Central Banks Dump $57 Billion Of US Agency Debt!? September 9th Treasury’s Auction of 30-year Bonds Failed !
- Looks like the US treasury bond bubble is about to burst. The notion that foreign governments will continue buying US treasuries and agency debt is nonsense. The talking heads who are still promoting the propaganda that treasuries are the safest investment in the world are about to get slaughtered. US treasuries are the final bubble. It will end with a USD crisis and capital flight out of America into hard assets: commodities and precious metals. Be warned this is a financial earthquake event. Buy physical gold/silver for your protection. Fiat currencies are about to tank! (emphasis mine)
Central Banks Dump $57 Billion Of US Agency Debt
… This week a big development took place which bears further scrutiny. It occurred in the Agency Debt category where Central Banks dumped $57 billion worth of US agency debt. That is the largest one week drop that my records going back six years show. They are now at the lowest level in three years.
The drop is so extreme and so severe that I am wondering if it might be a clerical error that will be corrected next week. If not, it could well be that we are seeing signs that foreign Central Banks are getting serious about diversifying their reserves away from US dollar backed paper. Given the uncertainties surrounding the other fiat currencies globally, it is no stretch of the imagination that some of this money from the sale of such debt is making its way into the gold market.
Bond Buyers Strike?
In years past, there was such strong demand for U.S. Treasury debt that it was typical for bidders to offer to purchase triple the amount being offered for sale at the interest rate set in the auction.
A year ago, buyers started closing their wallets. Although the Treasury is still trying to pretend that demand is very strong for all of its debt issues (the very short-term debt has been strong in reaction to this year’s European fiscal crises), it appears that a significant percentage of the longer term debt is actually being purchased by either the Federal Reserve or with the proceeds of debt collections by Fannie Mae and Freddie Mac. The reported data appears to be fudged to make it appear that outside buyers are as strong as ever.
Demand for long-term U.S. Treasury debt has fallen even more in the past year. It is becoming clear that the U.S. government can no longer automatically count on the Chinese and Japanese central banks, other foreign investors, and large investment funds to extend credit to the U.S. government.
On Thursday, Sept. 9, the Treasury’s auction of 30-year bonds failed.
That is not how the mainstream financial media reported the news. Instead of having the available bonds subscribed multiple times over, bidders only purchased about 38 percent of the bonds at prices guaranteed by the Wall Street banks that underwrote the auction. As a result, these banks were forced to buy the other 62 percent of the bonds at the guaranteed price. Officially, all of the bonds sold, but the reality is that the outside buyers have largely evaporated.
The clear meaning of the failed auction is that the former enthusiastic buyers consider the U.S. dollar to be overvalued. To protect themselves from a higher risk of decline in value, the buyers want a higher interest rate.
At some point, perhaps by the end of the year, the value of U.S. Treasury debt will decline to reflect the need for a higher interest rate. Compounding the problem, Wall Street banks will not want to take on more debt for very long when they face the prospect that this debt will fall in value.
This is just one more news note that indicates that gold and silver prices are more likely to rise in the near future than decline.
On Monday, Sept. 13, the price of silver closed on the U.S. COMEX above $20 for the first time in 30 months. Repeated attempts to bring down prices during U.S. trading hours were unable to overcome the continuing waves of buy orders. After the COMEX closed at $20.11, however, a late-in-the-day suppression tactic managed to push silver down to $19.93 in the electronic ACCESS market, despite a complete absence of any news that would affect prices.
In another interesting development, a buyer of a COMEX gold contract for delivery in September 2009 just received confirmation that the physical gold has finally been posted to his account. …The buyer noted that the broker’s rules for owning this particular bar have changed from past practice. … The new limitations on how the bar may be treated I interpret as a further sign of growing physical shortage in the COMEX gold and silver inventories.
If you don’t mind having to wait a year for delivery of your COMEX inventory, then you can consider owning a COMEX contract. If you want to make sure that you have the physical metal, though, get it in your own custody immediately.
Lucus & Dr. Jaysen Rand: The Return of Planet X! D.U.M.B.s And The Ruling Elites’ Preparation For Global Disaster!
- See also:
Andy Lloyd: Dark Star, Planet X, Nemesis, Nibiru.
Planet X Special Report No. 01: Where is Planet X? Flyby Scenarios !
Jason Martell: Planet X Nibiru Lecture.
Planet X: Search On For Death Star That Throws Out Deadly Comets!
Patrick Geryl: World Cataclysm In 2012 ?
Coast to Coast AM – Catastrophic Earth Changes !
The Horizon Project: Ancient History and Cataclysmic Geographical Pole Shift. Will Galactic Alignment in 2012 Trigger Crustal Pole Shift?
North Magnetic Pole Is Shifting Rapidly Toward Russia!
Nasa Warns Of Super Solar Storm 2012
Richard Sauder: Deep UnderGround Bases (DUMB) and Black Budget!
Jesse Ventura: Secret Underground Military Bases! ‘Designed For 2012 And Economic Collapse! Denver Airport?’
Deep Underground Military Bases (D.U.M.B.)
The Illuminist Population Reduction Plan Via War, Famine, Disease, GM Food, Vaccines….
Deep Underground Military Bases and the Black Budget – Phil Schneider
- Have things gotten better for the past 2 years? Did the massive worldwide stimulus work? Did the bailouts of Greece, Ireland, UK … U.S. work? Did Quantitative Easing 1.0 work? All these measures have simply made the problem bigger. Yes, they did give some temporary relief. But you cannot solve a debt problem with more debts! At some point in the near future debts have to be liquidated. When pay back time comes it will not end well for the world. Which domino is the first to fall? It is anybody’s guess. What is certain is that the whole world will be in this financial, economic and monetary tsunami together.
Can anyone out there suggest a reasonable way for Japan’s massive debt, now 200% of GDP, to be resolved without a lot of people getting gutted? (Unfortunately, it is the millions of Japanese savers and pensioners – holders of most of the unpayable debt – who are the most likely candidates for the inevitable societal seppuku.)
Considered from another angle, is it conceivable that the world will ignore Japan’s impossible situation… indefinitely? I think not. But just because something can’t last, that doesn’t mean it can’t last longer than one expects.
Ditto, the massive misallocation of capital in these United States. Just because returning to a robust economy requires first navigating a minefield littered with bad loans, that doesn’t mean the fatal misstep will come tomorrow.
As a consequence, it’s important to be measured in one’s analysis of how things will ultimately roll out. Under almost no circumstances does it do to run around screaming, “Doom! Doom!” while madly waving one’s arms in the air. There’ll be plenty of time for that once the heavens start to crash around us. The biggest question, at least in my mind, is, what is most likely to trigger the all-too-exciting conclusion to this crisis?
Using the overworked domino metaphor, I see three dominoes. The first is that related to the ongoing troubles in EuroLand. For all the reasons we’ve discussed in this, and in our paid, services, that domino is already very wobbly. While the PIIGS have enjoyed something of a reprieve from the abattoir of sound finances, that reprieve can’t last indefinitely.
A second, and potentially even larger, domino is that related to the aforementioned situation in Japan. As long as global financial markets are willing to do the equivalent of whistling past the graveyard of Japan’s debt, the domino will remain standing. Yet, if Ms. Market decides to look more closely at the situation, as she invariably will, then it will be screams and arm waving on an epic scale. And down the domino will fall.
In that light, the best strategy the Japanese can adopt at this point is to be really, really quiet. Tip toeing about like geishas in soft socks seems about right. Unfortunately, by intervening in the currency markets in an attempt to push the yen lower, the Japanese government has done the equivalent of making loud grunting sounds while stamping its feet.
Of course, the Japanese are no strangers to currency intervention, having done so with some success starting back in the 1970s when the cheap yen allowed the country to grab a stunning share of global manufacturing. Since then, of course, that market share has come down considerably – shifting over to the Chinese, who benefited from their own careful reading of the Japanese playbook.
Unfortunately for the Japanese, market share isn’t the only thing that’s been a-changin’ since the go-go 1970s and 1980s. Most noticeable is the colossal rise in debt, as mentioned in the opening paragraph of these musings.
The huge debt makes the country positively desperate for the improved export revenues necessary for it to service its debts and to keep the safety net under its aging population intact. It is this desperate need for growth that is driving the decision to weaken the yen. Unfortunately, while encouraging a weaker yen may reinvigorate Japan’s export-led economy, it’s no sure thing. For starters, even if the yen does come down, it will have to come down a lot – and stay down – in order for the country to sustainably compete on price.
It’s just not going to happen. For starters, you’d have to be smoking opium to expect the Chinese to stand idly by while Japan takes aim at its export industries – industries that are responsible for it unseating Japan as the world’s second largest economy in the blink of a proverbial eye. Paradoxically, the intervention by the Japanese has provided cover for China’s own manipulations. After all, how can the U.S. shake the fist at China for manipulating its currency while ignoring Japan?
Most importantly, however, the Japanese intervention has the potential to serve as a wake-up call for the world’s traders, indicating that Japan’s problems may be reaching a tipping point. The danger is that, should the intervention fail, as these things eventually must, speculators will begin to play the yen for a rebound, piling in and potentially causing the yen to overshoot on the upside. At that point, three things could occur, none of them good.
- First, the big money now involved in the yen carry trade might decide to head for the exits. That’s because these firms have borrowed huge amounts of yen, thus a rising yen increases their cost of repayment, wiping out the razor-thin margins most of the carry trade participants operate on. Wanting to avoid the losses by unwinding their yen-denominated loans, the carry traders have to buy back yen. Lots and lots of yen – pushing the yen higher still.
- Secondly, Ms. Market will look at the failed intervention as a sure sign that Japan’s export sector and – by extension – the economy will remain under pressure. Consequently, she might become (correctly) concerned that the country may have trouble servicing the Mt. Fuji of debt it has piled up. At that point, Japanese interest rates would be pressured upwards.
- And, thirdly, that would attract the flock of vultures, freshly cashed up by picking over the bones of the PIIGS, quickly causing the situation to spiral out of control as higher rates beget higher rates and causing the Japanese domino to fall.
That, in turn, would unleash a dangerous new financial tsunami around the globe, at which point the third domino will begin to teeter. I refer, of course, to the U.S. While the initial reaction to Japan’s crash will no doubt be a renewed flood of money seeking safe harbor in U.S. dollar-denominated instruments (and gold), as the dollar rises in response, it will be clear for all to see that the U.S. will not be able to compete its way out of its economic morass without significantly debasing its own currency. As that debasement will also do solid service in reducing U.S. debts, Ms. Market will quickly come to expect it.
And with that expectation, the third domino will fall, whereupon the global sovereign debt crisis will shift into the end game. At that point, running around screaming with hands waving madly in the air will be the new normal… at least for the masses.
By contrast, should this scenario come to pass – and it is as likely as any other I can think of – you and I will miss out on the whole screaming/arm-waving thing, but instead be little more than casual observers, watching calmly from the security of solid homes built on foundations of gold.
It’s too early to say whether the Japanese intervention is an early signal that the second domino is getting ready to fall, but that is certainly one possible outcome. And while it is likewise not certain that the second domino will topple the third anytime soon, it would be foolish to ignore the serious potential that it could… and to fail to prepare.
- The Zionist State of Israel is a terrorist state from its founding in 1948. It engages in genocide and ethnic cleansing. Professor William Cook writes about the senseless killing of Palestinians. Why? IMO it was a Satanic blood sacrifice! See also: Dr. Franklin Lamb: The Massacre At Sabra-Shatila By Zionist Israel !
William Cook: Return to Shatila
Twenty eight years ago, a scene of unspeakable horror rocked the rubble strewn alleys of Sabra and Shatila refugee camps in Beirut as vengeance vied with naked lust in a massive display of human malice illuminated for the IDF overseers of this massacre with flares that provided “an unobstructed and panoramic view” for Israeli Defense Minister, Ariel Sharon and his Chief of Staff, Rafael Eitan, as they watched from the seven story Kuwaiti embassy providing logistical support for their Phalangist allies as they “massacred for 36 to 48 hours” the hapless Palestinians imprisoned in the camps. “We were breathing death, inhaling the very putrescence of the bloated corpses around us. Jenkins immediately realized that the Israeli defence minister would have to bear some responsibility for this horror. “Sharon!’ he shouted. ‘That fucker Sharon! This is Deir Yassin all over again.’” (Fisk, Pity the Nation, 360). Outside of the Shatila camp, who remembers? What American knows of the massacre? What government agency has investigated our involvement in it? What lives lost haunt the Israeli or American mind for the evil we have done against the innocent who died such ignominious deaths twenty eight years ago?
Would that we could hold conference with the dead, to sense the absolute black fear that grabbed the mother’s heart as her executioner grabbed her skirt to shred it before unleashing his uncontrollable lust into her trembling body, to feel the depth of anguish that spread throughout her being in these last moments of her life, to fear with her the absolute despair she felt as her murderer laughed and mocked her before thrusting his knife into her child yet unborn in her womb. Would that we could share with those slaughtered during these days of anguish the pain and suffering they endured, hapless innocents offered by Sharon and his forces to their paid mercenaries as compensation for their loyalty to the invading armies of the Israeli nation. Would that we could comprehend from their recounting how a man might find it in his being, in the root cellar of his soul, to inflict such wanton barbarity on a fellow being. Would that we could understand how the chosen of G-d Almighty could unleash such hate on another people that they would allow a savage massacre of brothers and sisters to continue for three days yet proclaim to the world their innocence. Would that there might be some civilized, rational means of grasping how such pathological destruction of fellow humans could be justified that America’s support for a nation capable of such barbarity might also be justified.
Chris Hedges claims that “only the vanquished know war”; but this was not war, it was a massacre, yet these vanquished souls could tell us what vengeance is, what hate is, what sick minds are capable of inflicting on others if we only had time with them to learn. It is the destroyed that know and it is the destroyed we fear; to forget is our means to mental salvation, otherwise we are doomed to live in the hell of our memory that must see and know injustice exists and rules in this world inflicted by those who claim they are civilized but know in their souls they are but brutish beasts.
What can be said of Shatila twenty eight years later? It is, after all, but an incident in the horrors of sixty years stretching from the middle of the 20th century into the second decade of the 21st. It is an icon of American and Israeli horror, a burial of thousands destroyed savagely and forgotten while a symphony of hypocrisy extolling our virtues buries the reality. Those who died never existed, their sons and daughters never existed, their dreams and aspirations never existed, the fruit of their loins never blossomed to feel the heat of the sun, the coolness of the water, the fruit of the tree of life. We the indifferent cannot accept their existence nor recognize it lest we accept as well our guilt in their deaths. To return to Shatila is an act of retribution, an act that gives voice to the dead that suffered there, to accept responsibility for the horrors we allowed to happen there, to seek forgiveness of those who lost their lives there and cannot ever live those lives again nor see the sun rise or hear the baby’s cry or know the laughter of their children or weep at the loss of a mother or father … their voices have been silenced forever, yet they echo throughout the ages how vicious is the soul of humankind to remain silent and indifferent to their brothers and sisters in death.
William A. Cook is Professor of English at the University of La Verne in southern California. His most recent book, The Plight of the Palestinians: a Long History of Destruction is now available at Macmillan publishing or through Amazon and other book sellers. He can be reached at firstname.lastname@example.org or www.drwilliamacook.com