<< <i>The fed purchased over 60% of all debt it issued last year
How do you know this is true? >>
How do you know your news article is true? I'm just referencing what I posted on page 7 of this thread about the article in the WSJ. (Demand for U.S. Debt Is Not Limitless: In 2011, the Fed purchased a stunning 61% of Treasury issuance. That can't last.)
In either case, I see no reason why the FED could not continue to purchase large amounts for a long time. A large portion of the money used to purchase comes from interest and principal payments of other securities. Basically just re-investing.
It's spin at its finest. I'm not an expert on the treasury markets, but I'm not sure how that you can separate "old" treasuries from "new" treasuries in the market as they try to do. I think it would be like saying we're buying up all of the used/resale homes on the market, and consumers are still buying the new homes. In the end though, used and new homes contribute to the total real estate market and affect the purchase of a new home means one less used home that gets sold, and vice versa. The buying of treasuries is propping up the market.
<< <i>In either case, I see no reason why the FED could not continue to purchase large amounts for a long time. A large portion of the money used to purchase comes from interest and principal payments of other securities. Basically just re-investing. >>
And they will. But your explanation of where the money comes from is interesting... They used to not buy any treasuries so that money used to go somewhere else... It's like in college my parents would give me $20 and I'd put it in my bank account with all of my other money and then they'd ask me what I spent it on... Take your pick. Gas, groceries, beer. How exactly do you track where a particular dollar goes, and does it really matter? What matters is that the fed used to not buy any treasuries and now it does.
A lot of that current buying of Treasuries is linked to otc interest rate contracts being purchased by the top 6 (TBTF) banks. It's hard to say what is real and what is synthetic. But the demand is very real as every otc contract is tied to a real TBond/TNote purchase. What I do know is that it is a shell game of sorts. When Morgan Stanley presumably added $14 TRILL notional in otc derivatives during the first half of 2011 that sopped up a lot of Treasuries. It was more than coincidence that interest rates plummeted during the 6-9 month period when this buying was occuring. It also threw Pimco for a loop because they were dumping Treasuries just as MS was getting into full swing with their synthetic buying. This whole mechanism is one giant black hole. And it has the juice to sway entire markets and economies for months at a time regardless of what fundamentals might be projecting.
The "old" Treasuries are investments. The Fed collects the interest payments and when they mature, colllect the principle. This "money" is not new money,--it was issued years ago. This old money is being recycled into new investments. Believe me, there is tremendous demand for US Treasuries from foreign Govts, foreign companies, foreign investment plans, and foreign private investors, not to mention the US domestic companies, mutual funds, and individuals.
The FED is not driving rates lower--except perhaps thru ineptitude. It is HUGE demand for the safest asset on the planet that is driving and keeping rates down. Maybe that changes someday, but not in the forseeable future.
The buying of homes analogy doesnt work because a home always exists--it doesnt have a maturity date. Once the Treasuries mature, they are gone, and money (dollars) are left in its place.
The FED is not driving rates lower--except perhaps thru ineptitude. It is HUGE demand for the safest asset on the planet that is driving and keeping rates down. Maybe that changes someday, but not in the forseeable future.
That huge "demand" has largely been driven through the otc derivatives market. There are no retail end users for these products. But they do increase the demand for treasuries, even if it is artificial. There is no logical reason to have $250 TRILL of these products held by 6 US banks other than to skew the IR curve and keep rates tightly controlled.
Although I have private insurance, and I am in jeporady of losing it because of this law, I am for it. For once, Justice Roberts (not my favorite Justice) did the right thing. I am paying anyway over a $1000 more each year in premiums because of the uninsured(emergency room visits are subsidized by those that have private insurance). Will it get worse. I really don't know.
<< <i>The FED is not driving rates lower--except perhaps thru ineptitude. It is HUGE demand for the safest asset on the planet that is driving and keeping rates down. Maybe that changes someday, but not in the forseeable future.
That huge "demand" has largely been driven through the otc derivatives market. There are no retail end users for these products. But they do increase the demand for treasuries, even if it is artificial. There is no logical reason to have $250 TRILL of these products held by 6 US banks other than to skew the IR curve and keep rates tightly controlled. >>
The demand for Treasuries is very real. Very real.
The FED is in full control of interest rates. It is one of their primary tools. While the secondary market can charge whatever interest they choose, competition to get loan business ultimately decides how low rates are. When the loaners can get their money cheap, they have to offer cheap money to obtain an acceptable share of the loan business. Unfortunately the world is now built on debt. To get their piece of the pie, secondary market loaners have to be competitive with their rates and how low they can go is determined by how low the FED sets it.
Are they really this stupid, or are they destroying the dollar on purpose?
This is a tough issue. One of those where involvement is warranted but a one solution for all is very tough. The country is working its way through this. I too don't like that I'm paying for unisured. Of course if I was on the other side, I'd have a different opinion. At 58 this issue is big for me, maybe the biggest in my retirement. Keeping kids on parents policies sounds good, no denial of existing just has to be! I certainly want to help those in need for sure. I don't want to fund people that can contribute and don't. There will always be a percentage of both. But the point of the government using taxation as something other than what is intended for, is another bad step in the way our government is going. Its an interdependant progressional thing between citizens and the government. We let it happen and enjoy all the good parts of this, but we give away a lot at the same time.
<< <i>Healthcare ruling: good or bad? Although I have private insurance, and I am in jeporady of losing it because of this law, I am for it. For once, Justice Roberts (not my favorite Justice) did the right thing. I am paying anyway over a $1000 more each year in premiums because of the uninsured(emergency room visits are subsidized by those that have private insurance). Will it get worse. I really don't know. >>
Was Morgan Stanley increasing their derivatives by $8 TRILL in 6 months real demand, or artificial? One would assume that 75-100% of that increase were IR swaps. We all knew that the banksters manipulate the metals, stocks, and treasuries. Guess it should have been no surprise that they own the Libor as well (and therefore gold and silver lease rates). Do they control who gets the gold medals in London as well?
<< <i>There is no such thing as artifical demand. There are either buyers or there arent. >>
In a pay as you go society you are correct.
Housing is a great example of artificial demand. There were buyers but a lot of them were not payers. When payment can be postponed with debt (that may or may not get repaid) there will always be a such thing as artificial demand. Credit is a big creator of artifical demand - it creates an artifical ability (illusion) to be able to afford.
Are they really this stupid, or are they destroying the dollar on purpose?
People went to the banks to borrow money and the banks gave it to them. Nothing artificial. Just because you may not be able to maintain purchasing power or ability doent mean there never was demand.
I suppose the run in silver to $50 last year was artificial? There never was demand at $46, 47, 48, 49?
No, demand is never artificial. The circumstances that may enhance (increase/decrease) demand may be temporary, but the demand is still real.
<< <i>No, demand is never artificial. The circumstances that may enhance (increase/decrease) demand may be temporary, but the demand is still real. >>
A manufacturer may "stuff the retail channels" with product via a promotion to boost sales numbers for the quarter. The demand isn't real, it's artificial. The investor who fails to recognize the artificial demand and mistakes it for a sales or market trend will be sorely disappointed with the subsequent quarter posts a drop in sales as the market digests the glut in inventory.
The huge "demand" for otc interest rate contracts appears artificial as the end-users are the 6 largest US banks. These products are linked to actual purchases/demand for US TBonds/TNotes. In the same way the buying of stocks, bonds, and other financial products by the ESF/PPT is also artificial in that there is technically no limit to what they can do with other people's money. Same could be said for HFT's, naked shorting of equities, etc. Numerous ways to skew what appears to be real demand via artificial or contrived means. It's not your grandfather's real demand. Might be able to take this one step further and call the present financial and banking systems to be essentially artificial or imaginery. It makes no sense that we can increase the US debt by $1.5 TRILL per year yet rates stay near zero. Only artificial demand for Treasuries via 40-1 leveraged otc derivs is allowing this to happen.
It's not your grandfather's real demand. Might be able to take this one step further and call the present financial and banking systems to be essentially artificial or imaginery.
As long as there is "enough" in the way of real product and real manufacturing output, it doesn't seem to matter if there is real employment or real productivity. The problems begin when the imaginary money can no longer buy "enough" real food or real stuff. Depending on where you live, "enough" can be alot, or not much.
Q: Are You Printing Money? Bernanke: Not Literally
Major banks' balance sheets are artificial, ever since the FASB allowed them to start lying about the true value of the real estate paper they hold. Otherwise their insolvency would surface.
Are they really this stupid, or are they destroying the dollar on purpose?
Major banks' balance sheets are artificial, ever since the FASB allowed them to start lying about the true value of the real estate paper they hold. Otherwise their insolvency would surface.
It's truly a shame that FASB was willing to so quickly trash their own reputation which was built up over decades in both academic and professional circles.
Q: Are You Printing Money? Bernanke: Not Literally
manufacturer may "stuff the retail channels" with product via a promotion to boost sales numbers for the quarter. The demand isn't real, it's artificial
Demand is not artifical in your example. Producers made a product and people bought it. Whats artificial? All the producer did was perhaps pull demand forward. The demand was always there. Or if the producers sell their product for a penny and sell everything they make, the demand is not artificial. Demand increased due to a perceived value, but demand is demand. Nothing fake about it.
Numerous ways to skew what appears to be real demand via artificial or contrived means.
Demand is created by the market. If there was no demand for naked short selling (which is largely misunderstood by J6P), then it wouldnt happen. If it happens then there is demand. Just because you dont want something doesnt mean no one else does.
<< <i> manufacturer may "stuff the retail channels" with product via a promotion to boost sales numbers for the quarter. The demand isn't real, it's artificial
Demand is not artifical in your example. Producers made a product and people bought it. Whats artificial? All the producer did was perhaps pull demand forward. The demand was always there. Or if the producers sell their product for a penny and sell everything they make, the demand is not artificial. Demand increased due to a perceived value, but demand is demand. Nothing fake about it. >>
Ah but it is artificial. Again if you as the investor believed the increased sales numbers as increased demand, you'll lose your shirt when the next quarter's numbers come out and reality hits. The demand for that quarter was not real (it was manipulated), even if real products were sold by the mfr to the retail channel.
Still I have to disagree. The markets (company) put in place a situation that increased demand. That demand may be short-lived, but it wasnt fake.
It was just as real as the demand that pushed silver to $49 last year. Was that demand fake?
Demand is rarely ever constant. It ebbs and flows with market conditions. Just because there may have been a temporary spike or decrease in demand doesnt mean that it was artificial.
<< <i>Still I have to disagree. The markets (company) put in place a situation that increased demand. That demand may be short-lived, but it wasnt fake. >>
I'll try one more time. If your local McDonalds normally sells about 200 Big Macs/day, the market demand for Big Macs is 200/day. If McD's runs a promotion for 25cent Big Macs on July 4 and sells 2000, this does not change the reality of the market for Big Macs. If you were to open a competing burger restaraunt, you would base your market expectations on 200/day, not 2000. The demand for Big Macs is still 200/day despite the fact that McD's can run a promotion and unload 2000 at a drastically reduced price. The 2000 demand level is temporary and artificial and should be completely disregarded in any analysis of your local burger market.
The demand for Big Macs is still 200/day despite the fact that McD's can run a promotion and unload 2000 at a drastically reduced price. The 2000 demand level is temporary and artificial and should be completely disregarded in any analysis of your local burger market.
I understand exactly what you are saying, but I dont agree with the term "artificial". The demand for the burgers merely increased due to a perhaps temporary situation, but the demand was real. Fact is that MCD may not sell as many burgers tomorrow since no one is hungry. Is the "demand drought" artificial? No. The demand was always there, just borrowed from the future.
Demand is directly proportional to perceived value. Make it appear cheap and people buy more. I've always said, the best cure for high prices is high prices.
The fact that money continues to pour into Treasuries the lower yields fall is testament to the incredible demand for safe assets. Nothing artificial in that.
<< <i>The fact that money continues to pour into Treasuries the lower yields fall is testament to the incredible demand for safe assets. Nothing artificial in that. >>
Or lack of alternatives. When 60% of the demand is taking money from the left pocket and putting it in the right pocket, it's definitely not genuine.
Columnist and former foreign/war correspondent Chris Hedges gives a hard-hitting talk about his view of the current social, political, and corporate culture in the US. At the 50 min point he takes questions. Some of the replies are very interesting.
Removed the link. You can find it on Jesse's Cafe Americain or by googling CH.
RR, Excellent thought provoking post! Awoke at 5 am this morning to a calm sunrise, while the birds were swifly flying for their morning staples. As the podcast continued I did see a ray of hope that freedom can prevail. As Hodges stated, "The tinder is there, but no one knows when it will ignite."
Finally, as he states the failure of globlization, let us rethink how we can end the suffering of children and further pursue the ideals of freedom for all individuals, and ensure captitalism doesn't forget it's moral duty to people and the world.
RR, Kuch -- although many of his criticisms are valid and worthy of discussion, isn't he basically advocating "Marxist revolution"? I see this talk as more of a scary cultural phenomenon than a constructive analysis. Typical of leftists throughout history, he combines legitimate concerns with paranoia, a perverse intellectual veneer, anger, ego ...
Was Gold Manipulated Like Libor Rates? By CNBC | CNBC – Tue, Jul 10, 2012 7:16 AM EDT.. . . Gold may have been manipulated like the London interbank rate or Libor over a long time frame, Ned Naylor-Leyland, investment director at Cheviot, told CNBC.
The scandal surrounding the fixing of the Libor has opened markets up to "more scrutiny and more investigation," Naylor-Leyland said.
He expects to see revelations over the next few months that the price of gold (Exchange:XAU=) was also manipulated because "gold and silver reflect the true value of money the same way interest rates do."
"It is effectively an intervention in two ways; one would be the fact that for central banks, gold and silver going up doesn't make their currency look any good, and secondly a number of the big commercial banks have very large short positions which they like to manage and make easy money from," he said.
A formal investigation into the manipulation of silver has been going on for two years in the U.S. "Although there is a lot of evidence that it is taking place, nothing has come out of the investigation yet," Naylor-Leyland said.
Chris Powell, Secretary and Treasurer of the Gold Anti-Trust Action Committee told CNBC in June that "as central banks are interested in supporting government bonds and the dollar and keeping interest rates low, they continue to manipulate the gold market
NumbersUsa, FairUs, Alipac, CapsWeb, and TeamAmericaPac
10 yr Treasury yields at all-time lows and Santelli gives the bond auction an A+++++++ rating. Incredible demand.
Depending on which year you use as a baseline, (1980 or 1990) the real rate of inflation is between 5% and 8% which when coupled with the all-time low yield for the 10-yr Treasury at around 1.6% gives a Real Interest Rate between 3.4% and 6.4%, which means that the case for gold is very bullish.
I guess I'm among the cynics when I observe that Chris Hedges is well dressed, well educated, well spoken and has a very good job. He seems to be the recruiter for the new batch of useful idiots. Many half-truths mixed in with some truths, but nothing good to say about America. According to him, Corporations = bad. Government = useless.
He specifically mentions that the instigators of most revolutions are never the ones who ultimately gain power. However, never does he mention that some of those revolutions that he so idolizes turned into bloodbaths where tens of millions of innocents died, which then turned into dictatorships where tens of millions more innocents were starved to death or killed outright.
The questions and comments were especially intriguing. Without the context of listening to the whole video, I'd have thought that some of the questions, and then some of his answers were geared toward conservativism instead of communism and revolution. Exact same language, exact opposite intent.
Interesting video.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>10 yr Treasury yields at all-time lows and Santelli gives the bond auction an A+++++++ rating. Incredible demand. >>
But again, who are the actual buyers? If these are nebulous buyers who will recycle back into the FED in 2-3 weeks, or the FED itself, how useful is that demand? They only sold $21 BILL. Normally the 2nd auction of these bond weeks sells $30-$36 BILL. Wonder why they stopped at only $21B? Is that so they can make the bid to cover look better? I also notice that tomorrows 30 yr TBond auction is only scheduled for $13B in sales. That's far below the recent norm. ???? Why were the primary dealers (ie the smartest guys in the class they don't pass up sure-fire, FED guaranteed money) generally absent from the auction? Here's the ZH view of the auction.
If the official report states that there was low primary dealer bidding and very strong direct bidding how do we know that's really true? If Libor can be rigged just like the BLS NFP numbers, why not the Treasury Auction stats? As long as otc interest rate contracts continue to bloom on TBTF bank balance sheets, there's a potential conflict.
<< <i>RR, Kuch -- although many of his criticisms are valid and worthy of discussion, isn't he basically advocating "Marxist revolution"? I see this talk as more of a scary cultural phenomenon than a constructive analysis. Typical of leftists throughout history, he combines legitimate concerns with paranoia, a perverse intellectual veneer, anger, ego ... >>
No, I did not take away that Hodges was was calling for a Marxist revolution. Rather he was explaining the sometimes corrupt nature of capitalism. In the "Wall Street" movement, there is the fringe marxist/communist movement, however I think the board base is progressive socialist.
This next election is critical!
Simple question.... are we better off than 4 years ago, with regards to freedom and economic stability?
Best to leave politics and politicians out of all discussion. While our host appears to have granted some leeway with policy discussion in this forum, hopefully because they recognize it's affect on PMs, they do have little tolerence for talk of politicians and political parties. We have lost some good members over this.
Are they really this stupid, or are they destroying the dollar on purpose?
<< <i>So are all these cities that are going bankrupt defaulting on their muni bonds?? >>
Here is a recent snippet from a Wall St Jrnl article dated 7/12/12:
These California bankruptcies triggered a rarity. Wall Street investors and everyday Californians are paying attention to the same issue, even if for different reasons. They ask: "Is my bond next?" or "Is my city next?"
The answers are "no" and "maybe." As Michael Aneiro of Barron's pointed out Tuesday, high-profile city bankruptcy cases don't mean that we are suddenly going to see a rash of municipal-bond defaults.
With apologies to analyst Meredith Whitney, who 18 months ago predicted "50 to 100 sizable defaults" in the muni market, most municipal bonds are performing. Defaults in the muni market through the first half of the year are down 32% from the same period last year.
Moreover, as Barron's noted, the average size of the bond was $20 million, hardly sizable. Nor are the defaults going to reshape the historical muni annual default rate of less than 0.1%, according to Fitch Ratings.
And as the Stockton bankruptcy has shown, it is unclear at best whether bankruptcy courts will force losses onto bondholders. That is something the city is asking for.
NumbersUsa, FairUs, Alipac, CapsWeb, and TeamAmericaPac
<< <i>10 yr Treasury yields at all-time lows and Santelli gives the bond auction an A+++++++ rating. Incredible demand. >>
Just what Hoisinton Management and Lacy Hunt has been saying for years now, when everyone else was screaming TOP TOP TOP, they said hold on to your longterm bonds, especially the zero coupons.
NumbersUsa, FairUs, Alipac, CapsWeb, and TeamAmericaPac
Comments
<< <i>The fed purchased over 60% of all debt it issued last year
How do you know this is true? >>
How do you know your news article is true? I'm just referencing what I posted on page 7 of this thread about the article in the WSJ. (Demand for U.S. Debt Is Not Limitless:
In 2011, the Fed purchased a stunning 61% of Treasury issuance. That can't last.)
This is from the FED....http://www.federalreserve.gov/faqs/money_12857.htm
In either case, I see no reason why the FED could not continue to purchase large amounts for a long time. A large portion of the money used to purchase comes from interest and principal payments of other securities. Basically just re-investing.
Knowledge is the enemy of fear
<< <i>That article is an opinion piece. >>
Yes, but the facts are either true or they are not. 61% of all debt is a large share.
<< <i>This is from the FED....http://www.federalreserve.gov/faqs/money_12857.htm >>
It's spin at its finest. I'm not an expert on the treasury markets, but I'm not sure how that you can separate "old" treasuries from "new" treasuries in the market as they try to do. I think it would be like saying we're buying up all of the used/resale homes on the market, and consumers are still buying the new homes. In the end though, used and new homes contribute to the total real estate market and affect the purchase of a new home means one less used home that gets sold, and vice versa. The buying of treasuries is propping up the market.
<< <i>In either case, I see no reason why the FED could not continue to purchase large amounts for a long time. A large portion of the money used to purchase comes from interest and principal payments of other securities. Basically just re-investing. >>
And they will. But your explanation of where the money comes from is interesting... They used to not buy any treasuries so that money used to go somewhere else... It's like in college my parents would give me $20 and I'd put it in my bank account with all of my other money and then they'd ask me what I spent it on... Take your pick. Gas, groceries, beer. How exactly do you track where a particular dollar goes, and does it really matter? What matters is that the fed used to not buy any treasuries and now it does.
But the demand is very real as every otc contract is tied to a real TBond/TNote purchase. What I do know is that it is a shell game of sorts. When Morgan Stanley presumably
added $14 TRILL notional in otc derivatives during the first half of 2011 that sopped up a lot of Treasuries. It was more than coincidence that interest rates plummeted during the
6-9 month period when this buying was occuring. It also threw Pimco for a loop because they were dumping Treasuries just as MS was getting into full swing with their synthetic buying.
This whole mechanism is one giant black hole. And it has the juice to sway entire markets and economies for months at a time regardless of what fundamentals might be projecting.
The FED is not driving rates lower--except perhaps thru ineptitude. It is HUGE demand for the safest asset on the planet that is driving and keeping rates down. Maybe that changes someday, but not in the forseeable future.
The buying of homes analogy doesnt work because a home always exists--it doesnt have a maturity date. Once the Treasuries mature, they are gone, and money (dollars) are left in its place.
Knowledge is the enemy of fear
Box of 20
That huge "demand" has largely been driven through the otc derivatives market. There are no retail end users for these products. But they do increase the demand for treasuries, even
if it is artificial. There is no logical reason to have $250 TRILL of these products held by 6 US banks other than to skew the IR curve and keep rates tightly controlled.
Although I have private insurance, and I am in jeporady of losing it because of this law, I am for it. For once, Justice Roberts (not my favorite Justice) did the right thing. I am paying anyway over a $1000 more each year in premiums because of the uninsured(emergency room visits are subsidized by those that have private insurance). Will it get worse. I really don't know.
Box of 20
<< <i>The FED is not driving rates lower--except perhaps thru ineptitude. It is HUGE demand for the safest asset on the planet that is driving and keeping rates down. Maybe that changes someday, but not in the forseeable future.
That huge "demand" has largely been driven through the otc derivatives market. There are no retail end users for these products. But they do increase the demand for treasuries, even
if it is artificial. There is no logical reason to have $250 TRILL of these products held by 6 US banks other than to skew the IR curve and keep rates tightly controlled. >>
The demand for Treasuries is very real. Very real.
Knowledge is the enemy of fear
Are they really this stupid, or are they destroying the dollar on purpose?
But the point of the government using taxation as something other than what is intended for, is another bad step in the way our government is going. Its an interdependant progressional thing between citizens and the government. We let it happen and enjoy all the good parts of this, but we give away a lot at the same time.
<< <i>Healthcare ruling: good or bad?
Although I have private insurance, and I am in jeporady of losing it because of this law, I am for it. For once, Justice Roberts (not my favorite Justice) did the right thing. I am paying anyway over a $1000 more each year in premiums because of the uninsured(emergency room visits are subsidized by those that have private insurance). Will it get worse. I really don't know. >>
drugs, biotechs, medical device stocks are down... big
Liberty: Parent of Science & Industry
The overall demand for treasuries is as real as the end-user demand for otc interest rate swaps
Was Morgan Stanley increasing their derivatives by $8 TRILL in 6 months real demand, or artificial? One would assume that 75-100% of that increase were IR swaps.
We all knew that the banksters manipulate the metals, stocks, and treasuries. Guess it should have been no surprise that they own the Libor as well (and therefore
gold and silver lease rates). Do they control who gets the gold medals in London as well?
Knowledge is the enemy of fear
<< <i>There is no such thing as artifical demand. There are either buyers or there arent. >>
In a pay as you go society you are correct.
Housing is a great example of artificial demand. There were buyers but a lot of them were not payers. When payment can be postponed with debt (that may or may not get repaid) there will always be a such thing as artificial demand. Credit is a big creator of artifical demand - it creates an artifical ability (illusion) to be able to afford.
Are they really this stupid, or are they destroying the dollar on purpose?
People went to the banks to borrow money and the banks gave it to them. Nothing artificial. Just because you may not be able to maintain purchasing power or ability doent mean there never was demand.
I suppose the run in silver to $50 last year was artificial? There never was demand at $46, 47, 48, 49?
No, demand is never artificial. The circumstances that may enhance (increase/decrease) demand may be temporary, but the demand is still real.
Knowledge is the enemy of fear
Box of 20
<< <i>No, demand is never artificial. The circumstances that may enhance (increase/decrease) demand may be temporary, but the demand is still real. >>
A manufacturer may "stuff the retail channels" with product via a promotion to boost sales numbers for the quarter. The demand isn't real, it's artificial. The investor who fails to recognize the artificial demand and mistakes it for a sales or market trend will be sorely disappointed with the subsequent quarter posts a drop in sales as the market digests the glut in inventory.
US TBonds/TNotes. In the same way the buying of stocks, bonds, and other financial products by the ESF/PPT is also artificial in that there is technically no limit to what they
can do with other people's money. Same could be said for HFT's, naked shorting of equities, etc. Numerous ways to skew what appears to be real demand via artificial or
contrived means. It's not your grandfather's real demand. Might be able to take this one step further and call the present financial and banking systems to be essentially artificial
or imaginery. It makes no sense that we can increase the US debt by $1.5 TRILL per year yet rates stay near zero. Only artificial demand for Treasuries via 40-1 leveraged otc
derivs is allowing this to happen.
or imaginery.
As long as there is "enough" in the way of real product and real manufacturing output, it doesn't seem to matter if there is real employment or real productivity. The problems begin when the imaginary money can no longer buy "enough" real food or real stuff. Depending on where you live, "enough" can be alot, or not much.
I knew it would happen.
Are they really this stupid, or are they destroying the dollar on purpose?
It's truly a shame that FASB was willing to so quickly trash their own reputation which was built up over decades in both academic and professional circles.
I knew it would happen.
Demand is not artifical in your example. Producers made a product and people bought it. Whats artificial? All the producer did was perhaps pull demand forward. The demand was always there. Or if the producers sell their product for a penny and sell everything they make, the demand is not artificial. Demand increased due to a perceived value, but demand is demand. Nothing fake about it.
Numerous ways to skew what appears to be real demand via artificial or contrived means.
Demand is created by the market. If there was no demand for naked short selling (which is largely misunderstood by J6P), then it wouldnt happen. If it happens then there is demand. Just because you dont want something doesnt mean no one else does.
Knowledge is the enemy of fear
<< <i> manufacturer may "stuff the retail channels" with product via a promotion to boost sales numbers for the quarter. The demand isn't real, it's artificial
Demand is not artifical in your example. Producers made a product and people bought it. Whats artificial? All the producer did was perhaps pull demand forward. The demand was always there. Or if the producers sell their product for a penny and sell everything they make, the demand is not artificial. Demand increased due to a perceived value, but demand is demand. Nothing fake about it. >>
Ah but it is artificial. Again if you as the investor believed the increased sales numbers as increased demand, you'll lose your shirt when the next quarter's numbers come out and reality hits. The demand for that quarter was not real (it was manipulated), even if real products were sold by the mfr to the retail channel.
It was just as real as the demand that pushed silver to $49 last year. Was that demand fake?
Demand is rarely ever constant. It ebbs and flows with market conditions. Just because there may have been a temporary spike or decrease in demand doesnt mean that it was artificial.
Knowledge is the enemy of fear
<< <i>Still I have to disagree. The markets (company) put in place a situation that increased demand. That demand may be short-lived, but it wasnt fake. >>
I'll try one more time. If your local McDonalds normally sells about 200 Big Macs/day, the market demand for Big Macs is 200/day. If McD's runs a promotion for 25cent Big Macs on July 4 and sells 2000, this does not change the reality of the market for Big Macs. If you were to open a competing burger restaraunt, you would base your market expectations on 200/day, not 2000. The demand for Big Macs is still 200/day despite the fact that McD's can run a promotion and unload 2000 at a drastically reduced price. The 2000 demand level is temporary and artificial and should be completely disregarded in any analysis of your local burger market.
Kiss my A$$
I understand exactly what you are saying, but I dont agree with the term "artificial". The demand for the burgers merely increased due to a perhaps temporary situation, but the demand was real. Fact is that MCD may not sell as many burgers tomorrow since no one is hungry. Is the "demand drought" artificial? No. The demand was always there, just borrowed from the future.
Demand is directly proportional to perceived value. Make it appear cheap and people buy more. I've always said, the best cure for high prices is high prices.
The fact that money continues to pour into Treasuries the lower yields fall is testament to the incredible demand for safe assets. Nothing artificial in that.
Knowledge is the enemy of fear
<< <i>The fact that money continues to pour into Treasuries the lower yields fall is testament to the incredible demand for safe assets. Nothing artificial in that. >>
Or lack of alternatives. When 60% of the demand is taking money from the left pocket and putting it in the right pocket, it's definitely not genuine.
At the 50 min point he takes questions. Some of the replies are very interesting.
Removed the link. You can find it on Jesse's Cafe Americain or by googling CH.
Finally, as he states the failure of globlization, let us rethink how we can end the suffering of children and further pursue the ideals of freedom for all individuals, and ensure captitalism doesn't forget it's moral duty to people and the world.
By CNBC | CNBC – Tue, Jul 10, 2012 7:16 AM EDT.. .
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Gold may have been manipulated like the London interbank rate or Libor over a long time frame, Ned Naylor-Leyland, investment director at Cheviot, told CNBC.
The scandal surrounding the fixing of the Libor has opened markets up to "more scrutiny and more investigation," Naylor-Leyland said.
He expects to see revelations over the next few months that the price of gold (Exchange:XAU=) was also manipulated because "gold and silver reflect the true value of money the same way interest rates do."
"It is effectively an intervention in two ways; one would be the fact that for central banks, gold and silver going up doesn't make their currency look any good, and secondly a number of the big commercial banks have very large short positions which they like to manage and make easy money from," he said.
A formal investigation into the manipulation of silver has been going on for two years in the U.S. "Although there is a lot of evidence that it is taking place, nothing has come out of the investigation yet," Naylor-Leyland said.
Chris Powell, Secretary and Treasurer of the Gold Anti-Trust Action Committee told CNBC in June that "as central banks are interested in supporting government bonds and the dollar and keeping interest rates low, they continue to manipulate the gold market
Knowledge is the enemy of fear
Depending on which year you use as a baseline, (1980 or 1990) the real rate of inflation is between 5% and 8% which when coupled with the all-time low yield for the 10-yr Treasury at around 1.6% gives a Real Interest Rate between 3.4% and 6.4%, which means that the case for gold is very bullish.
John Williams' Shadow Stats
I knew it would happen.
He specifically mentions that the instigators of most revolutions are never the ones who ultimately gain power. However, never does he mention that some of those revolutions that he so idolizes turned into bloodbaths where tens of millions of innocents died, which then turned into dictatorships where tens of millions more innocents were starved to death or killed outright.
The questions and comments were especially intriguing. Without the context of listening to the whole video, I'd have thought that some of the questions, and then some of his answers were geared toward conservativism instead of communism and revolution. Exact same language, exact opposite intent.
Interesting video.
I knew it would happen.
<< <i>10 yr Treasury yields at all-time lows and Santelli gives the bond auction an A+++++++ rating. Incredible demand. >>
But again, who are the actual buyers? If these are nebulous buyers who will recycle back into the FED in 2-3 weeks, or the FED itself, how useful is that demand?
They only sold $21 BILL. Normally the 2nd auction of these bond weeks sells $30-$36 BILL. Wonder why they stopped at only $21B? Is that so they can make the
bid to cover look better? I also notice that tomorrows 30 yr TBond auction is only scheduled for $13B in sales. That's far below the recent norm. ???? Why were the primary
dealers (ie the smartest guys in the class they don't pass up sure-fire, FED guaranteed money) generally absent from the auction? Here's the ZH view of the auction.
This isn't Kansas anymore Toto
If the official report states that there was low primary dealer bidding and very strong direct bidding how do we know that's really true? If Libor can be rigged just like the
BLS NFP numbers, why not the Treasury Auction stats? As long as otc interest rate contracts continue to bloom on TBTF bank balance sheets, there's a potential conflict.
<< <i>RR, Kuch -- although many of his criticisms are valid and worthy of discussion, isn't he basically advocating "Marxist revolution"? I see this talk as more of a scary cultural phenomenon than a constructive analysis. Typical of leftists throughout history, he combines legitimate concerns with paranoia, a perverse intellectual veneer, anger, ego ... >>
No, I did not take away that Hodges was was calling for a Marxist revolution. Rather he was explaining the sometimes corrupt nature of capitalism. In the "Wall Street" movement, there is the fringe marxist/communist movement, however I think the board base is progressive socialist.
This next election is critical!
Simple question.... are we better off than 4 years ago, with regards to freedom and economic stability?
GOT GOLD? Got real hard assets out of the system?
Are they really this stupid, or are they destroying the dollar on purpose?
Last chance to watch TV. All satellites to be destroyed. LOL
Knowledge is the enemy of fear
<< <i>So are all these cities that are going bankrupt defaulting on their muni bonds?? >>
Here is a recent snippet from a Wall St Jrnl article dated 7/12/12:
These California bankruptcies triggered a rarity. Wall Street investors and everyday Californians are paying attention to the same issue, even if for different reasons. They ask: "Is my bond next?" or "Is my city next?"
The answers are "no" and "maybe." As Michael Aneiro of Barron's pointed out Tuesday, high-profile city bankruptcy cases don't mean that we are suddenly going to see a rash of municipal-bond defaults.
With apologies to analyst Meredith Whitney, who 18 months ago predicted "50 to 100 sizable defaults" in the muni market, most municipal bonds are performing. Defaults in the muni market through the first half of the year are down 32% from the same period last year.
Moreover, as Barron's noted, the average size of the bond was $20 million, hardly sizable. Nor are the defaults going to reshape the historical muni annual default rate of less than 0.1%, according to Fitch Ratings.
And as the Stockton bankruptcy has shown, it is unclear at best whether bankruptcy courts will force losses onto bondholders. That is something the city is asking for.
<< <i>10 yr Treasury yields at all-time lows and Santelli gives the bond auction an A+++++++ rating. Incredible demand. >>
Just what Hoisinton Management and Lacy Hunt has been saying for years now, when everyone else was screaming TOP TOP TOP, they said hold on to your longterm bonds,
especially the zero coupons.