Posted on 08/29/2013 10:54:25 AM PDT by whitedog57
The U.S. Treasury Department sold $29.000 billion of seven-year notes at a yield of 2.221 percent, as demand fell relative to the last auction of securities with the same maturity.
ust7auc
The bid/cover ratio, which gauges demand by comparing the number of bids to the amount of securities sold, fell to 2.43 from 2.54 at the last seven-year note sale, indicating weaker demand. The bid/cover ratio was the lowest since 2.26 at the May 2009, auction.
7ybdrat
The same occurred at the last 10 year auction of Treasury debt. Again. back to 2009 levels.
bidcover333
Indirect bidder participation (which includes foreign Central Banks), fell to 40.8%. It has averaged 45% since January 2009.
idbis0
Since May 1st, the US Treasury yield curve has risen over 100 basis points at both the 7 and 10 year maturities.
ustyc082913
Notice, of course, that the short-term Treasuries have show little movement since May 1st (blue area), but the 7 year and longer maturities have been leaping upwards and steepening the slope.
As BB King sang, “The thrill is gone” from US Treasury auctions.
Perhaps Fed Chair Ben Bernanke should perform a duet with BB King!
It’s only paper.............
they may not like US debt, but they like global economic collapse even less
Help me out here. I know I over simplify, but...
Helicopter Ben is “buying” $85B per month. And the federal government claims that the annual deficit is $1T.
So, am I correct to assume that the non-FED buyers of debt are buying the stuff getting rolled over, while the Fed is buying (such an Orwellian use of the language) only the new debt?
In any case, the size of the accumulated debt, growing at the *acknowledged* (as opposed to the real) rate is gargantuan beyond any rationalization that it can be continued at this (or any) pace.
The fact that our representatives in Washington are not in a state of absolute panic indicates to me that most of them are genuinely mentally ill and delusional to the degree of needing anti psychotic medication.
I have a bipolar, alcoholic in law that is addicted to Xanax, living on the taxpayer, and discussions with her regarding her own economic situation are no less rational than what our reps are saying.
Truly, I wonder if we are living in some alternate universe like the Matrix.
Wait for it.............game over.
The waters of the river Denial are warm and pleasing. Nothing bad can happen to you while you lazily swim there. All the problems of the world can be just wished away. There is absolutely no reason to leave the dream and face the harsh reality.
There is a good novel about that.
f time were not a moving thing
And I could make it stay
This hour of love we share
Would always be
There’d be no coming day
To shine a morning light
And make us realize our night is over
When you walk away from me
There is no place to put my hand
Except to shade my eyes against the sun
That rises over the land
I watch you walk away
Somehow I have to let you go
Cause it’s over
If you knew just how I really feel
You might return and yet
There are so many times
That people have to love and then forget
Oh there might have been a way somehow
I have to force myself to say
It’s over
So I turn my back,
Turn my collar to the wind
Move along in silence
Trying not to think at all
I set my feet before me
Walk the silent street before me
Now it’s over
If time were not a moving thing
And I could make you stay
This hour of love we share
Would always be
There’d be no coming day
To shine a morning light
And make us realize our night is over
Help me out here. I know I over simplify, but...
Helicopter Ben is “buying” $85B per month. And the federal government claims that the annual deficit is $1T.
Here is my understanding of how the game is played.
Congress/President approves debt limit ($16.7T) for 2013 based on $1T overrun between revenue (taxes) and expenditures (entitlement programs, military, etc.)
Treasury issues T-Bills based on debt limit and sells them through out the year to fund the fiscally unsound government.
This is the tricky part,
The FED lends money to primary dealers (Wall St. TBTF/TBTJ banks and investment houses) at zero percent at $85B a month that is exchanged for T-Bills and insolvent mortgages (about a 50/50 split, with the mortgages being credited at face value vs. market value). The FED creates this money out of thin air based on the debt limit authorization. This is why when the limit is reached (early 2013) they freak out because it brings QE to a halt.
This gets the insolvent mortgages off the books of the banks and onto the FED, while providing the primary dealers face value vs. market value in cash.
This allows the FED to monetize our debt as the primary dealers are the purchasing agents of the T-Bills that the Treasury department was authorized to issue by Congress/President to pay the yearly overruns. The primary dealers get to pocket the transaction fees and the interest spread between the zero percent FED dollars and the T-Bill yields.
The primary dealers then take their $85B zero percent loan money which is backed by insolvent mortgages and T-Bills to go play in the stock market thus driving it up to the moon while the real economy craters. This is a win/win/win for them.
The FED now has $2T worth of insolvent mortgages and T-Bills on their books which they are holding onto as collateral for their $85B/month zero percent loans. The FED hopes to have these items redeemed in the future once the economy is stabilized. They have the toxic mortgages not marked to market value, they have T-Bills that the primary dealers essentially bought for them, and they have kept the huge money expansion contained by being the buyer of last resort. This is a zero sum game for the economy except the primary dealers and Wall St. make out like kings.
The key is without the debt limit increase, no T-Bills, no FED zero percent loans, no zero sum game. This being a ponzi system and all the debt curves going exponential, it is only a matter of time before it goes down. The minute zero percent interest goes away, all this debt crushes us like a beer can. They will never pay back this debt. At some point, if the real economy continues on its downward spiral, they will stick the taxpayer with all of the insolvent mortgages.
The Federal Reserve is a privately held bank. Its ownership and activities are secret. The scam is that the Federal Reserve "issues money". Only, it's not their money....it's money the federal government invented out of thin air. But here's the scam....it's declared to be money borrowed from the Federal Reserve, so it's "paid back" to them, plus interest.
And us little folk? The government just invents the money; they don't even print it anymore....it's digitized. But, while we get near-zero interest on our savings, the federal debt that taxpayers owe is taxes we pay. It's the most incredible transfer of wealth from the middle class to the elite in history.
If the Federal Reserve and other private national banks were abolished, so what? There's no reason to pay the money "back" to the FR since it wasn't theirs to begin with. It might be a little tumultuous at the start, but with a balanced budget and getting real about the things the US cannot afford, we'll be much better off.
Buying US debt is like Amos selling Andy a Uranium mine in New York.
LLS
$45 billion in Treasuries, $40 billion in guaranteed MBS.
No it doesn't. The current Discount Rate is 0.75%.
Banks are currently borrowing $21 million with an M at the Discount window.
$85B a month that is exchanged for T-Bills and insolvent mortgages
Wrong. The Fed only buys guaranteed mortgages.
(about a 50/50 split, with the mortgages being credited at face value vs. market value).
Wrong. The Fed buys at market value, which is above par. Has been the entire time they've been buying them. They currently have an unrealized gain on their bond holdings of almost $200 billion.
This gets the insolvent mortgages off the books of the banks and onto the FED, while providing the primary dealers face value vs. market value in cash.
It takes high quality bonds yielding 2%-3% and replaces it with cash yielding 0.25%. At the market price.
The FED now has $2T worth of insolvent mortgages and T-Bills on their books which they are holding onto as collateral for their $85B/month zero percent loans.
They own them, they aren't holding them as collateral. There are no loans at zero percent.
The minute zero percent interest goes away, all this debt crushes us like a beer can.
Since there are no zero percent loans, why haven't we been crushed?
At some point, if the real economy continues on its downward spiral, they will stick the taxpayer with all of the insolvent mortgages.
The Fed makes big bucks, buying these perfectly solvent bonds, which it turns over to the Treasury each year.
Yes....except it would be the Kingfish selling Andy a uranium mind. Andy was a sensible cab driver.
Wrong and wrong.
But here's the scam....it's declared to be money borrowed from the Federal Reserve, so it's "paid back" to them, plus interest.
The Fed doesn't loan FRNs. The government doesn't borrow FRNs.
The government just invents the money; they don't even print it anymore....it's digitized.
FRNs are still printed, obviously.
It's the most incredible transfer of wealth from the middle class to the elite in history.
Paying interest on borrowed money does that?
Gee, I just read your FR page.
IMO, you’re a loon. Party on.
oops...just noticed I typed Andy last night. AMOS was the sensible cab driver.
Written is haste and yes you are correct. It was an actual episode also.
I miss the Amos & Andy programs.
You can still occasionally get the A&A radio programs that preceeded the TV series on http://www.yesterdayusa.com The radio Kingfish and Andy are the same actors as on TV.
Check that website if you like the old radio plays. Fibber McGee & Molly, The Great Gildersleeve, radio Dragnet (with Jack Webb), Gunsmoke, Jack Benny, the Whistler, Yours Truly Johhny Dollar, Bogey & Becall together, scary plays, singing shows and so many more. Radio was TV before there was TV.
I am all about the old movies and radio shows. I just watched all of the Bogart/Bacall movies and they were just outstanding. Thanks for the heads up!
LLS
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