Author Topic: Failed Treasury Auction  (Read 1608 times)

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Offline Chump

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Failed Treasury Auction
« on: July 30, 2009, 09:51:05 AM »
5-years got hammered.  No one wants them.

http://www.cnbc.com/id/32201716

Better analysis here:

http://market-ticker.denninger.net/archives/1267-US-5yr-Bond-Auction-Effectively-FAILS.html

This is a warning folks.  The rest of the world is quickly losing the ability to finance our way of life.  Additionally, I see no plans by the current administration to rein in spending.  In fact, the plans I see amount to ballooning our deficit spending to levels never seen before.

We'll see how the 7, 10, and 30 years go in the next few days.  But, consider this.  The total offering is 235 billion dollars in one week.  Yes, a quarter of a trillion in a week.  There is no reason for an auction that large except in anticipation of greater difficulty borrowing in the future.  And yet, we're already seeing tremendous difficulty borrowing NOW, on 5-YEAR BONDS.  Wait until people laugh off the 30-year notes.

We are looking at a detonation in our financial markets, and the results of this auction only amount to the fuse being lit.

Get your supplies and plans in order.  You owe it to yourself and your family to be prepared.
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Offline DumbAss Tanker

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Re: Failed Treasury Auction
« Reply #1 on: July 30, 2009, 09:56:07 AM »
Different and much less alarmist interpretations are possible.  For instance, nobody is going to want to be holding long-term bonds issued at record low interest rates when inflationary pressures come into play as the economy recovers, so this could just as validly be taken as a positive indicator for equities.  Equity markets do seem to be going apeshit today.
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Offline Chump

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Re: Failed Treasury Auction
« Reply #2 on: July 30, 2009, 10:01:55 AM »
Which has a lot to do with the dollar getting hammered recently.

And 5-year bonds are not long-term.  Of course the 30-year notes will get laughed at, but the yields are going parabolic at this point.  In short, we've run out of other people's money.  If this course continues (and I don't see how it couldn't) interest rates on our debt will skyrocket, essentially causing an exponential cost increase in our debt financing, i.e. BOOM.
Political tags - such as royalist, communist, democrat, populist, fascist, liberal, conservative, and so forth - are never basic criteria. The human race divides politically into those who want people to be controlled and those who have no such desire.   ~Robert A. Heinlein

...let the cannibal who snarls that the freedom of man's mind was needed to create an industrial civilization, but is not needed to maintain it, be given an arrowhead and bearskin, not a university chair of economics.
~Atlas Shrugged, Galt's speech

Offline Chump

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Political tags - such as royalist, communist, democrat, populist, fascist, liberal, conservative, and so forth - are never basic criteria. The human race divides politically into those who want people to be controlled and those who have no such desire.   ~Robert A. Heinlein

...let the cannibal who snarls that the freedom of man's mind was needed to create an industrial civilization, but is not needed to maintain it, be given an arrowhead and bearskin, not a university chair of economics.
~Atlas Shrugged, Galt's speech

Offline DumbAss Tanker

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Re: Failed Treasury Auction
« Reply #4 on: July 30, 2009, 10:58:54 AM »
And 5-year bonds are not long-term. 

Everything is relative.  5 years is 2-1/2 lifetimes in an inflationary economy.
Go and tell the Spartans, O traveler passing by
That here, obedient to their law, we lie.

Anything worth shooting once is worth shooting at least twice.

Offline Chump

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Re: Failed Treasury Auction
« Reply #5 on: July 30, 2009, 11:54:27 AM »
Everything is relative.  5 years is 2-1/2 lifetimes in an inflationary economy.

Granted.

At this point, however, let's consider that inflationary fears are lowering demand for Treasuries.  So...yields on the notes and bonds has to rise accordingly.  Which means we have to offer far more.  Which means yields have to rise.  Which means we have to offer far more.

At some point we smash face first into a wall.

But then again, I'm a deflationary guy.  Same wall, different direction.
Political tags - such as royalist, communist, democrat, populist, fascist, liberal, conservative, and so forth - are never basic criteria. The human race divides politically into those who want people to be controlled and those who have no such desire.   ~Robert A. Heinlein

...let the cannibal who snarls that the freedom of man's mind was needed to create an industrial civilization, but is not needed to maintain it, be given an arrowhead and bearskin, not a university chair of economics.
~Atlas Shrugged, Galt's speech

Offline DumbAss Tanker

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Re: Failed Treasury Auction
« Reply #6 on: July 30, 2009, 01:23:55 PM »
At this point, however, let's consider that inflationary fears are lowering demand for Treasuries.  So...yields on the notes and bonds has to rise accordingly.  Which means we have to offer far more.  Which means yields have to rise.  Which means we have to offer far more.

Oh yeah, it's a big problem, it's just a different big problem.
Go and tell the Spartans, O traveler passing by
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Offline JohnnyReb

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Re: Failed Treasury Auction
« Reply #7 on: July 31, 2009, 10:21:58 AM »
Look on the bright side, I'll be dead soon............WAIT A DAMN MINUTE!!!!!! That ain't bright.
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Offline Chris_

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Re: Failed Treasury Auction
« Reply #8 on: July 31, 2009, 11:49:54 AM »
Look on the bright side, I'll be dead soon............WAIT A DAMN MINUTE!!!!!! That ain't bright.

Of course it is JR.  Haven't you ever heard of "the light" all good conservatives are supposed to go into when they take up worm feeding as a hobby?  What do you mean it isn't bright?
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Offline DULurkster

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Re: Failed Treasury Auction
« Reply #9 on: August 02, 2009, 02:09:08 AM »
Look on the bright side, I'll be dead soon............WAIT A DAMN MINUTE!!!!!! That ain't bright.

 :exactly:
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Offline Chump

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Re: Failed Treasury Auction
« Reply #10 on: August 06, 2009, 07:53:39 PM »
Political tags - such as royalist, communist, democrat, populist, fascist, liberal, conservative, and so forth - are never basic criteria. The human race divides politically into those who want people to be controlled and those who have no such desire.   ~Robert A. Heinlein

...let the cannibal who snarls that the freedom of man's mind was needed to create an industrial civilization, but is not needed to maintain it, be given an arrowhead and bearskin, not a university chair of economics.
~Atlas Shrugged, Galt's speech

Offline BadCat

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Re: Failed Treasury Auction
« Reply #11 on: August 07, 2009, 02:40:43 PM »
So basically, we are buying our own debt with money we don't have?
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Offline rich_t

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Re: Failed Treasury Auction
« Reply #12 on: August 07, 2009, 02:48:29 PM »
So basically, we are buying our own debt with money we don't have?

Like this is a new thing?
"The American people will never knowingly adopt socialism. But, under the name of 'liberalism,' they will adopt every fragment of the socialist program, until one day America will be a socialist nation, without knowing how it happened." --Norman Thomas, 1944

Offline Chris_

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Re: Failed Treasury Auction
« Reply #13 on: August 07, 2009, 04:19:46 PM »
Like this is a new thing?

It's a recent thing.  Well for us, anyway.  Zimbabwe and the old Weimar Republic of Germany can tell you what happens after a country does something this stupid with it's own currency.
If you want to worship an orange pile of garbage with a reckless disregard for everything, get on down to Arbys & try our loaded curly fries.