Nearly 1/4 Trillion in Treasury Auctions this week

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Nearly 1/4 Trillion in Treasury Auctions this week

Source

70 day CMBs, $30 billion (tomorrow)
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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Re: Nearly 1/4 Trillion in Treasury Auctions this week

Sorry, forgot to add that is a quote from Karl Denninger at the market ticker.

I guess you can't edit a thread opening post.

Cheers,

Rog

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Re: Nearly 1/4 Trillion in Treasury Auctions this week

 

deninger wrote:

 When does the rest of the world wake up (not to mention the primary dealers) and say "NO!"?  

He answers his own question later by saying this is how institutions fail and how you detonate a monetary/political system, but he doesn't put 2 and 2 together because it's so unbelievable or because it makes others think "conspiracy nut."  Simply based on the facts before us, this is the means for the world to kill the US empire without firing a shot (as he said, this stuff killed fannie, lehman, etc) and turn it into the type of country they want...and our own government is making it happen because they don't represent the people but rather the Wall St interests behind all the debt peddling. And that's why the primary dealers don't say no.  They're the same interests behind the Fed...they've made mega billions over the years...and they continue to do so in this collapse...the more in debt we get, the more commissions they make peddling the debt (see Goldman's earnings).

 

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Re: Nearly 1/4 Trillion in Treasury Auctions this week

Ready,

Great post...all I can say is...wow.  I don't see any way in which private and foreign concerns will buy this much debt.  I think this will mean that we will have to buy it ourselves (through the Fed) and end up paying interest to borrow money for interest charges.

Thanks for the heads up...is it time to think about banking holidays?

Larry

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Re: Nearly 1/4 Trillion in Treasury Auctions this week

I agree these policies will eventually result in the end of the US dollar, but I wouldn't be looking for a collapse anytime soon.  They will sell all those bonds this week, and more next week.  In another month or so, they will have raised all that's needed for FY 2009, and yields will not have budged much at all.

More than enough money to buy all these treasuries was already injected into the system when the Fed and congress lent, paid for, or committed to the $2.0 trillion in bail-outs to the financial industry.  The financial industry sure as heck isn't lending this money out to businesses or consumers, so where else are they going to put it all but in US government bonds? 

As for the dollar, the entire world is running short on them.  With the US consumer on strike as it were, the flow of dollars from US to the rest of the world has collapsed.  With the vast majority of world debt and international contracts settled in dollars, countries are scrambling to buy dollars - printing more of their own currencies not only in order to buy them, but also to revive exports to the US. 

The dollar is hovering above a key support point at the mid-$78-ish mark.  If the bond sales go well, as I predict, that support level will hold and the dollar will go up.  I think another major leg in deleveraging is about to start, and I look forward to being able to buy gold at much more affordable levels.

The biggest bubble of them all I am afraid will be US bonds and the $, but that rollercoaster train is still sitting at the station accepting passengers.  There is still a pretty long line of empty carts on that ride, and the conductor is still showing the public aboard. 

 

 

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Re: Nearly 1/4 Trillion in Treasury Auctions this week

Patrick said:  The dollar is hovering above a key support point at the mid-$78-ish mark. If the bond sales go well, as I predict, that support level will hold and the dollar will go up. I think another major leg in deleveraging is about to start, and I look forward to being able to buy gold at much more affordable levels.

Interesting analysis - btw, the price of gold is dropping significantly so far today ( -15.20).  My sister wants to buy some gold but I think I'll suggest she wait just a little longer.

Larry

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Re: Nearly 1/4 Trillion in Treasury Auctions this week

Precisely Patrick.  $ will shoot up in the next collapse wave.  

After that is the scary part.  I only hope at the end of that phase we're still free to buy gold, move dollars overseas, shift into foreign-denominated assets, etc.  Perhaps not.  Other options are shutting down as well...UBS has ended inverse ETFs so it's not as easy to profit from decline...government is discussing shorting so there's a chance we won't be able to do that either.  

Larry, no doubt the Fed will be facilitating a good percentage of the auction, but it will work...for now.  And yes, I'd be prepared for a "holiday."  Cash in hand.  Maxing your ATM withdrawal limit for several days is a good way to build up cash without needing to go in-person to be hassled by a confrontational banker.

 

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Re: Nearly 1/4 Trillion in Treasury Auctions this week

I wonder if the Fed will buy it's own debt again? You have to wonder if the trillions that have gone out of this country without Americans knowledge and according to Ben Bernake- no one seems to know where the money went to. Off shore banks, hedge funds. IMF? Is the money coming back to buy the debt?                                              Not to mention that naked put shorting has been permanently ended by the SEC by the end of the month. Looks like Goldman Sachs and others are shorting Gold for all it's worth while they can.  How much time does the dollar have let? Know one knows for sure, but it's under extreme pressure from all sides now..........

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Re: Nearly 1/4 Trillion in Treasury Auctions this week
investorzzo wrote:

I wonder if the Fed will buy it's own debt again?

I was unaware that it had stopped. It would be my guess direct monitization would be the only method to keep yeilds in the band they need to prevent mortgage interest rates from climbing.

If a 30 yr fixed goes to 8% like when I bought my first house, stick a fork in the whole economy, it's done.

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Re: Nearly 1/4 Trillion in Treasury Auctions this week

The U.S. Treasury has raised $1,020.043 billion in new cash this year selling Treasury securities. The Federal Reserve has purchased $219.721 billion in Treasury securities, or 21.5 percent of the new cash raised in 2009 by the Treasury.

http://seekingalpha.com/article/151874-real-estate-not-out-of-the-woods-yet

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Re: Nearly 1/4 Trillion in Treasury Auctions this week

Foreign Investment in the U.S. – Going Down, Down, Down

http://www.financialsense.com/editorials/casey/2009/0728.html

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Re: Nearly 1/4 Trillion in Treasury Auctions this week
investorzzo wrote:

The U.S. Treasury has raised $1,020.043 billion in new cash this year selling Treasury securities. The Federal Reserve has purchased $219.721 billion in Treasury securities, or 21.5 percent of the new cash raised in 2009 by the Treasury.

http://seekingalpha.com/article/151874-real-estate-not-out-of-the-woods-yet

If I am not mistaken, they announced $300B for this program.

Your guess is as good as mine what the real number is, but it would seem that central banks are buying each other's debt at a staggering pace, so the effective amount of Fed involvment in the auctions could be well north of 50%. We will surely never know the full details.

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Re: Nearly 1/4 Trillion in Treasury Auctions this week

Investorrzo,

Thanks for the great article.  I have to wonder about two potential flies-in-the-ointment of the analysis however:  The first fly is, is foreign investment down because foreign governments are shunning US Treasuries, or is it down because there is a shortage of dollars in CBs throughout the world? 

I live in Costa Rica, and my personal observations on what is going on at least here locally are as such:  tourism (the #1 industry) has fallen through the floor.  Hotels are running 20-30% occupancy levels even after slashing rates 30-50%.  Any hotels with debt will soon be bankrupt, and even some without debt will be too.  Exports are down 20-30%.  Not as bad as places like China, but still quite a pop.  All this means the spigot of inflowing dollars has slowed to a trickle, and as such, so has the CR government's take of incoming dollars through taxes.  Now what does the CR government need US dollars for, you might ask?  Well first, to pay all foreign debt.  All our loans are in dollars, including a nice $300 million loan we received from China just 2 years ago.  Second, to buy oil.  We don't produce any, and need $ to buy all we need off the world markets.  Third, to import absolutely anything and everything else we do not produce locally.  The dollar still is the world reserve currency, and that is what everyone needs to do business globally (except for a handful of countries that have respectable currencies).

Now, CR is a small, practically insignificant country as far as global economic affairs are concerned.  But I can only imagine that the situation just described is very similar just about everywhere else in the world.  Governments are running very short on dollars with the US consumer being on strike.  Whereas the CR before might have had a surplus of $ and could have put some of that surplus into US Treasuries, that reality has gone out the window.  We are running a shortage now, not a surplus.  I can only imagine the CR government doing one of two things:  print local currency to buy dollars off the world stage, or sell CR bonds denominated in US dollars in order to raise the $ necessary to conduct business.  I think they will do both, especially since the second is only a precursor to the first (they will have to buy dollars to pay the interest on the dollars they borrow).

Which leads to my second fly in the ointment:  if the flow of US dollars has slowed to a trickle, it stands to reason that all those dollars are staying State-side, as is manifested by the historic flip-flop in the US personal savings rate.  If that is true (and I cannot think of any other conclusion), then those dollars are fully capable of being used to buy US Treasuries, and I am sure they are.  What savings people are stashing away are surely being put to work by their banks in US Treasury products.  Secondly, we know the Fed transferred over $2 trillion to the financial industry in exchange for toxic assets.  That right there is more than enough to buy all the Treasuries being sold this FY. 

Which leads to my final conlusion:  the referenced article I think will prove to be correct eventually.  That is because even with those $2 trillion going from the Fed to the financial industry, and even with the US consumer saving and allocating dollars capable of buying Treasuries, the government is amazingly enough spending more money long term than even those two sources of funds allow.  So, first we have to drain the monies made available through the Fed ($2 trillion), the debt monetized by the Fed ($300 billion), and the US citizen's savings, and then we will be in a real pickle.  That is why I think we are still in a dollar-strengthening phase (we'll see if the 78.5 level on the USD$ holds), and why yields will continue to go down.  When much more of the debt has to be monetized, and when foreigners start dumping Treasuries in order to raise cash for their (probably equally outrageous) spending, then we will have a US currency and Treasury crisis.  Mind you that all other currencies will have depreciated to near toilet-paper-status by then.

 

 

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Re: Nearly 1/4 Trillion in Treasury Auctions this week

Weak Treasury Auctions Raise Worries About US 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.

Under the weight of the ballooning deficit, the government has raised auction volumes and analysts now wonder whether the strain on the market is showing.

"Obviously everyone is inferring that tomorrow's won't be good either," said James Combias, head of government bond trading at Mizuho Securities USA in New York. "Maybe you will see more interest tomorrow but I think the increase in the auctions and the size of them may be starting to have an effect. These are very large auctions." 

"It was just a horrendous result," said William O'Donnell, head of U.S. Treasury strategy at RBS Securities in Greenwich, Connecticut."It was the weakest bid-to-cover since September 2008, and by my numbers it was the biggest tail since February 1993. It was just a very, very weak result.

The government plans to issue $2 trillion in new bonds this year to finance economic and financial rescues.

This is insane - if we can issue bonds, we can issue dollars.  There is no reason for the U.S. to borrow from any private bank.  Our monetary system is a scam.

Larry

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Re: Nearly 1/4 Trillion in Treasury Auctions this week

Very interesting Patrick. I hadn't viewed things from that angle before. I do have some questions though. With regard to Costa Rica, why are they not buying oil from Venezuela or Mexico? Or are those sources also sold in Dollars? I guess it makes sense if those countries are also paying off dollar denominated debts, but I didn't think Venezuela at least had much dollar denominated debt. . .

On another note, what're Geithner 'n' pals 'selling' the Chinese, Japanese, Russians, Germans, etc, to keep them from creating an alternate reserve currency? Obviously, these other nations are 'pretending' to play that card in order to be dealt a better hand in the 'big' game - but just what IS that bigger game? What do they ultimately get?  

Is the US going to parceled out to the highest bidder in the end? Or is it even bigger. . .by keeping the US as the worlds reserve currency, all the little debtor nations like CR will all eventually lose their currency and then the hawks will swoop down and buy up everything in sight. . . much to think on.

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Re: Nearly 1/4 Trillion in Treasury Auctions this week

Hi Tyler,

Even MX and VZ use dollars for international trade.  Dr. Martenson actually touches on this issue ($ use in intle trade) in the latest podcast from 2 Beers w/ Steve, which I highly recommend.  The US $ is the lubricant of all world trade.  Very little trade gets done in any other currency.  As much as China and a few others may want to change that (and eventually probably will), it is not that easy. 

As for Our Secretary of Borrowing, I have no idea what he could be telling the Chinese, or what he could possibly tell them that they might believe.  I do not however, think the US is without leverage here.  As irresponsible as we've been, the Chinese have also been irresponsible.  They have lent $800 billion to an insolvent nation.  They may be kicking themselves for that, but they have a huge incentive to see us succeed and protect their investment. 

China also isn't without its problems.  They have 700 million people living below the "poverty line".  Imagine that.  More than double the entire US population living in "poverty".  However that's defined, it's a huge number.  They have bastions of ethnic groups and thousands of dialects, spread over a large land mass with huge inequalities between those who live in cities and those who live rurally.  As much as I follow Jim Rogers and other China bulls, even they readilly admit China is a very long term play and do not rule out some very tough times ahead for them as they rise to be the wordl's economic engine.  The recent turmoil in western China is only the tip of the iceberg IMO, as that country struggles to maintain prosperity during its first major interruption of growth in 30 years.

For now, even with all its messes and broken political system, the US is still the world's largest economy. and the dollar is the world's heroin.  I don't know what is going to happen.  It seems like for now the $ will strengthen, but eventually, the currency of a country that must print more just to pay the interest will be discarded.  The problem is the whole world is built around the dollar, so it seems this is a bubble that will grow until the very last possible moment.

It did occur to me that maybe one solution would be this:  Have the US change its currency (issue a new one - without the Fed por favor), but keep the dollar in existence.  Transfer control of the dollar to a global body (not the IMF por favor), and back it up with commodities.  By keeping the dollar alive but out of the reach of the US government's inflationary and deflationary hands, that helps keep the world functioning.  By establishing a local currency for the US, that would free us of all the debt we owe for dollars borrowed (transfer bonds from the Treasury to the world body), and would free us from the dangers of being the world's reserve currency (I think there are more disadvantages to having that status than advantages).  I know, I know, this is the NWO everyone fears.  But if the US establishes its own currency, that makes us independent.  The NWO can have its dollar, and world trade can continue.  In fact, it introduces one more level of separation between us and the world.  The $ is already the world reserve currency.  We'd just be keeping that as it is, but shielding ourselves from the dangers (which we've proven we are not responsible enough to avoid) of being the world reserve currency.

My 2 cents.

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"Weak Treasury Auction Raises Concerns over the Gopher Hammer"

Larry,

I would not read too much into the "weak" treasury auction results.  Yields went up a little, but they're so low to begin with, the real news should be that they're not trading at much higher yields. 

Everyone knows the Fed has transferred trillions to the banks in exchange for toxic assets.  The banks aren't lending the money to businesses or consumers, so where else are they going to put that money other than US government bonds?  All the money necessary to absorb FY 2009 auctions and then some is already in the system.

On top of that, the Fed has committed to monetizing $300 billion, of which they still have about $100 billion to digitally inspire into existence. 

One interesting thing yesterday is that short-term yields went up and long-term yields went down.  That makes no sense - at all.  I think the Fed is using its relatively small barrel of powder to buy the long-end of the curve in an effort to manipulate the short-end.  It didn't work yesterday, but don't be surprised if they pulled a few strings overnight, called a few other banking buddies, and we see that little rise from yesterday get slammed today.

Like a kid at a carnival gopher-game, the Fed stands by waiting to hit those rising-yield gophers upside the head just as soon as they so much as take a peek outside their gopher hole.  Wear a helmet!

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7 yr auction looks good...

So, where do you think all the money is coming from, and why do the longer notes have better results than shorter ones? Either we have entered bizzaro world, or there is a greater force at play here behind the scenes.

http://www.reuters.com/article/marketsNews/idUSNYE00266320090730

[quote Reuters]

T-Bonds pare losses after $28 bln 7Y note sale

Thu Jul 30, 2009 1:08pm EDT

 

NEW YORK, July 30 (Reuters) - U.S. Treasuries pared losses on Thursday, after solid bidding at a record $28 billion sale of seven-year debt in contrast to the disappointing results at the previous two auctions.

 

In the open market, the price of seven-year notes US7YT=RR was trading up 3/32, versus a 13/32 decline before the auction results. Their yield which moves in the opposite direction to their price was 3.29 percent, compared with 3.37 percent prior to the auction result.

 

Benchmark 10-year notes US10YT=RR was down 1/32 to yield 3.67 percent. Before the auction results, they were trading down 15/32 to yield 3.73 percent.

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Re: Nearly 1/4 Trillion in Treasury Auctions this week

 

Quote:

 what're Geithner 'n' pals 'selling' the Chinese, Japanese, Russians, Germans

It's a mistake to view this in terms of nationalism...the type of lens we normal people use.  It's not the Chinese people, the Russian people, etc that Geithner is talking to.  It's the global banking powers that transcend nation-states...they view national boundaries as hurdles to overcome to be able to parasitically extract value more efficiently.  The elite screws people regardless of which country it is. JPMChase, BoA, Citi, Goldman are all simply shifting their focus and ramping up big time to get ready to profit from China's upcoming century-long boom now that they've extracted all the value they could from the US' century-long economic boom and killed it.  The Fed (in cooperation with the other central banks) facilitated the US phase.  Now the BOC (in cooperation with the other central banks) will facilitate the China phase.  

Everyone, don't try to apply normal reasoning to what central banks do because you'll be stuck wondering "why the heck are these guys buying so many treasuries!?"  They are not "looking out for the little guy" in their country. They are not interested in helping their country's economy...they only need to act like they do and make it work good enough to keep the people from kicking them out of power.  They are a cartel for the financial class to extract value.  Once that's understood, it's not hard to answer the questions that seem so unanswerable to our normal logic.  

 

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Re: 7 yr auction looks good...

While I always get a queezy feeling quoting things out of Wikipedia, the article below pretty much draws the whole picture out for us:  Primary Dealer, meet Fed.  Fed lends you money against your toxic assets at a cost below Treasury bonds.  Buy treasury bonds and make money off the spread. Now how do I get to be a Primary Dealer?

 

Primary Dealer Credit Facility

From Wikipedia, the free encyclopedia

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On March 17, 2008, in response to the subprime mortgage crisis and the collapse of Bear Stearns, the Federal Reserve announced the creation of a new lending facility, the Primary Dealer Credit Facility (PDCF). Eligible borrowers include all financial institutions listed as primary dealers, and the term of the loan is a repurchase agreement, or "repo" loan, whereby the broker dealer sells a security in exchange for funds through the Fed's discount window. The security in question acts as collateral, and the Federal Reserve charges an interest rate equivalent to the Fed's primary credit rate. [1] The facility was intended to improve the ability of broker dealers to access liquidity in the overnight loan market that banks use to meet their reserve requirements.[2]

The creation of the Primary Dealer Credit Facility constitutes the first time in the history of the Federal Reserve that the Fed has lent directly to investment banks, and it reflects the severity of the financial crisis perceived by Federal Reserve Chairman Ben Bernanke. [3] Non-bank institutions such as investment banks exist outside the Fed's regulatory structure. A full detail of the nominal value of loans outstanding through the PDCF is available in the Federal Reserve's public balance sheet. [4]

During the first three days the facility was open, an average of $13.3 billion was borrowed daily with $28.8 billion in loans outstanding.[5][6] Lending activity peaked in the first week of October 2008, averaging around $150 billion daily.

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Re: Nearly 1/4 Trillion in Treasury Auctions this week
Patrick Brown wrote:

Investorrzo,

Thanks for the great article.  I have to wonder about two potential flies-in-the-ointment of the analysis however:  The first fly is, is foreign investment down because foreign governments are shunning US Treasuries, or is it down because there is a shortage of dollars in CBs throughout the world? 

Dude -- this is a really interesting take on the whole current sitch.  Thanks!

Viva -- Sager

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Re: Nearly 1/4 Trillion in Treasury Auctions this week

 

 Strabes, when I said, "what're Geithner 'n' pals 'selling' the Chinese, Japanese, Russians, Germans", - I'm not at all meaning to imply that they're talking to the masses of those countries. I think however that we cannot forget that the elite are not unilateral and monolithic - they are always looking for ways to get up on each other. And there ARE national boundaries to many of these many power groups - there is no other way to explain the antics of the priesthood of the American elite, in their prancing about the globe trying to keep these other powers from acting in ways which might upset their big game plan.

My question still remains, what are they offering them? If China and Japan start selling treasuries, the FED will have to pick up the slack and that will not be politically easy - they may drop the ball. And if they were to drop that ball, the US wouldn't be able to fund itself - bye bye US. . .in the mean-time, the Chinese and Japanese go on a buying spree snapping up every US asset they can.

So why isn't that happening? Why don't they sell their treasury holdings?  Geithner 'n' pals must have convinced them that they will be better off by waiting. . .but for what?  Again, the only conclusion I can come to is that they hope to drag the entire world into the collapse. They must be offering the other power groups a share of the larger booty as these other groups have the ability to lever over the cart.

So I agree that a bigger bubble is being created. The question as always is one of timing. Is it this fall, or is it one-two-three years from now. Frankly, I can't imagine how this could drag out to much longer. History shows that Americans are slow to wake up to this sort of thing - they had to be dragged into WWI and WWII, but this information is really starting to spread, and there is only so long that the MSM will be able to misdirect the attention of the masses. The problem for the priesthood is that the electorate are well armed and know where they live. This is of course a frightening prospect as I'm sure the elite have contingencies for this sort of thing and they have had years and years to plan.

I don't see that the elite are imagining a 'recovery' in the near term i.e. the next 30-50 years. Economic growth is based on infinite energy, and oil isn't it. Was it the IPCC that quietly admitted in a report late last year the peak was reached in Aug of 2008? I believe it was. Fusion is at least 20 years from 'saving us', so we can forget that. With oil, water, topsoil, and ocean stocks in decline too, there won't be enough food to feed the billions on this earth.

The US gov has 'just' finished draining it's wheat reserve - probably not a good time to be without reserves. The price of food is soon to skyrocket for many of the above reasons. If the US preisthood is forced by the hungry electorate to put export duties on grain, the Chinese and a lot of Asia will be in a vise.

What will China do with it's vast disparate population? I believe that it will unite under attacks whipped up from some imagined foe and will move against it's neighbors - taking the Chinese perspective and understanding the art of war, we must conclude that they would not waste the opportunity. Their navy is growing rapidly and they have vast stockpiles of steel.

I do agree with Dr. Martenson, it is a very exciting time to be alive.

Keep smilin', keep planning,

Jordan

 

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strabes
Status: Diamond Member (Offline)
Joined: Feb 7 2009
Posts: 1032
Re: Nearly 1/4 Trillion in Treasury Auctions this week

What does China (Asia) get from buying Treasuries?  The Chinese masses get screwed (for now...they will become the richest mass of the 21st century), but the elite are basically our owner as they have become the primary senior debtholder. They have the benefit of massive interest payments in the safest dollars in the world...yeah we know we're insolvent, but in the meantime Treasury payments are the most reliable dollars in the world...most other "dollars" will evaporate in the upcoming collapse. On a real purchasing power basis China will become FAR more rich than it is today and the indebted US far poorer as deflation continues.  They enjoy having 100,000,000 US taxpayers paying them...how smug/proud they must be that they have won as our elite sold us out.  Just like bankers don't care about the principal as long as they're getting the necessary interest, China is willing to forgo principal for now...everybody knows it's impossible for them to be paid the principal...but they know they'll take massive amounts of highest quality dollars until the dollar system itself crashes. But just like banks get governments to hand over tax money in order to get their principal back as a result of their own bad decisions, I guarantee China is promised something more from us behind the scenes.  This is the thing that we can't 100% know because it's being discussed among the true elite, not the politicians we see on TV.  

I could guess at what has been offered, but I won't mention the details here because the post will be relegated to the CT bin.  I'll just say that Asia will gloat as the US masses get the comeuppance that the elite thinks we deserve...Clinton said in 93 that the US was given too much freedom (a "radical" amount) in our founding...good elitist opinion he learned at Oxford...that will be fixed...that's what has been offered...Obama said "a world order all of us would like to see" which doesn't involve the US "being above" anybody else. I'm just quoting presidents...I'm not a nut.  I hope folks are ready for a long period of downward mobility...we will move from the richest people in the world to being on par with the global average...that's a LONG way down.  Then we americans will be more easily managed.  

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