I mean, c'mon, $165 billion in Treasuries for sale in the next week?
$31 billion in 3-month bills
$27 billion in 7-year notes
$40 billion in 2-year notes
$37 billion in 5-year notes
$30 billion in 6-month bills
Annualized this is $8.58 trillion dollars!
Now obviously they won't keep doing that for the next 52 weeks (one hopes) but you have to be smoking something if you think the market can continue to absorb this sort of supply and shrug it off.
Today the TNX was up over 5%, undoubtedly on this announcement, almost erasing the benefit from the recent stock market decline.
So Ben's liquidity games have bought him about 15 basis points of improvement in the TNX, but he's given up 35 handles on the SPX.
At this rate to get the TNX down to 3% he'll have to sacrifice 230 points on the SPX, taking it down to about the March lows.
The thing which amazes me in the whole business can be summed up in another article by Karl Denninger:
There is no attempt to hide anything and no conspiracy - simply a conflict of interests.
Readers are at different levels of incredulity over the Fed's actions, from the, 'Oh I'm sure they wouldn't do anything nefarious, those nice men in suits,' through, 'Those incompetent bastards,' to the keen observers [see Sonus articles in the sidebar] who have come to the same conclusion, albeit from a different direction to me, that the Fed and others are simply proceeding to shaft us and position themselves nicely for the next induced stage of the crisis.
I say 'induced' in the sense that certain policies are going to result in certain economic outcomes and to say that from Greenspan to Bernanke weren't and aren't aware of this - come on, pull the other one.
I do sincerely hope that we've all got past the Economics 101 stage of thinking that the Fed is a Government agency, haven't we? We do all realize it's a private cabal of companies who handle the government's business?
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Why thanks, Jessica. Now, I think I know you from somewhere - you have a blog in that name, don't you or had one? And if it was what I was thinking, you didn't post all that often. Could be wrong. Anyway, I'll head over to autosurf.
ReplyDeleteWell, there goes the UK's financial independence.
ReplyDelete"Gordon Brown looks to have surrendered significant powers over the City of London to new bodies of European Union financial regulators, according to a high-ranking Brussels official."
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5577281/Gordon-Brown-surrenders-key-powers-over-financial-regulation-to-Brussels.html
Is this part of the same deal - is the EU a branch of the cartel? Because we just became a local branch. Of something.
James- what would a mistake look like? Every time I read you writing about politics- you write as though politicians and economists understand what they are doing. Presumably you would agree that well-intentioned people can make mistakes- even those in government- so what would convince you that a series of policy changes was a mistake rather than a conspiracy?
ReplyDeleteAbsence of the mountain of quite indicative evidence, Tiberius. That would be most convincing.
ReplyDelete