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"Horrible" 30 Year Bond Auction Prices With Unprecedented 11 bps Tail

Tyler Durden's picture





 

The just completed auction of $16 billion in 30 Year bonds, was, as Rick Santelli said, "a failure". And while this may be a little dramatic, this was without doubt one of the ugliest 30 Year auctions ever seen. The 30 year priced at 3.75%, a huge 11 bps tail to the When Issued which was trading at 3.64%, the Bid To Cover plunging from 2.80 to 2.05, the lowest since February 2009, and, most shockingly, the Indirect Bidders Imploded to a paltry 12.2%! Those wondering if Chinese posturing would led to anything more than just jawboning have their answer. The Indirect tendered bids were just $3 billion or about 20% of the total auction size, which resulted in a $2 billion take down. It was so bad that the Directs were for the first time in 30 Year history greater than the Indirects. And yes, while the yield was close to record low it won't stay there especially if as is now expected, August 26 will see the BEA report a second GDP revision of ~0.6% at 8:30 am, which will be promptly followed by Bernanke's 2011 Jackson Hole address. And so the yoyo continues: what today's auction has proven is that going forward the Fed will be forced to crash the market every day that there is a Treasury auction, while ramping stocks on days when Treasury does not need to fund its borrowing binge.

And what happened to the UST curve post the auction:

And a quick recap from Bloomberg: "Horrible auction,” RBS strategist Bill O’Donnell writes in client note. Dealers take 68.3%, “largest share of the auction since the unhinged markets of Nov, 2008. It may be a while before the markets get 30yrs priced on the curve appropriate to the Fed’s actions earlier this week"

 


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Thu, 08/11/2011 - 13:19 | Link to Comment Cleanclog
Cleanclog's picture

Dealers could get screwed with that much take down.  Back to gold?

Thu, 08/11/2011 - 13:26 | Link to Comment Spitzer
Spitzer's picture

 back to DOW it looks like. Its up 350.

The "anything but gold" trade is going full swing

Thu, 08/11/2011 - 13:30 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Recent history says it breaks post 2:30 pm.

I am going with  'massive volatility returns in 60 minutes or less' Alex, for $2000.

Thu, 08/11/2011 - 13:57 | Link to Comment Cleanclog
Cleanclog's picture

So far some strong hands with the dealers who "took" the 30 year, even if by surprise!

Mon, 12/26/2011 - 05:06 | Link to Comment jaffa
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Horrible science experiments do not require expensive or elaborate equipment. They are cheap and easy for children to perform. The range of approaches used in horrible science books are intended to emphasise the drama and excitement and wonder of science. Thanks a lot.
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Tue, 03/27/2012 - 03:28 | Link to Comment jaffa
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Unprecedented is Taiwanese Mandopop artist Jing Chang's first Mandarin studio album. It was released on 8 May 2009 by Gold Typhoon.As soon as released in its first week, it started at the third on local music charts in Taiwan, but then rose to the first. This album was released after 10 months Jing Chang getting the champion of Super Idol. Thanks.
Regards,
used boats

Wed, 03/28/2012 - 08:53 | Link to Comment jaffa
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Antiques are usually objects which show some degree of craftsmanship, or a certain attention to design such as a desk or an early automobile. They are most often bought at antique shops, or passed down as an estate. Some valuable antiques can be bought from antique dealers and auction services or purchased online through websites and online auctions. Thanks.
Regards,
Vacation Rentals

Thu, 08/11/2011 - 13:35 | Link to Comment SparkySC
SparkySC's picture

Wasn't it here on ZH that they said the next major downturn will begin w/ a failed auction?

Well here it is!

 

"Where's the KaBoom? There was supposed to be an Earth shattering KaBoom!"

Thu, 08/11/2011 - 13:42 | Link to Comment Joe Sixpack
Joe Sixpack's picture

Give it half an hour or so for the news to get out. Sheesh.

Mon, 12/19/2011 - 08:25 | Link to Comment jaffa
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Study each pitcher's particular pitching tendencies. Pitchers usually have one or two pitches that they favor over their other pitches. Therefore, if a player understands what the pitcher likes to throw and in what situations he prefers to throw them, this can help the batter be a more disciplined hitter at home plate. Thanks for sharing.
Regards,
Debt Relief

Wed, 12/07/2011 - 06:11 | Link to Comment jaffa
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Through your legal counsel, offer to settle the lawsuit outside the court with the consumer or consumer advocacy group. Include a nondisclosure agreement to keep the details of the settlement confidential. Thanks a lot.
Regards,
admissions essay

Thu, 08/11/2011 - 13:19 | Link to Comment pan
pan's picture

Tipping point?

Thu, 08/11/2011 - 13:19 | Link to Comment Greater Fool
Greater Fool's picture

Holy 10-30 steepeners, Batman!

Thu, 08/11/2011 - 13:19 | Link to Comment Turd Ferguson
Turd Ferguson's picture

"what today's auction has proven is that going forward the Fed will be forced to crash the market every day that there is a Treasury auction, while ramping stocks on days when Treasury does not need to fund its borrowing binge." 

No truer words have been typed.

Thu, 08/11/2011 - 13:31 | Link to Comment Chief KnocAHoma
Chief KnocAHoma's picture

You mean the Fed would crash markets just to direct money into one assett class like some grand master in an Orwellian World. Immposible! We live in a free society and believe in free markets!

Damn it... I almost said that without laughing.

I am The Chief

PS - buy land - http://sotcksdairyroadfarm.blogspot.com/

Thu, 08/11/2011 - 14:31 | Link to Comment takinthehighway
takinthehighway's picture

If you're in the market for a retreat, may I suggest...
http://www.survivalrealty.com/

Thu, 08/11/2011 - 13:42 | Link to Comment pods
pods's picture

Absolutely.  The FED will do this until the swings become too great that people leave the markets (the ones left) for good.  
Then QE3 will be cemented.  Just too much debt has to be sold at too low of rates.  That has to come from somewhere.

pods 

Thu, 08/11/2011 - 13:20 | Link to Comment SheepDog-One
SheepDog-One's picture

'Failed bond auctions'...well thats got to be bullish! Maybe bullshit is what I meant.

Thu, 08/11/2011 - 14:01 | Link to Comment DosZap
DosZap's picture

 SheepDog-One @13:20

Failed Bond Auctions, good for drop in Gold..................................BULLISH!!!!!!!!!.

$75.00 drop from High,in 24hrs,not done yet, yeah, that's a Parabola.

Thu, 08/11/2011 - 13:20 | Link to Comment fuu
fuu's picture

Wow.

Thu, 08/11/2011 - 13:21 | Link to Comment Larry Darrell
Larry Darrell's picture

So is the top in in bonds (yields at lowest they will get)??

Because I'm meeting about loan refinancing in an hour and a half.  it would be nice to lock it at just the right time.

Thu, 08/11/2011 - 13:28 | Link to Comment FLIP THAT BOND
FLIP THAT BOND's picture

If you abide by the theory that QE3 will be announce on Aug 26 at Jackson Hole, then the sell off in stocks will probably continue until then and therefore force yields lower.  My guess on the best time to refi will be Aug. 25, right before QE3.

Thu, 08/11/2011 - 13:39 | Link to Comment gkm
gkm's picture

John Najarian is only good for one thing IMO and that is this lesson:  "Don't be penny wise and dollar foolish".

Thu, 08/11/2011 - 13:40 | Link to Comment nodhannum
nodhannum's picture

Larry, I just got confirmation that I locked in with my bank at 3.375% for a 15 ur fixed with no origination and no points..,Youssa!!! I close next week. What idiot loans money like that :-))

Thu, 08/11/2011 - 13:45 | Link to Comment pods
pods's picture

Ones who need a housing market to keep the ponzi going.

Disclosure:  Still sitting in a 30 year ARM.  Now at 2.5%.  Figure if you are going to play chicken, better to be on the side of Uncle Gorilla, as they need low rates too.

pods

Thu, 08/11/2011 - 14:30 | Link to Comment NotApplicable
NotApplicable's picture

So you're the one keeping the ARM market going.

I just talked to a coworker who refi'd yesterday (20yr @ 4.25). Meanwhile, i just called my guy to refi my VA loan (30yr @ 4.0)

Thu, 08/11/2011 - 14:42 | Link to Comment pods
pods's picture

I took it out in like 2005 I think, at 3.5%.  It has moved up and down a bit, adjusts yearly, 1 point max per year, 7.5% up limit, no down limit.  It is impaired, as WF just registered it earlier this year.  They wanted to refi me. I said no thanks, then they registered it with the registrar of deeds.  

pods

Thu, 08/11/2011 - 14:37 | Link to Comment Manthong
Manthong's picture

ARMs are great if you've got the cash to pay off the loan when the SHTF.

Thu, 08/11/2011 - 14:45 | Link to Comment pods
pods's picture

It has a max rate of 7.5%, so it cannot break me from interest rate alone.  Only can go up 1 point per year as well, so it would be 5+ years before I hit the top rate again.  If (when) TSHTF, I got a bug out spot and could really just up an leave with the door locked and the power off. Pretty stable area, but always have backup.

pods

Thu, 08/11/2011 - 13:22 | Link to Comment snowball777
snowball777's picture

Not with the proverbial bargepole...

http://www.youtube.com/watch?v=vcrsEXxnzI0

Thu, 08/11/2011 - 13:22 | Link to Comment Mactheknife
Mactheknife's picture

Backed the truck up yesterday on TBT...no-brainer :-)

Thu, 08/11/2011 - 13:22 | Link to Comment RockyRacoon
RockyRacoon's picture

Stunning!

Thu, 08/11/2011 - 13:23 | Link to Comment max2205
max2205's picture

massacred the TLT boys....Fewd reset to pump stocks...will it work...this was all preplanned no doubt

Thu, 08/11/2011 - 13:24 | Link to Comment AlaricBalth
AlaricBalth's picture

Looks like China has had enough of our fiscal mess. “The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone” and “China, the largest creditor of the world’s sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China’s dollar assets,” China’s state-run Xinhua News Agency said Saturday Aug 6, 2011.

Thu, 08/11/2011 - 13:35 | Link to Comment hedgeless_horseman
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Thu, 08/11/2011 - 13:41 | Link to Comment baby_BLYTHE
baby_BLYTHE's picture

lawl

Thu, 08/11/2011 - 13:43 | Link to Comment RobD
RobD's picture

Umm...WTF? LOL, how long have you had that one ready to go hh?

Thu, 08/11/2011 - 13:50 | Link to Comment slaughterer
slaughterer's picture

Is that the "smiling O" picture Tyler likes to use when O gives a telepromper tennis eyes performance?  I think it is.

Thu, 08/11/2011 - 14:24 | Link to Comment I Got Worms
I Got Worms's picture

That picture you're referring to never fails to crack me up.

Thu, 08/11/2011 - 14:42 | Link to Comment Manthong
Thu, 08/11/2011 - 13:52 | Link to Comment Weimar Ben Bernanke
Weimar Ben Bernanke's picture

No lube I guess........

Thu, 08/11/2011 - 13:24 | Link to Comment monopoly
monopoly's picture

And so it begins. TBT up 9%. Fasten those seat belts, and trays locked in an upright position please.

Thu, 08/11/2011 - 13:25 | Link to Comment nobita
nobita's picture

I get the feeling that this is not a run on treasuries or a run on stocks or the dollar. This is a run on America.

Thu, 08/11/2011 - 13:47 | Link to Comment ZippyDooDah
ZippyDooDah's picture

Run, America, run!

Thu, 08/11/2011 - 17:00 | Link to Comment snowball777
snowball777's picture

Hey, who tied these shoelaces together?!

Thu, 08/11/2011 - 13:25 | Link to Comment Steroid
Steroid's picture

This explains why the DOW is up!

Thu, 08/11/2011 - 13:26 | Link to Comment vote_libertaria...
vote_libertarian_party's picture

Nobody thinks beyond a 2 minute horizon.

If the Fed isn't buying with their vapor money the gvt needs to find $120B in new buyers every MONTH.

10yr should be at 20% not 2%.

Thu, 08/11/2011 - 13:26 | Link to Comment SRV - ES339
SRV - ES339's picture

what today's auction has proven is that going forward the Fed will be forced to crash the market every day that there is a Treasury auction

... along with PMs (which has been going on for months).

Thu, 08/11/2011 - 13:28 | Link to Comment FunkyOldGeezer
FunkyOldGeezer's picture

what today's auction has proven is that going forward the Fed will be forced to crash the market every day that there is a Treasury auction, while ramping stocks on days when Treasury does not need to fund its borrowing binge.

 

If you had the actual data to prove this, the game would truly be over. Everyone would pile into the same bet depending on which day it was in their auction cycle.

Thu, 08/11/2011 - 13:41 | Link to Comment fuu
fuu's picture

"If you had the actual data to prove this, the game would truly be over."

Some days I miss the junk button.

Thu, 08/11/2011 - 13:56 | Link to Comment slaughterer
slaughterer's picture

Must remember:

Short SPY EOD the day before auctions.  

Double short SPY when it is a 30 year auction.

 

Thu, 08/11/2011 - 13:29 | Link to Comment ConfusedIdiot
ConfusedIdiot's picture

Hmmmm! Missing something here. If bond boyz think we are into a global re(d)cession of epic proportions (pencils and apples will be unaffordable) why would the long end >10-30 take a hit?

CI in Mex.

Thu, 08/11/2011 - 13:34 | Link to Comment Johnny Lawrence
Johnny Lawrence's picture

Bonds have gone straight up in the past two weeks, just like gold.  And like everyone is saying about gold, nothing goes straight up or down.  There needs to be consolidation at some point.  But because everyone here hates bonds, they won't apply the same logic. 

Thu, 08/11/2011 - 13:38 | Link to Comment Greater Fool
Greater Fool's picture

During a recession, rates stay low. The Fed's "2013" promise is leading to expectations that the economy will stay bad and ZIRP will stay in place for a long time--so long that 2% looks like a reasonable yield to enough people at 10Y.

Not at 30, evidently. Would be interesting to look at TIPS (no time at the moment) to see how the moves at the long end there compare.

Thu, 08/11/2011 - 13:47 | Link to Comment SheepDog-One
SheepDog-One's picture

2% yield over 10 years is smashed by 5% inflation...and the mad dash to find ANY safety anywhere continues in desperation.

Thu, 08/11/2011 - 14:24 | Link to Comment DosZap
DosZap's picture

SheepDog-One @13:47

"2% Yield over 10yrs, is smashed by 5% inflation."

Since we are well over 5% now, and in 10yrs, or 1yr, we could have 20%.............yeah,I'd say that is a definite WTF would you buy them for?.

Thu, 08/11/2011 - 14:38 | Link to Comment CustomersMan
CustomersMan's picture

 

    Do the new owners of the 10's and 30's (whomever they might be) think they can put on a realistic hedge against decline in value? One that will actually pay-off in the event of unforeseen abnormalities?

 

    Maybe they think their hedge against the 10's is more secure and has a certainty of paying-off, where as the 30's are so far away, even they don't have certainty of it working.

 

Thu, 08/11/2011 - 13:47 | Link to Comment vote_libertaria...
vote_libertarian_party's picture

That doesn't include the supply / demand equation. It's basic economics. The transactions are being swamped by supply. There isn't enough free cash floating around to handle this supply hitting the market.

Thu, 08/11/2011 - 14:02 | Link to Comment Greater Fool
Greater Fool's picture

Of course it includes a supply / demand consideration. There is no cash shortage; the most recent 10Y came in with record bids and was well inside the WI.

Real-money folks want more yield at that point in the term structure. Asset managers who care about their VaR are looking to shorten their duration, so more yield is needed to entice investors to take on the risk. The action of supply and demand tells you about expectations of where the interest rate / inflation risks are.

Thu, 08/11/2011 - 14:30 | Link to Comment CustomersMan
CustomersMan's picture

 

     Of what value are TIPS if they are able to "jimmie" the numbers on inflation whenever they want, and with COLA's in things like Soc. Sec. payments, there is every reason to believe they will?

Thu, 08/11/2011 - 13:47 | Link to Comment Caviar Emptor
Caviar Emptor's picture

The answer to your question is so dark, so unthinkable that I'm afraid for my life if I publish it here. 

Ask youself what this implies about credibility

Thu, 08/11/2011 - 14:26 | Link to Comment fyrebird
fyrebird's picture

Oh come on go ahead and tell us. We got yer back. Or maybe yer BAC.

Thu, 08/11/2011 - 14:09 | Link to Comment Soar07
Soar07's picture

Which question are you referring too? Talk about curiousity killing the cat!

Thu, 08/11/2011 - 21:44 | Link to Comment Stax Edwards
Stax Edwards's picture

Unfortunately you are correct CE.  I concur.  How do you outrun a freight train?

Thu, 08/11/2011 - 13:31 | Link to Comment Lazane
Lazane's picture

I do not know if the same is true today, but from an old line bondman this would be a very serious development in the capital markets, because the 30 yr was referred to as the "dog that wags the tail" and though while it can be said "you can't teach an old dog new tricks, the trick bag this bunch works out of is a market surprise a day.

Thu, 08/11/2011 - 13:47 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Yes. We're seeing many signs of a dramatic shift. If you listen to MSM and even net chatter you might miss it, but the change is real. 

Thu, 08/11/2011 - 14:35 | Link to Comment web bot
web bot's picture

Sage wisdom is rare in today's environment.

What are your longer term thoughts on Silver?

 

Tue, 03/27/2012 - 01:48 | Link to Comment jaffa
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Marketing is used to identify the customer, satisfy the customer, and keep the customer. With the customer as the focus of its activities, marketing management is one of the major components of business management. Marketing evolved to meet the stasis in developing new markets caused by mature markets and overcapacities in the last two to three centuries. Thanks.
Regards,
debt consolidation

Thu, 08/11/2011 - 13:32 | Link to Comment buzzsaw99
buzzsaw99's picture

Whoever bought those bonds just gave their damn money away.

Thu, 08/11/2011 - 13:34 | Link to Comment pcrs
pcrs's picture

This means a bigger crash is needed to create the panic to sell them, or a false flag attack.

Thu, 08/11/2011 - 13:45 | Link to Comment SheepDog-One
SheepDog-One's picture

Right, a 10% 'crash' is not near enough when its still a 40% bubble, and in between down days they have +300 point up days. They cant very well have fear and panic when everyone is as calm as Hindu cows.

I saw false flag attacks, big ones, and have been saying that for quite a while.

Thu, 08/11/2011 - 13:43 | Link to Comment kito
kito's picture

gold getting shazazzled--down 45 frns.

Thu, 08/11/2011 - 13:53 | Link to Comment slaughterer
slaughterer's picture

Margin hikes and Bild Zeitung title stories on gold.  Bad combination.  

Thu, 08/11/2011 - 13:51 | Link to Comment inkarri9
inkarri9's picture

Would someone please mind breaking this down into very easy to understand terms?  Thank you very much!

Thu, 08/11/2011 - 14:18 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Yields on the 30 year UST rose because demand (especially from indirect bidders), or the "takedown," was unusually weak.

At the beginning of the auction (actually, technically, prior to), the 30 year U.S. Treasury was only offering 3.64% yield on these notes, but that yield rose 11 basis points (just over one tenth of one percent) because no one, not even direct bidders, apparently were interested in it at the "when issued" price.

"When Issued" =

Securities term for when and if issued, referring most often to conditional trading in bonds or other securities in the interval between the announcement date and the actual date of issue. Securities dealers trade offerings of new securities, stock splits, and government securities, among others, in the period before the effective listing date. Although the U.S. Treasury Department tries to discourage trading in Treasury securities on a when issued basis, government securities dealers frequently can arrange preauction bond swaps (yield swaps) for the issue to be offered for sale.

Barron's Banking Dictionary
Thu, 08/11/2011 - 14:28 | Link to Comment inkarri9
inkarri9's picture

Thank you.

Thu, 08/11/2011 - 14:28 | Link to Comment the grateful un...
the grateful unemployed's picture

wasn't this auction swimming against the flow back into equities? which was caused in large part by the Feds announcement of ZIRP forever? and so isn't the Fed the victim of its own success, AND the yield curve steepens which is good the financials? all i see is win win, rates are still historically low, and the Fed promises to keep them that way. the only part that seems questionable in their goal of market stability, is this -can they keep both the bond and stock market on a upward trajectory. the problem in the private sector is the banks can't or won't lend the money the Fed places on their balance sheets, thus pushing the string, but if Fiscal Spending craps out, its the same problem.

Thu, 08/11/2011 - 14:04 | Link to Comment DonnieD
DonnieD's picture

Eventually, we are fucked.

Thu, 08/11/2011 - 13:55 | Link to Comment Caviar Emptor
Caviar Emptor's picture

If Treasury can't easily lock in low rates on 30 yr funding, that means the cost of financing the debt has just gone up. 

Thu, 08/11/2011 - 14:28 | Link to Comment fyrebird
fyrebird's picture

Yeah. Almost as if the USG had its credit rating downgraded. Or something crazy like that.

Thu, 08/11/2011 - 13:55 | Link to Comment the grateful un...
the grateful unemployed's picture

doesn't that take some pressure off the banks.  isn't the stock market up, including the financials and the gold mining stocks? isn't the TIP market crashing, (hey we licked inflation again). failure, it all looks like win win to me.

Thu, 08/11/2011 - 13:57 | Link to Comment gkm
gkm's picture

If you create money out of thin air, and you create bonds out of thin air, and you use one to buy the other, do they really exist?

Only if they fall in value because then they are a liability and you must cover that liability.  If they ever fall in value, they will fall apart in value.  Now look at a chart of the long term yields on the 30 year and consider whether a break of trend there will be incremental or drastic .

Thu, 08/11/2011 - 13:59 | Link to Comment digalert
digalert's picture

Sorry uncle Sam, I'll just stick with the 0.19% 2yr...thanks

Thu, 08/11/2011 - 14:29 | Link to Comment haskelslocal
haskelslocal's picture

Not getting this statement.... ... "forced to crash the market every day that there is a Treasury auction, while ramping stocks on days when Treasury does not need to fund its borrowing binge."

The market has been churning the last few days, down, up, down, up and there's been an auction on each of the days. And today, the 30 year auction, is an up day. So obviously, the market was not force crashed today....

http://www.treasury.gov/resource-center/data-chart-center/quarterly-refunding/Documents/auctions.pdf

Thu, 08/11/2011 - 14:33 | Link to Comment adr
adr's picture

I was going to post last night after Cisco beat by a whopping 2 cents that a "beat" like that would be good for 400 points on the DOW. But I thought man that is just ridiculous.

I guess ridiculous wins every time!!!!

Oil is back up to $85 a barrel again so there goes that hope of paying less at the pump.

Bank of America up by 9%. Insanity, insanity, insanity. You can't win if you play and you lose if you don't play.

They said it all Apple and Google are trading higher now than they were a full month ago. There was no downturn in stocks. It was all coordinated to sell government debt and make insiders a ton of money.

Thu, 08/11/2011 - 14:56 | Link to Comment the grateful un...
the grateful unemployed's picture

AAPL has been beating the snot out of gold, does that soulnd like a crisis to you?

Thu, 08/11/2011 - 14:39 | Link to Comment kevinearick
kevinearick's picture

Drop Dead

So, there are integral thinkers, creating the magnetic field on the event horizon, and derivative non-thinkers, falling into the gravitational distribution, forming the adjustable mechanism. Computers are replacing the latter, by assigning each a number and performing algebraic reduction with positive feedback on compliant behavior, locking them into the black hole. Unless you write the code, you can only see the process by filtering out the misdirection in time delay mechanisms, through a necessary vortex, the abutment, which gives you the necessary lift-off.

Where you want to go is up to you, and depends entirely upon acute democratic participation at the threshold, as is who you decide to take along for the ride. We just provide the technology. Each gravitational orbit perceives it as digital, good and evil, right and wrong. The Corporation – public, private, and non-profit, along with its denizens, cannot think, consider, or love. All it can do is negotiate maximum current revenue at longest term cost, passing the genetic code from government to parent to child, to be reinforced by government again.

Only you as a unique individual seeking liberty have the ability to love, and it may only be passed on in person, by example. The choice is raising intelligent children or becoming part of the herd to be culled. Building a heart is much easier than changing a heart. You must be smarter than the new computer. The old system passed its tipping point yesterday. Systems are systems; people are people. Artificial deadlines/crises make time the enemy. What numbers control your life, replacing effectiveness on the event horizon with speed into the black hole? Are you training your brain or is the nexus programming you?

Under the new system, gravity is finely and roughly adjustable in gradients, but the AI will adapt very quickly. Only those capable of maintaining the necessary gap to deliver economic profit will escape the resulting highly efficient black hole. If you think about it, only the effective adjustment has changed, so you now have the entire algorithm. The global IC chip is pulling global capital into US Treasuries for slaughter, promising to prime the artificial demand pump again at any cost, and the Fed is splitting the feed to the stock market and agency, creating all the symptoms.

Inflation and deflation feed each other through the layers, creating all the misdirection in time delays, forming the shape of the black hole. California, for example, came up ½ billion short in July, requiring liquidation acceleration. Mark to market, for example, would be a spring release, and the result would depend upon timing of direction and force, how you deployed the profit in a resulting feedback loop to balance the reactor. Consider the position of Bank of America.

Why would anyone expect Americans to revolt when the rest of the world is being dragged into famine to give them so much free food that they can “afford” to throw it away? Of course BofA recommends Monsanto, stimulus dollars are flying everywhere, and the Fed is defending the oil economy with everything it has left.

Expect those who have not chosen love by now to play out the survivor game, as they watch their distribution crash. Do not go in for any reason; stay away from the famine. Focus on finding your niche in the new distribution. Expect the old system to desperately hunt you down. Give it the cattle numbers it wants when you travel “through” the herd, as you gauge the new “intelligent” computer. Remember to compensate for yourself as an instrument. Create the virtual observer, the heartless bastard, to balance your logic/emotion fulcrum and deliver the desired results in the feedback loop of feedback loops.

By all means, they must buy BMWs. Let those who believe in an infinite number of do-overs, family or no, to fall into the black hole. You may rely upon the Fourth Reich to assume that everyone is stupid, because it is stupid; it cannot think. It is ruled by and rules by emotional passion. The response is intelligent passion, which it cannot perceive, AI or no, which is why its algorithm seeks to destroy anything it does not understand.

Family Law is simply a catch-all to deprive the individual of liberty, ensured by common law, in violation of the US Constitution. Because it is the first layer in the divide and conquer system, enabling the rest, and it is locked, the Fed may only address symptoms, creating more symptoms, accelerating the black hole.

"There will be another crash, because there are too many players looking for the trillion dollar score."

Fri, 08/12/2011 - 15:06 | Link to Comment kevinearick
kevinearick's picture

"Only Germany can reverse the dynamic of a European decay,” billionaire investor George Soros wrote in today’s Handelsblatt, the Dusseldorf-based newspaper. “Germany and other countries with a AAA rating have to approve some sort of euro-bond regime. Otherwise, the euro will implode.”

heads I win, tails you lose, said the spider to the fly.

Thu, 08/11/2011 - 14:44 | Link to Comment Random_Robert
Random_Robert's picture

Today, Gold, the 30 year treasury, and the CHF are all getting hit hard.

All Europen exchanges getting ready to ban equity short selling in unison, European banks facing deposit runs and on the verge of collapse, London landmarks being treated like kindling on a nightly basis… and the DOW rallying 400 points.

I guess US stocks are finally taking their rightful throne as the last, and most stable Safe Haven…

This liquidity driven slosh of hot money all over the world is pure insanity incarnate…

Pure insanity.

Fri, 08/12/2011 - 09:57 | Link to Comment Soar07
Soar07's picture

Starting to think some of the same thoughts

.gov or .euro debt all suck- the real bubble is DEBT!

Equities with strong earnings and Gold are the only alternatives to fiat and debt.

So, markets dont tank...... Perhaps?

Tue, 12/13/2011 - 08:21 | Link to Comment jaffa
jaffa's picture

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Thu, 08/11/2011 - 15:00 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

the T just borrowed $16,000,000,000 @ well under 4% and must re-pay the principal in the year 2041.

we can do ugly, just get 'er done! 

looking @ the idiot box on goldSeek, the bonds are down a whole point~~~to 137.2!!!  the PDs may be happy or unhappy and benzelbub too, not to mention timmah.  but it looks like just another day @ the office of mr ponzi...

Thu, 08/11/2011 - 15:42 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

now 135.2  down3.0000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000

Thu, 08/11/2011 - 16:43 | Link to Comment Neezer
Neezer's picture

Big deal... The treasury will just roll short-dated TBills at zero percent since the Fed promised to peg short rates at 0% until a specific date in 2013 that just happens to be well past the next presidential election.

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