Posted on 08/11/2011 2:23:59 PM PDT by Qbert
Aug 11 (Reuters) - The U.S. Treasury sold $16 billion worth of 30-year long bonds at a poorly received auction on Thursday, with investors showing the weakest overall demand in 2-1/2 years and foreigners largely steering clear.
[Snip]
Investors submitted bids worth 2.08 times the amount on offer, the lowest since February 2009. A measure of foreign demand -- the indirect bidder category -- accounted for just 12 percent of the sale, the lowest since February 2008.
(Excerpt) Read more at reuters.com ...
Treasuries bubble WILL pop...just a question of when. THEN, you will see REAL inflation in ALL categories.
Hoping someone can translate this into English.
Our chickens are coming home to roost.
Meant to type “rates” instead of “prices”. Sorry for any confusion.
Who is buying them and why?
... The only reason we’re not seeing higher bond prices is that Geithner and Bernanke are pulling an end-run on the markets with what amounts to monetization schemes. Only thing still propping the dollar up is reserve currency status (that’s starting to go away as we speak).
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My assumption as well. But how do we prove that? What is the mechanism?
I assume the upper end of the markets are still pretty flush with cash from QE and TARP infusions where the Fed purchased assets well above their fair market value from institutions probably in exchange for direct promises to support treasury auctions. I believe the Federal Funds Rate is still at 0% also, meaning banks can borrow from each other at 0% and still make a nominal profit in treasury instruments. The unwritten rule is that they MUST NOT let bond rates rise by refusing to buy if they want continued access to free money. It’s also assumed that they have a duty to keep the Dow insulated from reality if they want continued access to free money. This is part of the reason the ruling class and the banking industry become belligerent when the words “Fed audit” start popping up.
Essentially, we’re just printing money out of thin air to be handed over to the ruling oligarchs just like any other corrupt, economically failed regime.
So you believe the banks are the “straw buyers” of Treasuries for the Fed. I have to agree that’s a good bet. But I question whether there is enough QE2 money out there to fund the unsubscribed portion of Obama’s $1.6 trillion that he needs for FY2012. If not, it would seem that QE3 is a certainty.
I wouldn’t necessarily use the term “straw buyer”. I’d use the term “money launderers”. They actually do buy and hold treasuries, but they do so with money obtained at literally no cost and no counterparty risk so long as the treasury dept gives them assurances that they’ll fire up the printing presses if necessary to service the bonds. It really does amount to a counterfeiting racket done under color of law to benefit private companies. It should be illegal, and prosecuted as felony fraud IMHO.
They don’t necessarily have to QE to keep bond rates from rising. With reserve requirements being what they are, nearly infinite money can be created out of thin air by holding the Fed funds rate at 0%. The unwritten rule is that some of that free money must be used to fund treasury auctions and keep the major indexes from completely tanking to prevent a general panic.
Our financial sector is nearly as outsized as the federal gov’t in relation to the real economy supporting it, and has turned into a parasitic self-serving bureaucracy. It represents an liability rather than an asset in terms of economic recovery. Return to any kind of real growth in this country will require serious monetary and banking reform.
Our financial sector is nearly as outsized as the federal gov’t in relation to the real economy supporting it, and has turned into a parasitic self-serving bureaucracy.
This, after they jumped all over the 10yr on Tue?????
Any comments on this auction?
Investors submitted bids worth 2.08 times the amount on offer, the lowest since February 2009. A measure of foreign demand — the indirect bidder category — accounted for just 12 percent of the sale, the lowest since February 2008.
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I understand the 12% bit but what’s the 2.08 business all about?
In any case my main interest here is finding out who is actually buying the $125 billion in new debt that we are creating every month. Apparently it’s not going to be the Chinese or the Japanese or the Brits.
How about this thought ... The International Banksters had a 100 year plan to strip America of its wealth. The plan was put into action in 1913. Now let's just say that the fed is buying all of these treasuries. Once the fed is holding the majority of them we default and tell the holders to go stick the treasuries where the sun does not shine. They think that they own the wealth and in the end they get stuck with useless treasuries. That would an irony
How about this thought ... The International Banksters had a 100 year plan to strip America of its wealth. The plan was put into action in 1913. Now let's just say that the fed is buying all of these treasuries. Once the fed is holding the majority of them we default and tell the holders to go stick the treasuries where the sun does not shine. They think that they own the wealth and in the end they get stuck with useless treasuries. That would an irony
Poor 30 yr Bond auction! Wait, didn’t we auction off $16 Billion worth of 30 year Bonds paying a yield of 3.75%. And to boot the bidders ONLY wanted to buy twice as many as we were willing to sell. Someone want to explain what is so bad about this auction?
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