Holy Cow! Look at the Treasury Auction Schedule 38 comments
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Let's see if I can count this up....
70 day CMBs, $30 billion (Friday)
13 week Bills, $32 billion (July 27th)
26 week Bills, $31 billion (July 27th)
52 week Bills, $27 billion (July 28th)
2 year Notes, $42 billion (July 28th)
5 year Notes, $39 billion (July 29th)
7 year Notes, $28 billion (July 30th)
19 year, 6 month TIPS (reopened), $6 billion (July 27th)
That's two hundred thirty-five billion dollars over the next week!
Almost one quarter of a trillion....... geejus.
I guess you should get while the getting is good, but this is going totally parabolic. That money has to come out of somewhere, by the way, in order for the sale to succeed, which is going to get rather interesting at some point - but exactly where it matters is impossible to know.
I expected that when we crossed the $100 billion threshold in a week the market would throw up all over it, but it didn't. Now we've got the government trying to sell a quarter of a trillion dollars in debt over the next week, the announcement is out there, and while the bond market is selling off to a material degree equities could care less!
This is flat-out insane. At this run rate we would be trying to sell twelve trillion dollars over one year's time, an obviously ridiculous and impossible-to-peddle amount of debt at any price.
When does the rest of the world wake up (not to mention the primary dealers) and say "NO!"? Never? Is there a truly insatiable demand for our government's debt, despite the fact that President Obama got up on the national stage last night and promised to spend another trillion dollars we don't have?
How do equities power higher into this sort of debt issuance? Is it simply that the market has deduced that the government will hand all of this zero-interest money out - indefinitely?
Guess what - that which is impossible won't happen, and the stock market is now telling you that the impossible will become reality. There has been and will not be any amount of fiscal sanity on the part of our government until the market imposes it, and when it does it is going to happen in exactly the same way it happened to Bear Stearns, Lehman, Fannie and Freddie. May I remind readers that it was said that Fannie and Freddie "couldn't" get in trouble due to their implicit government guarantee? Well guess what - they both effectively failed, but when the US Government finds itself in the same situation it has nobody who can take it into conservatorship and as such we're just going to have to deal with the consequences of failed debt auctions - that is, dramatically increased funding costs across the board in the economy, including the government, which will choke off any hope of economic anything.
Folks, this is how you get detonation of a nation's monetary and political system. Timing the "event" it is not easy, but the certainty of outcome given this sort of outrageously irresponsible activity is not in doubt.
I'm increasing my stock of things that "will never go to zero" and keeping my ear to the ground. The "short the phone book but make sure you get out fast before you get trampled" moment approaches - mark my words.
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On Jul 23 05:38 PM buddhabill wrote:
> If the autcion 'fails' (i.e. the FED is the primary buyer) who is
> the quick winner?
>
> Precious metals?
> Oil, despite the current stateof inventories?
> The Loonie or the Aussie, playing on commodities?
> TBT?
>
> I'm sitting on 100% USD cash and shitting bricks...
Even China does not have all this money and they can NOT print the US$.
www2.macleans.ca/2009/.../
Davewmart wrote:
"The UK may be a bit ahead of the US in the race to default. Not that it will make any difference, as as soon as one of the big ones goes, the rest come tumbling down."
It is just a matter of fact before someone will start a chain-reaction. Who it might be?
And surprisingly, YES China CAN print the US dollars and it is doing exactly so. How does China print the US dollar? Read to understand China's smart strategy:
seekingalpha.com/artic...
seekingalpha.com/artic...
On Jul 23 09:48 PM nova wrote:
> Please forgive my stupidity but I have a question: Who has all this
> money to buy all theses Treasuries?
>
> Even China does not have all this money and they can NOT print the
> US$.
To the guy thinking US default cannot happen...hmmm. Do you count negotiating a dime-on-the-dollar payment plan (after over 75% devaluation of the US$) to be defaulting?
On Jul 23 07:42 PM SW Richmond wrote:
> "...which will choke off any hope of economic anything."
>
> Anything, including paying off the national debt. And what happens
> to the currency then? Remember what I said on your blog and you shrieked
> at me and then took away my posting rights? It was this very same
> message you've now come here to deliver, a mere week later:
>
> "Folks, this is how you get detonation of a nation's monetary and
> political system."
>
> When the monetary system detonates, Karl, WHAT DO YOU CALL IT?<br/>
>
> "...in exactly the same way it happened to Bear Stearns, Lehman..."
>
>
> That would be bankruptcy. What do we call national bankruptcy? What
> happens to the currency in a national bankruptcy? Come on, Karl,
> you can say it...hyper what?
>
>
> We are already borrowing just to meet "mandatory" expenditures, which
> IMO includes defense, since the USD is worthless if the U.S. financial
> position is evaluated as anything other than backed by the world's
> largest military.
>
> seekingalpha.com/artic...
>
>
> If I was a betting man I'd bet the stock market will miraculously
> crash just in time for all the money coming out of stocks to keep
> the Treasury auctions from failing next week. Interesting that it
> has been pumped up on thin volume; can anyone get me a look at Goldman's
> short book?
But cash? You might as well hold bonds and wait for inflation to get you.
On Jul 23 05:38 PM buddhabill wrote:
> If the autcion 'fails' (i.e. the FED is the primary buyer) who is
> the quick winner?
>
> Precious metals?
> Oil, despite the current stateof inventories?
> The Loonie or the Aussie, playing on commodities?
> TBT?
>
> I'm sitting on 100% USD cash and shitting bricks...
Think of their inability to sell enough long term treasuries as a way for the market to spank them without completely unhinging the whole system. It is a poignant warning. I suggest the Fed wisen up and consider its transgressions. Right now, like a spoiled blat they are in denial, ignoring their misdeeds and trying to make excuses in the international market. They are talking to the wrong person and saying the wrong things (they should be apologizing to the American public not begging infront of any foreigner that has spare cash).
> Surely there is no problem so big as to not be solved with more debt!
A splendid idea, my good fellow! Right you are indeed!
Then we shall solve that problem with ... even MORE debt!
Why, there's not a problem that can't be solved if we simply continue to eat exponentially more debt!
www.youtube.com/watch?...
This really is 21st century alchemy - let's hope the game of chicken continues to work.
And remember the successful auctions will be brought to you by the same people at the Fed who will pull off a successful "exit strategy."
$235 Billion in 7 days!
Holy Monetization of the Debt Bat Man!
Lets check the score board:
(1) the true Unemployment Rate is likely north of 15%,
(2) unprecedented plummeting Federal and State Tax Revenues (more correlated with a 15% Unemployment Rate),
(3) $800 Billion Quasi-Stimulus Plan based on Political-Political rather than Political Economy,
(4) an Administration rolling out Trillion Dollar plans every 2 months (Quasi-Stimulus, Cap and Trade, Socialized Medicine),
(5) no incentives for Private Capital Formation leading to Private Sector jobs (plenty of disincentives).
(6) government sponsored debt mounting at unprecedented rates.
When you wrap it all into one neat package, maybe the Economic Theory is: Neo-Crazy-ian with A.D.D. ( the Administration has given new meaning to Attention Deficit Disorder).
www.truthandpolitics.o...
$230,681,036,000 Federal spending 1972
$235,000,000,000 Federal *borrowing* week of 7-23-2009