This page has been archived and commenting is disabled.

Will Today's Second "Reverse POMO" Serve As Merely Another Capital Transfer Mechanism From Taxpayers To Banks?

Tyler Durden's picture




 

Last Thursday we observed the first "reverse" POMO event, in which the Fed sold $8.9 billion in sub 1 year bonds... on $242 billion of submitted bids, or a grotesque 27.4 Bid To Cover (aka Submitted to Accepted) ratio, for bonds that yield several basis point of interest, leading us to speculate that the only reason for this epic surge in buying interest is due to a levered ability to capture a taxpayer funded bid-ask spread courtesy of Primary Dealer BWIC-like collusion. A few minutes ago Ben Bernanke has commenced the second such bond sale as part of Operation Twist, this time selling bonds maturing between 03/31/2013 - 10/15/2013. So if indeed Operation Twist is nothing than a POMO-facilitated conduit to fund the Primary Dealers bond trading desks with precious, precious year end bonuses, what should we expect? Well, the most recent regular Treasury auction of 2 Year notes saw a Dealer Bid To Cover of 5.4 ($95.7 billion Bids tendered on $17.8 billion allotted). Assuming the same incremental efficiency pick up as seen last Thursday of 4.3x difference between the S/A ratio and the regular BTC, we would hope to see nothing short of 23.2 Submitted to Accepted ratio in today's POMO when it closes 30 minutes from now. It would also validate our theory from over a year ago, that no matter how it is structured, QE, Twist, or what have you, is merely a collusive way for Primary Dealers to extract a pound of flesh from US taxpayers via the Fed guaranteed bid-ask spread... With Bernanke's blessings of course.

Source: the Criminal Reserve

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 10/12/2011 - 10:32 | 1765597 nmewn
nmewn's picture

Weekend at Bennie's!

Wed, 10/12/2011 - 11:40 | 1765939 covert
covert's picture

no wonder there is envy everywhere!

http://expose2.wordpress.com

 

Wed, 10/12/2011 - 10:33 | 1765602 Iriestx
Iriestx's picture


Will Today's Second "Reverse POMO" Serve As Merely Another Capital Transfer Mechanism From Taxpayers To Banks?

 

Does the pope shit in the woods?  

Wed, 10/12/2011 - 10:38 | 1765627 SeverinSlade
SeverinSlade's picture

Holy shit!

Wed, 10/12/2011 - 10:52 | 1765697 bigdumbnugly
bigdumbnugly's picture

long KY

Wed, 10/12/2011 - 10:55 | 1765708 lizzy36
lizzy36's picture

If one thinks about it outside gold KY really is the only appropiate retail investment for the long term.

Living the Cramerica Dream.

Wed, 10/12/2011 - 11:16 | 1765812 Problem Is
Problem Is's picture

No... The pope shits in John Thain's $35,000 toilet paid for by tax payer bailout money... like all of Merrill's bonuses...

Pope got it a bankster yard sale...

Wed, 10/12/2011 - 10:39 | 1765634 firstdivision
firstdivision's picture

The market says "yes". 

HFT: Fucking up the markets since Janurary 16, 1974.

Wed, 10/12/2011 - 10:45 | 1765652 r101958
r101958's picture

"Will Today's Second "Reverse POMO" Serve As Merely Another Capital Transfer Mechanism From Taxpayers To Banks?"

Short answer: YES.

Wed, 10/12/2011 - 10:45 | 1765662 No One
No One's picture

What isn't a Capital transfer from taxpayers to banks? That might be a more difficult question to answer.

Wed, 10/12/2011 - 11:33 | 1765887 Lord Blankcheck
Lord Blankcheck's picture

There are purchases today also,$3.25-4Billion of 4/30/2017 thru 9/30/2018

 

Final day of current TOTO schedule

Wed, 10/12/2011 - 10:43 | 1765653 unununium
unununium's picture

Here's a plan:

 - Nationalize one bank (BAC).  It's going to happen anyway.

 - Use its manpower and trading systems to cut the middleman out of Fed operations by dealing directly with BAC account holders

 - While we're at it, why not issue mortgages directly to the sheeple too.  The Fed winds up owning them all anyway.

Socialism - yes.  But better than the current kleptocracy.

Wed, 10/12/2011 - 10:49 | 1765685 No One
No One's picture

Here's what we'll get - After QE7, there will be no sustainable econmic recovery. So,  the Fed will announce that it will pay 100% of the U.S. consumer's unsecured debt, and 50% of their outstanding secured debt, allowing our consumer based economy to consume again.

 

Wed, 10/12/2011 - 10:46 | 1765671 4shzl
4shzl's picture

Front-running the Fed is the only game in town -- not working so well at the long end though.

Wed, 10/12/2011 - 10:47 | 1765675 Schmuck Raker
Schmuck Raker's picture

[sob]

Wed, 10/12/2011 - 10:48 | 1765678 SheepDog-One
SheepDog-One's picture

Gee lets see...'will todays covert FED manipulation with billions in the market cornhole taxpayers for the benefit of banksters?'...

I'll take 'No question about it at all' for $500 Alex...

Wed, 10/12/2011 - 10:58 | 1765721 TooBearish
TooBearish's picture

Believe Bens including money market fund s in the bid pool for this short paper, TY

Wed, 10/12/2011 - 11:04 | 1765754 nmewn
nmewn's picture

Didn't break through it Bennie...what now? ;-)

Wed, 10/12/2011 - 11:08 | 1765772 TooBearish
TooBearish's picture

8x bid to cover

Wed, 10/12/2011 - 11:10 | 1765780 Problem Is
Problem Is's picture

"Bailout My Bonus!!"

Wall Street's only plan... besides fraud...

Wed, 10/12/2011 - 11:19 | 1765826 NotApplicable
NotApplicable's picture

Well, it is election campaign kick-back season.

Wed, 10/12/2011 - 11:16 | 1765815 slewie the pi-rat
slewie the pi-rat's picture

this is bullish4bullshit right?

Wed, 10/12/2011 - 11:23 | 1765849 Mae Kadoodie
Mae Kadoodie's picture

Occupy bond desks?

Wed, 10/12/2011 - 11:26 | 1765861 Bansters-in-my-...
Bansters-in-my- feces's picture

Fucking thieves.

USA GOVT ARE TERRORIST.

Wed, 10/12/2011 - 12:36 | 1766210 Hedgetard55
Hedgetard55's picture

Ben is selling the very bonds he bought at a premium in QE2, again at a second premium for the banks. Of course the tax payer is getting screwed and the banks blown.

Wed, 10/12/2011 - 12:54 | 1766279 PulauHantu29
PulauHantu29's picture

"Why steal less when you can steal more," they say on Wall Street these days.

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