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Presenting The Shocking Source Of US Treasury Demand In The Past Year

Tyler Durden's picture




 

When one thinks US Treasurys, and demand thereof, two entities pop into mind: the Federal Reserve, which over the past 3 years has been the biggest institutional buyer of US paper, and China, which is the largest foreign holder of US TSYs. Yet over the past year something curious happened: when it comes to setting marginal demand for US Treasurys, it was neither the Fed, whose sterilized Operation Twist has kept its holdings of US Tsys relatively flat, nor China, which has actually been a major seller of US paper, that has been the dominant source of marginal demand for Uncle Sam's never to be repaid obligations. Japan.

That's right, as the chart below shows using TIC data, even as China was quietly selling its paper (and that accounts for UK holdings, aka Chinese offshore operations) in the beginning of the year, taking its total from over $1.3 trillion to $1.15 trillion in December, where it has stayed without moving at all in 2012 as China entered a buyer's strike mode, it was Japan who quickly stepped in to fill the void. And what a void it has filled. According to TIC data, Japanese holdings of US paper have soared from $882 billion in June 2011 to a whopping $1119 billion a year later. In the process the spread between Chinese and Japanese holdings of US TSYs has collapsed from $430 billion to a tiny $43 billion and at this rate Japan will overtake China as the top foreign holder of US paper within 3-4 months! 

Why is this shocking. Well, for one thing, because as the chart below shows, Japan is about to surpass JPY1 quadrillion in total debt. In other words, the last thing the country needs is being saddled with more worthless, zero yielding paper...

No surprise there. In fact, as we have shown before, the Japanese debt debacle, whose debt/GDP is far far greater than even Greece's is well known. Also known is that even the smallest increase in prevailing Japanese interest rates will awake the colored swan that destroys Japan's precarious deflationary balance of the past 30 years.

The other major issue is that Japan's export powerhouse days are long gone, and while China reinvesting trade surplus into US paper makes perfect sense, Japan doing the same is stupid, simply because its surplus is hardly large enough for the country to avoid prefunding its imminent demographic crunch.

Which begs the question: is the only reason why US debt is largely bid because of Gresham's law? Are Japanese investors so sick of the tiny returns on JGBs they have no choice but to rotate into US paper, which despite its quite meaningless yields, at least provides a greater return than Japanese paper? And how much longer can this continue before the rotation of JGBs into TSYs is accompanied by wholesale selling of Japanese paper, and the Kyle Bass scenario comes into play? Also, one wonders, what is China buying with all those dollars, if indeed, it has been a net seller of US paper in the past year?

We will find out soon. But more importantly, at least we now know who has been the source of real marginal demand for US paper in the past year at a time when China was selling and the Fed was staying put, even as the US Treasury issued another $1 trillion in paper.

Domo arigato Japan. Don't expect to get any of this money back though.

 

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Wed, 08/15/2012 - 09:54 | 2706515 malikai
malikai's picture

But they said Japan was Bouncing Back..

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

Wed, 08/15/2012 - 10:02 | 2706547 max2205
max2205's picture

oil and Afican land

Wed, 08/15/2012 - 10:12 | 2706585 Short Memories
Short Memories's picture

Seems it was very expensive getting the US to agree to move a base from Okinawa to Guam... :-\

Sa-yo-na-ra~

 

Wed, 08/15/2012 - 10:43 | 2706700 Popo
Popo's picture

Q:  "Also, one wonders, what is China buying with all those dollars"

A:   Africa.

Wed, 08/15/2012 - 11:15 | 2706807 SWRichmond
SWRichmond's picture

+1

Also, this article is evidence of the BoJ behaving just like SNB.  Maintain the peg, and thus the export market, at all costs.

Wed, 08/15/2012 - 11:34 | 2706853 chistletoe
chistletoe's picture

are you suggesting that Japan is manipulating its currency?  manipulating exchange rates?  does Pelosi know about this? Geithner?  They need to get on this right away, don't they?

Wed, 08/15/2012 - 11:56 | 2706914 Fukushima Sam
Fukushima Sam's picture

When a small, radioactive island country in the middle of its economic death throes is the largest owner of your paper, then what is your paper really worth?

Wed, 08/15/2012 - 12:22 | 2706986 bankruptcylawyer
bankruptcylawyer's picture

easy shmeezy, wait for japan to implode and then force them to take 1000 tons of gold in return for 1 trillion of all the paper they hold. ( a markup of over 20 times the current cost of gold ).

if not---threaten to throw the japanese to LOOT their country, and then leave them to be raided and occupied by china. 

genius. GENIUS. this is why military power trumps everything in the short run.

Wed, 08/15/2012 - 12:56 | 2707122 Disenchanted
Disenchanted's picture

 

 

Confucius say drowning Nips grasp for any rope...

Wed, 08/15/2012 - 11:21 | 2706819 smlbizman
smlbizman's picture

maybe benny and the jets are just using japan as a conduit to cover their tracks...

Wed, 08/15/2012 - 11:30 | 2706845 Raymond Reason
Raymond Reason's picture

Bingo

Wed, 08/15/2012 - 13:15 | 2707072 BigJim
BigJim's picture

Yes, and in return Benny is probably buying JGBs hand over fist through some anonymous* Cayman Island trust.

No wonder the asshole doesn't want an audit.

*not to be confused with eveyone's favorite HanBot

Wed, 08/15/2012 - 10:51 | 2706708 Precious
Precious's picture

"Japan's export powerhouse days are long gone."  

You only say that because you have no idea how Japanese trade currently works.

Wed, 08/15/2012 - 11:18 | 2706812 vast-dom
vast-dom's picture

markets worse than broken. they are shattered. japan is on kamakazi mission and perhaps they think they will be bailed out by the country whose worthless paper they hold with more worthless paper from said country in order to prop the shitshow up a bit longer. smart? clever? not really.

Wed, 08/15/2012 - 11:27 | 2706836 TPTB_r_TBTF
TPTB_r_TBTF's picture

neither clever nor smart; however, if the Asians wanna export their crap, then they had better ensure the Amerikans have the credit to buy it with.

Wed, 08/15/2012 - 11:49 | 2706885 El Oregonian
El Oregonian's picture

It's damn hard to drain the cess pool when one hand is only using a tea cup to dip it out and all the while the other hand is filling it with a fire hose...

Wed, 08/15/2012 - 09:54 | 2706517 Turd Ferguson
Turd Ferguson's picture

"Also, one wonders, what is China buying with all those dollars"

315 metric tonnes a/o May 31st is all that they can't conceal.

Wed, 08/15/2012 - 10:03 | 2706548 DeadFred
DeadFred's picture

Don't forget the stockpiles of copper, iron ore, oil and every other commodity that that can be safely stored without the worms destroying it. They know their dollars will buy a lot more 'stuff' now than it will later.

Wed, 08/15/2012 - 10:03 | 2706549 Cognitive Dissonance
Cognitive Dissonance's picture

Hey Turd.

I just sent a small donation to your site. While I don't always agree with your views, it is VERY important to keep diversity of opinion alive and well in the financial blogosphere.

Thanks for keeping it going.

http://www.tfmetalsreport.com/donate

Wed, 08/15/2012 - 10:10 | 2706582 MillionDollarBonus_
MillionDollarBonus_'s picture

"it is VERY important to keep diversity of opinion alive and well in the financial blogosphere"

How ironic ... libertarians claim to support diversity of opinion yet at the same time they have shown themselves to be completely intolerant of anyone who disagrees with them about "the evils of the Federal Reserve" or the immorality of bailouts. It's too bad that libertarians can't tolerate any dissent from their dogmatic views.

Wed, 08/15/2012 - 10:14 | 2706592 Cognitive Dissonance
Cognitive Dissonance's picture

I beg your pardon. I'm a true blue American Neo-Con of the ancient and honorable Wall Street Clan.

You take that back now! Or I'll beat you until you're red, white and blue.

Edit: Opps, almost forgot the /sarc.

Thu, 08/16/2012 - 01:51 | 2709389 Precious
Precious's picture

MDB douchebag.  Go rent "Fight Club" again and this time watch it without jerking off.

Wed, 08/15/2012 - 10:28 | 2706647 Abiotic Oil
Abiotic Oil's picture

I can never determine if your up arrows are from folks applauding your trolliness or from idiots who actually believe it?

Wed, 08/15/2012 - 10:49 | 2706723 jmcadg
jmcadg's picture

Funny also how if you point out the ineptness of the poster, especially with a few appropriate 'rude' words, you get a -1.

I like a choice swear word. Twat sounds so much better than Troll. But both are spot on.

Wed, 08/15/2012 - 11:17 | 2706810 indygo55
indygo55's picture

There's more then one of 'em.

 

Wed, 08/15/2012 - 11:51 | 2706897 jmcadg
jmcadg's picture

Hard to believe MDB has any friends! But we do live in strange times :)

Wed, 08/15/2012 - 21:35 | 2708957 Inibo E. Exibo
Inibo E. Exibo's picture

MDB is one of the reasons I read ZH.  There are trolls and there are trolls.  MDB has elevated it to high art.  It's like the Orange Blossom Special on a Stradivarius.

Wed, 08/15/2012 - 12:26 | 2707005 bankruptcylawyer
bankruptcylawyer's picture

i'm one of the people who give him down arrows because i think trolliness , while at times amusing, denigrates the general atmosphere of a forum.

i would venture  with certainty that most people who give him down arrows are taking his opinion at face value :)

Wed, 08/15/2012 - 10:40 | 2706694 krispkritter
krispkritter's picture

MDB...why don't you take a break and be a good troll and go fetch some Chick-fil-a for everyone?!

Wed, 08/15/2012 - 10:47 | 2706714 Precious
Precious's picture

MDB.  You have nothing to say.  That's why.

Wed, 08/15/2012 - 11:06 | 2706779 sessinpo
sessinpo's picture

You just made a perfect example of intolerance and you probably aren't smart enough to see it. LOL

Wed, 08/15/2012 - 10:12 | 2706586 Turd Ferguson
Turd Ferguson's picture

Thanks, CD. You have always been a proponent and your support is much appreciated.

Rather than spam this thread, I thought I should c&p this clip from a post of mine made back in late June. This is still happening and everyone must be aware of the ramifications.


"All of that said, what we now know is this. Beginning some time ago, but continuing today at an accelerating pace, physical metal is being purchased in London and then delivered out of the system. Under "normal" circumstances, this is not necessarily unusual. The bullion banks simply expect this metal to return to them at some point, where it can be re-leased, re-hypothecated and re-delivered in the future. This is how it has worked for decades. However, this time it's different.

What I have learned and have since been able to confirm via a second source is this: London Good Delivery bars are being delivered to Eastern buyers. Instead of being vaulted inside the LBMA system, these bars are being sent directly to refiners. The bars are then being melted and recast in 1 kilogram sizes. The new bars are then being stamped with official, government insignia and sent on to vaults outside of the LBMA system and points east, never to return again. 

?What does this mean and why is this important? Quite clearly this information, if accurate, has several significant ramifications:

  • The Chinese and others are preparing for a new system. Whether it's simply a new gold pricing and delivery system to replace the LBMA/Comex or whether it's a new global trade settlement system that is guaranteed with gold is impossible to say, at this point. 
  • The physical gold supply of the LBMA and secondarily the Comex, much of which has been acquired/supplied through leasing, is being rapidly depleted and will not be coming back. 
  • The bullion banks, which have profited for years from leasing, trading, vaulting and the like, are about to feel the rather dramatic effects of this supply depletion."

Wed, 08/15/2012 - 10:28 | 2706648 Cognitive Dissonance
Cognitive Dissonance's picture

The final phase of the looting was always to take the loot and exchange it for a real thing, or in your example LBMA Gold bars. The same process is occuring in prime (commercial) real estate. Who cares what price you pay when it's all just fiat. All you care about is ownership after the fact.

Got Gold? (and Silver of course)

Wed, 08/15/2012 - 11:09 | 2706786 Deo vindice
Deo vindice's picture

Cognitive - real estate commercial or not as easy to hang on to. It will simply be taxed away or expropriated for some 'project' that may or may not ever happen. We don't actually own our homes as long as there are property taxes that can change at the whim of government officials.

Your alternative at the end of your comment is much more realistic as far as ownership goes.

Wed, 08/15/2012 - 11:46 | 2706887 Cognitive Dissonance
Cognitive Dissonance's picture

It seems the financial elite are taking several tracks to prepare for the end game. They aren't worried about their commercial property being taxed to death or confiscated. After all, they pull the strings so I'm certain they will arrange for the government to step in and insist they receive several (property and income) tax breaks so that they can "save" all those jobs they just threatened to dump.

It is the little guys and gals who will be bulldozed into oblivion and the real reason we should physically own Gold and Silver. When it is in my physical possession, they must break down the door and take it, not just make it disappear with the stroke of the pen.

Wed, 08/15/2012 - 11:50 | 2706882 cranky-old-geezer
cranky-old-geezer's picture

 

 

The Chinese and others are preparing for a new system.

Bingo.

Wiith their world reserve currency status, our monetary system's leaders believe their monetary system is unbreakable, they can print and print and print without any danger, funding endless government debt, giving endless bailouts to whomever they want.  They believe they can flood the world with US dollars and their system still won't break.

But it doesn't matter what they think.  It matters what the rest of the world thinks.  And the rest of the world is quietly preparing to dump USD.

Would another worthless unbacked fiat currency topple USD from its king-of-the-hill position?   Euro perhaps?

No, of course not.  Euro is no better than USD.  It too can be printed till it floods the world, because it is a non-redeemable currency. 

Yuan / Remimbi perhaps?  No, of course not, same problem, it can be printed till it floods the world, again, because it is a non-redeemable currency.

What keeps USD in the king-of-the-hill position?  Very simple.  Most of it is habit.   USD has been WRC for decades.  Secondly because other nations like China buy newly issued US govt debt, sending dollars back into America, keeping worldwide supply of dollars in check.

But in QE1 and 2 we saw what happens when the Fed is the only buyer, using printed money.  USD dropped in value rapidly, because the worldwide supply of dollars started growing rapidly. 

Somehow they convinced Japan to start buying more of it.  Once again dollars are coming back to America, reducing worldwide supply, causing USD to strengthen against other currencies.

Japan is buying US treasury debt at the expense of their own currency (sorry for the pun).  It's ok for a while since the Yen has been appreciating against USD lately.  Printing Yen to buy dollars to buy US govt debt brings the Yen back down against the dollar.

But bottom line, the worldwide flood of USDs and Yens and Euros and Yuans and Remimbis is growing.  Everybody is printing to fund more debt of their respective governments and more bailouts of their respective banks.

Sure, they may be keeping that flood of currency printing in some sort of balance in their steady pace toward worthlessness, but it is a steady pace toward worthlessness, which means it's unsustainable.

But maybe it's not unsustainable.  USD has lost 99% of its original value and nobody seems to care.

While it may not be unsustainable, there is a growing danger that someone could introduce a redeemable currency, redeemable for gold, silver, something like that. 

A truly redeemable currency would be a game changer.  Every nation in the world would flock to it.  Except maybe America, arrogantly thinking their USD would still retain WRC king-of-the-hill status (with military help of course).

But what if the "introducer" of said redeemable currency had just as many nuclear weapons as America does, maybe more?

 

 

Wed, 08/15/2012 - 11:56 | 2706912 AnAnonymous
AnAnonymous's picture

Wiith their world reserve currency status, our monetary system's leaders believe their monetary system is unbreakable, they can print and print and print without any danger, funding endless government debt, giving endless bailouts to whomever they want. They believe they can flood the world with US dollars and their system still won't break.

__________________________________________

This is not what they believe.

What they believe is that thanks to the USD, they can get the best of the mass consumption era, consuming the most of available resources, before the depletion era is entered.

And they are right.

US citizens will consume the world before the other nations manage to get out of the US world order web.

Wed, 08/15/2012 - 17:19 | 2708280 JeffB
JeffB's picture

Bernanke was quite thrilled to get a new tool for his toolchest when Congress changed the laws allowing him to pay interest on excess reserves.

That is the way they've been able to print so much and keep inflation under some semblance of control.

Money held as excess reserves is pulled out of circulation and hence does not contribute to inflation. It isn't counted as money supply while it "sits in the vaults", so to speak.

They can print it, buy Treasuries or MBS or whatever else they desire and then use more fiat, at very low interest rates, to induce the banks to keep it with them and out of circulation.

Look at the Fed's chart of their excess reserves:

Excess Reserves of Depository Institutions (EXCRESNS)

 

 

Wed, 08/15/2012 - 10:17 | 2706607 Stock Tips Inve...
Stock Tips Investment's picture

We must not lose sight of the strategic aspect of the debt. U.S., Japan and our major allies in Europe are the most indebted countries. The economy of these countries is growing very little and collecting more and more fragile. China, however, continues to grow (no debt) and buying commodities in large quantities. This is benefiting many small countries are now showing very solid and dynamic economies. The world is changing and this change is happening very fast. Our economy, despite all our problems, is more dynamic, flexible and robust than that of Japan and European countries. I think it's time to look though our strategic alliances.

Wed, 08/15/2012 - 09:56 | 2706520 Nothing To See Here
Nothing To See Here's picture

How could you say....  Hara-kiri?

Wed, 08/15/2012 - 10:10 | 2706581 williambanzai7
williambanzai7's picture

Don't you mean Hairy Carry?

Wed, 08/15/2012 - 10:21 | 2706622 Dr. Engali
Dr. Engali's picture

Hey I recognize your avatar from some place. Are you new to this place stranger?

Wed, 08/15/2012 - 10:27 | 2706642 williambanzai7
williambanzai7's picture

BARAKU SUWANU

Wed, 08/15/2012 - 10:30 | 2706656 Cognitive Dissonance
Cognitive Dissonance's picture

Bill, are you safely back at home base or are you still out chasing wild women all over the place?

Lie if you have too. :)

Wed, 08/15/2012 - 10:43 | 2706703 Bastiat
Bastiat's picture

I hope he brought his camera!

Wed, 08/15/2012 - 10:48 | 2706718 Precious
Precious's picture

Banzai.  Quit abusing your editor privileges.

Wed, 08/15/2012 - 10:17 | 2706606 midtowng
midtowng's picture

You know you are entering the last days of a Ponzi scheme when even the insiders of the Ponzi scheme began putting their own money into the scheme to keep it alive.

Wed, 08/15/2012 - 09:57 | 2706523 FranSix
FranSix's picture

I think the problems are in the UK, where they first managed to show up with bank runs and endless QE.  More so than Europe.  Europe can bail itself out if needed by consolidating their gold into the ECB.

Japan will have to allow negative nominal rates eventually.  So far, they have managed to stave off this eventuality.

Wed, 08/15/2012 - 09:58 | 2706526 khakuda
khakuda's picture

Someone smarter than I could probably make a compelling argument that in a world free to send capital anywhere with the click of a button, Japan set off the race to the bottom in rates globally decades ago.  If/when it blows itself up in its Kyle Bass moment, forget the impact on Japan, I'm going to want to leave the planet.

Wed, 08/15/2012 - 10:00 | 2706528 youngman
youngman's picture

China is buying Africa...commodities....and farmland or at least crops...assets baby.....no more paper......they have a lot more spys now....all around the world....Computer Hackers....and they are doing a little military investing on their own...you know....a new Navy....Space...Air Force....things that go BOOM!!!

Wed, 08/15/2012 - 10:30 | 2706652 FieldingMellish
FieldingMellish's picture

Indeed. Everyone is pointing the finger at the growing stockpiles of commodities and saying "this is proof that China is slowing" but it could be proof that China is stockpiling (as well). Make hay while the sun shines (for soon it will be dark, very dark).

Wed, 08/15/2012 - 10:38 | 2706686 johnjkiii
johnjkiii's picture

Are you accusing the Chinese of HOARDING? Heaven forfend! I do want to know why they might hoard tankers though.

Wed, 08/15/2012 - 11:09 | 2706788 LMAOLORI
Wed, 08/15/2012 - 09:58 | 2706529 LawsofPhysics
LawsofPhysics's picture

Debt buying debt?  Shit, I guess debt is money after all - FAIL.

Wed, 08/15/2012 - 09:58 | 2706530 UncleFurker
UncleFurker's picture

"When one thing US Treasurys" should be "When one thinks US Treasuries".

 

I thing.

 

You're welcome.

 


Wed, 08/15/2012 - 10:27 | 2706644 FieldingMellish
FieldingMellish's picture

I've come to the conclusion that these articles are rushed out to be in as timely manner as possible. The little niggly mistakes used to really bother me too but my brain has somehow adjusted so that only those that cause confusion in the meaning are really irritating anymore. I hope you can acheive such a zen state if blissful ignorance as myself in these matters one day.

Wed, 08/15/2012 - 09:58 | 2706531 Cognitive Dissonance
Cognitive Dissonance's picture

The only purpose for brothers-in-arms within the financial mafia (other than the rush to thieve which is so much more effective when done as a flash mob rob) is to cover for those who need covering so that they will cover you when you need it.

Who wants to bet Japan is the flush that sets the collapse in motion. The trigger usually comes from left field and not where you expect it. We shall see.

Wed, 08/15/2012 - 10:06 | 2706566 Winston Churchill
Winston Churchill's picture

So many fields this could unravell from.

Its like a Black Swan farm.

Wed, 08/15/2012 - 10:10 | 2706580 Cognitive Dissonance
Cognitive Dissonance's picture

"Its like a Black Swan farm."

Too funny.

Looks like a new brood has been bred.

Black swan farm

Wed, 08/15/2012 - 09:58 | 2706532 Jason T
Jason T's picture

all your debt are belong to us foreigners http://research.stlouisfed.org/fred2/series/FDHBFIN

Wed, 08/15/2012 - 10:50 | 2706729 LMAOLORI
LMAOLORI's picture

 

 

Actually the greatest percentage of our debt is domestically held Social Security owns the largest amount of anyone 19% and talking about debt buying debt the Fed has bought 61% of our debt this year! What one of these writers should cover is how monetization destroy's your purchasing power and the dollar.

 

WSJ: Fed Buying 61 Percent of US Debt

http://www.moneynews.com/Headline/fed-debt-Treasury/2012/03/28/id/434106

 

The TRUTH About Who Really Owns All Of America's Debt

http://www.businessinsider.com/who-owns-us-debt-2011-7?op=1

 

Wed, 08/15/2012 - 12:23 | 2706900 Revert_Back_to_...
Revert_Back_to_1792_Act's picture

A picture is worth a thousand words.

This is purported to be a picture of the Social Security Lockbox.

http://www.willisms.com/archives/filingcabinet.gif

.

Wed, 08/15/2012 - 11:56 | 2706915 cranky-old-geezer
cranky-old-geezer's picture

 

 

What one of these writers should cover is how monetization destroy's your purchasing power and the dollar.

That point is taboo, never mentioned, you don't want to disturb the sheep, just let them continue their peaceful ignorant grazing.

Thu, 08/16/2012 - 00:44 | 2709315 taeonu
taeonu's picture

In other words, the government is borrowing 19% of it's money from taxpayers' pensions and then promising to tax them to pay it back.  Nope, definitely not a ponzie scheme.

Wed, 08/15/2012 - 11:45 | 2706873 Revert_Back_to_...
Revert_Back_to_1792_Act's picture

Always check the documents carefully.

It specifically says "Federal Reserve Note" at the top of those things and down at the bottom, Geithner and Paulson Co-Signed it.

Have you ever watched what happens on Judge Judy when someone co-signs for a loan?

It never ends well for anyone involved.

 

Wed, 08/15/2012 - 09:58 | 2706533 101 years and c...
101 years and counting's picture

their printers never stop.  unlimited qe since 1990.  print ->buy treasuries-> "profit"

Wed, 08/15/2012 - 10:14 | 2706597 DeadFred
DeadFred's picture

I've wondered why the Swiss don't do this. I guess the problem is they'd have to convert euro to dollars making their peg that much harder to hold. Of course they could be thinking that holding overvalued euros is safer than overvalued US treasuries.

Wed, 08/15/2012 - 10:01 | 2706539 tuttisaluti
tuttisaluti's picture

No problemo. US sales worthless papers to Japan and they pay them with worthless papers too. Makes no sense for me.

except to keep the interest rates low.

Wed, 08/15/2012 - 10:00 | 2706540 LongSoupLine
LongSoupLine's picture

Global fiat ponzu. period.

Wed, 08/15/2012 - 10:01 | 2706544 JEHR
JEHR's picture

Maybe China is buying up interest in Canada's Tar Sands.

Wed, 08/15/2012 - 10:02 | 2706545 Dr. Engali
Dr. Engali's picture

The vassal state of Japan is buying up paper to hold on to the past and the status quo , and China is buying up hard assets preparing for the future.

Wed, 08/15/2012 - 10:31 | 2706659 odatruf
odatruf's picture

I remember when Japan, Inc. was buying up hard assets preparing for the future.  Rockefeller Center. Pebble Beach.  Remind me how did that worked out again.  I mean, besides for the prior US owners who sold to the Japanese and then bought them back for a fraction later.

Wed, 08/15/2012 - 11:05 | 2706775 PiratePawpaw
PiratePawpaw's picture

I agree. This is an example of the "shi" strategy that was discussed here not too long ago. Rather than dabble in paper markets and make a few basis points here and there today, China is going long on tangible assets which will hold value and can always be exchanged later for whatever is the currency de jour.

This is my strategy as well.

Wed, 08/15/2012 - 10:03 | 2706550 Arnold Ziffel
Arnold Ziffel's picture

Japan does what they are told to do.

Wed, 08/15/2012 - 10:04 | 2706552 Lost Wages
Lost Wages's picture

Radioactive Man saves the day.

Wed, 08/15/2012 - 10:04 | 2706555 FieldingMellish
FieldingMellish's picture

America's bitch, bitchez.

Wed, 08/15/2012 - 10:05 | 2706563 f16hoser
f16hoser's picture

Japan is finished. Stick a fork in 'er. Japan should be buying Potassium Iodide tablets and Keiger Counters instead.

Wed, 08/15/2012 - 10:38 | 2706689 krispkritter
krispkritter's picture

Maybe Japan is getting ready to declare the homeland a nuclear wasteland and will be willing to trade off that $1T for a big chunk of the US to settle into. Maybe we can get them to swap citizens with Commiefornia? We just can't let them run any nuclear power plants...

Wed, 08/15/2012 - 11:32 | 2706849 indygo55
indygo55's picture

They should all move to Detroit. /sarc

Wed, 08/15/2012 - 12:19 | 2706969 Totentänzerlied
Totentänzerlied's picture

Not a bad idea. If they did, Detroit would soon be twice the industrial powerhouse it ever was in its glory days. And the other minorities (uh-oh rayciss!) would have relatively unskilled but decent-paying manufacturing jobs.

Wed, 08/15/2012 - 10:06 | 2706564 Mad Max
Mad Max's picture

Suicide pact.

Wed, 08/15/2012 - 10:06 | 2706568 Miss Expectations
Miss Expectations's picture

So, what exactly happens if a mutant Japanese butterfly flaps its wings?

 

Wed, 08/15/2012 - 10:29 | 2706650 francis_sawyer
francis_sawyer's picture

Bono does a concert...

Wed, 08/15/2012 - 10:07 | 2706570 Seize Mars
Seize Mars's picture

The Japanese are not foolish, they are captive. Japan is basically an American State with its own little "central bank."

The orders come from The Great Eye, and they do it.

Wed, 08/15/2012 - 10:08 | 2706576 vertexa
vertexa's picture

The economy: Less bad or much worse (No matter who is elected)

No matter who is elected, the same unavoidable truths exist. The United States has too much debt, deficits are not under control, and something needs to be done to stem the problem. Everyone knows what needs to be done, and people have different ways of going about it, but no matter who is elected, the same thing is going to happen. Taxes will increase, and spending will decline, or what is already bad is going to get measurably worse.

With Ryan as the running mate, the new look of the Republican campaign is becoming ever more attractive to the wealthy. Proposals to slash government payrolls are being thrown around in media circles, as is tax reform, but do not mistake tax reform with lower taxes overall.

 

Wed, 08/15/2012 - 10:09 | 2706578 Dr. Engali
Dr. Engali's picture

The social security administration must be expecting the senior citizens to storm the buildings. They are ordering 174,000 rounds of hollow point ammunition.

 

https://www.fbo.gov/index?s=opportunity&mode=form&id=6c39a2a9f00a10187a1432388a3301e5&tab=core&_cview=0&fb_source=message

Wed, 08/15/2012 - 10:35 | 2706671 chubbar
chubbar's picture

It is worse than you think. This from the www.urbansurvival.com site yesterday.

As long as we're wandering through federal purchasing systems, don't know how many people realize that the EPA's office of inspector general bought 100...

 

"SIG Sauer Model P229 Semi-Automatic Pistol (P229); E29R-357-BSS-G; Caliber .357 SIG; DA/SA old style Alloy Frame; Stainless Slide; Black Nitron Finish; DA/SA Trigger; Supplied with three MecGar twelve (12)-round magazines and Trijicon three (3) Dot (White ? Glow Green) Night Sights; Milled locking inserts; and, Manufacturer carry case. "

 

last August... Dudes have good taste in arms and all, but EPA armed now? and "Pricing shall include armor certification and training, as well as add-on three (3) day conceal weapon carry course for up to ten (10) total armors/instructors."

 

Hmmmm...makes me want to find an EPA, Secret Service, or Capitol Policeman to sit near next time we go to the movies.

 

Just sayin'...

 

Anyway, in Wednesday morning's Peoplenomics.com report, we'll try to put a whole lot of dots up on the board (things like the Pacific quakes and sun getting angry and now all this ammo buying) and see what comes together... that'll be over on our www.peoplenomics.com site, which as I tirelessly remind you is just $40/year.

 

Secret Service Ammo Buy, Too

OK, as we continue our looking through Federal Bids, we see in June the Secret Service was shopping for "40,000 rounds with two options for 20,000 rounds" of Winchester .300 Magnums. Awarded to an outfit in Rapid City June 30, if we're reading it and all to be delivered before year end.

 

Urgent Update: 600,000 Rounds to Capitol Police!

I must not be reading this Federal Bid right: WTF do Capitol Police need 600,000 rounds of .40 cal for? I quote from the Federal web site:

 

"The United States Capitol Police, Training Services Bureau has a requirement to procure the following Ammunitions: 1. (600) 165 Grain Gold Dot Hollow Point, 40 S&W, 1,000/Case - 53970;

 

NOTE: Ship in 2 equal shipments of 300,000 rds each. The first delivery no later than September 30, 2012 and second delivery no later than December 30, 2012."

 

Something's going on - and we're still digging... But'cha know, for an administration that is down on gun control for The People, seems like a lot of .40 cal to be3 buying.... we continue our looking...

 

Urgent Update: Things Just Got Worse

OK, maybe we get a little paranoid around here sometimes but the revelation leaking out today that the Commerce Department's NATIONAL WEATHER SERVICE is looking to buy lage quantities of ammunication and targets has us going with a kserious WTF? moment... We quote from the federal government's bidding and procurement site:

 

"The DOC NOAA National Weather Service - Western Acquisition Division ? Boulder requires the following items, Purchase Description Determined by Line Item, to the following:

 

LI 001, 16,000 rounds of ammunition for semiautomatic pistols to be factory-loaded .40 S&W caliber, 180-grain jacketed hollow point (JHP). No reloads may be used with these weapons. All service furnished ammunition for issued firearms will be U.S. factory production. ?Inside Delivery? to locations below: NED: 8,000 rounds to: Ross Lane DOC, NOAA, NMFS, OLE, NED 130 Oak Street, Suite 5, Ellsworth, ME, 04605 8,000 rounds to: Troy Audyatis, DOC, NOAA, NMFS, OLE, NED 53 North 6th Street, Room 214 New Bedford, MA, 02740., 16, Cases;

 

LI 002, 24,000 rounds of ammunition for semiautomatic pistols to be factory-loaded .40 S&W caliber, 180-grain jacketed hollow point (JHP). No reloads may be used with these weapons. All service furnished ammunition for issued firearms will be U.S. factory production. "

 

More on the bidding website...since we just know you're not going to a gun show this weekend... Hollow points for the weathermen? Or, government trying to hide massive 40-cal arms acquisitions? You make the call...

 

Wed, 08/15/2012 - 10:38 | 2706688 Dr. Engali
Dr. Engali's picture

Crazy times we live in that's for sure.

Wed, 08/15/2012 - 11:48 | 2706891 TPTB_r_TBTF
TPTB_r_TBTF's picture

the Capitol Police need so many rounds cause they canT aim so good. ;-)

Wed, 08/15/2012 - 11:52 | 2706901 roadhazard
roadhazard's picture

I think it's going somewhere else. What next, 50,000 rounds for Medicaid.

Wed, 08/15/2012 - 10:35 | 2706673 odatruf
odatruf's picture

Hollow points? Hell, how about just taking out the wheelchair and walker ramps? Maybe add an extra step or two?  Or only have open hours during Price is Right and Matlock reruns?

Wed, 08/15/2012 - 11:04 | 2706769 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

+10 if I could.  Hilarious.

Wed, 08/15/2012 - 10:50 | 2706698 FRBNYrCROOKS
FRBNYrCROOKS's picture

That's small potatoes. Read this one the 112th Congress passed in July. The DoD plans on spending 500 billion dollars:

http://www.gop.gov/bill/112/2/hr5856

 


H.R. 5858 Spending Totals 
(In Millions of Dollars)

Total Budget Authority

633,229


That's $633,229,000,000, or 633 biliion for all you zero challenged. Fiscal Clif my ass! Pack of lies!

Wed, 08/15/2012 - 11:13 | 2706799 LMAOLORI
LMAOLORI's picture

 

 

A lot of Senior's are Veteran's and if the government try's to steal the Social Security they were forced to pay into from them what do they have to loose 

Wed, 08/15/2012 - 12:05 | 2706934 roadhazard
roadhazard's picture

I doubt SS is going anywhere soon. It buys US debt to the tune of over 2 TRILLION. I'd say the major problem with SS is THEFT.

I have always laughed at the people that want to abolish SS. The Gov. HAS TO HAVE that money and don't think if it's done away with you will see an increase in your pay check. The Gov. will just call it something else and not even pretend they owe you anything in the bargain.

Wed, 08/15/2012 - 22:40 | 2709107 StychoKiller
StychoKiller's picture

Talk about shootin' puppies in a barrel!  Granny ain't gonna be movin' too fast with her walker and won't be divin' for cover!

Wed, 08/15/2012 - 10:09 | 2706579 JackT
JackT's picture

When does Japan get their own direct link to the board?

Wed, 08/15/2012 - 10:11 | 2706583 yogibear
yogibear's picture

Bernanke and the other fed members will find out the results of their modified Keynesian experiment in a relatively short time.  

Wed, 08/15/2012 - 10:12 | 2706587 dottjt
dottjt's picture

Oh, that's why all our treasuries smell like fish and plutonium. I thought it was just the fed discount on paper.  

Wed, 08/15/2012 - 10:13 | 2706590 4xaddict
4xaddict's picture

Japan doesn't need the money back they are printing it for free and will continue to do so to try and pull the weight from the USDJPY pair.

Wed, 08/15/2012 - 13:24 | 2707250 bubbleburster
bubbleburster's picture

No one needs any money back 'cause the world's ending in December and we all get Mayan Currency flushed into our bank accounts. Right?  That what I heard at the local crack house....just saying....

Wed, 08/15/2012 - 10:14 | 2706595 Infinite QE
Infinite QE's picture

A benefit to controlling HAARP and being able to induce earthquakes with it and other tech. Similar thing happened after the Kobe quake. Japo's went crazy buying Treasuries after threatening to stop. 

Wed, 08/15/2012 - 11:53 | 2706902 TPTB_r_TBTF
TPTB_r_TBTF's picture

yep, and that quake off the coast yesterday was another warning to them...

Wed, 08/15/2012 - 10:16 | 2706604 jmcadg
jmcadg's picture

Hey FED, you didn't but those TSYs, someone else did that.

Wed, 08/15/2012 - 10:17 | 2706608 buzzsaw99
buzzsaw99's picture

Probably trying to weaken the yen.

Wed, 08/15/2012 - 10:20 | 2706619 jmcadg
jmcadg's picture

Hey MDB, I find libertarians very easy to tolerate, however pricks like you are difficult to digest. TWAT.

Wed, 08/15/2012 - 11:58 | 2706921 TPTB_r_TBTF
TPTB_r_TBTF's picture

hey jmcadg, i find sarcastic people very easy to tolerate; however, brain-damaged pricks like you are more difficult.  Brain-damaged TWAT.

Brain Damage hinders understanding of sarcasm

Wed, 08/15/2012 - 10:28 | 2706645 Stuck on Zero
Stuck on Zero's picture

Japan is desperately attempting to keep the value of the Yen down against the dollar.  The money is probably coming from profits from Chinese divisions of Japanese companies. 

 

Wed, 08/15/2012 - 10:33 | 2706667 johnjkiii
johnjkiii's picture

Seems simple to me. Japan prints paper worth nothing and buys TSYs that they think are worth more than the Yen. China sells TSYs it thinks is worth less than the commodities they buy with the proceeds. The US prints money and buys Yen, Euros etc. thinking they are worth more than bucks. China expects inflation and wants to make things with its commodities that it can sell to the world for more than the value of the commodities it owns. They may be right about the inflation part at some point but if/when they do become right the world will be a to-whomer market, as in sell to whom?

Wed, 08/15/2012 - 10:36 | 2706676 FRBNYrCROOKS
FRBNYrCROOKS's picture

 

Primary dealers are required to participate in all auctions of U.S. government debt and to make reasonable markets for the New York Fed when it transacts on behalf of its foreign official account-holders.

 

List of Primary Dealers:

Bank of Nova Scotia, New York Agency
BMO Capital Markets Corp.
BNP Paribas Securities Corp.
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Capital Markets America Inc.
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
HSBC Securities (USA) Inc.
Jefferies & Company, Inc.
J.P. Morgan Securities LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Mizuho Securities USA Inc.
Morgan Stanley & Co. LLC
Nomura Securities International, Inc.
RBC Capital Markets, LLC
RBS Securities Inc.
SG Americas Securities, LLC
UBS Securities LLC.

I see three Japanese banks listed as Primary dealers which means they must bid in every US Bond Auction. Maybe they are winning all the bids?

"Also, one wonders, what is China buying with all those dollars, if indeed, it has been a net seller of US paper in the past year?"

GOLD and Aircraft Carriers, Perhaps?

Wed, 08/15/2012 - 11:02 | 2706763 PatientZero
PatientZero's picture

Except China. China can buy direct and ONLY China can buy direct.

Sat, 09/08/2012 - 10:05 | 2774381 FRBNYrCROOKS
FRBNYrCROOKS's picture

You left out Goldman-Sachs as direct buyers. That is where China stole the software. 

Wed, 08/15/2012 - 10:49 | 2706721 Count de Money
Count de Money's picture

At 80 yen to the dollar, American paper is quite cheap. There's the possibility of a huge capital gain if the yen devalues, which it should at some point.

Wed, 08/15/2012 - 10:49 | 2706725 user2011
user2011's picture

well, as the conflict escalate between china and japan, japan will buy more.

It also allow japan to boost usd/jpy.

thirdly, japan may devalue yen. it is time to gobble up foreign asset.

Wed, 08/15/2012 - 10:59 | 2706754 TacticalZen
TacticalZen's picture

Predicting the next Black Swan event is like projecting when a home remodel project will be completed.  Take your best estimate, double the time allotted, and double it again.  There you have it!  One would think with the FED purchase of Treasuries the end would be near, but following this logic it may be 2014 before the next tsunami.

Wed, 08/15/2012 - 11:13 | 2706798 ParkAveFlasher
ParkAveFlasher's picture

Armstrong has spent too much time in solitary, unfortunately.

THE ANSWER IS THAT JAPAN WIELDS MOST OF CHINA.  MOST CHINESE WEALTH, DEBT, AND ALL COMBINATIONS THEREOF INVARIABLY FLOW THROUGH JAPAN FOR EITHER PICKLING OR IMMEDIATE CONSUMPTION.

And fair Korea, an eternally secretive global nexus of hidden wealth of all sorts, is the fulcrum of this China/Japan beam of power.

Wed, 08/15/2012 - 11:06 | 2706778 Burticus
Burticus's picture

According to the article, the Nips increased their holdings of U.S. Trashery securities by 237 billion FeRNs from June 2011 to June 2012.

But wait...we all know that the criminally-insane Untied States gubmint is running recurring 1.5 trillion FeRN annual cash-basis deficits.  Obviously, the Nips were not the sole or even the largest buyer of the related new debt paper.  So, who bought the other trillion plus of new debt?

As explained in another recent article, look no further than the usual suspect, the (not really) Federal (with no) Reserve, "where Trasheries go to die."

Wed, 08/15/2012 - 11:16 | 2706808 HurricaneSeason
HurricaneSeason's picture

Well, if Japan has $239 Billion covered annually, then Zimbabwe and Nigeria should be able to pick up the other $1 Trillion.

Wed, 08/15/2012 - 11:36 | 2706856 Dareconomics
Dareconomics's picture

ZeroHedge believes that the Japanese have been buying more treasuries because the rates on JGB are so low. These rates have been low forever, and the Japanese have not seem to mind so I believe that there is a different cause for this sudden buying.

I would like to see what holdings Japan has been reducing in order to buy treasuries. It could be there own bonds, but they have not had any funding issues. My guess is that the money that was formerly invested in the Eurozone is being placed into treasuries.

Switching to treasuries accomplishes two goals. First, it preserves capital by getting it out of Europe. Second, buying dollars to buy treasuries helps keep the dollar strong and the Japanese export machine happy. 

Isn't fun watching all of the machinations of these central banks? One makes a move, then another makes a countermove. When does this lead to a full-blown currency war?

http://dareconomics.wordpress.com/

Wed, 08/15/2012 - 11:59 | 2706922 BlackVoid
BlackVoid's picture

No, it is freshly printed money.

Wed, 08/15/2012 - 11:51 | 2706899 diogeneslaertius
diogeneslaertius's picture

cannibal corpse system 3.709n

Wed, 08/15/2012 - 11:58 | 2706920 BlackVoid
BlackVoid's picture

Japan is run by a US puppet government, it is not an independent country since 1945.

It is a US colony.

Wed, 08/15/2012 - 13:19 | 2707227 bubbleburster
bubbleburster's picture

Loud sound of "Bull crap"

Wed, 08/15/2012 - 14:23 | 2707491 FRBNYrCROOKS
FRBNYrCROOKS's picture

SONY= Standard Oil of New York

Wed, 08/15/2012 - 12:28 | 2707013 Bam_Man
Bam_Man's picture

Can you imagine at what level the Yen would be (hint: nosebleed territory) if not for these huge Treasury purchases?

Wed, 08/15/2012 - 12:47 | 2707094 poydras
poydras's picture

"long gone"  That is a bit extreme.

What else is Japan to buy to contain its currency?  Sadly, the US one of the better looking ugly girls at the ball.

Wed, 08/15/2012 - 13:36 | 2707280 exodus11
exodus11's picture

The Japanese only want to save face. They can't admit things are bad or they made a mistake. They are only delaying the inevitable time when their face can't be saved and then its all over. Fukushima, too much debt, export industry gone, game over for Japan. Start again after the big reset and the great war.

Wed, 08/15/2012 - 13:36 | 2707282 straightershooter
straightershooter's picture

HA, the riddle.....

China, long time ago,  made an effort and succeeded in stoping accepting dollars as payments. Case in point. China's #1 trading counterpart, Japan, pays Yen for exports to China. See, no dollars here. Same thing happens in Russia. Russia pays rubble to China for all those gas/crude/vodka. see, no dollars here. Repeat that for all other trading counterparts and one gets the picture.

 

As for Japan, another riddle......

BOJ prints trillions of yen to suppress the value of yen.... in the process, using the printed yen buying up printed dollars........ brilliant! A collapsing nation buying up another collapsing nation... Ponzi at its best

Wed, 08/15/2012 - 22:39 | 2709104 ClassicCommodity
ClassicCommodity's picture

As a half-Japanese half white person, this really PISSES ME OFF. Japan is forced to do this because they are the Bitch of those up top. Not only did they get their asses handed to them in WW2 and subsequently have their balls cut off, but to top things off they have ever since been forced to hand over shit tonnes of money (10's of Trillions) over the decades to those that be, and now this. Nobody else is buying that useless toilet paper USA shit because they have the CHOICE. The japs are FUCKED now. Sigh. What a cruel world. Revenge alone would never be enough to pay back the suffering the Japanese will endure from here on.

Sat, 09/08/2012 - 00:22 | 2773940 markar
markar's picture

Japan continues to be Uncle Sam's bitch. Been that way since the end of ww2

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