"This was the first time since 1995 that the UK gilts auction failed to cover the announced offering. More worrying for the Treasury, offered yields increased. The "tail", which measures the difference between the highest accepted yield and the average yield doubled.
In early March, the national debt office conducted a similar auction for £2,250 million. That auction received bids 1.4 times the offered amount, emphasizing the significance of today's demand shortfall."
I think the subtext is along the lines of "we are screwed"
2. City Unslicker explains why "Deflation talk is a cover for the Government to rob you":
"In the final stages of a Ponzi scheme things get stressfull for those in charge. Money ceases to come in at a rate fast enough to cover the interest payments to those already on board. The system starts to unravel and it is time to flee or hand yourself into the Police.
In the UK, we face an economic disaster and the Labour Government are determined to make it worse. They will have the Socialist redistribution of wealth by making us all much, much poorer. They will end their Ponzi scheme by laying waste to everything.
The Labour Government spent too much money from 1997 -2009 and allowed the property bubble to go too far. We now have a bust, the likes of which have not been seen in a century.
The response to this is more Government spending and a fingers-in-the-ears approach to all criticism. Worse, there IS a new plan. The Government and the banks know that they cannot repay the debt they have saddled the future British taxpayers with. So the only solution is to ignite inflation which will quickly whittle away the value of the debt, and it will quickly whittle away the value of everything you own too."
I think the subtext is along the lines of "we are screwed"
3. UK House Bubble explains why there are "Ten reasons why inflation will accelerate" It's a must read article for anyone who wonders why the Labour government, and its propaganda arm the BBC, are pushing the idea that deflation and only deflation is the problem. Maybe Robert Peston and Evan Davies should have a read as well.
I think the subtext is along the lines of "we are screwed"
4. Market Ticker has a rather technical article entitled "The End Game Approaches" that should scare you to pieces. It's US centric but translates quite well to the UK situation. Here's a few extracts but do read the whole piece:
"The underlying problem is not the stock market. It is the credit (bond) market - that is, the underlying reality that there is too much debt out there in relationship to GDP, it cannot all be serviced, and as the economy contracts it feeds a vicious spiral where a default produces unemployment which drops both spendable income (and thus income available debt service) AND tax revenues, giving it to the credit market in all orifices. This is "deflationary destruction" and it is inevitable when government pushes off the normal cyclical cleaning out that recessions do, as our government has.
President Obama thinks he can spend $3.6 trillion this coming fiscal year (an increase of some $600 billion dollars!) while tax revenues are collapsing. Available reports are showing anywhere from 15-25% decreases in tax revenues, depending on exactly where and what you're looking at, and the available Federal data is deteriorating rapidly.
If the bond market sells into Ben's bid for the long end then rates will immediately start to climb once Ben finishes performing his "operations".
This will force him to do it again, and again, and again, until he owns ALL of the long Treasuries.
Don't think for a minute he will let that "printed" money out into the economy. He can't, because if the market detects that it will ramp Treasury yields (and all other yields) even harder, making his "buying" of Treasuries a self-defeating act. Instead he will force those "excess reserves" to go where the rest have gone - into The Fed vault.
The problem with this is that once he owns all the long-term Treasuries he can't sell them without collapsing the price, and now the solvency of our government rests with the ability to roll over short-end debt. See, that which The Fed buys and Treasury sells is a funding circle-jerk, effectively removed from the float and thus the government's funding base.
Anyone care to take the bet on whether the selling pressure will move down the curve?
If it happens, we're done - and neither Bernanke or Obama has the ability to prevent it.
...
Here's a dose of reality for you folks.
I am confident, in the 90th percentile, that none of this is going to work.
All of these clowns still believe you can treat a drunk with a case of whiskey.
We still have trillions of credit in the system that has to be defaulted or cleaned, The Fed can't print out of that without destroying the bond and currency markets and they know it, and even if they did, its the same as defaulting the debt in that the valuation hit is identical.
That is, even if they were willing to destroy the only thing they have to sell (and they're not) printing to that degree would do the same thing as defaulting the debt in terms of the actual purchasing power impact for the banks and government. This is a default by another name, and does the same thing to the people holding the debt who get paid in trashed dollars as does defaulting on them.
...
What I believe we will see instead is similar to what we got after 1929; there was a short-lived rebound in the economy and markets, and it looked like we were going to come out of it with "just" a recession.
But the debt hadn't been cleaned from the system as they tried to prevent people from having to take the loss, and as a consequence able borrowers and able expansion of credit dried up, along with able providers. The "second leg down" was the real bone-crusher, and it will be this time as well.
I believe we will not see "666" again on the SPX this month or next, and while there will be ups and downs in the market, the general direction will be positive for the next month or so.
But by the summer into the fall, when employment hasn't materially turned around and both spending and tax receipts have continued to fall, reality will set in.
Congress is increasingly becoming aware that all of these "fixes" thus far since the summer of 2007 have been nothing more than a scam and a fraud - a ripoff of the Taxpayer and Treasury in a vain and vile attempt to keep those who committed willful blindness or even fraud from having to bear the pain of their sins. The American people are becoming increasingly aware as well.
Come summer and fall there will be no political capital available to play games, either in the American public or the Congress. If Congress tries to appease the Wall Street pressure groups again, they will run the risk of having the Capitol put under siege by angry citizens demanding 535 immediate resignations - or worse.
I further believe the American Public is getting damn close to the breaking point. The tone among people I interact with daily and among what I see online and off is shifting from hope and faith to anger with each passing day, and each revelation of another 10 billion here or there that get funneled through some conduit to an offshore bank just raises the pressure another notch. The people now want blood, and I believe the minimum they will accept are thousands of indictments, prosecutions and prison sentences along with forfeiture of these men and women's fortunes. Madoff didn't satisfy, it further enraged.
The government is running a very real risk, as I have noted in the past, of being declared by the people as "the felon" instead of "the cop", and if that happens I don't want to be anywhere near the angry mob that makes that decision.
So for now, enjoy the general upward to sideways trend in the market, but prepare. While the spring may bring hope and summer one of discontent, I believe there is a very high probability that come fall, the peak of Hurricane Season, a very ill wind will be blowing both in New York and Washington DC."
I think the subtext is along the lines of "we are screwed"
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