then NY Fed President Geithner received his salary, while past CEO of Goldman Sachs Hank Paulson worked hand-in-Treasury with the Fed. Timothy F. Geithner became the ninth president and chief executive officer of the Federal Reserve Bank of New York on November 17, 2003. It is now President William Dudley, formerly of Goldman Sachs, working hand-in-Treasury with Treasurer Geithner, formerly of the NY Fed.  Who benefits?  Why, Goldman Sachs. It is Goldman Sachs who runs the NY Fed and it is the NY Fed that runs the Federal Reserve.

Guest explained it well in February of 2009 on RGE Monitor:

“What is with this tendency to have Goldman Sachs alumni in all sectors of decision making? Robert Rubin, Henry Paulson, Tim Geithner! These apparatchiks are akin to the nomenclatura of the communist party. They are spread throughout our society to be the keepers of the faith. They are the heads of the economic inquisition. Any HERETIC will pay the price!  In 1998, Brooksley Born who had been appointed
the head of the Commodities Futures Trading Commission had the HERETICAL CONCEPT PERCEPTION that the (OTC) OVER THE COUNTER DERIVATIVES HAD TO BE SUPERVISED.
The Rubin-Goldman Mafia ran her out of town, and here we are with a FRANKENSTEIN OF OVER
INTO A CREDIT FREEZE. When you make heretics pay the price of telling the truth to power, your
society has no place but down. In a democracy, there can be no heresy! All ideas must be tested and falsified and adopted if truly functional. THIS IS INHERENT IN EVOLUTIONARY ADAPTATION.
"It doesn't matter whether a cat is black or white, can it hunt mice". We as a society decided that only greedy cats who ate our steaks and left us the mice to eat were going to run the financial system.

Are we freaking morons? Even worse, we now want these greedy cats to literally eat our flesh and leave us as a skeleton country in total debt. The mice are the derivatives that are totally separate from the subprime mortgage crisis. The greedy cats will eat the flesh and the mice will eat the bones.

to be regulated, or we will fail. We will fail for the same reasons the communists failed. They were
inefficient apparatchiks who ran the system for their purposes and subjugated the people with totalitarian
ideas. The financial elite is the same! They just use more subtle and stealthy methods developed in
Madison Avenue. They manufacture consent and root out the heretics.

Sun, 10/09/2011 - 12:00 | 1754734 Harlequin001
Harlequin001's picture

er communism failed because the US adopted fiat currency. There was no way any communist state without access to bond markets could compete with that, and Raegan knew it with his 'Star Wars' initiative...

How can communism fail? Everyone gives everything to the stae and the state gives out. There is no debt.

How does communism fail, unless too much valuable resource is spent trying to compete with a fiat currency?

How do you think the rest of the world stood up to fiat funded British imperialism while it was on a gold standard? They didn't...

The only thing that fails is individual incentive and effort, but I don't think individual effort is going to count for much in the US or anywhere else when the tax bill for this bailout eventually arrives.

Sun, 10/09/2011 - 12:20 | 1754803 JR
JR's picture

Actually, it was investment bankers like Jacob Schiff and the Rothschilds, inventors of fiat currency and tyrannical central banks, that put Lenin on a secret train to Moscow, raised money to transfer Trotsky from New York to Russia and kept a steady stream of cash and political favors from the U.S. government flowing to Stalin throughout his bloody regime that allowed Communism to live as long as it did.

And the only way the Soviet Union and its failed communist economic system with its slave-labor force and concentration on armament production survived as long as it did, was with the help of the United States.

Said Aleksandr Solzhenitsyn, who was there: “It is American trade that allows the Soviet economy to concentrate its resources on armaments and preparations for war.  Remove that trade, and the Soviet economy would be obliged to feed and clothe and house the Russian people, something it has never been able to do.  Let the socialists among you allow this socialist economy to prove the superiority that its ideology claims.  Stop sending them goods.  Let them stand on their own feet, and then see what happens.”

If America falters, there will be no United States to come to America’s aid and provide the banker oligarchy and its central planning and supporters the luxury of keeping their collectivist cake, while eating off the fruits of capitalism.  Communism does not work, except temporarily at the point of a gun, because there is nothing in it for the individual.  The bankers exported more than America’s manufacturing base and their capital to China; they exported Western capitalism.

I contend the American people, when faced with economic annihilation, will not simply lie down and say, take it, take all that I and my family have, and my country, too.

“You only have power over people so long as you don’t take everything away from them.  But when you’ve robbed a man of everything, he’s no longer in your power -- he’s free again.” –Aleksandr Solzhenitsyn

Sun, 10/09/2011 - 14:45 | 1755232 Harlequin001
Harlequin001's picture

If I remember correctly it was the horrendous conditions of serfdom under the Tsars that sent Lenin to Moscow. Whilst I do not dispute that he was funded by bankers I don't think it realistic to assume or infer that it was a banker led, funded or inspired revolution. The real 'slave-labor force' existed before Communism.

And whilst I understand the statement to which you refer, 'It is American trade that allows the Soviet economy to concentrate its resources on armaments and preparations for war. ' is somewhat dubious in that the best performing economy by far in the early 1930's I believe was Russia. It certainly wasn't the US, and when the Berlin wall came down the communists didn't drive through in Ford Escorts or Vauxhall Chevettes either. So where were the American goods to which you refer? Communism is an unachievable ideal that fails at the hands of humanity because the utopian dream is soon undermined by the idle and lazy until the dream deteriorates to cronyism and an unhealthy concentration of power, authority and control in the hands of those least capable and least merit it. That's politics for you. Now, you tell me how that is different from the US of today.

'Communism does not work, except temporarily at the point of a gun, because there is nothing in it for the individual.' on this we do agree because it stifles invention and ingenuity, and I am no communist, but I believe it somewhat disingenuous to infer that communism only ever worked as a consequence of US policy or that the US perpetuated it for one minute.

I think we can agree that communism doesn't work but I guess for entirely different reasons.

I am curious, 'Remove that trade, and the Soviet economy would be obliged to feed and clothe and house the Russian people, something it has never been able to do.' Do you honestly believe that the US can do that now?

Sun, 10/09/2011 - 15:45 | 1755388 JR
JR's picture

Surely, one of our responsibilities as human beings is to learn from history.

The Last Days of the Romanovs contradicts your thesis: “A public opinion poll conducted in 1990 found that three out of four Soviet citizens surveyed regard the killing of the Tsar and his family as a despicable crime (The Nation in 1991).  Many Russian Orthodox believers regard Nicolas as a Martyr. The independent ‘Orthodox Church Board’ canonized the imperial family in 1991… The Russian Orthodox Archbishop of Ekaterinburg announced plans in 1990 to build a grand church at the site of the killings. ‘The people loved Emperor Nicholas,’ the Archbishop said. ‘His memory lives with the people, not as a saint, but as someone executed without court verdict, unjustly, as a sufferer for his faith and for orthodoxy (Bill Keller, “Cult of the Last Czar, The New York Times, Nov. 21, 1990).'”

Here is the account written in 1920 by Robert Wilton, correspondent of The London Times in Russia for 17 years, of how Tsar Nicholas II and his family were murdered:

“In the night of July 16-17, 1918, Bolshevik secret police murdered Russia’s last emperor, Tsar Nicholas II, along with his wife, Tsaritsa Alexandra, their 14-year-old son, Tsarevich Alexei, and their four daughters. They were cut down in a hail of gunfire in a half-cellar room of the house in Ekaterinburg, a city in the Ural mountain region, where they were being held prisoner.  The daughters were finished off with bayonets.  To prevent a cult for the dead Tsar, the bodies were carted away to the countryside and hastily buried in a secret grave…”

The murders not only presaged Communist mass slaughter of the Russian people but are symbolic of the Communist effort to kill Russia itself. All the Romanovs who died violent deaths were convenient to Internationalist plans, according to Wilton.

Mon, 10/10/2011 - 04:08 | 1756668 Harlequin001
Harlequin001's picture

JR 'Surely, one of our responsibilities as human beings is to learn from history.' - It is but you must learn the right lessons.

Nothing here is incorrect but it is only a one-sided view. This was a civil war, there were supporters on both sides and both were prepared to fight for what they believed in. If Nicholas was as loved as you say then no one would have fought to remove him. Royalty have relatives all over the world and it shouldn't be difficult to get someone to speak well of anyone. Let's face it, if Obama can get a Nobel prize then does not that say it all? My history may be a little rusty but was it not Nicholas II who sat by and let Rasputin destroy his country? I don't recall anyone writing about how much fun the Russian peasants had during that period. How can the Russian people love him for that?

Even in the coming US bust-up there will be some who will defend Obama and his policies, they do it today on TV. Maybe someone will quote me those idiots in future as well, but what's needed is to discern the facts as opposed to the opinions and the bullshit.

History is written by the victors, but that doesn't make it correct or even accurate, and this is now so far off topic that it is becoming irrelevant.

Mon, 10/10/2011 - 03:44 | 1756651 Cap Matifou
Cap Matifou's picture

This good american lady spells the first-hand beans for you, how she realized after decades leading the CPUSA, that the the strings apparently coming from Moscow end in reality in wealthy hands in NY.

School of Darkness - Bella Dodd (1954)

Or if you spend just a few minutes, you can find first hand accounts how half of the enriched US uranium was sent to the USSR on lend-lease war effort planes before Hiroshima even took place.

"The first black suitcases, six in number, were in the charge of a Russian officer and I passed them without question upon his declaration that they were "personal luggage". But the units mounted to ten, twenty and thirty and at last to standard batches of fifty, which weighed almost two tons and consumed the cargo allotment of an entire plane. The officers were replaced by armed couriers, traveling in pairs, and the excuse for avoiding inspection was changed from "personal luggage" to "diplomatic immunity.""

"As I crossed the field toward the barracks, Colonel Kotikov fell in beside me. No doubt he reflected that he was in no position to force an issue. He may also have realized that I understood the gravity of almost nothing I had seen. All that mattered to him was getting the suitcases off to Moscow. Anxiously he inquired what I intended to do.

If I had known what I do today, I should have grounded the transport, but in the end it went on its way to Russia."

Mon, 10/10/2011 - 04:45 | 1756688 Harlequin001
Harlequin001's picture

Not sure what the implication is with this...

Sun, 10/09/2011 - 14:19 | 1755174 Mr. Magniloquent
Mr. Magniloquent's picture

I struggle to regard your comment as genuinely contemplated.

"Great" Britain's currency manipulations functioned benefitially for a time only because of its military domination of it's "trade partners" (See: Hostages). Historically, fiat only functions in the presence of cohersive military might. Fiat does not so much enable economies and nations as it does cast turmoil unto them.

Communism destroys far more than Human Action (see: Mises), it destroys the entire concept of what constitutes a market. The centralized structure of Communism provides no capable mechanism for responding to demand. In reality, market demand is dictated all but irrelevant and replaced with edict. The list continues, though I doubt I need to.

Sun, 10/09/2011 - 15:07 | 1755301 JR
JR's picture

Thereby the similarities between central planning and Communism. Ironically, the most obvious characteristic Communism and central bank fiat policy have in common is that they have a common enemy: free enterprise and free markets. Even Marx's proposal to abolish private property finds common ground with a financial cartel who would rob millions of people of their property values and potential wealth throughout Western Civilization.

A great statement, Mr. Magniloquent.  Most interesting, that fiat can only be accomplished with a strong military, hence multi-front wars under the financial control of the Fed cartel fought even during a time of economic crisis.

Mon, 10/10/2011 - 03:20 | 1756633 Harlequin001
Harlequin001's picture

OK Mr Magniloquent, - Britain didn't dominate its trade partners, it made them. That was the defining difference between the Great British Empire and all others. Other empires whilst based on a gold standard simply raided their colonies and took what they could. Britain installed a government that produced goods for trade so that it could sell it more debt with the proceeds, buy more warships and then take over the whole world (and its gold), or near as dammit. Seems to me that you are trying to re-write history and cast Britain as the typically American Revolutionary bad guy. Tell that to Singapore, Hong Kong, Malaysia and Australia, or any of the other countries that elected to remain part of the 'tyrannical' Commonwealth.

Let's not forget, the White House is white because of the British, and not because we were particularly good painters and decorators but because by then you were not only,  or were trying to be not part of the global British system of trade and to undermine British investment in its American colony. You were no longer protected.

Military domination? You need to go re-read a non American revolutionary version of the history books.

'Historically, fiat only functions in the presence of cohersive military might.' Bullshit. Fiat exists because it is a short term benefit to everyone which everyone wants. It only becomes problematic when there is too much money and its value begins to fall. Until that point you don't need a military to enforce it. The British military protected its trading partners so  that it could maintain the original fiat system of debt.

'Communism destroys far more than Human Action (see: Mises), it destroys the entire concept of what constitutes a market' - Under communism there is no market. The state takes all and redistributes it, or that's the way it's supposed to work. The only time a market has any relevance is when something needs to be purchased that can't be produced domestically. It becomes a problem when other countries use fiat to distort real prices and undermine the system.

'The centralized structure of Communism provides no capable mechanism for responding to demand.' I think we've already hammered that one to death...

Sun, 10/09/2011 - 12:00 | 1754747 azusgm
azusgm's picture

Try prosecution instead of regulation. Regulators such as Mary Shapiro and Christopher Cox are models of regulatory capture while honest business is hindered under increased regulation.

While you're at it, prosecute the regulators, too.

Sun, 10/09/2011 - 10:40 | 1754565 scatterbrains
scatterbrains's picture

what's the deal on these $30 tablet pc's made in India ?

Sun, 10/09/2011 - 02:06 | 1754165 MsCreant
MsCreant's picture

This last decade we lost three greats: Johnny Cash, Bob Hope, and now Steven Jobs. The world is truly a more bleak place: No Cash, No Hope, and now, no Jobs.

Sun, 10/09/2011 - 10:01 | 1754480 knukles
knukles's picture

(golf clap)

Sun, 10/09/2011 - 12:44 | 1754882 oddjob
oddjob's picture


Mon, 10/10/2011 - 00:24 | 1756457 MsCreant
MsCreant's picture

Heard it from my husband...

Sun, 10/09/2011 - 09:14 | 1754385 Mike2756
Mike2756's picture

They rolled into Greek bonds, better yield.

Sun, 10/09/2011 - 15:00 | 1755277 PonziBeaver
PonziBeaver's picture

How 'bout oil?

I mean, I know you can't wipe your butt with it, and it's not backed by the full faith and confidence of politicians, but ... too early?

Sat, 10/08/2011 - 23:36 | 1753978 Darth Silver
Darth Silver's picture

how long before the central banks lose their influence on the precious metal market?

that time is coming fast.

Sun, 10/09/2011 - 00:10 | 1754032 X.inf.capt
X.inf.capt's picture


Sun, 10/09/2011 - 04:13 | 1754239 philipat
philipat's picture

Yes, the Fed and other Central Banks pushed Gold lower to discourage China and others from selling Traesuries and buying Gold. However, with all the dumb shits in Congress and Trump abusing the Chinese and talking about tariffs, the Chinese, and others, will move anyway. So, agreed, the Fed can;t control the process for much longer.

Tariffs on Chinese goods make no difference except that all manufactured products will cost more for already strapped US consumers. The proceeds from the tariffs will, of course, be used by Congress to support extra spending. Trump would also "Say NO" to OPEC. If the Chinese and OPEC won't lsten, we'll stop importing to teach them all a lesson.

That should end well.

Sun, 10/09/2011 - 08:27 | 1754336 Harlequin001
Harlequin001's picture

Not sure how you worked that one out. It was Shanghai that raised margin rates roughly in tandem with the COMEX.

It appears to me as if the US and China are working together to nail the gold price...

Sun, 10/09/2011 - 08:11 | 1754321 MFL8240
MFL8240's picture

The game will end when the crime ring in Chicagos sewer hikes margins 1 or 2 more times and the contracts are 100% cash.  

Sun, 10/09/2011 - 11:44 | 1754702 Citxmech
Citxmech's picture

They've been losing it incrementally since Au = $300/oz.

<edit:  or should I have said since Au = $20/oz.?>

Sun, 10/09/2011 - 13:12 | 1754981 jekyll island
jekyll island's picture

Who owns the most precious metals?  The central banks, paid for by the people of course.  Losing control of the market was already baked into the cake.  They are planning their next adventures in piracy and rape in the new economy which will have a gold backed currency somewhere.  

Sat, 10/08/2011 - 23:48 | 1753990 Western
Western's picture

"Which begs the question: did Tim Geithner make a few phone calls, and tell foreigners to dump Treasurys, and to buy stocks instead in order to delay the next relapse of the Great Financial Crisis?"


Surely that's what you meant to say.

Sun, 10/09/2011 - 00:09 | 1754030 zorba THE GREEK
zorba THE GREEK's picture

"Which begs to question...."  Who the f___ listens to anything Timmy has to say these days?

Sun, 10/09/2011 - 01:09 | 1754110 Missiondweller
Missiondweller's picture

No shit. They Chinese fucking laugh at his face.

Sun, 10/09/2011 - 08:12 | 1754322 max2205
max2205's picture

That chart looks like the SPY ... hummm

Sun, 10/09/2011 - 10:03 | 1754484 knukles
knukles's picture

So do the Eurpoeans.
Alls he's got left is the Middle Easteners and Africans for the Tri-Fecta

Sun, 10/09/2011 - 10:10 | 1754498 knukles
knukles's picture

Makes me wonder.....
How fucked up is the Whole World.
Lots of leaders, no leadership.

Sun, 10/09/2011 - 00:27 | 1754061 sun tzu
sun tzu's picture

I doubt any foreigners would buy US stocks because Tim Geithner told them to.

Sun, 10/09/2011 - 01:27 | 1754126 Pike Bishop
Pike Bishop's picture

My crystal ball is in the repair shop again, but i'll take a shot anyway...

China can and will, and it has nothing to do with Timmeh the Boy Blunder.

The bollocks of the American orchestrated "wealth effect" and likely impending doom of the Western Equity Markets, is giving China's own "wealth effect" a kick in the nuts.

They are taking major hits in the manufacturing/export of poisonous cheap toys for the kids to chew on, and electronic gizmos which fuck-up kids' minds for life.

1pt off of US Consumer GDP hits China shores at about a multiple of 5. And diarrhea in western stock markets has given China markets outright dysentery.

This is screwing with China's Central Planning.

I know this sounds weird, and I don't know what it will look like when it comes. But it makes sense for a whole bunch of reasons for China to bail-out US-market investors.

And they have to do it soon.

Sun, 10/09/2011 - 08:19 | 1754329 DogRockets
DogRockets's picture

Right on. When the host organism begins to die, the parasite, if aware of its impending demise, suddenly has cause to care about the host's continued well being. 

Sun, 10/09/2011 - 08:48 | 1754355 Smiddywesson
Smiddywesson's picture

I agree in part. but the current system cannot be saved.  China knows that, but they are cooperating anyway (restraining their gold acquisition and coordinating their margin hikes.)  They will not destroy themselves to save what cannot be saved.  So what's going on?  It's all a stall to create a new system of trade based on a new monetary standard.

Sun, 10/09/2011 - 13:18 | 1755012 jekyll island
jekyll island's picture

SW, I agree with your point about China's cooperation, but no one outside their inner circle really knows how much gold they have acquired, or how much they are buying directly from mining companies.  I would be surprised if it is not many times larger than their current "official" holdings.  They will enthusiastically support a gold backed currency and the price per ounce will be north of $10,000. 

Sun, 10/09/2011 - 17:34 | 1755606 AustriAnnie
AustriAnnie's picture

+1  There is a reason why China is encouraging their citizens to guy gold.  

Sun, 10/09/2011 - 02:03 | 1754163 TrulyBelieving
TrulyBelieving's picture

Agree it's very possible no one would listen to Geithner, but who"s to say the orders didn't come from much higher up.

Sun, 10/09/2011 - 16:00 | 1755434 downrodeo
downrodeo's picture

as sam jackson said in jurassic park, hold on to your butts


i love how some still refer to it as a recession


Sat, 10/08/2011 - 23:49 | 1753994 The Big Ching-aso
The Big Ching-aso's picture

Anything is possible, including rational thought.

Sun, 10/09/2011 - 01:40 | 1754139 macholatte
macholatte's picture

Any chance all the turmoil in Europe could have something to do with this?  Maybe Dexia or another bank had to dump UST in favor of cash?


All political thinking for years past has been vitiated in the same way. People can foresee the future only when it coincides with their own wishes, and the most grossly obvious facts can be ignored when they are unwelcome.
George Orwell

I don't know whether it's a new thing, but it's certainly a current thing, in that it doesn't seem to matter what facts are. It used to be, everyone was entitled to their own opinion, but not their own facts. But that's not the case anymore. Facts matter not at all. Perception is everything.
Stephen Colbert

There are things known and there are things unknown, and in between are the doors of perception.
Aldous Huxley

Sun, 10/09/2011 - 11:28 | 1754670 Manthong
Manthong's picture

'Anything is possible, including rational thought.'

Short -  Rational Thought.

Sat, 10/08/2011 - 23:49 | 1753995 Aguadulce
Aguadulce's picture

This post has me thinking still, what IS the best flight to safety nowadays?  I mean sure personally gold and silver are great, but how many countries can physically procure any meaningful amount unless they have mining assets that they can oversee the physical product being produced.  So taking physical out of the game, and concentrating strictly on monies that can be transferred electronically in the "paper" markets.....what is king in terms of safety assets at the moment?

Sat, 10/08/2011 - 23:55 | 1754005 XitSam
XitSam's picture

You mean for the next four hours until the "smart" money thinks it is something else?

Sat, 10/08/2011 - 23:56 | 1754010 LongBallsShortBrains
LongBallsShortBrains's picture

I sleep well short 30 year bond futures.

but I got a stomach for it Your mileage may vary.

Sun, 10/09/2011 - 09:01 | 1754367 PMakoi
PMakoi's picture

Interesting play, but what will you be paid in?

Sun, 10/09/2011 - 13:23 | 1755032 jekyll island
jekyll island's picture

He will take payment in fiat and most likely quickly move it into a more tangible asset like PM's, land or equities.  It's not rocket science, you have to look at fiat as a medium of exchange, not as a store of value.  

Sun, 10/09/2011 - 16:45 | 1755519 Manthong
Manthong's picture

Medium of exchange for current needs, but also units of account for arbitrage and/or chips on the table.

Sun, 10/09/2011 - 13:21 | 1755020 jekyll island
jekyll island's picture

Me too.

Sun, 10/09/2011 - 00:00 | 1754015 Dapper Dan
Dapper Dan's picture

Cruise missiles, biological pathogens, and your  very own  High Frequency Active Auroral Research Program.

I have a feeling I should not have typed all that in one place.

See you  all in the relocation camp.


Sun, 10/09/2011 - 06:56 | 1754287 prophet
prophet's picture

and certainly not all at the same time

Sun, 10/09/2011 - 16:44 | 1755521 my puppy for prez
my puppy for prez's picture

I PROMIS you are creating the future with those words....

Maybe every blogger on the net should start typing those words everyday, in every post.....THAT would really freak out their "predictive software"! 

I call this "guerilla webfare"...

Sun, 10/09/2011 - 00:51 | 1754088 rocker
rocker's picture


Sun, 10/09/2011 - 01:16 | 1754119 Aguadulce
Aguadulce's picture

Thanks for the simple response.  I literally have no idea what to do with money right now.

Maybe I should choose a side and Ronco everything: set it and forget it.

Sun, 10/09/2011 - 02:23 | 1754173 The Big Ching-aso
The Big Ching-aso's picture

Diversify into concrete things that you can imagine could very well be valuable in your particular locale and individual circumstance.     

Such valuable things which could include, 

strawberries, coconuts, beans, apples, horseshoes, cheese, .50 BMG's, cordite, acorns, corn cobs, tampons, tampex, Depends, laxatives, KY Jelly, Vasoline, condoms, contraceptives, deodorents,  ShamWow's, Mad Dog, Night Train, Colt .45, Dom Perignon, Krystal, Chateau Lafite Rothschild, nightcrawlers, crawdads, catfish, sea urchins, anything,  just a myriad of products, foods, and services, which could prove extremely valuable to your quirky neighbor in need or want.    The upcoming SHTF Exchange Markets will likely encompass an infathomable array of barter that will boggle our puny minds.     Then to further cover potentialities, diversify into fanciful things of whimsy, like stocks, bonds, T-bills, REIT's, ETF's, annuities, and then the most whimsical of all, cash.

Then if and when it occurs that Mad Max, Deep Impact, Armageddon, or if and when Hillary becomes Prez is upon us then it may behoove to have diversified at least some of what you perceive as wealth into the precious.

If I missed anything or if you have any further questions, let me know.

Sun, 10/09/2011 - 11:44 | 1754709 Founders Keeper
Founders Keeper's picture


Personal survival gear comes first.

  • Faith/Spiritual comfort guidance (if so inclined)
  • Water
  • Food
  • Defense
  • Light (matches, candles, flashlight)
  • Family, Friends, good Neighbors
  • million-and-one items, including PMs

Accumulate barter items for later.

  • See Above

Be selective about barter items you accumulate and with whom you trade.  Really, what kind of people do you want to take a chance on meeting face to face; people you might not necessarily want having knowledge of your stash and home.  Don't plan on doing much barter until after civil authority and rule of law are reestablished.


Sun, 10/09/2011 - 17:42 | 1755618 AustriAnnie
AustriAnnie's picture

"Be selective about barter items you accumulate and with whom you trade.  Really, what kind of people do you want to take a chance on meeting face to face; people you might not necessarily want having knowledge of your stash and home."

You make good points.  This is something people forget.  HAVING a stash is not the same thing as KEEPING your stash.  It is important to make yourself also "invisible" to others.  Keeping a low profile is important.  Knowing who to trust is even more important.

There was a survival book written about this that focused not on the list of things you need, but more on how to hide it, trade it, and use it without detection.

Sun, 10/09/2011 - 11:59 | 1754744 tamboo
tamboo's picture

water and lots of it.

Sun, 10/09/2011 - 16:48 | 1755527 my puppy for prez
my puppy for prez's picture


Apparently, these are the first things to go at WalMart before a weather emergency.

They are definitely my favorite I'm doublin' up on those!

Sun, 10/09/2011 - 08:51 | 1754360 Smiddywesson
Smiddywesson's picture

This post has me thinking still, what IS the best flight to safety nowadays?  I mean sure personally gold and silver are great, but how many countries can physically procure any meaningful amount unless they have mining assets that they can oversee the physical product being produced.  So taking physical out of the game, and concentrating strictly on monies that can be transferred electronically in the "paper" markets.....what is king in terms of safety assets at the moment?

Gold and silver are king.  Aside from that, the only safehaven for a country in these dangerous times is a big ass military.

Sun, 10/09/2011 - 14:05 | 1755140 fuu
fuu's picture

Nukes seem kind of handy.

Sun, 10/09/2011 - 16:13 | 1755460 bIlluminati
bIlluminati's picture

The trouble with a nuke is you can't point one at somebody's head. So it's more a terror weapon than sel-defense.

Sun, 10/09/2011 - 18:11 | 1755688 azusgm
azusgm's picture

Overriding royalty interests. ORRIs are defined in decimal interest and are not specifically currency denominated.

Sat, 10/08/2011 - 23:51 | 1753997 Seasmoke
Seasmoke's picture

Where is Bill Gross ?

Sat, 10/08/2011 - 23:59 | 1754013 knukles
knukles's picture

a) yoga
b) signing up for next Bilderberg
c) hoping his not short but kinda maybe not really but then again doesn't happen anymore
d) proof reading Mohammed's next essay
e) who gives a rat's ass anymore 'cause all he does is talk book

Sun, 10/09/2011 - 00:03 | 1753998 bob_dabolina
bob_dabolina's picture

Tim Geithner will be the vessel in which all man kind is ended through. 

He is a seriously dangerous individual. He will look you straight in the face and tell you the US will not be downgraded right before it is. He overlooked the housing bubble as Chairsatan of the NYF. He can't figure out how to pay taxes. He doesn't know how to spell. 

This is the end. It can't get any worse than Tim Geithner. Whether by deflation or inflation, Tim Geithner will make sure the widest and longest cock be shoved into every Americans ass stretching us out to the point we will not be able to hold in our own shit. Geithner will have every American in diapers.

Sun, 10/09/2011 - 00:15 | 1754044 disabledvet
disabledvet's picture

That actually might be considered a compliment. "My name is Tim Geithner. I was the vessel in which all mankind was ended. I'm sorry."

Sun, 10/09/2011 - 16:51 | 1755531 my puppy for prez
my puppy for prez's picture

I think Tim Geithner looks eerily like the elf who "wants to be a dentist" from Rudolph the Rednosed Reindeer!

Kinda cute and.....

Okay, scratch that last line!

Sun, 10/09/2011 - 00:15 | 1754045 Seasmoke
Seasmoke's picture

and just imagine, that fuckers signature is on the FRNs and people still accept them willingly

Sun, 10/09/2011 - 00:18 | 1754046 zorba THE GREEK
zorba THE GREEK's picture

Bob.. Did you ever look at Timmy's forehead? He's not human, he's extra-terrestrial. He's been sent here to clear the earth of human inhabitants

for the coming take-over of earth by aliens (and I don't mean Mexicans) 

Sun, 10/09/2011 - 00:42 | 1754075 bob_dabolina
bob_dabolina's picture

I don't like you. Don't respond to my posts.

Sun, 10/09/2011 - 02:11 | 1754172 MsCreant
MsCreant's picture

You're a girl, aren't you!?!

Sun, 10/09/2011 - 02:19 | 1754178 The Big Ching-aso
The Big Ching-aso's picture

I think you mean birl.

Sun, 10/09/2011 - 02:51 | 1754186 bob_dabolina
bob_dabolina's picture

Gender bias? I thought you were better than that MsCreant. 

I don't know if you knew this about me but I'm a black woman and I don't appreciate your bullshit.

Sun, 10/09/2011 - 02:53 | 1754198 MsCreant
MsCreant's picture

No bias at all. ;-)

You have felt feminine to me in the past. This makes so much sense now. You did not feel black, but that's okay. It does make for an interesting story. I could see someone with a black identity posting anti-black material to bring out certain members of the crowd for their own reasons.

Enjoy, I am but a common MsCreant.

Sun, 10/09/2011 - 03:25 | 1754212 bob_dabolina
bob_dabolina's picture

I am black.

Why is the economy so racist? Why don't business hire black people? 

Why are blacks so unemployed?

Sun, 10/09/2011 - 03:41 | 1754226 StychoKiller
StychoKiller's picture

Not everyone can understand Ebonics.

Sun, 10/09/2011 - 04:30 | 1754244 The Big Ching-aso
The Big Ching-aso's picture

If the race card comes out I think a yellow-flag is in order.   Btw, I always felt in all my 2 long weeks of being here that she was more Dick than Bob.  Now I find out I don't know dick about Bob's or black chicks.

Sun, 10/09/2011 - 08:46 | 1754351 SamuelMaverick
SamuelMaverick's picture

bob dabolina, please go troll elsewhere and while you are at it,  take that racist shit and go shove it up your ass..

Sun, 10/09/2011 - 13:22 | 1755023 Alpha Monkey
Alpha Monkey's picture

I'm willing to bet that you are white... 

Sun, 10/09/2011 - 13:32 | 1755055 The Big Ching-aso
The Big Ching-aso's picture

"To be black and conscious in America is to be in a constant state of rage."   James Baldwin

Sun, 10/09/2011 - 09:08 | 1754374 spanish inquisition
spanish inquisition's picture

We are Sparta. We are war and are looking to rule the world. That is how we were designed. To do that, you need the populous to hate and want to go to war when the bankers and financiers want them to go to war. Peaceful and contented people and countries generally do not go to war.

Blacks are the USA's training wheels, the general undercurrent of hate is nurtured there by the financiers. When it comes time to kill towel heads, gooks or whatever group around the world for their resources, they make them the enemy and our troops go over to wanting to kill with citizens at home cheering. is a basic divide and conquer through document with a twist. You get the divided sides to fight each other while you go about the business of cementing your power structure. You can see many aspects of it in play today in the current crisis as the FED and Wall Street continue to follow the outline. Also note how the 2 party system is organized to divide by topic. So to make change, it is important to see how we got here in the first place.

As 99%ers, we are all being gamed together. As for being black, you are there, because it was convenient to the financiers to put you there based on their strategy listed above.

Sun, 10/09/2011 - 11:04 | 1754618 Harlequin001
Harlequin001's picture

Don't you believe it. the US just like the rest of the developed world pays for food imports with debt. What do you think happens when interest rates rise and governments can no longer sell debt?

And when they can't buy food and the masses start rioting the easiest and simplest solution is to march them over a border where they will either get fed or shot. It is a self resolving problem not constrained merely to blacks. This time everyone gets a go, like it or not.

Ever been to Mexico? You never know, you just might find your way there sooner than you think...

Sun, 10/09/2011 - 13:15 | 1754984 Alpha Monkey
Alpha Monkey's picture

It's pretty easy to explain actually.  The only problem is, unless you aren't black you won't be privy to the inside information.  If you look at a majority of corporate leadership chains, you will find it filled by predominantly white people.  And even more predominantly white men.  Consider for a moment the comfort and privilege these people live in.  If your life was filled with comfort and ability and privilege, what would you do to keep and maintain that? 

One thing to be done includes joining the inside group of white men who feel like they are better than everyone, especially minority women.  In order to get there you have to be willing to take the low road and give up morals, that way they know you have what it takes to deliver the dollars your bosses want to see.  My personal experience with this is from the perspective of a hispanic male who grew up in the midwest, was subject to ritual harassment as a child and teenager, eventually overcoming the torture by "joining" the other side.  Instead of reminding the ignorant white rednecks that I was from a heritage that existed in this hemisphere long before their ancestors showed up, I decided to join in the ridicule of mexicans, blacks, women, jews, asians, anyone who was not white basically.  I was referred to as an "uncle tom" mexican, and as the "whitest mexican" anyone had met, and as being "racist against my own".  All of which was true.  Through this though, I was granted access to see what it is like at the upper levels of corporate management (and in the eyes of privileged white people in general).  It was quite disgusting and i was no longer willing to inflict undue suffering on people for my personal advancement, which the "white man" is more than happy to do.  Unfortunately, the comfort and the lack of perspective from any other angle than that which has been catered to for their entire lives makes it extremely difficult for many of them to realize the disgusting web they entangle themselves in and the harm they inflict on others. 

This is one truth.


Sun, 10/09/2011 - 16:29 | 1755492 bIlluminati
bIlluminati's picture

My personal experience with this is also from the perspective of a hispanic male who grew up in the midwest. And I know that Mexicans learn to distrust Puerto Ricans, who don't like Cubans, etc. This is only occassionally encouraged by rich white men, who may care whether we vote R or D, but beyond that have no concern.

Now the multi-millionaires play on a whole different playing field, so I don't know how they think, except that most of them don't do their own shopping, gardening, child rearing, etc. I'd guess some at that level of rich play divide and conquer well.

In my decades in the business world, I never had a reason to be racist against my own, it simply never came up. Of course, I don't know what was said behind my back. On the other hand, I've seen all kinds of prejudice among the poor, whites vs. blacks vs. latinos vs asians, this ghetto vs. that barrio vs. the other slum. When you're down, any direction looks like up if you want to find up enough.

Sat, 10/08/2011 - 23:53 | 1754000 sitenine
sitenine's picture

Coming to a Country near you.

Hyperinflation, bitchezz!

Sun, 10/09/2011 - 00:02 | 1754006 knukles
knukles's picture

Oh man, that does so seem a bit of a stretch at first reading.  Sell treasuries, which have just had an EPIC rally, humongoloid total returns (forgetting the nominally low coupons), but to buy what?
Why common shares?  I can't personally piece that together.  Common stocks are not the end all panacea safe haven for desperate times.  It's f/i or PM's.  And "oui voila!" in any case, the report is lagged, so here we have the dumping in the midst of/before the bond rally.  Strange.  (Keep in mind that the total returns accruing to log fixed income this year have so far been exceptional.... not forecast of future events.  And for those who have run large bar belled longer treasury/PM portfolios, it's been a damned good year.)
And if they did go to common stocks, they've not only taken the opportunity loss on the treasuries (in particular longer dated, greater duration) but been corn-holed royally in the stock downdraft.
It just doesn't fit for me.  What in the world might be the motivation?
I could see selling treasuries for other "high quality debt" (Now there's a global oxymoron) or PM's, but again....  Drubbing deluxe.
And the lag in reporting...
Oh, the Mystery of it All.

Sun, 10/09/2011 - 00:08 | 1754028 nevadan
nevadan's picture

I am a bit flummoxed as well.  Who exactly bought all those bonds?  Is the implication the Fed bought and this is what QE III looks like?

Sun, 10/09/2011 - 00:26 | 1754058 zorba THE GREEK
zorba THE GREEK's picture

Knukles...(Shouldn't that be knuckles?)

Selling treasuries to buy common stocks could be very profitable if the Fed is getting ready to print massive

amounts of money to bail out the world. That would be very inflationary and would cause the price of all

commodities and real assets to rise while causing treasuries to tank on increasing interest rates.

Sun, 10/09/2011 - 01:17 | 1754120 Missiondweller
Missiondweller's picture

Good thinking. You figured it out quicker than I did. It makes perfect sense.

When faced with either global collape or moderate to high inflation, its pretty obvious which they're going to choose.

Of course this is going to make both the Tea Party & Occupy Wall St go completely apeshit.

Sun, 10/09/2011 - 08:21 | 1754333 kito
kito's picture

when faced with global collapse, bernanke knows printing wont help. he knows printing hasnt helped, which is why he hasnt printed and why he wont print. i assure you, there will BE NO MORE PRINTING FROM BEN!!!!!!!!!!!!!

Sun, 10/09/2011 - 10:58 | 1754613 Rynak
Rynak's picture

But it has "helped".... loads of bitches, icecream and luxury cars worth of "help".

Sun, 10/09/2011 - 00:51 | 1754067 Hansel
Hansel's picture

I advised someone to sell some treasuries and buy a dividend equity fund 2 Thursdays ago.  Treasuries have run too much and profits were taken.  I'll never suggest shorting treasuries because it is a rigged game, but I won't be buying sub 2% 10-years either.  The way you pose your questions gives the impression the dollar is on a pedestal.  I think some multinational companies are better run than the U.S. gov't and don't see why some dividend yields shouldn't converge to treasury yields.  Sitting in bonds going forward sounds like a good way to make no money.  Disclaimer: I could be wrong.

Sun, 10/09/2011 - 01:06 | 1754106 knukles
knukles's picture

As I had noted, none of my comments were meant to be forecasts of future returns amongst or across asset classes.  Rather, I was merely attempting to explore the possibilities as to why the foreign holdings declined.  What was the motivation?
As I said, I cannot figure (remembering that the data is months lagged, old, out of date, spoiled as in bad fish, water under the bridge) where the proceeds had been applied.  Indeed, any reinvestment of the sales from then to today in either stocks or PM's has been an unmitigated disaster.  So be it, it is what it is.

With respect to future opportunities, I believe that subsequent to further equity market weakness there will be some bonafide gang-buster income oriented strategies to be capitalized upon.  Serious opportunities.  I'm thinking similar to the opportunities available at the height of fear and loathing surrounding Lehman.
Nor do I believe that long run, long term debt with sub 2% coupons is intellectually appealing... unless we were to enter a prolonged period of deflation.  That case can be made.  Just as the hyperinflation case can be made. 
However, I care to separate the two into discrete time frames (for simplicity sake if anything else for I've only a finite store of mental capital to utilize) dependent upon a resolution to consumer and business behavior which will largely be dependent upon rising from the credibility and uncertainty traps (rationale for liquidity trap) which will take the form of a cleansing of the mercantilistic, kleptocracy and return of a lawful landscape.
In short, conditions conclusive to a significant rebound in the Velocity of Money.

In response, my own core portfolio has been (as I have described openly herein) a barbell between (longer duration) intermediate and long high quality debt and PM's attempting to address both possibilities as I cannot with any great degree of certainty place finite probabilities on the two outcomes.  (Thus, if the Fed were to re-institute mass monetary expansion, which I fully anticipate due to deteriorating economic conditions, the PM position will respond favorably.)  Nor, apparently can Mr.Market decide as psychology has seemed to gyrate between the two conditions over the past several years.
What I do feel highly certain of however, is that this is as dangerous a social-political-economic and thus financial environment as I have experienced in my career.  Thus, the driving quality of my portfolio disposition at all times must be that I can sleep well.  As odd as that might seem, for I have no better insight that that.  My serenity must be maintained for any serious discomfort in this environment is certain death... to be married to positions, to be unable to respond to opportunities... which likewise demands assets transmutable into cash for alternative opportunities.

These are tough times.  I pray for the best, plan for the worst and invest accordingly.
Best of luck.

Sun, 10/09/2011 - 01:30 | 1754129 Hulk
Hulk's picture

Treasuries are the biggest trap of all time...Makes tulip mania look like a piker...

Sat, 10/08/2011 - 23:56 | 1754009 azusgm
azusgm's picture

Outflow? As in "swap line"?

Sun, 10/09/2011 - 00:04 | 1754024 knukles
knukles's picture

Ah hah! 
Now there's a damned good, quality thought.
Damn.  Fits with the European banking system's increased demand for liquidity, in particular dollars.....
Great idea!  Solid.

Sun, 10/09/2011 - 00:21 | 1754053 dr.charlemagne
dr.charlemagne's picture

yup, liquidity related

Sun, 10/09/2011 - 00:10 | 1754027 slewie the pi-rat
slewie the pi-rat's picture



  • the long bonds were @ 118, then they went to 145! 
  • so people sold them!
  • children in the 8th grade were twittering & tweeting about shorting Ts to their friends and lovers
  • cab drivers & cooks advised shorting Ts
  • the chinese sold, the slovakians, the slovenians~~only $56 Bil? 
  • disturbing?  not to slewie.  just risk ON
  • when the FED sent people looking for safety, stocks found the level of "BUY!"
  • bonds found the level of "SELL!"

and they all went to heaven in a little row-boat, BiCheZ!


Sun, 10/09/2011 - 00:31 | 1754068 zorba THE GREEK
zorba THE GREEK's picture

You got that right slewie, the long bond has very little room to go up and lots of room to go down,

especially if the Fed is about to start a program of monetization large enough to bail out the world.

Sun, 10/09/2011 - 00:11 | 1754036 kujo
kujo's picture

I still miss Marla

Sun, 10/09/2011 - 02:19 | 1754179 MsCreant
MsCreant's picture

Me too. I hope she lurks and posts in other guises.

Sun, 10/09/2011 - 00:50 | 1754087 Spitzer
Spitzer's picture

Good ole capital flight, just like the Asian Financial crisis.

The similarities are explained here

Sun, 10/09/2011 - 00:53 | 1754090 AndrewCostello
AndrewCostello's picture

The market is such a manipulated mess, run by a bunch of buddies that anything is possible.  I wouldn't put it past them all.



Sun, 10/09/2011 - 01:04 | 1754091 mark mchugh
mark mchugh's picture

I'd strongly recommend reviewing Cramer's "THEY KNOW NOTHING" video clip to better understand August 2007.

Topics discussed:

Bear Stearns: Which was trading at (wait for it) $109.  Cramer "likes Bear Stearns very much"

Dick Fuld & Lehman: Cramer casts Fuld as a short-squeezing hero (really, he does).

Bernanke: Cramer says he needs to open the Discount Window.  "Has no idea how bad it is"

"I have talked to the heads of almost everyone of these firms in the last 72 hours"  (Hmmm...)

"these firms are gonna go out of business"

Citigroup (mentioned in passing)

Bill Poole: Cramer calls him "shameful"  Here's a quote from Mr. Poole

Congress ought to recognize that these firms (Fannie & Freddie) are insolvent, that it is allowing these firms to continue to exist as bastions of privilege, financed by the taxpayer."[

(note Poole stepped down 2 weeks after Bear collapsed)

"We have Armageddon"

"...Have them call me on the way home, like they do every night and tell me, "Cramer, what are you gonna do about it?  Are you gonna help us?"

"I wish I didn't know anybody so I could just sit here and say you know what? Just go buy some Washington Mutual and take that yield.  Unfortunately I know too many people...."


Sun, 10/09/2011 - 00:57 | 1754093 Iwanttoknow
Iwanttoknow's picture

Does anyone know of any impending financial catactlysm,alleged to start,of all days,on october the 15th?

Sun, 10/09/2011 - 02:22 | 1754180 The Big Ching-aso
The Big Ching-aso's picture

Look, I hate to be so blunt, but we ARE in a financial cataclysm.     There is no impending.  It's here and now, baby.

Sun, 10/09/2011 - 03:58 | 1754235 Fazzie
Fazzie's picture

 Why yes, that would be the defacto default of Greece potrayed as merely the bondholders getting a crewcut instead of a haircut. This domino starts the downgrades and credit starts seizing up. Even 2 percent long bonds beat losing your ass in the resulting stock crash.


Sun, 10/09/2011 - 08:50 | 1754358 Harlequin001
Harlequin001's picture

buy gold, no sweat...

Sun, 10/09/2011 - 10:41 | 1754567 Abitdodgie
Abitdodgie's picture

It is the end of creation on the 28 of October, it's only been 15.5 billion years in the making, what is going to happen you say -Nothing it never does. 

Sun, 10/09/2011 - 02:43 | 1754189 unirealist
unirealist's picture

FOOD is the next big thing.

Rice and beans, salt and sugar, canned tuna and salmon, wheat berries (and corn, soybeans, lentils), salad oil.

Put away LOTS and LOTS of it.  You'll be feeding three times as many people as you think you need to plan for.

Don't forget soap, analgesics, tampons, t.p., garbage bags, and ammo.

And figure out where your water supply is going to come from.

Have a credible Plan B, and enough PMs to buy your way to where you need to go.  

Sun, 10/09/2011 - 02:50 | 1754195 agrotera
agrotera's picture

Bear Stearns hedge fund blew up in June 07, all hell broke loose after that-- notice the picture rhyming.


Sun, 10/09/2011 - 03:00 | 1754201 MsCreant
MsCreant's picture

Nice to see you here and there. I have not left you a message because I thought you would not get it. Do you have your head tucked safely? I keep waiting for "it" and "it" never arrives. I have decided not to pay attention so much now (watched pots and all) in the hopes that something might actually change while I am not paying attention.

Part of me hopes it stays standing for a few months till my bunker is built (old one got destroyed). The other part of me would rather see it collapse so that we can get on with the pain and the healing.

Folks close to me have finally dumped Morgan Stanley as their (wait for it, choke) financial advisor. When that happens (calm folks, ordinary folks) that might be a clue that it's really "on" this time. That feels like rhyming to me.

Sun, 10/09/2011 - 03:23 | 1754208 agrotera
agrotera's picture

HI MsCreant!  Great to see you and thank you so much for the note!  (hope you got my note before i edited it)

I am hoping that things can get corrected without the nightmare of all the things we are imagining.  I know what you mean about waiting for the water to boil!  This week felt like a run up for the weekend disaster.   We have had so many weekends like that though, as soon as the pattern seems predictable, forget about it!

Sun, 10/09/2011 - 09:23 | 1754397 MsCreant
MsCreant's picture

Did not see till just now. Sorry about that but I do understand.


Sun, 10/09/2011 - 03:13 | 1754205 besnook
besnook's picture

the question is, who has those many billions to dump besides the fed? and what do they accomplish? what is their benefit? only china comes to mind. they sold to mess with timmy or maybe it is a back door bailout of the euro, providing the dollars they need in exchange for a faustian deal on the future status of the yuan.

Sun, 10/09/2011 - 04:25 | 1754241 Cat On A Ledge
Cat On A Ledge's picture

Some on/off-topic thoughts to share here.

The FED has taken a gamble with Op Twist, chasing momentum. Since i've always found the T-Sec to be more of a tactician than a strategist, the US Treasury is obviously trying to take advantage of the low interest rate environment to lengthen the average maturity of its debt, flattening the curve in the process. Meanwhile the FED is betting that the eurozone crisis will be drawn-out (which is, btw, fundamentally opposite to SNB's position). Sustained demand at the short end will allow them to achieve said objective without the need for further QE - which will undoubtedly corrode the fragile confidence the USD has recently found, and risk retaliatory moves from China (aka M.A.D. outcome).

A flatter curve, in addition to what's stated above, will have several other areas of impact: stem the bloodletting in money market funds, good for cash-starved banks, good for cash-rich corporations, bad for SMEs in general (esp. startups), 'encourage' pension funds to seek riskier investments (what about mandates?), reward new housing/refinancing loans, punish vintage ARMs holders (please solicit professional opinions on this one); overall mixed for 'risk'.

Of course, the caveat being, this curve is manufactured so its ability to predict sentiment (risk appetite) is unreliable; however its impact on the real economy remains.

If their gamble worked, will they go so far as to invert the curve? i give that a low probability; conversely, if their gamble failed QE3 is a certainty. One wonders about the onslaught of rating downgrades last friday, what a coordinated effort!

That said, "the most important Nash equilibrium in modern history" is very apt. Sharp minds, these Durdens. It's a little premature to call this the beginning of the end, but surely it is something that bears close watching.

Lastly, i also feel that the announcement to keep interest rate suppressed until 2013 had more to do with IR derivatives than the housing market, although my limited understanding of high finance forbids me to delve further into this area.

If there are any blatant errors in my analysis, i'd appreciate if fellow commenters would point them out.

Sun, 10/09/2011 - 16:42 | 1755517 bIlluminati
bIlluminati's picture

The Fed and the U.S. Treasury are taking opposing sides. Two previous examples come to mind:

The partial deregulation of California power, resulting in the power sellers to go up while the power delivery companies went belly up, while letting the insiders get rich.

Enron's public balance sheet vs. its private deals. Showing a profit while going insolvent. Meanwhile, the insiders load up the trucks.

Try to figure out which side is going to be left swinging in the breeze. Treasury is public, while the Fed is private. Deflation.

Mon, 10/10/2011 - 07:33 | 1756829 Cat On A Ledge
Cat On A Ledge's picture

Thank you for your response. However, i disagree.

The FED is tasked with issuing and controlling the currency - legal tender. To enjoy this privilege it must have the backing of the state. It may be independent in good times, given a free hand to do whatever it needs to, but when it comes to serious matters of national interest (9-11, '08 financial crisis etc), the FED will align itself with the state. It cannot be otherwise.

Sun, 10/09/2011 - 04:35 | 1754254 abugarance
abugarance's picture

Isn't the simple explanation that the dumping source is actually the ECB, which for quality reasons is replacing Treasuries with Spanish and Italian papier-cul?


Sun, 10/09/2011 - 05:46 | 1754270 Cat On A Ledge
Cat On A Ledge's picture

You could be right! That'd certainly underpin market confidence, at least in the short term.

Sun, 10/09/2011 - 05:59 | 1754275 Jeff the Gorilla
Jeff the Gorilla's picture

Why does no one seem to understand that all of the pressure is deflationary?

The number one thing that the US economy needs is loan demand, more so than jobs or any other consitutent.  Loan demand is the only organic way to grow the US economy out of the deflationary tail spin that Bernanke and a plethora of others have accelerated.  

The US continues to follow almost every unsuccessful step that Japan took at the turn of the century at a huge detriment to, not only its own but, the world economy.  

Find the basic issue outlined here:



Sun, 10/09/2011 - 07:19 | 1754292 tim73
tim73's picture

"Did Foreigners Bail Out The US Stock Market... By Dumping $56 Billion In Treasurys?"

So foreigners never take their money from USA and go home? American exceptionalism is such a wonderful thing, like fairytales for kids. Shields from reality really nicely.

Sun, 10/09/2011 - 09:22 | 1754395 dwdollar
dwdollar's picture

Foreign institutions aren't allowed to sell without permission from the Treasury. Otherwise they are subject to "shock and awe" if you know what I mean.

Sun, 10/09/2011 - 08:17 | 1754327 max2205
max2205's picture

99% of the time the system is uner control

Sun, 10/09/2011 - 09:02 | 1754368 Harlequin001
Harlequin001's picture

and 1% of the time they have a clue as to what they're doing with it...

Sun, 10/09/2011 - 09:21 | 1754392 zeroman
zeroman's picture

So, since we are all speculating why the outflow in treasuries occured, here is what i am more inclined to think.  The U.S. is pressuring China to improve its currency. China is telling the U.S., our value has declined in our assets due to your manipulation. So the deal goes, ok, we are staging a treasury rally for you to offload yoru treasuries and you can then lower your exposure and thin improve your exchange rate.  At the same time, anyone and everyone who can or is able to refinance loans will do so with and without the governments help.  I figure we have about 1 year before rates begin to rise. Whether the Euro dissolves or they create a ECB majic trick for a period of time, once the attention is taken off of the Euro, the U.S will be next.  So two things will either happen. !. The Government gets its act together and cuts the deficit and improves tax conditions for busiensses and individuals (repubs win) or there is veritually more and more stimulus thrown around and taxes increase. Either way, rates must go up.  When?  Who knows.  1-2 years maximum.

Personally, the real economy which is small business to medium size business or 95% of the economy has been operating at low levels since the crash of 08. minimal employees, no bank loans, low sales, etc.  For this reason, this part of the economy will not go down much if any. In fact, it may go up since the paraylsis of the debt ceiling. The face economy or financial markets, will continue to have volatility

Sun, 10/09/2011 - 09:25 | 1754400 rbg81
rbg81's picture

I don't doubt it.  Look for Timmy and crew to pull out ALL THE STOPS in the runup to the 2012 elections.

Sun, 10/09/2011 - 09:25 | 1754402 Georgesblog
Georgesblog's picture

The Fed and the Treasury are very good at working the Bait=And=Switch in public and the Shell Game in the back alleys of the brokerages. If this were a horse track, an analogy that has been applied many times, we could say that the fix has been in since 1913. In frustration, I once wrote that everyone should just put it all on Bucket Bladder in the 5th race. The odds are better. I see that people don't care how crooked the track is. They just try to figure out where the fix is going. In this manner, we have been trained to stay on the right side of wrong. In the end,  In the end, honorable intentions will be taken down with the guilty by guilt by association. We are literally about to get a "Crash Course" in business ethics.

Sun, 10/09/2011 - 09:27 | 1754403 buzzsaw99
buzzsaw99's picture

Which begs the question: did Tim Geithner make a few phone calls, and tell foreigners to dump Treasurys (knowing full well Op Twist was coming and the Fed would backstop the entire curve), and to buy stocks instead in order to prevent the next relapse of the Great Financial Crisis?

This shows a shocking naivete about how things work. Geithner is nothing, a waterboy. These types of discussions happen at the IB-client level and have been going on since the 70s. Foreigners can only do so much but they will always throw some change in the cup. The rest comes from the bernank.

Sun, 10/09/2011 - 09:58 | 1754475 Tyler Durden
Tyler Durden's picture

So... you are saying the coordinated G-8 intervention to bailout the Yen in March didn't really happen?

Sun, 10/09/2011 - 09:27 | 1754405 eddiebe
eddiebe's picture

Well yes duh! blow off top in the 30 year bond market is likely. The exit will get awefully crowded in a big hurry. The rush to buy stocks and commodities will create powerful bullmarkets there. Just because Benny said he would hold interest rates at 0 doesnt mean he will. As we all know, he hasn't been exactly accurate with his verbiage. Dow 30'000? Gold 10'000?  Plausible.

Sun, 10/09/2011 - 09:38 | 1754419 papaswamp
papaswamp's picture

The contagion is in too many places now…..the can gets kicked a shorter and shorter distance. Everyone knows the music is going to stop and there aren't any chairs...

Sun, 10/09/2011 - 09:51 | 1754449 mailll
mailll's picture

Between May and July, foreigners dumped 33 Billion dollars in treasures.  There was a concern at one time that if foreigners dump our treasures that we are finished.  But foreigners are dumping our treasuries now and have been for quite some time, but the interest rates on treasuries keep coming down.  They are at historic lows.  So where is the money coming from to buy our treasuries? I believe it is coming from the printing press of the Federal Reserve. In total secrecy of course. We can guess all we want as to where the money is coming from.  But only the insiders know. We can only keep guessing.

Sun, 10/09/2011 - 09:56 | 1754466 eddiebe
eddiebe's picture

Some people here make comments about the Chinese as if they were united in purpose. They have their own 99.9% vs. .1% thing going on. In my opinion their leaders are in it for themselves just as ours are ( Can one even hope for some altruism anywhere??). Who knows what the deals that are being made behind the doors are. Geithner, Benny etc. are front-men here, and the Chinese have theirs. Chances are really good that the powers pulling our 'leaders' strings, are pulling theirs, even more so. 

Sun, 10/09/2011 - 10:30 | 1754545 flow5
flow5's picture

What, you think somebody should keep their money in governments forever?

Sun, 10/09/2011 - 10:47 | 1754577 Founders Keeper
Founders Keeper's picture

Operation Defend Dow Ten-Thou


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