"Flip That Bond" Fed Monetizes 50% Of Primary Dealer Bid From Last Wednesday's 7 Year Auction

ZeroHedge ^ | 04/04/2011 | Tyler Durden

[RobertClark]

Grotesque, meet tragicomic. In today's POMO the biggest CUSIP monetized was QB9, of which the Fed purchased $5.99 billion (of a total $8.03 billion). And here's the kicker: when we commented on last week's 7 Year auction we once again were rather prophetic: "Altogether a weak auction but it's not like the PDs would let it fail especially not with QB9 becoming the next "flip back to the Fed" bond for the PD community." And tadaa: today, the Fed bought back 50% (!) of the Primary Dealer take down ($12.115 billion) of last Wednesday's (yes that would be the QB9) auction. This is probably the fastest episode Flip That Bond on record. Anything else and the Fed would be monetizing bonds that had not yet settled.

Sigh:

[RobertClark]

And....the primary dealers cleared just under a billion to hold the bonds for just under one week. How long do you think we can continue to buy our own debt with worthless paper before the rest of the world tells Bernanke to shove them up his a$$?

[JPG]

Bernanke must have watched Beavis and Butthead sell candy to each other during a school fund raiser. End result...no candy and no money.

[April Lexington]

Oh, my... this is not good... I can’t imagine why gold is trading above $1400 these days...

[fhayek]

I have been inspired. I am going to write a check from one account with no balance to deposit into another account with no balance. See, finance is easy the Bernanke way!

[April Lexington]

And....the primary dealers cleared just under a billion to hold the bonds for just under one week.

Does anyone believe that there are ANY Congressional Reps or Senators who understand what this sentence means? We are screwed while the government spends us broke and the Primaries make BILLONS! Oh, don't forget, peasants... your tax returns are due in Washington two weeks from today. Better hurry up and get your money in!

[April Lexington]

One would think that patriotic primary dealers would help the poor taxpayer by voluntarily doing this service for our government. Maybe just help the folks out a bit so we can get through this rough spot. No? Not at all? Sigh... I didn't think so. They have Long Island mansions to support....

[mewzilla]

Does anyone get a commission for these sales? If so, who and how much, anyone know?

[Frantzie]

No one wants US Treasuries. The country is a joke now. The drooling idiots watch Obama TV and live in a ddream world.

[tpmintx]

And....the primary dealers cleared just under a billion to hold the bonds for just under one week.

Does anyone believe that there are ANY Congressional Reps or Senators who understand what this sentence means?

I can think of 2 of them, and they both have the same last name. 1, a senator from Kentucky. The other, his father, a representative from Texas.

[scooby321]

No one wants US Treasuries. The country is a joke now. The drooling idiots watch Obama TV and live in a dream world. Would you invest in a company that spends like our country and revenues are good

Even if we would have a vibrant housing and construction, have ""real GDP at 6% we would still be trillion over budget.

[Former Proud Canadian]

The banks call that kiting. It is illegal. Wait a minute....

[RobertClark]

No one wants US Treasuries.

There is a tremendous amount of truth in that statement. The Lamestream media will focus only on the bid / cover ratio that is being touted by the treasury. Of course, when you assure primary dealers that you will buy the worthless paper from them for a premium, they will line up to take down the auction and keep the total bps within target. If the PD's were not flipping the bond issues to the Fed, more than 70% of all bond auctions would go uncovered and rates would skyrocket in an attempt to draw foreign suckers bidders back into the fray. We are sooooo screwed that most people have no idea how fast the dominoes could fall at the drop of a hat now.

[April Lexington]

I can think of 2 of them, and they both have the same last name. 1, a senator from Kentucky. The other, his father, a representative from Texas.

Well, 2 out of 535 is a good start. I love Texas!

[fhayek]

If I understand you correctly, either interest rates will skyrocket, or the Fed will become overladen with worthless securities. I cannot envision a scenario where this will be good for the economy.

[Southack]

Japan’s been doing it for over 20 years. We’ve got a long way to go.

[fhayek]

ping me