flows like water

[muldoon]

theres a money problem going on right now. 

seems we cant get enough of it.  seems these programs the obama camp has been selling are underfunded, and they are having a hard time raising capital. 

On friday, their was a 30 year auction on us treasuries.  it was horrible, 4.288% yield on the auction. it was at 4.18 before the auction. the rate is continuing to skyrocket.  the Bid to cover was 2.14, lowest indirect since last august.  the 10 year and the 30 year both increased 4% in a day. 

so last year, I made the statement that the bailouts were all about the big banks.  specifically, if you go back and search for the terms "primary dealers" you'll find me ranting about the structure for a while now.  Here is where we are today.  Out list of 16 primary dealers is now down to 6.  Only 6 banks in the entire planet will push US debt right now.   

Let's also consider china has stopped purchases of US debt in the past 2 months. 
go back to the beginning of the month:
http://news.yahoo.com/s/afp/20090430/pl_afp/financeeconomyuschinabonds

Republican US Senator Mark Kirk from Illinois speaks during a press conference in Baghdad in 2006. China, wary of the
troubled US economy, has already "canceled America's credit card" by cutting down purchases of debt, Kirk said Thursday.

WASHINGTON (AFP) – China, wary of the troubled US economy, has already "canceled America's credit card" by cutting down purchases of debt, a US congressman said Thursday. China has the world's largest foreign reserves, believed to be mostly in dollars, along with around 800 billion dollars in US Treasury bonds, more than any other country. But Treasury Department data shows that investors in China have sharply curtailed their purchases of bonds in January and February.

and how about this nugget from 2-3 days ago:
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5286832/China-fears-bond-crisis-as-it-slams-quantitative-easing.html

China has given its clearest warning to date that emergency monetary stimulus by Western governments risks setting off worldwide inflation and undermining global bond markets.

and

Hans Redeker, head of currencies at BNP Paribas, said China is switching into hard assets. "They want to buy production rights to raw materials and gain access to resources such as oil, water, and metals. They know they can't keep buying bonds," he said

Premier Wen Jiabao left no doubt at the Communist Party summit in March that China is irked by Washington's response to the credit crunch, suspecting that the US is engaging in a stealth default on its debt by driving down the dollar. "We have lent a massive amount of capital to the United States, and of course we are concerned about the security of our assets. To speak truthfully, I do indeed have some worries," he said.

Days later, the central bank chief wrote a paper suggesting a world currency based on Special Drawing Rights issued by the International Monetary Fund.

Some economists say China is suffering from "cognitive dissonance" by anguishing so much over its reserves, accumulated as a result of its own policy of holding down the yuan to promote exports. Quantitative easing by the US Federal Reserve and fellow central banks may have saved China as well, since the country's growth strategy is built on selling goods to the West.

So what does all this mean?

it means that china, once our largest debt purchaser has left us, and our debt actions are dying on the vine.  it means that there is no printing press as others want to belive, it means the treasury needs funds now.

Another thing I have often said is that I believe money flows like water, if money is going to be directed to treasuries, look for a waterfall in the stock market in the next 7-10 days.   It has to come from somewhere.   good luck out there.   Nothing I write should be considered stock advice, I am just posting an observed pattern and waiting for it to repeat. 

[glenn kangiser]

Thanks for the observations, muldoon.  This stuff is pretty deep for me and your observations help greatly.

Does the above mean that China wants actual property, resources etc.?  That our feds will sell the country to cover the debt they have created and are continuing to create?

[muldoon]

I tend to doubt that Glen. 

I think they are more interested in purchasing items of perceived value, such as oil, copper, steel, gold, etc and investing in themselves (their people) and not that interested in chasing the us debt pile.   To some extent it is related to trade balance, as long as US dollars were going to China chasing microwaves and 40 dollar dvd players the chinese had no problem taking those very same dollars and returning them to the US for treasuries and their 2-3% coupon.  Now that consumer demand has fallen off a cliff, those dollars going to china has slimmed down, and chinas internal costs have skyrocketed (socialism/communism is a bitch when everyone needs food and you don't have the same money coming in for their efforts), anyway since those dollars are not getting to china - china is not sending them to the us treasury. 

Couple that with the basic principle that we are doing some really dump/stupid/scary stuff in the treasury and federal reserve these days and maybe skipping back a few steps isn't a terrible idea anyway and you get where we are now. 

[sparks]

Why are our 'leaders' doing the same really dumb/stupid/scary stuff??

Are they privvy to info that the rest of us are not?

Something is not passing the smell test here.



sparks

[Virginia Gent]

I agree; this is some scary tin foil hat stuff here. Considering the company, I'm inclined to believe that it is a power grab they are after and are using the current situation to their advantage to consolidate said power.

[pagan]

It becomes even murkier when you read about all of the policies dealing with civil unrest precipitated by financial collapse.

Are we looking at the foundations to institute martial law? Is this the final grab for public money by the wealthiest who will then split the country as it implodes? Or are we witnessing the desperation of our so called leaders who are valiantly trying to save our country?

[peternap]

Why are our 'leaders' doing the same really dumb/stupid/scary stuff??

Are they privvy to info that the rest of us are not?

Something is not passing the smell test here.



sparks

I think the answer's pretty simple Sparks. We are going down and it can't be stopped. All they can do is make believe it is OK and hope for a miracle. When the Titanic was sinking and they ran out of lifeboats, the captain ordered the band to go on deck and play. The Captain and crew knew it wasn't going to be OK but they didn't want panic either.

[pagan]

At least with the Titanic the captain went down with his ship. The captains who've led us into this iceberg are smiling as they watch safely from their lifeboats as more people discover there aren't anymore lifeboats.

[NM_Shooter]

At least with the Titanic the captain went down with his ship. The captains who've led us into this iceberg are smiling as they watch safely from their lifeboats as more people discover there aren't anymore lifeboats.

Yup.  Good analogy.

And we are wagging the dog with the Swine Flu scare.  Ignore the man behind the curtain!

[pagan]

The quickest way for rapidly changing society is through conflict, whether actual or fabricated. Look how much America changed during WW 2 and Viet Nam, or how rapidly American freedoms were lost after 9-11-01. Now we have our so called leaders in Washington DC claiming we need to give up even more freedom so they can protect us from the impending pandemic. Fear is an excellent motivator, to be sure, unfortunately fear also has the tendency of creating panic.

[muldoon]

Why are our 'leaders' doing the same really dumb/stupid/scary stuff??  Are they privvy to info that the rest of us are not?  Something is not passing the smell test here.   sparks   

Maybe not the answer you were looking for, but I still believe we were incredibly close to a financial collapse last autumn.  At that point a decision was made to take this path and try to paper over the losses, once committed to our fed and treasury has continued to paint themselves into a corner.  I don't think for a second that they do not know the situation is terrible, but I do believe that from a day to day point of view they believe they did the only thing they could.  (I disagree with that however I do believe they think it, damn keynesians). 

I agree; this is some scary tin foil hat stuff here. Considering the company, I'm inclined to believe that it is a power grab they are after and are using the current situation to their advantage to consolidate said power.

I am an highly critical of "tinfoil".  Quite frankly I do not enjoy the genre, I prefer to live in the world of facts and history.  That being said, I have no naive belief that some group of people would not like to exploit our current situation for their own benefit - beit monetary or power related.   Historically, it hasn't worked out to well for those that have tried that over the last few centuries.   (revolutions are nasty things)

It becomes even murkier when you read about all of the policies dealing with civil unrest precipitated by financial collapse.   Are we looking at the foundations to institute martial law? Is this the final grab for public money by the wealthiest who will then split the country as it implodes? Or are we witnessing the desperation of our so called leaders who are valiantly trying to save our country?

who can really say?  I think the core of the problem is confidence and trust.  and without the rule of law there can be neither.  Our politicians have been corrupt for decades .. centuries perhaps?  Expecting them to understand that now we have reached the point of complete outright contempt for honesty and fair dealing is contributing to the problems may be asking too much.  The first step to fixing anything right now starts with handcuffs. 

- discloser - I now have financial motivation for my thoughts and postings as I took a material position in the market this morning.   (Just trying to be honest about anything I say so others can evaluate it for themselves with the relevant facts in mind). 

[peternap]

- discloser - I now have financial motivation for my thoughts and postings as I took a material position in the market this morning.   (Just trying to be honest about anything I say so others can evaluate it for themselves with the relevant facts in mind). 

Good luck with it Muldoon. I still it's a little early but that's guessing. That said I did buy 5000 shares of ABK while it was at .87. Last trade today was 1.75....so who knows

[glenn kangiser]

It becomes even murkier when you read about all of the policies dealing with civil unrest precipitated by financial collapse.

Are we looking at the foundations to institute martial law? Is this the final grab for public money by the wealthiest who will then split the country as it implodes? Or are we witnessing the desperation of our so called leaders who are valiantly trying to save our country?

I  do not believe our leaders are trying to save our country.  I believe they are trying to plunder it and make preparations to protect themselves when the people finally figure out what's up, as it is lost already.  Doesn't that make more sense when their actions are considered?

[pagan]

Glenn,

It makes perfect sense. When you look at the actions of politicians since around 1900 it's easy to see where they've been leading us. Couple that with the dumbing down of Americans through public education and it's also easy to see why so few people have tried to stop them. We are indeed looking at the death throws of the American experiment. What comes next?