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Last Treasury Auction Before US Breaches 100% Debt To GDP Prices Quietly And Without Surprises

Tyler Durden's picture




 

There is little if anything one can say about today's 5 Year auction. It priced at 1.055%, just above the record low 1.015% in September, and well inside the WI 5 Year trading at 1.08%, at a solid 2.90 Bid To Cover, compared to the 2.82 six auction average. The internals were boring, with Indirects taking down 49.3% of the auction, compared to the 40.5% LTM average, Directs declined modestly to 10.4% (in line with the 11.2% average), and Dealer take down unchanged from September at 40.3%. However, one massively notable thing about this auction is that it is the last one, probably ever, in which the US debt/GDP ratio is still under 100% following the auction. Adding today's $35 billion to yesterday's $35 billion in Two year bonds, brings total US debt to $15.010 trillion, with GDP still at $15.013 trillion (granted this number may be revised tomorrow), resulting in a debt to GDP ratio of 99.99%. Tomorrow's historical $29 billion in 7 Year bonds will take America into that uncharted territory of triple digit debt to GDP. But yes, the formal settlement of all bonds will not occur until Halloween, so we can celebrate on several days America's historic transition one step closer to insolvency.

 

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Wed, 10/26/2011 - 13:24 | 1813207 redpill
redpill's picture

Tonight we're gonna party like it's 99.99%!

Wed, 10/26/2011 - 13:32 | 1813247 GeneMarchbanks
GeneMarchbanks's picture

My maples are of the same purity 99.99

Wed, 10/26/2011 - 13:33 | 1813253 redpill
redpill's picture

This is Heli Ben's 9999 plan.

Wed, 10/26/2011 - 13:35 | 1813257 Ahmeexnal
Ahmeexnal's picture

Solars falling off a cliff, not only in China:

http://www.thelocal.no/page/view/investor-darling-rec-laying-off-700

 

The pride of Norway's industrial green energy effort, Renewable Energy Corp., has decided to shut down three Norwegian factories, or nearly half its local production, as a world glut in solar cell production forces the company's hand.

About 700 people will be laid off, a message to shareholders on Tuesday said. Third-quarter revenues of 3 billion kroner ($543 million) were not enough to stave off closures, and management used the occasion of its quarterly earnings release to deliver the bad news.

 

paging Leo...paging Leo...

Wed, 10/26/2011 - 13:36 | 1813263 dlmaniac
dlmaniac's picture

New FASB rules will mark debt as future wealth. Nothing to look here.

Wed, 10/26/2011 - 13:45 | 1813299 CPL
CPL's picture

Mark to fantasy

Wed, 10/26/2011 - 13:50 | 1813321 malikai
malikai's picture

America: Part of the 99%

Wed, 10/26/2011 - 13:52 | 1813332 Jumbotron
Jumbotron's picture

The pride of Norway's industrial green energy effort, Renewable Energy Corp., has decided to shut down three Norwegian factories, or nearly half its local production, as a world glut in solar cell production forces the company's hand.

About 700 people will be laid off, a message to shareholders on Tuesday said. Third-quarter revenues of 3 billion kroner ($543 million) were not enough to stave off closures, and management used the occasion of its quarterly earnings release to deliver the bad news.

 

Eric Jantzen of iTulip.com called this bubble in alt.energy back in Feb. 2008 in Harper's

http://www.harpers.org/archive/2008/02/0081908

Here's a snippet:

There are a number of plausible candidates for the next bubble, but only a few meet all the criteria. Health care must expand to meet the needs of the aging baby boomers, but there is as yet no enabling government legislation to make way for a health-care bubble; the same holds true of the pharmaceutical industry, which could hyperinflate only if the Food and Drug Administration was gutted of its power. A second technology boom—under the rubric “Web 2.0”—is based on improvements to existing technology rather than any new discovery. The capital-intensive biotechnology industry will not inflate, as it requires too much specialized intelligence.

There is one industry that fits the bill: alternative energy, the development of more energy-efficient products, along with viable alternatives to oil, including wind, solar, and geothermal power, along with the use of nuclear energy to produce sustainable oil substitutes, such as liquefied hydrogen from water.

Wed, 10/26/2011 - 14:10 | 1813460 epwpixieq-1
epwpixieq-1's picture

Why use solar when one can have concentrated solar, build in his own yard.

Agreed, it is less efficient because of the thermal conversion  but you can make it from scrap parts.

Technology is not a panacea but a mean to provide something people need.

If this need can be satisfied with other renewable, more efficient and cheaper tech, we see the law of natural selection in action.

Wed, 10/26/2011 - 13:55 | 1813349 s2man
s2man's picture

@ Gene.  And four 9's is the goal in computer uptime.  Maybe they think four 9's is a universal goal.

Wed, 10/26/2011 - 14:58 | 1813770 Raging Debate
Raging Debate's picture

Hmmm. Too much to explain commentary now. Time for me to write articles. Short: 3333 4444.

Think of man at the tipping point from using 3d paradigm and a 4d paradigm. Pyramids are a tool that geometrically is numbered 666. It is a human number representing our evolution itself. As we evolve so does our tools we build. Quantum physics is the study of the 4th dimension. Spirituality reflects our evolution too. The attempt at building the 'mega' super pyramid of 9999 is still a pyramid but the underlying intent I believe (as I don't know and now speculating) would be an attempt to crash through the wall. You need a Quantum Computer to enter 4d and for the information needed to enter the Promised Land. A scientist will tell you why and so could a deeply spiritual person.

Wed, 10/26/2011 - 13:32 | 1813248 Poetic injustice
Wed, 10/26/2011 - 13:42 | 1813290 jdelano
jdelano's picture

Dow just went parabolic.  not wtf is going on?  

Wed, 10/26/2011 - 13:56 | 1813354 s2man
s2man's picture

saw that too.  perhaps hopium over the EU summit?  Tyler, got any clue?

Wed, 10/26/2011 - 13:25 | 1813210 SheepDog-One
SheepDog-One's picture

Highly bullish Im sure as it opens the door wider to more insane destructive money printing out of thin air.

Wed, 10/26/2011 - 13:27 | 1813211 bugs_
bugs_'s picture

schedule ANOTHER debt ceiling vote???????

T-party and Anon/ows can you guys get together on this one?

Wed, 10/26/2011 - 13:26 | 1813215 RobotTrader
RobotTrader's picture

No worries.

A 5% correction in ES after a fast 18% run off the lows will simply send everyone fleeing back into Treasuries again.

Once again re-invigorating "Animal Spirits" and setting up a monster run in stocks.  At the same time, Uncle Gorilla continues financing his deficits at practically zero cost.

Wash, Rinse, Repeat.

Wed, 10/26/2011 - 13:26 | 1813216 kengland
kengland's picture

Is that 100% based on current liabilities? Like cash accounting? What's more scandales, the breach or reporting that it's only 100%?

Wed, 10/26/2011 - 13:28 | 1813218 Tyler Durden
Tyler Durden's picture

The simplest, non-contested definition. Obviously by any other metric, the US is bankrupt 8 times over.

Wed, 10/26/2011 - 16:15 | 1814081 NotApplicable
NotApplicable's picture

But, but we owe it to... wait for it... ourselves!

"We" are the 99%, after all. (Well, assuming "we" includes the Chinese.)

Aren't socialized collectives fun?

Wed, 10/26/2011 - 13:36 | 1813266 kengland
kengland's picture

"The simplest, non-contested definition."

Huh? Is this ZH or Mish's blog?

Wed, 10/26/2011 - 13:39 | 1813277 LongSoupLine
LongSoupLine's picture

Hmmmm, yep, sounds "AAA+" to me...

Wed, 10/26/2011 - 15:01 | 1813784 SixFeetFromTheHedge
SixFeetFromTheHedge's picture

By that do you mean the fact that even if USA uses 100% of its tax revenues to pay off the debt (including accumulated interest) it will take exactly 9 years to pay it all off?

Wed, 10/26/2011 - 13:55 | 1813348 SheepDog-One
SheepDog-One's picture

100% assumes a $15 trillion GDP? Another total fantasy.

Wed, 10/26/2011 - 13:26 | 1813217 Snidley Whipsnae
Snidley Whipsnae's picture

Gold is partying!

$1727.20 up 1.58% or $26.80 on option epiry day...

Wed, 10/26/2011 - 13:33 | 1813250 Long-John-Silver
Long-John-Silver's picture

Is the next CME margin hike going to take it to 100%?

Wed, 10/26/2011 - 13:35 | 1813260 ReallySparky
ReallySparky's picture

I do believe so sir.

Wed, 10/26/2011 - 13:38 | 1813274 Long-John-Silver
Long-John-Silver's picture

So they've run out of bullets..... I should go buy some Popcorn futures.

Wed, 10/26/2011 - 13:28 | 1813222 machineh
machineh's picture

'resulting in a debt to GDP ratio of 99.9%'

9-9-9 plan -- CHECK!

All your Treasury are belong to us!

Wed, 10/26/2011 - 13:28 | 1813223 Sequitur
Sequitur's picture

CNBC anchors apoplectic, look like deer in fucking headlghts given the unfolding disasters, e.g. Euro Summit, Greek Bonds, Italian leaders, AMZN, MF Global, NFLX . . . 

Wed, 10/26/2011 - 13:31 | 1813240 Snidley Whipsnae
Snidley Whipsnae's picture

Those CNBC and other MSM talking heads have been peddleing bs for a long time...

Trouble is, bs won't glue the ramshackle world economy back together any more than printing more debt will.

Wed, 10/26/2011 - 13:30 | 1813231 LongSoupLine
LongSoupLine's picture

Well...time for CONgress to call the contractor and add yet another dormer to the roof. The down side is, all that roof weight isn't working so well with the foundation made of sand and water.

Wed, 10/26/2011 - 13:31 | 1813236 eBuddha
eBuddha's picture

it was fun while it lasted.

 

Wed, 10/26/2011 - 13:31 | 1813239 mayhem_korner
mayhem_korner's picture

 

 

Alas, $14 Trillion, we hardly knew thee.

The signpost up ahead...$16T.  Coming to a FUBAR-nation near you.

Pathetic.  How in the hell can ya run up $15T in debt???????????

Wed, 10/26/2011 - 13:36 | 1813264 Long-John-Silver
Long-John-Silver's picture

The same way a stay at home wife can max out an infinite number of credit cards.

Wed, 10/26/2011 - 13:38 | 1813276 JohnG
JohnG's picture

Talk to my ex.  Ran her credit cards to the limit and beyond on stupid shit (like lots and lots of booze, horrid clothes, etc.)   ....sooooo glad I kept our finances separate.  She went to BK, I didn't.  Glad she's my ex too, I think I would have shot myself by now.  14 years was ENOUGH.

Wed, 10/26/2011 - 13:56 | 1813355 mayhem_korner
mayhem_korner's picture

 

 

(Gulp) Way too familiar...I think I married your ex.  :D

Wed, 10/26/2011 - 14:06 | 1813427 JohnG
JohnG's picture

I am so sorry about that.  Really, I feel bad for you.  Antifreeze is poisonous. ;)

Wed, 10/26/2011 - 13:32 | 1813246 Dick Darlington
Dick Darlington's picture

I bet Timmah will host a party, at tax payers expense of course, to his closest criminal partners to celebrate the 100% milestone. He'll call it "the debt shower". Larry will be the ball juggling clown. Long live Pinocchio!

Wed, 10/26/2011 - 13:37 | 1813268 ArkansasAngie
ArkansasAngie's picture

You know I don’t care what OWS stands for. At this moment … the enemy of my enemy is my friend.

I’ll worry about arguing with people about what needs to be done just as soon as the current evil-doers are thrown out.

Wed, 10/26/2011 - 13:42 | 1813292 Long-John-Silver
Long-John-Silver's picture

I remember Washington D.C. supporting Al-Qaida when the Russians were occupying Afghanistan using that reasoning. That did not work out very well for US a few years later.

Wed, 10/26/2011 - 13:51 | 1813322 trav7777
trav7777's picture

OWS is very dangerous in that they can identify a problem but their solution is what LED to the problem in the first place, except bigger!

Their plan is to raise more taxes so the government can get even bigger and make the elites even RICHER

Wed, 10/26/2011 - 13:39 | 1813278 TideFighter
TideFighter's picture

The sun is not that cheap...I know, I live on the beach in Florida.

Wed, 10/26/2011 - 13:41 | 1813289 YesWeKahn
YesWeKahn's picture

Is this why the market is rallying? The market is rallying on anything, even Obama pees.

Wed, 10/26/2011 - 13:44 | 1813296 JW n FL
JW n FL's picture

US cops tried to erase online evidence of brutality

http://www.youtube.com/watch?v=kkUKW8NtJdE

Oakland-Policeman-Throws-Flash-Grenade-Into-Crowd-Trying-To-Help-Injured-Protester

http://www.youtube.com/watch?v=L9O3o-7OvIY

Goldman Sachs v. Occupy Wall Street: A Greg Palast Investigation

http://www.youtube.com/watch?v=wNif3r8sOO4

Wed, 10/26/2011 - 13:44 | 1813297 Let them eat iPads
Let them eat iPads's picture

Ok, who just levitated the markets?

Fess up, bitchez.

Wed, 10/26/2011 - 13:48 | 1813302 Long-John-Silver
Long-John-Silver's picture

Timmy's giving out free Hopium hits.

Wed, 10/26/2011 - 13:51 | 1813311 SheepDog-One
SheepDog-One's picture

Probably got to pump it for the afternoon bad Eurozone news.

Besides, its ONLY the second trip up and down from +100 today anyway...all just the new normal total FUBAR.

Wed, 10/26/2011 - 13:45 | 1813298 RobotTrader
RobotTrader's picture

Hard to be bearish when Goldman Sachs is up 4%

Wed, 10/26/2011 - 13:47 | 1813304 sexcellent
sexcellent's picture

hard to be anything when the markets are manipulated

Wed, 10/26/2011 - 14:15 | 1813496 Sudden Debt
Sudden Debt's picture

ACCORDING TO WHAT YOU PUSH ON STOCKS, YOU'RE MORE BROKE THAN GREECE!!

Hard to be bearish? :)

 

Wed, 10/26/2011 - 16:20 | 1814097 SeverinSlade
SeverinSlade's picture

Whitney Tilson going long NFLX is just further confirmation that we haven't seen a bottom yet.

Wed, 10/26/2011 - 13:50 | 1813313 NoClueSneaker
NoClueSneaker's picture

Well, the german politicians just threw the populace under the wheels, so there will be recovery in US of A when the Squid & Co. cash the shorts. ( At least some of greek islands can be delivered as compensation ). Ben could print couple of FRNs, but in the long term, we'll all need a lot of lube.

 I'd realy to buy the Deutschmark story from the Summers's Fairy Tale, but somewhow I do belive in the Universal Corruption. ( Local whoes cheaper to have ).

Grace to the three wars that NobelTeleprompter@ just started to tackle mean and lean Chinese with his suitcases full of money on his way to Africa, all the Morgue, Squid, Deutsche Bank & Co. commodities scam stunts could bring a buck ...

 I'm somehow envy on Americans - you can lock and load - the european sheeeple is in the town-cages and easy to control . No fuckin' hopium here, and the internation of masses to the places behind a barb wire and culling of 'em well trained, heritage, so to say.

 Popcorn ... hm.

 

 

 

 

 

 

 

 

Wed, 10/26/2011 - 13:53 | 1813337 LawsofPhysics
LawsofPhysics's picture

"At least some of greek islands can be delivered as compensation"

 

LOL, yeah, now let's see them take delivery.   They may need some help with that, but I here that there are a lot of Italians out of work that can help with just such a repo.

Wed, 10/26/2011 - 14:56 | 1813753 NoClueSneaker
NoClueSneaker's picture

6th fleet is around the corner. Jamie, Timmay or Lloyd could ask for some assistance.

( And charge D.o.D. for a training course ).

Wed, 10/26/2011 - 14:09 | 1813454 FL_Conservative
FL_Conservative's picture

Why not?  Since buyers know the debt will be repaid....with MORE DEBT!!!  You seriously cannot make up any of this stuff.

Wed, 10/26/2011 - 16:17 | 1814090 NotApplicable
NotApplicable's picture

From the back to the middle, and around again

I'm gonna be there 'til the end

One hundred percent, pure debt

Wed, 10/26/2011 - 18:25 | 1814450 KandiRaverHipster
KandiRaverHipster's picture

straight to the reserve case of Hurricane 40s.  gotta pour one out for the homies.

Wed, 10/26/2011 - 23:17 | 1815751 blindman
blindman's picture

i'm not sure solvency has anything to do with it.
what is solvency in a debt based monetary system?
it is an - other foreign universe. a time gone by.
the umbrian hills or something. as tina asked,
what does solvency have to do with it?
.
What's love got to do with it - Tina Turner
http://www.youtube.com/watch?v=aAlN_9pbMLg
.
http://www.youtube.com/watch?v=pLwh9eMvcuc
MONEY: Before Ron Paul, was Merrill M.E. Jenkins Sr. (M.R.)
.
http://www.youtube.com/watch?v=ff0dcR1_ZeE&feature=related
MONEY: Before Ron Paul, was Merrill Jenkins (M.R.) 2
.
http://www.youtube.com/watch?NR=1&v=3Ha8HKSUxgk
MONEY: Before Ron Paul, was Merrill Jenkins (M.R.) 3
.
http://www.youtube.com/watch?v=0yrSHMn_CZo&feature=related
MONEY: Before Ron Paul, was Merrill Jenkins (M.R.) 4
.
http://www.youtube.com/watch?v=gwpT2lac2v0&feature=related
MONEY: Before Ron Paul, was Merrill Jenkins (M.R.) 5
...etc.

Wed, 10/26/2011 - 23:30 | 1815822 blindman
blindman's picture

THE DEEPER IN DEBT ONE GOES THE RICHER THEY BECOME!
.
TREADMILL
TO
OBLIVION
(BUY NOW -- PAY NEVER )
By
Merrill M. E. Jenkins Sr., M.R.
.
http://home.earthlink.net/~cadman777/treadmill-Jenkins.htm
.

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