"In the tank forever": U.S. consumers, retailers in a "death spiral,"

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investorzzo's picture
investorzzo
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Joined: Nov 7 2008
Posts: 1182
investorzzo's picture
investorzzo
Status: Diamond Member (Offline)
Joined: Nov 7 2008
Posts: 1182
Re: "In the tank forever": U.S. consumers, retailers in a ...

http://www.financialsense.com/fsu/editorials/wagner/2009/0827.html

Checkout this chart.

Thomas Hedin's picture
Thomas Hedin
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Joined: Jan 28 2009
Posts: 815
Re: "In the tank forever": U.S. consumers, retailers in a ...

And this could all be fixed with a matter of months through legislative action at the state level.

 

Up here in Minnesota we have in action right now a bill to put debt free money into circulation so that these businesses can stay afloat and get out of debt.

It's called The Minnesota Transportation Act.

or

H.F. 888 or S.F. 705

 

It's just going to take you to get involved and demand to the state legislators up here in Minnesota that they pass The Minnesota Transporation Act.

I think it's time we stop complaining and put our collective power into action and demand that the state legislators pass laws for the good of the people.

Pass The Minnesota Transportation Act.

 

Farmer Brown's picture
Farmer Brown
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Posts: 1503
Misreading the Tea Leaves

investorrzo,

That chart tells the whole story I was trying to explain in "Misreading the Tea Leaves":  http://www.peakprosperity.com/forum/misreading-tea-leaves/25661

The dollars needed to buy bonds are not coming from foreigners because we turned the dollar-export spigot off.  They are being replaced by dollars that are being kept at home, and being saved, by Americans.  Foreigners aren't "dumping" UST bonds.  They just don't have the dollar surpluses they used to have and therefore have no $'s to "park".  

investorzzo's picture
investorzzo
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Posts: 1182
Re: Misreading the Tea Leaves
Farmer Brown wrote:

investorrzo,

That chart tells the whole story I was trying to explain in "Misreading the Tea Leaves":  http://www.peakprosperity.com/forum/misreading-tea-leaves/25661

The dollars needed to buy bonds are not coming from foreigners because we turned the dollar-export spigot off.  They are being replaced by dollars that are being kept at home, and being saved, by Americans.  Foreigners aren't "dumping" UST bonds.  They just don't have the dollar surpluses they used to have and therefore have no $'s to "park".  

Farmer brown, did you miss this?

http://www.peakprosperity.com/blog/shell-game-how-federal-reserve-moneti...

Farmer Brown's picture
Farmer Brown
Status: Martenson Brigade Member (Offline)
Joined: Nov 23 2008
Posts: 1503
Re: Misreading the Tea Leaves

LOL!

No, I did not miss that!  But the source of current UST bond purchases and the reason for the reduction in foreign purchases are two different things.  By saying "they are being replaced by dollars that are being kept at home..." I did not mean to imply that the increase in domestic savings can account for all UST bond purchases.  Obviously there is something else going on and CM has shown us some of what that is.  

My more important point concerns what is happening with foreign purchases, and my contention is contrarian to the mainstream view that says foreigners are dumping treasuries.  They're not dumping anything - if so, then what are they buying?  As the chart in your link shows, they are suffering from dollar-withdrawal syndrome and simply have fewer surplus dollars with which to buy UST bonds with.  If they are "dumping" bonds it is because they are short on dollars.

edited to fix dumbness

investorzzo's picture
investorzzo
Status: Diamond Member (Offline)
Joined: Nov 7 2008
Posts: 1182
Re: Misreading the Tea Leaves
Farmer Brown wrote:

LOL!

No, I did not miss that!  But the source of current UST bond purchases and the reason for the reduction in foreign purchases are two different things.  By saying "they are being replaced by dollars that are being kept at home..." I did not mean to imply that the increase in domestic savings can account for all UST bond purchases.  Obviously there is something else going on and CM has shown us some of what that is.  

My more important point concerns what is happening with foreign purchases, and my contention is contrarian to the mainstream view that says foreigners are dumping treasuries.  They're not dumping anything - if so, then what are they buying?  As the chart in your link shows, they are suffering from dollar-withdrawal syndrome and simply have fewer surplus dollars with which to buy UST bonds with.  If they are "dumping" bonds it is because they are short on dollars.

edited to fix dumbness

Try reading US bank enemies at the gate. I just posted that one.

Farmer Brown's picture
Farmer Brown
Status: Martenson Brigade Member (Offline)
Joined: Nov 23 2008
Posts: 1503
Re: Misreading the Tea Leaves

Good read on US Bank Enemies at the Gate.

If all that is true, and I don't suspect it is not, then that points to further global deleveraging and perhaps a massive global deleveraging event.  In a deleveraging, assets get liquidated for pennies on the dollar.  Bonds are like most other assets in a deleveraging event, so they too could get "dumped". 

However the "dumping" so far has been met with par purchasing, not sub-par, so we're not there yet.  The "dumping" so far has also been caused by a deleveraging of sorts - the kind that happens when your positive cash flow decreases substantially or even goes negative.  That is different than what many are suggesting - which usually goes something to the effect that foreigners are "dumping" US bonds, with little further investigation or analysis.  It leaves the reader with only the image of US bonds being sold, but with no look at what price, what is going on with their dollar cash flows, and what they are doing with the proceeds.  Based on what I can tell, the answers are:  at par, to replace diminishing cash flows, and paying bills and/or debt.  And, it is a deflationary symptom caused by a increasing demand for dollars in a world with a decreasing supply, when looked at in terms of total debt outstanding and the velocity of money.

What the author of your Enemies article suggests, is an event or a trend that goes far beyond what we've seen so far.  I can definitely see that happening, but if it does, what happens to the dollar?  If bonds get dumped for sub-par, that means yields/interest rates by definition have to go way up.  Doesn't that mean the dollar then has to go up?  It obviously would suddenly pay more to hold them (you get a higher-paying bond in return after the deleveraging). 

AM I missing something here?  Thanks for the discussion.

Ron Shimshock's picture
Ron Shimshock
Status: Bronze Member (Offline)
Joined: Aug 27 2008
Posts: 35
Re: "In the tank forever": U.S. consumers, retailers in a ...

Thanks for the original post investorzzo.

I Howard Davidowitz.  A total straightshooter and knows the retail industry extremely well.

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