The SHTF Turning Point Quietly Happened, Last Week – Have you been Paying Attention?

Originally posted by marg6043
More explaining on the real problem with the sell of the US debt call The treasury debt instruments.

Many People doesn't understand how important is for the government to be able to work, pay bills and support programs in the nation.

Because we are a Nation of consumers on credit and loans the government is not far behind, it also depends on the ability of selling its debt instruments to support every government program and to sustain a budget.

It is not at all clear that the Treasury will be able to sell its debt instruments in 30 months, and it has nothing to do with health-care costs

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i think that is a key point to take from the post.......30 months ....that gives us 2.5 years .........there was no SHTF moment last week.......unless it was another tiny speck of feces.....that is adding to the mounting specs that have been plastered up there for years.

The gov't will keep spending ........besides being masters of deception .....they are masters of kicking the can down the road further in creative ways.......the fed will step into being a bigger and bigger buyer of the debt.....we have the most advanced bond market in the WORLD and they will let the fed continue to balloon it's own balance sheet.....well....because they can balloon it because they are in-auditable...and i mean a REAL AUDIT ...not a "slap on the wrist....appease the citizens.....audit that we may give the CIA" .

so we got 2-3 years as most respected economists i listen to say we do until the bond market and currency REALLY have the SHTF for real.

I think our big issue is jobs and our dependence on credit and the way that credit creates spending and thus the need for jobs that provide stuff to pay for.... perhaps the gov't will get the banks to lend more somehow because i have been trying to get a good idea of the amount of bank lending going on right now and it is difficult to get my head around.....sure loan standards are tightening......but they were so loose before.....so are they tighter than ever.....tighter than the bubble year (yes obviously)....but how damn tight are loans......and how many lines of credit are being cut back and how many lines of credit are up for extension in the next year or two which may be cut and will they be.

reply to post by crimvelvet


That is about as clear as mud to me. We'll discuss this elsewhere. This is QA's thread, and I don't want to be the one to derail it.

Thank you OP for explaining that so that even an economic dummy like me could understand it.

The G-men, they know what's going down. There is something behind all this suspicious "goings'-on" that so many here have been reporting on for several months. All these mysteries are going to come into the light one day and I hope it is not soon.

Could a similar thing be happening here in the UK? I heard on the 10pm news that the Treasury has authorised a new round of 'quantitive easing' of £50 Billion...the one word that was mentioned that immediately hooked my attention was 'bond' (and I don't mean James..)

Perhaps we've had a similar poor show in trying to persuade treasury-bond purchasers to buy sterling-debt as has happened on Wall St.?

It dont look good financially for the Bank of Englandcestershire


[edit on 6-8-2009 by Taikonaut]

This hit the internet today...

Shell game exposed!

BUSTED: FED SECRETLY MONETIZING DEBT; COLLUDING WITH DEALERS

Just last week, when the auction results were announced it was trumpeted to great fanfare that there was “more than sufficient” bid-to-cover, “strong demand” and all the rest.

And now it turns out that 47% (!) of the bonds that were taken by the primary dealers in that auction have been quietly bought by the Fed and permanently secreted to its balance sheet.

They didn’t even wait a full week! A more honest and open approach would have been for the Fed to simply buy them outright at the auction but this way, using “primary dealers” and “POMOs” and all these other extra steps the basic fact that the Fed is openly monetizing US government debt is effectively hidden from a not-too-terribly inquisitive US press and public.

www.chrismartenson.com...

The propaganda to create a false sense that everything is rebounding is nothing but deception.

reply to post by marg6043


I totally agree with you on all points.Only quoted this section because it made such a good point about most of the propaganda going on within the MSM,and perpetuated within our gov't.

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I'm filled with an overwhelming feeling of change......and not the good kind.I am not the type of person to freak easily,but lately I feel that what the OP has posted has many scary implications that are not,cannot be as easy to escape as they might once have been--and I don't know what I,or we can do to reverse the momentum that this country has found (put?) itself on/in.

My apologies,as I don't have anything to contribute to the thread,but did want to thank you for the read and for taking the time to share your knowledge.

www.youtube.com...


hmmm this fits no?

China and Russia have already taken some small steps to diversify their currency reserves away from the dollar:
China has made arrangements with six countries worth 650bn yuan ($95bn) that allow trade to be conducted in renminbi rather than dollars
China and Russia have said they will buy bonds to be issued by the IMF
Data released on Monday showed that both China and Russia had trimmed their holdings of US government bonds in April.
But analysts say the Bric countries are unlikely to mount a real challenge to the dollar's supremacy.

news.bbc.co.uk...

These states are the world’s four major emerging economies (constituting 15 percent of the world’s $60.7 trillion economy) and they are set to discuss a serious agenda. According to their draft communiqué, the BRICs will not formally discuss the role of the dollar in world finance and trade nor the creation of a supranational currency, despite the numerous discussions by BRIC members on these topics before today’s gathering.

www.coha.org...’s-block/

Now, however, there is increasing concern as to how the massive projected budget deficits are to be financed without a steep increase in interest rates and a resulting fall in current bond prices. Indeed, last Monday, in an attempt to quell the negative sentiment, a top IMF official publicly professed that the recent spike in longer-dated U.S. Treasury yields was not a sign of inappropriate monetary policy.

In reality, there is increasing investor concern about potential depreciation of the U.S. dollar, which may require the defensive action of sharply increased interest rates.

The Chinese and Japanese together hold almost $2 trillion of U.S Treasury obligations, or almost one-sixth of the total outstanding Treasury debt. As the largest single holder, the Chinese are particularly concerned. Indeed they have called for “special guarantees.”

The great, unspoken risk is that China may slow or even halt its regular purchases of Treasuries, causing great damage to U.S. interest rates.

Worse still, China may wish to lower its risk exposure both to U.S. inflation and to a forced increase in U.S. interest rates by switching long bonds for short-dated bills. At worst, China could become a net seller of U.S. Treasuries, putting great pressure on the U.S. dollar and American interest rates.

seekingalpha.com...

For those who think the OP is over reaching.

Just google BRIC nations. They met a couple of weeks ago. The discussion was the US. The US debt. The US dollar. US bonds.
You think they are talking about this because they read this thread?

Behind the scenes, we can bet that creditor states are preparing for flight. Though the dollar's slide has been stayed by pronouncements of confidence from Russia, Japan, China, and others, there will come a time when the pain is too great and the outcome too certain. Private investors who haven't already left the collapsing dollar ballroom may be crushed when the big players stampede for the door.

seekingalpha.com...

reply to post by burntheships

The consensus seems to be that we're STILL being lied to, and that the next Treasury issues will be even more precarious:

"Blatant Monetization Uncovered"

The Fed pretty clearly pre-arranged, either explicitly or by "suggestion", that the Primary Dealers take up the auction with the promise that The Fed would immediately monetize half what the Primary Dealer's took!

Folks, this is beyond bad - it is pernicious and outrageous conduct by The Federal Reserve in conspiracy with the Primary Dealers, both of which are now desperately trying to prop up the US Government Bond Market through subterfuge rather than just buying up the bond issue from Treasury when originally put to the market!

If you think the economy and credit markets are "on the mend" why would The Fed do something like this? It would not be necessary unless The Fed was told (by those very same Primary Dealers) that they were going to be unable or unwilling to take down any more Treasury Debt.

Folks, let me be clear: The United States HAS OFFICIALLY HIT THE TREASURY DEBT WALL and The Fed and Treasury are engaged in subterfuge and conspiracy in an attempt to hide this from the market.

There is no other explanation for what just happened.

None.

market-ticker.org...

With Japan and China holding back, who will buy our debt to keep the Treasury going? We'll need a lot more investment before the end of FY 2009 and for the 9/30/09 beginning of FY 2010.

It appears that unless the Fed creates more money "out of thin air" (as Chris Martenson observes), the dollar and dollar-denominated commodities will be in for extreme reactions.

Reply to post by atlasastro

The BRIC countries (Brazil, Russia, India and China) have also been meeting recently to co-ordinate their rejection of the coming Copenhagen 'global warming' conference goals/mandates.

With the failure of the largest GHGs to participate, or give in to the AGW hysteria, the coming "Cap and Trade" taxes will force the U.S. and U.K. economies to bear the majority of the cost of CO2 remediation and reduction.

Simultaneously, our largest creditors will be free to dump dollars, buy hard assets and secure access to resources to strengthen and rebuild their own economies.

The fall is going to be interesting. So will the change of seasons.
(I am liquidating many of my holdings at the first sign of a market downturn - most likely this week.)

Deny ignorance.

jw

Given that the Fed is committed to buy $300 billion in Treasuries this year, the only real surprise should have been the shift from short- to longer-term issues.

And the lack of foreign interest.

But, haven't we complained long and hard about the gov't. 'mortgaging our future' to the Japanese (first) and the Chinese (currently)?

So, we have the same result, except that American interests are among the primary purchasers of the U.S.' own bonds, notes and bills.

Now if s is going to htf, we should see a clearer signal at this week's Open Market Committee and the signals generated by its Wednesday announcements. Higher rates? Extend or hold the $300bn. limit?

The Fed is doing just as it promised thus far, and we can generally expect it to keep rates down as much as possible so that future borrowing will be less expensive.

"Fed to dampen rate hike talk, halt Treasury buying"
www.reuters.com...

The Federal Reserve meets this week with the delicate task of curbing a surge in expectations that it is ready to starting raising interest rates, without snuffing out crucial optimism on the economy.
Policy-makers are also likely to allow a controversial scheme to buy $300 billion of longer-dated Treasuries to end on schedule in September. But they may discuss extending a separate program to support the flow of credit to consumers and business, with an eye on propping up commercial real estate.
With no change to rates expected, the most likely action next week will be an announcement that the Fed will allow its program to buy up to $300 billion of longer dated U.S. government bonds to expire on schedule in September.
The campaign, which is in addition to Fed purchases of $1.45 trillion of mortgage debt by the end of the year, quickly become a lightning rod for concerns about future inflation and criticism that the central bank was helping to finance a record U.S. budget deficit, also called monetizing the debt.
Minutes of the Fed's June meeting show that policy-makers were uncertain about the programs' benefits given these pitfalls. And 14 out of the primary 16 dealers polled by Reuters on Friday did not expect the Fed to increase its Treasury purchase program beyond $300 billion.

www.reuters.com...

At some point, I'd expect inflation worries to begin taking more attention as we near the year's end. The stock market is generally considered "pricey" at this point, and any signs of Fed weakness or ineffectiveness will defintitely ripple through all markets, despite the recent strength of techs and some financials.

Watch Wednesday for the Fed statement and see if they are going to stick to their guns, or blink.

jw

What is happening in the US right now is like what can happy to any of us. We have 2 credit cards maxed, phone bill, cable bill, hydro bill are all way behind and you've taken an advance on your next paycheck and a pay-day loan and soon everything comes crashing down at once. They all want max payments and you don't have enough and can't borrow enough. This may sound familiar to some. This turkey here had to learn that one the hard way. But all is better after some grin and bear work as much as you can for 5 years.

With a future downturn looming on the US market horizon. The commercial real-estate and credit card crash are the next big ones. Going to hurt the banks and funds bad. Then I think it will be hard to sell treasuries for the US. With unemployment having more room to rise as layoffs would be inevitable and increasing benefit payments plus loss of tax revenue would push US deficits through the roof as you still have two wars going on and the cost to pull out of Iraq will be staggering.

I hate to say it but I think harder times are ahead for our friends to the south and this will hurt us here in Canada bad also.

Originally posted by jdub297
Given that the Fed is committed to buy $300 billion in Treasuries this year, the only real surprise should have been the shift from short- to longer-term issues.

Hi judb. The targets have also been public knowledge since the operations were first announced....

What is the policy objective of the Federal Reserve’s program to purchase up to $300 billion of longer-dated Treasury securities?
The goal of the longer-dated Treasury purchase program is to help improve conditions in private credit markets.

What Treasury securities will the Federal Reserve’s Open Market Trading Desk (“the Desk”) purchase?
The Desk will concentrate purchases in the 2- to 10-year sectors of the nominal Treasury curve, although purchases will occur across the nominal Treasury and TIPS yield curves.

Full Text

I think the issue is whether or not the Fed had a sweetheart agreement with the PD's to backstop those 7yr's.

In terms of a possible connection between Fed coupon passes (POMO's) , and the curious run in equities , check-out this research by Precision Capital Management....

A Grand Unified Theory of Market Manipulation

The POMO Effect

The theory for which we have the greatest supporting evidence of manipulation surrounds the fact that the Federal
Reserve Bank of New York (FRNY) began conducting permanent open market operations (POMO) on March 25,
2009 and has conducted 42 to date. Thanks to Thanassis Stathopoulos and Billy O’Nair for alerting us to the POMO
Effect discovery and the development of associated trading edges. These auctions are conducted from about 10:30
am to 11:00 am on pre-announced days. In such auctions, the FRNY permanently purchases Treasury securities
from selected dealers, with the total purchase amount for a day ranging from about $1.5 B to $7.5 B. These days are
highly correlated with strong paint-the-tape closes, with the theory being that the large institutions that receive the
capital injections are able to leverage this money by 100 to 500 times and then use it to ramp equities.

Full text

reply to post by OBE1


Which fits in well with a common, and predicted, September equities correction.

If Fed buying dries up and there are no more foreign investors, the Treasury will be running out of room to float more debt issues of any duration, even long bonds.

And if there is more supply than demand? Debt prices fall, and RATES RISE. (Markets are already pricing-in future rate increases.

All we need is for the business sector to falter, or just fail to thrive, and the game will be over. (As a side note, a recent employment analysis noted that there has been only a net 250,000 jobs increase over the past decade, the remaining employment expansion being 100% attributable to the public sector.)

Future reports on business spending on equipment, incomes, jobs, and profits MUST show significant improvement to justify current asset prices. Results that are merely "less bad" will not suffice.

Today's joblessness and profit announcements do not make me hopeful.

The house of cards is shaky and an ill wind is blowing, no?
jw

I don't think we had the SHTF moment yet. The recent moves are only toward a one world currency, and that is done in private so everyone doesn't panic. It's inevitable that we have one currency and with the right people in control of it... and not those who have nukes pointed and are threatening the G8.

It was AQ's (Saudi) mission to take out the G8 economically. 911 was the Awakening and AQ is right on schedule. But there are TPTB that won't let this happen... hopefully.

[edit on 22-8-2009 by JJay55]

Originally posted by JJay55
I don't think we had the SHTF moment yet. The recent moves are only toward a one world currency, and that is done in private so everyone doesn't panic. It's inevitable that we have one currency and with the right people in control of it... and not those who have nukes pointed and are threatening the G8.

It was AQ's (Saudi) mission to take out the G8 economically. 911 was the Awakening and AQ is right on schedule. But there are TPTB that won't let this happen... hopefully.

[edit on 22-8-2009 by JJay55]

Not in private anymore....

See link here ...Linky