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    Daily Digest – July 30

    by Davos

    Thursday, July 30, 2009, 2:40 PM

  • $235,000,000,000.00 Primary Dealers buying. Where is the money coming from?
  • 5 Year Bond Auction Fails
  • Notes on the Dollar….
  • Another Piece of the Money Trail (TIC Data – White Paper on Page)
  • Weak Treasury Sales Raise Worries About U.S. Debt Burden
  • Option Arms
  • Schumer Letter To Mary Shapiro (White paper)
  • IMF-Latvia deal foundering
  • Groundhog Day
  • Bank "Making" Money and Cutting 10% of it’s Branches
  • US, China have pointed questions in private
  • Jim Rogers on TV Investment Advice (Video, Repost)
  • Gold Coast CRE Meltdown Visualized (Slides)
  • The "Jobless Recovery’s" Impact on the Hotel Industry (Video)
  • Argentina (Video, H/T JAG)

Economy

$235,000,000,000.00 Primary Dealers buying. Where is the money coming from?

[Charts and tables on page]

Bond and dollar futures are both higher. Higher during a week that they are issuing $235 billion??? Now here’s my question… how do we finance $235 billion of bond auctions in one week – WHERE DOES THE MONEY COME FROM? Well, if we look at the bid results, we find that the Primary Dealers (PDs) are doing more and more buying each week. And when we look at the TIC data, we find that international buyers are doing more selling than buying. So, if the money to buy such massive issuances is coming from the PDs, then they have to be using their own cash or equivalents to buy them – correct?

5 Year Bond Auction Fails

That’s right, FAILS.

No, you didn’t hear it reported this way and won’t, but that’s the math.

Notes on the Dollar….

Hey, we’re about to find out what’s truly important to the powers that be. Of course they talk up a strong dollar while simultaneously killing it with their actions – you know, little things like auctioning off $235 billion in new DEBT just this week!

Another Piece of the Money Trail (TIC Data – White Paper on Page)

As I’ve been mentioning in my reports on the flow of Treasury International Capital (TIC Flows), foreigners have been net sellers of our debt. This last report, released July 16th, shows a net outflow of foreign private capital of $82.2 billion and the outflow of foreign official flows were $15.6 billion.As I’ve been mentioning in my reports on the flow of Treasury International Capital (TIC Flows), foreigners have been net sellers of our debt. This last report, released July 16th, shows a net outflow of foreign private capital of $82.2 billion and the outflow of foreign official flows were $15.6 billion.

Weak Treasury Sales Raise Worries About U.S. Debt Burden

The U.S. Treasury sold $39 billion in five-year debt Wednesday in an auction that drew poor demand, raising worries over the cost of financing the government’s burgeoning budget deficit.

It was the second lackluster showing in as many days, convincing analysts that the stellar results of debt auctions just a few weeks ago were a fluke and that Thursday’s $28 billion seven-year offering could suffer a similar fate.

Groundhog Day

Bonds, tech stocks, credit, housing, commodities… a would-be bubble in everything. Marc Faber, by way of Michael Panzner illustrates just how removed from any kind of sound economic foundation we became (Will They Ever Grasp the Simple Truths?) by the time the rolling bubbles of the 2003-2007 time frame had hit full throttle around mid-decade.

You’ve seen the movie Groundhog Day, with events repeating over and over in a maddeningly similar pattern? Our policy makers have been schooled in a system that has proved itself to be unsound or worse, disastrous and yet in their densely myopic fashion, these bureaucratic stooges move forward pumping the same old policy as heroin into the [debt] junkie as the first and most privileged abusers, the big banks, laugh all the way to the… bank. That would be our children’s piggy banks. We have eaten their future, and it is criminal.

Bank "Making" Money and Cutting 10% of it’s Branches

CHARLOTTE, N.C. – Bank of America Corp. could eventually shrink its 6,100-branch network by about 10 percent as consumers utilize other methods of banking, a company spokesman said Tuesday.

Bank of America spokesman James Mahoney made the comments when asked about a published report that CEO Ken Lewis and another bank executive described such a plan to investors at a meeting last week in Charlotte, N.C., where the bank is based.

US, China have pointed questions in private

The Chinese, who have the largest foreign holdings of U.S. Treasury debt at $801.5 billion, have been expressing worries that soaring deficits could spark inflation or a sudden drop in the value of the dollar, thus jeopardizing their investments. Chinese officials said those concerns were raised during Monday’s talks.

"We sincerely hope the U.S. fiscal deficit will be reduced, year after year," Assistant Finance Minister Zhu Guangyao told reporters after the Monday talks had ended.

"The Chinese government is a responsible government and first and foremost our responsibility is the Chinese people, so of course we are concerned about the security of the Chinese assets," Zhu said, speaking through an interpreter.

The discussions on America’s deficits and China’s role in financing them highlighted the growing economic importance of China, now the world’s third largest economy.

The discussions in Washington represent the continuation of talks begun by the Bush administration. While the initial talks focused on economic issues, Obama wanted the agenda expanded to include foreign policy issues such as America’s drive to get China’s support for more international pressure to curb North Korea’s nuclear ambitions.

Jim Rogers on TV Investment Advice (Video)

Gold Coast CRE Meltdown Visualized (Slides, Please see link on page)

A reader submits the following photo essay on the absolute commercial real estate carnage in Florida. Has to be seen to be believed: you will not see these pictures anywhere in traditional media.

The "Jobless Recovery’s" Impact on the Hotel Industry (Video)

Argintina (Video, H/T JAG)

[video:http://www.youtube.com/watch?v=whVSw5X2pVU&feature=player_embedded]

Full article this was taken from

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