The Conservative Cave
Current Events => Economics => Topic started by: Chump on July 30, 2009, 09:51:05 AM
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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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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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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.
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http://www.marketwatch.com/story/fed-buys-65-billion-in-treasurys-2009-07-30-117190
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And 5-year bonds are not long-term.
Everything is relative. 5 years is 2-1/2 lifetimes in an inflationary economy.
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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.
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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.
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Look on the bright side, I'll be dead soon............WAIT A DAMN MINUTE!!!!!! That ain't bright.
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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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Look on the bright side, I'll be dead soon............WAIT A DAMN MINUTE!!!!!! That ain't bright.
:exactly:
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http://www.chrismartenson.com/blog/fed-buys-last-weeks-treasury-auction/23880
More good news.
We've hit the wall.
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So basically, we are buying our own debt with money we don't have?
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So basically, we are buying our own debt with money we don't have?
Like this is a new thing?
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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.